- US retail sales disappointed but PPI data eased the sting
- CNBC’s Larry Kudlow is the new director of National Economic Council
- Rumours of new China trade sanctions are in the pipeline
- Uncertainty about the sanctions prompted selling on Wall Street
By Michael O’Neill
The caution flag was out and the pace car was on the track on Wednesday. FX traders were wary following reports that the White House was planning a new round of trade sanctions against China. It didn’t help that Russia and the UK were dusting off the “cold war” playbook or that the Federal Open Market Committee
meeting is just a week away. Meanwhile traders didn’t seem to care either way about Larry Kudlow’s appointment to replace Gary Cohn.
The caution showed up in FX ranges. EURUSD
reached 1.2396 after US retail sales missed the mark. But the move was reversed, and prices dropped to 1.2348 by lunch before drifting in 1.2360 area in the afternoon.
Visitors will flock to Moscow, above, and other Russian cities in June for the FIFA world cup, but there will be no members of Britain's royal family among them, thanks to UK sanctions.
popped to 1.3989 after the US data and then retreated to 1.3927. Prices recovered to 1.3965 in the afternoon. UK Prime Minister Theresa May was annoyed at Russia
, blaming the nation for a nerve agent attack on a former spy living in Britain. She kicked out 27 diplomats and announced the potential freezing of Russia state assets. She also said that no Royal family or UK ministers would attend the FIFA games in Russia.
see-sawed in a range between ¥106.07 and ¥106.55, with traders torn between risks of risk aversion selling and Fed rate hike demand.
The commodity currency bloc was sidelined. AUDUSD
finished the session a tad lower, NZDUSD
was a tad higher, and USDCAD
Wall Street doesn’t like uncertainty, and unknown impact about new trade sanctions on China and the upcoming FOMC meeting led to selling. The Dow Jones Industrial Average was the biggest loser, shedding 1.00%.
: The Swiss National Bank policy announcement and the quarterly bulletin will be studied to see how new trade risks and cold war shivers impact their outlook. USDCHF
is in an uptrend while prices are above 0.9430. A break of that level would target 0.9400 and then 0.9320.
Michael O'Neill is an FX consultant, currency strategist and author of the Trade of the Day at Loonieviews.net. Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.