Political risk takes over from trade talks as markets boost dollar on risk aversion
Peter Compton " | September 25, 2019
The US dollar regained all ground lost yesterday as markets see US impeachment investigation as adding to market uncertainty. The British pound is weaker as political uncertainty takes center stage after Boris Johnson’s suspension of parliament is found to be unlawful leading to calls for his resignation.
“If you could kick the person in the pants responsible for most of your trouble, you would not sit for a month.”
September 25, 2019
EUR/USD 1.0982 GBP/USD 1.2378 USD/CAD 1.3278 AUD/USD 0.6763 USD/JPY 107.53 USD/CNH 7.1277 USD/ILS 3.5012 USD/MXN 19.5697 USD/CHF 0.9874 USD/INR 71.0387
The dollar is much stronger this morning compared to yesterday's close. Financial markets are factoring-in efforts to impeach Trump by Democrats. Although there is seemingly little chance an actual impeachment will occur at this time, the potential distraction from trade talks leads to uncertainty.
New home sales for August will be released later this morning.GBP
The British pound has fallen almost 1% since the UK Supreme Court found Boris Johnson’s suspension of parliament to be unlawful. Brexit is still a concern, but the Prime Minister now needs to focus on keeping his job.EUR
The euro bounces around lows from May 2017 as markets continue to evaluate the ECB’s rate cut from earlier this month. Economists are concerned the eurozone has reached the maximum benefit from low rates.CAD
The Canadian dollar weakened slightly on overall dollar weakness and also a steadily weakening oil price. Saudis are reporting oil production is resuming faster than initially expected after terror attacks earlier this month. The oil price has now given back most all its gains since the attack.ASIA/PACIFIC
The Chinese renminbi was set weaker overnight despite a thawing in the US/China trade war.
The Japanese yen weakened after 5-year bonds traded at -0.40%, an all-time low. This after the head of the Japanese central bank indicated interest rates may need to be cut further.