FX update – USD slips

Stuart Cowell HFM

The Dollar has been ebbing moderately lower into the London interbank open, though has largely remained above lows seen on Monday. The USDIndex (DXY) drifted to a 93.25 (S1) low after yesterday’s rebound capped out at a six-day high at 93.95. This has come amid a risk-on backdrop, which has propelled the MSCI Asia-Pacific index to gains of over 1%, along with lifting US and European equity index futures. Strong manufacturing data out of the US and elsewhere yesterday, continued gains in tech stocks, and Germany’s IFO institute stating that there are signs of recovery in the auto manufacturing industry, have been bullish tonic for asset markets, offsetting the stalemate on Capitol Hill over the next pandemic fiscal support bill and anxieties about Hurricane Isaias. New Jersey governor has declared a state of emergency as the US Atlantic coastal states brace for the storm.

EURUSD lifted moderately, posting an intraday high at 1.1800, extending the rebound from yesterday’s eight-day low at 1.1696. Cable saw a similar price action, making a rebound peak at 1.3106 after setting a five-day low at 1.3004 yesterday. USDJPY plied a narrow range pivoting through 106.00, holding well within Monday’s range.

AUDUSD lifted to an intraday high at 0.7150, and above yesterday’s peak. The RBA left its cash rate unchanged following its August policy review today, and announced a resumption in bond buying from tomorrow “to ensure the yield on 3-year bonds remains consistent with the target” of around 25 bp. The RBA adopted yield curve control back in March. Regarding the outlook, the central bank highlighted a likely “uneven and bumpy” recovery in the state of Victoria, which has gone into lockdown in response to a flare up in coronavirus cases. The AUD remains in demand with Daily time frame charts showing gains across the board, with AUDCAD the best performer and into its 85th day above its 20-day moving average, with AUDJPY and AUDUSD above that key indicator for 24 and 23 days respectively.

Elsewhere, USDCAD ebbed to a five-day low at 1.3358. Front-month USOil prices remained buoyant after yesterday hitting a five-day high at $41.22. Gold prices pivot through $1975 today down $10-$15 off of yesterday’s nominal record peak at $1,987.00.

Author

Stuart Cowell

HFM

With over 25 years experience working for a host of globally recognized organisations in the City of London, Stuart Cowell is a passionate advocate of keeping things simple, doing what is probable and understanding how the news, c

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.