fbpx

The dollar’s rise resumes

The dollar's rise resumes - MarketPulseMarketPulse

image

Home/Central banks/FX/News events/Newsfeed/Technical analysis/Treasuries

Share 0

Dovish Fed Governors cap dollar’s gains

A plethora of Federal Reserve Governors, notably Harker, Brainard and Clarida, along with some successful bond auctions, managed to cap the rise in US yields overnight, with the 10-year now over ten basis points of its recent highs. Harker said that the Fed would basically keep rates lower for longer. Brainard, always an uber-dove, said much the same and added that the Fed could increase bond purchases if necessary. Clarida noted that when the Fed does raise rates, they will only have to raise them slightly to reach a neutral policy stance. He added that the Fed would like to see one year of two per cent inflation before tightening. Despite the dovish chorus emanating from the Fed, the dollar finished the overnight session stronger. The dollar index rose 0.30% to 90.35 and has climbed to 90.40 this morning. That leaves the index mid-range with critical levels being 90.00 and 91.00.

Amongst the major currencies, only sterling defied the greenback overnight but has traced out a double top at 1.3700. Sterling’s uptrend remains intact, but elsewhere, EUR/USD, AUD/USD, NZD/USD and USD/CHF have all moved deeper into reversal territory. Notably, on EUR/USD, a failure of 1.2135 opens a correction lower that could extend to 1.1900, its 100-day moving average (DMA). On USD/CHF, a rise through 0.8920 could see USD/CHF rise to 0.9050 initially, its 100-DMA.

Asian currencies are showing more fortitude, as the Chinese yuan remains anchored near its recent highs, with USD/CNY unchanged at 4.4710 this morning. Although the PBOC is sending subtle signals that the CNY rally has done enough for now, it would take a rise through 6.5500 to signal that the US dollar squeeze is spilling into the regional Asia space. Only the Korean won and Indonesian rupiah show material signs of weakening, but realistically, the yuan will have to buckle before seeing a general Asian currency retreat.

Overall, the rise of the US dollar overnight, even as US yields retreat, is a warning sign that the short-dollar squeeze may be about to accelerate.

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

Copyright

© MarketPulse

Oil and gold head lower
Market Insights (Episode 294)
 

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

 
     
 

Broker Search

Latest Spot Rate

 
23 January 2021
Big tech in focus Earnings season is up and running and next week will see some huge names reporting on the fourth quarter including Facebook, Apple and Tesla. Covid-19 is becoming more of a focus for investors as lockdowns take their toll and it bec...
22 January 2021
SHANGHAI, Jan. 22, 2021 /PRNewswire/ -- Boqii Holding Limited ("Boqii" or the "Company") (NYSE: BQ), a leading pet-focused platform in China, today announced the appointment of Mr. Kai Fang as the Company's Chief Strategy Officer, effective immediate...
22 January 2021
A tough end to the week - MarketPulseMarketPulse Home/COVID-19/News events/Newsfeed Share 0 Stock markets are ending the week on a negative note after a period of consolidation so far this month. It’s been a strange start to the year following a bump...
22 January 2021
Oil and gold slip as dollar higher - MarketPulseMarketPulse Home/Commodities/Metals/Newsfeed/Oil/Technical analysis/Treasuries Share 0 Oil could be seeing minor correction Oil prices have fallen by more than 2% on Friday, as widespread risk aversion ...
22 January 2021
Pound slips on weak retail sales, PMIs - MarketPulseMarketPulse Home/COVID-19/FX/News events/Newsfeed/Technical analysis Share 0 The British pound has reversed directions in the Friday session and headed lower. Currently, GBP/USD is trading at 1.3671...
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.