Weekly FX Chartbook: Earnings and geopolitics to take the focus away from Powell

Weekly FX Chartbook: Earnings and geopolitics to take the focus away from Powell

Forex 5 minutes to read
Charu Chanana

Chief Investment Strategist

Summary:  Goldilocks continues, but dollar downside remains supported on US exceptionalism as we expected in the Q1 outlook. Geopolitical and earnings risks could take a bigger focus this week and keep the dollar supported, absent any significant dovish FOMC surprise. EUR’s underperformance could remain hard to reverse, and markets will be sensitive to a less hawkish BOE outcome or a miss in Aussie Q4 CPI.


Dollar the ended the week marginally higher as US exceptionalism continues, and EUR underperformed with markets not buying ECB's pushback to April cut hopes. NOK led the pack with over 6% gains in oil prices, while CHF still buoyed for now but SNB stance on watch.
Our FX Scorecard shows sterling starting to lose momentum into the BOE meeting this week, while positive shifts are seen for CAD and NOK.
Forex COT to the week of Jan 23 indicated further short-covering in dollar as speculative shorts were reduced by 41%. Speculators sold EUR and JPY by the most, while selling also continued in AUD, somewhat offset by longs being added to CAD.

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