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By xemarketanalysis April 8, 2019 11:16 am
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    XE Market Analysis: The Currency Market Keeps Calm Ahead of Key Event Risks

    The OVERVIEW

    • The US dollar is trading with a weaker tone across the board, with DXY down 0.35%
    • GBP/USD is waiting near a three-day low with market waiting for a reply letter from the EU 
    • WTI crude oil climbed to a new 2019 high amidst growing tension in Libya. 

    HIGHLIGHT

    The British Pound is trading cautiously, near a three-day low. The market is hoping for a quick resolution to the Brexit impasse and is waiting to hear from the EU on the request from the British PM. Theresa May still believes that she can work across party lines and generate support for a new exit plan. 

    US DOLLAR

    It's a relatively quiet start to the week as the market looking for clear directions ahead of key events and brewing geopolitical risk. The ECB will meet mid-week, and investors will sift for finer details out of the FOMC March minutes. We expect the usual dose of uncertainty from Brexit developments, huge OPEC meeting and close the week with Treasury Currency Report to will reveal which country is manipulating its currency the most. Commodity currencies are trading higher, following the performance of WTI Crude oil which is trading a new 2019 high. Tensions in oil-rich Libya are adding to concerns of tighter oil supplies. Gold has also climbed above $1300, up nearly 1% on the day and the ongoing uncertainty could spread fear of currency contagion in the EM markets. 

    BRITISH POUND

    GBP/USD is trading cautiously this morning, after shedding 1.6% on the spot market last week. PM May requested an extension to Article 50 until the end of June which the EU has yet to respond. At this time of writing, the UK is stuck with two choices: Leave the EU with a deal which has yet to be agreed on, or to shelve the idea of leaving altogether. 

    EURO

    EUR/USD is extending its gains in a “buy on the rumour, sell the fact” move ahead of the ECB meeting. The Governing Council is not expected to divert from its recent economic assessment for the Eurozone. Fundamentals remain weak, and the Sentix survey did little to allay fears of an economic slowdown. The index rose to -0.3, its highest point since November 2018. We remain cautious on the Euro despite a strong start today.   

    CANADIAN DOLLAR

    The Canadian dollar is trading in a narrow range versus its US counterpart. The latest housing data revealed housing starts continue their southbound trajectory: Building permits dropped 5.7% in February from the previous month.  Higher mortgage rates and uncertain economic outlook are the main drivers behind softer demand. USD/CAD is expected to oscillate around current ranges as the market ponders on the next directional move. 

    AUSTRALIAN DOLLAR

    Quiet so far on the AUD front so far today, however, AUD GBP is on the climb, and currently sits at 0.54584, up from 0.54262.

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