USD gets some support from US trade gap narrowing and strong non-manufacturing ISM. GBP weakness continues, CAD underperforming
Despite the lack of a catalyst, yesterday’s risk off sentiment carried through to Wednesday, with heavy GBP losses through NY and Asia providing the prompt to pile into safe haven currencies, though JPY gains through London saw the USD rate find a near term base ahead of 100.00. CHF gains against the EUR see sub 1.0800 vulnerable again, but SNB smoothing operations are widely expected to be in play here. GBP consolidation saw cable tipping 1.3000 again as EUR/GBP tested .8500, but subsequent price action suggests the lows in Asia today may well be revisited. FOMC minutes later this evening should temper trade in the meantime, but the (pre Brexit) timeframe will make much of this redundant. Fed’s Tarullo revealed dampened expectations on inflation, but both the US trade stats and non manufacturing ISM posted decent results to give the USD some support late in the day. The Canadian trade deficit moved the other way however, and we are seeing an offered tone in the CAD at present, partly on oil, partly general negative risk sentiment, but it is slow going into the upper 1.3000s for now. AUD/USD retested .7500 but has failed so far, and perhaps justifiably so as the election results have yet to be finalised. EUR/USD keeps finding support ahead of 1.1000, but cross rate flow a big driver here at present. Early SEK gains post Riksbank were swiftly reversed; the USD rate posting new highs on the week.