USD Starts Quietly
The US dollar has had a subdued start to the week with the index trading lightly at 98.54, sitting just below recent highs. A raft of better data last week has improved the outlook for USD, headlined by a strong January NFP reading which came in at 225k vs 163k expected. Looking ahead this week, retail sales and CPI will be the main readings due on Thursday and Friday.
Euro Holds Below 1.10
EURUSD has been a little higher this morning, though is still sitting at the bottom of last week’s declines, with price having broken through the 1.10 support level last week. The resurgence in USD has weighed heavily on EUR recently. The currency remains under pressure in the wake of dovish comments from ECB’s Lagarde who warned markets not to assume that ECB policy will be on auto-pilot this year.
GBP Attempting to Recover
GBPUSD is attempting to rally this morning with price pushing up off the session’s 1.2872 lows to trade 1.2902 last. GBP has been under pressure recently over concerns for the UK/EU trade talks which got off to a rocky start last week as EU and UK leaders laid out very disparate visions for the future trade relationship.
Risk Sentiment Weakens
Risk assets have been lower again over the early European session on Monday as fears continue to drive uncertainty over the ongoing spread of coronavirus. The SPX500 has come under pressure again as the recent slew of positive US data has weakened any expectations of potential US easing. The SPX500 trades 3324.68 last, having found support at 3313.93 overnight.
JPY & Gold Higher
Safe-havens have had a quiet start to the week but both JPY and gold remain supported against the US dollar, given the risk-off tone to equities markets this morning. USDJPY trades 109.76 last, with price peeling back from the recent 110 highs. XAUUSD trades 1574. 55 last, having found support at the 1555.38.
Oil prices have been softer at the start of the week in light of the broad risk-off tone which we have seen so far today. Equities and commodities have been under pressure from the ongoing coronavirus outbreak which is hurting the demand outlook for oil. Crude trades 50.26 last, just up off the recent 49.43 lows.
Loonie Capped at 1.33
USDCAD is still trading around the 1.33 level. Following a brief spell above the level last week, price has now dropped back below. However, given the ongoing rally in USD and the weakness in crude prices, further upside is likely.
Aussie Back Above Key Support
AUDUSD has been softer today, as the general pull-back in risk assets weighs on sentiment. Trading .6695 last, price is back above the .6682 level support. Looking ahead this week, RBA Governor Lowe is due to give a speech, which will be the main Aussie trading focus.