DXY stays bid in slow US holiday trade, Thank God It’s Friday!

EUR Steadies; AUD, NZD Slip; EMFX mixed; USD/JPY Eases

Summary: FX markets slowed on Thursday as the US celebrated Thanksgiving with a holiday. Trading was muted with work hours shortened for today. The Dollar Index (USD/DXY), a popular gauge of the Greenback’s value against a basket of 6 major currencies, kept its bid tone, easing marginally to 96.77 from 96.85 yesterday. There was little in the way of economic data releases as well. After several days of heavy selling, the Euro steadied, settling at 1.1208 (1.1200). Antipodean cousins, the Aussie and Kiwi tottered, both finishing modestly lower against the US Dollar. The AUD/USD pair dipped to 0.7187 (0.7192) while NZD/USD was last at 0.6857 from 0.6870 yesterday, down 0.25%. Sterling (GBP/USD) closed flat, at 1.3325. The Dollar edged lower against the Yen to 115.37 (115.42). Against the Asian and Emerging Market currencies, the Greenback settled with modest gains.

USD/THB (Dollar-Thai Baht) grinded higher to 33.42 from 33.39 in dull trade. The Dollar-Singapore pair (USD/SGD) dipped to 1.3680 from 1.3684 while USD/CNH (Dollar-Offshore Chinese Yuan) finished lower in New York at 6.3875 (6.3970). After recovering slightly following its spectacular 15% crash on Wednesday, the Turkish Lira steadied against the US Dollar (USD/TRY) to 12.05 from 12.15 yesterday. The USD/TRY pair rocketed to a high at 13.0865 on Wednesday in European trade. In Asia meantime, South Korea’s central bank raised its key policy rate to 1% from 0.75%. Wall Street Stocks were little changed, holding on to their gains in low volume trade. The DOW settled at 35,840 (35,805) while the S&P 500 was last at 4,700 from 4,680 yesterday. Global treasury bond yields were little changed. The benchmark US 10-year note rate was last at 1.63% (1.64%). The 2-year US bond yield closed flat at 0.64%. Germany’s 10-year Bund yield settled at -0.25% from -0.23%. Japan’s 10-year JGB yield closed at 0.08% from 0.07% yesterday.

Data released yesterday saw New Zealand’s Trade Deficit ease to -NZD 1,286 million in October from -NZD 2,175 million in September, bettering median forecasts at -NZD 1,575 million. Japan’s SPPI (Services Producer Price Index) climbed to 1.0% from a previous 0.9%. Australia’s Private Capital Expenditure in Q3 fell to -2.2% from a previous downward revised 3.4%, and missing estimates at -1.9%. Germany’s Final Q3 GDP dipped to 1.7% from 1.8% previously. Germany’s Preliminary GFK Consumer Confidence for December slid to -1.6% from a previous 0.9% and estimates at 0.5%. The UK Consumer Board’s Realised Sales Index climbed to 39 from a previous 30, beating f/c of 32.

• EUR/USD – The shared currency steadied to 1.1207 from 1.1200 yesterday after sustained selling for most of this week. The EUR/USD pair traded to an overnight low at 1.1203 in dull trade. On the topside, the overnight high was at 1.2230.
• AUD/USD – The Aussie Battler eased to close at 0.7187 from yesterday’s 0.7192. Overnight, traders pushed the AUD/USD pair to a low at 0.7180 before position adjustments enabled the Battler to steady. A lower read on Australia’s Private Capital Expenditure weighed on the leading antipodean currency.
• USD/JPY – against the Japanese Yen, the Greenback hit an overnight high at 115.45 before easing in late New York trade to finish at 115.37. Trading volumes were light in lieu of the US Thanksgiving holiday, where many US investors take the whole weekend off.
• GBP/USD – Sterling finished at 1.3325, which was where it opened yesterday. Overnight the British currency traded to a fresh December 2020 low at 1.3305 before settling and edging up to its close. The overnight high recorded was at 1.3353 in dull trade.

On the Lookout: Today’s economic data calendar is another light one with US markets celebrating their Thanksgiving holiday with an extended weekend. Japan kicks off Australasia with its November Tokyo Core CPI report (y/y f/c 0.4% from 0.1% - ACY Finlogix). Australia is next with its October Retail Sales report (f/c 2.5% from 1.3%). The UK starts off Europe with its UK Nationwide Housing Prices for November (m/m no f/c, previous was 0.7%, y/y no f/c, previous was 9.9%). France follows with its November Consumer Confidence Index (no f/c, previous was 99). Switzerland releases its GDP Growth Rate (q/q f/c 2% from 1.8%; y/y no f/c, previous was 7.7%). Italy follows with its Italian November Consumer Confidence Index (no f/c, previous was 118.4). The US is scheduled to release its Treasury Currency report which is a detailed review of global exchange rate policies, central bank, and government actions around the world. The report also exposes any countries that the US Treasury deem as currency manipulators, which is the factor that FX markets focus on. ECB President Christine Lagarde is due to speak at an ECB conference. Traders will be closely watching her.

Trading Perspective: Thank God its Friday indeed! With the US markets on a long weekend which means reduced volumes, traders will be content to keep their powder dry (stay square). After a choppy week and little in the way of economic data releases today, markets should consolidate. FX will trade within recent ranges. While the Dollar had a minor pullback following its strong performance this week, the Greenback remains king of the currency mountain. That said, beware the pullback as speculative long US Dollar positions continue to build.

• EUR/USD – The shared currency steadied, settling at 1.1207 (1.1200) following sustained selling this week. For today immediate support can be found at 1.120 (overnight low was at 1.1203). The next support level lies at 1.1175 followed by 1.1155. On the topside, immediate resistance can be found at 1.1230 and 1.1260. With Europe still struggling to contain a wave of Covid infections, and an accommodative ECB, the Euro will remain under pressure. That said, speculative shorts will keep the downside supported. Look for consolidation in a likely range today of 1.1185-1.1285. Don’t want to get caught short at under 1.1200 for now.
• AUD/USD – The Aussie Battler grinded lower to finish at 0.7187 from 0.7192 yesterday. Broad-based US Dollar strength, particularly against the Asian and EMFX weighed on the AUD/USD pair. Immediate support for today lies at 0.7180 (which was the overnight low traded). The next support level is found at 0.7150. Immediate resistance can be found at 0.7210 followed by 0.7240 and 0.7270. Am looking for the Aussie to trade in a likely range today between 0.7170 to 0.7270. At or near the current levels, would rather buy the Battler.
• USD/JPY – against the Yen, the Dollar dipped to 115.37 from 115.42 yesterday. US bond yields were a tad lower, and this prevented the USD/JPY from further gains. On the day, USD/JPY has immediate resistance at 115.45 (overnight high) followed by 115.75. Immediate support can be found at 115.20 (overnight low 115.24). The next support level is found at 114.90 followed by 114.60. Look for a likely trading range today of 114.50-115.50. Prefer to sell USD rallies today, the move higher is overdone, and a correction should soon be seen.

(Source: Finlogix.com)

• GBP/USD – Sterling closed at 1.3325, unchanged from yesterday’s opening level. Overnight the British currency traded to 1.3353. Today’s immediate resistance can be found at 1.3355 followed by 1.3385 and 1.3405. Immediate support for today lies at 1.3300 (overnight low traded was 1.3305). The next support level can be found at 1.3285. Look for Sterling to consolidate in a likely trading range today of 1.3300-1.3400. Prefer to buy dips today.

Welcome to Friday! Whether you’ve got Friday on your mind or are grateful today has come… TGIF! Happy Friday and trading all. Top weekend ahead.