Market News | Amana Capital
Market Wrap: US Dollar Remains Soft on Trump Comments, Sterling Outperforms All Majors
The US dollar retained a soft undertone, underperforming against all majors except the Japanese yen in a classic risk-on sentiment shift. The Euro and risk currencies are mixed, and the British pound is the performer of the day with gains against all major currencies.
EUR/USD – The single currency is posting its fourth consecutive bullish day against the greenback, as President Trump criticised Fed Chairman Powell’s policy tightening plans and EU and Chinese currency manipulation. The US dollar bull run seems now to pause, and traders should pay attention to the accumulated USD longs which, if closed, could add further weakness to the greenback. This is especially important if the Fed shows any signs of “softening” on its rate hiking path. As of 16:03 London time, the pair traded at 1.1520 – up 0.75% in the last 24 trading hours.
GBP/USD – The British pound is on the way to post its largest gain against the US dollar in almost a month. At the time of writing, the GBP/USD pair was up 0.78% from yesterday and traded at 1.2861. It seems that markets are currently dismissing Brexit risks and focusing on Trump’s comments regarding the Fed. Nevertheless, British Foreign Minister Hunt said that “chances of a no-deal Brexit is not negligible” and that this scenario would be a “big geo-strategic mistake for the continent of Europe.”
AUD/USD – The Australian dollar was mixed in today’s trading and traded at 0.7344 against the greenback, at the time of writing. This is a modest gain after the pair closed yesterday at 0.7337. The Reserve Bank of Australia released the minutes of its August 7 meeting this morning, stating that a broad-based US dollar strength and a weaker Australian dollar could be beneficial to the export-oriented Australian economy. The minutes also showed that increased household income and a tighter labour market had a positive effect on personal spending in Australia.
Crypto – The cryptocurrency market was mostly lower today, with 19 of the 20 largest cryptocurrencies by market cap in the red. At the time of writing, VeChain was the only cryptocurrency from the top 20 list in green with a 5.29% gain in the last 24 hours. Tezos, Bitcoin Cash and EOS were down -13.96%, -3.98% and -5.91%, respectively. Bitcoin was also testing the lower bounds of its recent trading range and traded at $6,433 – down 0.52%.
Ifo Institute Says That Germany Set To Remain The World’s Largest Current Account Surplus Nation
The German Ifo Institute has said that Germany is on course to remain the world’s largest current account surplus nation this year, with a current account surplus of $299 billion. It is the third year running that Germany has taken the top spot, with Japan and the Netherlands coming in behind the powerhouse of the eurozone economy.
Germany is likely to come under some criticism for holding such a large current account surplus, as the IMF have repeatedly called for the world’s fourth-largest economy to reign-in structural imbalances and lift demand for imports and domestic consumption.
The Ifo Institute also noted that Germany has such a high current account surplus due to its trade balance, with exports easily outpacing imports by 265 billion euros this year.
It now remains to be seen if the Trump administration will impose trade tariffs on German imports into the United States, further reducing demand for popular German goods such as automobiles. Yesterday, the German central bank warned that the German economy was likely to see a notable economic slowdown during the third fiscal quarter.
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In early London morning, the Reserve Bank of New Zealand reported that credit card spending rose 3.2% in July year-over-year, down from previous month’s reading of a 5.8% y/y increase.
In July, total billings in New Zealand reached NZD 3,702 million, and overseas billings on New Zealand issued cards hit NZD 653 million, up from last year’s July reading of NZD 3,429 million and NZD 566 million, respectively.
Credit card spending is highly correlated with personal spending and consumer confidence, both of which have a large impact on overall retail sales. The Q2 change in retail sales in New Zealand is reported this evening at 23:45 London time with a market forecast of 0.4%.
This morning, the Kiwi dollar continued its bull run against the US dollar and traded at 0.6668 as of 8:00 London time, after a yesterday’s close of 0.6638. The NZD/USD pair currently trades right on the broken channel and July low resistance, which could increase selling pressure on the pair and reveal a potential short-setup.
To the upside, the July low of 0.6686 is an important resistance level close to the current price, while the previous week’s low of 0.6543 could act as a short-term obstacle for Kiwi-sellers to the downside.
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In the Sydney morning, the Reserve Bank of Australia released the minutes of their August 7 meeting. As a reminder, the central bank left interest rates unchanged at a record-low 1.50% but stated that GDP growth and wage pressure would gradually rise over the years.
The minutes showed that the RBA believed that, while the impact of global trade protectionism would likely be small, there remained a risk to investment and economic confidence. Nevertheless, a tightening labour market and increased household income showed to be beneficial to personal spending in Australia.
The RBA also noted that U.S. growth and inflationary pressures could rise stronger than expected, triggering a faster tightening of the Fed’s monetary policy and a broad-based strengthening of the US dollar. This, in turn, would lead to a depreciation of the Australian dollar and support the export-driven Australian economy.
