U.S. Dollar Trades Sideways for Three Days
The United States (U.S.) dollar trades sideways for the third day as currency markets are in holiday mode and will likely remain so until the middle of next week.
Market data shows that the dollar index barely changed from Friday at 96.11, marking three days of sideways trading, Jeffery Halley, senior market analyst at OANDA said in a note.
Halley hinted that if anything, the U.S. Dollar looks vulnerable to positive headlines still on the virus front this week with support between 95.80 and 95.85 the important level to monitor.
Liquidity is further reduced in Asia due to several regional centre holidays. Major currencies continue to tread water with EUR/USD at 1.1320, GBP/USD at 1.3410, USD/JPY at 114.40, AUD/USD at 0.7235, NZD/USD at 0.6820 and USD/CAD at 1.2810.
None of that has been much different since last Thursday. The return of US markets this afternoon and the gnomes of Wall Street should see volatility pick up slightly this evening.
Asian currencies continue range trading as the Asian interbank market looks to have closed shop for the year now. A stronger Yuan continues to backstop Asian FX from negative sentiment shifts.
USD/TRY fell by nearly 6.0% on Friday as intervention and the central government’s effective Lira value guarantee on deposits for retail savers continues to play out.
USD/TRY has risen by 3.50% today though and USD/TRY looks to be forming a base ahead of 10.0000 now.
The authorities in Turkey may find engineering further Lira rallies harder going from here, and I will be watching their foreign reserve data going forward for more signals of when to re-enter the short Erdogan trade.
“With the US dollar looking more vulnerable to positive virus sentiment at the moment, gold could potentially move higher throughout this week, but I wouldn’t put my house on it sustaining those gains”, OANDA analyst said.
US Futures Point to Narrow Gains
US stock futures were cautiously higher Monday as traders returned from a long Christmas holiday weekend, while omicron-related risks continued to hang in the backdrop.
The Dow Jones Industrial Average futures gained 0.2%, S&P futures increased 0.3%, and NASDAQ futures rose 0.4%
Travel-related stocks, along with oil prices, were under pressure, weighed down by flight cancellations by major US carriers amid surging COVID-19 cases.
Staffing shortages led to the cancellation of more than 2,000 flights since Christmas Eve, according to reports.
Oil prices slipped, with global benchmarks Brent crude down 0.1% and US West Texas Intermediate crude down more than 1%.
Data are expected to show the Dallas Fed General Activity Index coming in at 13 for December following November’s 11.8 reading, according to Bloomberg data. # U.S. Dollar Trades Sideways for Three Days
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