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By Associated FX Analysis Team

Kantox currency update: US dollar ticks up as market sentiment sours

Published December 5, 2018

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The dollar trimmed losses against its main rivals on Tuesday, slightly favoured by the negative market sentiment, although gains have been limited by investors concerns about the possibility of an economic slowdown triggered by the inversion of the US treasury yields’ curve.

EUR/USD retreats from 1.1440. The euro failed again to surpass the 1.1400 area and retreated on Tuesday from 1.1440 highs amid a sharp sell-off in equity markets, returning to the lower range of 1.1300. As at London market opening times, the EUR/USD is trading at 1.1330.

GBP/USD: testing 17-month lows at 1.2660. The sterling advanced to day highs near 1.2850 after the EU’s lawyers said that the UK can unilaterally stop the Brexit, although the pair ended up giving up as risk appetite deteriorated, and plunged to test key support at 1.2665. As at London market opening times, the GBP/USD is trading at 1.2710.

USD/JPY retreats to two-week lows at 112.50. The dollar dropped against the safe-haven yen on Tuesday, , retreating from highs near 114.00, to two-week lows at 112.55, weighed by concerns about a US economic slowdown and the dovish shift of the Federal Reserve. As at London market opening times, the USD/JPY is trading at 113.05.

In the Calendar Today

Today in the Euro Area we will be attentive to ECB Draghi’s speech. His comments about the Eurozone economic growth, the inflation perspectives or about the bank’s monetary policy might have some impact on the euro.

In the UK, Markit will release the Services PMI, however, with the interest focused in the result the parliamentary vote of the Brexit agreement, the impact of macroeconomic indicators in the GBP is expected to be limited.

Later on, the Bank of Canada will release its interest rate decision. The markets expect the bank to maintain the benchmark rate in December and hike in January, although the recent decline on oil prices are starting to dampen hawkish expectations. The risk for the Canadian dollar is skewed to the downside

 

08:30 GMT     ECB: Draghi’s speech

09:30 GMT     UK: Markit Services PMI (Nov)
Previous: 52.2              Expected: 52.5 

15:00GMT     BoC: Interest Rate Decision
Previous: 1.75%            Expected: 1.75%    

15:00 GMT     BoC: Monetary Policy Statement


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