The DXY has recaptured 90.000+ status (just) after last week’s roller-coaster ride when the index almost recovered to 91.000 before recoiling on US President Trump’s plans to slap import tariffs on steel and aluminium that sparked another wave of global trade war and protectionism jitters. However, the latest Dollar revival is largely due to the Eur’s demise and weakness in wake of no clear result at the weekend Italian general election.
Eur/Usd is trying to keep hold of the 1.2300 handle, but has been down to 1.2270, with some also noting that AXA’S $15 bn bid for XL may have been a factor. Meanwhile, Eur/Jpy breached strong technical support at 129.50 on its way down to a circa 129.35 low before what looks like a short-covering bounce.
Elsewhere, the Nzd, Aud and Cad are G10 underperformers after Chinese PMI misses and a general risk-off tone on the Trump proposals and pledges of retaliation, with the Kiwi only just keeping its head above 0.7200 vs the Greenback, Aud/Usd trading below 0.7750 and Usd/Cad at fresh 2018 highs around 1.2910 and just shy of key resistance in the 1.2915-25 area. The Jpy and Chf are both benefiting from their safe-haven appeal, with the former around 105.50 vs the Usd (strong barriers still reported at 105.00) and the latter within a 0.9750-85 range vs its US counterpart. Cable hovering either side of 1.3800 and Eur/Gbp still above 0.8900 between 0.8905-50 with Sterling continuing to be hampered by Brexit uncertainty amidst more reports about the EU’s hard-line stance on transition terms and conditions.