30/ 05/ 2019

Dollar on Positive Streak on Fears of Escalation between US-China

The dollar held up against its key rivals yesterday after fears of an escalation in the Sino-U.S. trade standoff forced investors to take shelter in safe-haven assets, including government bonds. As the dispute between the world’s two biggest economies showed no signs of abating, worries that global growth will be hurt have rippled through financial markets in recent sessions, with riskier assets in particular taking the brunt of selling.

The European Commission wrote on Wednesday to the Italian government asking it to explain a deterioration in the country’s public finances, a move that sets the stage for a possible legal clash with the Eurosceptic coalition in Rome.

Investor focus is now on U.S. data for an indication about the state of the world’s top economy, with market participants awaiting the second estimate of first-quarter gross domestic product growth figures and U.S. weekly jobless claims. 

29/ 05/ 2019

Trade War Developments Boost the Dollar Against its Rivals

Fears of a further escalation in the Sino-U.S. trade dispute kept the dollar steady on Tuesday, holding gains made overnight after investors scooped up safe-haven assets, including U.S. Treasuries. The People’s Daily newspaper, owned by China’s ruling Communist Party, warned that Beijing was ready to use rare earths for leverage in its trade war with the United States, saying in an extremely strongly worded commentary “don’t say we didn’t warn you”

Losses in the euro in the previous session also helped support the dollar, as analysts warned of more risks for the single currency on uncertainty surrounding the euro zone economy and the bloc’s political future. Italian Deputy Prime Minister Matteo Salvini, whose far-right League triumphed in European elections on Sunday, said the European Commission could fine Italy 3 billion euros for breaking EU debt and deficit rules, a comment that weighed on the single currency.

Today’s focus will be around towards the far east of Bank of Japan Governor’s speech & Euro Unemployment Rate.

28/ 05/ 2019

Dollar toughened while EU takes action against Italy

The dollar rose against its major peers on Monday late session as investor’s awaited new trading catalysts after the European Union parliamentary elections showed a polarization of the 28-member block. The euro struggled following remarks by two officials from the currency bloc that the European Commission is likely to start disciplinary steps against Italy on June 5 over the country’s rising debt and structural deficit levels, which break European Union rules. Pro-European parties retained a firm grip on the EU parliament, provisional results from the bloc’s elections showed yesterday, though eurosceptic opponents saw strong gains.

Trump also commented that Japan and US are working very hard to find a suitable line of trade beneficial for both countries on his summit to Japan.

Main focus of the day will be around GBP Inflationary Figures, Euro Zone Business Climate & further geo-political news from Japan and Trump.

26/ 05/ 2019

Week Ahead | Trade Tension will Retain the Spotlight

The euro strengthened against the U.S. dollar on Friday, as weak U.S. manufacturing activity data sparked worries the trade conflict with China may hurt the world's largest economy. The weaker-than-expected data, a closely watched proxy for business spending plans, drove the dollar lower and added to a fall which began Thursday following a report that showed manufacturing activity hit its lowest level in almost a decade in May.

The reports suggested a sharp slowdown in U.S. economic growth is under way, which could affect the dollar's safe-haven status. The pound rose against dollar on Friday, after British Prime Minister Theresa May set out a departure date after failing to push through a Brexit divorce deal.

Trading was volatile as concerns rose that she is likely to be succeeded by a Eurosceptic leader, potentially increasing the chances of a 'no-deal' Brexit. The process to elect a new party leader will begin next month - markets are concerned that a tougher stance with the European Union might prompt investors to turn more negative on the outlook for the pound in the coming months.

These upcoming days the macroeconomic calendar will be quite light, as the most relevant release will be revisions of data already released. Central banks had nothing to say and would likely stay below the radar these upcoming days, but trade tensions will retain the spotlight. Risk sentiment will keep leaning the scale in dollar's favor.