Risk Rallies On G20 Positives While Safe Havens Tank

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USD Climbs on G20 Developments

The US dollar traded strongly higher over the European morning on Monday as the positive input from the outcome of the G20 summit over the weekend was felt. Trump and Xi Jinping agreed to restart trade talks, along with Trump signaling a reversal of the ban on US companies dealing with Huawei. The moves have been welcomed by USD bulls, seeing the index trading back above the 95.72 level to trade 96.13 last.

Euro Sells off on USD Strength

EURUSD has been sharply lower today owing to the resurgent US dollar which has kicked EURUSD back down below the 1.1329 level as of writing. USD strength, along with expectations of forthcoming ECB easing are weighing on EUR currently.

GBP Lower on Weak Manufacturing

GBPUSD has come back under heavy pressure over early trading on Monday also. A fresh wave of USD buying has swung back into gear putting downward pressure on GBP which has been exacerbated this morning by a weaker than expected UK manufacturing PMI reading which sees the sector remaining in a contractionary territory over June. GBPUSD trades 1.2645 last continuing to move lower from 1.2771 level.

SPX500 Hits Fresh All-Time Highs

Risk assets have traded higher today also, riding the wave of optimism unleashed by positive developments at the G20 meeting. Along with progress around the US/China trade situation, Trump also made a historic move by becoming the first US president to set foot in North Korea. Trump met North Korean leader Kim Jong Um on Sunday and accompanied him a short distance into the Northern Territory, in an encouraging display of the improving relations between the two leaders. SPX500 trades 2973.03 last, having broken out to fresh all-time highs.

JPY & Gold Down

Safe havens have been the obvious losers from the early flows this week. The rally in risk sentiment has seen both JPY and gold falling lower against USD. The sell-off in gold has seen price falling back under the 1389.73 level, as the decline from 1434.00 gathers pace in the wake of this latest trade war optimism. USDJPY has seen a similar important technical break with the price jumping back above the 108.15 level and breaking the bearish trend line also.

Oil Boosted by Trade Hopes

Oil prices have started the week on a solid footing too given the fresh hopes for a US/China trade deal. The breakdown in talks in May hit oil hard, echoing the decline seen in oil last year as a result of the trade war. With recent EIA reports reflecting growing drawdowns in US crude stores, along with lingering tensions between the US and Iran, crude looks likely to stay well bid. Price is currently challenging the 60.15 resistance level which is holding for now.

Commodity Currencies Can’t Climb

USDCAD has been higher also this morning although only slightly so. Strength in USD has been offset by higher oil prices which continue to support CAD. USDCAD trades 1.3103 last as the market remains stagnant, caught between these two opposing market forces.

AUDUSD has been sharply lower today with price breaking back down below the .70 level. The moves are likely to largely be linked to the collapse in gold prices, along with a higher USD, which have capped the recent upside in AUDUSD. The RBA is not expected to ease further this week though we could get a signal of further easing to come, which should keep AUD weighed over the week.

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