Market Drivers June 27, 2018
Risk off as USDCNY at 6-month highs
Equity flows drive FX
Nikkei -0.31% Dax -.73%
Oil $70/bbl
Gold $1255/oz.
Bitcoin $6075
Europe and Asia:
No Data
North America:
USD Durable Goods 8:30
USDCNY hit 6-month highs in Asia session trade, breaking above the 6.6000 barriers and spooking the FX markets as the soft devalultion of the currency appears to be another salvo in the trade war between China and US.
Equity markets across the world were lower, with DAX particularly hit hard as it dropped by -0.75% causing risk off flow in high beta currencies with all the major FX pairs save for the yen, lower against the buck. The EURUSD was hit especially hard with the pair dropping towards the 1.1600 figure once again as it touched low of 1.1621 in morning London dealing.
Despite yesterday’s relief rally caused a massive backpedal on the part of the Trump administration, investors are growing increasingly more concerned that rhetoric could turn to policy and irreparably damage the highly interconnected global trading system dampening growth worldwide. So far there have been no new negotiations between US and China and markets are fearing that the two nations could settle into a low grade war of attrition that will erode investor confidence and weigh on risk assets for a considerable period of time.
On the eco front the calendar was barren in Europe, although later on investors will look at BOE Financial Stability report to gauge whether the central bank is seriously considering hiking rates later this summer. Any modestly hawkish remarks by Governor Carney could help pop GBPUSD which dropped below the 1.3200 in risk-off selloff once again.
In US today the only report of note will be US Durable Goods orders, but the focus in FX will be squarely on equities. If stocks remain weak, expect further risk-off flows as trade war tensions will continue to be the dominant theme of the day and further weakness in high beta FX could take EURUSD to 1.1600 and GBPUSD to 1.3150 as the day proceeds.
Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD continues its downward trend for the fourth consecutive day, driven by a stronger US Dollar influenced by the hawkish market sentiment surrounding the Federal Reserve and expectations of prolonged higher interest rates.
GBP/USD: The first downside target is seen at the 1.2600–1.2605 zone
GBP/USD trades on a weaker note around 1.2620 during the early European session on Friday. The decline of Pound Sterling is backed by the growing speculation that the Bank of England will begin the rate-cut cycle this year.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.