USD rallies as volatility rises, RUB plunges, AUD gains
11:00, 25 January 2022
The US dollar is rising in European morning trade after a session of high volatility in the stock market yesterday even as geopolitical tensions with Russia continue to escalate following reports that the US is contemplating sending troops to the area.
The greenback strengthened against all other major currencies, with the DXY index trading at 96.14 at 11.30 GMT, up 0.35% on the day.
Low-yielding currencies such as the euro, Japanese yen (JPY), and Swiss franc (CHF) all fell as traders braced for tomorrow’s pivotal Federal Reserve meeting. On the other hand, the pound was just marginally lower versus the US dollar.
The Russian ruble (RUB) fell 2% against the dollar yesterday, reaching 79.5, and held steady today.
The Australian currency (AUD) strengthened overnight as inflation outpaced estimates, fueling speculation that the Reserve Bank of Australia may raise rates sooner than predicted, while the New Zealand Dollar (NZD) fell amid worsening risk sentiment.
What is your sentiment on AUD/USD?
0.64439
Bullish
or Bearish
Vote to see Traders sentiment!
Economic events of the day
- The IMF will release its World Economic Outlook
- UK CBI Business Optimism Index Q1 (previous 2) – due at 12.00 GMT
- UK CBI Industrial Trend Orders for January 2022 (previous 24; consensus 22) – due at 12.00 GMT
- US S&P/Case-Shiller Home Price Index for November 2021 (previous 18.4% year-on-year; 18% expected) – due at 15.00 GMT
- US Conference Board Consumer Confidence Index for January 2022 (previous 115.8; consensus 111.8) – due at 16.00 GMT
- US API Weekly Crude Oil Stock Change 21-January (previous 1.404M) – due at 22.30 GMT
Daily performance of major forex pairs – 25 January 2022
- EUR/USD declined to 1.1275 (-0.42% on the day)
- USD/JPY edged up to 114.13 (+0.18%)
- USD/CHF rose to 0.9199 (+0.69%)
- GBP/USD edged slightly down to 1.3463 (-0.16%)
- AUD/USD held steady at 0.7135 (-0.07%)
- NZD/USD slipped to 0.6674 (-0.36%)
- USD/CAD was unchanged at 1.2632 (-0.02%)
- USD/NOK climbed to 9.0102 (+0.60%)
Performance matrix of major currencies – 25 January 2022
Performance matrix of major currencies as of 25 January 2022, 11:30 GMT – Credit: Capital.comUS Dollar today
- The US Dollar Index (DXY) was at 96.14 at the time of writing, up 0.35% on the day.
- US Treasuries yields marginally rose this morning after falling for four straight days. The US 10-year yield ticked up to 1.79%, while the 2-year yield is hovering around 1.02%.
- According to the latest CME Group FedWatch tool, market expectations have completely discounted a March 2022 Fed rate hike and are now pricing in four increases in total in 2022.
- According to the most recent Commodity Futures Trading Commission (CFTC) statistics, speculators’ net USD long positions decreased by around 79k contracts last week, the largest weekly decline in speculative USD long positions since May 2020.
- Yesterday, a preliminary estimate showed that the IHS Markit US Services PMI fell to 50.9 in January 2022 from 57.6 in December, considerably below the market expectation of 55.0. The manufacturing PMI also fell to 55 in January of 2022 from 56.7 in December, slightly below forecasts of 56.7.
- Investors are now awaiting tomorrow’s Federal Reserve meeting, which is likely to confirm the aggressive tone that emerged in December’s FOMC minutes, signalling the intention to hike rates as soon as March 2022.
US Dollar (DXY) technical levels:
- 52-week high: 96.88
- 52-week low: 89.49
- 50-day moving average (one-day chart): 95.99
- 200-day moving average (one-day chart): 93.23
- 14-day Relative Strength Index (RSI) (one-day chart): 55
Chart of the day: Russian assets (RUB & bonds) sold-off on geopolitical fears
USD/RUB and Russia 10y Government Bond Yield, year-to-date – Credit: KoyfinEuro today
- EUR/USD was 0.4% lower at 1.1275 by 11:30 GMT, after falling 0.2% yesterday.
- This morning, the Ifo Business Climate index for Germany increased to 95.7 in January 2022, rebounding from a ten-month low of 94.8 in December and above market estimates of 94.7, on signs of improvement in both industrial supply shortages and retail delivery bottlenecks.
- Yesterday’s European flash PMIs showed manufacturing improving significantly to 59 points from 58, exceeding market expectations (57.5), while the service sector contracted to 51.2 points from 53.1, falling short of market expectations (52.2), indicating that services activity has been hardest hit by the spread of the Omicron variant in Europe.
- Yesterday, lawmakers and regional electors overwhelmingly cast blank votes in the first round of voting in Italy’s presidential election, which was marred by political gridlock. The second round of voting is expected in the afternoon, but it’s unlikely to result in a conclusion.
- On the monetary policy front, recent pronouncements by the European Central Bank have dampened expectations for an aggressive monetary policy move. Following Christine Lagarde’s prediction that inflation would decline this year, Francois Villeroy, a member of the European Central Bank’s board of governors, said that monetary policy should be progressively adjusted.
EUR/USD technical levels
- 52-week high: 1.2345
- 52-week low: 1.1184
- 50-day moving average (one-day chart): 1.1314
- 200-day moving average (one-day chart): 1.1712
- 14-day Relative Strength Index (RSI) (one-day chart): 43
British pound today
- GBP/USD was last trading at 1.3463, down 0.2% on the day after falling by roughly 0.5% in the previous session. EUR/GBP fell by 0.2% to 0.8373.
- Yesterday, the UK Manufacturing PMI fell to 56.9 in January 2022 from 57.9 in December and below market forecasts of 57.9, indicating the slowest rate of industrial activity growth since February 2021. The January Services PMI fell to 53.30 points from 53.60 points in December 2021, falling short of the predicted 54.8 points.
- On the domestic political front, the market is awaiting Sue Gray’s report on UK Prime Minister Boris Johnson’s actions regarding alleged summer garden parties and Christmas events held in 10 Downing Street while the rest of the country was subject to stringent Covid-19 lockdowns, which is expected to be released this week. Meanwhile, Metropolitan Police Commissioner Cressida Dick said this morning that police will now investigate whether lockdown parties in the heart of the UK government broke Covid-19 protocols.
- The market’s focus will soon move to the Bank of England’s meeting next week, which is expected to hike interest rates for the second time in a row next week (February 3), after an unexpected increase in inflation and ongoing tightening in the labour market last week.
GBP/USD technical levels:
- 52-week high: 1.4248
- 52-week low: 1.3165
- 50-day moving average (one-day chart): 1.3419
- 200-day moving average (one-day chart): 1.3728
- 14-day Relative Strength Index (RSI) (one-day chart): 43
Forex performance heatmap – 25 January 2022
Forex performance heatmap as of 25 January 2022, 11.30 GMT – Credit: Capital.comDaily performance of EM currencies
- USD/MXN +0.44%
- USD/ZAR +0.45%
- USD/RUB -0.03%
- USD/TRY +0.65%
- USD/KRW +0.21%
- USD/CNH +0.05%
- EUR/PLN +0.39%
- EUR/HUF -0.23%
Markets in this article
Related topics