Markets Wait For NFPs
It’s been an interesting week for the USD which rallied strongly over the week, only to concede a large portion of its gains later in the week. USD rallied initially as the Fed cut rates by only the expected .25% and downplayed the chances of further easing. However, later in the week USD collapsed as Trump took markets by surprise. The president announced a fresh set of tariffs on Chinese goods. USD index trades 98.01 last with price reversing lower ahead of the NFP and unemployment rate releases later today.
Euro Boosted By USD Sell-Off
EURUSD has been higher again today also. Along with benefiting from a weaker USD, EUR has also been boosted today by a surprisingly strong set of eurozone retail sales figures. These printed 2.6% in June, vs 1.3% expected. EURUSD has rallied firmly off the a.1027 base to trade 1.1098 last. Currently, the currency is sitting just ahead of a.1130 resistance.
GBP Muted Following BOE
GBPUSD remains subdued today with price retaining a heavy tone following the BOE meeting yesterday. While the BOE kept rates on hold it slashed its growth forecasts. They further sounded much more alarmed over the prospect of a no-deal Brexit. They said it is looking more likely than ever now and could send the UK into recession. GBPUSD trades 1.2120 last, hovering around the 1.2119 level still.
Risk Markets Rocked on Trade War News
Risk assets have had a heavily bearish week, suffering the double whammy of a less-dovish-than-expected FOMC and an unexpected set of new US tariffs. SPX500 has been knocked sharply lower this week breaking down below the 2970.95 level to trade 2940.43 last. The prospect of a further escalation in the trade war between the US and China is a major concern for investors. This is keeping equities under pressure on Friday.
Safe Havens Rally
Safe havens have had a strong reversal in fortune this week. Following initial losses in reaction to USD strength, both gold and JPY have rallied strongly against USD into the end of the week. USDJPY has collapsed lower from highs above 109 to trade 106.90s last, only just above the 2019 low at 106.72. XAUUSD has been a little softer over the morning. Although, the metal ends the week back up near highs following a surge back up to test the 1449.75 level yesterday.
Crude Stabilises But Ends Week Lower
Oil price has stabilized today though have been knocked strongly lower over the week in reaction to a post-FOMC USD rally. Then there was the disappointing announcement of fresh trade tariffs on China. The moves will be frustrating for crude bulls given the ongoing drawdown in US crude stores which should be supporting price. Crude trades 55.12 last, having fought back above the broken 54.94 level today.
High Betas Wiped Out
USDCAD remains supported today as the moves lower in oil have offset the weakness in USD to send CAD trading lower against the dollar. USDCAD trades 1.3218 last, remaining above the 1.3207 support for now and keeping focus on further upside in the near term.
AUDUSD has continued its devastating decline this week with price having now sunken below the former 2019 lows at .6830. Currently the currency is trading its lowest level since 2009 at .6793. News of a fresh outbreak of tariffs in the US/China trade war has hit AUD hard. This increases the likelihood of further RBA rate cuts over the remainder of the year.