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Dollar loses traction as markets remain choppy

This is what you need to know to trade today friday march 25:

The US dollar index DXY pulls back early on Friday after closing the previous two days in positive territory as markets remain choppy as they assess the latest geopolitical developments. The Institute Ifo to release business sentiment data for Germany later in the session and the US economic calendar will feature pending home sales data for February and the Final Index of Consumer Sentiment from the University of Michigan for March. Several FOMC policymakers, including New York Fed President John Williams and Fed Governor Christopher Waller, will also deliver speeches ahead of the weekend.

US President Joe Biden said late on Thursday that he believes Russia should be withdrawn from the G20. Biden further noted that they were coordinating with the G7 and the European Union on food and energy security. Risky money flows continued to dominate financial markets, with the S&P 500 rising more than 1%. At the start of the European session, US stock index futures are up 0.2%.

Meanwhile, the benchmark 10-year US Treasury yield is slipping after gaining more than 3% on Thursday. Chicago Fed President Charles Evans said a 50 basis point rate hike could help them move rates close to neutral. Separately, Minneapolis Fed President Neil Kashkari has signaled that he is targeting seven rate hikes by 2022.

The EUR/USD closed largely unchanged on Thursday and is now trading with small daily gains above 1.1000, supported by modest selling pressure around the US dollar.

The GBP/USD started rising during the Asian session on Friday and seems to have stabilized above 1.3200. Data released by the UK Office for National Statistics showed on Friday that retail sales contracted 0.3% mom in Februarycompared to the market expectation of a 0.6% increase.

Driven by rising US T-bond yields, the USD/JPY extended its impressive rally and surged to its highest level since December 2015 at 122.42 late on Thursday. The pair is trading in negative territory below 122.00 early Friday. Commenting on the increased volatility, “I don’t think the weak yen reflects the erosion of market confidence in the value of the yenBank of Japan Governor Haruhiko Kuroda said. “The market view is that the yen’s weakness is due to Japanese importers’ demand for dollars and the prospect of rising US interest rates.”

The gold ignored Thursday’s rise in yields and reached its highest level in 10 days above $1,960. XAU/USD is consolidating its recovery gains at the start of the European session on Friday and remains afloat above $1,950.

The Bitcoin it continues to move higher towards $45,000 after closing the last three days in positive territory and gaining almost 7% in that period. Reflecting the optimistic mood around cryptocurrencies, the ethereum it is trading at its highest level in over a month near $3,100.

Source: Fx Street

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