Dollar strength was mitigated by a widening US trade deficit
Resignation of Gary Cohn the Whitehouse is now left without any heavyweight advocate
Encouraging data on domestic private hiring and labour costs reinforced the view of underlying strength in the US economy pushing it higher against currencies such as the Swiss Franc. However, dollar strength was mitigated by a widening US trade deficit for January, and many investors were favouring the yen as a safe haven asset over the dollar after anxiety of a deterioration of global trade. Despite a strengthening dollar, the euro still managed to make ground against the dollar, now trading above 1.241. Tomorrow, Draghi is likely to err on the side of caution amidst the tightening of global trade tensions. Although Brexit is still causing major headwinds for the Sterling, it too crept higher against the greenback.
The dollar succeeding to recouping some of yesterday’s losses up 0.2% against a weighted basket of currencies coupled with strengthening US equities saw Gold lose most of yesterday’s gains. However, following the resignation of Gary Cohn, Trump’s top economic adviser, the Whitehouse is now left without any heavyweight advocate of globalisation, reigniting fears of a global trade war which would provide a significant impetus for investors to back the precious metal.
Forecasts that US Crude Oil inventories increased by 3000k weren’t yet priced into the market as exemplified by the fact that an increase by 2400k was still enough to send US Oil down nearly 2% to $61. With prospects of the likelihood a global trade war increasing after comments that the EU would retaliate to Trump’s tariffs, the oil industry, an industry that thrives off of globalisation, would be negatively impacted.
The cryptocurrency market takes yet another slump after speculation that Binance, one of the world’s largest cryptocurrency trading platforms has been hacked. Bitcoin dips below $10000 but hopefully the continuation of increased adoption in the economy will provide investors with more confidence in this new asset class.