USD Driving Higher
USD has been firmer this morning so far with the USD index trading up to 98.20 last. The FOMC meeting minutes last week revealed the Fed is still highly concerned over the risks to the US economy, noting a willingness to ease further should conditions require it. However, policymakers said they are comfortable keeping rates on hold for now.
EUR Under Pressure
EURUSD has been lower again today, extending last week’s losses. A quiet data schedule this week should leave EUR trading off USD flows, trade-talk headlines as well as Brexit developments. In terms of key domestic data focus, the CPI flash estimate on Friday is the key reading to watch. Last week, the ECB’s Lagarde said that risks to the eurozone economy remain persistent and called on greater fiscal support from EU leaders. EURUSD trades 1.1014 last.
All Eyes on The Elections
GBPUSD remains stagnant for now. With no tier-one domestic data due this week, focus will remain on the fluctuating UK elections landscape. For now, polls still show the Conservative party as the favorite to win. However, we still do not expect an outright majority, so focus remains on a potential coalition government. GBPUSD trades 1.2879 last, still holding within the recent consolidation for now.
Risk Markets Muted On Monday
Risk assets have had a muted start to the week. Uncertainty remains over the health of US-China trade talks. Last week Trump said that a deal was “potentially very close” to being signed. However, issues remain around China’s handling of the Hong Kong protests as well as its insistence that the US remove existing trade tariffs. SPX500 trades 3119.73 last, continuing to hold near the higher traded at the open last night.
Safe Havens Mixed
Safe havens have had a mixed start to the day given the lack of clarity over US-China trade talks. The uncertainty is leading JPY higher against USD and gold lower. USDJPY trades 10884 last. XAUUSD trades 1458.80 last. While safe-haven flows are being seen in JPY, the stronger USD is keeping gold weighed to the downside.
Crude Slides on China Fears
Oil prices have been a little lower so far on Monday, reflecting the slight loss of confidence in the ongoing US-China trade talks. Last week, the EIA reported a further build in US crude stores, keeping the pressure on the demand outlook for oil. Crude trades 57.75 last.
Crude Slide Weighing on CAD
USDCAD has been higher today as the strength in USD, along with weakness in oil prices, is weighing on CAD. Canadian GDP on Friday will be the key domestic data focus. BOC Governor Poloz noted at the bank’s last meeting that a further rate cut will likely be necessary for the future. As such, any weakness in GDP will likely weigh heavily on CAD. USDCAD is once again challenging the 1.33 level which price fell back below last week.
RBA’s Lowe Up Next
AUDUSD RBA Governor Lowe speaks tomorrow morning and his comments could give some insight as to whether any further RBA easing is coming this year. The RBA kept rates on hold recently, though noted its concern or the health of the global and domestic economy. Uncertainty around US-China trade talks is also keeping pressure on AUD here with AUDUSD trading .6788 last, just above last week’s lows for now.