Article / 17 April 2015 at 12:55 GMT

The USD whipsaw is here to stay... for now

Director / Accumen Management
United Kingdom
  • USD selloff unsupported by data
  • GBP, CAD, AUD all head higher
  • US CPI print could provide direction

By Ken Veksler

It seems it’s just plain healthy to take some time away from screens occasionally. Given the sporadic nature of travel and the time it affords you (read: me) to be in front of a machine, with a little pause comes greater objectivity. 

The point of this philosophical rant is simply to say that I remain resolute in my stance on the ongoing consolidation phase of the broader DXY. The moves seen so far this morning and certainly overnight are testament to this very perspective. 

We’ve seen a USD selloff on nothing even remotely new and certainly nothing supported by data. Yet EURUSD is significantly higher, the Cable likewise (despite some mild attribution to slightly better employment data) as is the AUDUSD... even the loonie is looking a sight shinier!

Why though? Why now? Yes, they’re rhetorical questions. You needn’t have the answers, as I’m sure few others do either...
 
Given the above though, I’m not prepared to fade the USD weakness at the moment, as I believe it may have some legs in it. The USD CPI due shortly will naturally be the standout event today and will present very short-term resolution as to which way the USD will be headed. 

Paddington Bear
Will a soft CPI print bring in the USD bears? Photo: iStock

I’d wager though, that the result is likely to be a softer print and this could just add that little bit more fuel to the USD-sale fire. 

Couple this with the potential for CAD retail sales data to surprise to the upside and all of a sudden you have USDCAD revisiting levels sub the 1.2000 handle. Alright... on that last one, I may just be talking my book a little, but hey, you can’t blame me for trying.

Truthfully I don’t have a great deal more light to shed on what has been a rather mixed week in markets and one which is likely to be the benchmark – as far as price action is concerned, anyway – for the coming month or two.

As such, and especially given that it's Friday, helmets on and good luck out there today.

— Edited by Michael McKenna

Ken Veksler is director of Accumen Management

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