EUR, JPY & CAD, H1
The Dollar has continued to trade softer in thin markets. The narrow trade-weighted USDIndex (DXY) ebbed to a 17-day low at 96.73. The Index has racked up a near 1% loss over the last week, which has come as global stock markets rallied to fresh major-trend highs, or record highs in the case of the three principal indices in the US. The move has been concomitant with a decline in US yields, which has suppressed the US yield advantage over the Bund by about 5 bps in the case of the 10-year yield differential.
EURUSD earlier traded above 1.1200 for the first time since mid August, posting a high at 1.1210. This extends the moderate recovery the pair has seen after printing a 32-month low in early October. A pricing out of Fed tightening, after the US central bank reduced rates three times earlier in the year, has been weighing on the US currency, along with the thawing in US-China trade relations and the resolution of Brexit, which has seen the Dollar’s safe-haven premium unwind.
USDJPY posted an 18-month low at 109.06, putting in some distance from the seven-month peak that was seen in early December, at 109.72. Cable edged out an 11-day high at 1.3125 on the back of Dollar weakness, with the Pound trading more indifferently against other currencies. AUDUSD hit a five-month high at 0.6999 in what is now the pair’s fifth consecutive up week. NZDUSD also printed a five-month high. The antipodean currencies have been correlating with the progress of US-China trade talks.
The Canadian Dollar, meanwhile, the other dollar bloc member, posted a two-month high against the Greenback as USDCAD touched 1.3063. A three-month high in oil prices (USOil traded to $61.82 earlier) has helped underpin the Canadian currency. Data showing drawdowns in US crude reserves and tensions in the Mideast (following US airstrikes in Syria and Iraq) have been underpinning oil prices.
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Stuart Cowell
Head Market Analyst
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