USD Sinks on Fed Easing Expectations
The US dollar continues to sell-off on Friday, marking a week of straight losses and its biggest losing week since May 2019.
Traders are once again starting to price in a forthcoming rate cut from the Fed in a bid to buffer the economy against the harmful impact of COVID-19. USD index trades 98.02 last, down from highs of nearly 100 last week.
Euro Breaks Resistance
EURUSD has been a strong beneficiary of the move lower in the dollar this week. Price is soaring back up to 1.1036, breaking back above the 1.0986 resistance level.
This week’s move higher has also been helped by the heavy sell-off in European asset markets which has seen traders buying back their EUR hedges.
Trade Talk Fears Weigh on GBP
GBPUSD has not benefited quite so well from the USD sell-off this week. GBP has come under pressure over rising concerns relating to the UK/EU trade talks due to start next week.
The UK PM has warned that the UK will exit the talks if an outline for a deal is not established by June. GBPUSD is sitting right on the 1.2894 support line as of writing.
SPX500 Sees Record-breaking Fall
Risk assets have been sold ferociously this week. SPX500 is cratering from highs above 33 at the start of the week to back under 3000 as of writing. The uncertainty around the ongoing global coronavirus outbreak is forcing money out of equities, despite rising expectations of fresh central bank easing.
SPX500 trades 2901.68 last. The move lower this week marks the quickest downside correction for the S&P since the Great Depression.
JPY Surges Higher
Safe havens have had a mixed end to the week with JPY ending the week firmly higher and gold ending the week lower. Despite the heavy risk-off tone to markets, it seems traders prefer JPY as the safe haven of choice currently, with gold trading lower in line with USD and equities.
XAUUSD trades 1624.15 last, reversing from the 1651.75 level. USJDPY trades 108.67 last, as price continues to sell off back beneath the 109 level from highs last week of 112.
Oil Sheds $5 This Week
Oil prices are plunging further into levels not seen since 2018. The risk-off tone to trading, along with the EIA reporting a further inventories build, are weighing heavily on sentiment in crude. Oil trades 45.24 last, down over $5 on the week as of writing.
USDCAD has broken higher this week. Despite the sell-off in the US dollar, the plunge lower in crude along with the broader risk-off tone to the markets has hit CAD, taking USDCAD back up to 1.3451 last, near the 1.3468 resistance level. Canadian GDP today could add further downside is any weakness is seen.
Aussie Hits Ten-Year Lows
AUDUSD has been heavily lower all week as the combined weight of RBA easing expectations, a loss of trade with China and lower commodities prices takes its toll. AUDUSD trades .6529 last, deep into 2009 territory, and shows no signs of recovery so far. Focus is now on the RBA next week with the market expecting a cut.