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By xemarketanalysis June 27, 2019 10:31 am
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    XE Market Analysis: Canadian Loonie Flexes Muscles Despite Beef with China

    OVERVIEW

    • The US dollar made a comeback over reports that trade talks between Washington and Beijing are back on track.

    • The Canadian dollar is ignoring a ban on its meat products by China and is trading firm against the USD on strong oil prices.

    • Safe-haven currencies and gold prices are retracting ahead of the G20 summit.

    HIGHLIGHT

    US DOLLAR

    The DXY Index is consolidating near a four-day high as the greenback continues to firm up against low-yielding defensive currencies. Market sentiment is cautiously switching to risk-on on the back of reports that the US and China are close to announcing trade talks are back on track. We're optimistically looking forward to seeing that. 

    Today, the GDP report card was released by the Bureau of Economic Analysis and showed the economy expanded by 3.1% in Q1 of this year, matching the market consensus. The readings, though advise caution with personal consumption expenditure (PCE) revised lower. The currency market is expected to consolidate around current levels with the G20 meeting as the centre of attraction.

    BRITISH POUND

    The Sterling is looking for clear direction, trading slightly north of the 1.27 handle. UK and Brexit headlines and noises continue to drive sentiment though the market remains cautious ahead of month end closing. GBP/USD remains vulnerable to a no-deal scenario.

    EURO

    EUR/USD moves into consolidation zone, oscillating around the mid-point of 1.13. The Economic Sentiment Indicator (ESI) released by ECB revealed no new surprise: Sentiment in the euro area remains low with a gloomy economic outlook. The index dropped from 105.2 to 103.3 this month. Exports are pointing lower; manufacturing sector growth remains in the red and service sector is seeing lower demand. In the absence of any major data release today, we are likely to see the pair in range-bound trading.

     

    CANADIAN DOLLAR

    The Canadian dollar continues to trade with a bullish tone, fetching 76 cents US this morning. The pair is now consolidating around a 4-month low with crude oil prices trading not far off the five-week high. Rising oil prices have been the main driver for commodity currencies despite trade spat with China. We expect the pair to stick to current themes ahead of the G20 summit.

    AUSTRALIAN DOLLAR

    Hold on to your hats, currency fans. AUD USD is currently so close to the symbolic 0.70 that currency traders are toasting each passing pip. It currently sits at 0.69557. You go, AUD!

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