Thu, May 06, 2021 @ 01:32 GMT
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USD/CHF and DXY Mending Their Broken Relationship

The Swiss Franc and the US Dollar Index (DXY) have been highly correlated this year, with a correlation coefficient above +0.90 for most of the year. The correlation coefficient of +1.00 indicates a perfect correlation, indicating that the 2 assets move perfectly together.  A reading above +0.90 is pretty...

USD Strengthens While Gold’s Dive Lower Continues

The USD Index reached a three-week high yesterday characterizing USD's strengthening against a number of its counterparts yesterday, while gold's dive lower seems to continue, as markets expect a faster growth and inflation rates for the US economy. The greenback strengthened in the past few sessions along with US...

A Wild Week of Metals, Yields, Stocks and Dollar

Just after DOW hit new record high in the middle of last week, the rally was choked by skyrocketing treasury yields. Dollar surprisingly ended as the strongest one for the week, followed by Euro and then Sterling. Australian Dollar suffered most as it reversed some of the month's gains....

The US Dollar Flexes Its Muscles

Dollar piggybacks on US bond yield rise The rise in US bond yields overnight led to US dollar strength, notably amongst the previously pimped-up commodity currency grouping. The US 10-year yield finished the day 17 points higher at 1.53% overnight, a very significant gain. Notably, the Australian dollar staged a...

Powell is Head and Shoulders above the Rest: DXY, EUR/USD

Fed Chairman Jerome Powell continued with his dovish rhetoric yesterday when he testified on day 2 regarding  Monetary Policy in front of Congress.  The theme from the Federal Reserve is that they are in no hurry to raise interest rates or take their foot off the pedal regarding stimulus. ...

USD/CHF And DXY Diverge

The DXY and USD/CHF have been trading together for most of 2021. The correlation coefficient has been above 0.90 for over a month. A correlation coefficient of +1.00 means that the 2 assets move together 100% of the time. Many fx traders who may not have access to the...

European Open: New Highs For WTI, UK Jobs And Powell Up Next

News flow begins to pick up today, with UK employment data, Powell's testimony and RBNZ's first meeting of the year in focus. Asian futures: Australia's ASX 200 futures +1.1% at 6,787 Japan's Nikkei 225 closed due to a bank holiday Hong Kong's Heng Seng futures +2.6% at 30,850 FTSE 100...

USD Slips On Safe Haven Outflows

USD slipped lower on Friday and stabilised somewhat during today’s Asian session against a number of its counterparts as vaccination optimism caused safe haven outflows for the greenback. It’s characteristic how the USD lost against commodity currencies yet gained on safe haven currencies such as JPY and CHF, which...

Aussie Surged With Industrial Metal Prices, More Upside in Favor

Stocks markets took a breather last week while focus turned to surging industrial metal prices and treasury yields. Strength in metals was seen more about supply shortage than recovery in demand. That somewhat also reinforced reflation trades. US 10-year yield was back above 1.3%, German 10-year bund yield at...

Asian Open: US Data – All On The Rise

A slew of US data overnight saw inflationary inputs, unemployment and housing permits rise in tandem. Welcome to 2021! A slew of US data overnight saw inflationary inputs, unemployment and housing permits rise in tandem. Welcome to 2021! Jobless claims rose by 861k, which is 96k more than the 765k...

So You Want To Trade The DXY?: EUR/USD, USD/CHF

The US Dollar Index (DXY) is a measure of the value of the US Dollar relative to a basket of foreign currencies. The current breakdown of the DXY is as follows: EUR 54.6% JPY 13.6% GBP 11.9% CAD 9.1% SEK 5.2% CHF 3.6% Below is a daily chart of DXY: Since...

The beginning of the End for Stimulus?

“The Fed is always last to know” the saying goes.  Fed officials (and central bankers around the world) have been dovish to say the least over the last year.  More recently, as bond yields have been climbing, Fed members have been outspoken talking about how inflation is not a...

Asian Open: The Dollar Catches A Bid On China’s ‘Rare Earth’ Move

The US dollar caught a bid overnight on reports that China plans to curb its rare earth exports to the US. The move would restrict vital parts for US weaponry and F-35 fighter jets, and plans have been drawn to limit up to 17 rare earth materials. China currently controls...

Dollar Tumbled on Risk-On Sentiments Again, Ignored Yield Strength

Dollar ended as the worst performing one, reversing much of prior week's rebound. Risk-on sentiments appeared to be leading the greenback lower again, and boosted Australian Dollar as the strongest one. But the development in other major currencies were less clear. The strength in stocks and oil were not much...

No News is Sometimes Good News: DXY, AUD/USD

Many Asian countries were closed earlier due to the Lunar New Year, resulting in slow trade.  The muted session carried over to Europe and now into the US.  It’s quiet.  Therefore, yesterday’s themes have carried over into today’s US session, which primarily are the lack of inflation in the...

