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Forex today: Johnson is defeated, the US and China are friends again

Forex today: Johnson is defeated, the US and China are friends again

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Erik Holm - Head of media

There is another surge of optimism in the markets due to optimistic news on trade negotiations. Representatives from both the United States and China confirmed that the parties agreed on a new round of trade talks in Washington in early October. Before that, in mid-September, working meetings of the teams of trade negotiators will be held, aimed at “laying the foundations for tangible progress”.

This triggered a weakening of defensive assets, including the yen and gold. Gold fell back to 1540. USD / JPY jumped by almost 40 pct. to 2-week highs at 106.75, US stock futures and treasury yields also went up. AUD / USD broke above 0.68.

USD / CAD continued to consolidate above 1.32, where it ended yesterday as a result of a favorable combination of two factors at once: oil prices aggressively strengthened by 4%, and the Bank of Canada didn’t show an active pigeon mood.

Meanwhile, the British parliament rejected Prime Minister B. Johnson’s proposal for an early election. Johnson received in his support only 298 of the required 434 votes. Parliamentarians want to first pass a bill empowering them to block Brexit without a deal. Yesterday, the House of Commons approved the draft law by a majority vote, and now it has gone to the house of Lords. The legislation is expected to be completed on Friday. GBP / USD against this background continues to hold steady around 1.2250.

Key information about the situation on the Forex today

Key information about the situation on the Forex today

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Erik Holm - Head of media

The risk appetite recovered amid news that the British Parliament had voted in favor of a bill to block Brexit without a deal. Asian indices rose, as did Wall Street futures and Treasury yields. Ozzy became the leader in the Forex market.

AUD / USD continued to grow and reached weekly highs at 0.6785, even though the growth of Australia's economy in the last quarter was minimal for 10 years. Kiwi also rose and tested at 0.6350 amid rising commodity prices. Looney is holding on to its previous positions amid rising oil prices in anticipation of a meeting on the monetary policy of the Bank of Canada. Meanwhile, the yen was under pressure, despite favorable PMI data in the service sector. The comments of the Bank of Japan representative Kataoka put pressure on the currency, and the pair USD / JPY rose above 106.

The pair EUR / USD remains at high positions under 1.10, reached yesterday on weak ISM USA data. The pound is trading near 1.2100 after rising on the news that the Johnson government was defeated in parliament. Next, the focus of the players will be PMI in the UK services sector.

Today, the Eurozone and Britain will publish PMI indexes in the service sector. Also, candidate for the post of head of the ECB Christine Lagarde will deliver a speech, and the focus of players will be another vote in the British Parliament.

The US and China today will publish trade data, but the main event will be the decision on the monetary policy of the Bank of Canada. Also in the focus of the players will be the speeches of representatives of the ECB and the Fed, as well as news from the front of trade negotiations.

The current situation on Forex market

The current situation on Forex market

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Jim Anderson - Public Relations

Introducing the key events of Tuesday, September 3:

GBP / USD is trading near the lowest rate since 2019 at around 1.2015. Today, parliament resumes work after the summer holidays. And yesterday, opposition leader Jeremy Corbin confirmed that deputies will try to introduce a legislative initiative on Tuesday that impedes the country’s withdrawal from the EU without a deal. If the Labor plan gets approval, the UK government will have to ask for a 3-months Brexit delay until January 31. At the same time, British Prime Minister Johnson once again stated that he is not going to ask for any postponement, thereby hinting that he would be forced to hold early parliamentary elections, probably on October 14. These events attract the attention of markets.

EUR / USD continues to retreat to new lows at 1.0950 (the lowest since 2017). The US dollar is strengthening on all fronts, and players are waiting for the ECB’s decision on September 12.

The USA and China cannot decide on the date of the high-level negotiations. The largest economies in the world “exchanged” duties on the weekend.

RBA kept the interest rate unchanged at 1.00% and hinted at a further reduction in interest rates. AUD / USD is trading at 0.67. Previously, Australian retail sales fell to -0.1%.

Today, during the North American session, the United States will publish the ISM index of business activity in the manufacturing sector for August. This report will shed light on Friday’s NFP US employment data.

The markets of the USA and Canada are returning to work after the holidays so that trading will become more active.

Cryptocurrencies recovered, Bitcoin is again trading above $10.000.

Yen rises to dollar and euro

Yen rises to dollar and euro

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Jim Anderson - Public Relations

The US dollar rises against the euro and declined against the yen, while the Australian and New Zealand dollar dell amid falling demand for commodity currencies due to investor anxiety over the protracted trade dispute between the US and China and the slowdown in global economic growth.

Commodity currencies remain under pressure. Their weakness is due to “continuing concerns over the prospects for global economic growth after the escalation of the US-Chinese trade war.”

The official representative of the Ministry of Commerce of China, Gao Feng, said on the eve that China will not immediately respond to the new increase in duties announced by US President Donald Trump last week.

Beijing didn't leave unanswered the previous steps of the United States, which introduced new duties on Chinese goods, and failure to act this time could mean a change in strategy, experts say.

The US Department of Commerce revised its estimate of GDP growth in the second quarter to 2% in terms of annual rates from the previously announced 2.1%. This coincided with the forecasts of analysts. Meanwhile, the number of initial applications for unemployment benefits in the US last week amounted to 215 thousand, which roughly corresponds to the expectations of analysts and is a low value, indicating a strengthening of the labor market in the country.

As of 9:48 Moscow time, the euro fell 0.15% to $1.1040 from $1.1057 at the close of the previous session. The value of the single European currency to the Japanese currency was down 0.30% and amounted to 117.43 yen compared to 117.78 yen on Thursday. The dollar depreciated by 0.12% and is 106.39 yen against 106.52 yen.

 

 

Ruble slides down after Argentinean peso

Ruble slides down after Argentinean peso

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Jim Anderson - Public Relations

On Wednesday, August 28, the ruble fell completely discouraged and did not notice either positive news or the rising oil price. As a result, at the close of trading, the US dollar exchange rate "for tomorrow" again grew, adding another 36 kopecks (+0.54%), up to 66.8 rubles, and the euro didn't lag behind, having risen in price by 29 kopecks. (+0.4%), up to 73.98 rubles.

Perhaps the main negative factor that pushed the ruble down was the news from Argentina, whose authorities reached out to the IMF with a request to defer payment of debts. Recall that in 2018 Argentina received funding from the International Monetary Fund, the amount of financial assistance exceeded $56 billion. Probably, the country’s authorities are asking for postponement due to the election campaign, where, as shown by recent primaries, the current president is doing not good.

However, amid the recognition by the Argentine Ministry of Finance of the inability to repay the debt to the IMF in time, the Argentine peso collapsed on Wednesday by 3% against the dollar, pulling the currencies of other Latin American countries down. Brazilian real fell yesterday against the dollar by almost a percent, the Mexican and Colombian pesos lost a little less, about 0.2%, and the Colombian peso fell in price, but only by 0.06%.

Today, amid global instability, the ruble at the opening may again become lower. The forecasts for the dollar are up to 66-67 rubles per dollar and up to 73.5 -74.5 rubles per euro.