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By xemarketanalysis June 12, 2018 11:04 am
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    XE Market Analysis: Trumps Meets NK On the Block

    OVERVIEW

    • DXY Index flat after handshake effect fades away but JPY drops to a 3-week low.
    • Investors nervous as Brexit bill goes to House of Commons.
    • More tweets augur badly for an under-pressure Canadian Loonie.
    • WTI loses 13 cents, moving under $66.00 a barrel.

    HIGHLIGHT

    The Mexican Peso is searching for new bottoms after dropping nearly 3.3% so far this month. Investors are nervous and moving out of the currency due to trade tensions and political instability. MXN traded near a 16-month low last week. The presidential election is on July 1st and we should expect more volatility as we move closer to the event. 

    US DOLLAR

    The US Dollar is trading flat against the basket of major currencies this morning. The handshake impact between Trump and Kim seems to fade away as investors were left with little information to chew on. US inflation data came in line with expectations. CPI increased 0.2% in May, matching the number from the previous month. Over the past 12 months, the all items index rose 2.87%. The Fed starts its two-day meeting with a 25-basis rate hike on the cards tomorrow. The Canadian Loonie remains under pressure after Trump’s twitter feed went active again.

    BRITISH POUND

    The Brexit is turning out to be the perfect plot for a Shakespearean play. UK Justice Minister has resigned this morning as the UK House of Commons is set to vote on the Brexit bill. The Pound is trading with a negative bias for the third session in a row. Investors are on their toes, as the vote is seen as a test of confidence for PM May. GBP/USD is now 0.15% despite better than expected job data released earlier today. The unemployment rate was at 4.2%, down from 4.6% for a year earlier and joint lowest since 1975.

    EURO

    The Euro has retreated below the 1.18 level after the German ZEW Economic Sentiment dropped to its lowest level since September 2012. The index recorded a decrease of 7.9 points in June to now stand at minus 16.1 points. Trade disputes with the US and fears of the new Italian government working on a destabilizing policy were the main contributors to the poor readings. The economic outlook for the next 6 months has worsened.

    CANADIAN DOLLAR

    The Canadian Dollar continues to trade nervously as auto tariff threats linger on. The US-Canada relationship took a sour turn after the G7 meeting. There are now concerns that the US Administration will follow through with heavier trade protectionism measures against its neighbor. With no data for release in Canada, we expect the currency pair to trade higher with the high of June 5th on sight. 

    AUSTRALIAN DOLLAR

    The Aussie is trading under severe pressure this morning down 0.5% against the USD. This is mainly due to disappointing current account data and cautious comments from the RBA. In its latest RBA monetary policy update, the Central Bank showed concerns on wage growth, household debt, and international trade policy. 

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