This week has been and will be loaded with data: we already had Chinese manufacturing, US PMI, Australian rates decision and GDP. ECB, BOC and the classical NFP (and US unemployment) are still in front of us to come.

The leit-motive has been selling the safe haven currencies: USD, JPY and CHF all under performed. Commodities Currencies (AUD, NZD, CAD) have appreciated, EM as well. Both EUR and GBP have been grinding higher as well.

Many of these instruments are starting to show an excessive behavior: Aussie is printing a 76 RSI (and already it my mid-term target in the 0.69 / 0.70 area), EURCHF is overbought as well (77 RSI, but could still have some room to overshoot to 1.0850), USD Index (DXA) is touching right now the lower bound of the channel it has been trading since 2018 and is close to oversold levels.

USD Index, Daily, Aug 2018 – Jun 2020

With such important economic releases in front of us, I expect this risk-on movement to continue till the end of this week, probably coming to even more extreme excesses before eventually reversing of taking a major pause. But will need to see how big the new bazooka deployed by the ECB will be and how bad is the unemployment rate in US.

Marco Turatti
Market Analyst

TIO Staff

Write A Comment