The US dollar pushes higher
The continues to consolidate its post-FOMC gains, with virus concerns globally also providing some safe-haven support. However, forex markets appear to remain at a much more heightened state of alert, regarding potential spikes in US yields, than other asset classes. Markets today will potentially be quite choppy as the month and quarter-end rebalancing flows do their worst.
Overnight, the dollar index rose 0.20% to 92.07 with overnight resistance at 92.20, and the post-FOMC highs at 92.40 now in sight. Having climbed through the 200-day moving average (DMA) at 91.50 after the FOMC, the DMA has successfully repelled all corrections lower since. Today the 200-DMA is at 91.45, and only a daily close below changes the bullish picture.
US dollar strength sees edging below 1.1900 this morning with support at 1.1850 looming. Failure signals a deeper correction to 1.1700. Virus concerns have kept on the back foot for the past week after failing at 1.4000 and then 1.3950 subsequently. GBP/USD is trading at 1.3850 today, and failure of support at 1.3790 signals a deeper sell-off below 1.3700.
As global risk sentiment has turned negative this week on the delta-variant virus wave, and have come under sustained pressure as risk-sentiment barometers. The bearish tone has not been helped by Australia’s widening Covid-19 battle, with half of the country’s population now under restrictions. AUD/USD fell 0.75% overnight to 0.7510, closing below its 200-DMA at 0.7560. Failure of the 0.7460 support signals a much deeper sell-off. NZD/USD fell 0.65% to 0.6995, recording its second successive close below the 200-DMA at 0.7050. Failure of 0.6900 now signals a much deeper correction is ahead.
remains parked in a holding pattern on each side of 6.4600 after yet another neutral PBOC USD/CNY fix and the adding of more liquidity at the repo today. This week’s China Communist Party’s 100th birthday means that the yuan will remain a bastion of calm. That appears to have had the effect of stabilising the negative tone across the rest of Asia’s currencies. But the , and remain vulnerable to more Covid-19 losses, as will a much higher print on Friday.
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