US Dollar Returns As Risk Appetite Weakens

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Safe Haven Flows Boost USD

The US dollar enjoyed a strong rally over the European morning on Thursday as risk sentiment dipped, despite a slew of risk-positive headlines this week. USD safe-haven flows were back in fashion today as equities slipped lower on what is most likely position-covering ahead of the Easter weekend.

Indeed, optimism around a US/China trade deal along with a raft of strong China data, all buoyed risk appetite earlier in the week. However, this has now faded as the USD Index rallies to 97.01, just shy of last week’s highs.

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Eurozone Economic Concerns Return To Focus

The EUR rally of the last two weeks came sharply undone over the European morning today. EURUSD retraced over 50% of its gains, trading 1.1252 last, as the US dollar surged higher. EUR has come under fresh pressure following Germany revising its 2019 growth forecasts lower for the third time in a row. The country cited export weakness linked to Trump’s protectionist trade policies.

GBP Down Despite Strong Retail Sales

GBPUSD is trading heavily today also, shrugging off stronger than expected retail sales data. Price is moving back down toward the 1.2974 one month lows, trading 1.3004 last. Price has been underpinned by the 1.30 level since February this year, so a break here could spell big trouble for bulls.

SPX500 Fighting

Equities have had a volatile session so far today with price dropping sharply initially before staging a recovery. SPX500 is now fighting to get back above the 2895.92 level. However, profit-taking ahead of the Easter weekend has capped the rally for now.

Gold And JPY Rally on Risk Flows

Safe havens today have both benefited from the drop off in risk appetite this week with gold and JPY both stronger against USD. XAUUSD saw a small recovery rally over the European morning with price trading back up to 1275.13. But, for now, price remains below the 1280.58 level, broken earlier in the week. JPY has rallied today too, with USDJPY once again moving lower, away from the 112.16 resistance to trade 111.92 last.

Crude Softens Despite Bullish EIA Report

Oil prices have been under pressure today also despite a bullish report from the EIA yesterday. The group’s weekly update showed an unexpected drawdown in US crude stocks though US crude production was seen remaining at record highs. With the EIA’S latest 2019 forecast calling for even higher US oil production, crude prices have come under pressure for now. Crude is sitting between 63.14 support and 64.70 resistance currently.

Commodity Currencies Crumble Under Weak Oil

Its been a very whipsawing week for commodity currencies. CAD has come under pressure again today as a combination of weaker oil prices and a stronger US dollar has seen USDCAD trading back up to test the 1.3377 resistance level. CAD had been higher against USD following yesterday’s domestic inflation reading which saw core inflation stronger than expected. However, for now, oil flows are dominating.

AUDUSD has also weakened again today. Following a strong rally yesterday in response to a raft of better than expected China today, which complimented optimism around the prospect of a US/China trade deal, AUDUSD fell back today. After briefly piercing above the .72 level, AUDUSD now trades .7162 as the retracement deepens.

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