Get started

Capitalmarkets

Aussie loses ground ahead of RBA meeting AUDUSD declined on Friday after a strong US jibs report lifted the greenback marginally across the board. The pair remains under some pressure at the start of a new trading week as the USD receives another mild boost from the latest labor market data. The US non-farm payroll grew 304k in January, well above expectation of 165k. But the previous figure was revised sharply down from 312k to 222k. Moreover, average hourly earnings rose just 0.1% versus expectation of 0.3%. In fact, the dismal wages growth confirms the weaker inflation pressures in the US and justifies the recent dovish shift in the Federal Reserve’s tone. Accordingly, the buck failed to capitalize significantly on the data. However, the aussie remains under the increasing pressure on Monday. Ahead of tomorrow’s RBA meeting, the latest report showed that Australian building permits fell 22.5% in December from a year earlier after plunging 33.5 percent in November. As a result, that was the worst two-month result since January-February 2009. As for the RBA meeting, it looks increasingly likely that the central bank’s statement will be less upbeat than in December. Considering that other monetary authorities tend to soften their stance due to softer global growth outlook, the RBA may find it appropriate to act the same way and downgrades its GDP forecasts. In this scenario, AUDUSD could weaken further but as the statement is expected to be more neutral than dovish, the bearish potential will likely be limited. As such, the pair could get back below 0,72 but stay above the 0.7070 region.
by HelenRush
Euro underestimates the economic risks in Europe After a rally amid a widespread dollar sell-off following a more cautious Fed’s stance at the meeting, the euro capitulated much of the previous gains and turned negative on Thursday. The common currency resumed the ascent today but the impetus looks too modest to bring the pair back above 1.15. The key reason behind the latest bearish correction in the EURUSD pair was the statement from the Bundesbank President Jens Weidmann. According to him, economic weakness is likely to extend into the current year. Considering that Weidmann is an outspoken hawk, such a gloomy outlook for the largest European economy scared investors. Moreover, he is also seen as a candidate to replace ECB President Mario Draghi later this year. Despite the euro shrugged off the signals from the ECB official after a negative knee-jerk reaction, traders shouldn’t underestimate the economic risks in the region as the central bank won’t start the hiking cycle until it is firmly confident in the absence of a downside momentum in the economy. In the context of monetary policy divergence, this means that the central banks’ policy still plays into the dollar’s hands despite the Federal Reserve takes a pause in tightening.
by HelenRush
Italian recession as a wakeup call for euro The euro is rising for a fifth week in a row, encouraged by weaker dollar and better risk sentiment. The greenback continues to digest the Fed’s dovish message on rates. Powell, who is particularly careful about the message he sends markets, confirmed that the central bank had softened its stance and will take a pause in hiking. Despite a softer tone was expected by the markets, the dollar sagged and risky assets rallied. Against this backdrop, EURUSD challenged the 1.15 barrier for the first time in three weeks and refreshes the highs on Thursday. However, fresh economic data made the common currency give up part of gains as euro zone GDP in the fourth quarter stayed at its lowest rate in four years. But the main concern is that Italy’s economy slipped into a technical recession as the GDP contracted by 0.2% q/q in Q4 after a 0.1% fall in Q3. The government officials tried to calm down the worries as Di Maio said the GDP contraction shows failure of previous governments, while the prime minister Conte highlighted that the recession is temporary and due to US-China trade war. Anyway, the longer term, today’s data should serve as a wakeup call for euro bulls who are focused on the Fed’s dovish shift, as considering the budget issues, it’s hard to imagine how Italy is going to post a decent recovery this year.
by HelenRush
The Fed will stress its data-dependence Global investors are awaiting the outcome of the FOMC’s January policy meeting. Stocks and currencies are muted ahead of the important verdict. While nobody expects any changes in the rates, the estimates of the potential rhetoric by the Federal Reserve differ. Against the backdrop of the latest speculations, one of the key issues for markets is the possible end of the balance sheet reduction plan earlier than previously expected. But Powell will likely refrain from details and decisive statements on the issue, though a hint at such a step could put the greenback under pressure. The central bank could also revise slightly lower its economic assessment and even adjust the forward guidance, suggesting that the economic activity is ‘solid’ instead of ‘strong’. Also, chances are high that the monetary authorities will emphasize the data-dependence in the context of further rate hikes in the future. If so, the uncertainty will rise but at the same time, it could revive hopes for resuming the tightening cycle some time later this year. As such, the downside risks for the dollar from the upcoming meeting are limited, and the potential sell-off could be short-lived. And let’s not forget about the US-China trade talks that will set the tone for markets in the days to come.    
