USD still in the driving seat


The Dollar has been consolidating gains seen yesterday, which had been driven by more strong October data (non-manufacturing ISM, which backed up last week’s surprisingly solid employment report) and hopes a partial trade deal with China will be struck. The risk-on vibe that was coursing through global markets in the wake of last Friday’s US payrolls data has come off the boil, with the valuations of many major equity indices looking rich amid a degree of circumspection creeping in with regard to whether the 13th round of trade talks between the US and China will produce a deal. The key USA500 actually closed in negative territory yesterday although it is currently trading up and testing the daily pivot point at 3078.

Against this backdrop, the narrow trade-weighted USDIndex (DXY) has ebbed back by a fractional 0.1% after rallying by about 1% over the previous two days. EURUSD has settled just above the three-week low seen yesterday at 1.1063. Cable has lodged in the upper 1.2800s after failing to sustain gains above 1.2900. USDJPY is also softer, aided by a degree of Yen outperformance, which has seen EURJPY, AUDJPY and other yen crosses ebb back somewhat. USDJPY fell back below 109.0 after posting a one-week high yesterday at 109.25. The Australian Dollar and other dollar bloc currencies have also traded at softer levels after outperforming in recent sessions.

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Stuart Cowell

Head Market Analyst

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