Risk Recovery Falters as Markets Turn Lower
The US dollar has been weaker over the European morning on Tuesday, extending the week’s losses as the USD index continues to correct lower from the recent 99.82 highs.
Equities prices have posted a small rebound so far today, taking away some of the demand for USD. The Richmond manufacturing index will be the key release to watch over today’s US session.
EUR Higher on Better German Data
EURUSD is fighting to continue its recovery today, benefiting from the weakness in USD. For now, the heavy selling pressure in EUR has subsided. However, the outlook remains bearish in light of the ongoing coronavirus risks.
German Ifo business climate data came in better than expected yesterday which is helping provide some support in the short term. EURUSD trades 1.0852 last.
GBP Higher Following BOE Comments
GBPUSD is trading in the green today also with price fighting to hold above the 1.2869 support at 1.2987 last. Yesterday, BOE’s Haldane offered some positivity when he said that a large chunk of the Brexit uncertainty which had been stifling the economy had now lifted. He stated that there is a “stirring in the undergrowth” in terms of business investment.
Equities Turning Lower Again
Risk assets bottomed overnight with many indexes correcting a little higher over the Asian session following heavy selling yesterday. However, risk appetite is weakening again over the European morning seeing the SPX500 reversing lower once more to trade 3235.18 last, just up off the 3214.33 lows posted yesterday.
JPY Trading Strongly
Safe havens are trading firmly higher today also with the Japanese Yen and gold both higher against USD.
JPY is posting a solid recovery against USD with USDJPY correcting back down to 110.40 from highs of 112 last week.
XAUUSD is currently fighting to break back above the 1651.76 resistance level which is capping the rally for now.
Crude Reverses Again
Oil prices have been lower again today following a brief overnight recovery. The fall back in risk sentiment today has taken crude prices back down to 51.36 last from overnight highs of 52.05.
For now, the 51 level support remains the key area to watch, a break of which would be a very bearish signal. Later today, traders receive the API inventories report, ahead of tomorrow’s headline EIA report.
Loonie Testing 1.33
USDCAD has been trading higher again today. Despite the soft patch in USD, the fall back in crude prices has weighed heavily on CAD seeing USDCAD trade back up to test the 1.33 level, which is holding as resistance for now. Above here, the 1.3345 level is the next resistance to watch.
Aussie Anchored Near lows
AUDUSD is still holding near recent lows at .6599 last, just above the recent .6582 2020 lows. The bleak outlook for China as a result of the coronavirus outbreak, as well as the general risk-off tone to markets, is weighing heavily on AUD here and the bias remains tilted to the downside.