USD Daily Updates

09 January 2018

The US dollar is mixed this morning. The currency continues to make gains against the euro while selling off against the Australian dollar and the Japanese yen in particular. The US dollar index (a measure of the currency against its six most important peers) is currently flat. The euro is currently consolidating after strengthening to 1.20+ against the US dollar. The Japanese yen is stronger this morning after the Bank of Japan announced that it is tapering its purchases of long-dated government bonds. Given the market's sensitivity to tighter monetary policy, the yen strengthened as some believe the action is a prelude to ending the Bank's asset buying program. Overall, the US dollar remains weak thanks to strong global growth outside the US. Our short-term and medium-term trending indicators remain bearish.  

USD/JPY is down today and currently trading above 112.70. EUR/USD is flat and is trading above 1.1960. The pound is flat, and GBP/USD is currently above 1.3560. 

Looking at economic data this week, markets will be watching upcoming retail sales and inflation figures. On Tuesday we'll see JOLTS job openings. On Wednesday we'll see export and import prices. On Thursday, we'll get initial jobless claims and core PPI numbers. Friday is the most important day, and we'll see Core CPI, retail sales, and weekly earnings. Last week, nonfarm payrolls numbers missed expectations. 

Updated 
Short term outlook
Bearish

As the dollar weakens thanks to strong GDP growth outside the US, we are downgrading the dollar to bearish. Note that the currency is trading within a normal range in the short-term time frame. Our analysis is based on various technical indicators when looking at a daily chart of the US dollar index. 

Medium term outlook
Bearish

Following the holiday season sell-off, we are downgrading the US dollar to bearish. The currency is neither overbought nor oversold today, and trades within a normal range. This is based on technical indicators when looking at a weekly chart. 

Updated