Exciting times in FX markets

Exciting times in FX markets - MarketPulseMarketPulse


Home/Brexit/COVID-19/FX/News events/Newsfeed/Technical analysis

Share 0

US dollar rises as risk sentiment slides

The US dollar index rose 80 points to 91.00 at one stage overnight, as panicked investors rushed for safe-havens. However, as order was restored in New York, it retreated, finishing the day 0.10% lower at 91.04, cunningly disguising the day’s volatility. EUR/USD spiked as low as 1.2130 before rallying to finish almost unchanged at 1.2240. GBP/USD traded both sides of 1.3200 and 1.3500 in a Covid-19/Brexit induced sell-off. The UK’s fishing fig-leaf though, saw it close only 0.45% lower for the day at 1.3460. The story was much the same for AUD/USD, NZD/USD and USD/JPY, all suffering 1.0% plus sell-offs, before recovering all of those losses.

Having missed the worst of the currency market fireworks yesterday, Asia in risk aversion mode today. The dollar index has risen 0.25% to 90.25, well above critical support at 89.75. The commodity currencies have come in for particular attention as risk bellwethers. The NZD/USD has fallen 0.80% to 0.7055 in thin liquidity. The kiwi held support perfectly at 0.7000 yesterday, and any move lower should still be regarded as corrective unless we have a daily close under 0.7000. By contrast, the AUD/USD has fallen only 0.35% to 0.7560 today, well above yesterday’s panic sell-off lows at 0.7460. Support at 0.7500 should contain losses.

Asian regional currencies are all on the back foot as investors reduce exposures ahead of the holidays. USD/CNY has risen 0.10% to 6.5520. But across regional Asia, USD/SGD, USD/IDR, USD/MYR and USD/THB are all higher by between 0.25% and 0.40%. The price action looks corrective and not a structural turn in sentiment. Although I expect Asian currencies to outperform right through 2021, the next week or so may well see a choppy range-trading market.

Sterling continues to be emotional as the Brexit December 31st cut-off nears and European countries close their borders to UK travellers over the new strain of Covid-19. GBP/USD has fallen 0.50% to 1.3390 today after PM Johnson said the Brexit outlook looked negative still. The BBC reports that the UK and France have agreed on a plan to restart freight through the now Covid-closed border, which may give some support to sterling.

As previously said, sterling remains at the whims of Brexit, and now Covid-19, with a very noisy 1.3200 to 1.3500 range likely. That was pretty much how it played out yesterday and getting involved anywhere in between is likely to be hazardous to one PnL. GBP/USD has a lovely support trend-line extending back to June this year. Depending on the thickness of the line you draw on the chart, it comes in today around 1.3100, also the home of the 100-day moving average (DMA) at 1.3120. Unless GBP/USD closes under 1.3080, for charting inaccuracy sake, sterling remains in an uptrend versus the dollar. Failure likely means Brexit failure as well, in which case the chart hints that sterling’s initial target is 1.2700. You have been warned.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia and the New York Times. He was born in New Zealand and holds an MBA from the Cass Business School.

Jeffrey Halley

Latest posts by Jeffrey Halley (see all)

Original author: Jeffrey Halley


© MarketPulse

NetDragon Wins "Top 100 Hong Kong Listed Companies...
Asia equities in gentle retreat

By accepting you will be accessing a service provided by a third-party external to https://chatpips.com/


Broker Search

Latest Spot Rate

19 January 2021
Key risk events today: Limited. (Previous analysis as well as outside sources – italics). EUR/USD: Holiday-thinned liquidity witnessed narrow trading on Monday, despite shaking hands with H4 demand (green) at 1.2040-1.2064 and connecting 38.2% Fibona...
19 January 2021
Canadian dollar dips on mixed data - MarketPulseMarketPulse Home/FX/Newsfeed Share 0 The Canadian dollar is down slightly in the Monday session. Currently, USD/CAD is trading at 1.2759, up 0.22% on the day. Short squeeze boosts US dollar The week end...
19 January 2021

19 January 2021
Aussie dips below 0.77 line - MarketPulseMarketPulse Home/Central banks/COVID-19/FX/News events/Newsfeed/Technical analysis Share 0 The Australian dollar has started the new trading week with slight losses. AUD/USD is currently trading at 0.7681, dow...
18 January 2021
Quiet start to the week - MarketPulseMarketPulse Home/Central banks/COVID-19/News events/Newsfeed/Treasuries Share 0 A quiet start to the week, with the US bank holiday meaning trading is likely to remain extremely thin throughout the session. Europe...
How It Works | About | Contact | Contributors | Privacy Policy | Advertise
© 2009 - 2021 ChatPips. All Rights Reserved. Terms of Use: The content on this website is solely for educational and informational purposes and is not a substitute for official documentation of the original owners. Daily economic news is provided by third-party website. This site is not operated by, sponsored by, endorsed by, or affiliated with any parties in any way. The website owner, the authors, the publishers, and all affiliates of ChatPips.com assume no responsibility or liability for your trading and investment results. You should always check and confirm with several sources with your licensed financial advisor and tax advisor to determine the suitability of any investment before making your final decision. Your continued usage and browsing of information on this website constitute your agreement to this Terms of Use. If you do not agree, please do not proceed to use this website. Brokers Directory: The companies license information were obtained from respective local jurisdiction. All other company and/or product names are trademarks and/or registered trademarks of their respective owners.