Soft Start For USD
It was a quiet start to the week over the European morning on Monday as a light data sheet saw limited moves while traders await clear directional catalysts. The US Dollar was a little softer over the session as the market waits for further information regarding the likelihood of a forthcoming US/China trade deal. Talks continued in Washington last week as Trump told reporters that an “epic deal” could come as early as four weeks from now. The Index trades 96.83 as of writing, having fallen back below Friday’s opening price.
EUR Trades Higher on USD Weakness
EURUSD has taken advantage of a softer US Dollar at the start of the week with price trading up to highs of 1.1241 as of writing. For now, price remains supported by the 1.1194 level which has been tested twice in recent weeks. Concerns over the health of the eurozone economy are keeping EUR pressured in the near term.
Brexit Uncertainty Weighs on GBP
GBPUSD trading remains a headline-driven rodeo as the market struggles to get a grip on Brexit developments. Theresa May is due to continue cross-party talks with Jeremey Corbyn this week which could result in the UK remaining in an indefinite customs union with the EU or simply extending the current Brexit deadline by around a year. GBPUSD remains supported at the 1.30 end of the 130 – 1.33 range though is looking heavier recently.
Equities Take A Break
Despite the optimism around a potential US/China trade deal, the SPX500 has taken a breather at the start of the week following the strong rally into the close last week. Price is now well above the 2860.11 level resistance, with bulls eyeing a move back up to the 2940.69 highs next.
Safe Havens Rallying
Safe havens have been the clear winner over the European morning today. Both gold and JPY are trading higher against USD. Gold prices had been stagnant over recent days after testing the 1280.58 level support but are now breaking higher, trading 1297.36 last as a combination of a softer USD and softer equities attracts investors.
USDJPY has moved lower after testing the 111.76 resistance level which remains the key upside level to break. Indeed, JPY has moved higher this morning despite BOJ governor Kuroda reaffirming his message that rates will stay at current levels for an extended period of time.
Oil Remains Firm
Oil prices have picked up where they left off this week with price breaking out above the 63.40 level resistance this morning. OPEC production cuts, as well as expectations that these cuts will be extended, along with optimism over a US/China trade deal continue to keep oil supported.
Commodity Currencies Mixed
USDCAD has been a little softer today with CAD rising as a result of a weaker dollar and higher oil prices. The pair traded below the 1.3377 level earlier before rebounding slightly though we could see price back under here if USD continues to drift lower today. However, we don’t have much in the way of data, so we are unlikely to see any big moves.
AUDUSD has been a little weaker today, despite trade deal optimism. It seems as though, given the level of anticipation, the market is waiting for something more concrete regarding the progress of the ongoing US/China trade talks.