USD has probably made a cycle low - Westpac

Sandeep Kanihama FXStreet Contributor

Despite reasonably firm US data and ongoing improvement in yield support the DXY’s uptrend has stalled, points out Imre Speizer, Research Analyst at Westpac.

Key Quotes

“Upside catalysts in the form of a potentially hawkish Fed Chair have been dashed and risk appetite has taken a knock, holding the USD back in the near term. Key big picture risks during the next few weeks include: tax cut progress through Congress, and shutdown risks around the 8 Dec government funding expiry, and Yellen’s speech next week.”

“3 months ahead: The house and Senate tax plans differ markedly and it’s not clear there is a compromise that could pass both chambers. The Senate has more stringent rules and thus includes delays to corporate tax cuts and controversially, the full repeal of state and local income and property taxes, a measure that could easily lose 20-30 House Republican votes (cannot afford to lose more than 22 House votes). Republicans hope to have legislation on the President’s desk by Xmas but challenges in crafting a single bill that fits competing interests in the House and Senate make that a tough ask.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.