Italy’s woes and fresh US tariffs on Chinese imports continue to dampen risk appetite. How does the US Dollar trade amid all of these happenings? This and more are discussed in today’s 30 May US Dollar Trading Outlook.
30 May, ADS Securities – Markets’ focus remains on Italy following a failed attempt to form a government under former IMF economist Carlo Cottarelli and it now seems that new elections might the way forward.
At the same time, US President Donald Trump announced his intention to impose tariffs on $50 billion of Chinese imported goods re-escalating his trade spat with China. The continued uncertainty is forcing investors to look for safer havens with the Yen, Gold and US Treasuries leading the gains.
30 May US Dollar Trading Outlook
The Dollar gained yesterday even though the US Consumer Confidence report printed softer this month with the Euro dropping close to 1.15 as traders are rushing to reduce any exposure to the shared currency amid Italy’s woes.
This morning the Euro is attempting to stage a correction trending towards 1.16 but with the market sentiment heavily against it any gains will not likely be sustained. The German inflation report is scheduled for release today but with traders focused on news from Italy it should go unnoticed.
Bank of Canada Interest Rate Decision
At the same time, the Canadian Dollar will be front and center later in the day ahead of the BoC Rate Decision. The Canadian central bank will not raise rates this month but the focus is on any hints for a move In July. Currently the odds of a July rate hike sit around the 50% mark but more progress in the NAFTA negotiations will be crucial for Governor Poloz to pull the trigger.
A risk-off bias and a drop in Oil prices have forced the Loonie to 1.30 versus the Dollar – a 500 pips retreat for the Canadian currency compared to April’s levels – but a bullish tone coming from the BoC today could prompt investors to take some profits off the table.
The key level for the USD/CAD pair is the 1.29 floor and if Poloz sounds upbeat today we could see a move towards this strong support area. Otherwise, the Loonie will continue losing ground with the currency pair climbing towards the 1.3120 yearly highs.
Asia Equities Market
Equities in Asia are trading in the red this morning following a negative session for the US markets. Nevertheless, the European futures are suggesting a positive start for the day but we believe that it’s going to be hard for the direction in the markets to change.
There’s a host of potential risks on a global scale, with Italy’s troubles and the re-escalation of the US-China trade spat being the major ones, so traders should remain cautious and not get carried away from any early gains.
ADS Securities Risk Disclaimer
This article was provided by analysts of ADS Securities.
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