Dollar And Global Bond Yields Move Higher Upon Trade Optimism

Dollar And Global Bond Yields Move Higher Upon Trade Optimism

Ed Moya  | Feb 11, 2019 10:34AM ET

Summary

  • USD – Dollar rally continues as optimism grows on the trade front
  • Shutdown – Likely to go down to the wire again
  • Gold – Sinks on strong dollar and upbeat trade talks
  • Oil – Supply worries are building, WTI $50 level at risk
  • Apple – Huawei continues to take market share in China

USD

The dollar continues to ascend as global bond yields rise and optimism grows that we will see positive steps this week with the China and U.S. trade negotiations, potentially leading up to a meeting in mid-March with Trump and Xi. With the exception of Wednesday’s U.S. inflation reading, economic data is fairly light and the focus will remain on political developments with trade and government funding.

EUR/USD

Shutdown

Over the weekend, talks fell apart between Democrats and Republicans on border security, potentially signaling we could see another shutdown if no agreement passed by the February 15th deadline. The roadblock to a deal remains the level of funding for border barriers, funding increases for facilities and personnel. The President could be forced to accept funding that comes well below his $5.7 billion demand in order to avoid further political damage for another government shutdown.

USD/JPY

Gold

The precious metal declined as the strong dollar sank commodities across the board. Gold has been on a tear recently, rising for a fourth consecutive month, but has appeared to have seen some profit-taking after failing to rise above $1,335. The yellow metal appears to have some key support from China, the PBOC raised their holdings for a second consecutive month, this follows a 2-year break from any changes. Uncertainty on how the trade war will unfold and concerns over China’s credit markets could remain key catalysts for Chinese gold purchases. Overnight, two Chinese borrowers reportedly miss two bond payments, a sign Chinese credit markets are sensitive and will likely need further efforts from the Chinese government to support it.

Gold

Oil

West Texas Intermediate crude trades lower on the strong dollar and global growth concerns, but the next wave of selling could come from oversupply concerns when we see the OPEC monthly report tomorrow, the IEA report will come the day after. Concerns of trade talks falling apart between the U.S. and China will likely remain short-term risks for oil, but the worries of oversupply stemming from the U.S. will likely remain a dominant theme as we approach the warmer months. Last month, Saudi Arabia over-delivered on production cuts, but that is not likely to be a continuing trend for them. Compliance will closely be watched from the OPEC + group and, despite Venezuelan crude’s expected decline, we could see oil decline if other members fail to hold up their end of cuts.

WTI Oil

Apple

According to research firm IDC, Apple Inc (NASDAQ:AAPL) reportedly lost 19.9% in iPhone shipments in China, while Huawei saw 23.3% gain. Apple moved up one spot to fourth place, passing Xiamoi, but still behind Huawei, Oppo, and Vivo, respectively. Apple price cuts are heavily expected in China, but they may not see significant improvement in sales as authorized retailers have already begun offering discounts.

US Nas 100

Disclaimer: This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Related Articles

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (UK) English (India) English (Canada) English (Australia) English (South Africa) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 中文 香港 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+