Market Overview

Canadian Dollar drops sharply in early US session after terrible weak retail sales data. Headline retail sales dropped -0.8% mom in December versus expectation of -0.1%. Ex-auto sales were even worse by dropping -1.8% mom, versus expectation of 0.0%. On the other hand, Dollar continues to struggle to extend post FOMC minutes gains despite solid job data. Initial jobless claims dropped -7k to 222k in the week ended February 17. Continuing claims dropped -73k to 1.88m in the week ended February 10. USD/CAD jumps after the releases and is on course towards 1.29 near term resistance zone. However, Dollar is staying below near term resistance against other major currencies, thus, maintaining bearish outlook.

Dollar jumps overnight after hawkish FOMC minutes and remains the strongest one for the week. Nonetheless, the greenback is paring some gains in Asian session. And it's still limited below key near term resistance against most major currencies, except versus Canadian Dollar. Markets sentiment have shifted much since the start of the year. Back then, most doubted whether Fed would really hike three times this year. After a string of solid data and yesterday's minutes, traders are now talking whether Fed could hike more than four times. US treasury jumped on such expectations while stocks reversed some of recent rebound. DOW ended the day down -0.67% at 2479.78. For now, it remains to be seen whether Dollar would finally re-couple with yields.

Dollar stays firm and is trading broadly higher going into US session. FOMC minutes will be closely watched later in the session. But it's unsure how much boost the hawkish Fed could give Dollar. For the moment, the greenback is staying below near term trend definite resistance against all other major currencies despite this week's rebound. That is, Dollar remains in down trend and the rebound is viewed as a correction only. Elsewhere in the currency markets, Sterling is trading broadly lower as job data showed first rise in unemployment rate since 2016. Wage growth met expectation but stayed below inflation.

Dollar's rebound extends further in Asian session today. Momentum is starting to looking promising. But technically, there is still no confirmation of reversal yet. At the time of writing, EUR/USD is held well above 1.2205 key near term support. USD/JPY stays below 108.27 near term resistance. The greenback will look further to FOMC minutes to be released later today. Elsewhere in the currency markets, Euro and Sterling are following Dollar as the strongest ones for today. Aussie and Yen are broadly lower.

Dollar rebounds further today as US markets are returning from holiday. Mild strength is seen in US yields with 10 year yield back pressing 2.9 handle. DOW futures point to triple digit loss at open. In the currency markets, Dollar is leading the way higher, followed by Sterling for today. Swiss Franc and Yen are trading as the weakest ones. Technically, there is generally no change in outlook as most pairs are bounded in range. In particular, EUR/USD is held above 1.2205 support while USD/JPY is well below 108.27 resistance. Dollar remains bearish in spite of the rebound.

Dollar trades mildly higher today as risk markets are back on the defensive side. Yen is trading as the weakest one so far even though Nikkei is down -0.9% at the time of writing. Swiss Franc and Kiwi follows closely. Notable strength is seen in Aussie after RBA minutes showed neutral stance. Major forex pairs are crosses are generally stuck in range. Nonetheless, the dip in EUR/AUD is seen as a early sign of near term reversal and will be closely watched.

Commodity currencies are trading generally higher in Asian session, following the rebound in Asian stocks. Meanwhile, weakness is seen in Dollar, Yen and Swiss Franc. But after all, most pairs are confined by Friday's range. The economic calendar is light today, also with US on holiday. So, trading will likely be subdued. Nonetheless, the week ahead if packed with some important events, including minutes of RBA, Fed and ECB meeting. The forex markets will come back to life for certain.

Dollar's broad based weakness continued last week and ended as the worst performing major currency. Stronger than expected consumer inflation reading listed treasury yield and raised the chance of a March Fed hike. Fed fund futures are now pricing in 83% chance of a March hike. But that provided just very brief support to the greenback. Dollar index extended the long term down trend to new three year low, suffering the worst weekly decline since September. Some pointed to Friday's rebound as a sign of reverse in fortune in Dollar. But we'll, for now, take a more cautious stance on it first. Elsewhere, Canadian Dollar and Australian Dollar ended as the second and third weakest ones. Yen, Kiwi and Pound were the strongest.

After initial selloff, dollar regains some growth in early US session. Nonetheless, that's more about pre-weekend profit taking. The greenback is still trading as the weakest one for the week, followed by the Loonie. Yen continues to trade as the strongest one and is picking up some momentum against Europeans. Released from US, housing starts rose to 1.33m annualized rate in January, building permits rose to 1.40m. Import price index rose 1.0% mom in January. Canada manufacturing sales dropped -0.3% mom in December. International securities transactions dropped CAD -1.97b in December. Released earlier, UK retail sales dropped -0.3% mom in December.

Dollar suffers renewed selloff in Asian session with EUR/USD finally taking out 1.2537 near term resistance. The development could trigger more broad based weakness in the greenback before the weekly close. Elsewhere in the currency markets, Yen remains the strongest one for the week after Haruhiko Kuroda's nomination as BoJ Governor again is finally confirmed. Euro is trading as the second strongest for the week and that helps keep EUR/JPY resilient above 132 handle. Dollar and Canadian Dollar are the two weakest ones. Aussie closely follow as the third weakest after RBA Governor Philip Lowe reiterated the neutral stance.

