29/05 – Dollar sold heavily into month end

GBP: Pound able to take advantage of weaker USD
EUR:
EUR/USD hits 2 month high
USD:
Trump to announce new China policies later

Sterling

Sterling is happy to take advantage of a weaker dollar, pushing close to a 2-week high as we open this morning. It’s too early to tell whether this strength will last given it is predicated not on GBP outperformance but more on a USD that is suddenly failing to find traction.

Risks to the sterling outlook remain with Brexit trade talks restarting next week in the final month before an extension to the current transition can be agreed.

There is no UK data once again today.

Euro

EURUSD is back above 1.11 this morning for the first time since late March. Whilst the majority of the move is a weak dollar, continued belief that the stimulus plans being put together in Europe may be voted through eventually is helping the single currency.

EURGBP looks like it really wants to break above the 0.90 level and while it is typically a slow cross, positioning by investors shows that that is quite a likely outcome in the coming weeks.

This morning is full of European inflation data, none of which are going to show inflationary pressures, but large slashes in the rate of price growth may be enough to tempt consumers back into the shops as the lockdown eases.

US Dollar

Once again, as we come into month-end we are seeing portfolio managers sell the USD to balance the currency exposure of investments made in May.

That trend may end later today when Donald Trump announces a fresh set of policies that will surely heighten pressure on the US/China relationship. Ostensibly these policies are in response to China’s new security laws levied on Hong Kong but it is clear we will also see Trump in full campaign mode ahead of November’s election.

The White House have yet to announce when Trump will take to the mic.

Elsewhere we have US consumer confidence at 3pm and the Fed Chair Jerome Powell is due to speak at 4pm BST.

Elsewhere

Commodity currencies are a little softer this morning following a slight move in oil prices overnight. Oil has had a record month after some contracts hit negative pricing in April but an increase in tensions between the US and China and ahead of President Trump’s speech later today, we are seeing some investors choosing to cash in their gains.

Have a great day, a wonderful weekend and please take care.

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.

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