USD Advances But Downside Risks Remain

Dollar Higher

The US dollar has traded in the green across the European morning on Tuesday as softness in equities markets has seen renewed demand for the greenback. Despite the recovery so far today, USD remains under pressure given the recent series of data disappointments that have increased expectations of an October rate cut from the Fed. USD index trades 97.12 last, having recovered off the 96.99 level tested yesterday.

Traders Waiting for ECB

EURUSD has been a little lower against the US dollar today in light of the strength seen in USD over the day so far. The main focus for EUR traders this week is the ECB meeting on Thursday. While the bank is not expected to ease further, traders will be keen to see if the bank signals that any further easing is likely this year. EURUSD trades 1.1140 last, sitting comfortably above the 1.1112 level for now.

GBP Upside Pauses

GBPUSD has seen a brief pause in upside momentum today as USD strength headlines the session. However, focus remains on further upside while the price stays above the 1.2782 level (trading 1.2933 last). The EU is expected to grant the UK’s request to extend Brexit which should keep GBP supported in the near term.

SPX500 Near Resistance

Risk assets have seen a quieter session so far today though remain mostly positive. The expectation that Brexit will be delayed, as well as the expectation that the US and China will sign a trade deal, is keeping the outlook positive for now. The SPX500 trades 3006.93 last, nearing the 3020.23 resistance level once again.

Safe Haven Inflows Seen

Safe havens have been firmer today, despite strength in USD, with both gold and the Japanese Yen trading higher against the dollar. Despite the positive expectations around both Brexit and US/China trade negotiations, it seems traders are remaining cautious. XAUUSD trades 1488.20 last, holding at the 1481.93 support for now. USDJPY trades 108.57 last with upside capped by the 108.84 level resistance for now.

Crude Prices Stabilise

Oil prices have had a quieter week so far though are trading in the green today, as of writing. Supportive comments from Trump regarding the likelihood of a deal being done with China is helping to keep oil prices underpinned here. Later today, traders will receive the API crude inventories report ahead of tomorrow’s key EIA release. Crude trades 53.75 last with upside last week capped by the 55 level for now.

USDCAD Rallies

USDCAD has traded in the green so far today. The recent slide in the loonie has seen price falling from recent highs around mid 1.33 to the current 1.3085 level. For now, the recovery remains shallow and focus is on a further slide in the near term.

AUDUSD Holding Above .6850

AUDUSD has been a little lower against USD so far today, trading .6859 last. While above the .6850 level, however, focus remains on further upside in the near term. Towards the end of the week, focus will shift to the scheduled talks between US and Chinese officials with positive headlines likely to keep AUD supported.