Forex Today: Sentiment sours again with safe havens in demand, NZD/USD crashes

Yohay Elam FXStreet

Here is what you need to know on Wednesday, August 7th:
- Markets are stable after correcting higher on "turnaround Tuesday" but tensions are high. China has fixed USD/CNY just below 7.00, keeping the focus around its devaluation high. White House adviser Larry Kudlow said he still expects trade talks to resume in September.
- Safe-haven flows have picked up again, with the Japanese yen gaining ground and gold hitting the highest since 2013 at $1,490.
- Fed official James Bullard has said that the Federal Reserve should not respond to every move in the trade war and reduced expectations for further rate cuts. Bullard is known as a dove. His colleague Charles Evans will be speaking today.
- The New Zealand dollar has crashed by around 2% to below 0.6400 after the Reserve Bank of New Zealand shocked markets by slashing interest rates by 50 basis points to 1.00%. Governor Adrian Orr has said that uncertainty is rising around the US-Sino trade war is hurting business confidence and paralyzing activity. The move has been a huge surprise as it came after an excellent jobs report in the nation.
- AUD/USD has been dragged lower by the NZD sell-off and dropped below 0.67 – hitting the lowest in a decade. The Reserve Bank of Australia left interest rates unchanged on Tuesday but is now expected to act.
- Commodities are falling with Brent Oil entering a bear market, following the lead of iron ore.
- UK: Michael Gove, who is responsible for no-deal preparations, has blamed the EU of intransigence and reiterated that the UK is leaving on October 31st "deal or no deal." PM Boris Johnson's messages to his European counterparts have been that Theresa May's agreement must be scrapped.
- Cryptocurrencies have retreated after an attempt to move higher, with Bitcoin trading below $12,000.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

EUR/USD looks sidelined around 1.1850

EUR/USD remains on the back foot, extending its bearish tone and sliding towards the 1.1850 area to print fresh daily lows on Monday. The move lower comes as the US Dollar gathers modest traction, with thin liquidity and subdued volatility amplifying price swings amid the US market holiday.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

Gold battle around $5,000 continues

Gold is giving back part of Friday’s sharp rebound, deflating below the key $5,000 mark per troy ounce as the new week gets underway. Modest gains in the US Dollar are keeping the metal in check, while thin trading conditions, due to the Presidents Day holiday in the US, are adding to the choppy and hesitant tone across markets.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.