DXY steady, commodity currencies up and TRY crashes again
10:21, 2 December 2021
Major currency pairs were little moved in Europe on Thursday morning as traders await more clarity on the ramifications of Omicron as well as central banks’ reactions. The US confirmed its first Omicron case in California yesterday, raising worries of rapid worldwide spread and tightening border restrictions. Meanwhile, Fed chair Jerome Powell is becoming more hawkish, emphasising that inflation concerns are more persistent than expected and that it may be “appropriate” for the Fed to consider increasing the pace of tapering at its December meeting.
- DXY was last at 95.90 (-0.06%) by 10:30 GMT
The euro remained flat versus the dollar, while the Japanese yen (JPY) fell 0.3% as US Treasury yields climbed overnight. The British pound (GBP) edged 0.25% up and the Swiss franc (CHF) was 0.1% lower.
- EUR/USD was last at 1.1325 (+0.05%)
- USD/JPY climbed to 113.39 (+0.22%)
- USD/CHF ticked down to 0.9199 (-0.08%)
- GBP/USD edged up to 1.3310 (+0.25%)
The Australian (AUD) and New Zealand dollar (NZD) recovered overnight losses, as risk appetite slightly improved.
Oil-linked currencies strengthened as crude prices held firm ahead of today’s OPEC+ meeting. The Norwegian krone (NOK) and Canadian dollar (CAD) rose 0.2% against the US dollar.
The Turkish lira (TRY) hit a new all-time low against the greenback overnight, as President Erdoğan abruptly replaced his finance minister with Nureddin Nebati, who is perceived to be a close ally of former economy minister Berat Albayrak, a son-in-law of Erdoğan. USD/TRY was last at 13.40, up 1.3% on the day.
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Forex daily matrix – 2 December 2021
The US Dollar Index (DXY) was at 95.90 levels, broadly unchanged on the day.
Powell reiterated in yesterday’s second House hearing that inflation risks have increased and price hikes have “spread widely”, but he also assured lawmakers that the Federal Reserve will use its tools to ensure that “the current high inflation does not take root” in the economy.
Fed member Loretta J Mester said yesterday on Bloomberg TV that she is open to speeding the taper, suggesting also two interest-rate increases in 2022 as her base case.
On the data front, the ADP estimate of new private non-farm jobs in November confirmed expectations of strong employment growth, with a monthly change of 534,000 jobs (525,000 expected), while the ISM Manufacturing Index remained stable at 61.1 in November, up from 60.8 in October, with increases in new orders, production and employment.
Meanwhile, Treasury yields climbed overnight, with the 10-year yield rising by 3 basis points to 1.45%.
US dollar (DXY) technical levels:
- 52-week high: 96.52
- 52-week low: 89.212
- 50-day moving average (1-day chart): 94.57
- 200-day moving average (1-day chart): 92.50
- 14-day Relative Strength Index (RSI) (1-day chart): 57.86
Chart of the day: Turkish lira has lost 45% of its value since the start of the year
EUR/USD was last at 1.1325, flat from prior close.
The winter Covid-19 wave in Europe continues to weigh on the single currency. Germany reported its highest daily death toll since February, while new cases in France rose to 47,000 yesterday, the highest since April 2021.
On the data front, October’s unemployment rate for the euro area came in at 7.3%, down from 7.4% and matching market expectations.
EUR/USD technical levels:
- 52-week high: 1.2349
- 52-week low: 1.1184
- 50-day moving average (1-day chart): 1.1507
- 200-day moving average (1-day chart): 1.1818
- 14-day Relative Strength Index (RSI) (1-day chart): 43.12
GBP/USD was last at 1.3310 by 10:30 GMT, up 0.3% on the day.
Sterling short-term price movement continues to be mainly driven by risk sentiment swings. The focus in the immediate term is on whether the Bank of England would begin its tightening cycle in two weeks, with the UK money markets now pricing in 100 basis-point hikes over the next 12 months.
GBP/USD technical levels:
- 52-week high: 1.4248
- 52-week low: 1.3133
- 50-day moving average (1-day chart): 1.3553
- 200-day moving average (1-day chart): 1.3801
- 14-day Relative Strength Index (RSI) (1-day chart): 34.64
Forex performance heatmap – 2 December 2021
Other currency pairs (% change from previous close):
- USD/JPY +0.22%
- USD/CHF -0.05%
- USD/CAD -0.15%
- AUD/USD -0.04%
- NZD/USD +0.07%
- USD/MXN -0.86%
- USD/ZAR -1.09%
- USD/TRY 1.04%
- USD/RUB -0.39%
- EUR/NOK +1.12%
- EUR/SEK +0.08%
- EUR/PLN -0.34%
- EUR/HUF -0.07%
Markets in this article