Risk Appetite Softens

orbex market flash

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USD Hanging Out Near Highs

The US dollar is in the green again today though the index, which is down off the recent 97.48 highs, is currently capped by the 97.42 resistance. With a lack of any key US data this week, flows are likely to remain light. However, the pullback in equities should keep USD supported if it deepens over the week.

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Euro Lower Again

EURUSD has been a little lower again today as the USD rally over recent days keeps sentiment bearish for EUR. At the upcoming ECB meeting this week, the market is expecting broadly the same message as the December meeting with Lagarde highlighting that an economic rebound is still projected, though the bank will remain cautious in monitoring data and developments. EURUSD trades 1.1087.

GBP Higher on Better Data

GBPUSD has been a little higher today with the pair trading back above the 1.3014 level. This morning, the UK average earnings index 3m/y was seen higher than expected 3.2% vs 3.1% reading. GBP has been a lot quieter recently as the market awaits fresh catalysts ten days out from the Brexit date of January 31st.

Risk Markets Pull Back

Risk assets have been a little softer this week. Despite a better global backdrop in the passing of US/Iran tensions and the signing of the US/China trade deal. While some are attributing the softness to risks around the Trump impeachment trial, the visible market impact from the trial appears limited in scope. More likely, is some post-trade-deal profit taking for now. SPX500 trades 3311.13 last.

Gold Down, JPY Up

Safe havens have had a volatile morning with gold sharply lower against USD while JPY trades higher. The pullback in equities along with residual USD strength seems to be driving this theme for now. XAUUSD trades 1557.66 last, having recovered off the day’s 1552.64 lows. USDJPY trades 109.94 last., still above the 109.71 level for now.

Crude Crumbling

Oil prices have been under pressure today, given the general fading of strength seen across risk markets. Crude trades 58 last, heading back down towards the week’s lows. Later today, the market will receive the first look at US inventories via the API report, ahead of tomorrow’s key EIA release.

Loonie Breaking Out

USDCAD has been higher again today with price breaking out above the 1.3068 level overnight to trade up to just shy of the main 1.3078 level. This is a key longer-term level for USDCAD and a break above here could signal the start of a much broader bullish move.

Aussie Testing Support

AUDUSD has been under pressure again today. Price is currently challenging the .6850 level support which looks vulnerable to a break. Dovish RBA expectations, as well as recent USD strength, is keeping AUD sentiment skewed to the downside for now.

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