EU/UK PMIs Fall Further

Trade Deal News Weighs on USD

The US dollar has started the week on a soft footing, though trading has been quiet so far today as traders digest the moves seen late last week. News of a last-minute trade deal between the US and China was greeted with a surge in equities prices which sent USD lower.

Though we have seen some recovery off the very lows of the move, further losses look likely if equities continue higher. USD index trades 96.66 last.

EUR Lower on Data Dump

EURUSD has fallen lower over the first European session of the week. Price is trading 1.1131 last, pulling back from overnight highs as a slew of eurozone, German and French PMI data sets came in below expectations.

The data highlights the ongoing issues facing the eurozone. And, despite a more optimistic tone at the last meeting, traders still eye further ECB easing in the near term.

GBP Down On PMI Weakness

GBPUSD has come under pressure today also as data released this morning showed the manufacturing and services PMIs both moving deeper into contractionary territory last month.

While uncertainty ahead of the UK elections was the likely driver, these readings have been trending worryingly lower all year. GBPUSD trades 1.3336 last, back below the 1.3377 level for now.

Risk Rallies on Monday

Risk assets have been higher again at the start of the week, extending last week’s gains seen in response to the news of a trade deal. With both US and Chinese legal teams reviewing the document as a formality ahead of the official signing, risk sentiment has been well supported. SPX500 trades 3181.68 last, challenging last week’s new, all-time highs as of writing.

JPY Down, Gold Up

Safe havens have had a mixed start to the week. JPY is lower against USD in light of the strong rally in equities,. Meanwhile, gold has been a little higher against USD in light of the weakness in USD this morning. USDJPY trades 109.41 last while XAUUSD trades 1477.96.

Oil Higher on Trade News

Oil prices were initially firmly higher over the European session today. However, we have seen gains softening a little recently, taking price back below the 60 level, to trade 59.92 last. News of the trade deal has been a major supporting factor for crude. And, along with the recently announced increased OPEC+ production cuts, this is keeping the near-term outlook bullish for crude.

Loonie Lower As CAD Climbs

USDCAD has been sharply lower over the European morning on Monday with price breaking down below the 1.3145 level. The rally in crude, along with the firmly bullish outlook for crude prices, is keeping CAD supported here. Along with USD weakness, this is likely to keep USDCAD trading lower in the near term.

Aussie Higher on Trade Deal News

AUDUSD has been higher so far today, taking advantage of weakness in USD as well as the better tone to risk assets following news of the trade deal. With the US & China set to commence negotiations on the second phase of the deal shortly after the New Year, the Aussie looks set to enjoy some further upside. AUDUSD trades .6885 last.