The dollar index against a basket of six major currencies was up 0.15 percent at 96.155, trimming some of the previous day’s losses.
· The index had shed 0.4 percent overnight, when it stooped to 95.948, its lowest since Feb. 5. after Federal Chair Jerome Powell said that the U.S. central bank would remain “patient” on further interest rate hikes.
· The euro slipped 0.1 percent to $1.1377 against the dollar, which tends to attract bids in times of political tensions and market turmoil due to its high liquidity.
· The yen, another perceived safe haven, advanced to 110.38 per dollar from the previous day’s close of 110.585 and also rose against the euro.
· The Australian dollar, sensitive to shifts in risk sentiment, was a shade lower at $0.7182 , and headed towards snapping a three-day winning run.
· The pound was little changed at $1.3249 after surging more than 1 percent overnight to a five-month peak of $1.3288.
· The yield on the two-year treasury yield hit 16-day lows earlier today, possibly on the back of dovish Fed and dismal US data.
As of writing, the two-year yield is trading at 2.48 prcent, having hit a low of 2.46 percent - a level last seen on Feb. 11. Meanwhile, the 10-year yield is trading at 2.64 percent.
The yields came under pressure after yesterday after the US data showed housing starts fell at a seasonally adjusted annualiosed rate of 11.2 percent in December.
Further, Fed's Powell, during his Congressional testimony, reiterated "patience" on interest rate hikes, adding to the downside pressures around yields.
Looking forward, the focus is on the immediate support at 2.44 percent, which if breached, could yield a deeper drop to January lows near 2.36
· USD/JPY is stable in Tokyo, stuck in a tight range of between 110.52 and 110.58 at the time of writing, lacking a driver with the majority of the hard work done by the bears in North America.
The pair returned to the comfort zone in where it traded most of the last week, now challenging the base of the mentioned range and technically bearish according to the 4 hours chart, as technical indicators entered bearish territory, extending their declines to fresh weekly lows, as the price pressures the 100 SMA at around 110.40. A break below the level should signal additional declines ahead with the market eyeing then a break below the 110.00 figure.
Support levels: 110.40 110.10 109.80
Resistance levels: 110.90 111.20 111.45
· U.S. President Donald Trump said in a Wednesday Twitter post there's "AWESOME" economic potential for North Korea if the hermit nation's leader Kim Jong Un agrees to give up on his nuclear weapons.
Trump's tweet also pointed to Vietnam as an example that North Korea could follow.
"Vietnam is thriving like few places on earth. North Korea would be the same, and very quickly, if it would denuclearize. The potential is AWESOME, a great opportunity, like almost none other in history, for my friend Kim Jong Un. We will know fairly soon - Very Interesting!" the president said.
If North Korea follows in Vietnam's footsteps, the rogue nation's gradual opening up could bring in investment opportunities worth up to $9 billion per year, Morgan Stanley estimated.
· Bank of Japan Governor Haruhiko Kuroda said on Wednesday the chance of inflation hitting the central bank’s 2 percent target during the fiscal year ending in March 2021 was low.
Kuroda also told parliament that the BOJ’s purchases of exchange-traded funds (ETF) were a necessary step taken as part of the central bank’s massive stimulus program.
“We will continue to scrutinize the benefits and the potential costs of this measure,” he said of the BOJ’s ETF buying.
· An Indian Air Force plane crashed in the disputed area of Kashmir on Wednesday, killing two pilots and a civilian, a police official said, amid heightened tensions with neighboring Pakistan.
Further details about the incident were not immediately available.
India on Tuesday said it had launched an air strike inside Pakistan and that its warplanes killed “a very large number” of fighters at a militant training camp, raising the risk of conflict between the nuclear-armed neighbors. Pakistan denied there had been casualties, but has warned that it will respond to Indian aggression.
Tensions have been elevated since a suicide car bombing by Pakistan-based militants in Indian-controlled Kashmir killed at least 40 Indian paramilitary police on Feb. 14, but the risk of conflict rose dramatically after India’s air strike on Tuesday.
· China’s Foreign Ministry on Wednesday said it reiterated its call for India and Pakistan to exercise restraint.
Ministry spokesman Lu Kang made the comment at a regular news briefing in Beijing.
Pakistan shot down two Indian jets on Wednesday, a spokesman for the Pakistan armed forces said, a day after Indian warplanes struck inside Pakistan for the first time since a war in 1971, prompting leading powers to urge both sides to show restraint.
· Oil prices rose on Wednesday after a report of declining U.S. crude inventories and as producer club OPEC seemed to stick to its supply cuts despite pressure from U.S. President Donald Trump.
U.S. West Texas Intermediate (WTI) crude oil futures were at $55.89 per barrel at 0755 GMT, up 39 cents, or 0.7 percent, from their last settlement.
International Brent crude futures were at $65.48 per barrel, up 27 cents, or 0.4 percent from their last close.
· Crude Oil Weekly Price Outlook: WTI Turns from 2018 Trend Resistance
In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend.Crude Oil is down more than 2.7% from the weekly open with price now testing key near-term support - here are the key targets & invalidation levels that matter on the WTI weekly chart.
Immediate support is eyed here at the 55.21/53 pivot zone- a break / close below would threaten a larger decline targeting the 200-week moving average at ~52.23 with critical support eyed at 48.24.
A topside breach of this formation / the high-day close at 57.14 targets more a more significant resistance confluence at 59.61-60.06 where the 50% retracement of the October decline and the 2018 open converge on the 2015/ 2016 pitchfork resistance- look for a larger reaction there IF reached. A weekly close above would be needed to suggest that a more meaningful low was registered in December with such a scenario targeting the 52-week moving average / 61.8% retracement at 63.13/68.
Reference: Reuters, CNB
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