US dollar set to break further lower – MUFG

FXStreet Insights Team FXStreet

The US dollar is lurching lower with some key developments pointing to further weakness over the short-term such as USD/CNY – a key currency pair not just for Asia but for G10 also – breaking key technical support at 6.4000 with no obvious sign of opposition from the Chinese authorities, economists at MUFG Bank report.

Downside pressure on the dollar building

“Onshore, the CNY advanced to its highest level versus USD since June 2018 encouraged by a PBOoC reference rate that indicates the authorities are comfortable with the move. One of the implications of China’s complaint this week of excessive speculation in the commodities markets is the belief that the authorities have become more concerned over the threat of inflation and therefore CNY appreciation will be met with less opposition.”

“Of course, the authorities in China have greater freedom to allow for the break lower in USD/CNY given the overall relative stability of its currency on a trade-weighted basis.”

“The increased integration of China in global trade means the CNY has a greater and greater weighting in other currencies’ trade-weighted indices and hence the CNY move will reduce fears of further currency gains on a trade-weighted basis.”

“This break in USD/CNY is important and does open up the potential for broader USD weakness and at the margin means a little less concern from the ECB over EUR appreciation.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD holds losses near 1.1850 as US, China holidays keep trade muted

EUR/USD opens the week on a softer note, trading near 1.1860 during the Asian session on Monday. Activity is likely to remain muted, with United States markets closed for the Presidents’ Day holiday, while Mainland China is also shut for the week-long Lunar New Year break.

GBP/USD flat lines as traders await key UK macro data and FOMC minutes

The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.

Gold remains below $5,050 despite Fed rate cut bets, uncertain geopolitical tensions

Gold edges lower after registering over 2% gains in the previous session, trading around $5,030 per troy ounce during the Asian hours on Monday. However, the non-interest-bearing Gold could further gain ground following softer January Consumer Price Index figures, which reinforced expectations that the Federal Reserve could cut rates later this year.

Week ahead: Data blitz, Fed Minutes and RBNZ decision in the spotlight

The US jobs report for January, which was delayed slightly, didn’t do the dovish Fed bets any favours, as expectations of a soft print did not materialize, confounding the raft of weak job indicators seen in the prior week.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.