Commodity Currencies Collapsing As Trade War Woes Take Hold

US Retail Sales on Watch

It was another muted session for the US dollar over the European morning on Wednesday. Markets await the first tier-one US data of the week later today. April Retail Sales are due today. The index is trading midway between the 97.10 and 97.68 levels at 97.32 last with price regaining some of its overnight losses.

Weak Data Weighs on EUR

EURUSD has turned decisively lower today with price breaking down from the 1.1217 level. There has been a raft of weaker than expected data which has weighed on sentiment. German 1Q GDP was lowerthan expected along with QoQ Eurozone 1Q GDP. Both of which are once again ringing focus back to concerns over the health of the Eurozone economy.

May Announces Fourth & Final Brexit Vote

GBPUSD has been weaker today also with price remaining just above the 1.2895 structural support level. UK PM May announced that she will be holding her fourth and final Brexit vote in parliament by early June on the back of her ongoing cross-party talks with Labour. May clarified that if she is defeated a fourth time, the UK will either have to leave the EU without a deal or revoke Brexit altogether.

Risk Sentiment Weakens Again

Following a recovery yesterday, risk sentiment has been weaker again today with the SPX500 turning lower from just shy of testing the 2856.30 level. The trade war between the US and China has intensified this week following China announcing retaliatory tariffs to take effect in June. While the two countries are still involved in trade talks, for now, a deal looks unlikely.

Safe Haven Inflows Noted

Safe havens have benefitted from the risk off tone over the European morning. Both gold and the Japanese yen have been rising against USD. XAUUSD is once again sitting on the 1298.32 level after a strong rally overnight, keeping the focus on further upside. USDJPY has broken down below the 109.70 level again this morning after testing the level overnight. However, US data later today has the potential to spar USD gains so traders need to be wary.

Crude Capped By Inventories Build

Oil prices have traded with a relatively subdued tone today following explosive moves on Monday. The API crude report released yesterday indicated an unexpected build in US crude stocks last week. Traders now wait for the main EIA report released later today. Crude trades 61.27 ahead of the report, remaining rangebound between 60.41 and 61.89.

Commodity Currencies Down

Weaker crude prices have put pressure on the Canadian dollar once again today allowing USDCAD to break above the 1.3469 level. Price has tested the level several times with the level being a key zone over the year so far. Later today we also have Canadian CPI for April which is expected to have increased. A weaker than expected figure, however, could add further fuel to the USDCAD fire.

AUDUSD continues to deteriorate as concerns over the intensifying US/China trade war continue to weigh on sentiment. Price broke down through the .6982 level on Monday. It is now trading its lowest level since January. RBA rate cut expectations have increased in the wake of the latest round of trade tariffs between the US and China. This goes along with the RBNZ having recently cut rates also.