US dollar swings both ways US dollar swings both ways US dollar swings both ways

US dollar swings both ways

Macro 4 minutes to read
MO
Michael O’Neill

FX Trader, Loonieviews.net

Summary:  The US dollar is directionally challenged when it comes to the big three major currencies, while the euro has been chilled by a new blast of ECB dovishness.


USDJPY has bounced between 109.60 and 112.00 since the middle of February on the back of continually shifting risk sentiment. EURUSD has been in a 1.1200-1.1500 during the same period. The single currency was unable to sustain upward momentum after the dovish Federal Open Market Committee meeting, and European Central Bank President Mario Draghi reclaimed the dovish mantle this morning. Previously, the ECB suggested that Eurozone interest rates would rise around the end of the summer. Today, Draghi warned that expected rate hikes could be delayed. EURUSD has traded with a negative bias since then.

That isn’t the case for the commodity currency bloc. The Australian, New Zealand and Canadian dollars are on a one-way street lower. The Reserve Bank of New Zealand telegraphed a potential rate cut, in part because of a strong currency, trashing NZDUSD, and knocking CAD and AUD for a loop.

Further weakness in US Treasury yields, renewed recession chatter and a lack of progress with the China/US trade talks will continue to underpin the US dollar as a safe-haven currency and undermine the commodity bloc currencies. NZDUSD will target 0.6550 on a decisive break below 0.6740, AUDUSD has 0.6980 support in its sights while USDCAD is pointing at 1.3640.

Global growth concerns and recession fears sparked by falling US Treasury yields are making Wall Street nervous. The Dow Jones Industrial Average (DJIA) and S&P 500 opened in the red but clawed their way back to unchanged within the first 45 minutes of trading. The Nasdaq is still in negative territory albeit modestly.

T
he US data wasn’t much of a factor. The trade data was reportedly distorted by tariff front-running.

Chart: Commodity currency bloc and WTIoil-15 minutes. Source: Saxo Bank

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


Business Hills Park – Building 4,
4th Floor, office 401, Dubai Hills Estate, P.O. Box 33641, Dubai, UAE

Contact Saxo

Select region

UAE
UAE

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.