- January 15, 2018
- Posted by: Joey Benedid
- Category: Market News
The dollar index (see attached chart) has taken a big hit over the last 4 trading days and currently sits just above long term trend support of 90.20. These levels have not been seen since January 2015 and a firm break of 90.00 would lead to a test of the 84.80-85.50 area in future sessions. Recent weak U.S. data has the market rethinking the 3-4 hikes expected from the FED in 2018 while a breakthrough in German coalition talks last week bolstered the euro with Merkel expected to remain as leader of the German government. Sterling is benefiting from recent constructive Brexit developments however waning economic fundamentals remain a challenge for the Pound.
USD/CAD is following the general USD trend lower but remains extremely vulnerable to headline risks involving NAFTA commentary. Recent volatility has the market confounded with economic fundamentals & oil supporting CAD and NAFTA concerns favouring the USD while BoC interest rate expectations can come down on either side. Wednesday’s BoC rate decision will be front & center in the minds of the market so with little in the way of data releases until then expect range trading unless more NAFTA news pops out of the blue.
