Currency Market 2 Key Headline views

Stephen Innes SPI Asset Management

Euro is driving the currency bus

We were expecting a significant downside EONIA response to the weakening EUR, but the lack there off suggests the markets see a stronger probability of an ECB rate cut not QE at this stage.

So, with the market pricing in a ten bp ECB depo rate cuts in September and December, which suggest the FOMC have “out dove" the ECB's current messaging, as such the USD remains prone to further long liquidation.

Oil Things considered

AUD and CAD

Once the short-term effect from escalation tensions in Iran wane, and the market returns focus to global demand, commodity currencies could fall under pressure, but given the Greenback is in the middle of longer-term death throes these dips could provide an excellent buying opportunity notably if the worst case g20 scenarios are averted. Which remains the markets base case scenario?

I will follow up with Asia market after the CNY Fix as we remain on “Yuan Yuatch” (sic)

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

EUR/USD hovers around nine-day EMA above 1.1800

EUR/USD remains in the positive territory after registering modest gains in the previous session, trading around 1.1820 during the Asian hours on Monday. The 14-day Relative Strength Index momentum indicator at 54 is edging higher, signaling improving momentum. RSI near mid-50s keeps momentum balanced. A sustained push above 60 would firm bullish control.

GBP/USD holds medium-term bullish bias above 1.3600

The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.

Gold sticks to gains above $5,000 as China's buying and Fed rate-cut bets drive demand

Gold surges past the $5,000 psychological mark during the Asian session on Monday in reaction to the weekend data, showing that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Federal Reserve expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

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Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.