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It’s Risk-On Early, Pinning Back the Greenback in Favor of the EUR

Bob Mason
It’s risk-on in the early hours, support the EUR while pinning back demand for the Greenback. Earnings results will be key later.

Earlier in the Day:

It’s a particularly quiet start to the week on the economic calendar. With no economic data released through this morning’s Asian session, the markets continued to respond to Friday’s earnings.

The focus remains on the financial sector today, following JPMorgan and Wells Fargo’s earnings releases on Friday.

While the U.S – China trade war is now reportedly nearing an end and last week’s earnings results having been on the better side of forecasts, a pickup in risk appetite was evident.

The Majors,

At the time of writing, the Kiwi Dollar was up 0.24% to $0.6779 for the session. The Aussie Dollar was also up, rising by 0.08% at $0.7179, while the Japanese Yen flat at ¥112.00 against the U.S Dollar

In the equity markets, the ASX200 struggled at the start of the week, down 0.10% at the time of writing. Elsewhere, the Nikkei was up by 1.46%, with the Hang Seng up by 1.07%. Leading the way, however, was the CSI300, which was up by 1.82%.

The Day Ahead:

For the EUR

There are no material stats scheduled for release during the European session today. The lack of economic data will leave the focus on corporate earnings through the session.

If Friday’s financial sector results are anything to go by, it could be another hot day for the EUR. Both Citibank and Goldman Sachs will be delivering quarterly earnings results that will influence risk sentiment.

Anything disappointing and expect the EUR to cough up some of last week’s gains. There’s a mass of hard-hitting stats due out this week, so some caution may kick in later in the day…

At the time of writing, the EUR was up 0.13% at $1.1314.

For the Pound

There are also no material stats scheduled for release. It’s a busy week ahead on the economic calendar, however, and with Parliament in recess, the stats may finally have some influence.

Outside of the numbers, ongoing cross-party talks could deliver a surprise, though with Theresa May having very little wriggle room, compromises may be hard to come by…

At the time of writing, the Pound was up 0.21% to $1.3101.

Across the Pond

While the economic calendar is on the quieter side at the start of the week, the NY Empire State Manufacturing Index will garner plenty of interest. 1st quarter GDP numbers are due out of China this week and out of the U.S next week. Recent economic data out of China suggests that the adverse effects of the trade war could have been far greater.

Forecasts are for manufacturing sector activity to have a marked improvement in April. Whether the Dollar benefits remains to be seen, however. Positive earnings and risk appetite abound would likely overshadow. Until we see the more hawkish FOMC members begin to talk up the need to resume hiking rates, we can expect the risk-on, dollar-off routine to persist…

At the time of writing, the Dollar Spot Index was down by 0.13% to 96.843.

For the Loonie

While there are no material stats scheduled for release, the BoC’s Business Outlook Survey will provide some direction for the Loonie.

There’s been very little since the last Bank of Canada monetary policy decision to suggest that a more hawkish stance is needed. Today’s report will be of interest but unlikely to give the Loonie any material upside in event of a favorable survey.

The BoC is delivering on its April policy decision next week, so a little more sensitivity to data and reports out of Canada should be anticipated.

Crude oil prices are also likely to play a hand, as the markets look ahead to this week’s OPEC meeting.

The Loonie was up 0.02% at C$1.3321, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire