Incisive market commentary from David Morrison

Stay ahead with our market commentary and webinars from our in house market strategist

Open a Live AccountOpen a Demo Account
+ Show blog menu



Expand 2017 <span class='blogcount'>(348)</span>2017 (348)
Collapse 2016 <span class='blogcount'>(483)</span>2016 (483)
Expand December <span class='blogcount'>(23)</span>December (23)
Expand November <span class='blogcount'>(41)</span>November (41)
Expand October <span class='blogcount'>(37)</span>October (37)
Expand September <span class='blogcount'>(41)</span>September (41)
Expand August <span class='blogcount'>(52)</span>August (52)
Collapse July <span class='blogcount'>(38)</span>July (38)
Dark clouds ahead?
29 Jul 2016
BOJ underwhelms – JPY soars
29 Jul 2016
PM Bulletin: BOJ look-ahead
28 Jul 2016
AM Bulletin: FOMC leaves rates unchanged
28 Jul 2016
PM Bulletin: Yen swinging wildly on stimulus talk
27 Jul 2016
AM Bulletin: Fed rate decision and FOMC statement in focus
27 Jul 2016
PM Bulletin: FOMC look-ahead (and Japanese stimulus talk)
26 Jul 2016
AM Bulletin: FOMC meeting begins today
26 Jul 2016
Platform Tours: CFD Trading - Check Open P & L
25 Jul 2016
PM Bulletin: EURUSD breaks below 1.1000
25 Jul 2016
Weekly Bulletin: Fed and BOJ in focus
25 Jul 2016
PM Bulletin: Sterling looking vulnerable again
22 Jul 2016
AM Bulletin: Stocks lower as oil weighs
22 Jul 2016
PM Bulletin: The EURUSD and the ECB
21 Jul 2016
AM Bulletin: ECB rate decision ahead
21 Jul 2016
PM Bulletin: ECB look-ahead
20 Jul 2016
AM Bulletin: Q2 earnings keep markets buoyant
20 Jul 2016
PM Bulletin: A look at the yen
19 Jul 2016
AM Bulletin: More records for US equities
19 Jul 2016
PM Bulletin: Precious metals pull back
18 Jul 2016
Weekly Bulletin: It’s all about stimulus
18 Jul 2016
PM Bulletin: European banks in trouble
15 Jul 2016
AM Bulletin: Sombre mood following Nice atrocity
15 Jul 2016
PM Bulletin: The BoE rate decision
14 Jul 2016
AM Bulletin: All eyes on Bank of England
14 Jul 2016
PM Bulletin: BoE Rate Decision in focus
13 Jul 2016
AM Bulletin: Equities drift lower after record US close
13 Jul 2016
PM Bulletin: Global indices pushing higher
12 Jul 2016
AM Bulletin: Equity rally powers on
12 Jul 2016
PM Bulletin: Fresh record high for S&P500
11 Jul 2016
Weekly Bulletin: The markets called, NFPs answered
11 Jul 2016
AM Bulletin: The calm before the storm; Markets await today’s NFPs
08 Jul 2016
PM Bulletin: Non-Farm Payroll look-ahead
07 Jul 2016
AM Bulletin: As the Fed turns dovish, the markets turn bullish
07 Jul 2016
AM Bulletin: Concerns continue as Sterling touches $1.27
06 Jul 2016
AM Bulletin: Markets open higher, weak UK Construction PMI data removes confidence
05 Jul 2016
Weekly Bulletin: Central Banks react to Brexit vote
04 Jul 2016
AM Bulletin: When Carney speaks, the markets listen
01 Jul 2016
Expand June <span class='blogcount'>(42)</span>June (42)
Expand May <span class='blogcount'>(42)</span>May (42)
Expand April <span class='blogcount'>(45)</span>April (45)
Expand March <span class='blogcount'>(41)</span>March (41)
Expand February <span class='blogcount'>(42)</span>February (42)
Expand January <span class='blogcount'>(39)</span>January (39)


The EURUSD closed below 1.1000 on Friday for the first time since early March. Back then the single currency was recovering from a sudden retreat which coincided with a pick-up in global equities.

The year had kicked off with a substantial risk-off move thanks to a combination of the Fed’s December rate hike, crashing oil prices, concerns over the junk bond market and another sell-off in Chinese stocks on growth fears and yuan devaluation. But markets stabilised relatively quickly and the euro managed to push higher over the next couple of months. One of the reasons for this was talk that there had been an “off the record” agreement at the February G20 meeting in Shanghai to weaken the US dollar. This was seen as a way to reverse the sell-off in oil (as a weaker dollar helps to lift dollar-denominated commodities) while also helping to keep a lid on the Chinese yuan. The yuan is pegged to the US dollar and a cheaper yuan helps boost Chinese exports. There were fears that China would respond to any strengthening in the yuan by devaluing their currency again. That had happened in August 2015 and earlier in 2016 and in both cases we saw plunges in global equities on fears of spreading deflationary pressures thanks to cheaper Chinese exports.

We have just had another G20 meeting. Time will tell if there was any behind the scenes shenanigans, but the subsequent communique included a pledge to avoid competitive currency devaluations and agreement to consult on foreign exchange policy. However, Japan managed to underscore a warning in the communique concerning “excess” currency volatility. This may provide Japanese policymakers with the cover to intervene unilaterally should the yen strengthen and we see the USDJPY head back towards 100. This could be useful if the Bank of Japan fails to announce further monetary stimulus after this week’s meeting which would certainly wrong-foot investors.

As far as the EURUSD is concerned, the upside does appear to be capped at present. Much of this comes down to central bank chatter. The dollar is getting a lift from renewed speculation that the US Federal Reserve may be ready to hike rates again before the end of the year. This seems most unlikely (and nothing is expected at this week’s meeting) but it all helps to boost the greenback. At the same time, while the ECB declined to make any changes to its already-accommodative monetary policy at last week’s meeting, the governing council left the door open for further easing in September.

As the four-hour chart of the EURUSD shows, the euro is struggling to make gains:

PM Bulletin

David: As far as the EURUSD is concerned, the upside does appear to be capped at present.


Spread Co is an execution only service provider. The material on this page is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by Spread Co Ltd or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.


Posted by David Morrison

Category: PM Bulletin

Add a comment Add comment            


© 2018 Spread Co Limited. All Rights Reserved.

Spread Co Limited is a limited liability company registered in England and Wales with its registered office at 22 Bruton Street, London W1J 6QE. Company No. 05614477. Spread Co Limited is authorised and regulated by the Financial Conduct Authority. Register No. 446677.

Spread betting and CFD trading are leveraged products and can result in losses that exceed your deposits. Ensure you understand the risks.

Losses can exceed deposits. Click here to learn more.