Dollar stronger as investors look for haven following Saudi Oil attack
Kathryn Garvey | September 16, 2019
An attack on Saudi Arabian oil production facilities injected volatility and uncertainty into the markets. The dollar remained strong as a safe-havens outperformed, including the Japanese yen and US Treasuries. The FOMC will begin its two-day meeting tomorrow and markets expect an additional 25bp cut. The Bank of England as well as the Bank of Japan are also expected to deliver rate decisions this week.
Monday: US Empire Index
Tuesday: German ZEW Survey Expectations
Wednesday: FOMC Rate Decision, UK CPI, Canada CPI, US Housing Starts
Thursday: Bank of England Bank Rate, US Jobless Claims
Friday: EC Consumer Confidence, Canada Retail Sales
September 16, 2019
EUR/USD 1.1021 GBP/USD 1.2451 USD/CAD 1.3255 AUD/USD 0.6860 USD/JPY 107.88 USD/CNH 7.0678 USD/ILS 3.5338 USD/MXN 19.4373 USD/CHF 0.9940 USD/INR 71.55
The dollar is higher against most G-10 peers. Markets ignored the Empire State index miss and the dollar remained near session highs. President Trump commented that the US is “locked and loaded depending on verification” of who is responsible for the attack on Saudi Arabian oil facilities. Tomorrow begins the 2-day Fed meeting where markets expect US interest rates to be lowered amid slowing global economic growth and muted inflation.GBPThe pound was sold-off in advance of PM Boris Johnson’s meeting with European Commissioner Jean-Paul Juncker in Luxembourg. Johnson planned to reaffirm his commitment for a hard deal by the end of October. He also is expected to reject further extension in defiance of the law passed to block leaving the EU without a deal. Juncker commented that the talks went well whereas Johnson declined to comment. The pound popped slightly on this news.EUR
The euro found itself slightly lower this morning, mostly on US dollar strength. The strength of the dollar pared last week’s euro gains following the ECB meeting.CAD
The Canadian dollar outperformed after a strike on Saudi oil production facilities sent crude oil prices sharply higher. WTI prices are expected to remain high until oil production is stabilized.ASIA/PACIFIC
USD/JPY fell in reaction to Saudi oil attacks as the market moved into risk-off mode, but recovered after Trump released US oil reserves into the marketplace. The Bank of Japan is growing more open to cutting interest rates farther below zero. The decision will be released Thursday.Data out of China again showed signs that the economy is slowing. Industrial output expanded just 4.4% - the slowest since 2002. Retail sales also came in below expectations.