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By xemarketanalysis September 11, 2018 11:00 am
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    XE Marketing Analysis: Sterling is Losing the Crown as Brexit Deal Euphoria Fades Away

    OVERVIEW

    • Global trade tensions keep currency moves in check.
    • Investors focus on Washington, DC as Canadian and American officials reconvene to discuss NAFTA terms
    • Oil futures are up 0.3%, and Gold futures are seeing red, down $6 an ounce

    HIGHLIGHT

    The Indian Rupee continues to suffer following a significant selloff in the emerging markets. The INR has lost near 5.5% of its value against the USD this month alone and is the worst performer among its Asian counterparts. The BSE Sensex lost another 1% as investors are moving funds out of Indian assets. The currency touched a fresh low changing hands at 72.69. Widening trade deficits and a weaker Rupee are denting investors’ sentiment.  

    US DOLLAR

    The Dollar Index is in positive territory this morning with the Aussie caught in the crossfire of a trade dispute between global superpowers, the US and China. Investors continue to take a cautious approach amidst trade war headlines. The World Trade Organisation (WTO) signaled that China has asked for authorization to impose trade sanctions on the US. With no other economic data on the dockets, we expect White House Twitter feeds to be especially active. The currency market will keep a close watch for new developments related to ongoing NAFTA talks between Canada and the US.

    BRITISH POUND

    GBP/USD is very choppy today as the Pound currently sits in negative territory. The Barnier-effect seems to be fading: the EU Chief Negotiator reportedly said the two parties are close to a November deal. The UK's latest labor report highlighted the unemployment rate dropped to 4.0%. It's the lowest level in four decades. Average weekly earnings are up 0.5% in real terms. Despite the positive news, the currency pair failed to hold on to its six-week high. 

    EURO

    EUR/USD slid lower after losing steam above the 1.16 watermark. German ZEW Economic Sentiment exceeded the market’s expectations but remains in negative territory. In a separate report, employment in the Euro region remained at 0.4% in Q2 2018. Compared to last year, employment increased by 1.5%. While the data is mixed, global trade tensions and turmoil in emerging markets continue to undermine the shared currency.

    CANADIAN DOLLAR

    USD/CAD continues to consolidate within a tight range. The USD failed to maintain its momentum above 1.32, sliding lower with a modest rise in crude oil supporting the Loonie. WTI increased by 0.15% to trade at $ 67.60 a barrel. Canadian and US officials are back at the negotiation table in Washington to try and iron out thorny issues on new NAFTA.  We expect investors to avoid placing aggressive bets until the two sides make progress towards coming to terms on an agreement. 

    AUSTRALIAN DOLLAR

    The Aussie is the worst performer amongst G-10 currencies this morning as trade tensions between China and the US intensify. Australian businesses are feeling less confident going forward given the prevailing economic landscape. In the absence of macro data, we expect the AUD/USD pair to consolidate at current levels.

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