The US dollar has been a little lower over the first European session of the week despite weakness in equities prices. We have a quiet US datasheet this week so flows are likely to remain linked to incoming headlines around the initial US/China trade deal agreed last week. USD index trades 98.15 last with price reversing from overnight highs.
EUR Higher on Weak USD
EURUSD has been firmer against USD today though price action remains muted and corrective at best. The release of the ECB meeting minutes last week cast doubt over any further action from the ECB in the near term, highlighting the level of division among ECB policymakers. A quiet data calendar this week will keep the focus on Brexit and trade war headlines. EURUSD trades 1.1038 last, sitting back above the 1.1025 level for now.
GBP Lower on Brexit Uncertainty
GBPUSD has fallen back a little today as the EU has warned Boris Johnson to move “further and faster” if he wishes to secure a Brexit deal this week. The Queen is due to open parliament today with a speech outlining the domestic agenda though many are calling the speech a “sham” given that the focus is on holding elections in the immediate future. GBPUSD trades 1.2549 last as Brexit uncertainty once again drives flows.
Risk Assets Rocked
Risk assets have softened today following moves higher late last week in response to news of an initial US/China trade deal. Despite the step forward, the deal contains no progress towards resolving the more substantial issues between US and Chinese trade. Many remain skeptical that these issues will be resolved in the near term. Furthermore, China has said that it wants to run through some of the key details of the deal before signing anything. SPX500 trades 2955.38 last, sitting back under the 2959.04 level.
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Safe Havens Rally
Safe havens have had a strong start to the week as fading optimism around the US/China trade deal announced last week has seen equities cascading lower today. Both JPY and gold are higher against USD so far today. USDJPY trades 108.13 last as price reverses from recent three-week highs. XAUUSD trades 1495.30 which is still below the 1500 level for now.
Oil Slips on Trade Deal Fears
Oil prices have been sharply lower today also as a shift in sentiment over the US/China trade deal has weighed on prices. Crude has been higher initially in response to news of the deal though subsequent reports that China is stalling over signing off on the deal has seen a heavy reversal in crude which trades 53.51 last. With the EIA continuing to upgrade its US production forecasts, unless we see a big improvement in global trade, the weakening demand for oil is likely to keep prices pressured going forward.
USDCAD has been higher today in light of heavily weaker oil prices which have weighed on CAD. CAD has been sharply higher late last week in response to the reporting of a US/China trade deal. However, today, USDCAD is sitting back above the 1.3207 for now.
Aussie On The Way Down
AUDUSD has been sharply lower today also as concerns over the likelihood of the US/China trade deal being signed are taking their toll on the Aussie. AUDUSD trades .6754 last, retesting highs from mid-week last week. Back below here and focus will be back on a retest of the year to date lows.