The dollar has turned resoundingly bid

Currency Markets

London currency desks are wasting little time getting into the fray as the US dollar has turned resounding bid. Some factors could have traders pressing the buy button. In the Fixed income market, yields are turning higher lending support as G-10 which is now mirroring the Emerging market tone set earlier in Asia which saw firm USD bids across a broad spectrum of EM currencies. Also, traders continue to view the US dollar as an oasis in these trying times.

The Australian Dollar

Without overanalysing the subtle shift in the statement, the bottom line is the RBA didn’t validate the markets dovish suspicion after Westpac raised mortgage rates last week. So, the predictable top side squeeze ensues triggering some tight stops. But the overall outlook for the Australian dollar remains incredibly dour. Aussie bears will waste little time putting this RBA meeting in the rear view and will continue to fade upticks

 

Oil Markets

A very quiet session across most asset classes today and crude was no exception.

Even though OPEC exports in August hit highwater marks for the year, but a threat tropical storms ripping through the Gulf of Mexico has forced the closure of two platforms and has U.S. Gulf Coast refineries hunkering down. The anticipated supply disruption is keeping a bid under oil markets today and could be incredibly supportive of the prompt contracts if the weather pattern intensifies.

Overall, however, Iran sanction remains the cornerstone support for Oil markets, but by any market standard, supply is very tight as refiners’ clamber to mop up any available barrels before the re-imposition of U.S. Iranian sanctions in early November. Which of course is providing the underbelly of support from prompt contracts.

But for Oil to move significantly higher amidst the contentious escalation of US-China trade war, it all comes down to how quickly the lost Iranian barrels can be replaced if at all. Let’s face it Iranian sanctions are an absolute game changer and will continue to dictate bullish market sentiment for no other reason than losing a significant OPEC oil supplier is a huge event.

Commodities Weekly: Oil supported as a hurricane threatens production

Gold
With all the noise building around the trade dispute, along with unsettling economic prospects for Turkey and Argentina that will likely drag n more emerging market economies down the polished slope gold should be in demand. But with the US dollar now strengthening against not only EM currencies but far across the board, gold bears remain in complete control of the markets.

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