The greenback maintains firmness at the start of the New York session on Monday. Last week risk-off sentiment gets extended as the buck continues to lead its peers.
Stock market struggles as dollar soars on risk-off
The dollar index is flying toward 91. Although banks are on holiday in the US to observe Martin Luther King’s day, the Forex market is not short of good moves. DXY remains strong as the stock market and riskier FX struggle to make the expected bounces. S&P 500 is finding support at 3750 and currently making a slight bullish appearance but still mute below 3780.
Commodities – Oil struggles to flow while metals dominate the day
Meanwhile, Commodities are very active. Gold recovered sharply from the quick decline to 1802 during the Asian session and is currently having a bullish day. However, the commodity is shedding profit from the 1840 Asian session high. Oil prices are moving exactly with the S&P 500. WTI and Brent are building support bases at $51.75 and $54.5 respectively.
Risk-off FX – USD, JPY & CHF
Yen, Dollar and Swissy are narrowly mixed against the Dollar but have maintained broad strength against the riskier FX especially AUD, NZD and CAD. Also, the Pound and Euro have struggled against risk-off FX resulting in significant slumps. This further highlight that risk-off sentiment is yet unchanged going to a new market session.
RISKIER FX – AUD, NZD & CAD
Commodity currencies maintain last week struggle with many hitting 1-week. low. Aussie and Kiwi remain rooted in a lower zone despite better than expected Chinese GDP data. However, there has been some slow-down as risk-driven FX pairs enter critical price levels where we might see a change in sentiment. However, until we start seeing a significant surge on these pairs, the current risk sentiment will remain dovish.
Risk-Drivers
The market is cautious about the upcoming big events later in the week. Chief among them is the US Presidential inauguration. The economic calendar is very light today apart from China’s GDP figures that showed yet another expansion in the last quarter. Volatility is expected to be slow in the second half of the day as banks in the US are shut down to observe the MLK day.
Meanwhile, vaccine rollout is being intensified. Currently, over 40 million doses have been administered which is close to half of the number of total reported cases globally. Also, the virus growth curve is flattening globally and especially in the UK which has so far rolled out over 4 million doses while maintaining a national lockdown.
Biden’s inauguration, BoE, BoC, BoJ, Aussie employment, NZD CPI are some of the big events coming later in the week. Meanwhile, for the rest of today, no big event can be pointed at. Thus, the market might lose its savour or maintain the status-quo at best. However, traders need to watch for a switch in the market mood back to risk-on.
FX Majors Forecast into the new session
The dollar is expected to maintain further rallies above 91 and toward 91.2-91.4. However, a minor dip to retest the 90.72 intraday support could precede further surge. With that said, EURUSD will most likely current dip toward 1.2. Will there be a slight recovery to 1.21 prior? That’s very likely. Meanwhile, the Cable has hit critical support. Perhaps a bounce to 1.3615-1.3635 could follow. AUDUSD and NZDUSD are at critical supports as well. Bullish attractions should be watched at prices around 0.7650 for the former and 0.7070 for the latter. USDJPY is poised for more fall to retest 103.55-103.50. Bearish targets are set at 103.35-103.3 support zone.
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