Safe Haven Buying as Dollar Sinks Further on USD Political Concerns

As uncertainty over the most recent dramas in Washington continues to reign, the market has reacted in kind and continued to buy it’s usual safe haven currencies with the Chf, Jpy and now the Euro appreciating strongly under current conditions. Gold has also had a great run as you’d expect, hitting a high at 1263.00 last night.

Facts are actually pretty thin on the ground in Washington at the moment and I think that’s the most disconcerting thing for the market at the moment. Certainly the feeling on the street at the moment is that it’s looking more unlikely that the tax reforms will be coming anytime soon especially after Senate leader McConnell’s comments yesterday.

The Dxy is now down at 97.50 having been challenging 100.00 at the end of last week and UsdJpy has traded down over 4 big figs in the same amount of time.

Elsewhere in the market last night, we saw the UK unemployment rate improve slightly which helped keep some strength in the sterling, although Cable is still sitting below that elusive 1.3000 level.

Looking ahead to today’s trading and this sentiment should continue to permeate through to the markets with the dollar, risk and equities due to all come under further pressure.

We have employment data due out here in Australia this morning which will be the main focus in Asia and then the Retail Sales numbers in the UK are due early in the London session at 6.30 pm. Into the New York session and we have the weekly US unemployment numbers and Philly Fed Manufacturing data due but once again these should be overshadowed by any further developments in Washington.

Traders will continue to look for levels to sell the dollar and risk currencies while this sentiment prevails, however as always when we’ve seen such a quick move (and we’re still looking for full facts and clarification behind it) there will be come contrarians out there looking for good levels to get in if we start to see a change in sentiment.

Good Luck trading today and if you have any questions or queries, please contact the team at info@sec.rakuten.com.au

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