Safe-Havens Return, Euro rises, Aussie sinks

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Safe-Havens Return, Euro rises, Aussie sinks

MAY 13, 2019

The U.S. Dollar is trending on the downside against some major currencies, primarily the safe-haven Japanese Yen and other counterparts such as Swiss Franc and Euro.

Overview

As the weekend progressed, it was clear the two parties in the trade war are not changing their stance. China’s promise to retaliate and the implementation of a 25.0% tariff on remaining Chinese imports by the U.S. caused all global markets to dwindle. Simply put, countries and businesses have to prepare for a potentially long-term conflict with no promise of talks at least for this week.

Without any significant data and headlines primarily focused on trade concerns with U.S/China and Brexit, anything that leads traders to feel solutions are coming will impact markets. It is likely the Euro’s momentum could continue if Gross Domestic Product numbers and other productivity figures show signs of stable growth and expansion.

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

EUR

The Euro remains on a solid run as the past few trading sessions have turned its fortunes. Data that has shown signs of recovery and trouble building on our side of the Atlantic are factors behind the shared currency, now at its highest level in three weeks. Wednesday we shall see if Q1 numbers are revised to show any further expansion than the 0.4% originally read.

It is important to note that President Donald Trump had also warned of new added costs to imported cars from Europe, but we shall see if something is done about it this week since he had set Saturday as a deadline for talks. We shall monitor those developments and see if it derails the currency.

AUD

The Australian Dollar had survived a scare last week after very dovish expectations from the Reserve Bank of Australia did not materialize, but it is now less than half a percent away from hitting its weakest point since 2009. The Aussie is being crushed, not by expectations of the loose monetary policy down the line, but rather because of the shock that comes with such escalation in the U.S.-China trade war.

Changes in the dynamics of international commerce affect the Oceanic countries, dependent on imported food and oil, as well as a producer of all things to the world’s second-largest economy. The Asian powerhouse needs to be healthy for Australia to breathe easy and right now a lot is at risk for the island nation.

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