DXY Extends Drop, CAD Outperforms; AUD, NZD, EMFX Edge Up

EUR, GBP Climb; USD/JPY Slides; Stocks Mixed; Big Week Ahead

Summary:

The Dollar Index (DXY), a popular gauge of the Greenback’s value against a basket of 6 major currencies, extended its drop to 103.40 (103.75) in thin holiday trade.

The Canadian Loonie outperformed. The USD/CAD pair slid 0.7% to 1.3615, just over one-month lows from 1.3640 in the previous session. Canada’s Annual September Retail Sales soared to 2.7% from a previous 1.7%, beating estimates at 2.0%.

Sterling (GBP/USD) rebounded to 1.2605 (1.2540). The Euro (EUR/USD) rallied to 1.0942 (1.0905). Germany’s IFO Business Climate rose in November, to 87.3 from 86.9 but missed forecasts at 87.5.

The Australian Dollar (AUD/USD) extended its gains to 0.6585 from 0.6560, near 3-month highs. The Kiwi (NZD/USD) rallied to 0.6085 (0.6045) on the back of the robust Aussie and risk-on sentiment.

Against the Yen, the US Dollar (USD/JPY) slid to 149.45 from 149.65 previously in subdued trade. The Greenback finished lower against the Asian and EMFX.

The USD/CNH pair (Dollar-Offshore Chinese Yuan) edged lower to 7.1475 against 7.1515 previously. USD/THB (Dollar-Thai Baht) finished little-changed, at 35.40 (35.43). USD/SGD dipped to 1.3405 from 1.3420.

Global bond yields rose. The US 10-year Treasury Bond Yield climbed to 4.47% (4.40%). Two-year US bond rates settled at 4.95% (4.90%). Germany’s 10-year Bund yield rose 3 basis points to 2,64%. Japan’s 10-year JGB yield soared to 0.76% (0.71%).

US Stock markets closed steady in the shortened Thanksgiving session. The DOW climbed 0.27% to 35,383 (35,287) while the S&P dipped to 4,557 from 4,560. Other global share markets were mixed.

The VIX Index, which gauges the US equity market volatility, fell to its lowest close since January 2020, to 12.46 down 2.7%. Growing expectations that central bank tightening measures are over with buoyed equities.

• AUD/USD – The Aussie Battler rallied against the overall weaker Greenback to an overnight high at 0.6591 before easing to close at 0.6588 (0.6560 Friday). Risk-on sentiment and a strong drop in Wall Street’s VIX “Fear” Index buoyed the Australian Dollar.
• USD/CAD – Against the Canadian Loonie, the Greenback slumped 0.7% to 1.3615 from 1.3640 previously. Robust Canadian Retail Sales data and a rebound in commodity prices boosted the Loonie. The overnight high traded in the North America session was 1.3711.
• EUR/USD – The shared currency extended its rally against the US Dollar, climbing to 1.0942 from 1.0905. A rise in Germany’s IFO Business Climate boosted the EUR/USD pair. The overnight high traded was at 1.0948 while the overnight low recorded was at 1.0895.
• USD/JPY – The Greenback settled lower against the Japanese Yen, settling at 149.45 against Friday’s open at 149.60. Trading was more subdued due to the US Thanksgiving holiday shortened trading week. The overnight high traded was 149.71 with the low at 149.20.

On the Lookout:

This week’s busy economic calendar kicks off today with Japan’s Services Producer Price Index (SPPI: y/y f/c 2.1% from 2.1% - Forex Factory).

China’s October Industrial Profits follow – (f/c -8.0% from -9.0% - ACY Finlogix). There are no other Asian economic data releases scheduled for today.

The UK kicks off European data with its UK CBI Distributive Trades for November (f/c -6 from 36 – ACY Finlogix).

France releases its Unemployment Benefit Trades for October (f/c 25.1K from a previous -15.4K ACY Finlogix).

The US starts off North America with its US October Building Permits (m/m f/c 1.487 million from 1.471 million – ACY Finlogix), US October New Home Sales (f/c 0.721 million from 0.759 million – ACY Finlogix), and US Dallas Fed November Manufacturing Index (f/c -17 from -19.2 – ACY Finlogix).

Trading Perspective:

The US Dollar eased anew against its Rivals after markets speculated that the Fed was done with its tightening measures.

Stocks closed steady while the VIX Fear Index slumped 2.7%. Risk currencies led by the Australian Dollar, extended their gains in thin trade due to the long US Thanksgiving weekend.

As we begin another week, the last in November, expect the Greenback to steady, with good support at recent lows versus its Rivals.

• AUD/USD – The Aussie Battler climbed for the second day running as the risk appetite rose amidst the market’s risk-on stance. On the day, look for immediate resistance at 0.6600 (overnight high traded was 0.6591). The next resistance level lies at 0.6630. On the downside, look for immediate support at 0.6550 (overnight low) followed by 0.6520. Look for the Aussie to consolidate in a likely range today between 0.6520-0.6590. Trade the range.
• USD/JPY – The US Dollar eased against the Yen, settling at 149.45 (149.60 Friday) in subdued end of week holiday trade. Look for immediate support to emerge at 149.20 (overnight low) followed by 148.90 today. Immediate resistance can be found at 149.70 (overnight high traded was 149.71). The next resistance level lies at 150.00 followed by 150.30. Likely range today: 149.20-149.90. Preference is to buy USD/JPY dips.
• EUR/USD – The share currency edged higher against the overall weaker US Dollar to 1.0942 at the New York close. Look for immediate resistance today at 1.0950 (overnight high traded was 1.0948). The next resistance level is found at 1.0980 followed by 1.1010. Immediate support can be found at 1.0920 followed by 1.0890. Look for consolidation in the Euro today, likely between 1.0910-1.0990. Prefer to sell rallies today.
• USD/CAD – With the Canadian Loonie outperforming, we look at today’s opportunities. The Greenback has support at 1.3590 (overnight low traded was 1.3594). The next support level is found at 1.3560. On the topside immediate resistance can be found at 1.3640, 1,3680 and 1.3710. The overnight high traded was at 1.3711. Look for another choppy trade today in the USD/CAD, likely between 1.3600-1.3700. Prefer to buy USD/CAD on dips.

(Source: Finlogix.com)

Have a good week ahead. Happy Monday and trading all.

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