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The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market in order to determine daily biases and assist one’s decisions on a regular basis. Feel free to follow Ivan on Twitter & Youtube.
The USD, JPY, and the CAD have been the main laggards in the last 24h. On the flip side, the GBP, AUD, NZD keep attracting solid bids, leading to demand imbalances even if the environment remains extremely dicey ahead of crucial pending developments such as Brexit or the US-China trade negotiations. The Euro is sandwiched in the middle, with the currency largely conditioned to Brexit developments and Wed’s FOMC to find its next catalyst in either direction.
From a micro perspective, which is really what matters amind the dicey state of affairs in Brexit and with Central Banks meeting this week, we are faced with a ‘USD weakness’ environment in a context of rising equities, which keeps promoting the ‘risk on’ environment. Even if we should not place as much weight given the unpredictability of the events unfolding this week, the macro backdrop, comprised of the weekly trends, is also reflective of weak USD dynamics amid rising equities.
As our model explains, “when the usd and us30 yr bond yield both move lower, clues must be obtained via the sp500 and potentially gold to determine risk. If the sp500 moves lower, the risk environment remains not friendly overall. However, under this context, the usd weakness, indirectly, eases pressure on EMs and may keep the likes of the aussie or kiwi underpinned vs euro, gbp, cad, barring fundamental news affecting the flows in the oceanic currencies.”
EUR/USD: Range-Bound Conditions Awaiting Brexit News
GBP/USD: Brace For Another Week Of Brexit-Led Vol
USD/JPY: Constructive Bullish Structure But Intermarket Bearish
AUD/USD: Applying Pressure Against 71 cents
USD/CAD: Established A Range, Mixed Intermarket
Gold: All Indications Point to Higher Prices