Risk Appetite Consolidates

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Risk Assets

Most of the FX majors remain somewhat soft on the third trading day this week apart from FX safe-havens and the euro. With risk flows halting in the first half of the trading session, market participants seem rather restrained on asset options.

Euro Weakens Ahead of ECB

Market participants anticipate the ECB to dive into lower negative rates on Thursday, eurodollar flows indicate. After all, Draghi convinced the markets that the central bank will do “whatever it takes” to preserve the European currency.

Euro is falling away from 1.1050 and towards the 1.1025 level against the greenback. Data showed that Spanish Industrial Production deteriorated from 2.5% expected to 0.8%.

FX Safe-Havens Down on Easing Expectations

The Japanese yen continues being under pressure as investors turn their back on the safe-haven asset on expectations that BoJ will be easing policy on their meeting next week. USDJPY had an array of positive sessions this week with investors now eying the 108 level.

The Swiss franc, on the other hand, trades very similar to its homogenous consociate yen. USDCHF crossed above the 0.99 mark yesterday and continues moving higher this morning, supported by somewhat stronger trade optimism.

Pound Takes Break Above 1.2350

With the latest political and economic developments in the UK, GBPUSD remains at elevated levels above 1.2350 this morning. UK wages and a better than expected unemployment rate have partially offset the multimonth decline. The other half was yet another failure on British PM to call on a snap election. That was what triggered positive flows on cable at the beginning of this week.

Risk Assets Also Mixed

Aussie, Kiwi and the SPX look bullish in the short-term, however, any gains have now halted on lack of news and economic flows. Crude oil’s gains, however, were capped by Trump’s decision to fire John Bolton, his national security advisor.

AUDUSD received rejection after missing the 69 cents barrier again, NZDUSD stably trades above 64 cents and the S&P500 seems undeterred by policy easing headlines.

Gold and Dollar Move Hand to Hand

Surprisingly enough, today’s session has both gold and the US dollar moving higher consequently. It is probably an ECB related drop on euro allowing the dollar to move higher. This suggests that XAUUSD long is the only option for bulls looking for an alternative trading asset.

Gold nears the 1500 level once again, as bears never really triggered sizeable shorts, and the dollar index (DXY) heads towards 98.65 after a rejection at 95.25.

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