12 Jan 2016
US dollar trading on a firmer ground against major currencies - BBH
FXStreet (Delhi) – Research Team at BBH, notes that the US dollar is trading slightly firmer against the other major currencies.
Key Quotes
“Emerging market currencies are enjoying a firmer tone, perhaps encouraged by the lack of disturbance from China, where officials have denied seeking a large devaluation. Both Fed officials that spoke yesterday (Kaplan and Lockhart) explained that while the labor market enjoys favorable momentum, the four rate hikes of the dot plot are not a promise or commitment. Yesterday, the implied yield on the December Eurodollar futures contract fell to 101.5 bp, the lowest since early November.
Many reports note the hidden hand of Chinese officials behind the powerful short-squeeze in CNH (offshore yuan) today that following a similar move yesterday. This has succeeded in nearly closing the gap between the onshore and offshore markets. It is not clear that this can be sustained in a stronger US dollar environment.
As North American dealers return to their posts, the dollar is little changed against the euro and yen. The greenback needs to establish a foothold above JPY118 by finishing the session above there. Intraday technicals suggest it may make new highs on the session, but a close above JPY118 may require new developments.
After pushing toward $1.0970 yesterday, the euro reversed lower. Asia marginally extended those losses to almost $1.0840. Additional slippage is likely in North America, but the $1.08 seen after the strong US employment report may be sufficient to stem the fall.”
Key Quotes
“Emerging market currencies are enjoying a firmer tone, perhaps encouraged by the lack of disturbance from China, where officials have denied seeking a large devaluation. Both Fed officials that spoke yesterday (Kaplan and Lockhart) explained that while the labor market enjoys favorable momentum, the four rate hikes of the dot plot are not a promise or commitment. Yesterday, the implied yield on the December Eurodollar futures contract fell to 101.5 bp, the lowest since early November.
Many reports note the hidden hand of Chinese officials behind the powerful short-squeeze in CNH (offshore yuan) today that following a similar move yesterday. This has succeeded in nearly closing the gap between the onshore and offshore markets. It is not clear that this can be sustained in a stronger US dollar environment.
As North American dealers return to their posts, the dollar is little changed against the euro and yen. The greenback needs to establish a foothold above JPY118 by finishing the session above there. Intraday technicals suggest it may make new highs on the session, but a close above JPY118 may require new developments.
After pushing toward $1.0970 yesterday, the euro reversed lower. Asia marginally extended those losses to almost $1.0840. Additional slippage is likely in North America, but the $1.08 seen after the strong US employment report may be sufficient to stem the fall.”