Bullish Dollar Starts A Big Week

roche futures

USD rises across the board; Busy week ahead for US events
US inflation rises as expected to support USD appreciaiton
US500 opens at record level but pulls back into European close
GBP moving lower as UK100 holds above key level
Bitcoin trades back at 11,000 after massive heist and Coincheck

The USD has caught a much needed break today, with the world’s reserve currency moving firmly higher after several weeks of declines. Whether the price action represents a turning point for the Buck or simply a pause in the prevailing downtrend remains to be seen and with several major events ahead in the coming days, the outcome of them will likely drive the market going forward.  

The Core PCE price index for December rose to +0.2% M/M as expected, from 0.1% last time out. This inflation metric is often quoted by the Fed when discussing price pressures and the increase may alleviate some of the concerns that inflation remains stubbornly below the 2% mandate. As the same time as the PCE data there was also personal spending and personal income figures from the US with the latter missing forecasts and the former beating. The US500 was trading at a record level on the Wall Street open but it has since pulled back somewhat into the European close.  

The pound is one of the worst performing currencies in the G10 space today, with sterling sliding against all its major peers. The news flow has been relatively quiet at the start of the week, with a couple of Brexit-related stories having little by the way of an immediate reaction in the FX markets. A recent appreciation in the pound has clipped the wings of the UK100 and sent the stock market back lower, but if there is a pullback in sterling ahead, stocks could be well placed to resume their uptrend. 

Bitcoin started the week with a resumption of declines after retreating from the 23.6% retracement of the last leg lower. As we are experiencing new lower highs the bears still seem to be the dominant market side. However, the short-term ascending support line may turn out to be the major obstacle on their way down. The Coincheck exchange was a subject to one of the biggest digital token thefts. More than a $500 million of NEM coins has been stolen by an unknown hacker or group of hackers. 

The German investors have a lot of factors to take into account while making their investment decision as of late. With a myriad of fundamentals at play, sometimes it can be good to keep it simple and focus on the price action.