Forex Market Commentary
14/5/2019
AUDUSD
The much-anticipated Chinese retaliation has released its plan to impose higher tariffs on $60 billion worth of U.S. goods, the finance ministry said on Monday, after the United States announced a tariff hike on $200 billion of Chinese products last Friday.
As a result, the Chinese yuan dropped to its lowest levels against the USD since December as the trade war between the United States and China has well and truly escalated through the raising of tariffs on each other’s goods.
AUD/USD is also on a slippery slide dropping to as low as 0.6938 overnight.
The cause of all this was when U.S. President Donald Trump said Beijing “broke the deal” by reneging on earlier commitments made during months of negotiations, while China said on Sunday it would not swallow any “bitter fruit” that harmed its interests.
Rising tensions between the two countries has also increased fears that China may sell its vast holdings of Treasuries as punishment or as a negotiation tactic against the United States, this would place the USD in a vulnerable position and on the defensive against some of the other major currencies.
The NAB Business Confidence Index will be released at 11.30AM (AEST) today, this measure declined unexpectedly last month however consensus is pointing towards a move back into positive territory.
Forex Market Commentary
15/5/2019
EURUSD
The EUR dropped against the USD overnight, currently at 1.1207, after Italy’s deputy prime minister said the country is ready to break European Union budget rules on debt levels if necessary to spur employment (Reuters). This is a clear indication that the Italian government is more concerned about employment growth than debt ratios/limits and will go to great lengths to ensure his country is in a better position. These comments will continue to hurt the EUR because such measures safeguard the stability of the euro zone and provide a buffer for banks to remain solvent. Salvini’s coalition partner, Luigi Di Maio, later told reporters that it was “pretty irresponsible” to create market tensions by speaking about increasing Italy’s high debt level.
The threat of tariffs on imported cars and auto parts remain a focus and concern for investors as U.S. talks continue with the European Union and Japan.
Across the channel, GBP dipped further to 1.2902, a two-week low as a result of poor employment data showing wage growth in the quarter ending March was lower than expected, signaling the possible start of a turbulent period for the broader economy. In addition, Britain’s exit from the European Union continues to weigh on the Pound as leadership questions add further uncertainty for progression.
Forex Market Commentary for 20/5/2019
EURUSD
The euro fell on Friday, closing at 1.1158(-14 pips) against the greenback. However, the greenback was underpinned by local data and persistent US-Sino trade tensions during earlier sessions. These last couple of days, the US administration announced it will delay imposing tariffs on European cars’ imports, also that it reached an agreement with Canada and Mexico to remove tariffs on steel and aluminum, as President Trump is deterred to close the trade balance gap with the Asian giant. The EU released April inflation data at the end of the week, which resulted in line with the market’s expectations, with a modest uptick in core yearly inflation to 1.3% from the previous 1.2%. The number, however, was overshadowed by the US Michigan Consumer Sentiment Index, as the preliminary estimate for May came in at 102.4, the highest level in fifteen years and well above the expected 97.5. This new week will be mostly light in terms of macroeconomic releases, with the most relevant release being FOMC Meeting’s Minutes next Wednesday. This Monday, Germany ill release April PPI, while the EU will post an update on Current Account. The US will publish the Chicago Fed National Activity Index for April, while a couple of Fed authorities will offer different speeches.
Forex Market Commentary 21/05/2019
EURUSD
The euro strengthened on Monday, closing at 1.1168(+4 pips) against the greenback. Risk-averse headlines dominated the news feeds, although most of them related to familiar issues, named the US-Sino trade war and Brexit, failing to provide a fresh catalyst. Current account for the euro for the month of March came out slightly better than expected, being €35.1 billion, beating market expectation €0.6 billion. The current account surplus in the Euro Area narrowed to EUR 35.1 billion in March 2019 from EUR 43.9 billion in the corresponding month of the previous year and compared with market expectations of a EUR 34.5 billion surplus. The goods surplus declined to EUR 30.5 billion from EUR 34.2 billion a year earlier and the services surplus fell to EUR 7.0 billion from EUR 8.3 billion. Also, the primary income surplus dropped to EUR 10.4 billion from EUR 16.0 billion last year, while the secondary income deficit shrank to EUR 12.7 billion from EUR 14.6 billion. The economic calendar is fairly quiet today for the euro dollar pair.
