The US dollar’s weakness offered a boost to emerging-market currencies and oil.
Forex today: greenback’s uncertainties
- On Wednesday, the US dollar index failed to close at $93.50 but did not lose much and ended the trading day at $93.30. However, the US currency formed a candlestick that resembles a spinning top. It signals an uncertainty of future trading. There is a possibility that the US dollar index will lose points during Thursday’s trading day. A pullback of the greenback will give chances for other currencies to recover.
- There is a high volatility in the pound. Firstly, it was rising on the news on Brexit. There were reports in the media that the UK is ready to stay tied to the customs union beyond 2021. Then, however, British Prime Minister Theresa May said on Thursday that Britain will leave the EU customs union after all.
Earlier GBP/USD managed to break two important levels – the pivot point at 1.3540 and 200-day MA at 1.3550. Up to date, the pound is below those levels. On H1, we can see that the pound is swinging between 1.35-1.3550.
However, if the US dollar falls, the pound has chances to close above the pivot point at 1.3540. Otherwise, there is a possibility of the pullback to the support at 1.3450.
Trading is extremely volatile not only in GBP/USD but also in crosses like GBP/AUD. Supports lies at 1.7935 and 1.7860.
- Trade wars seem to intensify. Japan is ready to inform the WTO that it is ready to retaliate against US tariffs. The country is considering retaliating measures on the US exports that will worth about $409 million. More on trade wars. Negotiations between the US and China are continuing. Let’s see whether countries are able to come to an agreement or the result will be similar to the previous one.
- New trade war’s tensions will weight on the Australian dollar. However, up to now, the aussie is rising on the positive economic data. Employment was greater than expected. The unemployment rate was weaker than the forecast, but it did not pull AUD down. AUD/USD managed to stick above the pivot point at 0.75. The further aim is at 0.7560. However, there is a negative signal of the MAs. 200-day MA is near to cross the 100-day MA. As soon as it happens, there will signal about the bearish movement. The support will lie at 0.75.
- The New Zealand dollar rose after the government forecast a higher surplus. However, the kiwi could not gain a foothold at new highs and fell. NZD/USD is again below the resistance at 0.69. No significant data will be released either today or on Friday. So there are risks of the kiwi’s fall. The next support is at 0.68.
- On Wednesday, crude oil inventories showed a weaker data than expected. It appeared to be an additional boost for oil. Brent is already near $80, WTI is trading near $72. Bullish fundamental data, strong demand, and supply disappointments are the main drivers of oil prices.
- Strong oil is supporting the Canadian dollar. USD/CAD broke the support at 1.28 and is moving to 1.2740. No notable data for the loonie is anticipated to be released today. However, on Friday, traders will take into consideration CPI and core retail sales. The forecast is positive. Greater actual data may pull the USD/CAD pair lower.
- It is worth saying about Asia. The rupiah and stocks increased ahead of the Bank of Indonesia meeting. Investors predict a rise in the interest rate by 25 bps to 4.5%.
That is all for today. Follow markets news with us!
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
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.