Showing posts with label Dollar. Show all posts
Showing posts with label Dollar. Show all posts

Wednesday, January 6, 2021

Dollar Up, Steadies as Investors Await Georgia Election Results

 

Dollar Up, Steadies as Investors Await Georgia Election Results

By Gina Lee

Investing.com – The dollar was up on Wednesday morning in Asia, steadying as vote counting continues for a U.S. Senate runoff election in the state of Georgia and investors awaiting the results to determine market sentiment’s next move.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.15% to 89.547 by 11:16 PM ET (4:16 AM GMT), briefly falling to a fresh ten-month low earlier in the session. 

The USD/JPY pair inched up 0.09% to 102.81.

TheAUD/USD pair inched down 0.05% to 0.7755 and the NZD/USD pair inched down 0.01% to 0.7251.

Thursday, December 31, 2020

Dollar on Borrowed Time as U.S. Twin Deficits Balloon


Dollar on borrowed time as U.S. twin deficits balloon

 By Wayne Cole

SYDNEY (Reuters) - The dollar was ending 2020 in a downward spiral on Thursday with investors wagering a global economic recovery will suck money into riskier assets even as the U.S. has to borrow ever more to fund its swelling twin deficits.

The euro stood at $1.2291, having hit its highest since April 2018 with a gain of almost 10% for the year. The next stops for the bull train are $1.2413 and $1.2476, on the way to the 2018 peak at $1.2555.

The dollar was lying at 103.15 yen, but managed to hold above the December low of 102.86.

Tuesday, December 29, 2020

Dollar languishes amid pandemic aid optimism, pound meanders

Dollar languishes amid pandemic aid optimism, pound meanders

By Kevin Buckland

TOKYO (Reuters) - The dollar languished near a 2-1/2-year low on Tuesday with demand for safe-havens flagging as U.S. lawmakers pushed forward with a COVID-19 relief package.

The House of Representatives voted on Monday to increase stimulus payments to qualified Americans to $2,000 from $600, sending the measure on to the Senate for a vote.

Last week's Brexit agreement, while bare bones, also supported the outlook for global growth, lifting Asian stocks on Tuesday following Wall Street gains.

"Optimism abounds, and it’s generally coming from equity markets," said Bart Wakabayashi, Tokyo Branch manager of State Street (NYSE:STT) Bank and Trust.

"The dollar is very heavy, and that will continue into next year."

The dollar index was little changed at 90.194 in holiday-thinned trading, hovering near the 89.723 level reached on Dec. 17 for the first time since April 2018.

Short positions on the dollar swelled in the week ended Dec. 21 to $26.6 billion, the highest in three months, according to Reuters' calculations based on data released by the Commodity Futures Trading Commission on Monday.

The euro rose 0.1% to $1.22260 early in the Asian session, hovering near the 2-1/2-year high of 1.22735 touched earlier this month.

The dollar bought 103.740 yen, another haven asset.

Sterling rose 0.1% to $1.3477 following a two-day decline. It was as high as $1.3625 this month, a level not seen since May 2018.

Investors have taken profits in the UK currency following the confirmation last week of a Brexit trade deal that was widely expected.

While the agreement came as a relief to investors, the pact leaves Britain far more detached from the EU, analysts say.

"People are still trying to figure out what this Brexit agreement means," weighing on the pound, said State Street's Wakabayashi.

"Nothing has really been agreed on financial markets, and that’s a big negative for the UK."

Bitcoin slipped 0.8% to $26,841, continuing its retreat from the all-time high of $28,377.94 set Sunday.

Wednesday, December 23, 2020

ASX 200, Nikkei 225 Open Higher as Nasdaq 100 Leads a Defensive Play

 

NASDAQ 100, NIKKEI 225, ASX 200 INDEX OUTLOOK

NASDAQ 100, NIKKEI 225, ASX 200 INDEX OUTLOOK:

  • ASX 200, Nikkei 225 indexes opened mildly higher amid a relatively quiet pre-holiday trading
  • US House and Senate have passed a giant spending bill of US$ 2.3 trillion, in line with expectations
  • Falling industrial metal and crude oil prices flag the risk of softer demand as pandemic wave hits.

MIXED US SESSION, FALLING METAL PRICES, STRONGER USD, ASIA-PACIFIC AT OPEN:

A defensive session led by the tech sector may set a mixed tone for Asia-Pacific markets on Wednesday, with the ASX 200 and Nikkei 225 index opening mildly higher amid a relatively quiet holiday week. It is worth noting that the passing of a US stimulus package failed to inspire positive reactions among risk assets, as the expectations have largely been priced in over the past few weeks. Falling industrial metals and crude oil prices, alongside a rebound in the US Dollar, suggest that overall sentiment remains weak and there seems to be near-term demand for safety.

