Daily Roundup – Markets review 05/03/2019


Daily Roundup – Markets review

March 5th

The US Dollar stumbled yesterday, albeit temporarily, after the release of some worse than expected construction spending data for December. Any weakness was however only temporary, with markets continuing to push the greenback higher with optimism over the US-China trade deal being a key driver. Concern that any resolution here won’t be sufficient to help ailing emerging markets or Europe is adding further upside to USD pairs.

A key announcement to watch this week will the Thursday’s ECB policy statement and the subsequent press conference. There’s a weight of expectation that Mario Draghi needs to intervene in a bid to prop up the ailing Eurozone economy. This has the potential to weigh on the common currency regardless of the path chosen – either stimulus measures are taken which would in turn suppress yields, or the bank holds fire risking an even bigger economic crash in the months to come. Bouts of support may emerge, but given the fundamentals as they stand right now, the outlook is far from upbeat.

Sterling continues to sell off, especially against the US Dollar with cable around two cents below last week’s highs. There’s mounting uncertainty over Brexit, where an increasingly high stakes game is being played as the deadline approaches. On top of this, economic data is highlighting just how business investment is being suffocated by the uncertainty, too> Disappointment in today’s services PMI reading with a dip below the break-even 50 mark will likely trigger further weakness and arguably it’s going to be another week before any fresh Brexit clarity emerges.

AUD/USD continues to languish around February’s lows, although with a speech from the RBA governor due overnight, along with the Australian Q4 GDP figures, further movement could be seen here. The RBA has flip-flopped over the policy outlook, although consensus has been to take a bearish view. Anything that reaffirms this has the ability to see the Aussie continue its decline. Right now, even a resolution to the US-China trade talk only seems likely to provide short term support.


USD/JPY broke above its 200 day moving average last week and the uptrend is being sustained. A series of tests lie ahead, including 111.95 representing the 61.8% reversion of the sell off from September to just before the January flash crash, 112 remains a psychological level we have already seen tested and 112.30 acted as a support level late last year.