AMEX:USD
by HelenRush
Why is oil market indifferent to turmoil in Venezuela As was widely expected, the United States sanctioned Venezuela's state-owned oil company, in an effort to put more pressure on Maduro and oust him from power. The restrictions block about $7 billion in PdVSA assets. The American companies have until March 29 to wind down operations with PDVSA. However, crude oil markets have barely reacted to the measure. On Tuesday morning, Brent made some shallow recovery attempts but attracted the selling interest again and failed to regain the important $60 level. Why is the market so indifferent to geopolitics this time? In fact, there is a number of reasons behind the lack of positive reaction. First, traders are focused on the US-China trade talks amid the growing worries about the global economy and the outlook for oil demand. Second, Venezuela’s exports declined to little more than 1 million barrels per day in 2018 already and further cuts could be easily replaced by Middle Eastern countries so the general impact on the supply side could be minimal. Third, there are exemptions for a number of US companies, including Chevron, Baker Hughes and others, that will continue operations in Venezuela until July 27. Fourth, it may be difficult, but PDVSA may yet be able to find new buyers in the future. The effect from the sanctions could be felt by the global markets some time later but for now, traders don’t see any
OANDA:BCOUSD
by HelenRush
Dollar: FOMC and NFP in focus The greenback that suffered steep losses on Friday and remains mainly on the defensive at the start of a new trading week, will have a critical test in the days to some. The FOMC meeting and the NFP employment report will set the tone for the major currency pairs in the short term. Investor concerns over the US GDP and the global economy in general make the markets vulnerable to losses and assume a more cautious tone by major central banks amid the increasing signs that the economy still needs support from the monetary policy and is not ready for tightening yet. Moreover, there are even speculations about a possible recession.  In this environment, market expectations of further rate hikes in the US are rapidly abating, while the political chaos in the US adds to the worries. As such, traders are betting on a more cautious Fed’s tone and expect the officials will signal a pause in tightening on Wednesday. The dollar is ready for a more ‘dovish’ scenario but downside risks for the currency are still there.  As for the labor market report, following a string growth by over 300K in December, the results could disappoint, also due to the US government shutdown. A result around +100K will be a bearish scenario for the buck, while a rise by approximately 150K is going to be a neutral outcome for the American currency. In general, the bearish risks for the USD prevail, especially amid a threat of another government shutdown.
AMEX:USD
by HelenRush
EURGBP may drop further What is going on with the European currencies now cab be clearly seen in the GBPUSD dynamics. The cross has lost more than 3% over the last ten trading days and touched a May 2017 low marginally above 0.86 on Friday. It looks like the pair has found a local bottom at this level as the euro turned positive on the day during the European session. However, the fundamentals continue to signal the downside risks for the cross are still there. The common currency sell-off intensified after Draghi highlighted the increasing downside risks for the regional economy. Moreover, ECB’s Vasiliauskas said today that the central bank forecasts will be revised in March while the balance of risks has a ‘negative outlook’. Meanwhile, the ECB released the results of its latest survey of professional forecasters that sees slower growth and inflation projections. In particular, 2019 GDP growth is now seen at 1.5% versus the previous estimate of 1.8%. All the comments and numbers confirm that a rate hike this year is getting more unlikely, which will continue to press the euro lower. Considering the rising chances of a ‘soft’ Brexit, the near-to-medium outlook for EURGBP remains bearish. So despite the oversold conditions the cross will likely resume the downtrend after a pause. An important technical break below the immediate support at 0.86 could attract more sellers and open the way towards 0.85.
by HelenRush
Shutdown vote risks derailing USD appeal The greenback turned higher against major rivals on Thursday with traders switched to some profit-taking in the European currencies. As for the cable, the technical correction is due to overbought conditions. The pound was rejected from mid-November highs around 1.31 and got back below the 200-DMA that was eroded yesterday for the first time since April 2018. The euro attracted a selling interest ahead of the ECB meeting as investors expect that Draghi’s tone will be cautious and ‘dovish’ due to the growing economic risks in the Eurozone. In other news, as the US Senate vote on shutdown looms, the two parties remain in a standoff that prevents a full re-open of the federal government. The officials will vote on two bills – the Trump’s demands for border walls and a Democratic initiative that opposes additional funding for building a wall. Ad there are no signs of a progress towards a consensus, the vote could bring the dollar back under pressure at the end of the trading week. In this context, the USDJPY pair may resume the downside move as in a negative scenario, the risk aversion will resume across the financial markets, which will give the additional lift to the safe-haven Japanese yen. As such, the pair that touched a high of 110.00 on Wednesday could challenge the 109.00 support. Once below this support area, the dollar will target 108.60.
