Is a United States and China Trade Agreement Imminent?
Thursday 27 June, 2019
Daily Currency UpdateUSD - United States DollarCommodity-based currencies continue to run higher following news overnight that a trade agreement is imminent between the United States and China. Starting the trading day in North America, the Aussie dollar reaches 0.6998 against the US dollar, while the Canadian dollar trades against the greenback at 1.3106 it strongest level since the end of January this year. The currency markets were buzzing in anticipation of further news in a US-China trade deal. With the G20 summit in Japan set to start tomorrow, investors took solace in comments from US Treasury Secretary Steven Mnuchin yesterday when he said that a US-China trade deal is 90% complete. While we have heard this rhetoric before from both sides, investors still see this as a cue, and the USD rallied with USD/JPY picking up ground. There was a general increase in appetite for risk yesterday, and on the currency markets this saw the New Zealand dollar benefit the most. Despite the new dovish rhetoric from the RBNZ the Kiwi is still surging. Indeed NZD/JPY, which is an indicator of risk appetite, is at 3-week highs.
Key MoversMarkets slashed bets on the Federal Reserve making multiple rate cuts this year driving the US Dollar higher against the Japanese Yen overnight. President Donald Trump’s position of unnecessarily high-interest rates at present was starkly juxtaposed with the Federal Reserve as the President has commented on many occasions that rates should be much lower. Market participants scaled back expectations of multiple cuts overnight though as St Louis Fed President James Bullard who is widely considered a dovish banker commented that a half-percentage point drop in July’s meeting would be overdone.The USD/JPY reached 107.85 overnight as core durable goods orders for the month of May were positive following a poor reading in last month. The news supported initial movements higher for the US Dollar index which finished square for the day at 96.15. The G20 summit in Osaka, Japan will be a major focus heading into the weekend as the major leaders from around the globe expect trade agreements and tensions in the middle east to be a focal point of discussion.
- EUR/USD: 1.1347 - 1.1382 ▲
- GBP/USD: 1.2663 - 1.2725 ▼
- USD/CAD: 1.3106 - 1.3138 ▼
- AUD/USD: 0.6982 - 0.7007 ▲
- NZD/USD: 0.6670 - 0.6702 ▲