Shambolic US Administration

Shambolic US Administration 

The Washington political train wreck and month end flow has left the US dollar teetering on the brink of a cliff. After struggling through a torturous time last week, and just when it appeared the USD onslaught had abated, the dollar bulls were swallowed up by the expanding “DMV” political sinkhole.And while month end portfolio flows were not as unruly as they can usually be, USD sellers were coming out of the woodwork and could be found in every corner of the market.

However, we are entering a data-laden week for the USD, and we should expect this to come into trading decisions.With currencies trading at multi year highs will acrophobia set in before US payrolls? Since a good portion of the overnight dollar swoon was inspired on the back of month end portfolio adjustment, it’s difficult to envision more dollar selling ahead of the US economic data.
But the troublesome political headlines continue to weigh on sentiment, and while the removal of a White House communications director is hardly market moving fodder, it does point to growing instability in the Trump administration where Senior White House official continue to have very short shelf lives. Add in the US government’s diplomatic fracas with Russia and the confusing narrative over North Korea, political tensions in Washington remain on a rolling boil
The RBA rate decision is the primary regional focus today. Last week Governor Lowe and Deputy Governor Debelle leaned against the view that interest rates in Australia will track other G-10 central bankers policy normalisation. However, the post rate decision statement does not offer this latitude and given the economic pick up in Australia it’s highly unlikely the RBA will downgrade their economic assessment and move off their neutral policy stance. .

EURO

Expect a range trade day in APAC as the market awaits PMI data across Europe and the US PCE prints. But we should expect the market is to lighten up long EUR positions at current levels given the month end USD selling influence but maintain a stronger EURO bias while in buying the dip mode.
Japanese Yen

USDJPY continues to trade heavy on the back of a weaker dollar. With North Korea and shambolic US administration headlines filling the airwaves, topside moves will be limited.

Aussie dollar

Wait and see mode ahead of the RBA policy decision but it remains a US dollar story line on the back of a dovish Fed outlook.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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