Equities Break Fresh Weekly Highs on Risk Recovery

Dixy Down As Risk Rallies

Over the European morning on Friday, the US Dollar continued its decline, ending the week in the red after the three-week winning streak seen recently. Better risk appetite has seen a weakening of USD on safe haven outflows despite the release of the March FOMC minutes this week which highlighted the raised risk of a further Fed rate hike later in the year.

Looking ahead to today’s US session, traders are waiting on the U. of Michigan sentiment index which is forecast to have fallen back slightly over March. USD Index traded lows of 96.45 today, breaking below last week’s low, pointing to further downside to come.

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EUR Rises on USD Weakness

EURUSD continues to benefit from the current bout of USD weakness with the pair trading up to 1.1311 last as better risk appetite and news of a Brexit extension has boosted EUR. While concerns over the health of the eurozone economy remain prevalent, for now, the USD sell-off is the main driver.

Brexit Extension Fails To Lift GBP

GBPUSD is also a little higher today though GBP moves have been far more limited than those in EUR. News of an October extension to the Brexit deadline has kept GBP supported, though with political division running rife in UK politics, we haven’t seen quite the relief rally man were expecting. GBPUSD trades 1.3077 last, remaining in the middle of the recent 5-day range.

Equities End The Week At Highs

Risk markets have been firmly higher today, ending the week on a solid footing. Optimism around the prospect of a US / China trade deal, as well as relief around news of the Brexit extension, have combined to keep equities well bid. SPX500 has traded up to 2899.88 last, breaking above last week’s highs as the rally off 2860.11 continues.

Safe Haven Flows Hit Gold & JPY

With risk seeing a better tone this week, safe havens have traded lower. However, over the European morning today, gold prices actually traded up against USD, recovering some of yesterday’s losses to print 1293.61 last, though the tone remains heavy. The Japanese Yen has been firmly weaker against USD with USDJPY trading up to 111.96, just below the 112.16 March high.

Crude Oil Recovers

A weaker US Dollar and better risk appetite have helped crude oil get back on track this week. Despite a mid-week dip in response to a bearish report from the EIA which highlighted a further build in US crude inventories, oil has recovered now and is back up near the week’s highs, trading 64.63 last. OPEC production cuts and the expectation that cuts will be extended have helped keep oil well bid over recent months. This looks set to continue going forward.

Commodity Currencies Up

The Canadian Dollar has been a strong beneficiary of the moves in both oil and USD with USDCAD selling off from the 1.3377 resistance level to trade 1.3329 last. AUDUSD has also seen a strong recovery today with price trading back up to .7166 last, just below the week’s highs. Any further positive headlines around US/China trade talks will provide a strong boost for AUDUSD which continues to sit in the middle of the recent .7021 – .7237 range.

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