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USD hits fresh highs across most G10 currencies

By OFX

The Greenback continues to trend higher from last week after Trump announced he would double tariffs on steel and aluminium from Turkey and after investors flee to safe haven currencies like the USD. The USD has made new 52-week highs across most G10 currencies as a result. No release of economic fundamentals today in the US, but the next major data set will be on Wednesday when Retail Sales m/m and Core Retail Sales m/m print.

The Loonie is essentially unchanged from Friday's close. Strong job numbers reported on Friday, but it seems current market uncertainty has kept the CAD on a leash. On the NAFTA negotiation front, Trump continues to threaten Canada with automobile tariffs after he tweeted late Friday evening, "...New President of Mexico has been an absolute gentleman. Canada must wait. Their Tariffs and Trade Barriers are far too high. Will tax cars if we can’t make a deal!" The next set of economic data will release on Thursday as Manufacturing Sales m/m and on Friday with CPI m/m.

The EUR remains soft to start the week after EUR/USD tested a new low. There are no major data releases in the Eurozone today, so focus is on the situation in Turkey. Italian domestic fiscal policy remains a concern amid the resent weakening in BTPs. An Italian official told the press that breaking the EU’s 3% deficit GDP rule was not “taboo”.

The GBP is finally finding some support this morning after Fridays fall on the back of the erupting crisis in Turkey that saw investors dump the Lira and shun risk assets. Throughout the Asian session investors again sold off the Lira and sought out the usual safe havens of the yen, swissy and gold. No major event risk today, but the action starts tomorrow when employment data release tomorrow followed by inflation numbers on Wednesday.

The Australian dollar fell through key technical supports on Friday, breaking 12-month lows and crashing through 0.73 US cents. The AUD tumbled lower following the collapse of the Turkish Lira that prompted a broad-based flight to safety. Turkey’s deteriorating macroeconomic position escalated into an all-out currency crisis as the embattled unit plunged as much as 24%. The contagion spread to other emerging market counterparts, hampered the Euro for fears of exposure to Turkish banks and hammered demand for risk forcing a sell off in commodity led currencies and a push for haven plays and the USD.

The break below 0.7330/0.73 is significant. After a period of consolidation, the AUD appeared well bid on moves toward 12-month lows, comfortable amid ranges between 0.7300 and 0.7480, however the latest hit to risk appetite has opened the door to another downward correction and suggest there is still legs in the USD yet. Having touched 0.7270 a break toward 0.7230 and 0.7170 is open as attentions remain squarely focused on global risk appetite and trade tensions for direction into the week ahead.

The New Zealand Dollar had a week to forget last week as it tumbled 2.3% for the week. Opening this morning at 0.6594, the Kiwi finds itself in negative territory as risk-sentiment fled the market. Unsupported at home as well as abroad, the NZD looks to tread water ahead of a quiet week on the domestic calendar.

Fortunes turned sour early last week for the Kiwi with the RBNZ’s Governor John McDermott commenting that any rate rises “were off the table for the foreseeable future”. This had an almost immediate effect on the New Zealand Dollar, which tumbled significantly. NZD/USD remains close to a two year low around the .6585 level at present.