Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD hits pre-election lows
Global markets fell again yesterday with the US’s Dow Jones down 1.1%, UK’s FTSE 100 falling 1.2% and Japan’s Nikkei dropping 0.6%.
Rising global recession fears, equity market volatility and weaker growth indicators have driven a shift toward safe-haven assets with the Japanese yen and Swiss franc outperforming.
Unusually, the US dollar has not benefited from these safe-haven flows, with markets instead worried about the prospects for US growth.
The AUD/USD climbed from one-week lows with a 0.2% gain but remains broadly within the six-week old trading range between 0.6200 and 0.6400.
Similarly, the NZD/USD recovered within its recent trading range between 0.5600 and 0.5775.
In Asia, the moves were more significant. USD/SGD fell back to the lowest level since 11 November.
The USD/CNH fell to the lowest level since 19 November.
US inflation in focus tonight
Technically, the US dollar index remains relatively weak with the market still below its 50-day and 200-day EMAs.
Tonight, US consumer prices will be revealed at 11:30pm AEDT.
After a robust reading of 0.446% in January, core CPI inflation probably slowed somewhat to 0.287% m-o-m in February, although it most certainly stayed above the December level of 0.210%.
We anticipate that core PCE inflation (to be released later this month) stayed high in February at 0.282% m-o-m.
The Fed will probably continue to monitor inflation concerns if the print matches our prediction.
The USD index is now at a four-month low, with next key support at its weekly 200-day EMA of 102.58.
Korea’s artificial job market masks KRW weakness
Today, the Korea unemployment rate will be revealed at 10:00 AEDT. As the labor market improves, we anticipate that the unemployment rate will slightly decline once again, from 2.9% in January to 2.8% SA in February.
The service sector probably kept adding employment as a result of the government’s frontloading fiscal expenditures, offsetting job losses in the manufacturing and construction sectors.
We retain negative outlook on KRW, which may see USD/KRW move higher in the short-term.
USDKRW is currently at its three-month low. The USDKRW pair has rebounded from its 50-day EMA support of 1443.09, which may be attractive to USD buyers.
The next level of key support for USDKRW is at its 200-day EMA of 1403.63.
USD sees losses across Asia
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 10 – 15 March
All times AEDT
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.