by HelenRush
Davos will set the tone for gold Gold prices rose on Tuesday due to a widespread risk aversion amid the lingering concerns over global growth. The incoming economic data continue to signal that the global GDP is losing steam, which fuels demand for the precious metal since December. The decline in 10-year US Treasury yields was the largest since early January played into the bullion’s hands as well. The additional fears came from the reports that Washington rejected the offer to hold a meeting with the Chinese officials ahead of next week’s crucial trade talks. The move sparked doubts among investors that the two countries will be able to strike a deal finally. As a reminder, Trump threatened to increase tariffs to 25% from the current levels of 10% without a trade agreement. Meanwhile, Russia and Saudi Arabia Energy Ministers canceled their planned meeting where they were supposed to discuss the recent OPEC+ agreement, which doesn’t add optimism as well. Looking ahead, the World Economic Forum in Davos will set the direction for gold in the days to come. Considering further bearish signals from the economy around the globe, the remaining trade issues, Brexit-related uncertainty, unstable oil market and a number of political risks, the forum attendees may express concerns and even raise alarm bells, which could fuel demand for safe havens. This scenario will benefit the yellow metal that could regain the $1,290 resistance and retarget the key $1,300 barrier.
TVC:GOLD
by HelenRush
AUD/USD fears signals from China The AUD/USD recovery after the flash-crash from January 3 has stalled above 0.72, where the pair encountered a local resistance area. The price was rejected from a mid-December top and dropped to two-week low of 0.7120 on Tuesday. By the way, the move down is rather measured and gradual due to a muted USD demand amid the ongoing US government shutdown and a more cautious tone by the Federal Reserve. One of the key risks for AUD/USD is the slowing Chinese economy that grew at its slowest rate in almost three decades in 2018 and lost more steam in the fourth quarter. The latest IMF forecast has fuelled concerns over the global economy, which according to the Fund’s estimates will grow by 3.5% in 2019, the slowest in three years. In this context, another source of potential risk for aussie is the three-day World Economic Forum set to begin today in Davos, Switzerland. The attendees will discuss the outlook for global economy in 2019 and could express concern over the signs of weakness. The possible downbeat comments during the event could put the Australian currency under the additional selling pressure. As a result, AUD/USD may challenge the 0.71 support in the days to come. On the other hand, still weak USD demand will cap the downside impetus in the currency pair.
by HelenRush
Oil: longer-term prospects look bullish After three weeks of gains, Brent is trading directionless on Monday. The official Chinese data confirmed that the country’s economy has slowed in 2018 to 6.6%, which was the lowest growth rate in 28 years. But the numbers failed to spook investors as the expectations were even more bearish. In general, the risk sentiment looks subdued which prevents oil prices from further ascent at the start of the trading week. In January the oil market sentiment has improved and prices have switched to a recovery mode, in many ways due to some progress in the US-China trade relations. Meanwhile, the drilling activity in the US declined dramatically last week, with Baker Hughes reported that the number of active rigs drilling for oil dropped by 21 to 852. It was the third straight weekly decline, which signals the potential stagnation or even decrease in shale oil production in the weeks to come. In the longer term, there are some other factors that could support the bullish tone in the markets. First, a potential trade deal between the US and China may boost general risk-on trades in general. Second, lets’ not forget about the geopolitical risks in Iraq, Iran, Libya, Nigeria and Venezuela. Third, the waivers that the Washington gave to eight buyers of Iranian oil expire in May, and the US Administration will hardly expend the measures which could result in supply deficit later this year. Against this backdrop, Brent has a chance to recover above $70 from the current levels around $60.
