Dollar Reasserts Dominance on Fed Expectations and Risk Sentiment
| Action Insight Weekly Report 11-10-24 |
| Dollar Reasserts Dominance on Fed Expectations and Risk Sentiment |
Dollar regained its dominance in the currency markets last week, surging ahead despite U.S. Treasury yields struggling to break through resistance levels. Investors continued to adjust their expectations for Fed's monetary policy, increasingly anticipating a slower pace of interest rate cuts with fewer adjustments in the coming year. This shift in sentiment was also reflected amplified by the late selloff, which provided additional support for the greenback. However, with the Dollar Index now sitting inside a critical resistance zone, the currency may face significant hurdles in sustaining its upward momentum. In an unexpected development, Japanese Yen emerged as the second-best performer of the week. Yen's strong rebound occurred even in the absence of aggressive verbal intervention from Japanese authorities. While there are no clear signs of a reversal against Dollar yet, Yen is making notable progress against other major currencies. Canadian Dollar also demonstrated robust performance, ranking third among the top currencies. This strength persisted despite market expectations of interest rate cuts by BoC and the selloff in oil. On the other hand, British Pound ended the week as the worst performer, with Australian and New Zealand Dollars not far behind. All three currencies were pressured by deterioration in risk sentiment across global markets. For the Pound, the latest GDP data revealed weaker-than-expected growth, and an uptick in the unemployment rate has strengthened the position of dovish policymakers within BoE for another interest rate cut in the near future. Australian and New Zealand Dollars were dragged down as traders grew increasingly frustrated with the lack of concrete action in China's fiscal stimulus measures. |
USD/CAD Weekly Outlook USD/CAD's break of 1.3976 key resistance last week confirms larger up trend resumption. Initial bias remains on the upside this week. Next near term target is 61.8% projection of 1.3418 to 1.3958 from 1.3841 at 1.4175. On the downside, below 1.4032 minor support will turn intraday bias neutral and bring consolidations first. But outlook will stay bullish as long as 1.3841 support holds, in case of retreat. | |
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