NY Open: Pre-Thanksgiving profit-taking sinks greenback
Market sentiment is on the shaky side as US markets open, with flagging trade deal optimism, a dovish Fed and some profit-taking all taking their toll.
US markets are closed to mark Independence Day but in the background, the drumbeat of global trade wars continues to rumble, undermining the yuan and Chinese equities, sparking fears of contagion across fixed income and dragging a major tech company onto the battlefield.
The Peoples Bank of China's intervention yesterday in support of its currency did slow down the yuan's decline but the market remains unnerved by the currency's prospects. "The signal is rather clear that the PBoC doesn't want to see a devaluation just yet," notes John J Hardy, Saxo's Head of FX Strategy.
On the trade war front we have fresh news out of the EU that the bloc is trying to put together a coalition countries to counter president's Trump's threat of tariffs on motorcar imports to the US, and this, Hardy says, illustrates the vulnerability of the EU to Trump's trade crusade.
In equities, "we're still in a risk-off scenario even though Chinese equities are 1% lower" says Peter Garnry, Saxo's Head of Equity Strategy.
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