We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • Indices Update: As of 08:00, these are your best and worst performers based on the London trading schedule: France 40: 0.33% Germany 30: 0.30% Wall Street: 0.13% US 500: 0.11% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/7DedGNWcIG
  • Join our analysts for live, interactive coverage of all major market-moving economic data at the DailyFX Webinars. https://www.dailyfx.com/webinars?re-author=Cottle?utm_source=Twitter&utm_medium=Cottle&utm_campaign=twr
  • Have you been catching on your @DailyFX #podcast "Global Markets Decoded"? Catch up on them now, before new episodes release! https://t.co/mk1w1DM2Rh https://t.co/qjEHpxk8LC
  • CHF Switzerland Oct Exports MM: Actual: -1.3% Previous 2.7% Imports Actual: -2.4% Previous: -1.3%
  • Missed the Cross-Market Weekly Outlook webinar? See the recording here - https://t.co/3V2u4dXQRW Topics included: - UK general election, #Brexit - #RBA and #FOMC policy meeting minutes - US-China #trade war outlook - #OECD economic forecasts
  • How can you use PPI in #forex trading? Find out: https://t.co/TZEdU2SdaS #tradingstyle https://t.co/56Yeqg55OO
  • European Opening Calls from IG #FTSE 7321 +0.18% #DAX 13227 +0.15% #CAC 5939 +0.15% #AEX 599 +0.13% #MIB 23508 +0.19% #IBEX 9270 +0.13% #STOXX 3710 +0.14%
  • NZD/USD Technical Analysis: Trend Aims Lower Amid Congestion - https://www.dailyfx.com/forex/technical/home/analysis/nzd-usd/2019/11/19/NZDUSD-Technical-Analysis-Trend-Aims-Lower-Amid-Congestion.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #NZDUSD #technicalanalysis
  • - #Gold prices may rise if the ECB and FOMC meeting minutes incite rate-cut expectations - #SwedishKrona, #NorwegianKrone may also rise if dovish bets boost appeal of riskier FX - NOK, SEK may retreat on OECD publication, trade war risks, Sweden report https://www.dailyfx.com/forex/fundamental/article/special_report/2019/11/19/Gold-Prices-SEK-NOK-May-Rise-on-ECB-FOMC-Minutes.html
  • As promised, here is a link to my previous webinar where I outlined how leveraged debt could exacerbate a downturn - https://t.co/gfjnm1bPBo
FOREX TREND MONITOR: Dollar Rebound Hinted as Risk Appetite Fades

FOREX TREND MONITOR: Dollar Rebound Hinted as Risk Appetite Fades

2011-03-21 11:24:00
Ilya Spivak, Sr. Currency Strategist
Share:

Major Currencies vs. US Dollar (% change)

14 Mar 201118 Mar 2011

FOREX_TREND_MONITOR_Dollar_Rebound_Hinted_as_Risk_Appetite_Fades_body_03212011_table.png, FOREX TREND MONITOR: Dollar Rebound Hinted as Risk Appetite Fades

Dollar Rebound Hinted as Risk Appetite Fades

Sentiment trends are firmly in control of currency markets, with all of the majors showing robust correlations with the MSCI World Stock Index (a proxy for investors’ underlying risk appetite). Last week ended on a broadly positive note as the G7 intervened to counter Yen volatility, but the path of least resistance continues to lead lower considering the headwinds facing sentiment remain largely in place.

First, the G7 intervention left the underlying issues present in the aftermath of the Tohoku earthquake unresolved. The casualty tally continues to mount, the extent of the damage and cost of reconstruction is still uncertain, and the threat of disaster at the Fukushima Daiichi nuclear power plant continues to linger even after two of its six damaged reactors have been reportedly brought under control.

Meanwhile, a new phase of the Libyan crisis is unfoldingas the US, UK and France step in militarily to underpin the rebellion against embattled leader Muammar Qaddafi. The action sets an important precedent for future Western involvement in similar scenarios, particularly as protesters face a harsh response in Bahrain. In turn, that uprising is seen by many as a trial run before something similar is attempted in Saudi Arabia, the world’s top oil exporter, and crude prices seem likely to resume their ascent to the detriment of risky assets at the thought that the Kingdom could look like Libya before long.

EURUSD: Risk Trends, Debt Crisis Meet with All Eyes on EU Summit

The Euro’s correlation with underlying sentiment trends continues to strengthen, pointing to the distinct possibility of a reversal lower against a backdrop of Japanese- or Libyan-driven risk aversion. Regional event risk will intersect with broader trends on Friday as EU leaders convene for a much-anticipated summit that is expected to produce a “grand bargain” to structurally address fears of a sovereign default within the common market. As we discussed in detail last week, the preliminary outlines of the scheme amounted to nominal progress but fell woefully short of a true bulwark against further sovereign stress, pointing to a wave of disappointed selling across the spectrum of risky assets if the final version is not substantially strengthened. Preliminary March Euro Zone PMI figures as well as Germany’s IFO Survey of business confidence headline the local economic calendar.

