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Currency Market Analysis

Aug 31, 2018 | Currency Market Analysis

Global Themes

USD jumps as trade fears return; Argentine peso in meltdown

The US dollar rebounded after four days of weakness overnight as worries about global trade tensions returned.

Overnight, financial markets struggled on reports US President Donald Trump plans to press ahead with USD200 billion worth of tariffs on Chinese imports.

Additionally, pressure in emerging markets returned, with the Argentine peso down 13% overnight despite a move to raise official interest rates to 60% from 45%.

Safe havens favoured

The global worries saw the “safe haven” currencies perform best overnight.

As a result, the Swiss franc and, most notably, the Japanese yen surged higher.

The Australian dollar was pressured in yesterday’s session as a poor result from the capital expenditure report painted a gloomy picture ahead of next week’s second-quarter GDP numbers.

The AUDSGD fell back towards two-year lows.

Fed hikes ahead

Last night’s critical US personal consumption and expenditure index climbed to 2.0% in annual terms. Last night’s critical US personal consumption and expenditure index climbed to 2.0% in annual terms.

The measure – the US Federal Reserve’s preferred gauge of US inflation – is now at the Fed’s target and makes further US rate hikes more likely.

Today, Chinese manufacturing activity will drive activity while European inflation numbers will be the big release tonight.


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