USD: Better The Devil You Know
Over the European morning on Friday, the USD continued its recent bull run, printing a fourth consecutive day of green to end the week. This fresh buying has seen the index trading up to highs of 96.91 as of writing, despite a weaker than expected 4Q US GDP print yesterday. It seems that for now, USD is the preferred safe haven as traders react to the ongoing global risk factors. Among those, concerns around the economic downturn in Europe have taken center stage.
Eurozone Economic Fears Weigh on EUR
EURUSD traded down to retest the 1.1217 level support this morning as sales continue following a weaker than expected German CPI print yesterday for March. Recent eurozone data has continued to highlight weakness in the single market economy. And, with Brexit fears bubbling over, these concerns look set to gather pace.
GBP Down Ahead of UK Vote
In the UK, the ongoing uncertainty around Brexit has kept GBP weighed. GBPUSD has traded down to fresh two-week lows of 1.3003. Today, ministers are preparing for a third vote on the PM’s Brexit deal later today. This time, the vote will be aiming to secure a two-month extension. Today is the day that the UK should have officially departed the EU. But following an extension request, the date has been pushed back to April 12th with the potential to extend to the end of May.
Risk Appetite Remains Buoyant on Trade Talk Optimism
Risk markets have been fairly resilient this week despite the ongoing concerns driving global markets, as optimism around a potential US/China trade deal continues to keep sentiment buoyed. The SPX500 has managed to trade above the 2818.07 level following a move below the 2799.11 level earlier in the week. Traders now await the outcome of the current round of talks underway in Beijing.
God Prices Heavily Down
This better risk appetite can be seen clearly in the safe havens with both gold and JPY trading lower into the end of the week. XAUUSD is now heading back down towards support at the 1280.58 level which, if broken next week, could spell a much larger downside move. USDJPY has traded up to fresh weekly highs also of 110.92 as of writing, with traders preferring USD over BOJ despite recent dovishness from the Fed.
Oil Prices Rise on OPEC Talk
Oil prices have recovered earlier losses in the week to trade back up towards last week’s 60.42 highs. A bearish report from the EIA midweek, which showed an unexpected build in inventories, has largely been shrugged off now as traders continue to focus on the ongoing OPEC production cuts. News that OPEC could extend the current 6-month programme in its June meeting has increased the outlook for oil once again.
Commodity Currencies Holding On
The rise in oil this week has been good news for the commodity currencies with both AUD and CAD managing to fight back against USD. USDCAD has traded back under last week’s 1.3429 high and looking ahead today, traders will be waiting for the release of Canadian January GDP. AUDUSD has managed to stay above yesterday’s .7063 lows for now as optimism around the ongoing US/China trade talks continues to underpin the Aussie.