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The US dollar is mostly unchanged overnight on the back of the dovish waxing from the three leading central banks of the world, which muffles any rates volatility and takes any juice out of the differential narrative.

But outside of the Bank of Japan’s (BOJ) possible to move into negative rates, US Fed’s Powell and European Central Bank’s (ECB) Christine Lagarde’s messaging were very much a ” steady-state” of readiness. Still, the USD’s swing factor remains singularly on the market read from US fiscal policy and with nothing new in terms of prospects for passage, the US dollar cannot get excited.

It was a tranquil start to the New York session across USDAsia currencies and expectedly so as we enter the Lunar New Year. Typically, a low liquidity period when crossing the spread gets a little trickier, and trading volume tones down considerably.

The People’s Bank of China (PBoC) is unlikely offers up any obstacle for stronger Yuan post-LNY, so the Yuan bulls continue to set sights on 6.25 amid the confluence of positive flow dynamics.

The ongoing shift to liberalise the currency and lighter positioning after last weeks’ short dollar position clear out. Although the authorities have taken some steps to slow the pace of RMB appreciation, these measures are soft and not intervention aggressive styled push back and should not affect RMB’s travel direction.

With oil prices trading softer today and given we are at the start of the Lunar New Year holiday, I would expect limited foreign flows or trading in Malaysian assets among offshore banks. So, the FX market should be relatively quiet.

Gold remains supported

Lower-than-expected US CPI print rather fleeting and gold market quickly reversed lower from overnight highs but remained well supported on dips on the background reflation impulse.

FX Market analysis and insights from Stephen Innes, Chief Global Market Strategist at Axi