News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The US Dollar continues to hold its ground against most ASEAN currencies as recent downtrends lose momentum. What is the road ahead for USD/SGD, USD/THB, USD/PHP and USD/IDR? Find out from @ddubrovskyFX here:https://t.co/UcleaZEAaW https://t.co/dRD22S792t
  • 🇳🇿 Business NZ PMI (AUG) Actual: 40.1 Previous: 62.6 https://www.dailyfx.com/economic-calendar#2021-09-16
  • The Canadian Dollar has been caught in broad ranges against the Euro and the US Dollar, but can the upside bias in USD/CAD and EUR/CAD prolong? Find out here:https://t.co/8DubboXsjv https://t.co/SQAz8sCpmv
  • RT @BrendanFaganFx: Bitcoin Outlook: Crypto Adoption to Become Widespread in Wake of El Salvador, AMC? #Bitcoin #Ethereum $AMC $BTCUSD $ET…
  • Heads Up:🇳🇿 Business NZ PMI (AUG) due at 22:30 GMT (15min) Previous: 62.6 https://www.dailyfx.com/economic-calendar#2021-09-16
  • The 10-day range and realized volatility (ATR) on $USDMXN are the lowest since 2008 and 2014 respectively. Breakout risk is high - when the right spark comes along (eg FOMC) https://t.co/teP1XQI7W6
  • Bitcoin taking a breather today after rallying back above $47,000. 50-day MA crosses back above the 200-day MA $BTCUSD #Bitcoin https://t.co/5Yidx9WQhc
  • AUD/USD extends the decline following the larger-than-expected contraction in Australia employment as fresh data prints coming out of the US fuel speculation for an imminent shift in monetary policy. Get your $AUDUSD market update from @DavidJSong here:https://t.co/40vc0oCeiE https://t.co/vjrF47cALn
  • Gold prices are plodding along below symmetrical triangle support, with momentum indicators starting to point lower. Get your market update from @CVecchioFX here: https://t.co/9JDAY4QlnJ https://t.co/ftL6JbIC3c
  • Ouch. S&P Global said today that El Salvador's announcement that Bitcoin was legal tender represented an 'immediate' negative credit risk to its B- standing. They warn of trouble with IMF fund access and fiscal vulnerabilities. #Bitcoin
Currency Correlation with Stock Market Rises Sharply - Cross Asset Correlation

Currency Correlation with Stock Market Rises Sharply - Cross Asset Correlation

Justin McQueen, Strategist

GBP/USD, AUD/USD Analysis & News

  • Risk Rally Prompts US Dollar Pullback
  • Brexit Risks Remain for GBP
  • Australian-China Trade Tensions on the Rise

A trifecta of notable news catalysts has prompted a sizeable risk rally across equity markets, in which US stocks posted its largest daily gain since March. Firstly, Fed Chair Powell had reiterated that the central bank has more tools at its disposal. Following this had been the increased hopes of a potential vaccine after successful trial results from Moderna, while the most pertinent developments had been the proposal by Germany and France of an EU recovery fund. In turn, major G10 currencies soared at the expense of the US Dollar.

Since the coronavirus crash, G10 currencies have shown a greater correlation to risk assets (S&P 500) and by extension has traded in unison against the US Dollar with yesterday providing a reminder of this. That said, with the macro backdrop remaining highly uncertain we suspect this will remain the case for the majority of currencies with idiosyncratic factors playing less of a role in dictating price action.

Brexit Risks Gains Traction

However, there are a few exceptions, most notably the GBP, which as we highlighted last week will face Brexit uncertainty in the run-up to the transition period extension deadline (June 30th). As such, the Pound is likely to continue lagging its counterparts.

Trade Tensions Down Under

Elsewhere, rising trade tensions between Australia and China may create hurdles for further AUD upside. Overnight, China imposed a near 80% tariff (anti-dumping duty of 73.6% and anti-subsidy duty of 6.9%) on Australia’s barley sector and will look to potentially place more tariffs on Australia’s wine, seafood, fruit and dairy products.

Figure 1. Rising FX Correlation With Risk Assets

Currency Correlation with Stock Market Rises Sharply - Cross Asset Correlation

Cross-Asset CorrelationMatrix(1 Week, 1 Month & 3 Month Timeframe)

Currency Correlation with Stock Market Rises Sharply - Cross Asset CorrelationCurrency Correlation with Stock Market Rises Sharply - Cross Asset CorrelationCurrency Correlation with Stock Market Rises Sharply - Cross Asset Correlation

Source: Refinitiv, DailyFX. The Topix is used a proxy for the Nikkei 225.

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES