Market Overview

Dollar ended the week broadly and deeply lower as recent selloff intensified. It should be noted again that the current fall is the continuation of the down trend that started back in January 2017, that is, since US President Donald Trump took office. And that happened despite Fed's three rate hikes last year. DOW gained more than 30% in the period. 10 year yield struggled in most of 2017 but finally surged through a key resistance level at 2.621. Data released during the period showed solid underlying momentum in the economy, except sluggish inflation. Even though Q4 GDP missed expectation, 2.6% annualized growth is still respectable. Fed is more on track for three hikes this year, starting March.

Dollar stays steadily in range in early US session after mixed economic data. Q4 GDP showed only 2.6% qoq growth, missing expectation of 3.0% qoq. Though, GDP price index rose 2.4%, above expectation of 1.3%. Headline durable goods orders rose 2.9% in December, well above expectation of 0.9%. Ex-transport orders rose 0.6%, inline with consensus. Trade deficit widened to USD -71.6b in December. Wholesale inventories rose 0.2% mom in December.

After being pressured for most of the week, Dollar is trying to stabilize after US President Donald Trump said he wants a strong Dollar. But so far, there is little sign of sustainable rebound yet. The greenback is still vulnerable to another selloff. The key to whether Dollar could reverse recent fortune might lie in Q4 GDP. Sterling remains one of the strongest one this week and will also look into UK GDP for more strengthen. Euro jumped overnight after ECB President Mario Draghi's comment but there was no follow through buying.

Euro surges as being boosted by ECB President Mario Draghi's comment. In his remarks, Draghi said that "incoming information confirms a robust pace of economic expansion, which accelerated more than expected in the second half of 2017." And, "the strong cyclical momentum, the ongoing reduction of economic slack and increasing capacity utilisation strengthen further our confidence that inflation will converge towards our inflation aim of below, but close to, 2%".

Dollar stays weak in Asian session as the broad based selloff is extending. Dollar index broke 90 handle for the first time in more than three years after US Treasury Secretary Steven Mnuchin's comment that a weak dollar is good for trade. One explanation for recent weakness of the greenback is that global central banks would be starting to follow Fed's path of tightening. And that kept Dollar soft ahead of this week's BoJ and ECB meeting. However, the downside acceleration since Mnuchin's comments could now be taking the selloff to another level. In particular, markets would be looking forward to comments from ECB president Mario Draghi in the post meeting press conference. Any hawkish flavor in Draghi's message could prompt another round of sell-off in Dollar.

Dollar's broad based selloff resumes today as traders hit the accelerator. The key factors behind are improving economic outlook in other major economies. At the same time US Treasury Mnuchin's backing of a weaker dollar is triggering the acceleration. While economic data from Eurozone continued to be solid, it's following Dollar as the second weakest one. Sterling emerges as the strongest one today as data suggest faster wage growth. Aussie and Kiwi come as second and third.

Japanese Yen trades broadly higher today as supported by upbeat economic data. In particular, USD/JPY has now taken out 110.18 support (last week's low). Recent fallcould be extending towards next key support level at 107.31. Dollar is again back under pressure with weakness most notable against Sterling. In other markets, Nikkei is trading in red by -0.6% at the time of writing. That followed mixed US markets. S&P 500 and NASDAQ extended the record runs but DOW closed flat.

Yen continues today trade as the strongest major currency today as supported by relatively more upbeat BoJ. Dollar is also trying to rebound, in particular against Aussie but is outshone by both Yen and Swiss Franc. Confidence data from Germany is very upbeat but provides little support to Euro. Traders are getting a bit more cautious ahead of ECB rate decision and press conference on Thursday. Meanwhile, Aussie is trading as the weakest one on concern of more weakest in iron ore prices ahead..

Yen spikes higher after BoJ turned slightly optimistic over the country's inflation outlook. But there is no follow through buying seen. USD/JPY is kept in middle of range of 110.18/114.17. Dollar also recovers mildly after US government reopens. But overall, the greenback is staying in near term down trend against all major currencies. In other markets, risk appetite stays strong. DOW hit another record by gaining 0.55% to 26214.60. S&P 500 and NASDAQ were even stronger, closed up 0.81% and 0.98% at record highs. 10 year yield extended recent rally by rising 0.028 to 2.665. A take on 3% handle is now having realistic possibility.

Dollar trades broadly lower today as the shutdown of US government extends into the third day. But loss is limited as it's held above Friday's low. Reactions in other financial markets are also muted. Euro is getting some support from positive political news from Germany, as well as an upbeat Bundesbank monthly report. But Sterling, Aussie and Kiwi are trading firmer. In particular, EUR/GBP dips through last week low and could be accelerating towards recent low at 0.8688.

