The dollar gains as US-China trade talks start today, increased pressure on Asian equities and currencies
Scott Petruska, CFA | May 9, 2019
The market continued in “risk-off” mode as US-China trade talks start today. Investors are also concerned with intensifying geopolitical risks in Iran and North Korea, who launched more missiles overnight. Global equities dropped and US equity futures are poised to open lower. The dollar, yen, gold and Treasuries all gained as investors moved into safe havens, while the Chinese yuan fell to its weakest level since January.
“Conflict is good in a negotiation process…it’s the clash of two ideas, which then, all being well, produces a third idea.”Luke Roberts
May 9, 2019
EUR/USD 1.1196 GBP/USD 1.2995 USD/CAD 1.3493 AUD/USD 0.6969 USD/JPY 109.77 USD/CNH 6.8569 USD/ILS 3.5717 USD/MXN 19.1868 USD/CHF 1.0166 USD/INR 69.9475
The dollar made strong gains against Asian currencies as US-China trade talks commence. Yesterday, President Trump claimed that China “broke the deal” that had already been agreed upon, and therefore is justified in increasing tariffs tomorrow on $200 billion of Chinese goods. China said that will retaliate in kind.GBP
The UK pound continues to trade around the $1.30 level, as investors attention is focused elsewhere. Cross-party Brexit talks continue in earnest.EURThe euro is little changed from yesterday, as traders await news from the trade talks. There are no key German or other Eurozone country events or releases today.CAD
Lower oil prices and trade tensions are putting pressure on the Canadian dollar. USDCAD is edging higher, approaching key resistance at 1.35. Canadian data released today will include April’s International Merchandise Trade, New Housing Price, and Bloomberg’s Canada Economic Survey for May.ASIA/PACIFIC
The Chinese yuan traded to its weakest level since January. In addition to the trade talks, investors had to deal with release of China’s credit growth data, which was unexpectedly weak.
The Japanese yen made further gains overnight, reaching a three-month high, as investors move into safe haven currencies. Trade tensions and yesterday’s North Korea missile launches fueled increased risk aversion.
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