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By xemarketanalysis August 22, 2019 11:58 am
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    XE Market Analysis: The US Dollar Steadies Ahead of Jackson Hole Party

    OVERVIEW

    • The Dollar Index is flat near a 2019 high, waiting for the big Central Bankers' meeting we've been mentioning over the past few days. 
    • Soft PMI readings send the Euro below the 1.11 handle.
    • WTI Crude oil gained another 1.20% but commodity-currencies remain on the defensive.

    HIGHLIGHT

    The British Pound continues to make a steady recovery against the greenback. GBP/USD is up 0.85% this more driven by the sentiment that a no-deal Brexit could be averted at the last minute. It seems that Boris Johnson administration has a 30-day window to find a solution to the Irish backstop issue. In the absence of local economic data, the market welcomed the news, taking the Sterling to its highest level in three weeks.

    US DOLLAR

    The US Dollar Index is mixed this morning amidst escalating trade tensions, brewing political uncertainties in Italy and a Brexit poised for final-days drama. The antipodean currencies are trading lower vis a vis the greenback, whilst the Japanese yen is oscillating within recent ranges, supported by safe-haven flows. We expect risk-off sentiment to likely to persist over the coming days/sessions. The market will gradually shift its attention to Jackson Hole, Wyoming, where central bankers will gather for their annual conference. Besides a cuppa iced-cider and roasted sweet corn, the hot topics are likely to range from international trade, low growth, anaemic inflation and to the need to be creative with limited monetary tools.

    BRITISH POUND

    The Sterling is enjoying rare gains with the market hoping PM Johnson’s trip will result in an outcome other than no-deal Brexit. The officials have a 30-day window to concoct an alternative to avoid an Irish backstop. With no local data for release today, we expect the GBP to trade with measured optimism.

    EURO

    The move from the 1.12 levels to the lows of 1.11 was rather swift for the EUR/USD. The pair is now trading just under the 1.11 handle following the release of subdued PMI readings. The manufacturing sector continues to suffer and confidence among firms are low resulting in lower job creation. German economy also sent out signals of distress with the growth of service sector dented by falls in goods productions.

    CANADIAN DOLLAR

    AUSTRALIAN DOLLAR

    The Aussie dollar is not having its best day today following a speech from the RBA which left the door open for further interest cuts. AUD USD is now at 0.67929 after hitting a high of 0.67958.

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