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Forex Market Commentary
29/5/2019
EURUSD
The Euro closed lower on Tuesday, closing at 1.1166(-27 pips) against the greenback. The greenback surged on the back of positive data from the CB Consumer Confidence Index up in May to 134.1 following an increase in April of 129.2. Lingering tensions between the US and China added to the dollar’s strength, following the latest comments from US President Trump, who announced Monday that the country is not ready to make a deal with China. European stocks closed in the red, while US indexes trimmed most of their early gains ahead of the close amid the prevailing risk-off mood. Germany released the GFK Consumer Confidence Survey, which resulted at 10.1 in June, from a downwardly revised 10.2 in May. The country’s Import Price Index increased just modestly in April, up by 0.3% MoM and by 1.4% YoY. On Wednesday, the macroeconomic calendar won’t include relevant data coming out from these two currencies.
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Forex Market Commentary
30/5/2019
EURUSD
The Euro closed lower on Wednesday, closing at 1.1136(-31 pips) against the greenback. The shared currency suffered a setback after the ECB warned that the economic downturn, a result of the US-Sino trade war, threatens the Union’s financial stability. Also, and despite far from being a big concern, the German unemployment rate jumped to 5.0% from the previous 4.9%, worse than anticipated. The tit for tat scenario between the US and Chinese representatives exacerbated the dismal mood, as the Chinese Foreign Minister said that the US is in no position to decide who is a currency manipulator, while, later in the day, US Secretary of State Pompeo said that the country “may or may not” get a trade deal with China. Data released by the US disappointed, as MBA Mortgage Applications declined by 3.3% in the week ended May 24, while the Richmond Fed Manufacturing Index rose by less than anticipated, printing 5 in May vs. the expected 6, although above the previous 3. Not that the market cared much about these.
Later tonight (22:30 AEST), the US will release the first revision of the Q1 GDP, previously seen at 3.2% and now expected at 3.1%. Quarterly PCE prices will come alongside, seen unchanged from the initial estimate. The country will also release weekly unemployment claims, April Trade Balance, and Pending Home Sales.
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Forex Market Commentary
3/6/2019
AUDUSD
The Aussie rose on Friday, closing at 0.6933(-29 pips) against the greenback. As it stands, the commodity pair holds above the monthly-low (0.6865) despite signs of slowing activity China, Australia’s largest trading partner, and the exchange rate may continue to congest over the coming days as the RBA insists that ‘a further decline in the unemployment rate would be consistent with achieving Australia’s medium-term inflation target.’ It remains to be seen if the RBA will reduce the official cash rate (OCR) to a fresh record-low as recent data prints indicate a robust labor market, and Governor Philip Lowe & Co. may merely attempt to buy more time as ‘the central forecast scenario remained for progress to be made on the Bank’s goals of reducing unemployment and returning inflation towards the midpoint of the target.’ In turn, more of the same from the RBA may ultimately keep AUD/USD afloat as the central bank appears to be in no rush to reestablish its rate cutting cycle. Aussie traders will be focusing on the Caixin Manufacturing PMI data that will be released at 11:45 AEST for today.
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Forex Market Commentary
4/6/2019
EURUSD
The euro soared on Monday, closing at 1.1244(+71 pips) against the greenback. The EUR/USD pair fell to 1.1155 to finally settle above the 1.1200 figure, a level that capped advances for most of the last week. Markit released the final versions of the May Manufacturing PMI, which, in the EU, came as expected, with the German index at 44.3 and the Union’s one at 47.7. US data, on the other hand, surprised to the downside, as the Markit Manufacturing PMI resulted at 49.1 in May, below the preliminary estimate of 49.7. Furthermore, the official ISM Index printed 52.1, well below the 53.0 expected and the lowest since October 2016. Economic activity expanded at a slower than expected pace, fueling speculation of a possible rate cut in the US. Concerns were exacerbated by Fed’s Bullard, who said that a rate cut might be warranted soon amid trade and inflation risks. The central bank is scheduled to meet next week. This Tuesday, the EU will publish April Unemployment rate, foreseen unchanged at 7.7%, and May preliminary inflation, seen up yearly basis by 1.3%, while the core CPI is forecasted at 0.9%, both below April data. The US will release the ISM-NY Business Conditions Index for May, previously at 77.3.
