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AETOS Market Commentary 26/02/2019

AETOS Capital Group Partnership


The Aussie rose on Monday, closing at 0.7169(+13 pips) against the greenback. The commodity nature currency also rallied against all of the major crosses. Undoubtedly, continued optimism towards US-Sino trade negotiations was the main driver behind the Aussie’s strength. “President Trump twitted ‘I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!”. The news enhanced risk appetite with Asian equities performing across the board while emerging market FX and commodity-linked currencies also joined the party.” The tweets saw the AUD/USD lift above .7150, supported by renewed strength in Chinese stocks and the Chinese yuan which both hit multi-month highs during the session. The buying in the Aussie continued into European trade, seeing the AUD/USD lift to as high as .7184 before easing slightly towards the close. On the data front, today will be a quiet day, leaving Chinese markets to dictate the sentiment level.


The Euro closed higher on Monday, closing at 1.1364(+23 pips) against the greenback. The pair spent most of the last week fluctuating around the level amid investors unable to weigh whether EU's growth or the Fed's dovishness is worst. The absence of macroeconomic news on Monday from any of these economies exacerbated the quietness around the pair that got a small boost and rose up to 1.1367 during Asian trading hours on hopes related to the US-China trade war. President Trump tweeted that substantial progress has been made in talks and that he plans to delay the increase of tariffs on Chinese imports beyond March 1st. The greenback recovered just modestly during the American session, getting some help from collapsing oil prices, after another Trump tweet, in this case, criticizing the OPEC. Today, Germany will release the GFK Consumer Confidence Survey at 18:00 AEST ,seen for March at 10.8, while the US will have a busy calendar, which includes December Housing Starts and Building Permits, Consumer Confidence, the Richmond Fed Manufacturing Index and, above all, Fed's Chair Powell Semiannual Testimony on monetary policy before a special Senate Committee. This last event is the only one that has chances of triggering a relevant movement.


The Japanese Yen weakened against the greenback on Monday, closing at 111.03(-27 pips). The pair surged to a fresh yearly high of 111.23, breaking its range to the upside during the latest US session, as the better market mood on China-US trade talks progress lifter Wall Street, which in turn, weighed on demand for safe-haven assets, included the JPY and US government bonds. Treasury yields surged with the benchmark of the 10-year note peaking at 2.681%. Adding to yen's weakness, the final version of the December Leading Index came in at 97.5, below the previous estimate of 97.9. The Coincident Index was revised to 101.8 from the flash estimate of 102.3. There's no data scheduled in Japan this Tuesday.

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Source: https://www.aetoscg.com/uk/market-commentary
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