Posted by OFX
USD – United States Dollar
The risk-on sentiment extended into Asia yesterday after the U.S. Treasury retracted its decision in August to designate China as a currency manipulator. The market mood has been given another lift with the imminent sign of the Phase One trade deal between the U.S. and China due to take place today in Washington.
Attention this morning is on the U.S. Producer Price Index released earlier today as investors prepare for a big week of U.S. domestic data points, headlined by PPI excluding food and energy released at 1.1 short of previous and consensus of 1.3 percent, respectively. Softness across these data points will affirm suggestions the U.S. economy is shifting nearer recession and subsequently increase the likelihood that monetary policy amendments will be required at some point through 2020.
The Great British Pound found support bouncing back through 1.30 as investors looked to mitigate recent losses. Sterling has come under increasing pressure since the December election as the focus shifts again towards Brexit and a stagnating domestic economy. As the likelihood of a rate cut looms, analysts have begun to reprice GBP, forcing it toward seven-week lows earlier this week. While we anticipate the Pound will remain under pressure through the coming months, our immediate attentions turn to today’s CPI inflation report and commentary from Bank of England and MPC policy member Michael Saunders for further direction. With other policy members already suggesting a rate cut is imminent, a poor inflation print and dovish commentary from Saunders could force the Pound lower still. Initial supports at 1.2950 remain in play with extended downside toward and through 1.29 and 1.2850 possible through the day if money markets amplify rate bet expectations.
The Yen advanced through trade overnight, recouping losses suffered through the end of last week as risk sentiment soured following reports the U.S. will not reduce tariff’s on China before the 2020 Presidential Election. The commentary has doused recent optimism that today’s signing of a Phase One trade deal would be the beginning of a full-scale de-escalation in trade tensions.
EUR/USD: 1.1118 – 1.1163 ▲
GBP/USD: 1.2984 – 1.3043 ▼
USD/CAD: 1.3045 – 1.3079 ▼
AUD/USD: 0.6876 – 0.6905 ▲
NZD/USD: 0.6583 – 0.6621 ▲
Posted by OFX