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Hey everyone,
Forex Market Commentary for 5/6/2019
EURUSD
The euro strengthened on Tuesday, closing at 1.1255(+10 pips) against the greenback. The greenback was unable to recover the ground lost Monday, hit by trade war-related headlines and mounting speculation about a rate cut in the US. On Tuesday, Fed’s Chief Powell spoke about the Federal Reserve’s policy strategy, tools, and communication practices, and despite no direct reference to future policies, odds for a cut decreased modestly. Powell said that policymakers would act as appropriate to sustain the expansion, different from the official Fed’s ‘patient’ stance. In the data space, the EU released May preliminary inflation estimates, which missed the market’s expectations, up by 1.2% YoY vs. the expected 1.3%, also below the previous 1.7%. Core CPI in the same period posted a modest 0.8% advance against the 0.9% forecasted, while the unemployment rate in the Union decreased to 7.6% in April. The US published the ISM-NY Business Conditions Index, which collapsed in May to 48.6 from 77.3 previously, and April Factory Orders, which declined by 0.8%, better than the -0.9% expected. This Wednesday, Markit will release the final services PMI for both economies, while the US will release the official ISM Non-Manufacturing PMI, this last expected at 50.9. Earlier in the day, the EU will release April PPI and Retail Sales, this last, seen decreasing monthly basis by 0.4%.
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Good morning everyone,
Forex Market Commentary for 6/6/2019
EURUSD
The euro weakened on Wednesday, closing at 1.1229(-23 pips) against the greenback. Greenback remained weak throughout the first half of the day, with the shared currency underpinned by upward revisions in Markit Services PMI. The German index showed that the service sector grew at a solid pace, printing 55.4. For the whole EU, the Services PMI resulted at 52.9, while the Composite PMI came in at 51.8, better than April’s 51.5, indicating expansion of the EU private sector, albeit at a modest pace. The EU also released April Retail Sales, which resulted as expected at -0.4% MoM. News that the EU Commission decided to launch a disciplinary procedure against Italy amid the country´s growing debt, put the pair under temporal pressure, later bouncing after the US ADP survey showed that the private sector added just 27K new jobs in May, way below the 180K expected, the catalyst that sent the pair to the mentioned high. The dollar turned north after the release of the ISM Non-Manufacturing PMI, which rose in May to 56.9, much better than the 55.5 expected. Furthermore, US Senate Finance Committee Chairman Grassley predicted the US will not impose sanctions on Mexico and said that he thinks an announcement could be made on Thursday night about a possible tariff deal. President Trump, however, later said that if Mexico doesn’t control migrants the tariffs will take place.
