King Dollar Returns
Over the European morning on Tuesday, the US dollar strengthened, with the index recovering some of the lost ground of recent days to trade back up to 96.70 last. Looking ahead to today’s US session, we have industrial and manufacturing production for March, both of which are forecast to have increased from the prior month.
Stronger USD Weighs on EUR
EURUSD was back under pressure again today, despite an upbeat ZEW eurozone economic sentiment survey reading, as the resurgent US dollar weighed on price. EUR has been held down over recent months due to growing concerns for the health of the eurozone economy. EURUSD remains in the lower end of the 1.12 – 1.14 range with pressure building to the downside.
Better Data Fails To Lift GBP
GBPUSD has ground to a halt over the last couple of weeks with price currently trading 1.3083, right in the middle of the last week’s range. The latest earnings and employment data, which showed unemployment remaining at 3.9% and wage growth remaining at 3.4%, failed to boost prices today as political uncertainty keeps flows constricted.
Equities Keep on Rising
Risk appetite has continued to build this week with equities prices storming higher. The SPX500 has traded up to 2914.78 last, levels not seen since September last year as the index’s impressive recovery continues to hurtle back towards all-time highs. Positive headlines around the prospect of a US/China trade deal are driving much of the gains so incoming updates on that front will be key to near term price action.
Safe Havens Mixed
Interesting trading among the safe havens today with gold down against the dollar while JPY is stronger. A resurgent US dollar and better equity prices have taken the wind out of gold’s sails over the last week. Price is now just shy of retesting the 1280.58 support level. However, JPY has traded higher today, with USDJPY pulling back from the 112.16 level resistance. The rally in JPY comes despite BOJ’s Kuroda reaffirming the BOJ’s dovish stance in Parliament and likely reflects the fact that the market feels the BOJ has no tools left to move JPY lower.
Traders Waiting on Oil Reports
Crude oil remains weaker again today, extending declines from last week following a bearish report from the EIA. The report highlighted a further, unexpected build in US crude stocks along with a forecast for higher US crude production. The market now waits for the API inventories report later today followed by the EIA’s latest update tomorrow. 61.89 remains the key support in crude for now.
Commodity Currencies Down On Weaker Oil
Softness in oil prices along with a resurgence in USD has been clearly visible in USDCAD with the pair trading up above the 1.3377 level as price tested last week’s highs of 1.3402. A further bearish report from the EIA today could see USDCAD making bigger upside moves over the coming days.
AUDUSD has also been under pressure today despite optimism around a US-China trade deal. Weakness in oil prices along with a stronger US Dollar has given buyers ammunition to take price back down to .7145 last as the pair reversed just shy of testing the .72 level resistance.