Summary: The US dollar was broadly lower as risk appetite surged on Inauguration Day for US President Joe Biden, but the narrative fails to fit with the action seen across markets, even if a single odd day should not . Biden set to work immediately unwinding a raft of Trump move. Elsewhere, Bank of Canada optimism sent USDCAD to a new cycle low.
FX Trading...
Summary: The US dollar continues to consolidate to the strong side as the Biden presidency approaches, one that was meant to weaken the US dollar further, given the slim Democratic control of Congress, but with the market constantly trying to operate on far future expectations, it may simply have gotten ahead of itself. Soon, however, this consolidation will...
Summary: The USD rally was capped and reversed yesterday as US yields retreated sharply from new highs, Fed officials weighed in against any tapering urgency, and risk sentiment stabilized. This sets up the USD high from early Monday as the key line in the sand, or tactical pivot for USD bears as we await more Fed guidance after a confusing couple of weeks, as...
Summary: The consolidation in the US dollar bear trend continues as global markets start the week on wobbly footing on some of the usual suspects returning and grabbing the spotlight, from Covid-19 concerns looking more global again, to longer term concerns on the US-China relationship and maybe even on the implications of Trump finding himself locked out of his...
Summary: Markets largely shrugged off the mob of Trump supporters descending on Capitol Hill, but the prospect of a Democrat-majority Congress voting for new large stimulus checks shortly after the inauguration of Biden saw US yields spiking higher through key levels, and acted as a sudden headwind for USD bears, a development that could continue if the yield...
Summary: The two Senate run-off races in Georgia are set to go to the Democrats, giving the incoming Biden administration control of the US Congress by the slimmest of margins. This has strongly rejuvenated the reflationary trade, driven by a weaker US dollar. Most importantly, US long yields have broken resistance, which eventually could become a hurdle for USD...
Summary: The market tried to set-off the reflationary fireworks as the first session of 2021 got underway, but while big moves up in some commodities and in particular crypto assets opened the year with a bang, the only move that is sticking well as the market rolls into North American hours is the move in the Chinese currency higher after weeks of quiet at the...
Summary: The market narrative is overwhelmingly positive for a reflationary rebound and for a weaker US dollar in 2021, an outlook we are largely sympathetic to, but plenty can still go wrong, and the speculative fervor of the momentum is the most clear and present danger for a correction sooner rather than later. Elsewhere, the Brexit deal was the dampest of...
Summary: The sudden meltdown in risk sentiment yesterday, followed by an impressive reversal that wiped away much of the damage, is not a sign of a healthy market, at least tactically. Markets could remain a bit edgy after this episode and at least into early January, especially around the two run-off elections in the US state of Georgia that could yet grant more...
Summary: The market is starting off this holiday week in a very different place from where it closed last week, as Covid mutation fears and an isolated UK are pounding sterling, while the US dollar has suddenly gone vertical, with no compelling narrative to latch onto other than thin trading and perhaps a sudden hangover from global speculative energy that had...
Summary: The FOMC meeting last night failed to produce any indication of new easing measures from the Fed, an initial disappointment, but one that was quickly wiped away as Powell and company entirely failed to indicate any concern with recent market developments. Elsewhere, GBPUSD is breaking above major resistance on fresh hopes of a last second Brexit deal...
Summary: The FOMC meeting tonight will help reveal both where the Fed is in its thinking as it observes its effect on both the economy and of increasing importance, on the financial markets. There is certainly room for the FOMC to disappoint on the hawkish side by indicating no urgency to act with any new easing, but how much is expected? Elsewhere, sterling is...
Summary: The FOMC meeting tomorrow is arguably the last major macro event risk for the year. The meeting carries with it the risk of a market temper tantrum if investors fail to get what they want, namely, even more accommodation from a Fed that has been providing everything expected and more since 2019. The US dollar risks are distinctly two-way over this...
Summary: Strong risk sentiment continues and a fresh surge in industrial metals has helped AUDUSD to new highs. But our focus should be squarely on sterling today and in coming days as Brexit crunch time has arrived and disaster insurance buying has picked up on the latest uncertainty. Elsewhere, we look at the last remaining hurdles for USD bears heading into...
Summary: Last week saw markets trying to close on a positive note despite weak US jobs data, perhaps as US fiscal stimulus hopes weighed. But this week is off to a rocky, with geopolitical concerns a sour note in the Asian session, while this morning is seeing fresh dark clouds over the status of Brexit talks.
Today’s FX Trading focus:
Markets grinding gears...
Summary: A US dollar breakdown has unfolded over the last couple of sessions, a notable development as major chart levels in a number of USD pairs have given way, but the move seems to require constant fuel from risk sentiment. Elsewhere, some of the usual correlations are misbehaving slightly and sterling is in its own world on fresh Brexit uncertainty.
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Summary: The price action yesterday smacked more than a bit of end-of-month rebalancing after an incredible month for global equity markets, but it could also be that USD traders are a bit nervous ahead of Fed Chair Powell testimony today and tomorrow, as much of the USD bear case is built on the anticipation in the nearest term that the Fed is ready to move...
Summary: The US dollar is perched near the final support levels in a number of USD pairs ahead of Fed Chair testimony later this week and a busy economic calendar through the Friday payrolls and employment data. But global animal spirits are likely the more important drive in determining whether the US bear trend is set to deepen here.
Today’s FX Trading...