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Forex Market Commentary
7/6/2019
EURUSD
The euro made gains on Thursday, closing at 1.1276(+48 pips) against the greenback. As per the prediction of the forecasts, the central bank kept rates unchanged and pushed forward guidance into H1 2020, signaling no rate moves until next year. Such dovish tilt was offset by an optimistic outlook of the economic conditions, and details about the new TLTRO, which seem beneficial for local banks and financial institutions. Mr. Draghi remarked in the press conference that the central bank stands ready to act if conditions deteriorate, a remake of the “whatever it takes,” amid the risk and the uncertainties related to global trade and economic growth. The pair eased from the mentioned high, but met buyers around 1.1240, ending the day with gains around 1.1300, finding additional support on disappointing US data. The country’s trade deficit narrowed by less-than-expected, down anyway amid falling imports, hitting $-50.8B in April. Weekly unemployment claims increased to 218K in the week ended May 31, while the Unit Labor Costs decreased by 1.6% in Q1. In the trade war front, US President Trump said that the Mexican offer was “not enough,” and while some advances are being reported in negotiations, no resolution seems likely ahead of Monday 10, when the US will hit its neighbor with a new round of tariffs. This Friday, Germany will publish April Industrial Production and the Trade Balance, yet the market will focus on the US Nonfarm Payroll report. The country is expected to have added 185K new jobs in May, while the unemployment rate is seen steady at 3.6%, a 49-year low. Average hourly earnings are forecasted to have risen by .03% MoM and by 3.2% YoY, in line with the yearly average. Speculative interest is already pricing in a soft outcome, given employment data released throughout these last few weeks
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Market Commentary
11/06/2019
EURUSD
The euro closed lower on Monday, closing at 0.6961(-32 pips) against the greenback. euro rose sharply versus the dollar last week, lifted by a disappointing nonfarm payrolls report, which changed expectations over the Federal Reserve path on rates. However, the shared currency came under mild pressure on Monday amid reports suggesting the European Central Bank is worried about the exchange rate and might consider an interest rate cut, while on the flip side, the greenback was supported by Trump’s announcement that the US will refrain from imposing tariffs on Mexico while both countries secured a deal to curb inflows of central-American migrants to the US.
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Forex Market Commentary
17/06/2019
EURUSD
The euro tumbled on Friday against the greenback. Closing at 1.1210(-69 pips) on Friday. The dollar recovered amid decreasing fears of an upcoming dovish Fed. The preliminary June Michigan Consumer Sentiment Index came in at 97.9, slightly below the 98.0 expected and the previous 100, while Industrial Production in May expanded by 0.4% following April’s 0.4% contraction, and Capacity Utilization expanded by more than anticipated in the same month, up to 78.1%. The dollar also benefited from its safe-haven condition, as tensions between the US and Iran over the attack to oil tankers in the Gulf of Oman, spooking investors away from high yielding assets. This week will start with a light calendar, as there’re no relevant data scheduled in the EU, while the US will release the June NY Empire State Manufacturing Index, foreseen at 12.75 vs. the previous 17.80.
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Forex Market Commentary
19/6/2019
AUDUSD
The Australian dollar rose to 0.6876(+25 pips) against the greenback on Tuesday. The Australian dollar has been under pressure recently due to the Reserve Bank of Australia’s rate cut by 25 basis points earlier this month- first interest rate change in 30 months. The minutes of the RBA was released at 11:30 AEST yesterday, and that saw the Aussie trading as low as 0.6831. The RBA’s minutes indicated that members agreed that a further easing in monetary policy in the foreseeable future is likely as the central bank tries to stimulate economy through lowering the exchange rate and reducing borrowing costs for businesses. The minutes also revealed that the RBA will also be turning their attention on lowering the jobless rate given it is “apparent that the labour market still had significant spare capacity”. Traders will now shift their attention to the speech that will be given by Governor Philip Lowe, in relation to the Labour Market and Spare Capacity at the CEDA luncheon in Adelaide on Thursday 12:35 AEST.
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Forex Market Commentary
Happy Friday everyone.
Attached is the commentary for 21/6/2019
GBPUSD
The Pound strengthened on Thursday, currently trading at 1.2706(+54 pips) against the greenback. On Thursday, the Bank of England voted unanimously to vote their interest rate decision. At 21:00 AEST, the central bank announced their decision to maintain interest rate at 0.75%. The central bank also lowered its outlook for the economy to zero in the second quarter of the year from its previous estimate of 0.2 percent growth. They too emphasized that the economic outlook will continue to be dependent on the nature and timing of the EU withdrawal. With focus being on the new trading arrangement between the European Union and the United Kingdom. For today, the economic calendar is light for the Pound, with only the Public sector net borrowing data for May set to be released at 18:30 AEST, with previous reading coming in at £-4.97B, and forecast to be at £-5.10B.
