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Weekly FX Chartbook: Dollar rally looking stretched, bullish signals for NZD

Forex 5 minutes to read
Charu Chanana 400x400
Charu Chanana

Head of FX Strategy

Summary:  With hawkish vibes since the start of the year from Fed pushback and jobs/inflation data surprises, the gap between market expectations for Fed’s 2024 rate cuts and the December dot plot has nearly closed. Dollar positioning has also turned to a net long, suggesting the bar for further gains may be high. China markets have returned with optimism after the Lunar New Year holiday, but the sustainability of the trend will be one to watch and that can support CNH and AUD, while NZD looks more compelling amid room for RBNZ rate cut delay and a technical buy signal.


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US inflation surprises were the key story last week but USD only gained 0.2% WoW, while miss in Swiss CPI made CHF an underperformer.
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Our FX Scorecard suggests silver and NZD are leading the pack, while dollar momentum is turning bearish.
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Forex COT to the week of Feb 13 saw dollar turning to a net long, with shorts gathering pace for AUD, CAD, JPY and CHF. Further reduction also seen in EUR longs, while fresh longs were added to MXN, NZD and GBP.
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