Powell Positive on US Economy
The US dollar was higher over the last 24 hours. This is despite a weaker than expected CB consumer confidence number (125.5 vs 126.9 expected) in response to comments from Fed chair Powell.
Speaking figuratively, Powell noted that the US economy glass is “more than half full.” He stated that rates are at the appropriate level, provided that incoming data remains consistent with “generally good” conditions. USD index broke above 98.30 briefly but has since reversed.
EUR Drifting Lower
EURUSD has been lower today on the back of a stronger US dollar. In the midst of a quiet week for eurozone data, more optimistic comments from the Fed Chairman are leading EUR lower. The market still anticipates further easing from the ECB over coming months in line with continued data weakness. This should see EURUSD continue lower. EURUSD trades 1.1007 last, back below the 1.1024 level.
Elections Uncertainty Weighs on GBP
GBPUSD continues to hover within the recent consolidation between 1.2782 and 1.2974. The market has lost its directional bias over recent weeks as the uncertainty of the upcoming UK elections continues to cap flows. A Conservative party win remains the consensus forecast, which will keep focus on Johnsons deal being passed ahead of the January 31st, 2020 deadline. GBPUSD trades 1.2851 last.
Risk Markets Rally
Risk assets continue higher into the middle of the week as optimism around a US-China trade deal keeps risk appetite buoyant. Both the US and China continue to reassure markets that a deal is coming. For now, traders are happy to go along with it.
Trump spoke yesterday to say that the US and China are very nearly done on the deal and continued to placate President Xi by praising his handling of the Hong Kong protests. Over the last 24 hours, SPX500 has broken into yet further record highs, trading 3148.18 last.
Risk On Sees Safe Havens Lower
Safe havens have both been lower today, in light of the rally in equities. The move higher in USD has also weighed on both gold and JPY which are trading lower today. USDJPY trades 109.16 last, with price moving back towards the week’s highs. XAUUSD trades 1458.95 last, hovering just above the November lows at 1445.19.
Crude Rises on Trade Deal Optimism
Oil prices have been higher today, shrugging off the report from the API yesterday which showed a further build in US crude stores. Speaking yesterday, Trump said that the US & China are in the “final throes” of a trade deal. The news has boosted risk appetite and lifted oil prices today.
Traders now wait on the headline EIA report later today. However, in light of the focus on the trade deal, it might not have as much impact as usual on price action. Crude trades 58.39 last, moving back towards the 60 level.
CAD Climbs On Oil Rally
USDCAD has been moving lower today. Despite the strength in USD, it seems that optimism over a trade deal and higher oil prices are helping boost CAD here. USDCAD trades 1.3268 last, moving back down into the middle of the 1.3207 – 1.33 range.
Trade Deal Hopes Boost AUD
AUDUSD has been well supported today also in response to better headlines about trade talks. The market had been concerned over the last couple of weeks that progress was stalling. In light of Trump’s comments yesterday, traders are now hopeful, keeping risk assets well supported. AUDUSD trades .6783 last.