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Commodity currencies moving up in weak USD environment


USD index lowers further despite of the higher US stock and UST yield (10 years 2.92%), with the market concerning on fragile risk sentiment after weak retail sales and slightly higher CPI driven for more stagflation risk in US. Market increases Fed hike up to 4 times this year and chances to up to 27% but still the majority expects a 3 hikes for the years with fully discounted and little support for USD overall. USDJPY lowers gradually upon reflecting on USD weakness. And earlier the Japan Finance Minister comments in the current situation about a lesser chance for intervention have spur some short term selling on the pair. With technical below 107.30-40 and having a chance for a risk downside to 106 and maybe 105.50.

EUR rebounded from 1.2275 to 1.2512 in earlier Asian session with more short coverings on lower side and the momentum still pointing to retest the year high of 1.2538 with downside support at 1.2450 and then 1.2400 for intraday.

GBP higher on broad USD weakness despite of the remaining uncertainty on Brexit negotiation and some GBP cross rebound will still support the currency on the lower side.

Commodity currencies (AUD/NZD/CAD) continues on running up while reflecting on the weak USD environment and the near term trend indicates that it will remain to follow the broad USD direction.

Today US initial jobless claims, Philadelphia Fed Manufacturing Index, NAHB Housing market index, Producer Price Index and stock/bond market move will have some intraday impact. As the China New Year Golden Week holiday starts, the Asian markets liquidity will getting more thinner in coming days that will exaggerate the move if any surprise.


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