18.07.2019: USD obeys Federal Reserve (USDХ, AUD, JPY)
Traders tamed their appetite for risk amid new concerns about the trade conflict between the US and China. The US dollar is declining following lower yields of US Treasuries. On the other hand, the yen and the franc perked up amid growing demand for safe haven assets.
On Thursday, the US dollar index settled down at 97.10 having shed 0.17%. Investors rushed to sell off the US currency yesterday after the US stock market was opened. The Beige Book of the Federal Reserve did not spoil investors’ mood. However, weaker-than-expected data on the US housing construction dented market sentiment on the US dollar.
Nevertheless, its index has not changed the dynamic drastically. The price is trapped in a wide trading range which is getting tighter that indicates hesitation of investors. Today, the G7 group is holding the second day of the summit. The US dollar could trade with higher volatility in case of new statements, conflicts, and arguments. However, the overall picture of the greenback will hardly change as the US currency is trading under pressure due to the likelihood of a rate cute of the Federal Reserve.
Meanwhile, the yen is enjoying buoyant demand due to the lack of progress in the trade talks between the US and China. On the contrary, the talks are getting sticky. Yesterday, Donald Trump did not rule out introduction of new tariffs on China’s imports. Besides, he said there was a long way to go before the countries would eventually settle a trade deal. The dollar/yen pair is trading lower. Support of 107.80 has been broken that indicates waning influence of buyers. Thus, the odds are that the pair is to fall deeper to nearly 106.
The New Zealand dollar is taking the most advantage of the US dollar’s weakness. The kiwi surged to a three-month high. The Australian dollar is also gaining ground, having reached 0.7033. Aussie bulls are unaffected by the unpleasant news on the US - China trade talks which are running a risk of failure. In this case, both kiwi and aussie may suffer a blow. Meanwhile, the Australian dollar benefited from macroeconomic data released overnight. Unemployment rate in Australia remained flat and the employment change came to market expectations.
The latest batch of economic data from Australia decreased the prospects of monetary easing by the Reserve Bank of Australia in the short term.
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