Dollar remains the weakest one and is under broad based selling pressure. Mixed economic data from the US provides little support to the greenback. Headline PPI rose 0.4% mom, 2.7% yoy in January, versus expectation of 0.4% mom, 2.5% yoy. Core PPI rose 0.4% mom, 2.2% yoy, versus expectation of 0.2% mom, 2.1% yoy. Empire state manufacturing index dropped to 13.1 in February, below expectation of 18.0. Philly Fed survey rose to 25.8, above expectation of 21.6. Initial jobless claims rose 7k to 230k in the week ended February 10. 1.2537 is a key level to watch in EUR/USD today.

The moves triggered by stronger than expected CPI in the US proved to be short lived. DOW opened lower overnight to 24490.36 but quickly reversed. Eventually it ended up 1.03% at 24893.49. S&P 500 and NASDAQ also closed up 1.34% and 1.86% respectively. Dollar initially gained after the release but also reversed quickly. More importantly, it now looks like the greenback is ready to resume it's broad based down trend. Staying in the currency markets, Yen is trading as the strongest one for the week on revived speculations of stimulus exit. That's followed by Kiwi and then Euro. The only move that was persistent was the rally in treasury yields with 10 year yield closing up 0.073 to 2.913, resuming recent up trend towards 3.036 key resistance.

Dollar jumps notably in early US session after stronger than expected inflation data. Headline CPI jumped 0.5% mom in January, above expectation of 0.3% mom. Annual rate of CPI was unchanged at 2.1% yoy, above expectation of 1.9% yoy. Core CPI rose 0.3% mom, above expectation of 0.2% mom. Annually, core CPI was unchanged at 1.8%, above expectation of 1.7%. The set of inflation does nothing to alter expectation of a Fed hike in March. More importantly, the resilience in annual reading is raising the chance of three or four hikes this year. Retail sales were disappointing but markets paid little attention. Headline sales dropped -0.3% while ex0auto sales was flat in January.

Yen continues to trade higher in calm markets. DOW closed up 0.16% at 24640.45 overnight as consolidation continued. Nikkei also opened higher initial trading but turns flat since then. Hong Kong HSI is up 0.75% in thin trading ahead of lunar new year holidays. While USD/JPY dip extended recent decline, EUR/JPY and GBP/JPY are held by the temporary lows established earlier. The greenback remains one of the weakest and will look into CPI and retail sales from US today for inspirations.

Yen and Swiss Franc jump broadly today as the recovery in global stock markets lose steam again. At the time of writing, both DAX and CAC 40 are trading in red even though FTSE is mildly higher. That followed -0.65% decline in Nikkei earlier in the day. US futures also point to another day of loss. Sterling follows as the third strongest one for the day after higher than expected consumer inflation reading. On the hand, commodity currencies, and Dollar, are trading generally lower.

Australian Dollar is lifted mildly today by business condition and confidence data and is trading broadly higher. Nonetheless, the forex markets are generally stuck in consolidation mode. Risk markets further stabilized overnight with DOW closed up 410 pts, or 1.7%, at 24601, responded positively to US President Donald Trump's infrastructure plan. Japan Nikkei follow is s trading up 0.8% at the time of writing. The economic calendar remains rather light today. UK inflation data, in particular CPI, will be the focus.

Global markets are generally in recovery mode today. European indices are all in black at the time of writing. US futures also point to higher open as markets await Trump's infrastructure plan. Major forex pairs and crosses are staying gin Friday's range, except AUD/NZD. But it should be noted that the retreats in Dollar and Yen are shallow and weak so far. There could be renew interests in these two currencies if risk sentiments turn sour again later in US session.

The Asian markets are rather quiet with Japan on holiday. Dollar and Yen are paring back some of last week's gains. Meanwhile, Euro and Aussie are recovering. It now looks like EUR/USD is holding on to 1.2222 key support for the moment. Elsewhere in the Asian Pacific markets are steadily mixed with Hong Kong HSI trading up 1%, South Korea KOPSI up 1.1%, China SSE down -1.3% at the time of writing. The economic calendar is light today, with Swiss CPI as the main feature. Speeches of UK MPC member Ian McCafferty and Gertjan Vlieghe will catch some attention.

Japanese Yen ended as the strongest major currency last week as selloff in global stock markets intensified. Dollar followed closely as the second strongest. Sterling, however, ended as the weakest one despite hawkish BoE announcement which hinted at earlier and faster rate hikes. Euro followed as the second weakest while Aussie was the third weakest. DOW recorded two of the largest single day point drops over the week. And two days of more than 1000 pts decline was definitely historic. Judging from the technical pictures of DOW, FTSE and DAX, while the corrections are not finished, they would enter into "buy zone" of traditional medium term corrections on next fall. That is, we could see the selling recedes soon. However, we'd like to point out a big risk ahead, China stocks, that could make these global selloffs long term corrections.

Sterling tumbles sharply today after EU Brexit negotiator Michel Barnier warned that a transition deal is "not a given". That came as Barnier concludes the week long technical discussion between civil servants of UK and EU. And he pointed out there are three "substantial" disagreements remained over the transition period. Firstly, UK wants the rights of EU citizens coming in during the transition period to be different from those who come in before. Secondly, UK wants to retain the right to object to new EU laws during the period. Thirdly, it's uncertain how UK could have a role in new EU justice and home affairs policies during the transition.