- January 2, 2018
- Posted by: Joey Benedid
- Category: Market News
Happy New Year to all & hope the holidays were enjoyable!
The dollar index took a significant hit over the last week of 2017 as a combination of thin markets, month/year end rebalancing flows and year end position squaring has taken a heavy toll on long USD positioning (see attached DXY chart). The year long downward trend has remained intact and technical indicators appear to be bottoming out. With market participants slowly coming back from holidays I would suggest thin trading conditions will remain until next week and moves remain unpredictable. This Friday we have U.S. employment data out at 8:30 AM EST which will be the first significant release of 2018.
USD/CAD has followed the general market trend with oil trading above $60 per barrel & heavy month end USD selling pushing us to a low of 1.2520. As with the dollar index, technical indicators suggest a bottom is near (see attached CAD chart) and buy orders have been noted at the Canadian Banks between 1.2450-1.2520. With all the same headwinds that were discussed at the end of the year still stacking up against CAD we will have to see how early data releases affect the currency and Friday’s dual Canadian & U.S. employment figures will be the first test. We do not get a BoC meeting until January 17 at which time the market is not currently expecting any rate movement.