The US dollar holds its overnight gains

The US dollar remained strong overnight, with losses against the euro offset by gains against Asian and Commonwealth currencies. Rising US yields and flows to safe havens continue to support the greenback, as do commodity prices, most of which are denominated in US dollars. That left the dollar index trading sideways, slipping 0.16% to 99.08, falling slightly to 99.05 in Asia. Only a drop to 98.50 would alter the underlying bullish outlook for the US Dollar.

Euro rises as Europe refuses to follow US energy ban

EUR/USD staged an overnight relief rally as Europe refused to follow the lead of US energy sanctions and gas prices in Europe fell. It rebounded 0.37% to 1.0895, rising to 1.0910 in Asia. Once again, sentiment remains fragile and although it remains technically oversold, the 1.1000 region will challenge resistance. The UK followed the US sanctions to some extent, capping GBP/USD overnight. It was unchanged at 1.3110, where it remains in Asia, with resistance at 1.3150. USD/JPY rose to 115.85 as US yields rose overnight.

AUD and NZD fell once again overnight as tensions in the commodities sector temporarily eased, nickel aside. AUD/USD ended down 0.60% at 0.7270, closing below support at 0.7300. NZD/USD fell 0.30% to 0.68o5, just above support at 0.6800. After posting strong gains in recent weeks as commodities rallied, the Antipodes now remain more vulnerable to risk aversion flows.

The onshore and offshore Chinese Yuan fixation is virtually unchanged over the past 24 hours, trading at 6.3170 and 6.3220 respectively in Asia. USD/Yuan remains anchored below 6.3300 as safe-haven entries cap any yuan weakness. Given the rise in commodities, the authorities are likely content to leave the yuan’s strength untouched. Elsewhere, regional Asian currencies traded mostly sideways overnight as the US dollar consolidated its gains.

This article is for general information purposes only. It is not investment advice or a solution for buying or selling securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for everyone. You could lose all your deposited funds.

With over 30 years of experience in the foreign exchange market – from spot/margin trading and NDFs to currency options and futures – Jeffrey Halley is OANDA’s Senior Market Analyst for Asia -Pacific, responsible for providing timely and relevant macroeconomic analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia, as well as prominent print publications including the New York Times and The Wall. Street newspaper, among others. He was born in New Zealand and holds an MBA from Cass Business School.

Jeffrey Halley
Jeffrey Halley

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