FXStreet (Córdoba) – The US dollar plummeted across the board on Wednesday, losing ground even against Emerging Market currencies. The Mexican peso, that is used as a proxy for EM, rose from the lowest level in a week, approaching last week highs.

USD/MXN
peaked at 18.61 (1-week highs) and then turned sharply to the downside, reversing the trend that had been in place since the beginning of the week. Recently bottomed at 18.18 as stock in Wall Street turned sharply to the upside on a volatile session.

The pair was trading at 18.23, near last week lows located at 18.10 that could be challenge if stocks and crude oil continue to recover.

BRL, RUB outperforming

Among EM, the Brazilian real and the Russian ruble are the top performers. The rally in stocks and in crude oil (WTI up by more than 8%). USD/BRL dropped to a fresh 2016 lows at 3.89 while USD/RUB was falling more than 3%, trading under 77.00.

The US dollar plummeted across the board on Wednesday, losing ground even against Emerging Market currencies. The Mexican peso, that is used as a proxy for EM, rose from the lowest level in a week, approaching last week highs.

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FXStreet (Guatemala) – Analysts at Brown Brothers Harriman explained, apparently, that when Irish eyes are smiling, it’s time to call an election.

Key Quotes:

“And that is why Prime Minister Kenny has done. The election will be held on February 26. The polls suggest that the governing coalition (Fine Gael and Labour) it may struggle to secure a majority.

In some ways, Kenny is making the same bet as Spain’s Rajoy. The economy’s strength will provide a lift on election day. It has not worked out so well for Rajoy though Kenny may have greater success. However, this is most likely to be in a coalition.

This year is expected to be the third consecutive year that the Celtic Tiger is leading European growth. Last year’s 7% pace is not going to be sustained, but around 4% growth will likely be sufficient to push unemployment lower. Unemployment peaked in 2012 near 15% and finished last year at 8.8%, the lowest since late-2008. Both Spain and Portugal have unemployment rates above the eurozone aggregate. Ireland’s is below it.

Ireland’s 10-year bond yield peaked in 2011 near 14.2%. It is now lower than 1%. At shorter end of the coupon curve, Ireland’s 2-year yield is minus 36 bp. Since it is through the deposit rate, it no longer qualifies for ECB purchases. In comparison, Spain and Italy’s two-year yields less than five basis points through zero.

Kenny’s announcement was not a surprise. There has been talk in recent weeks that picked up over the last few days. Irish bonds have underperformed recently. That is expressed as a widening of the premium it pays over Germany, though over the past week, it has done better than Italy and Spain. There is some concern the any hiccup in the process could delay the privatization of Allied Irish Banks.

Irish equities are off 8.3% this year, which is better than most European markets. At the recent lows, the Irish bourse was off 11% from the multi-year high reached late last year. It is a painful correction but does not meet the bear market threshold.

Kenny’s Fine Gael is drawing 30% while the junior coalition partner Labour is polling around 10%. This illustrates the political risk Kenny is taking though it is ultimately a question of timing. Perhaps to ensure an ability to respond decisively if needed if the UK were to vote to leave the EU. The European debate over immigration and Schengen is likely to intensify. The Fine Gael does appear to be on the uptick in terms of public support.

While Irish economy recovered stronger and faster than others in the euro area, the social scars remain. The two main opposition parties, Fianna Fail (center-left) and Sinn Fein (left) are polling just below 20 percent. The former is anti-austerity, and the latter is anti-EU. Mutual antipathy prevents an alliance with Sinn Fein for either Fianna Fail or Fine Gael. The fact that the opposition is divided will prevent a repeat of Portugal, and possibly Spain’s experience.

Fine Gael is likely to remain the largest party. It will likely lead any new government. This too suggest a continuity of policy. The latest polling figures suggest the governing coalition is about ten seats shy of a majority. If this borne out in the election, there would likely be an attempt to bring into the coalition some independents or a couple of small parties. However, given the divided nature of the opposition, a minority government cannot be ruled out, and it might be more stable than it sounds.

