Major USD indices are down 0.3-0.4% and are threatening key technical levels; EUR one of the best performers against the USD, up 0.5% to 1.1815; NZD up 0.2% to 0.7325 USD

By Jason Wong

As the skies darkened over the US during a rare total solar eclipse, a pall of gloom overhung the US dollar, which showed a broadly based fall.  Markets started the week on a very quiet note, with no data and light trading conditions.

The focus for the day was the total solar eclipse that swept across the US. A total solar eclipse hasn’t been visible from the mainland US since 1979.  For the first time since 1918 the total solar eclipse is visible within a band across the entire contiguous United States.  And in another fun fact the solar eclipse’s path of totality makes landfall exclusively within the US – one has to go back to 1257, the last total eclipse to make landfall exclusively on lands currently part of the US (source: Wikipedia).  Today was a rare event!

Now onto less interesting news.  There is little to report on the market other than the USD finds itself under renewed pressure.   The various dollar indices we track – DXY, BBDXY and TWI-majors – are down 0.3-0.4% and are again threatening key technical levels.  The tradeable DXY is within 1.2% of the 2016 intra-day low of 91.9.  A break of this will get the technicians excited, opening up the threat of a much greater decline.

There has been no news to drive the dollar and in light trading one shouldn’t make too much of the move, but the weakness follows on some of the vulnerability we saw to the dollar last week. Treasury Secretary Mnuchin said tax reform will be President Trump's focus, and an effort to have a “combined plan” between the House, the Senate and the administration will kick off next month.  He added that raising the US debt ceiling is the priority as Congress returns.  The market ignored these USD-positive comments.

EUR is one of the best performers against the USD, rising by 0.5% to 1.1815.  GBP is up 0.3%, back to the 1.29 mark ahead of the government’s release of five new position papers for upcoming Brexit negotiations.  Some say that GBP could come under renewed pressure as the focus returns to Brexit.

The NZD has nudged up 0.2% from last week’s close to 0.7325.  NZD/AUD has managed to find a base just over the 0.92 mark over recent trading sessions and currently sits around 0.9230.  On the other NZD crosses, changes are fairly muted, but the outperforming EUR sees NZD/EUR down 0.3% to the 0.62 mark.  Oil prices have almost fully reversed Friday’s 3% surge, but CAD has managed to hold its ground against the USD. 


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