Forex today: Dollar holds the 97 handle while geopoltical tensions continue to mount

  • Dollar holds onto the 97 handle despite a drop in US yields in risk-off markets.
  • Hundreds of flights from Hong Kong cancelled which weighed on risk sentiment.
  • Argentina markets collapsed as President Macri after he performed poorly in a primary vote ahead of elections later in the year.

Forex today was somewhat downbeat while US markets went heavily offered as investors walked into a tidal wave of geopolitical risks which included demonstrations in Hong Kong and Italian political division as well as the collapse in Argentina equities. Of course, US trade-wars remain a concern and Brexit continues to play havoc in financial markets as well. 

Japan is back today, so it could make for further risk-off if Tokyo follows suit ahead of some key economic data releases out of Europa and the US, although starting closer to home, Australian NAB business conditions come first. 

The US benchmarks overnight were down over 1% and the Dollar likely attracted a safe-haven bid as it held territories on the 97 handle despite the US 2-year treasury yields falling from 1.63% to 1.58% and the 10-year yield dropping from 1.73% to 1.64% in negative correlation to US stock prices. As for the pricing for the Federal Reserve, ahead of this week's Federal Open Market Committee minutes, markets were 'pricing 32bp of easing at the 19 September Fed meeting', according to analysts at Westpac.

Hong Kong protests take it up a notch: 

The protestors succeeded in closing Hong Kong airport overnight, one of the world’s busiest hubs, seeing hundreds of flights cancelled which weighed on risk sentiment as there seems no end to the demonstrations which if anything, are getting worse.

"These developments will increase tension with mainland China and damage the Hong Kong economy, with growing fears that the region will enter a recession. Meanwhile, data out of China showed weaker credit growth and falling producer prices, which along with the recent yuan depreciation, signals global deflationary pressure ahead," analysts at ANZ Bank explained. 

Currency action: 

Analysts at Westpac offered a snapshot of the currency market's action from overnight. 

  • EUR/USD bounced off 1.1162 to 1.1215, up slightly on the day. Italy is stepping closer to a vote of confidence in Conte as PM that may see the end of the current fragile 5 Star/League coalition. This may result in another coalition being formed, a caretaker technocrat government being appointed or flash elections. The last option is what Salvini wants, but he may be thwarted given the need for a budget to be passed in September. The rebound in the euro and sharp rally in Italian government bonds (10 year yield -11bp to 1.70%) indicates an expectation that a technocratic government is more likely.
  • GBP/USD recovered some of Friday’s steep decline, up half a cent to 1.2085. 
  • USD/JPY probed lower to 105.05 – a seven-month low. AUD/USD fell from 0.6790 to 0.6745 in the London morning, then stabilised in NY. 
  • NZD/USD was choppy but softer overall, -0.4% on the day at 0.6445. 
  • AUD/NZD lost a net 20 pips over the day at 1.0475.
  • Argentina markets collapsed as President Macri after he performed poorly in a primary vote ahead of elections later in the year. The peso closed -14.5%, the benchmark stock market -38%.

Key notes from Wall Street:

Wall Street bleeds out in risk-off environment, DJIA eyes 200-DMA

Key events ahead in Asia:

NAB July Australia business confidence survey takes the spotlight. "Expect domestic business confidence data to be a key catalyst today with downside risks to the AUD," analysts at ANZ bank explained. 



Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD falls toward 1.19 after robust US Nonfarm Payrolls data

EUR/USD is trading above 1.19 after dipping below that number in response to the US Nonfarm Payrolls, which showed an increase of 379K jobs in February. Higher yields in response to Powell are keeping the dollar bid.


GBP/USD recovers after post-NFP dip below 1.38

GBP/USD is trading above 1.38 bus till down the day. The US gained 379.000 jobs, roughly double than expected and supporting the dollar. The Senate's stimulus debate is eyed.


XAU/USD battles 1700 level

Gold is staging a rebound toward $1,700 amid proift-taking ahead of the weekend but remains on track to close the third straight week in the negative territory.

Gold News

Ethereum price primed for a swift recovery as the network prepares for a major update in July

Ethereum price aims for a significant recovery towards $2,000. A major upgrade scheduled for July intends to fix the problem with gas fees on Ethereum. ETH miners are not happy with the decision.

Read more

US Dollar Index pushes higher to 92.20 on stellar Payrolls

The march north in the greenback remains unabated and trade in fresh 2021 highs beyond the 92.00 hurdle when tracked by the US Dollar Index (DXY).

US Dollar Index News