Celebrating 10 Years of Trusted News Discovery
One News Page
> >

Forex today sent dollar higher as markets turn risk off fearing Trump/Xi trade risks Wednesday, 5 December 2018
· *Forex today was risk-off following the market's interpretation over the US-China agreement at the G20 whereby the ambiguous detail of the deal left a trade war still very much on the table.*

European markets were also soft but the mood really soured in the NY morning as President Trump’s many tweets included reaffirmation of his underlying preference for trade tariffs: “President Xi and I want this deal to happen, and it probably will. But if not remember...I am a Tariff Man. China also vowed serious punishments for IP breaches overnight

When Wall Street came online, things really turned sour and the Dow fell by as much as 800 points. The greenback started to pick up the bid again and everything else was history. The currency board turned red and profit-taking left EM-FX out to dry along with the high beats such as the antipodeans. 
At the same time, US 10yr treasury yields extended a month-old decline, from 2.97% to 2.88% - which was the lowest since early September – then pushed back to 2.92%. 

The Fed is increasingly concerned by the crashing yield curve. Even Williams (hawk, voter) also sees risks on the horizon as the 2yr-5yr curve inverts signalling economic weakness. The 2yr yields were choppy but net only 1bp over the day at 2.81%. The Fed fund futures now price in a slightly lower chance of a 19 December rate hike and the market is starting to believe that the Fed they won’t achieve their objective on rates, (futures see peak Fed Funds around 2.75% vs current dot plot at 3.375%), nor their economic aspirations which leaves the greenback  vulnerable from heavy long positioning.

*Currency action*

EUR/USD climbed to 1.1419 but then fell in NY to 1.1340 as the dollar picked up a bid and also in sympathy with GBP. The single unit is under pressure also due to the news flow over the Paris protests that have forced Macron to cave in on fuel tax ahead of the European Parliament votes next spring. EUR/USD now trades back below the 10 & 21-DMAs, with eyes on a test of the 1.1305/20 support zone.

GBP/USD rose to 1.2840 then slid back to 1.271, breaking new ground after May loses unprecedented parliamentary contempt vote and is now being held in contempt for refusing to provide the full legal advice it received on the Brexit deal it negotiated with the European Union. Comprehensive legal advice from the attorney general on Brexit treaty will be released while the opposition claims earlier summary had attempted to obscure controversial details. The 2018 low is in reach at 1.2696.

USD/JPY dropped about 1 yen to 112.60 in NY on the back of risk-off flows, and a sell-off on Wall Street with the pair now burdened on trade doubts that could well provoke a short yen squeeze if derisking intensifies. The 200-DMA at 110.50 could be targeted if yields continue to fall and calls for a US recession echo for much longer.  The USD/CNH extended its  decline to just under 6.83 before steadying around -0.5% on the day, at 6.8450 while AUD/USD initially popped up to 0.7394 but risk aversion kicked in and took the pair lower to 0.7330-40 with a slide in global bond yields, equities and commodities souring risk sentiment of which the Aussie trades as a proxy and AUD/JPY fell to near 82.60.

*Key notes from overnight*

· *Wall Street was a sea of red as investors square up ambiguous ceasefire deal to mourn President George Bush*

*Key events in Asia*

Analysts at Westpac noted the key events coming up in Asia as follows...

"Australia’s Q3 GDP data is due at 11:30am Syd/8:30am Sing/HK. Following the firm net exports and public demand data yesterday, we look for growth of 0.6%qtr, with risks evenly balanced (consensus is also 0.6%). Annual growth is forecast at 3.3%, little changed from 3.4% in Q2. The arithmetic of our Q3 GDP forecast is: domestic demand +0.5%; inventories -0.3ppts; and net exports +0.4pts. Key uncertainties: the consumer and the drought – with a lack of partial data around consumer spending on services and on farm inventories. The drought in NSW and surrounding areas is likely to have its biggest impact in Q4 and Q1, but there is a risk of an inventory drag in Q3."
Credit: Wochit - Published < > Embed
News video: World Shares Skyrocket After Trade News

▶ World Shares Skyrocket After Trade News 00:48

SYDNEY/TOKYO (Reuters) - Asian shares rallied on Monday after U.S. and Chinese leaders brokered a truce in their trade conflict, a relief for the global economic outlook and a tonic for emerging markets and battered oil prices. Market prices are reflected in a glass window at the Tokyo Stock Exchange...

You Might Like

Recent related videos from verified sources

The Economy Is Shifting Towards a 'Manufacturing-Driven Economy;' NYSE Trader [Video]The Economy Is Shifting Towards a 'Manufacturing-Driven Economy;' NYSE Trader

Tim Anderson, managing director at TJM Investments, talked to TheStreet about the impact of positive headlines on U.S.-China trade talks, and what he's seeing in the markets Friday, March 15. "I think..

Credit: The Street     Duration: 07:22Published

Unusual Investor Behavior in Stocks, Caesar's Entertainment's Board -- ICYMI [Video]Unusual Investor Behavior in Stocks, Caesar's Entertainment's Board -- ICYMI

Aside from Lyft's filling to go public, it was a pretty quiet Friday. But we still have info to share. Unusual Behavior Usually, when there's 'risk-on' sentiment, cyclical sectors of the economy like..

Credit: The Street     Duration: 01:39Published

Dollar rises, 'Trumpflation' trade | Market Minute [Video]Dollar rises, 'Trumpflation' trade | Market Minute

The FT's Katie Martin highlights the key stories to watch for in the markets on Thursday, including the strengthening dollar and the 'Trumpflation' trade driving heavy momentum against US government..

Credit: Financial Times     Duration: 01:10Published

Stocks Willing To Take Risks [Video]Stocks Willing To Take Risks

LONDON (Reuters) - World shares and bond yields rode a renewed surge in risk appetite on Tuesday as investors turned optimistic about U.S.-China trade talks and cheered Washington’s deal to avoid..

Credit: Wochit Business     Duration: 00:45Published

Recent related news from verified sources

Forex today: Dollar eases back, CAD/WTI slide and sterling rides Brexit deal optimism

· *Forex today was seeing further bleeding in the DXY that dropped from 96.70 to a low of 96.49 into the close. * · *Eyes are set on the FOMC next week,...

Markets: German IFO and NZ trade balance in focus – TDS

Analysts at TD Securities are seeing downside risks to the March German IFO, which is scheduled to release later on today and suggests that the NZ trade balance...

Other recent news in Markets

GBP/JPY: Traders weigh MUELLER report, Brexit around 145.50IFO’s Wohlrabe: Brexit is a burden on GERMANY's industrial sector
German Ifo BUSINESS climate index rises to 99.6 in March, a big beatWhy Freedom Foods, St Barbara, Virgin Australia, & Wattle HEALTH shares surged higher
Environmentally friendly: One News Page is hosted on servers powered solely by renewable energy
© 2019 One News Page Ltd. All Rights Reserved.
About us  |  Contact us  |  Disclaimer  |  Press Room  |  Terms & Conditions  |  Content Accreditation
 RSS  |  News for my Website  |  Free news search widget  |  In the News  |  DMCA / Content Removal  |  Privacy & Data Protection Policy
How are we doing? FeedbackSend us your feedback  |   LIKE us on Facebook   FOLLOW us on Twitter  •  FOLLOW us on Pinterest
One News® is a registered trademark of One News Page Ltd.