RECENT weakness in the dollar has been exaggerated by talk of another round of stimulus spending from the Fed. While this is increasingly likely to happen, the dollar is approaching what looks like a point of inflection. ETX Capital is quoting 77.51-77.59 for the Dollar Index December contract.
Euro-dollar may have had a recent uptrend, but it topped out at the $1.3150 level and retraced its step back down to the $1.3550-3750 level, before it was saved by a support and bounced back. WorldSpreads offers a one-point spread at $1.3870-$1.3871.
After reaching parity with the US dollar for a few seconds on Friday, the Australian dollar lost more than 150 basis points against the greenback yesterday. With Australian rates still on hold for the time being and the US dollar likely to come under further strain in the coming months, some analysts are speculating that the Aussie could make a comeback and possibly even move beyond parity. Spreadex offers a spread on spot Australian dollar-US dollar at US$0.9765-US$0.9768.
Since breaking parity against the US dollar last Thursday, the Loonie has been in reverse. It is taking back levels to around Ca$1.02. The decision by the Bank of Canada to leave rates unchanged yesterday has helped propel US dollar-Canadian dollar to a new high. But then it settled below the strong Ca$1.0350 resistance level. Look out for weakness around this area for a short play, or if it breaks through and closes above Ca$1.038 go long for a run at Ca$1.05. Spread Co offers a spread on US dollar-Canadian dollar of Ca$1.0322-Ca$1.0326.
The Swiss franc’s foray below parity against the greenback could be looking short-lived after tough talk from the Fed and a rate hike out of China. This will doubtless offer much relief to the Swiss National Bank, which despite costly intervention measures has been unable to rein in Swiss franc strength and instead was harming the country’s own economic recovery. The current IG Index price on US dollar-Swiss franc is SFr0.9717-SFr0.9719.