Morning Commentary & Currency Insights – June 20, 2018

The DXY is 0.06% as it continues to push highs that we haven’t seen since last July. Trade war escalation took the night off as neither China or the US added to the deteriorating rhetoric between the two nations. Earlier in the week Trump threatened to impose a 10% tariff on $200B of Chinese imports, causing growing concern that an all-out trade war could occur. Trump did switch his attention to NAFTA talks stating that things are getting there in terms of striking a new deal. While this is far from a signed agreement, this appears to be an improvement considering how tumultuous previous talks have been. EUR slipped against the Dollar after Draghi reiterated the ECB’s dovish sentiment and maintained that rates will remain unchanged until Summer 2017. Sterling is still under pressure as Theresa May faces another legislation vote today after being defeated yesterday. The government is seeking to rout an attempt to give MPs a meaningful vote before Britain can leave the EU without a deal.

Another relatively quiet day on the calendar, with the highlight being speeches from the heads of the Fed, ECB, BoJ and RBA in Portugal this morning. Short term support and resistance are 1.3130 and 1.3347 respectively, while RSI is 63 and the 200-day moving average residing at 1.2709.