Currency Market Analysis

Jun 25, 2018 | Currency Market Analysis

Global Themes

US dollar jumps on oil hike, Chinese cut

The USD was higher in early Monday trading after a strong rally in commodities on Friday and a move to loosen monetary policy from the Chinese central bank over the weekend.

Crude oil jumped 4.6% on Friday after OPEC announced smaller than expected production increases. Other commodities, including iron ore, also gained.

Over the weekend, China announced it would lower its reserve requirement ratio (RRR) in order to spark more lending to small businesses. The RRR is a widely-used tool in China to drive economic activity.

Euro climbs

The euro was stronger on Friday as the EURSGD hit one-month highs.

The European Central Bank’s move to recently indicate it would end its stimulus program in December this year.

The British pound also gained as markets looked ahead to potential rate hikes from the Bank of England.

Trade fears remain

US durable goods on Wednesday night and US GDP on Thursday will be the major events this week.

Around the region, Thursday morning’s Reserve Bank of New Zealand meeting will be closely watched.

The US-China trade feud will also remain in focus with key Chinese tariffs due to be implements on 6 July. The build-up to this date could see greater market volatility.

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