There ’s a picture taking shape in the macroeconomic world that can be seen in the correlated actions of the most significant traders in the currency, interest rate, stock and precious metal markets. We’ll deliver the data and the markets. You can draw your conclusions as to how it all plays out amid a trade war backdrop.
The U.S. dollar is higher against most major currencies on Friday. The Canadian dollar was the single currency that appreciated versus the greenback. The loonie moved higher at the end of the week with the release of a stronger than expected monthly GDP number. The softer trade comments also helped dissipate the risk aversion sentiment lifting the Canadian currency.
It has been a bit of a lackluster week; the FIFA World Cup has provided way more excitement for more people than the financial markets. Stocks fell at the start of the week but the selling didn’t materialize into a proper correction and equity indices managed to regain their poise towards the end of the week. The dollar also eased back towards the end of the week after trending higher initially in what has been a quiet week for data.
There have been some interesting moves in the markets this morning, in what is the last trading day of the week and month. But it remains to be seen whether there will be further follow-through in these moves once we head into the U.S. session. After all, it has been a very choppy week and we wouldn’t be surprised if the markets were to reverse, especially the equities.
After a strong start to this week’s trade, the U.S. dollar is on the back foot on the final trading day of the week, month, and quarter. The proximate cause for the buck’s weakness is good news overseas: specifically, the EU countries reached an agreement on migration, while the UK’s Q1 GDP was revised up by 10 basis points to 0.2% quarter-over-quarter.
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While the speed of selling has slowed down compared to the early part of the week, emerging market currencies have continued to show weakness in the early hours of Thursday morning. The Thai Baht, Malaysian Ringgit, Chinese yuan, Indonesian Rupiah and Indian Rupee are all trading lower at time of writing.
The U.S. dollar remains among the strongest of currencies out there. Not only is it finding support from safe-haven flows amid the current stock market weakness, but it is also in demand due to the growing disparity between monetary policies in the U.S. against other major economies.
For euro/British pound (EUR/GBP) currency pair traders, there’s been good news and bad news over the last couple of months: The good news is that they’ve had plenty of time to watch the World Cup…and the bad news is that neither bulls nor bears are making any money in the pair!