- Forex today gave two-way traffic in the greenback, although the bears are back in control.
- The US CPI, ECB, Turkey’s central bank and the BoE were the highlights along with Trump's Tweet stating that there is no progress with respect to the US and Chinese trade dispute.
Analysts at ANZ Bank offered a snaspshot recap of the European and US market:
- "US equities rose following the weaker CPI and the USD declined. Treasury yields were little changed and oil fell. The BoE decision kicked off the overnight session with 9-0 voting to keep everything on hold. There was little market reaction."
- "Turkey’s central bank lifted its policy rates 625bp to an eye-watering 24%, seeing the lira lift 4% and supporting other EM currencies."
- "The ECB was next, with Draghi’s positive comments sending EUR higher."
- "President Trump then tweeted that he felt no pressure to do a trade deal with China, causing some unwind of the positive risk sentiment."
- "However, US equities remain up solidly (Dow and S&P 500 +0.5%, Nasdaq +0.7%)."
- "Hurricane Florence on the east coast lost some power, sending oil lower during the trading session, with WTI spot down 2.3% to USD68.73 at the time of writing."
- "The USD fell against all but JPY in the G10. Gold is down 0.4% at the time of writing."
As for the currency actions, EUR/USD was propped by ECB’s Draghi slightly hawkish presser on the rate hold outcome of the meeting. Draghi was lowering the 2018 GDP forecasts, as expected, but he suggested that the European Union had grown above potential - inflation is on the way, in other words - This sent yields higher narrowing the spread to the US, lifting the euro. However, there were risks that were noted by the ECB with respect to trade issues and EM-FX. EUR/USD closed through the 100-D SMA and pierced the 1.17 handle to reach a high of 1.1708. Sterling bulls remained in control despite no moves from the BoE and a lack of continuity with respect to positive Brexit sound bites. Cable hit a 6-week high on the back of the US CPI miss that weighed on US long-term yields. GBP/USD scored 1.3122 and closed NY at 1.3104. The cross remains in the balance of the Brexit talks which are stalling with respect to progress. EUR/GBP was up by 0.03% to 0.8912 in NY o the dollar cross-flows within a North American range between 0.8928-0.8894. USD/JPY made its mark around 112 the figure with risk-on flows kicking in following the CPI miss which boosted the mood in the equity space. Trade talks are meandering following Trump's tweet which gave the dollar a boost- (may be short lived though as the focus remains with Mnuchin's more positive remarks) - Also, EUR/JPY lends USD/JPY bulls a helping hand. AUD/USD was a mixed bag and it is evident that if Trump allows the dispute with China to continue, bears are going to be all over rallies. AUD/USD climbed to 0.7195 but fell back to 0.7182 on the Trump tweet by the London fix - The proxy for EMs and China closed NY at 0.7197 while Trump feels no pressure to make a deal with China.
Key notes from US session:
Key events ahead:
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