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USD Extends Gains but Trade Tensions Likely to Weigh

Geopolitical risks add to US/China trade tensions                        

  • With renewed US/China trade tensions in the background, markets will also keep an eye on rising geopolitical tensions as oil hits a 4Yr high on expectations that President Trump may announce his decision on the Iran nuclear deal as early as tonight. There are mounting expectations that Trump could pull out of the 2015 Iran nuclear accord but exactly how he will do so remains unclear. 

 

 

Italian political risk adds to EUR’s woes

  • EURUSD hits a fresh YTD low of 1.1898 overnight just after the NY open but soon bounces back above 1.1900. Negative news from the Italian election are perhaps making investors nervous at a time when EUR sentiment already appears vulnerable as Italian president Gentiloni warns there is "no chance" of forming a new government and asks each party to support a "neutral government" through the rest of 2018 to allow Italy to pass the 2019 budget. However, Five-Star leader Maio rejects this idea and demands a July election.

 

 

Commodity Bloc: AUD & NZD underperformance likely to continue against CAD

  • AUDUSD slips towards the 0.7500 level on the back of mixed data as Australia’s April ANZ job advertisements fall -0.2% vs 0.0% MoM prior but the April NAB business confidence index rises to 10 vs 7 prior and business conditions to 21 vs 15 prior, matching the prior record high. This week, following a dovish RBA Monetary Policy Statement on Friday, markets await tonight’s Federal budget – more an issue for fixed income than AUD but likely to aid the assessment on the re-election chances of the current Turnbull government.

 

 

 

This is an extract from the Daily Currency Update, dated 8th May 2018. Please approach a Citigold Relationship Manager if you would like more information

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