· The dollar was on the defensive on Monday in light year-end trading after suffering a setback in the previous session, as safe-haven demand for the greenback waned on hopes of a U.S.-China trade deal and renewed optimism about global growth.
Sentiment was also boosted during Asian hours after China’s central bank unveiled a measure that would help lower borrowing costs and boost flagging economic growth. Investors also cheered a report forecasting China’s 2019 retail sales grew by 8%.
As the dollar fell out of favor, its index against six major currencies eased a shade to 96.810 following Friday’s 0.6% which was its biggest single day percentage drop since June.
With Friday’s loss, the index’s gains for the year have shrunk to 0.7%, putting it on track for the smallest annual change in six years.
Against the Japanese yen, the dollar was a tad weaker at 109.13, on track to end the year slightly below where it started in January.
· Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The market is feeling the pressure of Monday’s closing price reversal top. A trade through 96.295 will reaffirm the downtrend. A secondary lower top at 97.405 has also formed.
A trade through 97.405 will negate the closing price reversal top and signal a resumption of the uptrend.
The short-term range is 98.045 to 96.295. Its retracement zone at 97.170 to 97.380 is resistance. It stopped the selling earlier in the week.
The minor range is 96.295 to 97.405. Its 50% level at 96.850 is the next downside target.
The main range is 94.665 to 98.735. Its retracement zone at 96.700 to 96.220 is major support. This zone is controlling the longer-term direction of the U.S. Dollar Index.
Daily Swing Chart Technical Forecast
Based on the early price action and yesterday’s confirmation of the closing price reversal top, the direction of the March U.S. Dollar Index the rest of the session on Friday is likely to be determined by trader reaction to the 50% level at 97.170.
Bearish Scenario
A sustained move under 97.170 will indicate the presence of sellers. If this continues to generate enough downside momentum then look for the selling to possibly extend into the minor pivot at 96.850. This is followed by the major 50% level at 96.700.
Bullish Scenario
Overcoming 97.170 will signal the presence of buyers. If this move generates enough upside momentum then look for a possible surge into the short-term Fibonacci level at 97.380, followed by the main top at 97.405.
Taking out 96.405 will change the main trend to up. This could trigger an acceleration to the upside.
· Hong Kong will end 2019 with multiple protests planned for New Year’s Eve and New Year’s Day aimed at disrupting festivities and shopping in the Asian financial hub, which has seen a rise in clashes between police and protesters since Christmas.
Events dubbed “Suck the Eve” and “Shop with you” are scheduled for New Year’s Eve on Tuesday around the city, including in the party district of Lan Kwai Fong, Hong Kong’s picturesque Victoria Harbour, and popular shopping malls, according to notices circulated on social media.
· North Korean leader Kim Jong Un called at a ruling party meeting for "positive and offensive measures" to ensure security ahead of a year-end deadline he has set for denuclearisation talks with the United States, state media KCNA said on Monday.
Kim convened a weekend meeting of top Workers' Party officials to discuss policy matters amid rising tension over his deadline for Washington to soften its stance in stalled negotiations aimed at dismantling Pyongyang's nuclear and missile programmes.
At a Sunday session, Kim suggested action in the areas of foreign affairs, the munitions industry and armed forces, stressing the need to take "positive and offensive measures for fully ensuring the sovereignty and security of the country," KCNA said, without elaborating.
· China’s factory activity likely expanded again in December on stronger external demand and an infrastructure push at home, but the pace of growth is set to ease as markets await more certainty on a U.S.-China trade truce, a Reuters poll showed.
The official Purchasing Managers’ Index (PMI) for December is expected to come in at 50.1, slightly above the 50-point mark that separates expansion from contraction on a monthly basis, according to the median forecasts of 27 economists.
· China’s retail sales are expected to increase 8% in 2019 to 41.1 trillion yuan ($5.88 trillion), the official Xinhua News Agency reported on Monday, citing a commerce ministry official.
That compared with a 9% rise in retail sales in 2018.
· Thai November exports fall 7.7% year-on-year, current account surplus widens: central bank
Thailand’s current account surplus was $3.38 billion in November, up from $2.91 billion in October, the central bank said on Monday.
Exports declined 7.7% in November from a year earlier, after falling 5% in October.
Imports slumped 13.9% in November from a year earlier, after falling 9.2% in the previous month.
November saw a trade surplus of $1.97 billion, compared with October’s $2.09 billion surplus.
Private consumption in November dropped 0.4% from the previous month, while private investment contracted 1.6%.
The economy is expected to grow close to 2.5% in the fourth quarter from a year earlier, a central bank official said.
· Oil prices traded at three-month highs on Monday, underpinned by optimism over an expected U.S-China trade deal, while traders kept a close eye on the Middle East following a U.S. air strike.
Markets showed little initial reaction to news of the U.S. strikes in Iraq and Syria against an Iran-backed militia group, even as U.S. officials warned “additional actions” may be taken.
West Texas Intermediate (WTI) crude futures CLc1 edged up 5 cents to $61.77 a barrel by 0529 GMT. The U.S. benchmark is up about 36% so far this year.
Brent crude futures LCOc1 were at $68.36 a barrel, up 20 cents, or 0.3%. The international benchmark has risen around 27% in 2019.
Reference: Reuters, CNBC, Yahoo
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