Is the dollar index about to break, will the dollar rise!? ~ February 14 highlights and schedule ~
Yesterday, stock prices remained sturdy as risk-off tensions eased. The RBNZ's statement did not hint at a dove, leading to a rebound in Australasian currencies. Additionally, following the US CPI results, dollar buying has begun, and the Dollar Index has moved up to its recent high.
Will the dollar strengthen further, the Dollar Index push to new highs or break higher, and will EUR/USD continue to press lower? Attention is focused on these developments.
◎ Today's Points of Interest
1) US Budget Risk and Dollar Strength
With the US budget deadline tomorrow, it appears a compromise is moving forward. While not a complete agreement yet, progress is supporting a reversal of risk-off sentiment and pushing stock prices higher. What to watch out for is the possibility of failing to reach an agreement at the last minute, which could abruptly tilt the market back to risk-off.
Moreover, internationally, discussions between the US and China on relations and trade are ongoing. No negative news has emerged so far, and it seems some progress is being made step by step. However, if talks were to suddenly break down, risk-off could prevail.
Although there is risk on the US side as described above, economic indicators suggest a strong economy and improving conditions. Also, given that there are few currencies attractive to buy relative to the US dollar, the dollar is being purchased. The Dollar Index has reached a key high level. If the index breaks through that resistance, further dollar strength could follow. Caution is warranted for the Dollar Index as well.
For information on the US dollar, please refer to the following as well↓↓↓
2) European Economy and Politics
Yesterday, out of nowhere, concerns about a snap election in Spain emerged, previously not on the radar. Reports indicate a failure to reach an agreement over the budget, with a dissolution election being likely. While the reaction in the euro was not a dramatic sell-off, this is undoubtedly a negative factor. Other countries like Italy and France are also dealing with political turmoil.
Additionally, concerns about an economic downturn are spreading across European countries. In this context, Germany's GDP data will be released today. If Germany's GDP underperforms, the euro could be sold, potentially breaking lower. This is worth watching closely.
EUR/USD 4-hour chart
EUR/GBP 4-hour chart
◎ Today's Economic Calendar
Thursday, February 14
U.S.-China Senior Trade Officials Talks
16:00 EUR Germany GDP
18:30 GBP BoE external member remarks
19:00 EUR Eurozone employment change & GDP
22:30 USD Retail Sales
Friday, February 15
U.S.-China Senior Trade Officials Talks
U.S. Congressional Budget Deadline
U.S. Treasury debt issuance & interest payment
01:00 USD Harcker, President of the Philadelphia Fed remarks
05:45 AUD Kent, Deputy Governor of RBA remarks
06:30 NZD NZ Purchasing Managers' Index
