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By xemarketanalysis June 15, 2018 10:40 am
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    XE Market Analysis: Euro Crashing Down Like Pieces of Jenga

    OVERVIEW

    • DXY Index consolidates near 2018 high.
    • The Euro is recovering after falling in a 200-basis point sinkhole.
    • Canadian Loonie nosedives to its lowest level in 2018 as US tariffs bite.
    • WTI slides again, loses 21 cents, trading near $66.65 barrel.

    HIGHLIGHT

    The Argentine Peso is making a dramatic comeback, up nearly 3.10% against the Greenback this morning. The currency plunged more than 6% yesterday after the surprise resignation of Federico Sturzenegger as the head of the country’s central bank. Caputo, a former FM, takes the helm now. Volatility is not for the faint hearts. Investors seem to respond positively to the latest appointment. But many prefer to adopt a wait and see approach. 

    US DOLLAR

    Trade protectionism continues to dominate the headlines. The US Administration is expected to print the list of made-in-China products hit by a $50 billion tariff bill. Shares in Shanghai Index closed the final session of the week down 0.53%. We are most likely to see retaliatory measures from the Chinese authority over the weekend. Meanwhile, the Euro is recovering timidly after falling through a sinkhole following the ECB meeting. The Bank of Japan, as expected, did nothing this morning, keeping its policy unchanged. Commodity currencies are the worst performers as we move into the North American session. 

    BRITISH POUND

    The Pound is also in recovery mode after falling off steeply following the Euro. GBP/USD fell to a 2-week low due to heavy selloff after investors moved their funds into the Greenback. There is no data out of the UK today and with BOE and Brexit withdrawal bill returning to the House of Lords next week, we expect the Sterling to move with a bearish bias.

    EURO

    EUR/USD is recovering after clocking a 200 basis points slide yesterday. ECB signaled that the interest rate will be stagnant for at least through the summer of 2019 and 2018 GDP forecast was downgraded. The dovish statement pushed the shared currency below the 1.16 levels. Eurozone data released this morning saw a preliminary reading of inflation at 1.9% year-over-year with core inflation at 1.1% year-over-year in May.

    CANADIAN DOLLAR

    The Canadian Dollar fell to its lowest in a year against the USD. Once again, the Loonie is undermined by US tariffs policy, a hawkish Fed and sliding oil prices. Incoming data also failed to provide any support for the currency. Manufacturing sales fell 1.3% in April. Sales were down in 10 of the 21 industries, representing 49.6% of the manufacturing sector. WTI is down 21 cents, to trade near $66.65 a barrel. Investors will have an eye on the US rigs counts data due for release later today. 

    AUSTRALIAN DOLLAR

    Commodity currencies are under pressure this morning. The Aussie is soft, down 0.15% against the Greenback and trading near a 1-month low. Escalating trade tensions between the US and China are putting pressure on the AUD as well. US Administration has approved tariffs on Chinese good worth up to $50 billion.

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