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The Dollar firmed in early trade on Friday, seeing the DXY hit four-session highs of 90.74. Gains were short lived however, as selling stepped in at mid-morning, leaving the USD index at 90.38 lows after the London close. Following losses seen this week, the USD appears to be entering a consolidative period, managing to close out the week above its lows. The U.S. economic recovery will largely depend on the pace of Covid vaccinations, which will determine how long that takes. Uncertainty remains however, and a bumpy rebound may be in store, leaving USD direction going forward a bit up in the air. The miss in Friday's consumer sentiment index, along with disappointing jobless claims seen Thursday, perhaps saw traders leaning toward selling the Greenback into a long holiday weekend.
Feb 12, 2021, 19:34 UTC
The dollar has firmed up amid a risk-wary sentiment in global markets, which has seen world equity markets settle lower from record highs. At the same time, market conditions have been thinned by the lunar new year holidays in China and some other Asian nations. Some tough talk aimed at China from U.S. President Biden was blamed by some on the souring in sentiment, alongside a higher than expected print in weekly U.S. unemployment claims data. The DXY dollar index, after tumbling in three of the last four days, found a footing and lifted to a three-day high at 90.53. The index has been trading without sustained direction for nearly two months now, having recovered out of the 35-month low that was seen in early January at 89.21. EUR-USD settled deeper in the lower 1.2100s, edging out a two-day low at 1.2110, while USD-JPY pegged a three-day high at 104.98. Cable traded below 1.3800 for the first time since Tuesday. The dollar bloc currencies were marginal underperformers. Bigger picture, the reflation trade seems more likely to revive and sustain than not, given the precipitous decline in the rate of new positive Covid test outcomes worldwide (including South Africa, despite the supposed hyper-transmissibility of the dominant SARS-Cov2 variant there), vaccine rollout, stimulus, and prospects for a lockdown-saving fuelled consumer spending spree in developed economies as and when societal restrictions are lifted. This translates as a weaker dollar call, which remains richly valued by historical trade-weighted standards. Elsewhere, Bitcoin hit yet another record high earlier, this time at $48,540, after BNY Mellon said it will offer custodian services for cryptocurrencies. Some crypto devotees are calling for Bitcoin to reach $500,000, anticipating a long-awaited embrace by institutional investors. Others think there is a risk that Bitcoin is little more than a passing fad. A recent UBS research note argued that "there is little to stop a cryptocurrency's price from going to zero when a better designed version is launched or if regulatory changes stifle sentiment," pointing to the analogy of Netscape and Myspace as "...examples of network applications at that enjoyed widespread popularity but eventually disappeared."
Feb 12, 2021, 09:04 UTC
The dollar has firmed up amid a risk-wary sentiment in global markets, which has seen world equity markets settle lower from record highs. At the same time, market conditions have been thinned by the lunar new year holidays in China and some other Asian nations. The DXY dollar index, after tumbling in three of the last four days, found a footing and lifted to a three-day high at 90.67. The index has been trading without sustained direction for nearly two months now, having recovered out of the 35-month low that was seen in early January at 89.21. EUR-USD has edged out a three-day low at 1.2097, while USD-JPY lifted above 105.00 as Cable traded below 1.3800 for the first time since Tuesday. The dollar bloc currencies, naturally, underperformed amid the risk-off positioning. Bigger picture, the reflation trade seems more likely to revive and sustain than not, given the precipitous decline in the rate of new positive Covid test outcomes worldwide (including South Africa, despite the supposed hyper-transmissibility of the dominant SARS-Cov2 variant there), vaccine rollout, stimulus, and prospects for a lockdown-saving fuelled consumer spending spree in developed economies as and when societal restrictions are lifted. This translates as a weaker dollar call, which remains richly valued by historical trade-weighted standards. Elsewhere, Bitcoin hit yet another record high earlier, this time at $48,945, after BNY Mellon said it will offer custodian services for cryptocurrencies. Some crypto devotees are calling for Bitcoin to reach $500,000, anticipating a long-awaited embrace by institutional investors. Others think there is a risk that Bitcoin is little more than a passing fad. A recent UBS research note argued that "there is little to stop a cryptocurrency's price from going to zero when a better designed version is launched or if regulatory changes stifle sentiment," pointing to the analogy of Netscape and Myspace as "...examples of network applications at that enjoyed widespread popularity but eventually disappeared."
Feb 12, 2021, 11:53 UTC
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