A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
Share this story:
Alan Rose Foreign Exchange Senior Trader
I was away for two days but in following the markets from home and arriving today, I cannot help but be reminded of how quickly sentiment and price action can shift from bullish to bearish regarding the U.S. dollar (DXY). This has been a feature of the market now for quite a while; just about the time that all hope is lost or when investors become the most optimistic, price action runs out of momentum and a course reversal is about to take place.
The DXY has now fallen for four straight days. In the previous cycle, it rose in six of seven trading sessions. In the previous cycle before that, it fell in seven of the nine trading sessions. You get the point! Since October of last year, the DXY index has traded in a narrow range largely between 95.00 and 97.75. At some point, there will be a breakout, but it does not appear to be close at hand.
The DXY index being trapped does not imply that individual currencies have not been on secular bullish or bearish trends. Each individual currency has its own set of dynamic metrics that can be more sensitive to domestic economic data, interest rates, commodity prices, or equity movements. We continue to recommend that importers and exporters be proactive about managing their requirements; this is a time to be more tactical, be less strategic and take what the market offers you in terms of opportunities and price action.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
Yesterday, we pointed out that there has been a sharp spike higher in the volatility associated with the British pound (GBP) surrounding the three votes in Parliament this week. Late yesterday, PM Theresa May's modified Brexit deal went down to defeat again (smaller than the first defeat in January), but this was expected. More votes are scheduled for today and tomorrow with the market pricing in a request for an extension past the March 29 deadline. With lots of volatility and price action, the market believes that a soft Brexit is still the ultimate conclusion and seems to believe a stronger GBP could be in order.
U.S. Durable Goods Orders for January came in stronger than forecast at 0.4% against expectations of a decline of 0.4%. Ex-transportation, Durable Goods Orders fell by 0.1% but Non-defense rose more than expected, up by 0.8%. PPI for February remained benign at 0.1% dropping the YoY rate from 2.0% to 1.9%. U.S. interest rates are up slightly on the session.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Investment and Insurance Products:
Are Not insured by the FDIC or any other federal government agency
Are Not deposits of or guaranteed by a Bank or any Bank Affiliate
May Lose Value
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. The Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Here's what this indicator is saying about US stocks right now. ACTIVE INVESTOR WEEKLY EDITION: January 21, 2022 View in a browser FIDELITY VIEWPOINTS ® WEEKLY EDITION: January 21, 2022 Bollinger band stock signal Here's what this indicator is saying about US stocks right now. Read more CHART OF THE WEEK Inflation and corporate consolidation US industries have become
Learn how to keep all your accounts—not just the ones at Fidelity—secure. November 18, 2021 View in a browser FIDELITY VIEWPOINTS ® WEEKLY EDITION: November 18, 2021 What to do after a data breach Learn how to keep all your accounts—not just the ones at Fidelity—secure. Read more What's ahead for your RMDs Make sure to take your required withdrawals this year, then start to plan ahead.