Weekly Preview: G8 Currencies Driven by China-U.S. Trade Rhetoric

AxiTrader

Pound was able to sustain its rally last week before closing lower at the end of the week. The Sterling’s performance was largely driven by the general election results which indicated that the Conservatives were in ample lead, say senior analysts at AxiTrader

In this Guest Editorial, the management team at AxiTrader look at analytical aspects of importance in retail trading, focusing on movements in G8 currencies due to trade rhetoric between the giants of the East and West.

  • USD: USD buoyed by domestic data upside, personal spending and core durable goods orders in focus
  • GBP: Brexit’s outcome and General Election results in focus
  • JPY: JPY on the bid amid trade uncertainties, Tokyo CPI in focus
  • EUR: Germany’s IFO business climate, GFK Consumer Confidence, CPI, Unemployment and Eurozone’s CPI and unemployment data in focus
  • AUD & NZD: Unclear outcomes on global trade continue to be the key factors this week for both AUD and NZD despite heavy week with domestic data release
  • CAD: Focus will be on upcoming GDP data release as investors would prefer to adopt a wait and see approach

CURRENCY: USD

USD edged higher last week as risk-off sentiment has buoyed the safe havens. U.S. Senate passed a bill on Tuesday aimed at protecting citizen’s rights in HK. Besides, Trump threatened to raise tariffs on Chinese imports further if a trade deal cannot be reached. On the data side, U.S. homebuilding rebounded in October, and permits for future home construction jumped to a more than 12-year high, suggesting the economy might have bottomed and is recovering gradually.

On Friday, IHS Markit said its U.S. flash manufacturing sector purchasing managers index rose to 52.2 in November from 51.3 in October. This is the fastest rate since April.

Meanwhile, the U.S. flash services sector purchasing managers index in November rose to 51.6 from 50.6. This is the quickest expansion since July. USD could continue the rally as data prints to the upside, reviving investors’ confidence in the economy. This week we will have Chicago PMI, personal spending, and Core Durable Goods Orders. If data continue to print to the upside, USD could strengthen against most majors.

CURRENCY: GBP

Pound was able to sustain its rally last week before closing lower at the end of the week. The Sterling’s performance was largely driven by the general election results which indicated that the Conservatives were in ample lead.

Besides, assurance from Nigel Farrage that his Brexit party won’t contest the 317 seats won by the Conservatives at the last election and will go after the Labour-held seats instead, along with Prime Minister Boris Johnson claiming that all Conservative Party Candidates in the December 12 election have pledged to back his Brexit deal, opening the door to getting the agreement passed through the Parliament, helped to prop the currency higher.

Looking ahead, on the data front, it is a light calendar week for the Sterling this week, with the Consumer Confidence data in focus though any impact is likely to be minimal as the focus remains on the Brexit saga.

CURRENCY: EUR

EUR rallied against the greenback last week as trade optimism helped to prop the currency higher before paring recent gains as a report by Politico indicated that Trump administration officials are considering whether to start a new trade investigation to justify tariffs on the EU. Looking ahead, on the data front, investors will be keeping a close watch on Germany’s IFO business climate, GFK Consumer Confidence, CPI, Unemployment and Eurozone’s CPI and unemployment data which could help to prop the currency higher should they meet estimates.

CURRENCY: JPY

JPY was buoyed by uncertainties in the U.S.-China trade talks in the past week. On Thursday, Bloomberg reported, citing unnamed sources, that China’s lead trade negotiator Liu He said at a dinner speech on Wednesday that he was cautiously optimistic about a phase-one trade agreement with the U.S. The report added that Liu told an attendee he was “confused” by the U.S. demands, while remaining confident that a phase-one agreement could be reached.

Donald Trump and Chinese President Xi Jinping were expected to meet on the sidelines of an international summit in mid-November in Chile, until it was canceled due to domestic unrest. While investors await for good news from the trade front, safe havens are still on the bid due to the uncertainties.

CURRENCY: AUD

The AUD moved sideways over the course of last week. Given a light week with only RAB’s meeting minutes release, we know that the RBA left rates unchanged. Further, there was no fresh developments coming from the US-China trade talks. This week, we have more domestic data release.

