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Greenback Off Best Levels, Consolidates Prior Day’s Rally

FOREX
  • The US dollar traded sideways for the majority of the US trading session following a small retrace of yesterday’s strong rally. While the Dollar Index is seen 0.2% lower on the day, the DXY remains above the 95.50 mark, a short-term pivot level of significance.
  • In line with greenback weakness, EUR, GBP, CAD, CHF and CNH were all supported.
  • However, the outperformers were AUD (+0.56%) and NZD (+0.41%), largely down to an extension of positive price action in the commodity space, with both metals and oil prices providing tailwinds.
  • NZDUSD remains well supported below the 0.6750 mark with firm technical support coming in at 0.6700. The Kiwi had caught a bid overnight as participants added hawkish RBNZ bets, with money markets now pricing ~31bp worth of tightening come the end of the Feb MPC meeting.
  • A turn higher for AUDUSD and importantly a break of 0.7314, Jan 13 high would resume the recent upleg and cancel the developing bearish technical threat.
  • Worth noting some interesting price action in the Canadian Dollar. Canadian CPI printed in line with median estimates, however, the BOC core indices were above expectations. Perhaps with a buy the rumour, sell the fact dynamic in play, USDCAD put in a fresh low at 1.2450, closely matching with Fibonacci support, and then sharply rose immediately after the data back to 1.2520. The pair’s squeeze quickly lost steam after that, consolidating around the 1.2490 level. A move through 1.2448 would open 1.2387, the Nov 10 low.
  • Aussie Employment data headlines the overnight session before the Norges Bank rate decision in the early European session.
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Energy BulletsCommodities

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