View our guide on how to interpret the FX Dashboard
- Risk sentiment was given a gentle boost with traders anticipating that US and China will sign the much-touted phase one trade deal on Wednesday.
- The British pound was weaker following further hints from BOE that they may ease.
- AUD and NZD are the strongest majors, GBP and JPY are the weakest.
- Volatility remained low overall due to a lack of economic data.
- DXY’s advance has stalled at the 200-day eMA, with the index closing the week with a 2-bar reversal pattern below this key level.
- A bearish pinbar has formed on USD/CHF and bullish engulfing candle on EUR/USD underscores the potential for the dollar to mean revert
- USD/JPY traders are keeping a close eye on 109.73 resistance to see if it can finally break. Whilst Friday’s bearish pinbar shows a hesitancy to push high, today’s price action is testing its highs on the back of the weaker yen and positive trade deal sentiment.
- We’re keeping a close eye on GBP/USD to see how it reacts around 1.30. Price action is drifting lower to this key support level and, if it breaks, opens up a run for the lows around 1.2900.
- NZD crosses are perking up, reinforcing the analysis that perhaps we’ve seen a trough on NZD/CHF, NZD/JPY, NZD/USD (and a peak on EUR/ZD).
- Most Asian stock markets are trading in the green ahead of the official sign-off of the U.S-China Phase One trade deal that is scheduled to take place in Washington on 15 Jan. Meanwhile, Japan’s Nikkei 225 is closed today for a public holiday
- Interestingly, the USD/CNH (offshore Yuan) has continued to inch lower and in today’s Asian session, it has managed to breach below 6.90 for the first time since Jul 2019 that has added impetus to maintain the on-going positive sentiment seen in Asian equities in general.
- Australian’s ASX 200 has dipped slightly by -0.37% but the Index is still holding at its previous range resistance/all-time high area of 6890/880. Today’s lacklustre performance has been dragged down by healthcare related stocks where the Healthcare sector is downed by-1.23%.
- Other than U.S-China diplomatic trade relations, the other significant focus will be the start of U.S. Q4 2019 earnings session. Overall, the consensus is set for another second consecutive drop in earnings for Q4 at -1.6% y/y. The major banks will kickstart the reporting session where Q4 earnings report cards for Wells Fargo, Citigroup and JP Morgan will be out on Tues, 14 Jan.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.