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Forex today: Dollar breaths and sends FX into a chop in a risk-on environment

  • Forex today witnessed a slight bid in the greenback as the markets breath into the final session for the week, albeit casting a less bearish case for the dollar in the near term.

The greenback was travelling from the 95 the figure in the DXY to a high of 95.62 in a move that started in late Asia and accelerated after the dovish-leaning ECB minutes when the euro gave back some of its firmer tone of late. 

"The ECB minutes of the December meeting noted that the Governing Council’s decision to wrap up its asset purchase program was unanimous. But a new targeted longer-term refinancing operation (TLTRO) was tabled by some governing council members (which would provide banks with new multi-year loans). If implemented, this would introduce additional monetary stimulus and help banks meet their multi-year funding requirements. With some members looking to describe risks as “tilted to the downside” this option is likely to remain on the table for discussion in the month ahead," analysts at ANZ explained. Elsewhere, Fed Chairman Powell’s speech to the Economic Club of Washington where he reiterated the “waiting and watching, patient and flexible” message did little to move markets that were already well accustomed to the rhetoric. 

Currency action

There was some life in USD/CHF with the Swissy extending losses that started in Asia from below 0.9720 to enter early Asia today at 0.9849. The SNB revealed a 15-billion franc loss last year as the global stock market rout and a rallying franc took a toll. EUR/USD caved in Asia as well and slid from 1.1570 to a low of 1.1485 in NY, supported at the 21 4hr SMA, closing NY at 1.15 the figure. Cable was lively in a chop as traders sit on the sidelines waiting for the Brexit meaningful parliamentary vote. Cable travelled between 1.2728 and 1.2781, ending the session at 1.2752. The yen dropped in a risk-on environment, and USD/JPY rallied from the 107.70s to a high of 108.52. AUD/USD battled the strength in the greenback in a bullish chop between the 0.7170s and to a touch below the 0.78 handle, closing NY at 0.7186.

Key notes from US session: 

  • NZD/USD: Bulls need to get over the 200-D SMA

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