USD Retracing Data Gains

The US dollar has been a little softer over the morning so far on Wednesday. The weakness comes despite better data yesterday which saw the US ISM Non-Manufacturing reading rebounding firmly over October, recovering off three years lows plumbed in September. USD index trades 97.64 last, still well up off the 97.01 level support.

EUR Rises on Weak USD

EURUSD is stronger this morning, benefiting from a softer US dollar. Nothing on the domestic datasheet today, so flows likely to remain tied to US trading. Fed’s Evans due to speak later though not likely to be too market moving in the wake of the FOMC. EURUSD trades 1.1090 last, heading back towards the 1.1024 support level.

GBP Quiet Ahead of BOE Tomorrow

GBPUSD has had a muted session so far today with traders remaining cautious ahead of tomorrow’s headline BOE event. The BOE is not expected to cut rates though traders do note growing downside risks. We are likely to see further downward revisions in the bank’s new forecasts. GBP remains supported near recent highs on the back of news that Brexit will be delayed until the end of January 2020, trading 1.2880 last.

Risk Rally Pauses

Risk assets have seen a pause in upside momentum into the middle of the week. SPX500 is trading 3072.48 last just a little under yesterday’s closing price and down off recent highs. The stronger-than-expected US data is the likely culprit for some position squaring at these levels though focus remains on further upside in the near term. This is given the better relations between the US and China and the likelihood of a deal being signed this month.

JPY & Gold Rally

Safe havens have benefited today from the weaker tone to risk appetite as well as a softer US dollar. Both JPY and gold have risen against USD as some mild safe-haven flows are noted. XAUUSD trades 1487.97 last, sitting back below the round figure for now following yesterday’s sell-off in reaction to better US data. USDPY trades 108.95 last, pulling back from recent highs seen earlier this week.

Traders Waiting on EIA

Oil prices have seen some weakening today on the back of yesterday’s API report. The report showed an unexpected 4 million barrel increase in US crude stores. Traders are now waiting on the headline EIA report today which could send oil sharply lower if a surplus is confirmed. Last week, the EIA reported a 5.7 million barrel rise in US crude stores. Another increase today would raise concerns over the demand outlook once again. Crude trades 56.79 last.

CAD Contained

USDCAD trades 1.3160 last, sitting back atop the 1.3145 level for now. Weakness in crude prices is being offset somewhat by the softer US dollar today, keeping flows contained here. More stagnation around this level is likely until trades receive the next data catalyst, with Canadian employment figures due on Friday.

AUD Holds Near Highs

AUDUSD has had a very quiet session so far today with price hovering around the .69 mark, just above the week’s lows. With the rally in risk assets having paused for now, AUD is seeing a loss of volatility. However, in light of better expectations regarding a forthcoming US/China trade deal, the outlook remains bullish near term.