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With the Fed dropping its hawkish bias, and with recent US data deteriorating slightly, bond prices should remain supported and yields undermined going forward

Despite today’s slight pullback in risk assets, the start of 2019 has been very good for equities, commodities and government bond prices.

With both the US and Canada out on a bank holiday, we’re seeing a relatively quiet session in the FX market. As the chart below shows, the dollar index is falling for its third consecutive day after rally though the first seven days of the month.

At a good $1325 per ounce, the precious metal is trading just under its 2019 high of $1326 it hit at the end of January. Gold is now not too far off the 2018 peak of $1366, where I think it is potentially heading to over the coming weeks.

In the middle of the week, the RBNZ opted to leave its primary interest rate unchanged at 1.75%, where the central bank expects it to remain for a “considerable period.” Governor Orr and company noted that there were both upside and downside risks to inflation; therefore, the next change to interest rates could either be higher or lower.

Sentiment turned positive apparently on renewed hopes over a US-China trade deal, as the third round of talks between the two parties since Presidents Trump and Xi agreed on a truce in December 2018, concluded.

Today’s latest macro pointers from some of the major developed economies have disappointed expectations – quite badly, in some cases – fuelling fears over an economic slowdown.

The EUR/USD and other euro crosses remain pressured by growing signs of a slowdown in the Eurozone economy. An interest rate increase in Q3 looks increasingly unlikely now given the recent fundamental developments — or lack thereof — with the Brexit situation still unresolved and the Eurozone economy ailing.

Despite the Federal Reserve dropping its hawkish bias, the US dollar has been quite resilient. The closely-watched Dollar Index rose for the eighth consecutive day until yesterday when it was hit by profit-taking, before rebounding again today

After being hit by profit-taking yesterday, the US dollar was trading mixed on Wednesday morning when this report was written. The greenback was holding its own well against the euro and the pound but was down against some commodity dollars. FX market participants were looking forward to US consumer inflation data, due for release at 13:30 GMT (08:3...

If you had checked USD/CHF’s exchange rate at Friday’s close and a mere 30 minutes after Monday’s open, you wouldn’t think anything was amiss…at least if you didn’t have any stop losses within 100 pips!

The major FX pairs further extended their losses earlier this morning, before rebounding to turn green on the day as North American participants slowly made their way to their trading stations.