USD Rally Continues
The US dollar continues to trade higher into the middle of the week as the reversal lower in equities keeps the greenback bid on Tuesday. Looking ahead, the main focus of the week will be tomorrow’s FOMC meeting. No change in policy is expected though traders will be keen to see if the Fed has shifted its view at all following the signing of the US/China trade deal. The USD index trades 97.80 last.
EUR Under Heavy Selling Pressure
EURUSD has been under heavy selling pressure all week as the rally in USD continues to weigh on price. Last week the ECB statement came with a mildly dovish tone. ECB chief Christine Lagarde warned markets not to think that ECB monetary policy will remain on auto-pilot while the ECB conducts its strategy review. EURUSD trades 1.1015.
GBP Lower on Brexit Trade Deal Fears
GBPUSD has been lower again today also with price now challenging the rising trend line ahead of the 1.2978 level. The latest-sell off comes amidst reports that the EU is demanding the European Council enforce trade deal rules, which Johnson has said is “unacceptable”. The headlines are fuelling worries over the likelihood of the two sides being able to agree a deal in the current timeframe.
Risk Assets Still Under Pressure
Risk assets have been lower again today. The outbreak of corona-virus, which has now claimed the lives of 80 people and spread as far as America, is fuelling worries of damage to the global economy. SPX500 trades 3248.58 last, having broken back under the 3261.46 level yesterday, which has held as resistance so far today.
JPY & Gold Higher Again
Safe havens have been firmer today with both JPY and gold rallying against USD, though gold’s upside move has been a little more tempered in light of USD strength. XAUUSD trades 1579.73 last, sitting just under the week’s highs. USDJPY trades 108.81 last.
Crude Holding At Support
Oil prices continue to hold near the week’s lows with crude holding just above the 52.73 level at 52.91 last. The outbreak of corona-virus has raised fears over the demand outlook for crude given the sharp hit to oil demand during the SARS outbreak in 2003. Later today, traders will get a first look at US oil inventories with the API report.
Loonie Testing Resistance
USDCAD has been higher again today with price trading up towards the 1.3207 level. The ongoing slide in crude prices, as well as the rally in USD, is helping keep the loonie in demand this week. The FOMC meeting tomorrow could fuel further upside if the Fed strikes a more optimistic tone.
Aussie Continues Lower
AUDUSD has been lower again today. Following the breakdown below the .6850 level, price is now trading 100 pips lower at .6748. Looking ahead today, Aussie traders will be waiting on the CPI release due over the Asian session which is expected to have ticked up over the final quarter of 2019.