03.12.2019: USD takes a nosedive (USD/JPY, AUD /USD)

In the Asian session, the US dollar was consolidating against its major rivals. Currently, market participants are awaiting news on the US foreign trade policy. The quote of the US dollar collapsed by 50 points to the level of 97.85. It was steadily declining for several hours. Such a sharp decrease was triggered by a mixed economic background and a stronger euro. The single currency gained momentum after the release of upbeat data on the eurozone PMI index. Besides, Christine Lagarde hinted that the ECB may keep the key rate reduction on hold. As for the US-China trade relations, investors priced in the news about the imposition of sanctions by Beijing. Additionally, the US is on the verge of a trade conflict with another country. Robert Lighthizer, the US trade representative, said the White House could impose duties of up to 100% on $2.4 billion of French goods in response to France’s digital tax that may harm American companies. Yesterday, Donald Trump announced the restoration of duties on all steel and aluminum from Argentina and Brazil. It was due to the decision of both countries to devalue their national currencies which makes their supplies to the US more competitive. Trump also criticized the Fed’s policy and
Fed Chairman Jerome Powell in particular. So, the US dollar sank almost across the board. The dollar/yen pair fell to the level of 109.00. In the morning, the pair was trying to enter a correction phase. Traders have also factored in the news that the Japanese government intends to compile a new stimulus package of 25 trillion yen to support the economy. Analysts predict a downtrend for the pair. If it breaks the resistance level at 108.80, it is likely to decline to 108.50 and then to 107.60. Today, the Reserve Bank of Australia has made a decision on its key rate. Analysts suggest that although the RBA has decided to keep the key rate unchanged, the overall rhetoric of the regulator has remained soft. Therefore, it may continue to ease the monetary policy of needed. What is more, the RBA made it clear that it did not cut the key rate amid the signs if recovery in the global economy. Against such a background, the AUD/USD pair rose to a 2-week high. The quote broke above the level of 0.6850 and continued to move higher. Now it is trying to advance to the medium-term target at 0.70. The pair may get support from tomorrow’s report on GDP data for the 3rd quarter. If the figure is weak, the pair is likely to fall back to its previous levels. We continue to keep close tabs on market developments! Stay tuned!

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