A slowly fought trade war

Danske Research Team Danske Bank A/S

Market movers ahead

In the euro area, we project HICP inflation in March will bounce back to 1.5% y/y supported by Easter effects.
Several Fed members are due to speak in coming weeks, giving further insight into the future hiking pace.
Average hourly earnings will again be in focus in the US labour market report for March. We expect PCE core inflation figures to remain unchanged at 1.5% y/y.
In Japan, keep an eye on private consumption and labour market data.
We expect Chinese Caixin PMI manufacturing to decline, driven by financial tightening measures.
In Scandinavia, Danish business confidence and Norwegian house prices are due for release.

Global macro and market themes

The trade war is being fought very slowly.
The Fed lifted its rate path slightly due to Trumponomics.
We are keeping an eye on the increasing Libor/OIS spread.
The Brexit transition deal is not a game changer for EUR/GBP.

Download The Full Weekly Focus

Author

Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

EUR/USD loses traction, breaks below 1.1900

EUR/USD comes under extra downside pressure, breaching below the 1.1900 support once again on Tuesday. The improved tone in the US Dollar keeps the pair on the back foot after two consecutive daily advances. In the meantime, prudence is expected to kick in ahead of the release of the key US Nonfarm Payrolls on Wednesday.

GBP/USD slips back to daily lows near 1.3640

GBP/USD drops to daily lows near 1.3640 as sellers push harder and the Greenback extends its rebound in the latter part of Tuesday’s session. Looking ahead, the combination of key US releases, including NFP and CPI, alongside important UK data, should keep the pound firmly in focus over the coming days.

Gold the battle of wills continues with bulls not ready to give up

Gold remains on the defensive and approaches the key $5,000 region per troy ounce on Tuesday, giving back part of its recent two day. The precious metal’s pullback unfolds against a firmer tone in the US Dollar, declining US Treasury yields and steady caution ahead of upcoming key US data releases.

Bitcoin's downtrend caused by ETF redemptions and AI rotation: Wintermute

Bitcoin's (BTC) fall from grace since the October 10 leverage flush has been spearheaded by sustained ETF outflows and a rotation into the AI narrative, according to Wintermute.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.

XRP holds $1.40 amid ETF inflows and stable derivatives market

Ripple trades under pressure, with immediate support at $1.40 holding at the time of writing on Tuesday. A recovery attempt from last week’s sell-off to $1.12 stalled at $1.54 on Friday, leading to limited price action between the current support and the resistance.