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No Progress on Trade. It’s Back to the Safe Havens

Bob Mason
It’s risk off early on as the markets respond to the weekend chatter on trade talks and Asia wakes up to yet another week without a deal…

Earlier in the Day:

Home loan figures out of Australia were the only key data for the markets to consider through the Asian session.

For the Aussie Dollar,

Home loans slid by 2.5% in March according to the ABS. The March slide reversed a 2% increase from February, while also falling well short of a forecasted 2.3% increase.

  • With the total number of commitments for owner occupied dwellings (incl.) refinancing down by 2.5%, there was also a fall in the total number of refinancing, which fell by 2%.

The Aussie Dollar moved from $0.69857 to $0.69820 upon release of the figures. At the time of writing, the Aussie Dollar was down 0.33% to $0.6979.

Elsewhere,

At the time of writing, the Kiwi Dollar down 0.21% to $0.6583, while the Japanese Yen was up by 0.16% to ¥109.77 against the U.S Dollar

In the equity markets, it was a bad start to the week. The CSI300 was down 1.32% at the time of writing, while the Nikkei and ASX200 were down 0.34% and 0.55% respectively.

The Day Ahead:

For the EUR,

There are no material stats due out of the Eurozone later this morning.

While there are no stats to consider, trade chatter from the weekend will need to be factored in. While economic data out of the Eurozone was on a better footing last week, 25% tariffs and the threat of tariffs on another $300bn worth of Chinese goods will be a concern.

Risk off sentiment could send the EUR into a spin later in the day. The jury is still out on what lies ahead, but a smooth ride it won’t be when considering the current global economic environment.

At the time of writing, the EUR was down 0.04% at $1.1229.

For the Pound,

Despite weak numbers elsewhere, UK economic data has been on a more positive footing. While the stats have been Sterling positive, however, Brexit has continued to be a major hindrance.

The Pound slid by 1.33% back to sub-$1.30 levels last week. All of this even with Theresa May making it through another week as British PM.

Progress on a deal will be needed for the Pound to find any support. The lack of stats will place Brexit and UK politics front and center for the day.

At the time of writing, the Pound was up 0.09% to $1.3010.

Across the Pond,

It’s also a quiet day ahead on the economic calendar. With no material stats due out of the U.S this afternoon, the Dollar could find direction from FOMC member chatter.

FOMC members Rosengren and Clarida are due to speak and could deliver some insight into the FED’s views on the ongoing U.S – China trade war and likely influence on monetary policy.

Away from the calendar, expect chatter from Beijing and Washington to continue to impact risk appetite. If there’s no resolution soon, the latest tariff hike is expected to impact consumers and that may be enough to materially impact domestic consumption.

At the time of writing, the Dollar Spot Index was up 0.01% to 97.338.

For the Loonie,

With no material stats scheduled for release later today, crude oil prices will provide some direction as the markets fret of the U.S – China trade war.

The Loonie was down 0.16% at C$1.3439, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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