Thu, May 06, 2021 @ 01:26 GMT
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Is USD/CHF Trying To Tell Us Something About DXY?

DXY and USD/CHF is known to have a positive correlation, and it’s usually a strong one. As such, when traders don’t have access to the DXY, they sometimes trade USD/CHF as a proxy. Except for a brief dip in late February, the correlation between the 2 assets has been...

CPI Data: Buy the Rumor, Sell the Fact: DXY, EUR/USD

The US March CPI headline YoY print was 2.6% vs 1.7% in February.  2.5% was expected.  While it is true that March’s print is much stronger, the YoY data is distorted.  Recall that between March and May last year, businesses were closing their doors and lockdowns were in place...

US Stockmarkets Rally On Optimism

US stockmarkets were on the rise on Friday, with Dow Jones and S&P 500 reaching new record highs, while Nasdaq also rose, as the market seems to shake off inflation worries adopting a more risk on approach. The USD continued to remain pinned down against a number of its...

USD Index Outlook: Dollar Gained Traction After The Worst Week In 2021 But 200DMA Caps For Now

The dollar extends consolidation above 2 –1/2 week low after bears were sidelined by stronger than expected US producer price data that improved the mood. Lower Treasury yields kept the greenback under pressure last week which resulted in the biggest weekly loss this year. Larger uptrend from early January, driven by...

European Open: Powell Talks Of ‘Inflection Point’ For US Economy

Fed Chair Jerome Powell’s comments were aired on Sunday night in the US on '60 minutes', although he also reiterated that risks to the recovery remain. Powell also said that the principles risk to the economy is that the disease would spread again, and the recovery would be uneven. Yet...

The Dollar Tries To Extend Friday’s Rebound With The DXY At 92.30

Markets Markets on Friday backtracked on the benign environment of softer yields and a weaker dollar that reigned most of last week. Inflation roared back into spotlight. Chinese CPI and PPI were stronger than expected. This narrative was solidified as US PPI jumped 1.0% M/M and 4.2% Y/Y, with core...

USD Retreats Ahead Of The Fed’s Minutes Release

The greenback weakened to a two-week low against a basket of its counterparts yesterday after U.S. treasury yields declined as high expectations for the Fed to tighten its policy earlier than stated, seem to be on the retreat. In the epicenter of trader's attention is the release of the...

European Open: GBP Looking Weak Ahead Of The Open

After a noteworthy bearish session for the pound yesterday, its not look much happier today ahead of the open. Asian Indices: Australia's ASX 200 index rose by 38.2 points (0.55%) to close at 6,924.10 Japan's Nikkei 225 index has risen by 61.1 points (0.21%) and currently trades at 29,757.73 Hong...

Dollar Bulls Losing Traction; US NFP Could Spark Deeper Pullback

The dollar extends consolidation into second day as bulls take a breather under new five-month high (93.45). Lower volumes in pre-holiday trading and higher than expected US jobless claims, could cause deeper drop, as reversal pattern is forming on daily chart. Investors focus on US March non-farm payrolls data, which could...

What Is The US Dollar Index And How Can You Trade It?

What is the US Dollar Index? The US Dollar Index (DXY, DX, USDX) measures the value of the United States dollar relative to a basket of other currencies, including the currencies of some of the US's major trading partners. The Dollar Index rises when the US dollar gains strength compared...

Dollar Could Hold Strong Again Today

Markets Biden's leaked $2.25tn stimulus plan supported risk sentiment on US markets yesterday. Despite ambitions to fully fund the proposal by raising corporate taxes, WS finished a tech-lead rally up to 1.5% (Nasdaq) higher. Some end-of-month rebalancing from surging value stocks to growth was also at play. Very strong US...

Two Trades To Watch: FTSE, US Dollar Index

FTSE bulls need to break above 6800 After a weak handover from Wall Street & Asia the FTSE is pointing to a mildly negative start. Elevated US treasury yields continue to sap demand for equities. UK Q4 GDP final reading came in better than expected recording 1.3% QoQ growth versus 1% previously....

The Rise of the US Dollar and Yields into Month/Quarter End

In our Week Ahead for last week, we highlighted the daily US Dollar Index (DXY) as the Chart of the Week.   We noted that price had broken out of a flag pattern on the daily timeframe and was heading towards the target price from the flag breakout and a...

Markets Cautious Ahead Of Holiday-Shortened Week

Biden's infrastructure plan and US jobs report in focus. Dollar enters the week on firm footing. Gold lingers around $1730. Asian shares turned mixed on Monday while US equity futures slipped despite Wall Street ending Friday on a strong note. Investors seem to have entered the holiday-shortened week in...

Risk Sentiments Turned On Again, But Euro Likely to Stay Weak on Third Wave

After staying cautious for most of the week, risk sentiments were turned on again towards the end, bringing DOW and S&P 500 to new record highs. Aussie, Kiwi and Sterling staged a strong come back while Yen and Swiss Franc were deeply sold off. Yet, Dollar ended as the...

Week Ahead: Where Do We Start?

