The dollar is stronger today vs. the major counterpart currencies as the prospect of a new round of fiscal stimulus remains in limbo, dampening the appetite for the riskier assets.
The dollar’s widest gains are primarily against emerging market pairs BRL (+0.91%) and MXN (+0.56%), but also vs. the GBP (+0.67%) on disappointing employment figures released today for the U.K. Other gains for the dollar are +0.54% vs. the AUD, +0.52% vs. NOK, +0.41% vs. DKK and EUR, +0.31% vs. CHF, and +0.25% vs. JPY.
The slow progress in Brexit trade negotiations between the U.K. and European Union are weighing on the EUR and GBP ahead of PM Johnson’s October 15 deadline.
USD/CAD: Support at 1.3100 continues to cap further CAD strength. Near-term resistance is at 1.3150.
USD/MXN: Support at 21.1000, resistance at 21.5000.
U.S. fiscal stimulus talks are back in full swing after the Trump administration reversed Tuesday’s call to end negotiations until after the election. The potential for new stimulus (and even larger stimulus numbers under consideration) markets are reducing positions in ‘safe’ assets and flocking to risk and assets that outperform inflation.
As a primary safe-haven asset, the dollar is lower against all major and emerging market currencies:
USD/MXN: nearing short-term
support at 21.1500, major support at 20.8000. Resistance remains at 22.0000.
USD/CAD: broke through support at
1.3205, next support seen at 1.3125 (today’s low at 1.3128). Resistance at 1.3385.
AUD/USD: the Aussie dollar is
testing resistance at 0.7200 (current 0.7212). Momentum could lift the AUD to
0.7250. Support at 0.7000.
The Dollar Index (DXY) is trading at
93.194, near its lowest point since late September and approaching support at
93.000. Gold is higher by 1.39% to trade at $1,925.19. Silver is higher by
3.12% at $24.58. The major European and U.S. equity indices are all higher.
The dollar is in its 8th day of a sideways range, trading on headlines and mixed signals from Washington on a second round of stimulus. The Dollar Index (DXY) is higher today by 0.08% at 93.706 and -0.10% for October.
Currency trading results are a mixed picture of small gains and losses. The dollar’s gains are mixed with the widest advances against emerging market currencies: +0.40% vs. BRL & +0.14% vs. ZAR. But also higher vs. majors: +0.18% vs. CHF and EUR. The dollar is -0.31% vs. MXN, -0.25% vs. AUD, -0.20% vs. NOK, and -0.07% vs. CAD.
USD/MXN: resistance at 22.0000, support at 20.8000.
USD/CAD: resistance at 1.3385, support at 1.3205.
AUD/USD: resistance at 0.7200, support at 0.7000.
Gold is trading at $1,891.03, below $1,900 resistance as the prospects for inflation on the near horizon continue to dim. Silver is trading at $23.91.
Weekly Initial Jobless Claims released today for the week ending October 3rd were 840k, just above the 820k estimate.
Risk sentiment improved over the weekend over news of President Trump’s steady recovery from COVID-19 and imminent release from the hospital. Asian and European equities are higher and U.S. stock futures are pointing to a higher open for the major U.S. equity indices. The dollar is broadly lower as traders add positions in currencies with higher potential for ‘alpha’.
The BRL is leading the list of gains vs. the dollar +1.13%, followed closely by the MXN which is +0.92%.
The G10 vs. the USD today:
The Japanese yen has seen some strange trading patterns over the last few days, starting with Friday morning as it strengthened 0.75 percent during early trading hours as news that President Trump tested positive to COVID-19 and was to be hospitalized. This news sent investors to the safety of the yen, resulting in a short-lived rally, while the futures market tumbled. However, as President Trump is due to be released from the hospital as early as today the yen has given back all of Friday’s gains and then some. Currently the USD/JPY is trading at the upper end of its previous week´s range in the 105.60 price zone as speculation that US President Trump is recovering from COVID-19 is boosting the mood. The pair needs to break above last week high at 105.80 to turn bullish in the short-term.
This will be a very quiet week for scheduled economic releases. Tomorrow the Trade Balance figures will be reported, MBA Mortgage Applications on Wednesday, and Thursday’s Jobless Claims.
The dollar is lower for the second day with the U.S. Dollar Index (DXY) down 0.31%, surrendering some of the 1.81% gain from last week. Daily DXY trading activity during August/September formed a reversal chart pattern (head & shoulders) which suggests support at 93.900 (currently trading at 93.983). We should know soon if dollar bulls have ‘buy’ orders at that level.
Looking at the G10 currencies today, the AUD has posted the widest gain vs. the USD, +0.72%. The AUD had one of the biggest drops last week against the dollar (-2.67%) so leading the way higher is no surprise with more ground to recover. Other gains vs. the USD: SEK +0.62%, CHF +0.54%, EUR & DKK +0.53%, NZD +0.50%, NOK +0.44%. GBP is fractionally higher. The dollar has managed to eke out gains vs. the JPY (+0.09%) and CAD (+0.13%).
