Higher-than-expected US Consumer Price Index (CPI) readings failed to support the US dollar, which erased earlier gains and subsequently tumbled to 88.9 area overnight.

The January CPI reading came out to be 0.5%, topping market consensus of 0.3%. This also sparked a renewed wave of sell-off in treasuries, sending 10-year yield back over 2.9%.

US Dollar Index – Mar 2018

A weakening US dollar is accompanied with soaring equity prices, with Dow, Nasdaq and S&P 500 indices climbing 1.03%, 1.86% and 1.34% respectively. And market’s ‘fear gauge’ – VIX index, has finally come off from its recent high, which indicate that ‘risk on’ sentiment is prevailing the equity markets again.

Soft dollar sent oil and gold prices higher, due to their negative correlations. Last night’s DoE crude oil inventory build-up came below market expectation, which also helped to support crude prices. Technically, Brent oil prices have found some support at US$62.5 area and started a technical rebound. Momentum indicator RSI has jumped out from its oversold zone below 30% and MACD is about to form a ‘golden cross’ if price could sustain above current level.

USD/JPY dived further to 106.8 area (61.8% Fibonacci Retracement) after breaking down a key support level at 118.0 breaking down below 106.8 will open room for more downsides towards 104.0 (76.4% Fibonacci Retracement). Its near-term trend remained bearish with 10-Day Simple Moving Average line resuming its trajectory downwards and SuperTrend (10, 1.5) flipping down.

EUR/USD surged for a third day to 1.245 area, with its immediate support and resistance level at 1.238 (127.2.7% Fibonacci extension) and 1.251 (161.8% Fibonacci extension) respectively.

Singapore’s Straits Times Index closed 12 points or 0.36% lower yesterday, largely due to sell-off in OCBC and UOB after their earnings release. So far, all three local banks have announced strong 4Q earnings amid improved fundamentals and they are going to ride the tailwind of rising interest rates. All three banks have increased their core dividend pay-out for 2017, but DBS outshined its peers with 55% increase in its core dividend plus additional 50 cents of special dividend. This could probably explain the divergence in their share performances yesterday.

Due to Lunar New Year, many Asian markets including China, Korea, Taiwan are closed today and several more will be closed tomorrow. Traders with heavy positions in those markets could consider taking some hedging measure such as GSLO to protect their portfolio in order to have a peaceful mind for the long holiday.

Crude Oil Brent - Cash

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