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US Dollar Index maintains levels as trade negotiations continue

USD - United States Dollar

There were further escalations in the US-China trade war overnight, as President Trump claimed that China ‘broke the deal’ between the two economic heavyweights. He went on to state China ‘will be paying for it’ when addressing the public at his campaign rally. It's looking more and more likely that Trump will impose increased tariffs on Chinese exports into the US. These tariffs are expected to be implemented as early as Friday, May 10th at 12:01 am according to officials in Washington. This announcement left the US Dollar negatively impacted for a brief period, however like in recent months, the US Dollar has remained resilient in the face of adversity. It has slightly bounced back against the majority of majors, despite the initial shock. The DXY traded in a tight 20-point range, weakening by a meager 0.08%, and sits at 97.33 this morning. In contrast, this news was very much Yen positive, and for the first time in over a month, USD/JPY fell above the psychological 110 level. Expect both USD and Yen volatility over the coming days as the 11th round of bilateral trade talks continues.

Key Movers

Brexit woes continue. Morrison supermarkets is the latest large corporate to post negative growth figures, after political and negative uncertainty weighed on its Q1 growth. Britain’s fourth-largest supermarket group has warned that these challenges may continue into the next three months. The group posted growth figures 0.2% lower than forecasted and 1.3% lower than the previous quarter. As Brexit negotiations continue, expect UK businesses to feel the effects of reduced consumer and investor confidence as fear of the unknown continues to weigh on the British economy. Investors look ahead to Friday for UK manufacturing data, and the release of preliminary q/q GDP data.

Expected Ranges

EUR/USD: 1.1173 - 1.1250 ▲

GBP/USD: 1.2967 - 1.3025 ▲

USD/CAD: 1.3467 - 1.3504 ▲

AUD/USD: 0.9384 - 0.9421 ▼

NZD/USD: 0.6569 - 0.6590 ▼