The main market tendency today is that the US dollar is rising against its major peers and riskier assets such as stocks and oil are plummeting.
Daily News: banks forecast
- The US dollar doesn’t have support from data today (no releases). As a result, the US dollar index is moving down to $95 again. Up to now, the index has been trading near $95.25. The trading within the 95-95.50 channel is anticipated.
- Currencies have been recovering because of the weak USD.
Although the Reserve Bank of Australia hasn’t shocked the market with a hawkish speech, the Australian dollar has managed to rise. Moreover, the statement was mixed. The outlook for the labor market remains positive, but inflation in 2018 is expected to be lower than it was forecast before. According to the statement, the market shouldn’t anticipate a rate hike this year. The bank anticipates a further progress in the inflation rate and a decline in the unemployment rate, but it will be gradual.
AUD/USD broke above the pivot point at 0.7395 and the trendline at 0.7415. If the USD remains weak for today, the pair will be able to stick at these highs. Otherwise, it will return to the pivot point.
- The weak USD is giving chances to the JPY as well. On H4, 50-hour MA doesn’t let the pair to rise further up. The support lies at 111.15 (23.6 Fibo level, 200-hour MA). However, if the USD recovers, the pair will be able to break above the 50-hour MA. The resistance is at 111.70.
However, JP Morgan bets on the long JPY because of 2 reasons. The first one is trade tensions. The second one is changes in the BOJ monetary policy.
- USD/CNH has been moving down as well. The weaker USD will bring the pair to the support at 6.8235. In case of the recovering USD, the pair will go up to 6.8760.
According to Goldman Sachs, the pair will go to 6.90-7.10 in 3 to 6 months. In 12 months, the yuan will have chances to recover to 6.6. Moreover, the bank bets on a trade deal between China and the US, but tensions will escalate before that.
- The oil market has been moving up because of worries around the oil supply. On Monday, the first wave of US sanctions on Iran took place. Moreover, the US warns about new sanctions that will be imposed by early November. Such news makes the market volatile and forecasts the rise of oil prices as the supply is under threat again.
As a result, Brent has broken above the pivot point at $73.50 and has been moving further up. 100-day MA will be a strong resistance for the price, as it couldn’t break above it yesterday. If the price breaks above the 100-day MA, the next resistance is at $75.15. Otherwise, the return to the pivot point is anticipated.
WTI has been rising as well. The price rebounded from the pivot point and 50-day MA at $68.65. The next resistance is at $70.35. If the market sentiment changes, the WTI will come back to $68.65.
That’s all for today! Follow market news with FBS!
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.