USD Muted Following NFP

USD Soft Following NFP

The US dollar has started the week on a soft note with the dollar index trading 98.58 last, reversing from earlier highs on the session.

USD has been following a string of poor data sets recently. On Friday, the headline NFP figure came in at just 136k, narrowly beating the 130k forecasts.

The results reflected a sluggish month for the US economy which also saw softer-than-expected manufacturing and non-manufacturing readings for September.

Euro Lower

EURUSD has been a little lower today, despite the weakness in USD as concerns for the state of the eurozone economy keep the outlook bearish.

Data sets have continued to trend lower over the last month meaning that the ECB might not yet be done with easing.

EURUSD trades 1.0937 last. In the absence of any key domestic data this week, EUR flows likely to be tied to trade war and Brexit headlines.

GBP Consolidates Further

GBPUSD price action has become very congested over recent days as traders wait for news on the UK Brexit negotiations.

The UK is expected to receive a decision from the EU this week regarding the new proposals submitted by the UK PM last week.

The UK currently has until October 19^th to reach a deal or the PM is required to request an extension to Article 50. GBPUSD trades 1.2306 last.

Waiting on Trade War Updates

Risk assets have had a soft start to the week as uncertainty ahead of the next round of US-China trade talks due this week is keeping traders sidelined for now.

While Trump has sounded optimistic over the prospect of a deal, the market remains hesitant. SPX500 trades 2940.18 last with price sitting back above the 2932 level.

Slow Start for Safe Havens

Safe havens have seen a subdued session so far with gold a little weaker against USD while JPY has been a little firmer.

The US-China trade talks present two-way risk for safe havens which will likely be lower on good news though could see strengthening if talks fail, driving safe-haven inflows.

XAUUSD trades 1501.36 last with price in the middle of the 1481.93 – 1522.75 levels. USDJPY trades 106.86 last, with price still sitting above the 106.75 level for now.

Crude Recovers

Oil prices have seen better buying over the European morning on Monday.

Cautious optimism ahead of US-China trade talks is helping keep oil supported. However, the backdrop remains bearish for crude. The EIA last week reported a further build in US crude stores, highlighting the ongoing demand issue facing oil.

Crude trades 53.09 last with price having bounced off the 50.93 level support.

CAD Higher on Oil

USDCAD has been sold across the European session so far today.

A weaker US dollar along with resurgent oil prices is helping lift CAD. Given how weighted the Canadian economy is to commodity prices, any positive developments with US-China trade talks this week should provide a further lift

Aussie Down

AUDUSD has started the week on an offered tone as expectations of further RBA rate cuts keep the outlook bearish for the Aussie.

If the US and China can agree on a short term deal this week, this could help buffer AUD. However, if talks fail, AUD is likely to take the brunt of the FX reaction. AUDUSD trades .6735 last.