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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
USD
The broad DXY has edged away from its cycle low in recent weeks, although hasn't been able to breach the down trendline drawn off its March '20 peak. Also, the index hasn't managed to close above its 50-DMA since November despite threatening to do so in recent sessions. The index is now moving towards the end of the triangle pattern drawn off the recent intra-day lows and the aforementioned March '20 high.
- While the U.S. twin deficit problem and the potential fiscal headwinds for the USD are well defined, the uptick in U.S. Tsy yields that a sizeable fiscal impulse may bring could generate some short term tailwinds for the USD, while perceptions surrounding more stability (at least in a broader political sense) under the Biden administration vs. its predecessor may also prove to be USD supportive in the near term.
- Intraday COVID data suggests that the U.S. is now through the worst of the latest round of the epidemic, and the U.S. growth dynamic looks attractive vs. the likes of Europe, among other G10 economies.
- As ever, the assessment of the greenback's dual personalities i.e. the local USD vs. the international USD will need to be assessed.
- We should not forget the impact that positioning may have on the USD as well, with sizeable USD shorts evident for months (at least in the weekly CFTC CoT data). Indeed, net positioning in the USD continues to operate around multi-year shorts.
Fig. 1: The U.S. Dollar Index (DXY)
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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