German Manufacturing "in freefall" according to IFO. Over to you Mario Draghi.
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There’s not much at all going on USDCAD this morning as markets are glued to what the ECB’s latest decision will be on the European monetary policy outlook. The overnight range has been extremely tight and we’re expecting the market to be largely EURUSD driven, at the margins, over the next hour or two. The US reports its Durable Goods figures for June at 8:30amET, which could have more of direct impact on the broader USD. Traders are expecting a read of +0.7% MoM. September crude oil prices are trading up 1.5% this morning, but this move is largely a recovery from the market’s inability to break above the 57.20 following a bullish EIA inventory report yesterday.
SEP CRUDE OIL DAILY
Euro/dollar traders are on edge this morning as expectations are high for the ECB to respond to the increasingly gloomy European economic outlook that bond markets have been worried about of late. The OIS market is still pricing in a 40% chance the deposit rate gets cut by 10bp. Stay tuned @EBCTradeDesk on Twitter.
AUG GOLD DAILY
Sterling is trading with a choppy tone as Boris Johnson has just concluded his first speech as UK PM before the House of Commons. He reiterated his “absolute commitment” to the UK leaving the EU on Oct 31, saying he would push ahead with Brexit “whatever the circumstances”. He also said that No-Deal preparations for the country “must be turbocharged” even though the UK is “better prepared for No-Deal than many believe. More here from Sky News. GBPUSD traders seem to be comfortable with Johnson’s confidence for the moment, even though he has not given any detail yet about the “how’s” of renegotiating with the EU. The technicals for the EURGBP cross are looking rather precarious this morning heading into the ECB decision, which is mildly GBPUSD supportive.
The Aussie struggled to regain trend-line chart support in the 0.6980s overnight after a speech from RBA Governor Philip Lowe indicated nothing positive on the Australian rate outlook. The “if needed” language that got AUD traders feeling a little better after the last RBA meeting has now be eclipsed by “prepared to ease further” language and “be prepared for lower rates for longer” language. More here from Bloomberg. We think today’s breakdown below the 0.6980s now risks putting AUDUSD back into its downtrend for the year. Let’s see if the market can manage a hockey stick save into the NY close.
SEP COPPER DAILY
Dollar/yen is struggling once again in the low 108s this morning as the “Fed rate cut trade” builds up steam for the first time in over a week. The US 10yr yield is trading back down towards 2.00%, August gold prices have rallied back above chart support at 1425, and the Eurodollar futures are better bid, especially further out the curve. We continue to believe that the Fed blackout period will do the US bond market some good ahead of next week’s big FOMC meeting, and with that we think the USDJPY might need to probe lower here for buyers.
DEC 3-MONTH EURODOLLARS DAILY
Charts: TWS Workspace
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