Concerns over a new type of coronavirus strain, which is reportedly 70% more transmissible than the original, has weighed on the prospects for global economic recovery. The potential for wider spread may threaten further lockdown measures and travel bans between the UK and Europe in a time when both sides are trying to finalize a post-Brexit trade agreement. More than 40 countries have banned UK arrivals because of the new virus strain and further restrictions are likely if the situation worsens.

Tech outperformed cyclical sectors on Wall Street and this theme is likely to play out across Asia-Pacific markets as well. Investors weighed stricter lockdown measures before the gradual rollout of vaccines helps to bring down the number of infections. The Dow Jones and S&P 500 fell 0.67% and 0.21% respectively whereas the tech-led Nasdaq 100 gained 0.51%.

The rising US Dollar threatens stock markets’ astonishing rally, as the DXY US Dollar index has exhibited a strong negative correlation with the S&P 500 index over the past 12 months. More than 40% of the S&P 500 companies’ revenue comes from overseas markets, which infers that a stronger USD will translate into lower overseas income due to forex changes. Same for the emerging markets, which are sensitive to the strength of the US Dollar as it tends to influence capital flows.

For now, however, recent strengthening in the US Dollar appears more like a technical rebound driven by demand for safety. Profit-taking activity following the passing of the US stimulus package has probably played a part too.

DXY US Dollar Index

DXY US Dollar Index


On the macro front, US existing home sales figures came in at 6.69 million, or -2.5% MoM. This marks the first MoM decline observed since May 2020 as a result of soaring house prices and constrains in supply. The US economy expanded at annualized rate of 33.4% QoQ in the third quarter, slightly higher than baseline forecast of 33.1%. Today, the US Core PCE price index, durable goods orders and Michigan consumer sentiment index are among the top events to watch for. Read more on DailyFX calendar.


US Existing Home Sales MoM (November)

US Existing Home Sales MoM (November)

Source: Bloomberg, DailyFX

Sector-wise, 9 out of 11 S&P 500 sectors ended lower, with 65.5% of the index’s constituents closing in the red on Tuesday. Energy (-1.74%), communication services (-0.99%) and financials (-0.96%) were among the laggards, while information technology (+0.86%) and real estate (+0.61%) outperformed.

S&P 500 Sector Performance 22-12-2020



S&P 500 Sector Performance 22-12-2020

Source: Bloomberg, DailyFX

Nasdaq 100 Index Technical Analysis

The Nasdaq 100 index is trending up within the “Ascending Channel” formed since early November, forming higher highs. The overall trend remains bullish-biased, as suggested by upward-sloped 20-, 50- and 100-Day Simple Moving Average (SMA) lines. Its upward momentum, however, appears to be faltering as the MACD indicator trends lower after the formation of a “Death Cross” in early December. Immediate support and resistance levels can be found at 12,530 and 12,790 respectively.

Nasdaq 100 Index  Daily Chart

Nasdaq 100 Index – Daily Chart


Nikkei 225 Index Technical Analysis:

The Nikkei 225 index has been trading in a “range-bound” condition since early December as highlighted in red color below. Immediate support and resistance levels can be found at 26,350 and 27,000 respectively. Breaking this support may open the door for further losses with an eye on 26,000 for support.

Nikkei 225 Index  Daily Chart

Nikkei 225 Index – Daily Chart

ASX 200 Index Technical Analysis:

The ASX 200 index has likely broken the “Ascending Channel” this week (chart below) and the overall momentum has turned bearish as suggested by the MACD indicator. An immediate support level can be found at 6,570 – the lower Bollinger Band. Price has pierced below the middle Bollinger Band (also the 20-Day SMA), suggesting that near-term trend has likely turned bearish.

ASX 200 Index – Daily Chart

ASX 200 Index – Daily Chart

--- Written by Margaret Yang, Strategist for DailyFX.com












Tuesday, December 1, 2020

EUR And USD Adds Over 30 Pips As Risk Assets Gain Ground

EUR/USD adds over 30 pips as risk assets gain ground

  • EUR/USD trades at 1.1959 versus 1.1923 in early Asia. 
  • Corona virus vaccine optimism and buoyant equity markets weigh over the dollar. 
  • Fed's Powell says the US economy remains in a damaged state.

The bid tone around the single currency strengthened on Tuesday, pushing EUR/USD higher, as stock markets gained, weakening safe-havens such as the greenback. 

The pair traded near 1.1959 at the time of writing, representing a 0.30% gain on the day, having found buyers near 1.1923 in Asia. 

Vaccine hopes boost risk appetite

Major Asia indices rose over 1% on prospects of a COVID-19 vaccine. Drugmaker Moderna said Monday that it will apply for the US and European emergency authorization for its COVID-19 vaccine, with full results from its late-stage study showing 94.1% effectiveness with no serious safety concerns. 

