Safe haven demand eases as North Korea responds in a positive manner to President Trump’s decision to cancel the meeting with Kim Jong Un next month. How has the US Dollar, Euro and the British Pound reacted to this news? Find out with this 25 May US Dollar Trading Outlook.
25 May, ADS Securities – Pyongyang said it was surprised by Trump’s decision and reiterated its commitment to meet with the US President at any time which dampens the risk-off sentiment that gripped financial markets over the past couple of days. Nevertheless, Yen and Gold are among the main gainers from the recent re-escalation with the Dollar/Yen hitting a 109 low and the yellow metal rising to $1,305.
25 May US Dollar Trading Outlook
The greenback remains under pressure in the short-term and with trading volumes expected to be lower due to the long weekend ahead any fresh push lower could be magnified. Today the focus will be on the Durable Goods Orders figures and Fed Chairman Powell’s speech in the afternoon.
The US report could print either way with the headline number predicted to come in softer but the Ex Transportation component is thought to rebound which might balance a potentially bearish set of figures. At the same time, we shouldn’t expect anything new from Powell today and a cautiously optimistic tone would do little to change the steady Dollar bias in place.
Euro and the Pound Trading Analysis
The European majors came off their lows as the Dollar struggles to revive its rally with Treasury yields now firmly below the 3% mark. The Euro and the Pound will be getting fresh stimulus from incoming data today with the IFO and GDP figures from Germany and the UK respectively expected to dictate the price action in the short-term. The sentiment report from Europe’s largest economy is expected to print in a positive manner but with uncertainty surrounding Italy’s future any gains for the shared currency will likely be capped by the 1.18 resistance.
On the other hand, the Pound seems to have carved a bottom after hitting 1.33 on Wednesday and it is now trying to break above the 1.34 figure. Today’s GDP report will likely print steady which should provide little support however we could see more profit-taking on Sterling shorts ahead of the long weekend. Should this be the case, the Pound will extend its correction rally above 1.34 and the next level to keep an eye on is the 1.3450 area.
Finally, equities have welcomed North Korea’s tempered response to Trump’s decision to cancel the June meeting and the European and US futures are indicating a bullish opening bell.
Stock traders seem to take this negative development in their stride understanding that bringing both parties to the negotiating table is going to be a long process. Fed’s stable guidance and yields’ hesitation to rally above 3% again are fueling equity traders’ optimism so we should be in for a positive session at the end of the week.
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This article was provided by analysts of ADS Securities.
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