Dollar hits YTD highs as traders await Powell’s speech today
August 23, 2019
The dollar reached new highs for the year following hawkish comments by Fed members ahead of today’s speech by Fed Chair Powell at the Jackson Hole summit. The UK pound rallied after news of a possible Brexit breakthrough. China imposed retaliatory tariffs on US soy bean and crude oil imports.
August 23, 2019
EUR/USD 1.1071 GBP/USD 1.2246 USD/CAD 1.3319 AUD/USD 0.6747 USD/JPY 106.43 USD/CNH 7.1008 USD/ILS 3.5174 USD/MXN 19.8544 USD/CHF 0.9835 USD/INR 71.6637
The dollar index reached new highs for the year as three Fed members voiced resistance to further rate cuts. Traders await more clarification from Fed Chair Powell’s speech later today. China’s retaliatory tariffs pushed the dollar in safe haven reaction, but US equities look to open lower on the news.GBP
The UK pound soared following optimistic Brexit news. In his first foreign trip as prime minister, Boris Johnson met with German Chancellor Angela Merkel and French President Emmanuel Macron. The response was reportedly upbeat, with both Merkel and Macron saying that a solution to the Irish backstop can be found in 30 days. Some of sterling’s strength was given back when EU officials repeated the message that the basic divorce deal is not changing.EUR
The euro traded down to new lows for the year following Fed members' hawkish monetary policy statements and China’s escalation of the trade war with announcement of retaliatory tariffs on US soy beans and crude oil imports.CAD
The Canadian dollar is weaker overnight from overall US dollar strength, but traded off its lows following better-than-expected Retail Sales in Canada. MoM sales for June were unchanged at 0.0%, which compared favorably to the expected -0.3%; and Ex-Auto Sales gained 0.9%, above expectations of 0.0%.ASIA/PACIFIC
China surprised markets by announcing tariffs on $75 billion of US imports in retaliation for President Trump’s planned tariffs on Chinese imports. The tariffs will commence in two stages, on September 1 and December 15. It mirrors the timetable that the US laid out for its planned 10% tariffs on $300bn of Chinese imports. An extra 5% tariff on US soybeans and crude oil imports will start next month and a 25% duty on US cars will start December 15.
The Japanese yen moved off earlier lows as markets shifted into risk-off mode following news of the China tariffs on US goods.