MARKET DEVELOPMENT – Mexican Peso Plunge, JPY Soars, Euro Benefits from Month-End
MXN: The Mexican Peso plunged overnight after President Trump astounded markets by announcing that a US will place 5% tariffs on all Mexican goods, serve dampening risk appetite, while Mexican unprotected bonds (autos in particular) had also dragged equities lower. That said, a 3% dump in a Peso looks to be rather stretched with a pierce exacerbated by complicated prolonged positioning in a banking (net longs top given 2014).
JPY: The Japanese Yen is a important outperformer in a G10 space as safe-haven flows support. Subsequently, USDJPY has done a mangle subsequent a 109 hoop with support during 108.50 eyed.
EUR: Despite a dump in German inflation, that raises a risk of softer Eurozone inflation, a Euro is handling to reason organisation as month-end shopping in EURGBP provides support for a currency, while an tell of a Euro saved lift trades in a Mexican Peso has also underpinned. Reminder, a Euro had been many traders appropriation banking of choice when going prolonged EMs. However, gains in a Euro sojourn extent given a downside risks stemming from a doubt around Italy. Of note, a 5-Star celebration announced that it would support a taxation cut plan, that is expected to see a budget-deficit aim raised. Alongside this, eyes will be on subsequent week’s ECB assembly with Draghi and Co. set to hang to a dovish script.
USD: The US Dollar has unsuccessful to find comfort from a increasing trade fight doubt with a greenback modestly lower, despite holding onto a 98.00 handle. Elsewhere, yesterday’s debate by Fed Vice Chair Clarida has also kept gains in a USD singular after opening a doorway to a intensity rate cut supposing downside risks to a mercantile run-down further.
Crude Oil: Oil prices are once again on a backfoot as souring risk view weighs on a commodity. Consequently, oil prices are now on march for a worse monthly given a Nov sell-off with Brent wanton futures down over 14% for a month.
Source: DailyFX, Thomson Reuters
WHAT’S DRIVING MARKETS TODAY
- “EURUSD Regains Some Strength, Bond Yields Signal a Recession” by Daniela Sabin Hathorn , Junior Analyst
- “Gold Price Outlook: Bullish Breakout Gathers Pace, Fed Opening Door to Rate Cut” by Justin McQueen, Market Analyst
- “FTSE 100 Outlook – Looking to Break a 200-day, Pattern Neckline” by Paul Robinson, Currency Strategist
- “Using FX To Effectively Trade Global Market Themes during IG” by Tyler Yell, CMT , Forex Trading Instructor
— Written by Justin McQueen, Market Analyst
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