Fundamental Analysis

FX Replace – November 20


The Greenback and Yen have firmed up amid a risk-off flip in international markets as tensions between the US and China bubble up. The US Senate yesterday handed a invoice in help of Hong Kong’s pro-democracy protesters, to which Beijing responded sharply, accusing Washington of being unaware of “details and truths” whereas threatening retaliation for interfering with what it sees as its inside affairs. This comes with little signal of the lengthy since tabled, and unambitious, “Part 1” partial commerce deal coming to fruition. Sources cited by Reuters report that US President Trump is wanting deeper concessions from China in return for making a full roll again of tariffs and cancelling further tariffs scheduled to take impact on 15 December.

Towards this backdrop, the Yen has seen its danger premium rise, albeit reasonably so. USDJPY ebbed to a six-day low at 108.35, with the Japanese foreign money outperforming an in any other case agency Greenback. EURJPY posted a six-day low, and different Yen crosses additionally declined. The slim trade-weighted USD Index printed a two-day excessive at 97.93, placing in a ways from the 15-day low seen on Monday at 97.68. EURUSD concurrently noticed a two-day low at 1.1055, and Cable a three-day low at 1.2888, with final night time’s Common Election debate seen as a “draw” however with the Conservatives coming below criticism for deceptive the general public after it rebranded one in every of its Twitter accounts to “factcheckUK”.

Sharp declines in oil costs, the place considerations of a provide glut have run into considerations concerning the US-China scenario, have pushed underperformance within the Canadian Greenback, lifting USDCAD to a close to six-week excessive at 1.3296. The pair is up almost 1% from yesterday’s lows. USOil futures have dropped by four% during the last two days, yesterday posting the largest one-day tumble in seven weeks and testing $55.00. The Australian and New Zealand are additionally decrease, although by a lesser extent, and most developing-nation currencies are softer.

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Stuart Cowell

Head Market Analyst

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