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We come into the new week with the US Dollar having reasserted itself, with a fresh wave a momentum, on the back of Friday’s better-than-expected US industrial production data and an upward revision of US retail sales. ECB Draghi will be on the wires later today. read report
When we look at this week’s price action, what stands out is relative weakness in risk correlated commodity bloc FX, despite US equities trading in positive territory. However, the price action is less perplexing when breaking it down, with the weakness less a function of risk sentiment and more about country specific negative drivers. read report
Every time the market wants to feel better about the US administration lightening up on its protectionist trade campaign, it gets let down almost immediately thereafter. The US administration may indeed be ready to make some concessions, but it’s also clear there is nothing that suggests it plans on retreating from its stance on trade. read report
FX markets might be confined to tighter ranges for the moment, but this certainly doesn’t mean the price action isn’t getting interesting. We believe it is, with the subtle upward movement in currencies like the Euro and Pound indicative of what could be a developing uptrend for these major currencies against the US Dollar. read report
Fresh China tariff threats from the US administration haven’t done much to weigh on sentiment into Tuesday, perhaps with market participants anticipating some form of a resolution in light of how things played out with Mexico. Looking at the calendar, key standouts come in the form of UK employment and earnings reads, and US producer prices. read report
We’ve had a risk on open to start the week, on the back of the weekend news, with the US and Mexico agreeing on a migration deal resulting in an indefinite suspension of tariffs. Meanwhile, China has been out saying there’s tremendous room to ease monetary policy, offering yet another prop for risk markets. read report
As we head into the weekly close, the US Dollar is looking softer, with all of the developed currencies tracking higher against the Buck since the weekly open. The FX market seems to be increasingly sensitive to soft Dollar US trade policy, which continues to attract a lot of attention. read report
Trade war tensions continue to be at the centre of all things financial markets, with talks between the US and Mexico going nowhere and President Trump warning that if no agreement is reached, Mexico should expect 5% tariffs on all goods to kick in on Monday. The ECB decision is the highlight event on Thursday's docket. read report
As we highlighted in Tuesday’s call, the fact that currencies haven’t been moving much this week should not necessarily be passed off as a non-event, given the fact that the consolidation has been a consolidation of currency strength against the US Dollar, something we haven’t seen for many months. read report
It’s all about what’s priced in to the market and looking at AUDUSD on Tuesday, this point could not be clearer, with the pair trading higher on the day despite the RBA cutting interest rates to 1.25%. Eurozone CPI, UK construction PMIs, US factory orders and a speech from the Fed Chair are the key standouts on today’s calendar. read report
