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Dollar peaks at six weeks against yen due to easing trade tensions

Dollar peaks at six weeks against yen due to easing trade tensions

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Erik Holm - Head of media

The dollar rose to a six-week high against the yen on Thursday after Washington and Beijing took steps to meet each other in trade, triggering an increased risk appetite for investors. China has exempted 16 categories of US products from additional duties, including whey and fishmeal used in animal feeds, some cancer drugs and lubricants, the Chinese Ministry of Finance said on Wednesday.

US President Donald Trump tweeted that he would postpone the increase in tariffs on Chinese imports planned for October by two weeks. The yen dropped 0.47% to 74.35 against the Australian dollar and 0.21% to 108.04 against the US dollar at 6:34 London time, previously reaching 108.16, the lowest level since August 1.

"Australian" reached a six-week high, while the Chinese yuan rose 0.4% to a three-week high of 7.0855 per dollar. The euro stabilized at $ 1,1014 in anticipation of the outcome of the ECB meeting, before dropping to a weekly low of $ 1.0983. The pound fell after a Scottish court on Wednesday declared the illegal suspension of parliament. The pound was trading without sharp fluctuations at $ 1.2328 after falling 0.4% to $ 1.2313 the day before.

The situation on the Forex market before ECB meeting

The situation on the Forex market before ECB meeting

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Jim Anderson - Public Relations

The yen fell to a six-week low, as demand for safe-haven assets fell amid signs that China's active actions could limit the negative impact of the trade war on the global economy. The euro fell as traders prepared for the European Central Bank to launch a new round of monetary stimulus, while the pound rose on the news that British Prime Minister Boris Johnson could soften his Brexit strategy.

USD / JPY is increasing by 0.2% to 107.81; the pair reached 107.85, the highest since August 1, after the Global Times announced that Hu Xijin said China would announce measures to mitigate the negative effects of the trade war with Washington. Hu tweeted that these steps "will benefit some companies from China and the United States" 10-year-old Treasuries stopped a five-day decline. The currency haven, the Swiss franc, has weakened; USD / CHF rose 0.2% to 0.9940.

USD / JPY is “within reach of the level of 108.00”. The yen remained at a low after news that Hong Kong Exchanges and Clearing Ltd. Unexpectedly offered 36.6 billion dollars for the London Stock Exchange Group Plc. The currency is also under pressure from the news that the Bank of Japan may consider new mitigation measures at a meeting on DC policy next week. The ECB will announce its new policy on Thursday, the Fed on September 18 and the Bank of Japan on September 19.

EUR / USD drops 0.3% to 1.1015, the euro is falling for the second day in a row. Markets expect the ECB to lower its deposit rate and unveil further incentive measures. The 1-week implied EUR / USD volatility jumped to its highest level since January - the indicator covers both the ECB and the US Federal Reserve.

The pound rose on the news that Johnson is considering ways to circumvent one of the UK Parliament’s main objections to the existing Brexit agreement, the border issue with Northern Ireland. Sterling rose 0.1% to $ 1.2359. AUD / USD has not changed much and is trading at 0.6864.

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.