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By xemarketanalysis September 14, 2018 11:01 am
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    XE Market Analysis: The Currency Market is in Consolidation Mode

    OVERVIEW

    • Investors stay away amidst uncertainty over global trade issues.
    • No major update on NAFTA as US and Canadian officials are still wrangling over crucial issues in the dairy and media industries.
    • Oil futures are back below $70, and Precious Metals are trading up with Gold futures up around by $1.65 to $1,208.50 per ounce.  

    HIGHLIGHT

    Data out of the US this week has been mostly below analysts’ expectations. While investors hold their breath over significant trade taxes on Chinese imports, there is growing hope that the US and China will avoid a global trade war. The Dollar Index is trading in a consolidation mode after touching a 2018 high in mid-August.  

    US Exchange Rate

    US DOLLAR

    The currency market is looking for clear direction as we hit the end of the week. Investors prefer to shy away from taking a definitive call amidst continued uncertainty about global trade relations. US retail sales, released this morning, barely rose in August, ticking up 0.1% to record the smallest increase in six months. Major G-10 currencies are expected to continue to trade in consolidation mode. The focus will now turn to US sentiment data for more trading impetus.

    BRITISH POUND

    Sterling is on course to close near a six-week high with the BoE sounding more hawkish than expected yesterday. The MPC held rates unchanged amidst ongoing Brexit talks. The EU and the UK are hoping to have a deal in place by November. However, we expect the currency to trade cautiously for the foreseeable future. 

    EURO

    The EUR/USD pair failed to maintain its momentum above the 1.17 levels and is now trading with a negative tone. Investors prefer to adopt a wait-and-see approach in the absence of significant data releases. Brexit. NAFTA and turmoil in EM are weighing on the shared currency and future economic outlook. 

    CANADIAN DOLLAR

    USD/CAD is trading in the psychologically important 1.30 range, after bouncing off from a 10-day low. Market participants continue to monitor the ongoing NAFTA negotiations. The Canadian PM is in no rush to sign a deal that isn't in Canada's best interest. He is expected to face stiff opposition in Parliament if an agreement is struck that does not meet the approval of dairy producers.

    AUSTRALIAN DOLLAR

    The Aussie is on track to end the week on a positive note. It bounced from 2018 lows near 0.7085 against the USD. Better-than-expected employment numbers and expectations that the US and China will be sitting around the table to talk trade helped the currency to bounce back. We expect the pair to hold and consolidate around in this range. 

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