Daily Market Report: EURUSD, GBPUSD, AUDUSD
US dollar outperforms against the FX majors, German/French yields drop to record lows, while the RBA cuts rates by 0.25%.
EURUSD: Euro drops on worse than expected PMI as USD outperforms
The US dollar was the top perform amongst the FX majors yesterday, and the euro underperformed with Eurozone PMIs contracting, internal divisions at the EU summit that failed to reach a consensus on filling the top jobs, and threats of US tariffs on additional EU goods. Furthermore, German (and French) 10-year yields continue to edge lower into record negative territory, reducing the attractiveness of the euro following comments from the ECB’s Knot on easing. As for sentiment, retail bias has shifted from a previous majority short 58% to a now slight majority long 53% as shorts get enticed into taking profits. The fundamental outlook remains negative, and what little positive technical bias the pair was enjoying is eroding quickly.
GBPUSD: USD gains keep the pair’s bearish technical overview in check but lacking momentum
With the US dollar outperforming yesterday, it was difficult for the pound to keep up even if it outperformed compared to most of the remaining FX majors. UK data was a disappointment with its PMI contraction accelerating, money supply contracting, mortgage approvals down compared to last month, and net lending dropping to lows unseen in two years. The technical overview remains bearish as a result, though the relative lack of follow through after oscillations last week has meant its stalling heavily.
AUDUSD: Australian dollar holds its ground despite a 0.25% RBA rate cut
The Australian dollar lagged significantly yesterday and was the second-worst performer after the Swiss franc. Against the strengthening greenback then, the price drop was significant and erased nearly three consecutive days of gains. As of this morning however, despite another RBA rate cut of 0.25% for its second month in a row, the commodity currency has risen after making fresh intraday lows first. Technicals matter little in this state as fundamental portfolio repositioning will likely dominate flows in this currency, though as it stands the mid to long-term outlook remains bearish, while short-term daily technicals are more neutral as a non-trending ADX and mostly neutral indicators fail to offer guidance.
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