US dollar moved lower amid easing US-China trade tensions, the ECB cut interest rates further below zero
Scott Petruska, CFA " | September 12, 2019
The USD moved lower as Trump delayed tariff increases and following the European Central Bank’s monetary policy announcement today. Global equity and bond markets are mixed as traders now wait for next week’s Fed and other major central bank meetings.
September 12, 2019
EUR/USD 1.1023 GBP/USD 1.2331 USD/CAD 1.3203 AUD/USD 0.6867 USD/JPY 107.78 USD/CNH 7.0809 USD/ILS 3.5410 USD/MXN 19.4688 USD/CHF 0.9904 USD/INR 71.1375
President Trump and China both took steps to ease tensions in the ongoing US-China trade war. Markets adopted a slight risk-on mood, reducing safe-haven demand for the dollar. Trump will be postponing the 5% extra tariffs on Chinese imports by two weeks, so China can better celebrate their October 1 national day. China, in turn, may permit extra imports of American farm goods.GBP
PM Boris Johnson won a Belfast court ruling on a no-deal Brexit. The UK pound fluctuated within a narrow range, as confused FX traders reduce trading activity. Parliament is in recess after Johnson suspended it for five weeks, a ploy judged unlawful yesterday by Scotland’s highest court of appeal. Almost any Brexit outcome remains possible.EUR
The euro initially moved lower today after the ECB finally announced a package of stimulus. The deposit rate cut and QE size are smaller than expected; however, the new economic projections remain dovish despite the easing package. EUR/USD fell within one pip of the YTD low of 1.0926 on ECB announcement, but has bounced back since then.CAD
The Canadian dollar remained in a tight trading range overnight, and is little changed from last night’s close, just below C$1.3200. Recent strength in the loonie remains intact as positive economic data surprises from Canada continue to be supportive. Oil prices are soft while OPEC officials meet in Abu Dhabi.ASIA/PACIFIC
The Chinese yuan rallied to three-week highs versus the US dollar after Trump’s announcement that he will delay tariff hikes on Chinese imports. Traders welcomed the shift from retaliatory tariff hikes to a scaling down of trade tensions.
The Australian and New Zealand dollars rallied as US-China trade tensions ease. At the same time, selling of safe-haven yen was seen, pushing USD/JPY briefly over 108.