This could be one of the busiest weeks of the year for the markets or it could be extremely dull.  The coronavirus is still plaguing Europe. With more lockdowns and restrictions on the way, the vaccine rollout continues to be slow.  There is still a ship stuck in the...

DXY Tests Key Levels

As the US dollar index (DXY) reaches its 200-DMA for the 1st time since May of last year and EURUSD breaks below its own 200-DMA, traders ought to watch these key levels for a possible breakout(down). That is expecially the case if oil makes a fresh descent under 58.00....

7-Year Auction Preview: Will It Be As Bad As February’s Auction?

What: US 7-year Treasury Auction When: Thursday, March 25th, 2021 1:00pm Why is it important: Recall the 7-year Treasury note auction on February 25th. It was bad. The bid-to-cover was 2.045, which is the lowest on record. In addition, indirect bidders fell to 38.06%. Indirect bidders are often used as a...

Would US PMI’s And Durable Goods Highlight The Divergence In The Pace Of The Recovery?

Markets From moderation to risk-off, that's the change in narrative on global (bond) markets this week. End of last week and early this week, a pause in the sharp rise of long term yields provided breathing space to risky assets, especially ‘highly valued' tech stocks. This feeling of relief eroded...

Fed: Progress Is Developing More Quickly, But The Recovery Is Far From Complete

Markets A moderation in US yields facilitated benign global trading yesterday. The correction was modest and didn’t change the broader steepening trend. US yields declined between 0.2 bps (2-y) and 3.5 bps (30-y). The correction was due to lower real yields (-4.25 bps 10-y). While modest, it supported interest rate...

Sunset Market Commentary

Markets The Fed reiterated its commitment at Wednesday’s policy meeting to keep policy extremely accommodative until its aim for inflation above 2% and maximum employment will be visible in hard data. Late last week, investors doubted that this would be enough to halt the protracted curve steepening. US yields held...

USD Index Outlook: Bulls Consolidate Under Key Barriers At 92.51/63

The dollar eased after overnight's spike above 92.00 mark and retest of Friday's high, but keeping firm tone against the basket of currencies. Bulls are consolidating under pivotal barriers at 92.51/63 (new 2021 high, the highest in four months / Fibo 61.8% of 94.78/89.15), break of which would signal continuation...

Sentiments Turned Cautious on Yields and Infections, But Stay Positive

US treasury yield jumped last week after Fed gave way to more yield strength. In the background, there were some concerns over resurgence of coronavirus infections in some countries like France, Brazil and India. There was also risk of slower than originally expected vaccine rollouts. Tensions between US China...

USD Index Outlook: Dollar Firms as Upbeat Growth Expectation Improve the Sentiment Despite Fed’s Dovish Stance

The dollar kept firm tone against the basket of major currencies on Friday, following previous day’s rebound that almost fully reversed Wednesday’s post-Fed fall. Investors digested Fed’s dovish stance on decision to keep ultra-low rates but central bank’s pledge to press on with aggressive stimulus and projections for the strongest...

Will The Asian Bull Flattening Roll Over Into European And US Dealings?

Markets Core bonds got hammered yesterday. USTs significantly underperformed the German Bund, reversing much of (short-term yields) or more than (medium- to long-term) the losses in the wake of the Fed policy meeting Wednesday. The yield surge happened even as oil prices tanked more than $4/b to $63.28 in what...

Powell Exudes Dovishness During Q&A

As Powell has been telling us for a month now, the FOMC is in no hurry to raise interest rates. And today, he stuck to his guns. However, the Q&A is what may have caught some traders off guard. He wasn’t just dovish. He was ULTRA-dovish! According to Powell, this Fed...

DOW, SPX and DAX Hit Records While US Yield Surged, CAD Shone

Global equities struck a strong note in ending last week, with help from fresh US stimulus and ECB's pledge to accelerate asset purchases. Yen, Dollar and Swiss Franc ended as the worst performing ones. Canadian Dollar was the strongest on the back of risk-on sentiment, while additional supported up...

FOMC Meeting Preview: Will Inflation Spook the Fed?

Traders are still digesting the surprising outcome of Thursday’s ECB meeting, wherein the central bank announced that it would start purchasing bonds at a “significantly higher pace” over the next quarter in an attempt to get ahead of rising yields and (potential) increasing price pressures in the coming months. Beyond...

Will The Expected Approval Of The US Stimulus Continue To Support Core Yields?

Markets European markets gradually calmed Friday after the recent protracted rise in in core yields caused upticks in volatility. In the afternoon, US payrolls revived the dilemma for global markets. With 379K net job creation in February and an upward revision for the previous month, the report printed stronger than...

10-Yr Yield Couldn’t Break Loose from 1.5 Magnet, Dollar and Canadian Soared

Strong treasury yield continued to be a major theme last week. But for now, it seemed 10-year yield could still break loose from the "magnetic field" of S&P dividend yield at around 1.5%. Indeed, US stocks, including NASDAQ staged a strong rebound on Friday, as 10-year yield settled back...