Summary:

• US dollar loses steam in early trading on Monday after having the brilliant past week, BoE’s Ramsden weighs in to an interest rate hike talks
• USDCAD failed to retain its last week gains after a solid inflation print, what’s next for the pair?
• Asian stock market trade broadly higher following healthy results on Wall Street

The past week belonged to the US dollar as it marked its second best week this year fuelling by more hawkish than expected FOMC minutes. However, the story seems to be coming to an end at the beginning of the new trading week as the greenback is edging lower against its all major peers in G10. During the Asian session we did not have any particular reports. In turn, looking back to the weekend one may mention an interview of Bank of England deputy governor Dave Ramsden who told the Times that he spots more impetus on wages. He added that the whole MPC is keeping a close eye on what happens through the early part of this year so as to see if the BoE forecasts of wage growth assuming a pick-up to 3% are realized. Finally, he admitted that the case for higher rates strengthened in his eyes compared to his prior view. Why could it be a noteworthy change in the BoE? Well, Ramsden voted against a hike in November 2017, so his fresh outlook means he is slowly moving to a hawkish camp.

Ramsden’s words have had a little impact on the pound so far. The GBPUSD is climbing higher mainly due to overall US dollar weakness. The first resistance might be localized in form of an upper limit of a triangle pattern. Should buyers deal with it successfully, it would pave the way for more gains. Source: xStation5

Admittedly, the Canadian dollar is rising against the USD the least compared to its peers in G10, the pair could be worth looking at. This is especially true when we take into account the latest inflation report released on Friday showing unexpected resilience of core price growth to base effects. As a result of quicker than anticipated core inflation the CAD surged erasing a crucial part of gains made prior to the reading. Accordingly, the pair failed to close above its crucial technical resistance and therefore one may count on a downtrend resumption.

Technically, the pair seems to be poised to resume its downward trend after it failed to break 1.2680. Thus, a move toward 1.24 appears to be on the cards. Source: xStation5

At the end it’s worth mentioning Asian indices as they’re gaining in the morning. The best performers are the NIKKEI (JAP225 on xStation5) and the Shanghai Composite, the former closed 1.2% higher while the latter is adding a touch above 1% a while before the end of trading. Rosy moods might be response to the Friday’s session on Wall Street which saw all three main indices rising well above 1% (the NASDAQ or US100 on xStation5 moved up as much as 1.8%.

The JAP225 seems to be en route to its critical resistance placed in the vicinity of 23100 points. A breakout of this level will be pivotal once buyers want to continue climbing higher making a fresh peak in the current bull run. Source: xStation5