Daily Analysis - 27/06/2018
Trade war concerns are still in the air and this is evident in the markets. The risk-off sentiment has hit Chinese equity markets, while the yuan fell on expectations that Beijing will prefer a weaker currency to soften the impact of trade tariffs imposed by the United States.
The People’s Bank of China (PBOC) lowered the Chinese currency’s midpoint for the sixth straight day to its weakest in six months. As a result, USDCNH surged to a high of 6.6160, the highest since December 2017. The trade-sensitive Australian dollar also weakened, with AUDUSD dropping towards a 13-month low of $0.7345 reached last week.
Crude oil surged on news that the U.S. State Department expects oil buyers to completely cut off purchases of Iranian supplies in early November. Oil companies SHELL and TOTAL have already announced they’re not buying anymore. Iran, OPEC's third-biggest producer, exports more than 2 million barrels per day, and so Trump’s sanctions on Iran will affect global oil supply.
NZDUSD was the biggest mover in the Asia session and continues to look uneasy going into the upcoming RBNZ policy meeting. Meanwhile, the loonie is also in focus and USDCAD will likely remain in full stand-by mode waiting for Bank of Canada Governor Poloz to speak later. Another central bank speaker later today will be Bank of England Governor Carney.
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