Markets Stabilize Following Explosive Moves Yesterday

Little to Report in USD

The US dollar was slightly higher over the European morning on Tuesday. The index rose to 97.16 last, keeping its head above the 97.10 level. Looking ahead to today’s US session, there is very little on the data sheet. Therefore, we expect quiet trading.

Soft ZEW Surveys Hit EUR

EURSD traded lower over the day so far with sentiment weighed upon by a set of weak data from the eurozone and Germany. ZEW surveys were weaker than expected with both counts printing minus figures. EURUSD remains above 1.1217, for now, but is turning lower quickly.

GBP Down on Weak Wage Growth

GBPUSD has found itself lower again today, with the pair now back firmly below the 1.30 level. This morning, the latest data from the ONS showed that despite unemployment ticking lower again in the 3 months to March (3.8%), wage growth came in lower than expected at 3.2% vs 3.4% expected and 3.5% last.

Risk Sentiment Stabilises

Risk sentiment has seen some recovery so far today. SPX500 is trading back above the 2816.15 levelwhich was broken yesterday. SPX500 sold off sharply yesterday in response to news that China has retaliated to the US tariffs. The Asian giant announced its own 25% tariffs on 5000 items which will be coming into effect on June 1^st.

The UK100 has also been higher over the European morning today. It was boosted by risk buying across the board as well as a weaker GBP. The UK100 bounced off the 7156.4 level and is now making its way back up to test the 7262.6 level from the underside.

Safe Havens Retreat Following Big Gains Yesterday

With the recovery in risk sentiment, safe havens have come off a little over the day so far. Both gold and JPY are down against USD following explosive moves yesterday. XAUUSD blew through the 1298.32 level resistance yesterday in response to the China retaliation news.

However, price is back below the level today. USDJPY similarly crashed through 109.70 support to trade lows of 109.02. But, we are now back up, challenging the level from the underside today.

Crude Rises Again

The recovery story is visible in oil today also. Crude is recouping some of the losses suffered yesterday in response to the China news. Crude was initially trading higher yesterday due to heightened tensions in the Middle East following Iranian attacks on Saudi oil tankers. However, it cratered in response to news of the China tariffs. For now, price is between the 60.41 and 61.89 levels.

Commodity Currencies Mixed Between Oil & China Themes

The rebound in oil prices has helped CAD make up some lost ground. USDCAD is pulling away from the 1.3469 level once again after trading above the level yesterday. Weakness in oil along with concerns over the global trade landscape will likely keep CAD pressured in the near term. However, Middle East tensions have the potential to keep oil supported which should buffer CAD losses.

AUDUSD has not been supported by the moves in oil today or the recovery in risk appetite. Concerns around the impact that fresh tariffs will have on the Chinese economy, as well as world trade in general, are clearly visible in AUDUSD. The pair continues to plow lower today having broken firmly below the .6982 support level on yesterday’s news.