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Market Commentary for 24/6/2019
AUDUSD
The Australian dollar closed on a positive note on Friday, closing at 0.6927(+7 pips). The Aussie recovered last week by 82 pips, after falling up to 156 pips the week before due to trade war and the RBA’s interest rate decision. The Fed’s dovishness last week also provided support for the Aussie. Last week, RBA’S Governor Philip Lowe also mentioned that expectations of another rate cut is not unrealistic and that the interest rate cuts earlier this month was not due to the poor economy, but more so that the Australian economy can get even better. On the data front, this week offers very little data. Two RBA speakers, including Mr. Lowe, will be providing his speech at 9:30 AEST. It is likely that the speech would be rather repetitive and give the market little reason to price in more than a single near-term rate cut, the Australian Dollar market is likely to remain focused on the US Dollar’s fortunes.
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Forex Market Commentary
25/6/2019
AUDUSD
The Australian dollar continued its bullish run on Monday, currently trading at 0.6965(+20 pips) against the greenback. Australian dollar was the best performer amongst the G10 countries, up by 0.09%, followed by its neighbor, who were up by 0.07% on Monday. RBA’s governor gave his speech on Monday morning, further commenting that monetary easing will not be as effective as in past years. This comment provided a boost to the Australian dollar during the day. For today, in terms of data front, the economic calendar remains light with only the US New home sales data and CB consumer Confidence for June that is set to come out at 00:00(26th of June). RBA ‘s assistant governor Michele Bullock is also set to provide her speech at 17:30 AEST later today, however it is unlikely to cause major price movements.
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Forex Market Commentary
01/07/2019
AUDUSD
The Aussie opened with a 10 pips gap on Sunday, opening at 0.7032, initially closing at 0.7022 on Friday. The Aussie benefited from the news that US and China have reached a temporary truce on trade war, during the G20 meeting at Osaka, Japan over the weekend. This truce allowed the US and China to stop USD$300 billion worth of additional tariffs. The current ban on Huawei as well has been rectified as Trump said that US companies could sell to the Chinese telecommunications giants again, just as long as it does not involve equipment that threatened US national security. However, he also mentioned that the decision to remove Huawei of the “entity list” would be left to later, adding he will be having a meeting on Tuesday on this subject. For today, the economic calendar remains light, as the Aussie traders will only have the HIA New Home sales MoM for May to look out for at 11:00 AEST today and the US ISM Manufacturing PMI for June that is set to be out at 00:00 AEST on Tuesday(2nd July).
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Forex Market Commentary 2/7/2019
AUDUSD
The Aussie dropped on Monday, currently trading at 0.6964(-57 pips) against the greenback. The truce between the two economic giants have done little to shift the market forecasts for the Feds to cut interest rates in July. The signs of a cooling labour market and below expectation inflation reading could provide the Feds with solid validation to lower interest rates in 2019. While it is encouraging that the US and China have agreed on a temporary truce, but based on history, last year at the G20 summit in Argentina, a trade truce only lasted for 6 months before US went ahead to impose tariffs on USD$ 200 billion of Chinese import in which they escalated to 25% from 10%. Markets are still very wary that at anytime, another round of tariffs will be introduced from either party. For today, traders will shift their attention to the RBA interest rate decision, which is set to be released at 14:30 AEST.
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Forex Market Commentary for 3/7/2019
AUDUSD
The Aussie appreciated on Tuesday, currently trading at 0.6992(+28 pips) against the greenback. The Reserve Bank of Australia lowered its cash rate by 25 basis points to a new record low of 1.0 percent at its July meeting, as widely expected. It is the first back-to-back cut in borrowing cost since 2012, aiming to support employment growth and to provide greater confidence that inflation will be consistent with the medium-term target. Out of the big four commercial banks, ANZ was the first bank to react to the decision, announcing that it would pass on the 25 basis point rate cut in full to all of its variable home loan customers. RBA Governor Phillip Lowe did not rule out further cuts in the future, which could cause further detriment to the Australian dollar. For today, trader’s will turn their attention to the Australian balance of trade for May, which is scheduled to release at 11:30 AEST.
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