19.02.2020: Nothing can halt USD steady rally (USDХ, EUR, CAD)

The US dollar index has been extending its
stellar rally for three weeks in a row. The US currency benefits from both risk aversion
and risk appetite. Today, the economic calendar reminds traders
of US inflation data, building permits, and speeches by several Fed officials. Meanwhile, the US dollar has been trading
with extreme volatility which has not been seen for long. It would be a good idea to remain cautious
as the greenback could lose momentum and halt its climb. Market sentiment will depend on macroeconomic
data and the tone of the Fed officials. The US dollar index opened the New York trade
at near 99.4. The strong New York empire state manufacturing
index again proved immunity of the US economy to the coronavirus unlike the eurozone’s
economy which disappoints investors with negative metrics. Such difference in fundamentals props up the
US dollar and weakens the euro. The euro/dollar pair dropped below the level
of 1.08 with prospects of a bounce from 1.0790. The euro could continue its weakness both
in the short and medium term. The euro will be able to recover only amid
positive fundamentals. On the whole, both American and European business
is equally vulnerable to troubles in the global trade and the coronavirus. However, every time the market finds evidence
that the US economy regains footing promptly whereas the eurozone’s economy is not able
to overcome headwinds for long. The USD/CAD pair is trading firmly lower,
having reversed from yesterday’s climb. The loonie bulls are again setting the tone,
so the currency pair retraced to a one-week low at 1.3221. The Canadian dollar’s strength comes from
rising oil prices. Today traders were anticipating upbeat data
on Canada’s consumer inflation. The CPI rose 2.4% in January on a yearly basis,
beating the forecast for a 2.3% gain. Thus, the loonie bears are discouraged as
the Bank of Canada is unlikely to ease monetary policy in the near future. The USD/CAD pair is expected to continue its
correctional decline. Earlier, the main reason behind the advance
of the currency pair was strong macroeconomic data from the US and downbeat data from Canada. Today the pound sterling plummeted below the
level of 1.30 versus the US dollar despite unexpected inflation surge in the UK. Investors are monitoring the trade talks between
London and the EU.

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