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By xemarketanalysis December 14, 2018 11:47 am
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    XE Money Transfer: USD Brushes Aside G-10 currencies and Moves to a 20-month High

    OVERVIEW

    • Better-than-expected retail sales attract more bid for the US dollar. The Dollar Index is up 0.6%
    • Sterling comes under heavy selling pressure as a no-deal Brexit situation resurfaces. 
    • NYMEX WTI Crude flat near $52.25 a barrel as investors assess the impact of a stalling Chinese economy

    HIGHLIGHT

    GBP/USD sees no end to the Brexit quagmire. The pair is under intense selling pressure, losing 0.75% on the spot market. With UK expected to leave the EU block on March 29th, local MPs are clearly against the current Withdrawal plan, and investors are feeling nervous about a disorderly Brexit. PM May will be holding more talks in coming days to obtain concrete assurances from the EU. 

    US DOLLAR

    The currency market is feeling giddy this morning after data out of China signaled a stalling economy and reigniting fears of a global economic slowdown. Growth in Chinese industrial product slowed to 5.4%. Chinese consumers are reportedly spending less, with retail sales at its lowest level in 15 years and business investment was flat at 5.9%.

    Equity indices are suffering from outflows with the antipodean currencies recording drops of nearly 1% as investors seek the refuge of safe-haven assets. The US Dollar Index is up 0.5%, near a five-week high, supported by incoming better-than-expected retail sales numbers (+0.2% v/s 0.1%). The Greenback is on course to close the week near a 20-month high against the G-10 currencies.

    BRITISH POUND

    The GBP rally didn't last long after all. Sterling came under heavy selling pressure this morning following reports that British Prime Minister failed to obtain more concessions on the withdrawal deal. With lawmakers running out of time, the scenario of a no-deal Brexit is playing at the top of investors’ minds. GBP/USD has fallen nearly 6% so far this year, and we could see the pair revisiting recent lows.

    EURO

    EUR/USD seems to be sliding into a freefall, down 0.75% on the day after soft PMI data disappointed investors. The German PMI Composite Output Index touched a 48-month low, and the future outlook does not look bright. New orders are expected to stall, and business confidence is taking another dent. We anticipate the pair will trade with a negative bias after the ECB downgraded their macroeconomic projections for the Euro area yesterday.

    CANADIAN DOLLAR

    USD/CAD is bouncing off this session’s low after US retail sales numbers came above market estimates. The pair is now knocking on the 1.34 handle. Investors could move more flows into US-denominated assets after poor data from China spooked fear of global slowdown. NYMEX WTI is trading in a tight range after peaking at a four-day high yesterday.

     

    AUSTRALIAN DOLLAR

    AUD/USD is at the centre of a selling storm as the latest Chinese data fuelled fear of an economic slowdown. The pair took a hit, cracking below the key 0.72 level, and is now trading near this month’s low. We expect the AUD to remain under pressure as the market assesses the impact of the disappointing data. 

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