· The dollar rose against most other currencies on Monday, holding near a six-week high as fresh worries about U.S.-Sino trade tensions and global growth drove appetite for safe-haven assets.
"U.S.-China talks are the big focus for the week and the dollar strength is indicative of the cautious market sentiment right now owing to its safe-haven status," said Nick Twidale, chief operating officer at Rakuten Securities.
· "The Aussie dollar and the euro are at vulnerable levels right now and further dampening in risk sentiment can lead to further downside in these currencies."
U.S. negotiators will this week press China on longstanding demands that it reform how it treats U.S. companies' intellectual property in order to seal a trade deal that could prevent tariffs from rising on Chinese imports.
· The dollar gained 0.1 percent versus the yen to 109.82. However, traders expect moves in dollar/yen to be small on Monday as Japanese markets remain shut for a public holiday.
· The dollar index, a gauge of its value versus six major peers, was marginally higher at 96.64, on track for its eighth straight day of gains.
· The euro was marginally lower versus the greenback at $1.1322 in early Asian trade while the Aussie was 0.15 percent higher at $0.7099, after a disastrous week in which it lost 2.2 percent.
The strength in the dollar has come despite the Federal Reserve taking a dovish stance at its last policy meeting in January. For now, investors are piling into the safety of the greenback due to fears of a sharp global economic slowdown.
The euro came under pressure as core European government debt yields touched their lowest in over two years. The single currency has lost 2.5 percent so far this month.
· Technically the GBP/USD is moving within a corrective trend after breaking the psychologically important 1.3000 and 38.2% Fibonacci retracement line of 1.2970 on Tuesday.
The technical oscillators like the Relative Strength Index (RSI) and Slow Stochastics (SS) are both pointing lower with Slow Stochastics making a bearish crossover in the Overbought territory indicating future price declines towards 1.2900 level representing a 100-DMA on a daily chart and 1.2800 representing 50-DMA on a daily chart next. On the upside, the 1.2970-1.3000 levels are expected to hold as a resistance line.
· AUD/USD reversed course and swung back onto the 0.71 handle , as a risk-on wave returned alongside the Chinese equity markets amid the renewed hopes of US-China trade resolution.
The Aussie has been in supply following the RBA's move to neutral while the greenback remains robust despite the Fed's switch in tone. The futures markets are pricing very little chance of any further Fed rate hikes in this cycle.
· USD/JPY has been accumulating a bid of late but has been unable to get over the line, capped before critical resistance on the 110 handle. US stocks were mainly in the green on Friday, although the DJIA bucked the turned and closed negative.
The pair holds on to gains above the 61.8% retracement of its 111.44/105.16d decline at 109.05, a strong static support level, although, in the daily chart, it offers a technical stance, given that technical indicators hold flat right above their midlines. The 100 and 200 DMA in the mentioned chart converge above the top of the range, in the 111.50/70 price zone, acting as a long-term line in the sand.
Support levels: 109.40 109.05 108.65
Resistance levels: 110.15 110.45 110.90
· With the U.S. Federal Reserve pledging to be "patient" in future rate hikes, emerging markets should do better this year, and may in fact even have "a decent rally," one strategist told CNBC on Monday.
Last year, economic troubles in Argentina and Turkey, as well as the Fed tightening monetary policy, had caused a selloff in several emerging market currencies. Some emerging market stock indexes also saw steep declines. Rising interest rates stateside make it harder for emerging economies to service their U.S-dollar debt.
· China’s foreign ministry expressed anger on Monday after two U.S. warships sailed near islands claimed by China in the disputed South China Sea.
The ships entered the waters without China’s permission, ministry spokeswoman Hua Chunying told a daily news briefing.
China hopes to see good results from trade talks with the United States, the country’s foreign ministry said on Monday, as the the latest round of negotiations began in Beijing.
· Chinese investors have continued pouring their money into Thailand's property sector even as the kingdom barrels toward an uncertain national election.
That underscores the Southeast Asian nation's enduring popularity with the Chinese — tourists from Asia's top economy have for years seen Thailand as a top spot for holidays. According to recent data from online Chinese real estate portal Juwai.com, Thailand was its most popular country when it comes to inquiries from potential real estate buyers in 2018 — climbing up from the sixth spot in 2016.
Thailand will hold general elections on March 24, but Juwai CEO Carrie Law said the company hasn't seen "a link between the Thai election and Chinese property buying."
"While the election is momentous for Thailand, most of the buyers we work with are unconcerned about the outcome," she told CNBC.
· France is expected to have first quarter economic growth of 0.4 percent, the Bank of France said in its monthly business survey on Monday, as the euro zone’s second-biggest economy grapples with the impact to business from anti-government protests.
First-quarter growth of 0.4 percent would represent a slight improvement from the fourth quarter of 2018, when the French economy grew by 0.3 percent.
The French government expects the country’s economy to grow by 1.7 percent for 2019.
· Oil prices fell by around 1 percent on Monday as drilling activity in the United States, the world's largest oil producer, picked up and financial markets were pulled down by trade concerns.
A refinery fire in the U.S. state of Illinois, which resulted in the shutdown of a large crude distillation unit, that could cause crude demand to fall also weighed on prices, traders said.
U.S. West Texas Intermediate (WTI) crude futures were at $52.09 per barrel at 0347 GMT, down 63 cents, or 1.2 percent, from their last settlement.
International Brent crude oil futures were down 49 cents, or 0.8 percent, at $61.61 a barrel.
Reference: Reuters, CNBC, FXStreet
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