US Dollar May Extend Losses as Gold Prices Surge With Stock Markets
US Dollar, USD/INR, Bank of India Rate Decision, Gold Prices, Disney Stock – TALKING POINTS
- US Dollar may extend losses as capital flees haven-linked Greenback
- Asia-Pacific stocks, gold prices and crude oil could continue to rally
- US Dollar index indicates selloff may deepen. Where might it slow down?
Wall Street stocks closed on Wednesday with a pep in their step. The Dow Jones, S&P 500 and Nasdaq indices closed 1.39, 0.64 and 0.52 percent higher, respectively. The first benchmark was carried by the movies & entertainment sub-sector, were in it Disney (DIS) contributed +77.01 points. It closed over nine percent higher for the day and added approximately $21 billion to its over $230b market cap.
Optimism in equities spilled over into foreign exchange and commodity markets. The petroleum-linked Norwegian Krone likely benefited from a rise in crude oil prices and strong appetite for growth-oriented assets. NOK’s rise came at the expense of the haven-linked US Dollar that continues to be battered in an high-risk threshold environment.
The US Dollar’s weakness may have also contributed to the continuous surge in gold prices as they comfortably traded above a record high of $2,000/oz. The precious metal’s rise has come on the heels of depressed yields – thereby decreasing the cost of holding a non-interest bearing asset – and speculation that monetary and fiscal stimulus efforts may cause future inflation to swell.
Thursday’s Asia-Pacific Trading Session
The winds of strong risk appetite may blow into Asia-Pacific trade and give a tailwind to cycle-sensitive assets at the expense of the US Dollar and anti-risk Japanese Yen. APAC stocks may rise in tandem with commodities and other growth-oriented asset classes. The Reserve Bank of India will be announcing its rate decision which could influence USD/INR dynamics.
To learn more about this event, be sure to follow ASEAN specialist Daniel Dubrovsky on Twitter @ddubrovskyFX
US Dollar Forecast: Selloff to Deepen?
Since topping at an 18-year high, the US Dollar has quickly retreated and shattered an over two-year support channel along its descent. The selloff accelerated after weeks of persistent friction eroded the slope of appreciation, subsequently leading to an over-four percent drop. Selling pressure may start abating around familiar support at 1.2185.
USD index chart created using TradingView
--- Written by Dimitri Zabelin, Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitriTwitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.