Dollar Dives Down
The US dollar weakened significantly over the European morning on Friday as optimism over a partial US/China trade deal led equities higher, taking some of the safe-haven bid out of USD. The fall comes despite data yesterday which showed core inflation rising to one year high in August. For now, however, the market is still expecting the Fed to ease this month though pricing for a further hike in 2019 is receding. USD index trades 97.59 last.
EUR Rallies Despite ECB Easing
EURUSD remains firmly bid today as the market continues to rally in the wake of the ECB announcing a wave of easing measures at yesterday’s September meeting. Despite both a cut to the deposit rate and the restarting of QE, it seems that some were expecting a more aggressive move, leading EURUSD back up to challenge the 1.1112 level last.
Fading No-Deal Brexit Risks Boost GBP
GBPUSD has been firmly bid today. Optimism around the receding chances of a no-deal Brexit happening by October 31st has caused a strong short squeeze in GBP. Law passed this week means that unless a deal (or a no-deal exit) can be approved by parliament by October 19th, the PM must request an extension to Article 50 until January 31st, 2020. GBPUSD trades 1.2463 last with price having broken firmly above the 1.2382 level.
Risk Sentiment Strong Into Weekend
Risk assets have remained well supported over the final European session of the week in light of a fresh wave of stimulus in Europe, growing optimism around both a potential US / China trade deal and the aversion of a no-deal Brexit. SPX500 trades 3019.30 last, with price making its way back up to near all-time highs. The prospect of further Fed easing is also keeping the outlook bullish in the near term.
Softer USD Supports Gold & JPY
Safe-havens have both been a little higher today, despite the rally in risk sentiment, as a weaker USD creates space to the upside in both JPY and gold. USDJPY trades 107.99 last as the bearish USD move has seen price pulling away from recent highs. XAUUSD trades 1507.74 last with price rallying back up following the recent rejection at the 1522.75 level.
Crude Rallies on USD Dip
Oil prices have recovered off initial lows on the day in light of the strong move lower in USD. Earlier this week, the EIA reported a large drawdown in US crude stores though this was upstaged by a set of bearish forecasts from OPEC, which is now considering further production cuts in December. Crude trades 55.03 last.
Commodity Currencies Supported
USDCAD has softened today given the weakness in USD and the recovery in oil. Price trades 1.3220 last, though still above the 1.3207 level for now. US data later today could still turn the tide for USD though the focus on improvements in global trade expectations is keeping CAD supported for now.
AUDUSD remains well supported today also. The growing optimism around US/China trade negotiations following Trump postponing the start of the next round of tariffs, as well as news of a potential interim trade deal, is helping keep AUD sentiment buoyant with price trading .6874 last.