Risk Appetite Improves Ahead of Tomorrow’s US CPIs

USD SLIDES, EQUITIES GAIN AMID LIGHT AGENDA, BUT US CPIS LOOM

The US dollar traded lower against the majority of the other major currencies on Tuesday and during the Asian session Wednesday. It gained only against CAD, while it was found virtually unchanged versus JPY. The greenback lost the most ground versus AUD and NZD.

DJIA — TECHNICAL OUTLOOK

The Dow Jones Industrial Average cash index traded higher on Tuesday, breaking above the 35320 barrier, marked by the highs of February 4th and 8th. Overall, the index remains above the upside support line drawn from the low of January 24th, and even if we see a setback tomorrow due to the US CPIs, as long as the price stays above that line, we would consider the short-term outlook to be positive.

AUD/USD — TECHNICAL OUTLOOK

AUD/USD edged north yesterday, after it hit support near the 0.7110 zone. Overall, the pair has started forming higher lows, marked by the upside line drawn from the low of January 28th, but it has yet to start printing higher highs and thus, we will adopt a cautiously-bullish stance for now.

AS FOR TODAY’S EVENTS

The calendar remains very light. The only release worth mentioning may be Germany’s trade balance for December, with the forecast pointing to a small decline in the nation’s surplus, to EUR 10.4bn from EUR 10.9bn. That said, Germany’s trade balance has rarely been a market mover and thus, we don’t expect any reaction by the euro at the time of this release.

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