We start a new week with the US Dollar at the forefront of trader’s mind amid the steady demand flows it’s shown through the course of January in line with positive seasonals. The fundamental news out of the US, with a huge 17% jump in housing starts aiding the trend, as together with the US-China phase one trade truce, reaffirms the neutrality of the Fed policies. The Swissy, after meeting its 100% measured move at an index level, has seen buy-side interest petering out as the fast money-type accounts take the foot off the gas pedal. The Canadian Dollar is the third best performing currency this year, piggy-backing the rise in the USD, and opening up a significant gap with the Euro, which follows as the 4th best currency. In the bottom half, I must say that amid very depressed volatility conditions, the outlook is mixed, with only the Japanese Yen displaying the cleanest downtrend. The Aussie, the Kiwi, and the Pound, are all confined in ranges of difference dimensions from an index standpoint, even if the British currency was the most punished in the last 24h following a dismal UK retail sales. Judging by the ebbs and flows seen as of late, the USD and CAD look best positioned to capitalize on the current market conditions, while the JPY and the GBP, with risk-on flows (S&P 500 keeps making record highs) and UK fundamentals deteriorating at a rapid pace, appear to be the most vulnerable currencies this week. Remember though, today’s trading activity is likely to be much more quiet than usual, as US stock and bond markets are closed to commemorate the Martin Luther King Jr. holiday. Later in the week, things will spice up as we get the moneta policy decision by the BOJ, BOC, ECB, Aussie jobs, Canadian/NZ CPI and EZ manuf numbers.
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