US Dollar, DXY Index, US Dollar, Fed, Lunar New Year, Oil, Gold – Talking Points
- of U.S. dollar fell today as the Fed may become less aggressive
- The stock market, which remains open during the Lunar New Year, is booming today.
- As the Fed slows its pace of rate hikes, the DXY (U.S. dollar) pressure on the index?
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The US dollar lags to start the week as a slowdown in rate hikes by the Federal Reserve is becoming apparent. Thin trading conditions throughout the Asian session may have exaggerated the move.
APAC markets are likely to have a quiet week in celebration of the Lunar New Year in many parts of the region. In addition to mainland China, Hong Kong, Seoul and Singapore will take a break, and Australia will also take a holiday on Thursday.
Asian equity spot markets that were open were mostly green. Hong Kong’s Hang Seng Index futures contract also he rose more than 1%.
This follows on from Wall Street’s strong performance last week. Fed speakers Esther George, Patrick Harker and Christopher Waller cited 25 basis points as the most appropriate step forward, noting that the Fed is less hawkish about future rate hikes.
The word “restrictive” also received a lot of airplay from them. The next Federal Open Market Committee (FOMC) meeting will be held on Wednesday, February 1st.
The comments seem to have boosted risk assets such as stocks and weakened the US dollar.
The Kiwi Dollar, the Euro and the Nordic DKK, NOK and SKK have seen the biggest gains so far today. ECB President Christine Lagarde is scheduled to speak later today. The Japanese yen is her only G-10 currency struggling to make headway against the ‘big dollar’.
Treasury yields are up a few basis points across most of the curve.
The Brent futures contract is below 87.50 bpd while the WTI futures contract is below 81.50 bpd, with oil slightly softer and gold slightly higher. Physical gold is trading near US$1,930 for him by the time it goes to print.
A notable data point later today is the Conference Board US Leading Index.
You can view the full economic calendar here.
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DXY (USD) INDEX Technical Analysis
The DXY index continues to languish around its May 2022 low of 101.30 and may provide support ahead of its April 2022 low of 99.42.
After breaking below the lower band of the 21-day Simple Moving Average (SMA)-based Bollinger Bands and then back inside the Bollinger Bands, the price moved sideways.
This directional pause could suggest a reversal if it recovers above the 103.42 breakpoint. The 21-day SMA is close to that level and could become resistance.
Further up, the previous peaks may offer resistance at 105.63, 105.82, 107.20 and 108.00.
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— Written by DailyFX.com Strategist Daniel McCarthy
please contact daniel @DanMcCathyFX on Twitter