USD Still Down
The US dollar continues a week of lackluster trading over the European session so far on Wednesday. Price has remained relatively muted, still sitting at the bottom of last week’s decline for now.
With little in the way of noteworthy US data, light flows are likely to continue. However, US-China trade deal headlines have the potential to cause volatility. USD index trades 96.85 last.
EUR Data Beats
EURUSD was initially higher at the European open today, though has since given back most of the gains to come back to trading around flat on the day. The German Ifo business climate reading came in a little better than expected today.
However, in light of the recent weight of data weakness, it was unable to provide much support. EURUSD trades 1.1132 last, continuing to move away from the week’s highs.
CPI Higher – BOE In Focus Tomorrow
GBPUSD has had a quiet start to the day too, with price still sitting at the bottom of recent lows, trading 1.3111 last. On the data front, November CPI released today was seen higher at 1.5% vs 1.4% expected.
The BOE holds its final MPC of the year tomorrow. While no rate cut is likely, the bank’s outlook is likely to remain tilted to the downside as Brexit uncertainty continues.
The UK parliament is due to vote on Johnson’s Brexit deal this Friday which will now include a provision to stop the transition phase deadline from being extended.
SPX500 Rallying Again
Risk assets continue to move higher today with the SPX500 trading 3193.13 last. The US-China trade deal is currently under legal review before being officially signed. The US Trade Secretary has confirmed that the deal is “totally done”, keeping risk appetite support into the middle of the week.
JPY Lower, Gold Higher
Safe havens have had another mixed day so far with the Japanese yen a little lower against USD while gold has been a little firmer. JPY remains under pressure as a result of the continued rally in equities while gold has benefitted from the sell-off in USD over the last week.
USDJPY trades 109.43 last, continuing to move away from the week’s highs. XAUUSD trades 1478.96 last, turning back up towards the highs of the week.
Bearish API Report Weighs – EIA Next
Oil prices have come back under pressure over the last 24 hours following a bearish report from the API yesterday which noted an unexpected build in US crude stores last week.
Traders are now waiting on the headline EIA report later today which could add further pressure if a similar build is reported. Crude trades 60.29 last, still holding above the 60 level for now.
Crude Still Helping CAD
USDCAD has been a little lower again today, despite the weakness in crude prices. Looking beyond the reported increase in US crude stores, the outlook is positive for crude now. This is on the back of the US-China trade deal.
Higher prices will help boost CAD in the medium term. USDCAD trades 1.3160 last, still above the 1.3145 level for now.
AUD Data On Watch
AUDUSD has posted a mild recovery over the middle session of the week so far, recovering off the week’s lows to trade .6851 last.
A dovish set of RBA meeting minutes earlier in the week put the pair under pressure though downside has stalled for now. AUD unemployment data due overnight tonight will be the key domestic data focus, expected to remain unchanged at 5.3%