Revived negotiations on a second stimulus bill between Congress and the Trump administration have led to an increase in investor appetite for ‘risk’ currencies. The Mexican peso has gained 0.57% today, recouping some of last week’s 4.44% decline against the USD. USD/MXN is trading in a wide daily range with resistance at 22.6500 and support at 22.0000.
USD/CAD: the USD is adding to last week’s gains vs. the CAD and is now encountering resistance near 1.3400, the 100-day moving average. Support is seen at 1.3350.
AUD/USD: The AUD rebound currently in progress should lift the pair to near-term resistance at 0.7190 initially. Other resistance is seen at 0.7250 and 0.7325. Strong support is sitting at 0.7000.
The dollar index (DXY) is higher by 0.24% today so on the surface it looks like another day added to the recent dollar rally. However, the DXY is trading below yesterday’s high so the runaway dollar strength seen earlier in the week has at least paused vs. the component currencies that comprise the DXY.
The dollar is higher today primarily against emerging market currencies BRL (+1.12%), ZAR (+0.97%), and MXN (+0.77%). Dollar gains are also concentrated vs. the Scandinavian ccy’s: NOK (+1.01%), SEK (+0.53%), and DKK (+0.35%).
Precious metals traders have had a volatile week as gold has declined 4.21%, platinum is down 10.29% and silver dropped 15.01%. Gold is trading at $1,862.76, a good distance away from its recent historical high $2,072.49 and below long-term resistance at $1,900.
Preliminary Durable Goods data for August was released today at 0.4%, below the 1.5% estimate.
Weekly Jobless Claims data released today for the week ending Sept 18th were reported today at 870k, above the estimate of 840k. After relatively consistent declines from the March/April peak, jobless claims have plateaued at 800k over the last four weeks (884k, 893k, 866k, 870k).
There has been no letup in dollar strength, the Dollar Index (DXY) is higher by 0.15% today, its 5th daily gain in a row. The DXY has gained 1.69% this week, effortlessly leapfrogging all near-term resistance levels. Some resistance may surface at 94.650, the weekly low from March 13th. Aside from that there is little resistance until 95.750, another 1.28%.
USD/MXN is the leading pair in dollar strength with a gain of 1.11%. The peso has declined 7.79% over the last week, its biggest weekly decline since the COVID-19 breakout in mid-March. USD/BRL is up 6.35% and USD/ZAR is up 5.65% over the same 1-week period.
Turning our focus to the G10 currencies, the dollar is up 0.90% vs. SEK, +0.53% vs. NZD, +0.51% vs. AUD, and +0.46 vs. NOK, and minimal gains against the CHF, DKK, EUR, and CAD.
AUD/USD has breached support at 0.7050, next support seen at 0.6975.
The dollar is unchanged vs. the JPY and down against the GBP by 0.33%.
Gold is lower by 0.58%. Silver down by 3.26% to trade at $21.96, on track to reach support near $19/oz.
The dollar index (DXY) is higher again today for its 4th consecutive daily gain. A resurgence in coronavirus cases and renewed lockdown measures have further dampened the hope for near-term relief from the economic impact of the virus. Increased uncertainty in the global economic landscape is driving a risk-off market trend and flows to the safety of U.S. dollars and treasuries.
The DXY has gained 0.21% today and is up by 1.30% since last Thursday’s close. The dollar has risen most against exotic and emerging market currencies, but still has healthy gains the majors this week.
USD/MXN: the dollar is higher by 1.33% today and up 3.95% for the week at 22.0020. The break of weekly support at 21.5000 and peso strength to 20.8300 was short-lived.
Today’s primary dollar gains:
+1.13% vs. ZAR
+0.85% vs. BRL
+0.78% vs. AUD. The AUD/USD has declined 2.72% this week, next support is seen at 0.7050.
USD/CAD: The U.S. dollar is higher by 0.35% today with next resistance seen at 1.3390. Support at 1.3280.
Gold is lower by 1.35% today and down 3.88% this week, reflecting the diminishing expectations for inflation.
Markets have shifted to a defensive stance to start the week, reducing exposure to risk assets and driving flows to the safety of U.S. treasuries, the U.S. dollar, Japanese yen, and Swiss franc. A spike in global coronavirus cases has markets fearing a reinstatement of lockdown measures.
Treasury prices are higher (yields lower) in all tenors with the benchmark 10-year yield lower by 4.1 basis points. The U.S dollar index is higher by 0.53% with the dollar’s primary gains against the ZAR (+2.78%), NOK (+1.71%), MXN (+1.67%), NZD (+0.95%), and BRL (+0.94%). The dollar has also advanced against the GBP (+0.63%), AUD (+0.62%), EUR (+0.59%), CAD (+0.39%), and CHF (+0.23%). The dollar has declined vs. the JPY (-0.27%), driving the USD/JPY to support at 104.00.
Gold is lower by 1.91% to $1,913.54 (the logic being that renewed lockdowns will reduce economic activity and dampen the outlook for inflation). Silver is lower by 2.99%.
U.S equities are expected to follow the path of major European equity indices which have declined 3% on average today.
*The arrows indicate how the base currency performed against the counter currency overnight. This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.