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By xemarketanalysis February 15, 2019 11:56 am
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    XE Market Analysis: The Greenback Roars Back Against Major Peers on Optimism over China-US trade talks

    OVERVIEW

    • The US dollar moves higher on positive trade talks between Beijing and Washington

    • The British pound remains under pressure, trading in negative territory this week as the UK House of Commons continues to find the right BREXIT formula.

    • NYMEX WTI Crude returns to a 12-week high, up 1.95% on the day.

    HIGHLIGHT

    The Sterling continues to be under pressure for the third consecutive week. The GBP/USD has lost nearly 2.20% of it spot value since the beginning of February. Another defeat for the PM May is casting more doubt on a positive outcome for March 29th. Investors are hoping the UK politics and ongoing discussions with EU officials will avoid a no-deal Brexit. 

    US DOLLAR

    The US dollar is set to close the week on a firm note amidst improving market sentiment. The DXY Index is up 0.20% following reports that Sino-US trade talks are progressing smoothly. Global equities have responded positively, and commodity currencies (AUD, NZD and the CAD) are the best performers this morning. Meanwhile, the UK PM May suffered yet another defeat in the House yesterday. She is expected to bounce back, but the shape and form of a Brexit plan (if any) remains very blurry as we approach the divorce date of March 29th. The Sterling has lost nearly 2.2% since the beginning of this month. 

    BRITISH POUND

    The Sterling reacted positively after the latest retail sales numbers beat market expectations. Sales in January rose 1%, erasing the 0.7% decline recorded in the previous month. Shoppers took advantage of discounted prices in January with the year-on-year price falling by 0.9%. We expect effects of the data to be transitory and the focus from the market to return to Westminster. The Government suffered a new defeat in the House of Commons, and at this stage, there is a complete lack of clarity on the shape and or form UK’s exit from the EU.

    EURO

    EUR/USD is trading below the 1.1300 barrier with market participants shying away from the shared currency. The European calendar was quite light and the Italian trade data failed to inspire any action in the market. Political tensions in Spain and soft economic fundamentals out of the euro bloc are expected to weigh on the currency pair.

    CANADIAN DOLLAR

    USD/CAD is trading slightly lower this morning after touching a three- week high yesterday. The Canadian loonie is supported by optimism over global trade talks and firmer trading in the oil futures market. WTI at $55.30 a barrel, is closing on to erase last week’s decline and is currently up by 1.7% on the day. 

    AUSTRALIAN DOLLAR

    The Aussie jumps to a session high towards 0.71 handle on the back of US-China trade optimism. There are hopes that both parties will tackle key issues (intellectual property) and avoid more tariffs. Meanwhile, the borrowing numbers in China beat market estimates- Though this number has to be taken with caution, it does signal that consumers are confident about future outlook and helping collateral currencies such as the AUD and NZD.

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