Better Data Supports USD
The US dollar traded higher again over the European morning on Wednesday bolstered by better than expected data yesterday. US consumer confidence for May came in at 134.1 vs 130 expected. Falling equities prices have also helped keep USD bid with the index trading 97.93 last, moving back up toward the 98.07 level.
EUR Down on Data Misses
EURUSD has turned lower once again today weighed upon by weaker EUR data and a stronger US dollar. German employment data today came in weaker than expected, once again highlighting concerns around the health of the eurozone economy. For now, EURUSD remains above the 1.1129 support though is still trading within the local bearish channel.
Politics Weighing on GBP
GBPUSD remains heavily pressured by political turmoil as a big shift continues to develop within British political support, raising serious questions over the outlook for Brexit. GBPUSD is now trading back below the 1.2642 level support, testing the bearish channel low.
Risk Sentiment Sours
Risk assets have been heavily lower today, trading in reaction to news that China is considering using rare earth exports as leverage in the ongoing trade war with the US. The SPX500 has broken below the 2816.15 level. It is now trading down through the neckline of the sloping head and shoulders pattern that peaked in March.
Safe Havens Mixed
Safe havens have had a mixed day today so far with gold rising sharply against USD, supported by weaker risk sentiment. On the other hand, JPY has softened due to the stronger USD. XAUUSD is now back above the 1280.58 level, trading 1283.06 last. USDJPY has turned lower again and is trading 109.32 last, though still above the 108.99 support for now.
Crude Capped By Trade War fears
Oil prices have turned heavily lower again today, extending the sharp declines which started last week. Crude has been under steady sale as investors anticipate a weakening of demand in response to the escalating trade war between the US and China. A further increase in rhetoric by China this week has seen crude trading back down below the 58.06 support, putting focus on a test of the 55.67 level next.
Commodity Currencies Under Pressure Again
Weaker oil prices and a resurgent USD have seen strong buying USDCAD over the last few days taking USDCAD to test the 1.3520 2019 high. However, traders have been covering longs this morning ahead of the BOC meeting later. While the BOC is forecast to keep rates on hold, there are some growing expectations that we could hear more of a hawkish skew to the tone of the meeting statement given better data recently and a supportive yield environment.
AUDUSD has been a little weaker today also, weighed on by weaker risk sentiment. The growing uncertainty around the US/China trade war, in light of this latest Chinese response, has kept the recovery in AUDUSD halted for now. The intensification of the trade war over the last month has seen growing expectations for an RBA rate cut at some point this year. AUDUSD has so far managed to stabilize above the .6917 level though still remains capped by resistance at the .6982-.7021 region.