market, video, forecast February 23, 2021 6:27 pm today
Cyclical rotation pushes USD down
a US USD found no solace inside higher longer-end bond yields overnight, likely because a move was mirrored to some extent among another developed market currencies. a greenback suffered as a cyclical rotation into global recovery positioning continued gaining momentum. a USD index fell 0.40% overnight, leaving it sitting on support at 90.00.
a euro, Japanese yen also Canadian dollars rose overnight, with a cyclical darlings, a Australian also New Zealand dollars booking 0.50% gains. a most notable gainer was a British pound which gained 0.50% to 1.4060 as a Prime Minister unveiled a reopening plan also vaccination progress continues impressively. GBP/USD broke through a top of its multi-month ascending wedge at 1.4000 overnight, targeting further gains above 1.4300. inside contrast to Europe’s bungled efforts, Britain’s vaccine progress saw EUR/GBP fall through 0.8670 overnight, also a cross now targets 0.8300 inside a coming weeks.
Major currencies are mostly unchanged inside Asia, with local markets content to wait for a Powell testimony this evening. a PBOC set a yuan fixing slightly firmer at 6.4516 this morning while adding 10 bio CNY of liquidity via a repo market. Net, a effects were neutral also left USD/CNY at 6.4580, almost unchanged from yesterday.
With a PBOC content to leave a US USD fixing on a firm side, activity inside regional Asian currencies remains muted. a Korean won, Singapore USD also Malaysian ringgit are around 0.10% higher, reflecting a USD weakness overnight. inside a bigger picture, regional Asian currencies remain content to range trade, awaiting China’s further direction.
Later inside a day, all eyes become become on Fed Chair Powell’s testimony before Congress. Expect every single word to dissected, looking for hints that a Fed may taper QE sooner than expected. Mr Powell become go out of his way, I am sure, to reiterate that a Fed has no plans to taper anytime soon also rightly so, as I dread to think what a taper-tantrum of a 2020s become look like.
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