Forex News.
US Dollar Index (DXY) makes rounds to 103.15-20 as sellers pause after a two-day downtrend around the lowest level since June 2022. That said, the gre.
US Dollar Index steadies after refreshing multi-day low. Hawkish Fedspeak, US inflation expectations probed DXY bears amid light calendar. US data, China-linked optimism and downbeat Treasury bond yields previously weighed on US Dollar Index. Fed Chair Powell needs to defend policy hawks to recall DXY buyers ahead of US inflation.
US Dollar Index (DXY) makes rounds to 103.15-20 as sellers pause after a two-day downtrend around the lowest level since June 2022. That said, the greenback’s gauge versus the six major currencies refreshed a multi-day low the previous day as the market’s risk-on mood joined hopes of easy Fed rate hikes. However, the recently hawkish comments from the US Federal Reserve (Fed) officials and cautious mood ahead of the key data/events seemed to have triggered the quote’s latest stoppage in further declines.
That said, China’s reopening of the international borders after a three-year halt joined Beijing’s readiness for stimulus and early signals of a shopping spree ahead of the Chinese New Year holiday season to underpin the firmer sentiment on Monday.
On the other hand, Friday’s US economics, mainly concerning the wage growth and ISM Services PMI for December, raised speculations that the Federal Reserve (Fed) finally has an upper hand in taming inflation, suggesting a pause to aggressive rate hikes. The same weighed on the US Treasury bond yields and the US Dollar even as the latest comments from the Fed officials restrict the Greenback’s latest downside.
It should be noted that Atlanta Federal Reserve bank president Raphael Bostic said on Monday that it is ''fair to say that the Fed is willing to overshoot.'' On the same line, San Francisco Federal Reserve Bank President Mary Daly stated that they are determined, united, resolute to bring inflation down. Additionally, the Federal Reserve Bank of New York's monthly Survey of Consumer Expectations showed on Monday that the US consumers' one-year inflation expectation declined to 5% in December from 5.2% prior. Alternatively, the three-year ahead expected inflation remained unchanged at 3% and the five-year ahead expected inflation edged higher to 2.4% from 2.3%.
Against this backdrop, Wall Street closed mixed and probed the S&P 500 Futures while the US 10-year Treasury yields dropped five basis points to 3.51% before snapping the three-day downtrend around 3.53% by the press time.
Moving ahead, the DXY traders should wait for Fed Chairman Jerome Powell’s speech considering the recently hawkish comments from other Fed policymakers and Thursday’s looming US Consumer Price Index (CPI).
Technical analysis.
An ascending support line from May 2021, around 102.90 by the press time, restricts short-term US Dollar Index downside.
02:01 United Kingdom BRC Like-For-Like Retail Sales (YoY): 6.5% (December) vs 4.1%
United Kingdom BRC Like-For-Like Retail Sales (YoY): 6.5% (December) vs 4.1%.
01:59 USD/CHF rebound from 0.9200 amid caution in market mood, Fed Powell’s speech eyed.
The USD/CHF pair has sensed buying interest after dropping to near the round-level support of 0.9200 in the early Asian session. Earlier, the Swiss fr.
USD/CHF has picked demand after a marginal correction to near 0.9200. The risk-on profile is easing further, weighed down by rising US Treasury yields. Fed Bostic sees no recession in CY2023 but has trimmed the GDP forecast dramatically to 1%.
The USD/CHF pair has sensed buying interest after dropping to near the round-level support of 0.9200 in the early Asian session. Earlier, the Swiss franc asset extended its recovery above the immediate resistance of 0.9200 despite a cheerful market mood.
S&P500 futures are displaying a subdued performance after a corrective move on Monday as equities failed to extend a rally. Stretched upside in stocks triggered long liquidation. The US Dollar Index (DXY) has refreshed its seven-month low at around 102.50 led by soaring recession fears after a meaningful contraction in economic activities and less-hawkish monetary policy projections after a sheer drop in wage inflation.
