US dollar sell-off proves short-lived, global markets mixed, ASX futures down 14 points

The US dollar sprang back last night, after having fallen significantly yesterday morning on US Federal Reserve comments. Traders have taken charge and resumed short bets on the EURUSD, seeing it reverse yesterday's highs above US$1.10 to be back trading down at US$1.065. So for now, the status quo has resumed, with maybe a little more of a tentative tone with regard to the size of risk being put into the short euro theme. There will have certainly been a lot of weight in that trade and, in hindsight, it's no wonder that the reversal kicked so hard when it did. I'm sentimental about seeing this US dollar strength end, so my notes yesterday should be read with the understanding that I am likely suffering confirmation bias when it comes to looking too intently for what might not be there; i.e., an end to the US-dollar-strengthening theme. No matter how right I may think I am about the US market being too focused on a Fed rate hike and not focused enough on the threat of disinflation, the market will always be right-er!!!

Today's first chart shows a 'window' into the behaviour of the US dollar index (black) and EURUSD (orange). While neither of these instruments are back to their respective highs/lows, they certainly backed out a lot of the move from the first 12 hours that followed yesterday's Fed statement; the only question will be whether this aberration was a warning to those who were getting complacent in this trade, or simply a blip on the radar that will get buried under more risk-taking.

In today's second chart I have shown US dollar spot gold (XAUUSD), which has been in a broad down-trend for two months now; however, it is now sitting snug at the top of the down-trend's range, having bounced off recent buying support over the past few sessions. This could present an entry for those who believe that gold will break higher from this point, should it hold this US$1,170 level for the next session or two and break upwards out of this channel.

Australia's ASX 200 had a cracking day yesterday and, as you can see from today's last chart, the index is now sitting back near recent highs. This really illustrates the amount of money that is willing to buy the dips in Australia; having faded from this level down 5,750 throughout early March, plenty of willing buyers have pushed it back up to a level whereby it may launch another assault on the 6,000 level. Those wishing to get long the Australian market may wish to wait for a close above 6,000 before entering, as selling resistance here could see another pull-back. The current 5,750 - 6,000 range is only six weeks old but nonetheless may offer some guidance to those trading this market.

Today‚Äôs charts are taken from the Rivkin Trader platform. 30,000 global instruments available to trade including FX, commodities, index, ETFs and international shares. Trade Australian share CFDs from just $8 or 0.10%. Click here or phone 1300 748 546 to open a Rivkin Trader account now.

Upcoming economic announcements: Bank of Japan minutes out at 10:50am, Glenn Stevens of the RBA speaks at 1:10pm, Canadian CPI out at 11:30pm, all Sydney time.

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