USD Pauses as CNY Bounces

All currencies are up against the US dollar as USDX comes off the 95.40/60 ceiling, which it failed to break repeatedly over the past 2 months. Aussie is the best performer mainly because the Chinese yuan is the day's biggest gainer among Asian currencies. Readers ought to grasp these intermarket flows, which Ashraf has referred to in his videos and interviews: CNY movements are paramount in influencing USD pairs, with AUD and gold the highest correlated w/ CNY. The Premium video highlights, which trades are most likely to be taken.

Click To Enlarge

GBPUSD recovers its 1.2920 lows seen after Liam Fox said on the weekend that a Brexit no deal was more likely than an agreement. The international trade minister warned that stubbornness on the EU side was making a deal impossible.10 Downing St tried to counter that with a statement from May saying she still believes a deal is the most-likely outcome but that did little to inspire a bounce.

Meanwhile, EURGBP extends recovery past 0.8940, eyeing a recapture of the 0.90 level, last seen in November.

In the bigger picture, the US-China trade spat remains the dominant story. Along with roiling emerging markets, it helped to underpin the US dollar Monday across the board. China isn't showing any sign of wanting to negotiate and appears to be digging in.

AUD rallies alongside the gains in Chinese currency equities.We highlighted an extra-interest in the Australian dollar last week because it's become a choppy, sideways and boring chart but those are often followed by powerful moves. The RBA announcement contained no major changes in the outlook forecast and AUDUSD traders continue to monitor the 55-DMA at 0.7460 resistance.