Dollar slightly higher and risk-on sentiment returns
Kathryn Garvey " | August 19, 2019
Risk-on sentiment returned to markets this morning after a rocky week last week. The dollar was slightly firmer on positive US-China relations. The euro advanced at the indication of German stimulus and the sterling fell as Brexit unrest continues. Markets await news out of the Jackson Hole conference this week culminating with a speech from Fed Chairman Jerome Powell on Friday.
Monday: EU CPI
Tuesday: CA Manufacturing Sales MoM
Wednesday: CA CPI, US Mortgage Applications
Thursday: US Initial Jobless Claims, FR Markit Manufacturing, GE Markit/BME Manufacturing
Friday: US Homes Sales
August 19, 2019
EUR/USD 1.1099 GBP/USD 1.2115 USD/CAD 1.3267 AUD/USD 0.6775 USD/JPY 106.61 USD/CNH 7.0551 USD/ILS 3.5331 USD/MXN 19.7491 USD/CHF 0.9811 USD/INR 71.4425
USDThe dollar firmed this morning as investor sentiment was buoyed by news that Huawei has been granted a 90-day extension for business in the US. Investors are looking towards the Jackson Hole central bank conference this week during which Fed Chairman Jerome Powell is set to speak. Market strategists surmise Powell’s speech will set the expectation for a 25 basis point cut at the September meeting.GBPSterling opened the week lower as no-deal Brexit rhetoric drove sentiment. Labor leader Corbyn called for cross-party solidarity against PM Johnson but a no-confidence vote is perceived as unlikely to gain majority. Both Johnson and Corbyn are committed to reaching an agreement with the EU. PM Johnson will meet with German Chancellor Angela Merkel and French President Emmanuel Macron this week.EUR
The euro advanced this morning after sliding nearly 1% last week. The rise was predicated by risk-on appetite returning to the markets after a week of turmoil and Germany reporting that the Finance Ministry is considering easing on a budgetary surplus policy to take on new debt and support the economy amid recession fears.CAD
The loonie edged higher against most G10 peers as risk-on appetite returned to equity markets and oil prices rose. Lower CPI and softer retail sales numbers are expected this week which may provide a challenge to the Canadian dollar.ASIA/PACIFIC
China’s 10-year sovereign bond yield was steady before the central bank's release of a new reference rate reform aimed to bring lower cost borrowing to the economy. The yuan, off 2.3% versus the dollar for the year, remains above 7.0 – perhaps a new threshold.