Fundamental Analysis

U.S. Dollar on the Downside - Brexit, Eurozone PMIs and U.S - China Trade Development in Spotlight

Published on 2019-03-22 10:22 Share

Pound managed to keep its recovery mode intact after the European Union agreed to give May two weeks’ Brexit extension, while the safe-haven Yen benefited from risk-aversion, having limited the USD/JPY post-FOMC recovery near 110.90 region. The Euro lacks the recovery momentum, as the bulls turn cautious heading into the flash manufacturing and services PMI releases from across the Euro area economies due later today.

Today’s EUR macro calendar remains a busy one, with a bundle of Euro area flash manufacturing and services PMI releases dropping in from 08:15 GMT onwards. Among them, the French, German and the entire bloc’s reports will be closely eyed for a fresh take on the Eurozone’s economic health.

Also, of note remains the Eurozone current account data that will be reported at 09:00 GMT. The speeches by the ECB Governing Council members De Guindos and Mersch will also grab attention at 08:15 GMT and 10:15 GMT respectively. At 12:00 GMT, the GBP traders will await the BOE quarterly economic bulletin while the Brexit-related development will continue to drive the sentiment around the pound.

The NA session also has plenty of event risks to offer, including the Markit flash manufacturing and services PMI readings due at 13:45 GMT. At 14:00 GMT, the US existing homes sales data will be published alongside the wholesale inventories report. Next of relevance remains the Baker Hughes US oil rigs count data that will drop in at 17:00 GMT, an hour ahead of the US monthly budget statement release.

Oil prices were little changed on Friday, trading near $60.00, as traders remained cautious amid the latest news on the Sino-U.S. trade war. The energy benchmark failed to sustain its rise past-$60.00 and has been trading with the low around $59.30 as doubts over economic growth amid the trade tensions. Looking forward, the US Baker Hughes oil rig count could offer fresh directions to the price moves.

Gold climbed to session tops, further beyond $1310 level, as the US Dollar failed to capitalize on the overnight rebound from the post-FOMC slump to the lowest level since early February and eventually turned out to be one of the key factors underpinning demand for the dollar-denominated commodity. This coupled with resurfacing US-China trade tensions, especially after the US President Donald Trump said to keep tariffs on China for a substantial period, further benefitted the precious metal's relative safe-haven status and remained supportive.

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