OANDA:BCOUSD
by HelenRush
Euro: bearish risks limited The euro turned marginally higher on Friday but in weekly charts, the EURUSD remains firmly in the red. The common currency continues its efforts to break above the 1.14 handle which is in focus these days. The pair still lacks the directional impetus amid lack of meaningful drivers. Traders continue to digest a more cautious ECB stance. Investors are now pricing out hike expectations, citing the slowdown in the Eurozone economy. According to the official data, German GDP posted the weakest growth in five years in 2018, while the regional CPI fell to an eight-month low led by slower rise in energy prices. As a result, the economic picture in the Eurozone looks really worrisome and further signs of weakness could push the euro down. But we should remember that there are three factors that could curb the potential selling pressure on the common currency. First, most negative signals have been priced in already and the euro is ready for delaying in hiking rates. Second, the dollar itself faces a softening stance by the Fed. Third, signs of progress in the US-China trade relations cap the dollar’s upside potential and support the euro as a high-yielding currency at the same time. In the short term, EURUSD will likely proceed with a consolidation around the 1.14 handle. On the upside, the important resistance comes at 1.15, while the potential bearish pressure will be capped in the 1.340 region.
E
by HelenRush
Dollar seeks direction The US dollar is trading in a mixed mode on Thursday, appreciating against the euro and declining against the Japanese yen. The dynamics reflects the lack of risk appetite in the global financial markets as investors continue to worry about slowing global growth, the US government shutdown, and political and economic issues in Europe. The greenback is moving mostly directionless recently in absence of clear drivers. On the one hand, the currency feels the pressure from the political crisis in Washington.  As there are no any movements in settling record-long shutdown, there are few chances that the buck could appreciate substantially in the foreseeable future. On the other hand, Brexit turmoil, signs of slowing growth in Europe, and the reducing probability of raising rates by the ECB and Bank of England cap the downside potential in the USD. As for the USDJPY pair, the downside risks continue to prevail as risk aversion could resume and intensify due to a number of global risks that remain unresolved, including the US-China trade war. Technically, the pair struggles to stay above the 109.00 figure since the start of the month and will hardly make a decisive break above this level in the days to come due to investor cautious behavior. On the downside, the immediate important support comes at 108.00.
by HelenRush
Gold may have formed a local top Gold, along with other safe-haven assets, failed to receive a boost from a parliamentary vote in the UK where Theresa May suffered the worst defeatof a government in the history of the House of Commons. Now, investors bet on a ‘softer’ Brexit, which in turn supports high-yielding assets, while the Japanese yen and gold turned lower on Tuesday. Today, the yellow metal makes some recovery attempts but the bullion obviously lacks the impetus at this stage as the current investor sentiment in the global financial markets looks neutral-to-positive. Besides, gold struggles to attract more buyers as the price has encountered a strong psychological resistance of $1.300 and struggles to overcome this barrier amid lack of catalysts. All this makes traders suppose that the precious metal has reached a local top and will likely get down from the current levels in the short term. Fed’s Beige book due today could serve as a confirmation of forming a short-term top if the report shows that the central bank is not as pessimistic on the US economy as the markets are. Any signs of positive assessment could encourage dollar bulls at the expense of gold. In this scenario, the bullion may challenge the intermediate support around $1,284 should investor sentiment remain relatively elevated. Otherwise, the metal will settle above the $1,290 level. In the longer gold could yet receive a boost against the backdrop of a number of global risks.
TVC:GOLD
by HelenRush
Euro needs signals from the ECB Euro is trading little changed from the early January levels, demonstrating a neutral dynamics. On the weekly charts, EURUSD is stuck between the 100- and 200-SMAs and continues to trade within a limited range. But the general dollar weakness suggests the common currency could resume the rally after the current retreat. To make a new bullish breakthrough, the pair needs to settle firmly above the 1.15 handle – as long as the price is below this level, the risk of challenging the key immediate support at 1.14 persists. On the one hand, dollar safe-haven demand is getting weaker due to a political chaos in the US and the aggres-sive Trump’s internal and foreign policy. There is some progress in the trade talks with China, but lack of details and official arrangements makes investors nervous. However, this factor is not able to bring buying impetus for the greenback as the currency is focused on a more ‘dovish’ Federal Reserve rhetoric. Now, when the Fed has put its cards on the table, it is interesting to see how the ECB will react to the incoming bearish signals from the regional and global economy. The central bank’s assessment of economic risks is the key for the euro now, and any hints at a delay in the first rate hike could derail the euro’s bullishness in the me-dium term.