Investors should watch closely private new capital expenditure, new home sales and private sector credit. A better than expected data release for these events would show that the domestically Australia’s economy is going well and investors can expect the AUD to strengthen, barring any fresh developments on the US-China trade front.

CURRENCY: NZD

NZD moved a lot but got nowhere last week. It made made huge sideways swings but it ended the week at the same level where it was at the start of last week. The NZD dipped lower on mixed sentiments regarding US-China trade talks.

However given improving Global Dairy trade prices, the NZD was lifted up. Going forward into this week, we have a number of high impact data coming up such as the RBNZ financial stability report, trade balance, core retail sales and ANZ business confidence report. Should the data be better than expected, we can see the NZD outperform further if there are no negative sentiments from the ongoing US-China trade talks. Else, investors may see the NZD still continue to move in a sideways range.

CURRENCY: CAD

Last week has been a heavy week for the CAD as it weakened considerably at the start of the week despite positive domestic data. This is probably due to the price of oil tanking. However, on Thursday, BoC’s Governor Poloz surprised market with his hawkish tone, pointing out that the economy is in a “good place” and that there should be no need to change monetary policy.

This caused the CAD to strengthen significantly. This coming Friday would be a heavy day for the CAD as we have GDP data release. Hence we expect that investors would prefer to stay on the sidelines in anticipation of GDP data.

Find out more at AxiTrader here.

The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.

Read this next

Digital Assets

Sumsub and Mercuryo publish a guide for VASPs: “Mastering Travel Rule Compliance”

“At Sumsub, we’ve concentrated our efforts on filling the gap in understanding the complexity of Travel Rule regulation and helping organizations find the best solution to stay safe and compliant while minimizing costs and avoiding potential risks of non-compliance. This guide we created with Mercuryo, our trusted partner, is the ultimate navigation tool all VASPs can consult.”

Digital Assets

Bitget Wallet Leads with Record Swap Volume & New Crypto Innovations

This week, Bitget Wallet achieved a milestone by surpassing Metamask with a record 388,757 Swap order transactions, securing the global lead. The significant 7-day trading volume, almost 68,000 more than its rival, underscores its liquidity and user trust. This robust activity signals Bitget Wallet’s prominent role and reliability in the dynamic crypto market.

Digital Assets

Embarking on a Digital Currency Journey

Imagine you’ve stumbled upon a treasure map, leading you to untold riches hidden in the vastness of the internet. Instead of gold coins and jewel-encrusted goblets, this treasure comes in the form of digital currencies, the modern-day loot coveted by many.

Reviews

Traders Union Experts Share The Trading Analyst Review For 2024

Navigating options trading in rapidly shifting markets poses a considerable challenge. This is where options trading alert services become invaluable. They aid traders in keeping abreast of evolving opportunities and market trends. In this assessment, Traders Union experts scrutinize The Trading Analyst alert service to ascertain its efficacy. 

Digital Assets

BlockDAG’s Presale Achieves $9.9M: Aiming For A 5000-Fold ROI As Cardano’s Price Rises And Fantom Launches Sonic

Explore Cardano’s surge, Sonic’s efficiency, and why BlockDAG’s growth makes it the top crypto choice. A deep dive into the future of blockchain investments.

Digital Assets

US, UK probe $20 billion Tether transfers tied to Russian exchange.

U.S. and UK authorities are investigating the movement of $20 billion in the USD-pegged stablecoin tether (USDT) through Moscow-based exchange Garantex.

Digital Assets

BlockDAG Presale Raises $9.9M as Batch 5 Nears Sell-Out Amid Bonk’s Fluctuating Trading Volume & Spell’s Bullish Price

Explore BONK’s trading volume, SPELL’s market shifts, and why BlockDAG’s 10,000 ROI makes it an ideal crypto for savvy investors in 2024.

Digital Assets

Bybit expands into Europe amid regulatory scrutiny

Dubai-based cryptocurrency exchange Bybit is expanding its operations in Europe after encountering regulatory challenges in Hong Kong.

Digital Assets

Cathie Wood’s sponsored Bitcoin ETF sees historic $200 million inflows

The ARK 21Shares Bitcoin ETF (ARKB), co-sponsored by Cathie Wood’s ARK Invest, registered historic inflows exceeding $200 million on Wednesday, signaling a robust appetite among investors for Bitcoin-centric investments.

<