|Day's Range||97.67 - 97.95|
|52 Week Range||95.16 - 99.67|
In order to continue the strong upside momentum, March U.S. Dollar Index futures are going to have to take out and sustain a rally over the Fibonacci level at 97.700.
It’s a busy day ahead, with private sector PMIs for January to set the tone. Expect retail sales figures from Canada to also drive the Loonie.
The U.S. dollar’s dominance in world financial markets is poised to erode over time as government officials seek to manipulate the strength of the currency for politically motivated purposes, according to the head of investment research at the world’s largest hedge fund.
Caution reigned supreme today in markets as Wuhan went into shutdown and those that were unfortunate enough to have China risk to cover were forced to do so amid dwindling liquidity on both the Yuan and SHCOMP.
Employment figures give the Aussie a boost as the focus shifts to the ECB. Will Lagarde follow the BoC with a dovish outlook to sink the EUR?
Asian stocks and currencies are mixed as investors grapple with the extent of the coronavirus outbreak and its potential implications on the global economy.
In the middle of the week, I think we can already state that the main topic on the Forex market is the reversal on the American Dollar. Dollar bears tried their chances yesterday but the USD weakness was contained very efficiently. In few cases, that allowed to create sweet reversal patterns.
IMF attributes ‘the lion’s share’ of downward revision to ‘more subdued growth forecast’ for India. Asia’s third-largest economy, is expected to grow by 5.8% in 2020, a 1.2 percentage point markdown from the organization’s October forecast.
Equity markets moved into risk-off mode overnight with E-mini S&P; futures down 40bp, and Europe is expected to open the same. Asian weakness was led primarily by the spread of the coronavirus in China, which comes on top of a downgrade of global growth forecasts from the International Monetary Fund, and Moody’s cut the credit rating of Hong Kong.
More stats due out of the UK could test the Pound further this afternoon. Earlier in the day, the BoJ held rates steady.
Based on the early price action and the current price at 97.455, the direction of the March U.S. Dollar Index the rest of the session on Monday is likely to be determined by trader reaction to the main 50% level at 97.375.
Will 2020 turn out better than 2019 for the yellow metal? Gold prices don’t move in a vacuum – the macroeconomic situation definitely plays a key fundamental role.
The tailwind from better than expected data continues to support equity markets as US stocks traded at record levels, and those in Europe notched new highs on Friday after Chinese growth data reassured investors over the health of the world’s second-largest economy.
The PBoC left LPRs steady this morning, with some time likely needed to asses the impact of recent cuts and the phase 1 agreement.
Based on Friday’s close at 97.359, the direction of the March U.S. Dollar Index on Monday is likely to be determined by trader reaction to the main 50% level at 97.375.
The Aussie and Kiwi were also underpinned by the inking of the trade deal, but domestic economic concerns limited gains as well as increasing chances of central bank rate cuts. Demand for higher-yielding assets drove the Japanese Yen lower.
Thursday starts with the weakness on the American Dollar and new all-time highs on the SP500. The second part should not be a surprise but the weakness of the USD is something new in the 2020.
Even as we write this post, the US Stock Market continues to push higher as global traders and investors pour capital into the continued US rally. The strong US Dollar continued to attract capital from around the globe and with fresh earning about to hit from Q4 2019, investors are expecting another round of solid income and earnings growth.
On Wednesday, the March U.S. Dollar Index plunged when it crossed to the weak side of a downtrending Gann angle at 97.075 and the main 50% level at 97.035. The retracement level and the Gann angle are new resistance.