12/ 12/ 2019

Dollar loses ground after Fed states Stable Inflation for Hikes, ECB & UK Election takes Center Stage

The euro strengthened against the U.S. dollar on Wednesday, after the Federal Reserve held interest rates steady and Fed Chair Jerome Powell said a significant, persistent inflation rise would be needed to hike rates. Investors also remained on edge as Sunday’s deadline for the next round of U.S. tariffs on Chinese goods looms, and ahead of a European Central Bank (ECB) meeting and the UK election later today.

The pound strengthened against the dollar in very thin trading, shrugging off an opinion poll for Britain’s election that showed the ruling Conservative Party might fail to win a majority. The narrowing of the Conservative’s lead just a day before the vote has cast some doubt on the expectations of a definitive outcome that have boosted sterling in recent weeks. A poll by research company Opinium on Wednesday said the Conservatives’ lead over Labour had narrowed to 12 points - a marginally better forecast than YouGov’s.The probability of a hung parliament is also higher this time round - 29% rather than 14% right before the 2017 election - demonstrating the difficulty of predicting the result.

Looking ahead, on the geopolitical front, the markets are still waiting for some clarity from the U.S and Chinese governments on where things stand. While there has been the talk of the 15th December tariffs being delayed, there has been little else from either side. It may be a case of no news is good news if both sides are close to thrashing out a phase 1 agreement. Later today, there’s also the UK General Election to consider, the outcome of which will influence risk sentiment.

11/ 12/ 2019

Sterling takes a hit on Poll Projections, Dollar Awaits for Fed Decisions

The dollar slipped against the euro on Tuesday after a better-than-expected German economic sentiment survey boosted the common currency, while sterling hit an eight-month high against the greenback ahead of Thursday’s British general election. The euro was 0.28% higher at $1.1093 after the ZEW research institute’s monthly index on economic morale among German investors showed the mood improved far more than forecast in December, with an unexpected rise in October exports boosting hopes for an upturn in Europe’s biggest economy.

Currency market moves yesterday were fairly muted as investors awaited developments from central bank meetings in the United States and Europe and as a Dec. 15 deadline for the next wave of U.S. tariffs on Chinese goods fed caution in global markets. Investors are almost certain the Federal Reserve will leave rates unchanged when its two-day meeting ends on Wednesday, while the European Central Bank is likewise expected to keep interest rates steady on Thursday.

Sterling edged up to a seven-month high against the dollar on Tuesday, cementing recent gains as traders shrugged off weak economic growth data and kept an eye on the final days of campaigning before Britain’s general election.

It could be another testy day ahead for the bulls, with uncertainty over trade and the UK election coinciding with the FED’s final policy decision

10/ 12/ 2019

Dollar Steadies for Sino Vs U.S Trade News Deadline, with UK Politics Remains in Focus

The dollar was little-changed against a basket of currencies yesterday as investors awaited fresh developments in the 17-month-long U.S.-China trade war,while pound crept higher on the latest polls ahead of this week’s British election. Weak Chinese export data dented risk appetite, while a lack of clarity on whether Washington would impose increased U.S. tariffs on Chinese goods on Dec. 15 if the two countries cannot agree a limited trade deal kept investors from placing large directional bets. China’s exports in November shrank for the fourth consecutive month, underscoring persistent pressures on manufacturers from the Sino-U.S. trade war. Top White House economic adviser Larry Kudlow said on last Friday that the Dec. 15 deadline is still in place to impose a new round of U.S. tariffs on Chinese consumer goods, but President Donald Trump likes where trade talks with China are going.

Sterling hit a seven-month high of $1.3180 against the dollar before paring gains to trade up 0.07% at $1.3146 after fresh polls showed British Prime Minister Boris Johnson’s Conservative Party has extended its lead in opinion polls before Thursday’s election.

It could be another day in the red for the majors as sentiment towards trade turns sour. We can expect economic data to take a back seat once more today as the market focus remains on geopolitics.

09/ 12/ 2019

Week Ahead | Dollar Boosted after Strong Job Sector Data, Trade and the UK General Election in Focus

The dollar held firm earlier today after data showed surprise strength in the U.S. jobs market, but the currency was restrained from moving higher by worries about an escalation in the U.S.-China trade war. U.S. nonfarm payrolls increased by 266,000 jobs last month, the biggest gain in 10 months, while the unemployment rate ticked back down to 3.5%, its lowest level in nearly half a century. Those figures suggested the Trump administration’s 17-month trade war with China, which has plunged manufacturing into recession, has not yet spilled over to the broader U.S. economy. Still, investors think that could change if trade tensions escalate further, especially if Trump goes ahead with planned tariffs on some $156 billion worth of products from China from Dec. 15. Top White House economic adviser Larry Kudlow confirmed on Friday that the Dec. 15 deadline to impose the new tariffs remains in place, but added that President Donald Trump likes where trade talks with China are going. Meanwhile, sterling has been bolstered by expectations that Prime Minister Boris Johnson’s Conservative Party will win an outright majority in the upcoming election on Thursday, thereby ending a hung parliament and political paralysis on Brexit.

With stats on the lighter side, we can expect geopolitics to be in focus. Trade and the UK General Election are likely to be the talking points