Dollar Licks Its Wounds

We have seen the dollar recover a bit since the morning yesterday after it got battered overnight due to comments from Trump and his team Trump had said that he prefers to see low interest rates in the US which is a clear signal that he is likely to pack the Fed with dovish members. Also, he said that he felt that the dollar was too strong especially considered in the context of how the other countries were manipulating their currencies to keep them low. This was enough signal for the dollar bears to take control and the dollar buyers to head for the exit.

This pushed pairs like the EUR/USD and GBP/USD higher and also helped to push the gold prices higher as well and this was the theme last evening. As of today morning, we have been seeing the various pairs in a corrective mode as they unwind some of their gains but we believe that this is more of a correction of the move higher and the dollar weakness is here to stay in the short term. Also, we could be seeing some profit taking in the various pairs as we look ahead to the long weekend in the markets.

Looking ahead to the rest of the day, we are generally light on the data with the manufacturing sales data from Canada and the PPI and unemployment report data from the US being the only data of note. We do not expect any of these data to be enough to move the markets as such but we believe that the dollar weakness is set to continue in the markets for today. Also, with the looming holiday up ahead, we might see some very volatile moves later on in the day ahead of a dull market tomorrow and so it is very important to stay alert and probably wait for the right moment to enter and trade for the dollar weakness.