USD firms amidst 'prominent downside risks'

Forex 4 minutes to read

Michael O’Neill

FX Trader, Loonieviews.net

Summary:  A data-defying dollar is surging in early New York trade while equities are green amidst reports of Chinese trade concessions.


The US dollar is grinding higher against all the major G10 currencies in New York trading, despite sharply weaker than expected Q4 GDP data. The Bureau of Economic Analysis said real GDP rose 2.2% in the fourth quarter, which was below the previous reading of 2.6%. 

FX traders didn’t seem to care, in part because weather and the government shutdown may still corrupt the data. Traders bought dollars with the Japanese yen nosing out EUR and GBP as the worst-performing currencies since New York opened.

Fed vice-chair Richard Clarida reiterated the FOMC’s dovish outlook in a speech in Paris this morning. He said, "US and other financial markets are attuned to a number of prominent downside global risks, which include Brexit, a sharp slowdown in global growth prospects and trade tensions." 

He echoed concerns echoed by officials from other central banks saying that concerns about global economic and financial developments will keep the Fed “patient and data dependent."

USDJPY rallied on the back of a jump in US Treasury yields from 2.63% at the New York open to 2.393% by mid-morning. The dovish remarks from the Fed vice-chair and the jobless claims data gave a modest improvement to the risk tone. 

Brexit drama enveloped GBPUSD. The Guardian reported that British MPs would vote for a third time on Theresa May’s Brexit plan. GBPUSD selling dragged EURUSD lower as well. EURUSD broke below support at 1.1240, which opened the door to further weakness to 1.1175.

Wall Street is trading in positive territory helped by a modest improvement in the weekly jobless claims report. The ongoing US/China trade negotiations and reports that China is making concessions on some key issues may have also contributed to the mood.
EURUSD
EURUSD (four-hour, source: Saxo Bank)

Saxo Bank A/S - Representative Office
Boulevard Plaza - Tower 1
30th floor, office 3002
Dubai Downtown, Burj Khalifa area
Dubai
UAE

UAE

Trade responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.