USD has been a little higher today though moves have been volatile over recent sessions given the whipsaw in equities markets. The market is continuing to digest news of fresh US trade tariffs on China as well as China’s subsequent currency weakening. The fear is that trade talks will break down altogether, leading to further issues for the global economy. USD index trades 97.32 last, sitting back above the 97.11 lows for now.
Euro Held Down
EURUSD has reversed over early European trading on Tuesday. From initial session highs back above the 1.1217 level, EUR has since crumbled under the weight of the USD recovery to trade 1.1195 last. German factory orders were still in negative territory over June at -3.6% though this was less than the forecast -5.2%.
GBP Rallies on PMIs
GBP has been higher against USD today with the pair trading up off the recent 1.2073 lows to trade 1.2200 last. It seems GBP is continuing to find support after a batch of better than expected PMI sets yesterday. Both services and composite were above expectations in July, printing 51.4 and 50.7 respectively.
Turn Around Tuesday For Risk
Risk assets have posted a solid recovery so far today with SPX500 trading back up above the 2816.41 level to trade 2854.73 last. In a classic case of “Turn around Tuesday,” it seems that longer-term traders have been more than willing to buy the dip in SPX500. However, with the situation between the US and China still volatile, there is the potential for further downside still.
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Safe Haven Inflows Still Seen
Safe havens have both been a little higher against USD today though moves have been a little more subdued than those we saw yesterday. USDJPY trades 106.39 with the recovery capped by the 106.77 level. Price is still sitting well up off the recent 105.55 lows for now. XAUUSD trades 1463.51 last with price remaining hemmed in between 1452.95 and the 1472.06 level resistance.
Crude Capped By China Woes
Oil prices have recovered off initial session lows today with crude fighting to hold above the 54.90 level. The news of fresh trade tariffs between the US and China has dealt a heavy blow to oil prices last week with price remaining subdued at lows over early trading this week. Looking ahead, traders are waiting on the API report ahead of tomorrows key EIA report. However, given the current situation between the US and China, inventory levels will likely lose some importance.
RBA Cuts Growth Forecasts
USDCAD has been a little firmer today with CAD weighed on by weaker oil prices. However, price remains capped by the 1.3207 resistance level for now with momentum having stalled over recent days as price ground slowly lower. While above 1.3145, focus remains on further upside in the near term.
AUDUSD has weakened today following the RBA’s August meeting held overnight. While the bank kept rates on hold, as was expected following two previous consecutive rate cuts, the RBA cut its growth forecasts. The meeting statement highlighted ongoing risks from both the global and domestic environment and the market is still pricing in a further cut by the November meeting. AUDUSD trades .6782 last.