After last weeks strong US economic data releases and signing of the phase one trade agreement, the US$ continues to strengthen. US$ hit a fresh one month highs vs the major currencies and Chinese CNY extended to a 6 month high. Expect markets to be relatively range bound today as the US markets are closed for Martin Luther King day. In other news ECB president speaks today, US impeachment trial starts tomorrow and Libya oilfields closed.
Oil prices rose on the news that a military blockade closed down the Libyan oil fields, reducing flows from OPEC to a trickle. Stronger oil prices has enabled C$ to remain firm whilst other trade-exposed currencies eased vs the strong US$. No economic data out from Canada and with a US holiday, look for oil prices to dictate C$ short term direction.
The generally strong US$ put pressure on Euro, causing the single currency to fall below 1.11 and test 2020 lows. 1.1065 should provide an intraday support for Euro and the market will wait for ECB Presidents speech today for direction. Tuesday a number of key European economic releases are due out and should provide direction to Euro.
GBP remains under-pressure from a combination of a stronger US$ and Brexit concerns. With both BOE rate decision on Jan 30th, and departure from Europe on Jan 31st, investors remain cautious of buying GBP. Tuesday sees a number of UK data releases which should provide some direction to GBP. Intraday GBP has bounced off its lows and look for it to continue to straddle 1.3000 vs US$.