Dollar gains cool off for the time being

The greenback is seeing some light retracements across the board today, though the antipodeans are posting a solid rebound so far on the day. AUD/USD is up 0.8% to 0.6620 and is moving closer back towards a test of its 200-day moving average (blue line) of 0.6628.

There’s not much catalysts in play at the moment as traders and broader markets are still largely digesting the US election result. Four more years of Trump. Four more years of random “China” or “all time high” tweets. Tariffs. Trade wars. Gonna be a lot of fun there.

The dollar raced higher yesterday in factoring all the outlook of Trump’s presidency but traders are taking a step back now so far today. The greenback is slightly lower across the board but for the most part, the gains from yesterday are still sustained.

The antipodeans are the only exception, as highlighted above, with AUD/USD bouncing back strongly after once again testing key daily support closer to 0.6636-46 from late October.

Meanwhile, USD/JPY is down 0.2% to 154.25 with EUR/USD up 0.1% to 1.0740 on the day. The moves elsewhere are relatively controlled for the time being.

In the bigger picture, there is scope for the dollar to extend its run when Trump starts to flex his muscles in the president’s seat. That especially if inflation returns back into the picture and causes a stir for the Fed going into next year.

For now, the bond market is also keeping calmer with 10-year yields up just 1 bps to 4.435%. But it may not stay too quiet for long though. With election risk not out of the way, there will be plenty of flows looking to get back into the thick of things.

This article was written by Justin Low at www.forexlive.com.