USD Pressured, GBP Buoyant, SEK Underperforms - US Market Open

2018-09-06 13:35:00 Justin McQueen

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MARKET DEVELOPMENT – USD PRESSURED, GBP BUOYANT, SEK UNDERPERFOMS

USD: Slight dip in the greenback this morning following the miss on the latest ADP report. Private payrolls rose by 163k, underwhelming expectations of 190k. The US Dollar is back at 94.90-95.00 support area, which is holding further losses for now.

GBP: The Pound continues to remain buoyant over the recent positive headlines surrounding Brexit progress. GBP firmly above 1.29 and is hovering around best levels of the day, next target is the 1.30 handle. EURGBP dips back below the psychological 0.90 level, support is situated at 0.8930-60.

AUD: The Australian Dollar had weakened overnight after reports that ANZ and CBA followed Westpac in raising variable mortgage rates. Consequently, this has tightened financial conditions within Australia, meaning that there is less pressure for the RBA to raise interest rates, while the last of the big 4 banks, NAB, is likely to follow. As such, housing sentiment may begin to deteriorate with consumers feeling the squeeze from rising mortgage rates.

SEK: The Riksbank kept rates unchanged at -0.5%, as expected. 2 hawkish dissenters provided an initial boost to the Krona, however, all eyes were on the rate path, which had been lowered yet again with the central bank signalling that a rate hike could take place in December or February. In turn, the SEK had been pressured with EURSEK hitting highs of 10.60. Next up for the Swedish Krona is this Sunday’s general election.

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IG Client Sentiment Index:

AUDUSD: Data shows 69.8% of traders are net-long with the ratio of traders long to short at 2.31 to 1. In fact, traders have remained net-long since Jun 05 when AUDUSD traded near 0.75645; price has moved 5.1% lower since then. The number of traders net-long is 3.4% lower than yesterday and 23.9% higher from last week, while the number of traders net-short is 14.6% higher than yesterday and 6.9% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUDUSD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed AUDUSD trading bias.

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