US dollar range-bound

Currency markets swing back into range-trading mode

The waning vaccine momentum saw the US dollar continue to recoup its losses from earlier in the week. The US dollar index was almost unchanged at 93.00, with the rise in the euro overnight blocking DXY gains. The US dollar did record decent gains versus the Canadian and Australian dollars.

The British pound also retreated and has now fallen from 1.3300 to 1.3100 over the past two sessions. It seems to have run out of Brexit steam at 1.3300. It is now in danger of breaking support at 1.3090 as Brexit talks remain at an impasse. The USD/JPY is also threatening support at 104.80, highlighting the waning vaccine momentum.

Asian currencies continue to outperform, and mostly remain near multi-month highs, with dollar strength overnight only moving them to the middle of their one-week ranges. In the absence of other factors, the yield differential enjoyed by China, the Philippines and Malaysia will ensure they remain firm. Strengthening that view is that neither the PBOC nor BSP are likely to cut rates next week.

The Indonesian rupiah has outperformed this week, with its preponderance of primary industries being a boon for once. USD/IDR fell from 14,700 to nearly 14,000 yesterday, before rising to 14,170 this morning. The rupiah is still holding onto most of its gains and is well placed to outperform the rest of Asia, if we get more positive news from other vaccine providers in the weeks ahead.

Currency markets are almost unchanged in Asia today, with only some profit-taking pressure on the New Zealand dollar evident. Otherwise, currency markets appear content to range-trade into Europe. With a lack of tier-1 data to change the equation, the harsh realities of Covid-19’s second wave across Europe and the US will likely hamper any upward movement on Friday.

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.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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