US DOLLAR

The DXY index is consolidating near a four-day high as the greenback continues to firm against low-yielding defensive currencies. Market sentiment is cautiously switching to risk-on on the back of reports that the US and China are close to announce trade talks are back on track. Today, the GDP report card was released by the Bureau of Economic Analysis and showed the economy expanded by 3.1% in Q1 of this year, matching market consensus. The readings, though come with a caution with personal consumption expenditure (PCE) revised lower. Currency market is expected to consolidate around current levels with the G20 meeting as the centre of attraction.

CANADIAN DOLLAR

The Canadian dollar continues to trade with a bullish tone, fetching 76 cents US this morning. The pair is now consolidating around a 4-month low with crude oil prices trading not far off the five-week high. Rising oil prices have been the main driver for commodity currencies despite trade spat with China. We expect the pair to stick to current themes ahead of G20 summit.

EURO

EUR/USD moves into consolidation zone, oscillating around the mid-point of 1.13. The Economic Sentiment Indicator (ESI) released by ECB revealed no new surprise: Sentiment in the euro area remains low with a gloomy economic outlook. The index dropped from 105.2 to 103.3 this month. Exports are pointing lower, manufacturing sector growth remains in the red and service sector is seeing lower demand. In the absence of any major data release today, we are likely to see the pair in range-bound trading.

BRITISH POUND

The Sterling is looking for clear direction, trading slightly north of the 1.27 handle. UK and Brexit headlines and noises continues to drive sentiment though market remains cautious ahead of month end closing. GBP/USD remains vulnerable to no-deal scenario.

JAPANESE YEN

The greenback, as we noted yesterday, made its first attempt to climb above the 108 level. There seems to be a breakthrough in trade tensions between US and China. This bodes well ahead of the meeting between the US President and his Chinese counterpart. US GDP came in line with market estimates, allaying fears of imminent rate cuts from the Fed. USD/JPY expected to keep a bullish tone as we move towards month-end.