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Greenback Completes V Shape Intra-Day Recovery

FOREX
  • Broad risk-off in equity and commodity markets filtered through into a stronger US dollar on Tuesday, after the greenback had been under initial pressure to start the trading day.
  • Lows of the 96.10 in the dollar index were short-lived as Omicron fears sapped risk optimism in global markets and prompted a flight to quality in G10 FX. The DXY rallied to the best levels of the week and the index currently hovers just below the December highs of 96.59.
  • EURUSD moved in line with the broader dollar, continuing to pivot off the 1.13 mark and currently pressing recent lows around 1.1260. The recent consolidation appears to be a triangle formation. This is a continuation pattern and reinforces the current bear trend. The bear trigger is 1.1186/85. Clearance of this support would resume the trend and open 1.1128, a Fibonacci projection.
  • With risk under pressure, the usual suspects AUD(-0.3%), CAD(-0.3%) an NZD(-0.15%) have all drifted lower, albeit in fairly narrow ranges.
  • The risk-off tone may struggle to build too much momentum as markets turn their focus to the upcoming slew of major central bank decisions over the next 48 hours, including the FOMC and the ECB.
  • Higher US yields and lower equities have weighed on emerging market currencies, with the JPMorgan Emerging market currency index currently down 0.65%. Ongoing troubles for Turkey saw the Lira plunge another 4% and in LatAm, the Mexican peso fell over 1% back to 21.20.
  • Despite the build up to the Fed, we have a busy data schedule with Chinese retail sales overnight and US retail sales headlining the early US docket. Additionally, CPI data from both the UK and Canada will be published. The FOMC decision/statement takes place at 1400ET/1900GMT.
Energy BulletsCommodities
Energy BulletsCommodities

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