Australian Dollar (AUD) Boosted as US-China Talks Delayed
The Australian Dollar (AUD) edged higher on Monday after the meeting between the US and China scheduled for the weekend to review the current Phase 1 trade deal was delayed. This boosted risk appetite as the phase deal between Beijing and Washington was left intact, for now.
However, gains were largely limited during Monday’s session as traders focused on the upcoming Federal Reserve monetary policy minutes as they await clues for any shift in monetary policy.
Meanwhile, today could see the ‘Aussie’ surrender any gains if the latest Reserve Bank of Australia’s (RBA) monetary policy minutes are overly dovish.
Pound (GBP) Struggles Ahead of Next Round of Brexit Talks
The Pound (GBP) edged higher against the US Dollar on Monday but struggled against a handful of riskier assets ahead of the latest post-Brexit negotiations.
Brexit talks are due to resume today, with the main issue being whether the country’s financial sector will be able to access the EU after Brexit. The bloc’s financial services chief has noted the City of London may not find out if it will have access to the EU’s market until after the end of the transition period.
Sterling could struggle today if there is a fresh bout of Brexit pessimism as Brussels and London begin the next round of talks and the deadline draws closer.
Euro (EUR) Boosted by Upbeat German Bundesbank
The Euro (EUR) made gains against the majority of its main rivals during Monday’s session after an upbeat report from Germany’s central bank.
The Bundesbank said the economy is set for a rapid and broad-based recovery after the coronavirus crisis, although a vaccine may be necessary for a full recovery. However, the bank did note that as the coronavirus has not been contained globally it will weigh on German exports and industrial production.
Meanwhile, the single currency could give up gains following a dovish speech from the European Central Bank’s (ECB) Vice-President, Luis de Guindos, as new coronavirus hotspots in Europe emerge.
US Dollar (USD) Slides as Delay of Phase 1 Review Buoys Risk Appetite
The US Dollar (USD) suffered losses during Monday’s session as investors were relieved by the delay to the six-month review of the US-China Phase 1 trade deal which left the current pact intact.
Markets also eagerly await the latest US Federal Reserve monetary policy minutes which are due to be released during Wednesday’s session. Many believe the Fed will adopt an average inflation target.
The US Dollar could suffer some losses during today’s session if the latest US housing starts and building permits disappoint investors. Otherwise, market sentiment is likely to continue driving US Dollar movement.
Canadian Dollar (CAD) Gains despite Falling Oil Prices
The Canadian Dollar (CAD) edged higher as the currency also benefitted from the upswing in support after the US-China meeting was cancelled.
However, oil prices slipped thanks to rising coronavirus cases, mainly concentrated in Europe, and US-China tensions, although China’s plans to increase imports of US crude oil limited losses.
Looking ahead, if oil prices slump further ahead of this week’s OPEC+ meeting, the oil-sensitive ‘Loonie’ will fall.
New Zealand Dollar (NZD) Struggles as Arden Postpones Election
The New Zealand Dollar (NZD) slumped against a handful of currencies after New Zealand’s Prime Minister Jacinda Arden postponed the county’s election on Monday by a month as Auckland remained in lockdown due to a coronavirus outbreak.
Yesterday also saw New Zealand record nine new cases of the coronavirus, which took the number of active cases to 78.
Looking ahead, if the country continues to report new cases due to the fresh outbreak, it will leave the ‘Kiwi’ under pressure.