FOMC Minutes Weigh on USD

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CPI UP Next

The US dollar has sunk heavily lower over the European morning on Thursday. Last night, the FOMC meeting minutes revealed a highly divided Fed at the last meeting. Policymakers were torn over cutting rates. However, the majority were in favor of a rate cut with many noting that the risk of a recession had grown notably over recent months.

Indeed, while some were opposed to a rate cut, others felt a larger rate cut would have been appropriate. The Fed remains highly concerned about the outlook and with data having worsened recently, the market is still looking for at least one further cut this year. USD index trades 98.39 last with price testing October lows currently. US CPI due today is the key data print for the session, forecast to have fallen back slightly last month.

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EUR Testing 1.1025

EURUSD has moved higher today in the wake of the USD sell-off. While the outlook for EUR remains bearish in the medium term, there is scope for a further move higher in the short term. The ECB meeting minutes might provide headwinds however if the bank is seen to be discussing the potential for further easing. EURUSD trades 1.1027 last, challenging the 1.1025 level once again.

GBP Rises

GBPUSD has risen today also, benefiting from a weaker USD. Conflicting reports around the latest Brexit updates have been creating choppy price action in GBP as the market awaits the EU’s decision on Johnson’s proposed Brexit deal. GBPUSD trades 1.2256 last having bounced off the 1.2207 level once more.

Risk On (just!)

Risk assets have had a quiet start to the day. Although, they are trading in the green ahead of the US/China trade talks getting underway today. The market is quietly hopeful that an interim deal can be done, paving the way for a proper trade deal in the future. SPX500 trades 2919.03 last as price moves back towards the 2931.00 level.

Safe Havens Flat

Safe havens have had a muted session so far with gold and JPY both roughly unchanged against USD. XAUUSD trades 1505.99 with USDJPY trading 107.41. Today’s trade talks between the US and China are the key focal point. As headlines start to emerge overnight and tomorrow we could see some more directional play.

Crude Steady Despite Bearish EIA Report

Oil prices are mostly flat today, having recovered off initial lows on the session. Yesterday, the EIA reported another build in US crude stores, marking a fourth consecutive week of surpluses. Alongside this, US crude production was seen rising to fresh record highs with the EIA also revising its production forecasts higher for 2019 and 2020. However, with the market awaiting news from the next round of US/China trade talks starting today, flows have been very quiet for now. Crude trades 52.58 last, sitting above the 51.28 level for now.

CAD Rises on Weak USD

USDCAD has been firmly lower today as USD sells off and crude prices hold their ground. Price is now testing the 1.33 level from above which has underpinned the recent block of price action. A break here could see a deeper move down to the 1.3207 level next.

AUD Up On Trade Talk Hopes

AUDUSD is trading firmly higher today. A weaker USD, as well as optimism ahead of the US/China trade talks, is helping boost the Aussie which continues to hold above the .6690 support, trading .6765 last. Headlines around the talks are expected to be a big source of volatility into the end of the week. These could see AUDUSD breaking above the local bearish trend line.

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