March 20, 2023 19:49 GMT
Greenback Extends Weakness, USD Index To Fresh One-Month Low
- The USD index looks set to post a third consecutive losing session, declining 0.35% on Monday and falling below last week’s lows of 103.44 in the process. Despite an early sell-off across equity markets, the greenback failed to garner any upward momentum during European hours and the subsequent bounce for risk has in turn weighed consistently on the US dollar.
- GBPUSD (+0.85%) has outperformed on the session, second to only the Swedish Krona. The pair has been grinding consistently higher to breach the mid-Feb resistance of 1.2269. A close and break above this mark would be a bullish development in the near-term, but the more solid upside level crosses at the Dec/Jan highs of 1.2446/48. GBP/JPY has also traded back into positive territory and has seen a near 1.5% recovery off the 158.97 session lows.
- In similar vein, the likes of the Euro and the Canadian dollar are making advances of around 0.5% amid the improved risk backdrop and market calm following the CS/UBS tie-up and the associated headlines concerning a write-down for Credit Suisse AT1 holders. Conversely, the Swiss Franc does remain under pressure with notable 0.75% gains for EURCHF, extending the bounce from last week’s lows and narrowing the gap with parity once more.
- RBA minutes and Canadian CPI highlight Tuesday’s docket. Focus the turns to Wednesday’s FOMC decision/statement. There aren't many sell-side analysts calling for a Fed hold this week, however of 25 FOMC previews we've reviewed so far (and only taking into account those written/updated at the end of last week or today, given how quickly events have moved), four see a pause, with the rest eyeing a 25bp hike.