The demand for US government bonds is losing traction further as investors’ risk appetite is declining again. This has led to an increase in 10-year US Treasury yields above 3.53%.
On Tuesday, the show-stopper event will be the speech from Federal Reserve (Fed) chair Jerome Powell, which will trim ambiguity over February’s monetary policy action. Meanwhile, the commentary from Atlanta Fed bank president Raphael Bostic is full of information that will guide investors for further action. Fed policymaker sees no recession in CY2023 but has trimmed Gross Domestic Product (GDP) forecast dramatically to 1%. He believes that interest rates will have to stay high for a long time well into 2024".
On the Swiss franc front, a decline in the Real Retail Sales (Nov) data on an annual basis is going to compel the Swiss National Bank (SNB) to keep monetary policy moderate. The economic data contracted by 1.3% while the street was expecting an expansion of 3.0%.
01:38 USD/JPY slides below 132.00 on mixed Tokyo Inflation data, focus on Fed Chair Powell.
USD/JPY takes offers to refresh intraday low near 131.60 as it prints three-day downtrend even as the Tokyo inflation data fails to bolsters hawkish e.
USD/JPY extends two-day downtrend even after mixed Tokyo inflation figures. Tokyo Consumer Price Index eased below market forecasts, CPI ex Food, Energy matched upbeat expectations. Downbeat yields, hawkish hopes from BOJ challenge recovery moves. Upbeat Fedspeak, long weekend in Japan allowed Yen bears to take a breather ahead of Fed Chair Powell’s speech.
USD/JPY takes offers to refresh intraday low near 131.60 as it prints three-day downtrend even as the Tokyo inflation data fails to bolsters hawkish expectations from the Bank of Japan (BOJ). The reason could be linked to the long weekend in Japan, as well as wait for Fed Chair Jerome Powell’s speech and the US inflation data.
As per the latest Tokyo inflation data, the headline Consumer Price Index (CPI) rose by 4.0% versus 4.5% market forecasts and 3.8% previous readings. Further, the Tokyo CPI ex-Food, Energy matched 2.7% YoY forecasts versus 2.5% prior.
However, hawkish Fedspeak and wait for full markets, as well as speech from Fed Chair Jerome Powell, seemed to have put a floor under the Yen prices.
Given the escalating price pressure in Japan, the odds of Bank of Japan’s (BOJ) exit from the easy money policy gains momentum and weighs on the USD/JPY. That said, Japanese Prime Minister Fumio Kishida said on Sunday his government and the central bank must discuss their relationship in guiding economic policy after he names a new Bank of Japan (BOJ) governor in April, reported Reuters. The recent chatters over the BOJ’s readiness to edit the Yield Curve Control (YCC) policy seemed to have weighed on the USD/JPY prices of late.
It’s worth noting that the hawkish comments from the Fed policymakers join the firmer prints of the US inflation expectations to challenge the USD/JPY bears.
On Monday, Atlanta Federal Reserve bank president Raphael Bostic said that it is ''fair to say that the Fed is willing to overshoot.'' On the same line, San Francisco Federal Reserve Bank President Mary Daly stated that they are determined, united, resolute to bring inflation down. Additionally, the Federal Reserve Bank of New York's monthly Survey of Consumer Expectations showed on Monday that the US consumers' one-year inflation expectation declined to 5% in December from 5.2% prior. Alternatively, the three-year ahead expected inflation remained unchanged at 3% and the five-year ahead expected inflation edged higher to 2.4% from 2.3%.
Against this backdrop, the US 10-year Treasury yields dropped five basis points to 3.51% while printing the three-day downtrend whereas Wall Street closed mixed.
Looking forward, USD/JPY traders will pay attention to Fed Chairman Jerome Powell’s speech, as well as Thursday’s US inflation data, for near-term directions amid receding hawkish bias for the Fed.
Technical analysis.
A daily closing beyond the 21-DMA hurdle surrounding 133.35 becomes necessary for the USD/JPY buyers to retake control, even for the short-term.