FOREX_TREND_MONITOR_Dollar_Rebound_Hinted_as_Risk_Appetite_Fades_body_03212011_EUR.png, FOREX TREND MONITOR: Dollar Rebound Hinted as Risk Appetite Fades

Source: Bloomberg

GBPUSD: Sentiment Takes Over as Leading Driver of Price Action

Risk trends have taken a lead role in driving British Pound price action, threatening a reversal lower in the works. With that in mind, price action may turn messy if interest rate hike expectations find renewed momentum as the CPI inflation rate ticks to 4.2 percent, the highest since October 2008, while the Bank of England prints minutes from its last policy meeting. The latter seems especially likely to produce volatility given the possibility (albeit a remote one) that another member of the rate-setting MPC defected to the hawkish camp.

FOREX_TREND_MONITOR_Dollar_Rebound_Hinted_as_Risk_Appetite_Fades_body_03212011_GBP.png, FOREX TREND MONITOR: Dollar Rebound Hinted as Risk Appetite Fades

Source: Bloomberg

USDJPY: Yen Poised to Extend Gains Despite G7 Intervention Efforts

While the outlook for the Yen continues to be clouded by considerable uncertainty, its standing correlation with overall FX market volatility seems to suggest renewed gains if risk aversion returns in earnest as expected. While the threat of intervention is clearly quite real, its aim is unlikely to simply produce a weaker currency. On one hand, a stronger Yen threatens the critical export sector that will be seen as instrumental in helping the economy recover; on the other, the Yen's increasing purchasing power will help to dull the cost of recovery efforts for individual as well as public and private entities considering so many goods and resources in Japan are imported. On balance, this means Japanese officials will look to manage Yen volatility rather than push prices in a given direction, suggesting renewed strength may be allowed to progress undeterred provided it progresses gradually.

FOREX_TREND_MONITOR_Dollar_Rebound_Hinted_as_Risk_Appetite_Fades_body_03212011_JPY.png, FOREX TREND MONITOR: Dollar Rebound Hinted as Risk Appetite Fades

Source: Bloomberg

USDCAD, AUDUSD: Canadian, Australian Dollars to Decline on Risk Aversion

The Canadian and Australian Dollars remain firmly anchored to underlying trends in investors’ sentiment. As with risk appetite itself, this foreshadows a volatile week ahead but ultimately hints at Aussie and Loonie weakness as events in Libya and Japan continue to weigh on confidence. Canadian Leading Indicators and Retail Sales figures top a very slim docket of scheduled economic data releases.

FOREX_TREND_MONITOR_Dollar_Rebound_Hinted_as_Risk_Appetite_Fades_body_03212011_CAD.png, FOREX TREND MONITOR: Dollar Rebound Hinted as Risk Appetite Fades

Source: Bloomberg

FOREX_TREND_MONITOR_Dollar_Rebound_Hinted_as_Risk_Appetite_Fades_body_03212011_AUD.png, FOREX TREND MONITOR: Dollar Rebound Hinted as Risk Appetite Fades

Source: Bloomberg

NZDUSD: Kiwi Dollar Decoupling from Comm Bloc on Rates Outlook

The New Zealand Dollar is increasingly decoupling from the remainder of the commodity bloc, with prices paying closer attention to the outlook for interest rates rather than risk trend at large. Indeed, NZDUSD now shows a formidable correlation with the spread between December US and New Zealand interest rate futures, a reflection of investors’ priced-in monetary policy expectations for the remainder of the year. This puts the spotlight on Wednesday’s fourth-quarter Gross Domestic Product reading. Consensus forecasts point to an increase of 0.1 percent from the three months through September, but even the finance minister has openly acknowledged the risk of a second consecutive quarter of negative growth. This would breed speculation that the RBNZ’s latest rate cut may not have been as temporary as it seemed, pushing the currency lower even if risk trends prove more robust than is expected.

FOREX_TREND_MONITOR_Dollar_Rebound_Hinted_as_Risk_Appetite_Fades_body_03212011_NZD.png, FOREX TREND MONITOR: Dollar Rebound Hinted as Risk Appetite Fades

Source: Bloomberg

For real time news and analysis, please visit http://www.dailyfx.com/real_time_news

To receive future articles by email, please contact Ilya at ispivak@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.