Dollar firmer amid trade talk trouble

Dollar rises as China cancels trade talks

The US dollar was marginally higher on a holiday-thinned Asia Monday morning, reacting to weekend news that China had cancelled plans to visit Washington this week for trade talks. Remember the next set of US tariffs on $200 billion of China goods has just kicked in at 12am Washington time with $110 billion worth of US goods being hit by China tariffs at the same time. There is speculation that nothing further will happen with trade negotiations before the US mid-term elections in November.

 

 

Of the equity market that were open (China, Japan, South Korea and Taiwan were all closed), Hong Kong stocks reacted negatively to developments, dropping 1.59% while Australia gained 0.2%. The SPX500USD CFD declined 0.22% to 2,921.1. On Friday it hit a record high. The Aussie currency reacted more, falling 0.46% versus the dollar to 0.7255 as the US dollar, measured against a basket of six currencies, rose 0.11%.

 

UK Sunday press awash with rumors

The UK’s Sunday Times reported that aides to PM May had started contingency planning for a snap November election in order to rally public support for an updated and improved Brexit plan. The pound suffered heavily on Friday, falling the most in one day since June 2017, after May was heavily criticized at the EU summit in Salzburg and said that talks were at an impasse. The rally from the August 15 low stalled near the 50% retracement level of the drop from April 17.

 

GBP/USD Daily Chart

Source: Oanda fxTrade

 

 

Oil prices advance as OPEC ignores Trump’s demands

US President Trump called on OPEC to reduce oil prices which provoked the response from the group that it would boost output only if customers asked for it. This pushed oil prices higher with West Texas Intermediate pushing further ahead from the $70 mark, rising as high as $72.40 per barrel, the highest in 2-1/2 months. Brent continues to straddle the key $80 per barrel level, currently at $80.306.

 

WTI Daily Chart

Source: Oanda fxTrade

 

Another improvement in German IFO surveys may help the Euro

It’s a slow start to this week’s busy data schedule with German IFO surveys and the UK’s CBI orders survey the only items to set the pulse racing in Europe. The IFO survey last month saw the expectations index bouncing higher and another improvement in sentiment in September could help EUR/USD stave off some of the dollar’s strength today. The current assessment index has been rising for the past two months and was at 106.4 last month. However, economists expect the business climate to deteriorate to 103.0 from 103.8, the latest poll shows.

The North American session features August’s Chicago Fed activity survey, the Dallas Fed business index for September and Canada’s wholesale sales for July.

 

The full MarketPulse data calendar can be viewed here: https://www.marketpulse.com/economic-events/

 

OANDA Trading Podcast : BFM 89.9 Kuala Lumpur

Source: MarketPulse

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Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.