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The Greenback Finds Support as Trade War Rhetoric Softens

Bob Mason

Earlier in the Day:

The economic calendar was on the quiet side once more through the Asian session this morning. Economic data was limited to 2nd quarter construction work done figure out of Australia.

Outside of the numbers, the Asian market reacted further to U.S President Trump’s change in strategy on trade. After Friday’s escalation, Trump stated on Monday that U.S and China trade negotiations were set to go ahead.

The shift in sentiment supported the U.S Dollar and the Asian equity markets this morning.

For the Aussie Dollar

Construction work done fell by -3.8% in the 2nd quarter, which was worse than a forecasted 1% decline. In the 1st quarter, construction work done fell by 2.2%. According to the ABS,

  • Total building work down fell by 5.7% in the June quarter, with engineering work down falling by 1.1%.
  • Residential building work down fell by 5.1%, while non-residential building work down fell by 6.6%.

The Aussie Dollar moved from $0.67571 to $0.67474 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.22% to $0.6737.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.09% to ¥105.85 against the U.S Dollar, while the Kiwi Dollar was down by 0.39% to $0.6337.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. German’s GfK consumer climate figures for September are due out ahead of the European open.

With the ECB reliant upon consumer spending to support the economy, a deterioration in consumer confidence would weigh on the EUR.

Outside of the stats, geopolitics will continue to provide direction through the day coupled with sentiment towards the economic outlook.

At the time of writing, the EUR was down by 0.04% to $1.1086.

For the Pound

It’s another quiet day ahead on the data front. House price figures are due out later this morning that will be brushed aside by the markets.

The UK Parliament’s summer recess is coming to a rapid end and we can expect the chatter to build on Brexit and talk of a vote of no confidence to influence on the day.

Any news of Corbyn agreeing to step back from a plan to lead a caretaker government would provide support to the Pound. Borish Johnson may consider a surprise snap election and even suspension of Parliament to deliver Brexit.

At the time of writing, the Pound was down by 0.11% to $1.2277.

Across the Pond

It’s a  quiet day on the economic calendar, with no material stats due out of the U.S to provide the Greenback with direction.

The markets will continue to focus on trade and the economic outlook. While trade talks are now set to resume next month, the ongoing damage to the U.S and global economies need to be considered.

Will the FED step in and deliver a rate cut if there is progress ahead of the next FOMC meeting?

At the time of writing, the Dollar Spot Index was up by 0.08% to 98.081.

For the Loonie

It’s a day ahead on the economic calendar. There are no material stats due out of Canada.

Market risk sentiment will influence ahead of the EIA inventory numbers later in the day.

With the economy slowing, OPEC will need to announce a cut in supply to prop up oil prices…

The Loonie was down by 0.18% at C$1.3307, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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