Last month, drugmakers Moderna, Pfizer, and AstraZeneca announced positive results of their respective experimental vaccines, putting a strong bid under the risk assets. Since then, a massive wave of liquidity has come into equities, as noted by Reuters, weakening demand for anti-risk assets such as the US dollar. 

The trend looks set to continue, as markets believe the Federal Reserve would boost stimulus to counter the recent resurgence of coronavirus. "Recent news on the vaccine front is very positive for the medium term," Powell said in testimony released Monday while adding that the economy remains in a damaged and uncertain state. 

As such, the EUR/USD pair could have another go at the psychological hurdle of 1.20. The bulls failed to establish a foothold above that level on Monday on month-end dollar demand. 

Data wise, the focus would be on the German labor market report and Eurozone's preliminary Consumer Price Index for November. A big beat on expectations will likely draw more substantial buying pressure for the common currency. 

Technical levels

EUR/USD

EUR and USD adds over 30 pips as risk assets gain ground


EUR and USD adds over 30 pips as risk assets gain ground


EUR and USD adds over 30 pips as risk assets gain ground



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Saturday, November 28, 2020

Gold Price Forecast: Dovish FOMC Could Underpin Bullion Ahead of NFP

Gold Price Forecast: Dovish FOMC Could Underpin Bullion Ahead of NFP

 

Gold Price Forecast Dovish FOMC Could Underpin Bullion Ahead of NFP

GOLD PRICES FUNDAMENTAL FORECAST: MIXED

  • The potential adjustment of the Federal Reserve’s bond-purchasing program may underpin gold prices.
  • Declining real yields and rising inflation expectations also suggest a rebound higher could be in the offing.
  • Non-farm payrolls and a flurry of PMI releases may dictate the near-term outlook for bullion.

DOVISH FOMC TO UNDERPIN GOLD PRICES

Gold prices have taken a beating in recent weeks, falling over 8% from the monthly high, after a slew of positive vaccine results triggered a rotation away from the anti-fiat metal and into growth-related assets.

However, this correction lower could prove short-lived given recent comments from the Federal Reserve suggesting the provision of additional monetary stimulus is on the table.

The minutes from the FOMC’s November meeting showed that “many participants judged that the Committee might want to enhance its guidance for asset purchases fairly soon”.

The central bank also noted that “while participants judged that immediate adjustment to the pace and composition of asset purchases were not necessary, they recognized that circumstances could shift to warrant such adjustments”.




Source – COVID Tracking Project

Considering Treasury Secretary Steven Mnuchin refused to extend several of the Fed’s lending facilities past their December 31 deadline, and with the nation averaging over 160,000 new cases of Covid-19 a day, the central bank may look to act sooner rather than later.

Indeed, several officials “emphasized the important roles” these lending facilities have played “in restoring financial market confidence and supporting financial stability”, adding that “these facilities were still serving as an important backstop in financial markets”.

Moreover, the absence of a much-needed fiscal stimulus package, in tandem with initial jobless claims figures spiking to five-week highs, could put further pressure on the Fed to act in the near term.

US INITIAL JOBLESS CLAIMS


Source – Trading Economics

FALLING REAL YIELDS, RISING INFLATION EXPECTATIONS TO NURTURE BULLION’S REBOUND

The recent breakdown in gold’s relationship with real yields and inflation expectations could also imply that bullion’s turn lower was driven more by portfolio repositioning, than a true shift in overall market sentiment.

After all, as a non-yielding asset, gold prices tend to move higher on the back of falling real rates of return.

Gold is also widely considered a hedge against inflation and may continue to benefit from rising inflation expectations in the medium-term.

Therefore, prices may recover in the coming weeks on the back of falling real yields and rising consumer price growth expectations.


Data Source – Bloomberg

NON-FARM PAYROLLS, NOVEMBER PMI FIGURES

Looking ahead, a flurry of PMI figures out of the US for November will be intently scrutinized by market participants to assess how the world’s largest economy is coping with a third-wave of infections, ahead of the volatility-inducing non-farm payrolls report.

Better-than-expected data may diminish the need for additional monetary support and in turn cap the yellow metal’s upside potential.

Conversely, disappointing economic data prints could put a premium on gold if investors begin to price in further easing from the Federal Reserve.


Gold Price Forecast: Dovish FOMC Could Underpin Bullion Ahead of NFP

Thursday, November 26, 2020

Dollar Losses Put On Hold But Long Term Outlook Tilts To Downside

 

Dollar losses put on hold but long-term outlook tilts to downside

Dollar losses put on hold but long-term outlook tilts to downside

TOKYO (Reuters) - The dollar was on the defensive on Thursday as downbeat U.S. economic data and optimism about corona-virus vaccines prompted investors to seek out riskier assets tied to global commodities and emerging markets.

