USD Strengthens Despite FOMC Vowing to Hold Rates
The US dollar has strengthened over the European morning on Thursday, extending gains in the wake of yesterday’s FOMC meeting minutes. The gains have come despite the minutes revealing that the Fed is not looking to raise rates anytime soon with some members judging:
“In light of recent, softer inflation readings, some viewed the downside risks to inflation as having increased”.
USD index has broken to fresh 2019 highs today, trading 98.11 last as safe haven flows favour USD, with equities sliding.
EUR Weaker Following Soft Data
EURUSD has been weighed upon by the resurgent USD. The pair broke down below the 1.1135 support level this morning. Weaker than expected eurozone PMI data sets this morning have once again brought eurozone economic concerns to the forefront. And the release of the ECB meeting minutes today is likely to further this issue
Pound Down on Politics
GBPUSD is heavily lower today as political turmoil keeps sentiment pressured. Theresa May’s Conservative party are widely expected to lose in the MEP elections today, allowing Nigel Farage’s Brexitparty to take seats in Europe. This could devastate the current leadership. GBPUSD has broken below the 1.2670 level again today, continuing its run lower.
Risk Sentiment Weakening Again
Risk sentiment has weakened into the penultimate trading day of the week. This has led the SPX500 sharply below the 2856.30 level to trade 2827.68 last. Rising tensions in the Middle East along with the heightened trade war concerns are weighing on risk appetite once again.
String Safe Have Inflows Seen
Safe havens have been strongly higher this morning, benefitting from the risk off tone. Both gold and JPY are higher against the US dollar. USDJPY is trading 110.01 last, with price turning back down towards the 109.70 level broken last week.
Looking ahead today, we have JPY CPI due over the Asian session. Expectations are for this to have increased to 0.9% in April from 0.5% prior. Meanwhile, XAUUSD, at 1276.41 last, is doing its best to try and get back up to the 1280.58 level which has been a key price for the gold market this year.
Further Inventories Build Caps Crude
Crude oil has been heavily lower again today as the market digests news of yet another build in US crude stores. The latest EIA report showed a further rise in US oil stores last week, along with increased US crude production. Along with concerns over the intensifying US/China trade war, crude has been weighed down, despite supply disruption fears linked to tensions in the Middle East. Crude trades 60.39 last as price challenges the 60.41 support level.
Commodity Currencies Crushed
The breakdown in oil prices, along with the resurgent US dollar, have fuelled a sharp reversal in USDCAD over the last 24 hours. USDCAD has rocketed from lows of mid 1.33 to trade 1.3475 last, breaking back above the key 1.3469 level. Little on the domestic data front today will keep CAD driven by USD and oil flows.
AUDUSD has been net sold over the European morning again on Thursday with price now sitting on the .6864 low, which continues to be under threat. Rising trade war concerns, tumbling oil and a stronger USD don’t make for a very good outlook in AUDUSD over coming sessions.