Risk Assets Affected By US Waiver Decision

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Aussie Soft Ahead of CPI Inflation 

The Australian dollar is getting battered in the London session. From a daily high of 0.7133, it has dropped to a rate near 71 cents against the buck. Fear of missing CPI inflation seems to be affecting market participants as this could change RBA’s policy language in their next meeting.

Speculatory powers suggest quarter on quarter inflation could come in below the 0.2% expectation target. Either that or these are simply prepositioning flows. Either way, Aussie has been under pressure since Trump’s sanctions waivers. This is because the announcement is likely to tense up US-Sino trade talks.

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Yen Storms Away From 112

The Japanese Yen pushed the dollar 25 pips lower overnight. This came after Eiji Maeda’s message stating that the BoJ will ramp up stimulus. The Assistant Governor indicated that in the likely scenario that inflation remains weak enough to miss the bank’s inflation target at 2%, the BoJ will ease policy.

USDJPY plummeted away from the psychological 112 it has been floating at for days. It reached a 2-week low at 111.65 before bulls stepped in. The pair will most likely remain in a perhaps wider range now, until the BoJ’s interest rate decision. The decision is due on Thursday’s during the Asian session.

Pound Supported by Low Volatility And 200 DMA

Politics are taking center stage, and this may become more apparent later in the session. From a technical perspective, the pound looks weak on the medium term. The change in sentiment was evident following the break below the psychological resistance of $1.32.

On the intraday, cable bulls might have an opportunity to take advantage of the low volatility levels as the 200 daily moving average seems to be repelling market participants away. Aside from activity levels, GBPUSD volatility could increase over the next few hours. This will be as the Commons comes back together to re-start compromise discussions and seek the best route to take before the EU elections in May.

Dollar In Tight Range As Liquidity Remains Thin

The greenback maintains a somewhat uncertain outlook ahead of the NY open. This is despite existing home sales coming in quite upbeat yesterday. With the US GDP scheduled in for Friday and corporations reporting mixed results, prices could trade sideways for the next few sessions.

Aside from the patient stance around growth, the US Index seems to be under pressure every time it reaches the 97.00 hurdle. Whether it will keep drifting away could depend on how the US market anticipates the US GDP to pan out. In the short-term, some microflows may be seen, as markets await the release of US new home sales.

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