Asia Open: Dollar Bears Lose Appetite, Key Reversals Form On US Indices

US indices provided a technical pattern at record highs, which can be indicative of a reversal. And bearish momentum on USD is coming into question. Are dollar bears losing their appetite? Key reversals form on US indices Copper continues to leave gold for dust Oil moves in on 200-month...

US CPI: No Inflation Could Mean Bad News for US Dollar

US inflation was released earlier, and it wasn’t good.  Although headline inflation was in line with expectations for January (MoM) at 0.3%, it was core inflation which set the tone for the markets.  Core inflation for January (MoM) was 0% vs and expectation of 0.2%!  Core inflation strips out...

Markets Set To Ignore Impeachment Noise Again

US futures point to new record highs. Senate proceedings unlikely to derail risk-on sentiment. Investors still focused on incoming US fiscal stimulus. Powell speech, US inflation data may offer more reflation trade signals. Former US President Donald Trump’s second impeachment trial in the Senate has just been given the...

Asia Open: The USD Is Broadly Weaker Ahead Of US CPI

Dollar bears returned in force overnight, pushing the US dollar index to a 7-day low and back beneath its 50-day eMA. The US dollar was the weakest major currency overnight, falling broadly lower against its peers and placed EUR/USD as the biggest gainer and USD/CHF as the weakest pair of...

USD/JPY Near Strong Support, DXY May Be The Key For Next Move

On a daily timeframe, USD/JPY and the US Dollar Index (DXY) have been highly correlated since late December 2020 (see bottom of chart below). The current correlation coefficient is +0.86. For comparison, a correlation coefficient of +1.00 means that USD/JPY and they DXY are perfectly correlated and move together...

US Dollar ahead of Inflation Data: DXY

As we wrote in the Week Ahead, the US Dollar (vis a vis the US Dollar Index) has been in a tear since early January.  The reason seems to be that higher inflation expectations have been creeping into the market,  which is causing the US Dollar Index (DXY) to...

USD Retreats After Soft US Employment Data For January

The USD retreated against a number of its counterparts on Friday and during today’s Asian session as worries for the rebound of the US employment market tended to resurface after a relative euphoria for the comeback of the US economy. Despite the unemployment dropping and the NFP figure landing...

Dollar Rally Choked by Job Data, Spotlights Turn to Sterling and Aussie

Dollar was in a pole position to end as the strongest major currency. But disappointing non-farm payroll report gave dollar bulls a reality check as the greenback ended mixed, after late selloff. Australian and New Zealand Dollar have indeed closed as the best performers, followed by Sterling. Euro, Swiss...

Dollar Strong in Risk-On Markets, Non Farm Payrolls in Focus

Return of risk-on markets, after some solid economic data, pushed S&P 500 and NASDAQ to new record highs overnight. Yen and Swiss Franc trade broadly lower naturally but Euro was not far behind. Commodity currencies, while firm, are so far overwhelmed by Sterling and Dollar. In particular, the greenback...

Dollar index eyes 91.74 resistance as NFP awaited

Dollar is currently trading as the strongest one for the week and stays firm, as focus turns to non-farm payrolls report from the US. Markets are expecting 85k job growth in January, while unemployment rate would stay at 6.7%. Looking at some employment related data, ADP private job growth surprised...

DXY Continues Higher! Where To Next?

Earlier, we wrote that the DXY was holding key resistance near 91.50 and had pulled back after the BOE said they did not intend to give the impression to the markets that they would take interest rates negative. That didn’t last very long!! The US Dollar Index later broke...

Have The Rules Changed For Trading The US Dollar?

Throughout the past several months, a risk rally ordinarily meant a weaker US Dollar. The DXY index, which measures the greenback’s value against a basket of six world currencies, slid 6.7% in 2020 recording its second worst annual performance since the global financial crisis. Global expansionary monetary and fiscal...

Dollar Index Rises to Nine-Week High on Fading Risk Sentiment

The dollar index extends gains and hits the highest in nine months on Tuesday, lifted by fading risk sentiment on darkening economic outlook on extended lockdowns. Monday’s 0.54% rally, which penetrated through the base of thick falling daily cloud (spanned between 90.74 and 91.96) and registered close deeply in the...

EUR/USD And DXY At Key Levels

The fundamental data released from Europe earlier was not good. Retail sales from Germany for December were -9.6% vs -1.2% expected and +1.1% in November. In addition, Spain became the first of the major European countries to post a Manufacturing PMI below the expansion/contraction level of 50, with a...

Markets Down after Roller-Coaster Rides, Dollar Upside Still Capped

January ended with an exceptionally volatility week. While GME occupied a lot of headlines, there were other important developments like vaccines, US stimulus, and central bank expectations. Sterling ended as the strongest one with traders paring bets on negative interest rate of BoE. The same went for New Zealand...