Dollar weaker on trade hopes and UK parliament is back
Peter Compton " | September 24, 2019
The dollar sold-off and the British pound jumped as risk-on permeated the world financial markets. China provided waivers to a few US farmers allowing Secretary Munchin to agree to talks on October 7. The UK court found Boris Johnson’s suspension of the UK parliament illegal, further boosting the pound.
September 24, 2019
EUR/USD 1.1007 GBP/USD 1.2482 USD/CAD 1.3248 AUD/USD 0.6796 USD/JPY 107.65 USD/CNH 7.1033 USD/ILS 3.4995 USD/MXN 19.4408 USD/CHF 0.9881 USD/INR 71.0163
The dollar is weaker today as risk-on sentiment sees global investors move back into equities, emerging markets and other risky assets. A combination of seemingly positive developments in the US/China trade war, odds of hard Brexit next month falling, and a new direction in the West’s reaction to Iran’s attack on the Saudi oil refinery all led to the purchases of risky assets. House price data and Consumer Confidence readings due later this morning.GBP
The pound is stronger today against almost every currency as parliament is to return after court rules Johnson’s suspension illegal. Markets see the move as assurance against a hard Brexit on the Oct 31 deadline. Johnson is now in the unenviable position of having to negotiate for a better Brexit deal – something that drove his predecessor into retirement. Johnson’s brash approach may be just what is needed to push all sides to consider their steadfast positions regarding the Irish border.EUR
The euro is stronger today on overall US dollar weakness. Economic data continues to come in mixed at best as business sentiment grows in France and sinks in Germany.CAD
The Canadian dollar strengthened on hopes of a thawing in the global trade war. This despite oil dropping 1% as Saudi supply returns and Europe joins the US in blaming Iran for the attack. It appears the West will pressure Iran for a more stringent nuclear deal, providing relief from the possibility that the US was on the brink of launching an attack on Tehran.ASIA/PACIFIC
The Japanese yen weakened due to risk-on market sentiment. Also, the Bank of Japan head, Kuroda, said cutting negative rates and buying more bonds is on the table.
The Australian dollar strengthened relative to the US dollar on overall dollar weakness. The head of the RBA indicated a rate cut to 0.75% on October 1 may be necessary – in part to keep the A-dollar from appreciating relative to regional peers.