The British pound traded near a more than two-month high against the dollar as investors awaited details on trade talks between Britain and the European Union this week.

The dollar's fall has been so rapid that it could rebound in the short term, market watchers said, but some investors still expect a decline over the longer term as they shift positions in expectation that the corona-virus outbreak will wane next year.

"A China-led recovery in the global economy and commodities should benefit commodities currencies," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

"The outlook is good, but we are reaching levels where authorities might feel some concern. Other emerging market currencies with good fundamentals should benefit."

Against the euro, the dollar stood at $1.1926, close to its weakest in more than two months.

Sterling bought $1.3392, which is near its strongest level since Sept. 2. The pound held steady at 89.02 pence per euro.

The dollar was little changed at 104.32 yen.

Investors have rushed to riskier currencies and emerging-market assets in recent weeks after positive data on COVID-19 vaccine efficacy and signs of stability in U.S. politics, which has weighed broadly on the dollar.

Sentiment for the greenback took a hit after data on Wednesday showed weekly U.S. jobless claims rose more than expected and personal incomes fell.

Some economists said more job losses are likely as many U.S. states reinforce restrictions on businesses to curb a spread of corona-virus infections.

The dollar index against a basket of six other currencies was near the lowest in more than two months.

In Asia, trading in the dollar was subdued because U.S. financial markets are closed later on Thursday for the Thanksgiving holiday.

The onshore yuan rose to 6.5688 per dollar, resuming its advance toward a 29-month high set last week.

The Australian dollar traded near its highest since September, supported by improving risk appetite and strong Chinese demand for the commodities that Australia exports.

The New Zealand dollar traded near its strongest level in more than two years.

Tuesday, November 24, 2020

Dollar Down Over U.S. Election Clarity, More Positive COVID-19 Vaccine News

Dollar Down Over U.S. Election Clarity, More Positive COVID-19 Vaccine News


Dollar Down Over U.S. Election Clarity, More Positive COVID-19 Vaccine News

Investing.com – The dollar was down on Tuesday morning in Asia, with riskier currencies boosted by the news that U.S. President-elect Joe Biden is set to nominate Janet Yellen as the U.S. Secretary of the Treasury.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.03% to 92.487 by 10:02 PM ET (2:02 AM GMT). The dollar saw its lowest level since Sep. 1 overnight, as clarity from November’s U.S. presidential election begins to emerge.

However, analysts warned of a potential fresh downturn for the dollar should a conclusive break on the dollar index below support at around 92 occur.

Yellen, a former Federal Reserve Chairman, will be the latest nomination to the Biden cabinet. Already hinting at how she will tackle her role, she called for increased government spending to boost the COVID-19-ravaged U.S. economy. She has also often cited growing U.S. economic inequality as a threat to U.S. values and the country’s future.

Some investors welcomed the news.

“One thing is for sure, and that is there are unlikely to be as many Fed-Treasury spats … those Fed lending facilities for municipal funding, the corporate bond market and Main Street will be coming back quickly after the December 31 expiration date,” MUFG Union Bank chief financial economist Chris Rupkey told Reuters.

Rupkey was referring to incumbent Treasury Secretary Steven Mnuchin’s shock decision during the previous week to let some Fed lending programs expire at the end of the year. The decision sparked a feud with the Fed, led by incumbent Chairman Jerome Powell, who argued that the programs were vital in supporting the economy.

Incumbent U.S. President Donald Trump’s go-ahead to General Services Administration head Emily Murphy to proceed with assisting the Biden administration's transition to government also increased risk appetite as the first steps towards acknowledging the election results. However, Trump is still planning to continue his legal challenges over the same results.

On the COVID-19 front, AstraZeneca (LON:AZN) in conjunction with the University of Oxford, is the latest company to report positive news for a vaccine candidate. The candidate, AZD122, met its primary endpoint in clinical trials that took place in the U.K and Brazil, the company said on Monday. Preparations are now underway to submit the data to authorities globally for conditional or early approvals.

The USD/JPY pair inched up 0.02% to 104.56 as Japanese markets reopened after national holiday on Monday. The safe-haven yen is slowing reversing a slip of around 0.6% seen during the previous session.

Both Antipodean risk currencies benefitted from the increased risk appetite. The AUD/USD pair was up 0.25% to 0.7304 and the NZD/USD pair gained 0.65% to 0.6966.

The USD/CNY pair edged down 0.11% to 6.5777.

The GBP/USD pair inched up 0.05% to 1.3330. The pound was staying close to a near 12-week high against the dollar thanks to investor bets that the U.K. and the European Union will finally seal a Brexit trade deal soon. Negotiations between the two parties continue this week, racing to beat the end-of-year deadline for a deal.