We're happy to introduce the new Daily Commentary. A streamlined format highlighting the latest home currency updates, and the key movers affecting markets today. We hope you like it.
USD - United States Dollar
The Greenback continues trading on its back-foot, falling -0.17 this morning after it fell 0.36 percent yesterday. While the timing of the US-China trade deal is confusing, the threat of new US tariffs on European goods from President Trump hurt risk appetite overnight. The US is once again testing its friendship with the European Union by suggesting new tariffs on imports from the EU in response to the bloc’s subsidies of Airbus. In answer to that, the EU is preparing retaliatory tariffs against US Boeing subsidies. The interesting thing though is that the US dollar is not acting as a safe-haven this morning, and neither is the global equity market selling off decisively.
Fed officials reiterated their patience in the hiking cycle yesterday. President Williams repeated his speech from March 6th, where he argued that policy is in the right place because the economy continues to run close to the Fed's dual mandate. The next upcoming events are Fed official Clarida speaking in Minneapolis and the Fed minutes from the March meeting tomorrow. Most importantly, CPI numbers will be released tomorrow, which could be impacted following the increase of crude oil prices.
The US dollar might continue weaker until tomorrow as market participants await the much-anticipated FOMC meeting minutes.
The EUR/USD is increasing 0.16 percent this morning after yesterday’s headlines. According to Bloomberg, the ECB committees are not discussing ahead of Wednesday’s meeting. The European Central Bank Rate Decision is tomorrow and some are not happy with Draghi’s comment on negative rates, as it could send a message that rates could stay low for much longer or even signal a cut. The ECB officials are not in a hurry to renovate their negative interest-rate policy, despite Mario Draghi’s suggestion to look into the matter.
The GBP/USD bounced overnight although there has been little by way of recent Brexit headlines. May is due to meet both the French and German leaders today in an attempt to get them both onside before all EU 27 vote tomorrow on the PM's request to delay Brexit to June 30th. Meanwhile, a bill was passed in Parliament yesterday evening, which means the PM is forced to request an extension should there be no agreement on a deal. However, it's already happening, and so the reaction in markets to the bill passing was muted.
1.1253 - 1.1301 ▲GBP/USD:
1.2975 - 1.3151 ▼USD/CAD:
1.3284 - 1.3340 ▲AUD/USD:
0.7110 - 0.7160 ▲NZD/USD:
0.6725 - 0.6806 ▲