MORNING BRIEFING: Greenback slips following no new developments from G7

[RTFX-Trading]

MORNING BRIEFING: Greenback slips following no new developments from G7

What’s new:
G7: Press for a stronger Yuan, No new developments.
Japan: Finance Minister says Japan not yet ready for exit strategies.
Australia: Markets set alight with talks of a rate hike.
United States: Employers cut 263’000 jobs in September.
United States: Weak employment numbers reinforce low US rates for a while.

Today:


Overnight Rates and Indices:
EURUSD: 1.4655 – 1.4581.
USDCHF: 1.0355 – 1.0307.
GBPUSD: 1.6024 – 1.5920.
EURJPY: 131.67 – 130.47.
USDJPY: 89.95 – 89.40.
DowJones: 9'487.67 -0.23%.
NASDAQ: 2’048.11 -0.46%.
S&P 500: 1’025.21 -0.45%.
Nikkei: 9’683.91 -0.49%.
Shanghai: 2’779.43 +0.90%,
Gold: $1004.55
Crude Oil: $69.88
 
Comments:

There were no new developments from the G7 Summit in Istanbul during the weekend. They issued more or less the same statement as in April. The market was expecting comments about the recent dollar weakness, instead urged China to strengthen the Yuan to help correct global imbalances and also stated that too much FX volatility threatened economic stability. Some analysts said the lack of news about the dollar from the summit potentially left the greenback vulnerable to further weakness.

Speaking at the G7 meeting, Japan’s Finance Minister Fuji said Japan would only take action if currency moves become excessively one sided. However he declined to mention whether the recent moves fall in this category.

Following a hawkish tone from Alan Mitchell of the Reverse Bank of Australia, the market is now expecting a 25bps rate hike in tomorrow’s meeting. Following comments by two Australian media columnists who confirmed that a move to 3.25% is now likely at Tuesday’s meeting, the Australian Dollar rose from 0.8647 to a high of 0.8756 against the US Dollar earlier today. It also was up to 78.63 from a low of 77.38 against the Yen, to 1.6732 against the Euro and 1.2162 against the Kiwi.

This week key events are the RBA meeting tomorrow, ECB and BoE meetings on Thursday, Euro-zone Q2 GDP on Wednesday and US Trade Balance on Friday.

Have a good week.

Emman Xuereb
RTFX Ltd
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