by HelenRush
Safe-haven yen remains attractive A fresh flurry of bearish news renewed safe-haven demand at the start of a new trading week, with the Japanese yen is back on the offensive after two days of a limited correction. USDJPY failed to break above 109.00 last week and now threatens the 108.00 figure again on Monday. In another sign that US-China trade war hurts the global economy, the huge China’s export industry entered the negative territory in December. In particular, exports fell by more than 4%, which is the biggest decline in two years. Such a disappointing number reignited concerns over the health of the second-world’s largest economy and fuelled demand for such save assets as the yen and gold. The news that the New-York based Viacom is in talks to sell majority stake in China business added to the negative pressure on riskier assets. It is reported that the company has had talks about a sale with at least one Chinese entity. Add to this the uncertainty over Brexit, the longest US government shutdown in history, a other signs of slowing global growth, and the Japanese yen still looks attractive for buying. In the medium term, the USDJPY pair may challenge the March 2018 lows below the 105.00 figure registered in late-December.
by HelenRush
Gold fears US-China warming relations Gold prices climbed to fresh six-month highs a week ago as the rally was capped by the psychological barrier at $1,300. The precious metal failed to regain the sustainable traction since then and goes through a consolidation mode in anticipation of fresh drivers. On Friday, the prices resumed the upside move, challenging the $1,295 handle. In the weekly and monthly charts, the general picture looks far more distinct – the bullion is steadily recovering from August lows and looks set for further gains. Technically, the immediate upside target comes at the $1,300 level, a sustained break of which is needed for entering another bullish phase. The weak dollar plays into the metal’s hands and could support the prices further as a more ‘dovish’ Fed policy is not yet fully priced in by investors. On the other hand, the downside risk for the precious metal as a safe haven comes from the US-China trade relations. The two countries assessed the recent talks as deep and positive. The next negotiations will take place later this month, the Chinese officials reported. So stock markets could proceed with recovery amid trade optimism, which in turn will derail demand for gold at some point. In a wider picture, the downside risks for the global economy may support gold in 2019. After a break above $1,300, the prices will target the $1,303 that could be tough to overcome.
TVC:GOLD
by HelenRush
Dollar bulls lack arguments The greenback outperformed its major rivals in 2018, though felt much worse towards the end of the year. Since the start of January, the US currency faces an even stronger selling pressure as the Federal Reserve is sending clearer signals about a pause in further tightening due to slowing growth in the US and globally, trade wars, and the increasing political pressure from the Trump administration. The FOMC meeting minutes published yesterday revealed that the central bank will take a more cautious position in terms of managing its monetary policy amid the increasing uncertainty. Earlier this week, some Fed officials also expressed their ‘dovish’ tone on policy tightening. The Fed emphasizes that the decision-making will depend on the incoming economic data. In this context, the greenback could be more volatile in the months to come as any strong report could revive rate hike expectations and send the buck north. Anyway, as the monetary policy divergence factor is fading away, the dollar will lack bullish arguments and could derail the upside trend should the economy confirm the fears expressed by the Fed and by investors lately. So, after a break above 1.15, EURUSD may target even higher, but the potential way up won’t be easy and straightforward for the common currency as there are still many risks in Europe, from weaker economic data to Brexit and its consequences.
by HelenRush
Arguments for euro gains The common currency resumed the rise on Wednesday after a brief retreat yesterday. EURUSD is still stuck in a range limited by the 1.14 barrier on the upside as bulls lack the incentive to make a clear break above the 100-DMA that caps the momentum since late-September. However, there are some arguments for euro gains in the medium term. First, the dollar continues to lose its appeal amid signs of slowing growth, signals of Fed’s ‘flexibility’, and pos-itive developments in US-China trade talks. Progress in negotiations fuels demand for riskier assets, discourag-ing USD safe-haven buying, while the continuing government shutdown over border funding adds to the down-side pressure on the American currency. Second, the euro shook off yesterday’s German industrial production data that was really bad. Production fell 1.9% in November versus +0.3% expected. Moreover, the previous reading was revised down to -0.8% from -0.5%. Interestingly, the EURUSD pair hardly reacted to the poor numbers, which could be a sign that the euro is getting more resilient and has found a cyclical bottom in November. But it doesn’t mean that the euro will rally strongly from here as there are some downside risks as well, including Brexit developments, slowing growth in euro area, and the potential deterioration of risk sentiment. So it’s better to wait until the economic situation in the region and Fed’s position on tightening get clearer before buying the euro. Anyway, the single currency feels more comfortable at this stage and could challenge the 1.14 barrier in the short term.