If an asset manager was looking to add to Irish exposure, underperformance ahead of the election may offer an opportunity if one expects the election will not disrupt the underlying fundamental strength of the economy and the general thrust of policy. Ireland’s economy is enjoying good momentum now that looks strong enough to weather some near-term uncertainty, and it is a short campaign season. The composite PMI reported earlier today rose to 61.1 from 59.2. It peaked at 61.8 last July and fell to 57.7 in October.

The status quo has not done particularly well in recent elections. Ireland may buck the trend.”

Analysts at Brown Brothers Harriman explained, apparently, that when Irish eyes are smiling, it’s time to call an election.

(Market News Provided by FXstreet)

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FXStreet (Córdoba) – Gold prices advanced on Wednesday as the US dollar weakened across the board, with spot reaching its highest level since October 30th at $1,145 an ounce, before correcting slightly. The yellow metal ended the day at $1,141 an ounce, its highest close in over three months.

There were no clear catalysts for the slump witnessed in the US dollar, although dovish comments from Fed’s Dudley ignited the downward move at the beginning of the New York session, while disappointing ISM services PMI fueled the decline.

Gold prices advanced on Wednesday as the US dollar weakened across the board, with spot reaching its highest level since October 30th at $1,145 an ounce, before correcting slightly. The yellow metal ended the day at $1,141 an ounce, its highest close in over three months.

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FXStreet (Guatemala) – EUR/GBP is above the 0.76 handle and the 200 sma on the hourly sticks at 0.7594.

The euro has rallied on a soft dollar, as has the pound, but the euro has the upper hand in a short squeeze that triggered multiple stops on the way up. “We think EURUSD is likely to trade on a firmer footing as the 1.13 area beckons,” suggested analysts at TD Securities.

“Super Thursday;’ at the BOE tomorrow and newspapers dominated by the Brexit story will attract more attention however, and the FT’s headline (“Cameron faces tough fight to sell EU plan”) doesn’t suggest we’ll get much of a bid to sterling,” suggested Kit Juckes, economist at Societe Generale.

EUR/GBP levels

EUR/GBP has recovered into key bullish territory through the 0.75 handle and looks for space to consolidate on the 0.76 handle above the 1hr 200 sma at 0.7594. This converges with the 20 dma at 0.7585 today and the uptrend eyes 0.7755 high of 19th Jan. RSI (14) is in neutral on the 4hr sticks at 47.06 and spot trades above the pivot of 0.7577, with R1 at 0.7613 and R2 at 0.7655 .

EUR/GBP is above the 0.76 handle and the 200 sma on the hourly sticks at 0.7594.


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FXStreet (Córdoba) – Another wave of USD selling pushed USD/CHF to dropped momentarily below the parity level. The pair bottomed at 0.9985, hitting the lowest level since January 15.

Afterwards, the pair rose quickly back above 1.0000 and it was trading at 1.0030/35. Despite rising 50 pips from the lows, it was still down 150 pips from the level it closed yesterday.

During the Asian session, the pair moved toward 1.0200 and then turned to the downside. The decline was modest until the American session when Greenback plummeted across the board. There was no particular trigger but the market is reducing expectations of another rate hike in the US during the first half of the year.

USD/CHF below 20-day MA; above trendline

The rebound in USD/CHF from the lows pushed the price back into a bullish channel that has been guiding price action since mid-December. But as long as it remains below 1.0070, it will post the first daily close under the 20-day MA since the beginning of the year. The mentioned average is starting to point to the downside.

Another wave of USD selling pushed USD/CHF to dropped momentarily below the parity level. The pair bottomed at 0.9985, hitting the lowest level since January 15.

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FXStreet (Córdoba) – USD/CAD has completely retraced its 2016 rally and is trading at fresh year-to-date lows, as the US dollar continues plummeting across the board, while the loonie gained some support from higher oil prices.

After being rejected from 1.4100, USD/CAD started to fall and it has lost more than 300 pips throughout the day, leaving several support levels behind, to hit a low of 1.3783 in recent dealings. At time of writing, the pair is trading at 1.3787, recording a 1.9% loss on the day.

The US dollar can’t catch a breather from a massive sell-off that started with the New York session. Dovish comments from Fed’s Dudley coupled with disappointing US ISM services PMI fueled the decline.

