A successful bond auction and upgraded global growth forecast saw the US dollar broadly weaken overnight. Two markets we’re closely watching are gold and USD/CHF.
With traders having been heavily net-short US dollar at levels not seen in over 10-years, a short squeeze and counter-trend rally for the greenback was simply a matter of time. Yet even recent bullish moves were beginning to look a bit stretched for the dollar, so we suspect we are now entering a minor corrective phase for the dollar.
And this could provide further support for gold which has rebounded from a key support level and weigh on USD/CHF, which appears in need for some mean reversion.
We also look at WTI which appears to be within a healthy correction, yet continues dances to its own beat regardless of USD strength (or weakness) at present.
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