FX Update – EUR & GBP Pressured

UK EUrope


The Euro has carved out fresh lows in an otherwise narrow ranging day among the main currencies so far, with Dollar majors making it to the London interbank open showing no more than 0.2% net changes. EURUSD edged out a fresh 28-month low at 1.0904 and EURJPY a three-week low at 117.44, before quickly recouping to levels around 117.60-65. EURCHF posted a two-day low but remained shy of the three-week low seen on Wednesday at 1.0832. EURGBP also saw a two-day low, while the Pound held steady against the Dollar and other currencies overnight, however in early London trades Cable has breached below 1.2300 and S1 to 1.2270, following comments from BOE member Saunders that the Bank’s next move for interest rates could be a cut. USDJPY tipped fractionally lower relative to New York closing levels before settling around 107.75-85, consolidating below the nine-day high seen yesterday at 107.95.

Stock markets have continued an overall sputtering price action, albeit near record highs in the case of the USA500. On the trade front, Beijing said yesterday that China was willing to buy more US products, and that negotiations would bring results if both sides “take more enthusiastic measures” to show goodwill and reduce “pessimistic language.” This comes with the next round of face-to-face talks coming the week after next. Most likely there will be fresh disappointment, at least in terms of there being major progress. The US economy and Wall Street are holding up well enough to keep any conciliatory feelings in President Trump repressed, and both sides look to be actively pursuing a level of strategic disengagement from one another. The cost of the trade war showed up in a fall in industrial profits data out of China today. Also of note, key oil freight rates rose by near 20% in Asia today following the US sanctioning of units of China’s COSCO for alleged involvement in transporting Iranian crude.

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Stuart Cowell

Head Market Analyst

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