Currency Market Analysis

Dec 12, 2018 | Currency Market Analysis

Global Themes

US dollar falls as markets fret about trade, Brexit, US shutdown

The US dollar fell overnight as a series of geopolitical crises weighed on global markets.

Across markets, the arrest of a Canadian diplomat in China sparked fears of an escalation in the US-China trade wars.

In the US, President Donald Trump warned of a government shutdown

as the opposition Democrats refused to approve the Mexican boarder wall.

Low confidence

The British pound fell to near two-year lows as media reports suggested the prime minister Theresa May might face a leadership challenge after this week’s failed Brexit vote.

The AUD climbed despite a poor number in yesterday’s business confidence reading. The local business confidence numbers fell to the lowest level since January 2016 as global trade tensions and the local housing slowdown hit sentiment.

The Japanese yen slipped back from three-week highs.

US inflation in focus

Overnight, US inflation will be critical ahead of next week’s Federal Reserve decision.

With markets expecting a shift in the Fed’s views for hike next year, a weaker number might weigh on the US dollar.

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