FX update – Dollar down again

Stuart Cowell HFM

USDIndex, Monthly

The Dollar continued lower in what is now the biggest monthly decline the US currency has seen in a decade. The narrow trade-weighted USDIndex printed a fresh 26-month low at 92.49, the culmination of a 5% decline from the finishing level in June and marking just over a 10% drop from the highs seen in early March. US Treasury yields have printed fresh lows, with the 30-year bond in record low territory, extending declines seen since yesterday’s release of US Q2 GDP data, which came in at a dismal -32.9% y/y, although this met the consensus expectation. President Trump’s tweeted suggestion that the presidential election in November should be postponed has also been in the mix, adding a political element to arguments that the pandemic has precipitated a further erosion in the dollar’s reserve currency status. The EU’s recently greenlighted recovery fund is also seen as a first step in shared fiscal responsibility in the Eurozone, which by all accounts has triggered a re-weighting of euros in currency portfolios at the expense of the Dollar. Gold prices have lifted to back within a couple of dollars of the record nominal high seen earlier in the week at $1,974.90. EURUSD, amid its sixth consecutive week of accelerating gains, has pegged a fresh 26-month high at 1.1908. Cable pinned a new five-month peak, at 1.3143. USDJPY posted a five-month low at 104.19. AUDUSD saw a 17-month high at 0.7228. USDCAD has been an exception to the US Dollar weakening theme, with the pairing consolidating in the lower 1.3400s after making a nine-day high at 1.3461 yesterday. The Canadian Dollar has been affected by the drop in oil prices over the last day. Front-month USOil futures hit a three-week low on Thursday at $38.72, and while since recouping to levels over $40.0, remain down by over 2.5% from week-ago levels.

The big tech companies SMASHED it. APPL. $11 bln profit on $60 bln rev, 4 for 1 stock split coming, AMZN $5bln profit as income doubled & sales up 40%. Alphabet ad revenue down but still beat estimates & FB rev. up 11%, as activity increased 13%. Other companies reported mixed results. Today – Eurozone CPI & GDP (Q/Q) (Prelim), US PCE, Chicago PMI & UoM Sentiment & Exp., CAD GDP (m/m). Earnings are due from: Exxon, Chevron, Phillips 66, Caterpillar, Merck and Colgate.

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.