Dollar Upside Despite Data Slump
USD has strengthened again today, with the index extending the week’s advance above the 97.11 level. Today’s gains come on the back of disappointing economic data release. The US manufacturing PMI released yesterday showed the sector falling to its lowest level in almost a decade over June. While USD is rising, the near term outlook looks bearish as the Fed is widely expected to cut rates next week.
Euro Under Pressure
EURUSD has been under pressure today also, weighed on by the rally in USD. The market is expecting the ECB to announce fresh easing today meeting. The ECB has clearly signaled its intent in recent comments and expectations have been reinforced by weakness in Eurozone data. EURUSD trades 1.1127 last, having broken below the 1.1130 support which has been underpinning price action recently.
Sterling Still Supported
GBPUSD has managed to trade in the green over the European morning today. GBPUSD bounced higher earlier in the week in response to news that Boris Johnson was successful in his bid for leadership of the conservative party, making him the UK’s new PM. However, price has since moved lower, retracing around half of those gains to trade 1.2457 last.
SPX500 Retreats From Highs
Risk assets have traded lower today, though the retracement is shallow and looks likely to be short-lived. SPX500 is still trading above the 3019.38 level for now as price remains supported by expectations of a US rate cut next week. Furthermore, optimism over fresh US/China trade talks, due to start next week, will likely keep equities bid.
Safe Havens Rallying
Safe havens have been higher against USD today, despite strength in the index. Gold and JPY have both moved higher against USD, supported by retreating equities prices. USDJPY trades 108.09 last as price continues to range between support at the 107.90 level and resistance around 108.28. Gold prices are likely to stay supported going into the FOMC next week given expectations for a US rate cut.
Crude Rallies On Continuing US Inventories Drawdown
Oil prices have been higher again today. Price is rallying strongly in reaction to yesterday’s EIA report which showed that US crude inventories fell by nearly 11 million barrels last week. This latest decline marks the sixth consecutive decline in US crude stores which is helping assuage concerns about the US demand outlook. Crude trades 56.41 last, with price trading back above the recently broken 56.18 level.
CAD Climbing, But AUD Upturned
USDCAD has struggled today with higher crude prices supporting CAD. USDCAD trades 1.3125 last as the 1.3145 continues to offer resistance. An expected US rate cut next week is likely to make upside even more difficult. Tomorrow’s US GDP print will be keenly watched by traders and any downside surprise is likely to be met with swift USD selling given the current backdrop.
AUDUSD has traded to the downside again today. A resurgent US dollar, as well as lower equity prices, have weighed on the recent recovery in AUD. Price trades .6970 last, having moved firmly back beneath both the .7021 level and the .70 level also. However, the decline is currently still holding the rising trend line from year to date lows, keeping hopes of further upside alive for now.