 Dollar's selloff continues as markets enter into US session. It's clear that Democrats have regained control of the House while Republicans retained control of Senate. The reactions in the financial markets are not too straightforward. Stocks are cheering the results as futures point to triple digit gain in DOW at open. Yet Dollar is under broad based selling pressure even though weakness is relatively limited so far. We'd view the slight decline is US treasury yields as the link between them. 10-year yield is currently down -0.12 at 3.203. One explanation is that it's hard for Trump's administration to push through aggressive fiscal stimulus, thus reduce the risks of worsening debt. Hence, lower yields are welcomed by stocks but pressure the greenback. Nevertheless, for such a big event, it takes a bit more time to see which sides the investors would take. Staying in the currency markets, Yen is the second weakest ones on return of risk appetite. Sterling is the third weakest as this week's rally lost momentum, on lack of progress of any kind in Brexit negotiation. Australian Dollar is the strongest one, followed by New Zealand Dollar. The latter was boosted by strong job data which raise the chance of RBNZ turning less dovish in the upcoming rate decision. Swiss Franc is the third strongest. In other markets, FTSE is currently up 1.29%, DAX up 0.86%, CAC up 1.25%. German 10 year yield rises notably by 0.0161 to 0.453. Italian 10 year yield drops -0.0575 to 3.355. Asian stocks were mixed with Nikkei closed down -0.28% at 22085.80. China Shanghai SSE dropped -0.68% to 2641.34. But Hong Kong HSI and Singapore Strait Times rose 0.10% and 0.15% respectively. Gold edged higher to 1236.60 earlier today but it's now back pressing 1230 handle. Technically, there are a couple of developments to watch in US session. Firstly, break of 0.7314 key resistance in AUD/USD will be would confirm medium term bullish reversal. EUR/AUD is pressing 1.5742 support now and firm break will resume recent decline from 1.6357. EUR/JPY will likely have a take on 130.20 resistance and break there will indicate near term reversal too. | 
No comments:
Post a Comment