FOREX: Dollar Given Modest Reprieve as Trump Eases Forceful Tone
Jan-21 18:53
- In anticipation of President Trump’s WEF address in Davos, the US dollar had been trading on the back foot once more amid ongoing concerns related to his recent escalatory remarks surrounding Greenland and Tariffs. However, the USD index was given a modest reprieve as his comments on not using force in the acquisition of Greenland provided a more favourable backdrop for risk.
- The Swiss Franc is the poorest performing currency in G10 Wednesday, merely a reflection of this week’s substantial gains somewhat reversing, while the likes of AUD and NZD have shrugged off the dollar bid, and extended a string of winning sessions that have specifically taken AUDUSD to a fresh cycle high of 0.6778.
- Aussie’s outperformance has been particularly notable in the crosses, with the 0.5% decline for GBPAUD catching the eye. Most recent weakness has been exacerbated following the breach of trendline support, drawn from the December 2023 lows, with developments signalling scope for a deeper selloff towards the 2025 low at 1.9594.
- Amid the stronger price action for equities, USDJPY was given a late boost, rising around 50 pips from session lows, supporting the narrative that short-term bouts of weakness are still considered technically corrective as we approach Friday’s BOJ meeting.
- In the EM space, bolstered risk sentiment and higher gold prices continues to support the likes of ZAR and MXN, which have rallied to multi-year highs today.
- Australian employment data is expected during Thursday’s APAC session, before the Norges Bank rate decision. US PCE data and the third reading of Q3 GDP are the notable US data points on Thursday.
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GBPUSD TECHS: Set for Bull Annual Close
Dec-22 18:30
- RES 4: 1.3527 High Oct 1
- RES 3: 1.3471 High Oct 17
- RES 2: 1.3457 High Dec 22
- RES 1: 1.3452 61.8% retracement of the Sep 17 - Nov 4 bear leg
- PRICE: 1.3450 @ 15:27 GMT Dec 22
- SUP 1: 1.3312 Low Dec 17
- SUP 2: 1.3300 50-day EMA
- SUP 3: 1.3180 Low Dec 2
- SUP 4: 1.3125 Low Nov 26
The trend condition in GBPUSD remains bullish and for now, short-term pullbacks are considered corrective. A fresh cycle high today reinforces the bull theme. Attention is on 1.3452 (pierced), 61.8% of the Sep 17 - Nov 4 bear leg. A clear breach of this hurdle would strengthen a bull theme and open 1.3527, the Oct 1 high. Initial firm support is 1.3300, the 50-day EMA. Clearance of this average would highlight a possible reversal.
US: FED Reverse Repo Operation
Dec-22 18:28
RRP usage slips to $1.523B with 7 counterparties this afternoon vs. Friday's $3.047B. Compares to December 12 low of $0.838B (lowest level since mid-March 2021); this years highest excess liquidity measure: $460.731B on June 30.
LOOK AHEAD: Tuesday Data Calendar: ADP Weekly, GDP, IP/Cap-U, 2Y FRN/5Y Sales
Dec-22 18:16
- US Data/Speaker Calendar (prior, estimate). All times ET
- 12/23 0815 ADP Weekly NER Pulse (16.25k, --)
- 12/23 0830 GDP Price Index (2.1%, 2.7%)
- 12/23 0830 GDP Annualized QoQ (3.8%, 3.2%)
- 12/23 0830 Durable Goods Orders (0.5%, -1.5%), ex-trans (0.6%, 0.3%)
- 12/23 0830 Philadelphia Fed Non-Mfg Activity (-16.3, --)
- 12/23 0855 Redbook Retail Sales
- 12/23 0915 Industrial Production (0.1%, 0.1%), Capacity-U (75.9%, 75.9%)
- 12/23 1000 Richmond Fed Mfg Index (-15, -10)
- 12/23 1000 Conf Board Consumer Confidence (88.7, 91.0)
- 12/23 1130 US Tsy $75B 6W & $50B 52W bill auctions
- 12/23 1300 US Tsy $28B 2Y FRN (91282CPG0) & $70B 5Y Note (91282CPR6) auctions
- Source: Bloomberg Finance L.P. / MNI