The Aussie rose following the release of the MoM and was 0.26% higher against the US dollar in the last six trading hours to trade at 0.7356, as of 7:14 London time. However, this year’s downtrend in AUD/USD remains intact as long as the pair trades below the 0.7480 resistance, which acts as the previous lower high of the downtrend.
To the downside, the pair could find support at last week’s low of 0.7202. Still, traders should note that the Jackson Hole symposium and the speech of Fed Chair Powell on Friday could create volatility in the pair in the short run.
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Morning Outlook: Greenback Falls As President Trump Reiterates His Displeasure With The FED
- EUR/USD pair recovers towards the 1.1540 region over U.S. President Donald Trump’s remarks about the pace of FED rate increases
- GBP/USD pair recovers above the 1.2800 level, marking the highest trading level for sterling in over one-week
- USD/JPY pair briefly falls below the 110.00 handle, touching its lowest level since late June
EUR/USD : The euro currency moved to its highest trading level in nearly two weeks against the greenback on Tuesday, after the U.S. Dollar sold-off broadly following U.S. President Donald Trump’s latest remarks about the Federal Reserve. President Trump reiterated his displeasure at the Federal Reserve continuing to hike U.S. interest rates, while also commenting that the FED should ‘do more’ to help the U.S. economy. As of 06.40GMT the pair traded 0.46% higher, at 1.1534.
GBP/USD : The British pound recovered above the 1.2800 handle Vs the greenback in early Tuesday trade, as sterling received a boost from overall U.S. Dollar weakness. Data from the United Kingdom economy on Monday that business confidence was at its lowest level of the year so far over ongoing Brexit concerns. The Institute of Directors, which is a survey comprised of over 750 businesses in the UK fell to -16, compared to -11 last month. 06:45GMT the pair +0.34% higher, at 1.2838.
USD/JPY : The U.S Dollar tumbled to its lowest level since late June against the greenback on Tuesday, as the pair was dragged lower by overall weakness in the U.S. Dollar Index. The USD/JPY pair briefly fell below the 110.00 level, as the greenback tumbled across the board following President Trump’s criticism of the U.S. Federal Reserve. As of 06:50GMT the pair traded 0.02% higher, at 110.09.
USD/CAD : The U.S Dollar continued its downward trajectory against the Canadian Dollar in early Tuesday trade as the USD/CAD pair approached the psychological 1.3000 support level. Friday’s sell-off in the USD/CAD pair spilt-over into early-week trade, as the Canadian Dollar benefitted from weakness in the greenback. As of 06:55GMT the pair traded 0.15% lower, at 1.3021.
The greenback is mixed against major counterparts so far, outperforming the Euro and risk currencies but underperforming against the Japanese yen, British pound and Swiss franc in the last 24 trading hours. Among majors, sterling is the performer of the day while the Australian and New Zealand dollar are losing ground across the board.
EUR/USD – The Euro vs US dollar pair is mostly unchanged in today’s trading, forming an indecisive hanging man candlestick pattern on the daily chart. Market participants are likely awaiting the gathering of central bankers this week, including ECB’s monetary policy meeting and Fed’s Jackson Hole symposium on Thursday. There are no data from the United States at all today, but the German Bundesbank warned that economic growth in Germany might slow down over the third quarter amid weak factory orders. As of 15:09 London time, EUR/USD traded at 1.1431.
GBP/USD – The British pound is on the way to post its third consecutive bullish day against the greenback, but the currency remains vulnerable on Brexit news and the FOMC meeting this week. British PM May is now also facing pressure from her own party to scrap the Chequers Brexit plan. At the time of writing, the pair traded at 1.2764.
USD/CAD – The Canadian dollar is giving back some gains from Friday after the currency faced increased demand amid a series of impressive numbers from Canada. On Friday, Canada reported that consumer prices rose 0.5% month-on-month vs 0.1% expected, but labour market statistics and retail sales figures have also beaten market forecasts this month. Markets are now pricing in a growing chance for BoC to hike rates at their next meeting. At the time of writing, USD/CAD traded at 1.3067.
USD/TRY – Today, the Turkish lira continued its Friday’s fall against the greenback, as markets continue to scrutinise the country’s ability to battle the looming lira-crisis. At the time of writing, USD/TRY traded at 6.17 after closing just under 6.00 on Friday. The central banks of Qatar and Turkey signed a currency swap agreement on Friday that should provide liquidity to the Turkish economy, and local banks are now paying a 1.50% premium on the official repo rate of 17.75% by borrowing at the overnight lending rate of 19.25%. Meanwhile, S&P and Moody’s downgraded Turkey’s credit rating to junk territory on Friday.