Currency Market Analysis

Nov 08, 2019 | Currency Market Analysis

Global Themes

Markets in full ‘risk on’ mode after US-China trade deal

The US dollar climbed to more than a five-month peak against the safe-haven yen and a three-week high versus the Swiss franc last night, bolstered by expectations the United States and China were inching closer to a trade deal.

The world’s two largest economies have agreed to roll back tariffs on each others’ goods as part of the first phase of a trade deal, offering a new sign of progress. The Chinese commerce ministry, without laying out a timetable, said the two countries had agreed to cancel the tariffs in phases.

That pushed investors’ risk appetite higher, lifting the greenback against the safe-haven Japanese yen, as well as the Australian and New Zealand dollars. Trade-sensitive currencies, including the Singapore dollar, also strengthened against the greenback on the news.

Surprise Bank of England votes to cut rates

The British pound fell to two-week lows against the US dollar after two Bank of England officials unexpectedly voted to lower interest rates on Thursday to ward off an economic slowdown.

The BoE kept the bank rate steady at 0.75%, but other officials with the central bank, including Governor Mark Carney, said they would consider a cut if global and Brexit-related headwinds do not ease.

China and US economic data due on Friday

It’s a relatively quiet day on the economic calendar today – Chinese trade data will be released this morning at 10:30am (a surplus of USD 40.83 billion is expected), whilst the US Consumer Sentiment will be released at 11pm (95.9 is expected).

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