The Greenback trades flat, abandoning its “safe haven” status
Friday 17 May, 2019
Daily Currency UpdateUSD - United States DollarA set of strong data (decrease in jobless claims, stronger Philly Fed numbers, and robust housing start numbers) were the reason behind higher equities and the higher US dollar yesterday, but was it the tipping point for a stronger dollar? In overnight news, Chinese state media warned that the country has no interest in resuming trade talks with the US as long as the US continues to threaten more tariffs. This comes after Commerce Secretary Wilbur Ross told Bloomberg TV that new restriction against Huawei would limit its access to US suppliers. China sees little "sincerity" in President Trump's recent approach. The next opportunity for both sides to meet and try to arrange an agreement would be in the G20 summit in June. The US dollar was trading flat and the US equity market was falling. However, the US dollar is picking up some momentum to the upside, rising 0.10 percent after an increase in the University of Michigan's consumer sentiment, which came in at 102.4 versus a forecast of 97.8 and the previous read of 97.2, the highest level in 15 years. However, the optimistic consumer outlook was mostly recorded before US-China trade deliberations soured earlier this month.
Key MoversThe Chinese Yuan tumbled as tensions between the world's two biggest economies escalated after the Huawei action. The USD/CNH pair touched 6.9490, the highest level since November 2018 in the European session. Other than the inflammatory trade-war headlines, the tiresome issue of Brexit looks set to raise its head again. UK PM Theresa May met with the Tory back bench 1922 Committee yesterday and agreed to set out a timetable for her departure once legislation for her planned withdrawal agreement has been voted on in parliament next month. It seems the ever-resilient May has finally bowed to internal pressure within her party. With May set to leave whether her plan gets through or not, it looks like the Sterling will be depressed by uncertainty over her successor with no candidate having a clear lead in polls. Boris Johnson has already stated he will be standing for the post with other candidates likely to include Home Secretary Sajid Javid, Environment Secretary Michael Gove, and former Brexit Secretary Dominic Raab, all likely to throw their hats in the ring. The GBP/USD just tested a strong support level at 1.2750, which coincides with the rate traded in the first week of January. At the time of this writing, the Cable is trading at 1.2757.
- USD/CAD: 1.3466 - 1.3543 ▲
- EUR/USD: 1.1118 - 1.1176 ▼
- GBP/USD: 1.2680 - 1.2794 ▼
- AUD/USD: 0.6853 - 0.6916 ▼
- NZD/USD: 0.6515 - 0.6546 ▼