Market reactions to the US government shutdown is rather muted. Dollar is trading generally lower today but is held within Friday's range. Asian markets are pretty steady with Nikkei trading down just -0.14% at the time of writing. The Senate was in session yesterday but failed to deliver any breakthrough. The shutdown is extending into its third day and there is no sign of a resolution in the Senate yet. A procedural vote is expected at noon today. But there are unlikely enough votes to pass the bill to keep government running through February 8. For forex traders there are so many key events ahead in the week that they couldn't care less regarding the government shut down.

Dollar ended the week broadly lower, except versus Canadian Dollar. The Loonie was pressured after the "dovish" BoC rate hike which indicates cautiousness of next move. On the background, there was also a lot of uncertainty surrounding NAFTA renegotiation. Euro and Yen followed closely as the third and fourth weakest, ahead of BoJ and ECB meeting. On the other hand, Sterling ended as the strongest one as markets are increasing optimistic on the Brexit deal. Indeed, businessmen and investors could be starting to prepare for a smooth Brexit transition. Australian Dollar followed as the second strongest as solid job data boosts the chance of a rate hike in the second half of the year.

Dollar is trying to recover again as markets are heading for weekly close. But the greenback is overwhelmed by the rebound in Yen. There was some concerns over US government shut down. But with the spending bill passed in the House already, vote in the Senate should be...

Sterling continues to trade as the strongest major currency for the week. Fundamentally, focus will turn to retail sales data to be published today. Technically, GBP/USD should have already taken out 1.3835 key resistance. GBP/JPY also broken 153.66 near term resistance for rally resumption. The next to be watched is 0.8688 support in EUR/GBP, which is still a bit far away from the current 0.8810 level.

Sterling trades notably high against Dollar and Yen today on more optimism over Brexit. GBP/USD reaches as high as 1.3942 so far and looks set to take out 1.3835 key resistance decisively. That would carry long term bullish implications. But for now, Euro and Swiss Franc are trading as the strongest ones for today. There is no change in Dollar's fate for the moment as its rebound again lacks follow through momentum. The greenback is weighed down by talks of global diversifications away from Dollar assets, including China and others. And Euro is an important destination of the funds.

Trading in the forex markets remain rather dull today. Dollar's recovery overnight again lack conviction. Nonetheless, USD/JPY does seem to have bottomed out, but that's mainly thanks to Yen's weakness. Canadian Dollar is bounded in range after the highly anticipated BoC rate hike. Traders are holding their bet on the Loonie after cautious tone of BoC. Sterling spiked higher through 1.3835 key resistance but there was no follow through buying. It'll take a little more time to see if that's bull trap. Australian Dollar doesn't get any lift by strong job data and is staying in consolidation.

Euro is trading generally lower today after some ECB officials expressed concerns over its recent appreciation against Dollar. The greenback is also trying to gain some footing as the steep broad based selloff is exhausted. But for the momentum, there is no confirmation of a turnaround in Dollar yet. At least, Dollar's recovery today is overwhelmed by the strength in Aussie and Kiwi. Canadian Dollar, on the other hand, remains in tight range as traders await BoC rate decision cautiously.

While the forex markets remained generally steady, stock traders experienced a roller coaster ride overnight. DOW surged in initial trading to as high as 26086.12 (up 283 pts) but reversed gain and closed down -0.04% at 25792.86. That's the biggest single day reversal since February 2016. Similarly, S&P 500 surged to 2807.54 but closed down -0.35%. 10 year yield was relatively steady, closed down just -0.008 at 2.544. TNX is still struggling to have the momentum to get through 2.621 key resistance. A factor is the concerns over government shutdown in the US. The Congress will need to pass a spending bill by the end of this week to avoid the shutdown and it's seen as a risk by many traders

The forex markets are generally trading within yesterday's range today as markets turn into consolidation mode. Dollar is trying to pare back some losses but there is no indication of bottoming yet. The greenback remains the weakest major currency for the week so far. Commodity currencies, in particular Aussie, stays strong. Elsewhere, markets are also in general risk seeking mode. At the time of writing, German DAX is up 0.95%, French CAC 40 is up 0.28%. FTSE 100 is nearly flat, though. US futures point to sharply higher open as markets come back from bank holiday. DOW would extend recent record run and would likely take on 26000 handle.

Dollar is mildly higher in Asian session, as it turns into consolidation after recent steep selloff. Among the mostly traded currencies, Australian Dollar is trading as the strongest one. That's partly supported by strength in China as the Shanghai SSE composite index, trading at 3420, is close to 2017 high at 3450. And break there will push the index into highest level since 2015. Meanwhile, Hong Kong HSI, as a proxy to China, is also close to the record high at 31958 made 10 years ago. Euro is trading as the second strongest as supported by hawkish comments from ECB officials. It seems now, after last week's December meeting minutes, ECB policymakers are starting to sing a chorus of ending asset purchases after September. As for today, UK inflation data will be a key event to watch.