Written by Lukman Otunuga, Research Analyst at FXTM
Most emerging market currencies ventured higher during Thursday’s trading session as the Dollar tumbled to fresh three year lows.
Indonesia’s Rupiah appreciated against the Dollar on Thursday, with the USDIDR trading to levels not seen since September 2017 below 13280. With Dollar weakness, a dominant market theme, emerging market currencies such as the Rupiah could remain supported. Much attention will be directed towards the foreign direct investment report on Friday which could provide insight into how much FDI the nation received in the final quarter of 2017. An increase in FDI has the ability to bolster confidence towards the Indonesian economy, consequently boosting buying sentiment towards the Rupiah.
Dollar Index dips below 89.00
The Greenback extended losses against a basket of major currencies on Thursday morning after stumbling overnight on comments from US Treasury Secretary Mnuchin.
With Mnuchin stating a weaker Dollar is “good” for American trade, Dollar bearish investors ruthlessly attacked the currency pushing the Dollar Index below 89.00 during early trade. Sentiment towards the Dollar is turning increasingly bearish and this is reflected in the depressed price action. From a technical standpoint, the Dollar Index remains heavily bearish on the daily charts. A breakdown and daily close below 89.00 could open a clean path towards 88.00.
Commodity spotlight – Gold
Gold has jumped to levels not seen since August 2016, to above $1360 thanks to a heavily depressed US Dollar.
The yellow metal remains firmly bullish on the daily charts with further upside on the cards amid a vulnerable US Dollar. A decisive breakout and daily close above $1360 could encourage a further incline higher towards $1375. Bulls remain supported above the $1340 dynamic support level.
Sterling punches above 1.43
The GBPUSD is heavily bullish on the daily charts, mostly due to a vulnerable US Dollar. The combination of Dollar weakness and Brexit related optimism has the ability to elevate the GBPUSD towards 1.4300 and 1.4370, respectively. Technical lagging indicators such as the MACD and 50 Moving Averages both go in line with the bullish bias on the daily charts and weekly.
Bitcoin remains in the spotlight
Bitcoin displayed weak and wobbly characteristics this week as the cryptocurrency struggled to hold ground above $11,000.
There is anxiety in the air over South Korea banning anonymous cryptocurrency trading, while China’s cryptocurrency crackdown has somewhat impacted appetite for Bitcoin. Taking a look at the technical standpoint, Bitcoin remains in a bearish trend on the daily charts. Sustained weakness below $11,000 could invite a decline towards $10,000. Alternatively, a break above $12,000 could trigger a further incline towards the $13,000 lower high.
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