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US Dollar May Rise, GBP Mute as Brexit Overhang Mutes BoE Hike Bias

US Dollar May Rise, GBP Mute as Brexit Overhang Mutes BoE Hike Bias

Daniel Dubrovsky, Strategist

Asia Pacific Market Open Talking Points

  • US Dollar eyeing uptrend resumption in the aftermath of less dovish Fed
  • Sentiment-linked crude oil prices sink after OPEC commentary with S&P
  • GBP/USD ignores BoE Mark Carney hawkish tilt, Brexit uncertainty looms

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FX News Thursday

The US Dollar outperformed against its major counterparts on Thursday, building on gains from yesterday’s less dovish-than-expected Fed monetary policy announcement. The Greenback’s appreciation picked up pace during the European trading session as S&P 500 futures turned lower as anticipated. Weakness prolonged with an uninspiring earnings report from Caterpillar Inc.

Sentiment-linked crude oil prices also followed suit after a delayed reaction to the Fed, clearing a major rising trend line that has increased the odds of a bearish reversal. Just as the commodity embarked on its journey lower, OPEC Secretary General Mohammad Barkindo noted that the cartel is working to avoid an energy supply crisis given the situation in Venezuela.

Oil Sinks with S&P 500

US Dollar May Rise, GBP Mute as Brexit Overhang Mutes BoE Hike Bias

Chart Created in TradignView

The British Pound showed a muted reaction to the Bank of England monetary policy announcement even though Governor Mark Carney talked up interest rate hikes. The uncertainty that looms over the United Kingdom, Brexit, was cited as a concern which inherently saps the appeal of Sterling given geopolitical risks.

US Dollar Technical Analysis

On a daily chart, DXY appears to be making an attempt to retest late-April highs after bouncing on former resistance-turned-support at 97.52. The US Dollar thus sits right under June 2017 highs and under the psychological barrier between 98.15 and 98.33. On the whole, the US Dollar has been slowly trending higher this year, guided by rising support from late September 2018.

DXY Daily Chart

US Dollar May Rise, GBP Mute as Brexit Overhang Mutes BoE Hike Bias

Chart Created in TradingView

Friday’s Asia Pacific Trading Session

Aside from Australian building approvals, Friday’s Asia Pacific economic docket is relatively light. On top of this, markets are eagerly awaiting the US jobs report at the end of this week. With S&P 500 futures trading little changed, there may be a brief period of consolidation before critical data crosses the wires.

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.