With US markets closed for Presidents Day holiday, markets have done little more than moved sideways in soundless trade. With few news events to influence rates markets, it was a very dull day in the currency markets. While most assets classes were quiet but industrial metals prices soared with Iron ore showing the way trading to another multi-year high as the billet price rose three times during yesterday trading session.

Trader frustration is building as narrow trading ranges persist as contrasting market drivers confuse and the Trump headline effect is waning. While dealers spent the last few trading days sleepwalking, there are enough moving parts to keep things interesting, with  European risks smouldering and Fed  Minutes on tap as Fed watch is creeping back in the headlines.


EUR traded a little heavy, but with much ink spilt over the French elections, the Euro has held remarkably well, as traders donned their noise cancelling headphones, not wanting to get emotionally caught in EU political melodrama at this stage.  G-10 traders are struggling to find a near-term catalyst for US dollar strength. Given the divergent market drivers, Euro political risk, and tepid dollar demand,  I cannot help but think the current range-bound market will persist.

US Dollar

I sense a subtle shift from Trump headline drove risk, to a more Fed focus as the game of words should accelerate this week with the plethora of Fed speak leading up to the FOMC minutes release. However, if we are expecting the Feds to raise the March flag, you may be disappointed as it is doubtful the FOMC minutes will resolve any debate on the fuzzy  USD picture.  However, of concern to the dollar bulls is even after last week’s hawkish delivery the Greenback failed to rally significantly and could not even maintain it prior levels

Australian Dollar

The Australian dollar continues to trade constructively as it has done so since the last  China PPI print.Last week’s profit taking move lower has run its course, and the Aussie is ready to pounce on the 77 level after another stellar performance in Iron Ore prices yesterday.  With little new on offer from the RBA minutes although members did note downward pressure on inflation could be more persistent than assumed, other than an unlikely event of the Fed aggressively talking up the March rate hike, the Australian dollar should remain very much in play.However,  the pair needs to make progress above the .7800 barrier to gain any significant momentum.

Japanese Yen

Mired in the   112-115 range as dollar bulls grow increasing frustrated that the dollar can not make a convincing move to  115.0. With political angst brewing in Europe,  I suspect this will cap dollar upticks until greater clarity on US Fiscal and Tax policies emerges.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes