Equity market s are in selloff mode as investors fear further repercussions from China in regard to tariffs, plus tech stocks are still reeling in particular Amazon, it’s down another 4.8% today. Trump has reiterated that he is still going after Amazon for anti-competitive practices.
Markets are trading on thinner volumes, today is a public holiday in the U.K., most of Europe, and Australia.
USDCAD 1.2905, 1.2898, 1.2875 1.2929, 1.2949, 1.2957
The Sterling is carrying the crown of the top performer among the G10 currencies. Trading remains thin as some EU markets are closed for Easter Monday. The US Dollar is trading with a negative tone across the board: USD DXY index is down 0.11%; investors are concerned that trade wars will slow down world economic growth. China slapped a $3 bln tariffs on US imports. The economic calendar is light today; politics and trade war rhetoric are likely to be the main drivers for the day.
The Dollar is trading with a negative bias after the release of lower than expected Manufacturing ISM. The report card came at 59.3, a decrease of 1.5% points from the previous month’s reading of 60.8%. New Orders Index dropped 2.3% while the Employment component was lower by 2.4% points. We expect the Greenback to be on the defensive as markets digest the latest tweets from the White House and the fallout of Chinese tariffs.
The Cable is trading higher trying to recoup some of the losses from the previous sessions. GBP is currently up 0.45% against the US Dollar. But the underlying volume remains low, and this is where the danger lies. We expect this sugar rush to fade as investors turn their attention to incoming US data.
The EUR/USD pair is choppy and has cracked below the 1.23 handle. Overnight markets registered thin trading activity. Most European centers remained closed for Easter Monday. We expect the pair to consolidate within narrow ranges. Investors have been cautious not to breach the upper barrier and thus avoid attracting the wrath from ECB officials. These levels will be put to severe test. EU CPI and unemployment data are released mid-week. Better readings will get the market talking about ECB changing its monetary policy stance earlier than expected.
USD/CAD is between the devil and the deep blue sea. White House tweets on NAFTA went into a frenzy over the weekend. Once again, there were threats to pull out of the agreement. USD/CAD is expected to come under pressure; failure on the NAFTA front will kick in the impositions of tariffs on Canadian steel and aluminum. The pair is currently down 0.25%.
The Australian Dollar is looking vulnerable on the first trading session of the week. AUD is down 0.30% as market recalibrates its positions with trade wars looming ahead. Commodity-based currencies are expected to come under pressure. The Reserve Bank of Australia is expected to leave rates unchanged at 1.50% and inflation continues to be anemic.
The Japanese Yen is expected to trade in line with risk-on and risk-off investors’ mood. The USD/JPY touched the session lows following the release of lackluster US ISM data. This will once again raise an eyebrow in Japan. Large corporates are concerned that a strong Yen will east into the bottom lines. Year to date, the Japanese Yen has registered a gain of +6% against the Greenback.