by HelenRush
Gold shows commitment to rise further After a brief pause that was just a short-term bounce within a bullish trend, gold prices resumed the ascent on Thursday, though failed to challenge the six-month highs close to $1280 reached the day before. On Friday, the price has refreshed a six-month high above $1281 and looks set to target the key $1300 barrier. The yellow met-al continues to attract demand on correction attempts, which confirms its strong commitment to rise further. The precious metal finds the buying momentum from a combination of weaker dollar and falling stock markets. Investor concerns over the economy add to the upside pressure on the bullion. By the way, as the U.S. Confer-ence Board report showed, consumer confidence index fell more than expected in December, down to 128.1 from November's multi-year high at 135.7. More importantly, the expectations index dropped below the 100 mark from 112.3 earlier, which shows that US consumers are getting more concerned about future economic growth. All this play’s into gold’s hands and could continue to fuel safe haven demand in 2019 should the global econ-omy lose momentum further. But at the same time, the major central banks could at some stage delay monetary policy tightening, which in turn may cap the downside pressure on risky assets and limit the metal’s bullish po-tential some time later.
TVC:GOLD
by HelenRush
Fresh harbingers of recession The US stock markets shifted to a recovery mode on Wednesday after an aggressive pre-Christmas sell-off. S&P 500 gained by nearly 5%, with most sectors turned green. However, the rebound was more like a dead cat bounce and a sign that the selling was overdone rather than an improvement in investor sentiment. By the way, risk trends looked less robust in Asia on Thursday, while the European stock markets opened mixed amid a tepid risk sentiment and failed to follow up from the gains posted in Wall Street. This is partly due to fresh signs of the potential slowing growth globally. In particular, the Federal Reserve Bank of Richmond's manufacturing gauge fell by a record, to -8, missing all estimates projecting an increase to 15. This was due to weakening in new orders and shipments – another sign that the trade war with China is starting to hurt the US economy. By the way, it is the fourth regional bank factory index that reflected a drop in Decem-ber. In another sign of the impending recession, China published another bearish report. In November, the industrial profit dropped for the first time in three years. The rate declined by 1.8 y/y versus -3.6% in the previous month. The fall in profits reflects slowing growth in producer prices and sales along with rising costs. Moreover, the earnings are expected to contract further in 2019 amid the cooling demand. As such, markets have fresh evidence that the global economy is losing its momentum. As long as such sig-nals continue to emerge, investor sentiment will remain fragile and will hardly recover substantially.
AMEX:USD
by HelenRush
Dollar could have an even tougher time The greenback has been losing ground aggressively at the end of the year. The US currency fails to resist the fundamental bearish drivers threatening to derail the already vulnerable upside trend in the USD. These drivers are the widespread rout in the US stock markets, concerns over the economic growth, Trump’s aggressive for-eign policy and political disputes, raising political uncertainty in the country. Add the President’s criticism of the Fed’s policy, and it’s not surprising that the dollar is rapidly losing its appeal both as a reserve currency and as a safe-haven asset. Next year, the situation may get even worse should the US economy shows more vivid signs of slowing along with the global GDP. In this case, the Federal Reserve that is under an intense pressure from the White House will have to give up and take a pause in hiking rates, which will make the dollar even less attractive for bulls. On the other hand, the potential global growth slowdown suggests that other major central banks will refrain from tightening as well. So in this context, the greenback will still have the advantage as the Fed hikes rates since late-2016. The markets will also continue to closely monitor developments in foreign and domestic policy. The political ucertainty Trump’s disputed even with the Republicans, and staff reshuffles could fuel a full-fledged crisis on Wall Street, which will inevitable affect the US currency.
AMEX:USD
by HelenRush
Trump deprives the dollar of safe-haven appeal After a short-lived corrective rally on Friday, the greenback is back under the selling pressure at the start of the last trading week on the year. The market liquidity is getting thinner ahead of Christmas holidays, and the trad-ing activity will be rather subdued in the days to come. The buck finishes the month on a weaker note, while the government shutdown in the US doesn’t bode well for the currency as well. Market positioning ahead of month- quarter- and year end could distort the moves in the market, but the politi-cal events in the US make the dollar lose its appeal further. Apart from the situation in the federal government, there are rising concerns over the Trump’s criticism of the Fed and its current policy that damages the markets, according to the US President. Against this backdrop, the buck loses its appeal as a safe haven, while positive developments in Italy only increase the pressure. On Friday, the US releases the key labor market data that could affect the short-term dynamics in the dollar pairs but will hardly change the market sentiment dramatically. Strong numbers may lift the USD across the board but there is a risk of profit-taking in this scenario as traders get disappointed in the US currency as a safe haven bet.
AMEX:USD
by HelenRush