USD/CAD levels to watch

As for technical levels, next supports are seen at 1.3777 (Dec 17 low) and 1.3727 (Dec 16 low). On the other hand, resistances line up at 1.3907 (Feb 1 low), 1.4075 (10-day SMA) and 1.4100 (Feb 3 high/psychological level).

USD/CAD has completely retraced its 2016 rally and is trading at fresh year-to-date lows, as the US dollar continues plummeting across the board, while the loonie gained some support from higher oil prices.


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FXStreet (Guatemala) – AUD/NZD has bounced while the main driver today has been the dollar sell-off. The long positions in the greenback have been squeezed out on a huge correction and a bounce in the price of oil and commodities. The Aussie trade bala…

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FXStreet (Córdoba) – GBP/USD has extended gains above the 1.4600 level during afternoon trade in New York, as US dollar weakness remains as the theme of the day, although there were no clear catalysts to blame.

GBP/USD broke above several resistances levels and climbed to a high of 1.4648, stalling just a few pips shy of the 50.0% retracement of the December-January drop between 1.5239 and 1.4078, being this latter a 7-year low scored on Jan 21st. At time of writing, the pair is trading at 1.4620, marking a 1.48% gain on Wednesday.

GBP/USD levels to watch

In terms of technical levels, next resistances are seen at 1.4657 (50.0% Fibo retracement of 1.5239-1.4078) and 1.4722 (50-day SMA). On the downside, supports could be found at 1.4383 (Feb 3 low), 1.4357 (20-day SMA), 1.4325 (Feb 2 low) and 1.4227 (Feb 1 low).

GBP/USD has extended gains above the 1.4600 level during afternoon trade in New York, as US dollar weakness remains as the theme of the day, although there were no clear catalysts to blame.

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FXStreet (Córdoba) – AUD/USD continued to trend higher during the American afternoon, breaking above the 100-day SMA among other key resistance levels, as the greenback’s sell-off intensified.

There were no clear catalysts for the slump witnessed in the US dollar, although dovish comments from Fed’s Dudley ignited the downward move at the beginning of the New York session.

AUD/USD has climbed more than 150 pips and broke above last week’s highs to reach a peak of 0.7186, last seen on January 4th. At time of writing, the pair is trading at 0.7180, recording a 2.05% daily gain.

The Australian dollar has been on recovery mode from a multi-year low scored mid-January at 0.6826. Next major level on the upside could be found at 0.7280, which is the 2016 starting point.

AUD/USD levels to watch

Above 0.7280, other resistances are seen at 0.7303 (Dec 31 high) and 0.7337 (200-day SMA). Meanwhile, immediate supports could be found at 0.7140 (100-day SMA), 0.7002/00 (Feb 3 low/psychological level) and 0.6918 (Jan 26 low).

AUD/USD continued to trend higher during the American afternoon, breaking above the 100-day SMA among other key resistance levels, as the greenback’s sell-off intensified.

(Market News Provided by FXstreet)

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FXStreet (Córdoba) – USD/JPY dramatic decline continued during the second half of the American session as the US dollar printed fresh lows across the board. The pair dropped so far almost 300 pips on Wednesday and 440 from Monday’s high.

During the European session, the US dollar rose momentarily above 120.00 against the yen and recently bottomed at 117.09, the lowest level since January 21. The pair appears to be quickly headed toward January lows located at 115.96.

All gains that followed the decision last Friday from the Bank of Japan to introduce negative interest rates have been erased and is even 150 pips below the level it had back then.

The Japanese yen and the New Zealand dollar are the top performers in the currency market on Wednesday so far.

USD/JPY: Another test of 116.00?

The sharp decline changed dramatically the technical outlook for the pair that now is near the key 116.00 area. That area has been offering support since December 2014. It the pair breaks below and consolidates it could open the doors for a bearish continuation.

To the upside, 118.80 – 119.00 could become again a relevant short-term resistance area like it was during January.

USD/JPY dramatic decline continued during the second half of the American session as the US dollar printed fresh lows across the board. The pair dropped so far almost 300 pips on Wednesday and 440 from Monday’s high.

(Market News Provided by FXstreet)

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