Forex

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  • Inflation Print Gives Support to USDOLLAR

    Initial jobless claims came in at 205K, slighter higher than the 200K expected, and were constant week over week. At the same time, core durable goods and core PCE were released, with both numbers beating consensus. Core durable goods m/m printed at 0.8% (0.6% - forecast) and core PCE m/m was 0.5% (0.4% - forecast). The dollar has been under pressure this week, but these provided some support. FXCM's USDOLLAR…

  • USDOLLAR’s Low Volatility May Be The “Calm Before The Storm”

    USDOLLAR Trading Range FXCM's USDOLLAR basket has been moving sideways since the end of November (blue rectangle). Moving averages are trend-following indicators and are inclined to give whipsaw signals when the price is ranging (aqua ellipses). We note that the quicker green moving average has just crossed above the intermediate orange moving average (blue arrow). This aligns the moving averages bullishly, and if they develop angle and separation will be…

  • Short-Term USDOLLAR/Gold Relative Strength Analysis

    The top chart below shows the H4 relative strength ratio between FXCM's USDOLLAR basket and gold (XAUUSD). The ratio started to fall last week Wednesday (blue dashed vertical). I.e., the greenback was declining against the precious metal. The catalyst here was the spread of the omicron variant, and gold's regard as a safe haven. We do note that the EMAs and stochastic are rolling over (red ellipses), which may suggest…

  • Turkish Systemic Risk Likely Higher After “Deposit Guarantee” Announcement

    The Turkish lira strengthened by as much as 15% after President Erdogan announced a plan to guarantee local deposits against market volatility. Accordingly, the government will pay the difference between the value of savings in lira and equivalent dollar deposits. The market has been heavily short lira, and the jump in value is likely a short squeeze. Moreover, the weekly chart's overbought condition has now been normalised (blue rectangle). The…

  • Turkish Lira Capitulation As Bizarre Monetary Policy Implemented

    The Turkish lira dropped to record lows against the dollar after its central bank lowered its repo rate by 100bps to 14% yesterday. This is despite an inflation rate that has surged in 2021 to above 17%. Moreover, the inflation rate has ticked up in recent months after the bizarre implementation of monetary policy, which flies in the face of traditional economic theory. The weekly chart below displays the capitulation…

  • Gold vs Dollar Relative Strength Analysis

    As we head into the next tightening cycle, it is informative to consider the relationship between the dollar and gold. To this end, below is the weekly relative strength chart of FXCM's USDOLLAR basket and our XAUUSD instrument. The chart has a cyclical component to it. Between 2011-2013, the ratio formed a base or accumulation pattern (first green rectangle). When this completed, the greenback appreciated against the precious metal in…

  • USDOLLAR Subdued As We Head Towards FOMC Release

    The dollar's momentum has slowed as we head towards the FOMC statement release tomorrow (15 December) at 7:00 pm GMT. This is to be expected, as the tone of the statement will be a key focal point for market participants. However, December has been a less volatile month for the greenback. At the time of writing the December range of FXCM's USDOLLAR basket is only about 35% of November's range.…

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