USD Down Ahead of US ISM Non-Manufacturing Reading

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Over the European morning on Wednesday, moves in cross-asset markets were predominantly driven by growing expectations of a trade deal between the US and China.

USD Lower On Safe Haven Outflows

The US Dollar softened a little over early trading. It conceded some of its recent gains despite a better than expected durable goods release yesterday which printed -1.6% vs -1.8% expected. The selling is most likely safe haven outflows, given the better risk appetite seen across markets today. USD has been the preferred safe haven of choice recently though the index has traded back to 96.56 as of writing today on these current risk flows.

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EUR Shrugs Off ECB Dovishness For Now

EURUSD is benefitting from the bearish drive in USD. Despite dovish ECB expectations and concerns about eurozone economic growth, EURUSD is managing to stay above the 1.1174 level support. It has traded to highs of 1.1247 as of writing. A light European data calendar today leaves the focus on data due over the US session later with ISM Non-Manufacturing as the headline print, expected to come in at 58 from 59.7 prior.

GBP Higher Despite Softer UK Data

GBPUSD has also traded higher today, benefiting from a weaker US Dollar despite data disappointment. Services and composite PMI readings both came in lower than expected for March, highlighting the negative impact from ongoing Brexit uncertainty. GBPUSD has traded firmly higher off the 1.30 level support making its way back to 1.3179 at the time of writing.

Risk Appetite Improves On US/China Trade Deals

Equities prices continue to surge higher, driven by growing expectations of a trade deal between the US and China. Delegates from both sides are due to meet today for a further round of talks with sources reporting that a deal is very close. However, some key issues do remain. SPX500 has now broken strongly above the 2860.11 resistance with clear water now up to the all-time highs at 2940.69.

Gold Higher on Weaker USD

Despite better equities prices, gold has managed to post a second consecutive bullish day so far today. It has traded up to highs of 1292.91 on USD weakness. USDJPY, meanwhile, remains in the green, trading up to 111.57 as BOJ dovishness keeps JPY pressured.

AUD Higher on Chin Proxy Trade

AUD has been a strong beneficiary of trade deal optimism with price almost eclipsing yesterday’s negative day. With Australia being China’s largest trading partner, AUD is often used as a proxy for trading China news, typically performing strongly on positive headlines. AUDUSD traded highs of .7121 over the European morning as of writing.

Oil Higher on OPEC Expectations

Optimism around a potential US/China trade deal is also keeping oil prices firmly bid, alongside continued OPEC production cuts and expectations that current production cuts could be extended further. Oil prices are now sitting further above the 61.89 level, trading highs of 63.01.

CAD Rises on Stronger Oil

The Canadian Dollar has clearly benefited from this combined rise in oil prices and weakness in USD with USDCAD trading down to lows of 1.3301 as of writing with further downside likely if we see today’s US data print below expectations.



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