Dollar is falling again against a basket of currencies and Gold is rising to the 1337 level
USD weakness and consequent sell-off in the USDJPY was the main focus of in the European session. The Nikkei showed some weakness after the midday break in the Asian session feeds into FX. The Trump comments on reciprocal tax also had potentially some influence in the USD.
USDJPY is reaching the 106.83 level, while the Nikkei futures continue to sell-off further after the cash close. The EURUSD was lifted to the 1.2370 mainly due to the move in USD. The GBP was supported by higher than expected CPI figures.
The European equity markets ground lower as peripheral equity markets and export stock underperformed. Similar moves were seen in the U.S. equity futures. Spot gold and other metals were supported by a weaker dollar as crude futures remained flat due to the U.S overproduction.
The European Central Bank President Mario Draghi was on the horn yesterday in an interview directed towards the youth of Europe. In the interview, he said that Europe has recovered from the recession as the quality of employment in the euro-zone must be improved. He also said that the ECB is very much interested in the blockchain technology while advising young people from bitcoin saying that it is not a currency.
In the key headlines for the European session:
- China Urges U.S, to be restrained in trade restrictions, especially in the steel sector.
- U.K. January CPI came in at 3.0% vs the 2.9% expected while Core CPI came in at 2.7% vs the 2.6% expected.
- Japan’s Asakawa (minister whose brief includes JPY) is closely watching whether there are speculative factors behind the JPY.
- The People Bank of China conducts 393 Billion Yuan 1y MLF operation before the Lunar New Year Holiday.
- South Africa: Zuma refuses ANC party request for him to resign, according to people familiar with the matter.
The Yen led gains in the Group-of-10 currencies as the Nikkei reversed early strength, spurring follow-through price action the spot market as the dollar dropped below the 108.00 support. While the European equities declined, and the Swiss franc gained alongside Treasuries and euro-area bonds, there has been no clear shift towards haven demand as the Kiwi rallied and Emerging Market FX rose the third day. The Euro flirted with supply near the 1.2370, while the pound rose after the U.K. inflation data beat estimates, keeping the Bloomberg Dollar Spot Index under pressure.
USDJPY – There is strong support zone in sight as the market makes new cycle lows. The 106.70 area may provoke some tactical profit taking.
EURUSD – The pair broke prices, around the 21-Day Moving Average at 1.2333. and made 1.2370 as high yesterday. A Closing break above here is required to inspire more upside movement.
AUDUSD – The pair is printing back-to-back gains above long-term moving averages. Downside risks still hang over the market while shorter-term averages point lower. The market is testing and struggling at its 200-Hour moving Average at 0.7875.
GBPUSD – The rally post-U.K. CPI remain contained inside Friday’s range. The downside bias on the pair still persists. A closing break above the 1.3987 is needed to force a shift in the near-term outlook.
USDCHF – Is set to stay bearish while the 21-Day Moving Average at 0.9445.
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