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
GBP/USD
Mixed
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
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
Oil - US Crude
Mixed
Bitcoin
Mixed
More View more
Real Time News
  • $USDCAD may extend declines while $EURUSD turns higher based on trader positioning signals. What is the outlook for the Canadian Dollar and #Euro incorporating IG Client Sentiment? #CAD - https://www.dailyfx.com/forex/fundamental/article/special_report/2020/02/19/USDCAD-Outlook-Bearish-EURUSD-Forecast-Bullish-on-Positioning.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/ZiW77qolR2
  • Hey, traders 👋 do you want live AMAS with our analysts, market updates and tools to improve your trading strategy? Join us now on Instagram! 👉 https://t.co/pHGzVMqsC4 https://t.co/LTuJok49Ac
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.98%, while traders in France 40 are at opposite extremes with 81.87%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/d3YBidnCIl
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.10% 🇨🇦CAD: 0.10% 🇳🇿NZD: 0.09% 🇬🇧GBP: 0.03% 🇨🇭CHF: -0.01% 🇯🇵JPY: -0.15% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/T3eOx2Lw1X
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: France 40: 0.63% Germany 30: 0.62% Wall Street: 0.28% US 500: 0.27% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/7P5zkqlgMm
  • The #Euro may retrace higher before resuming a selloff that brought the single currency to the lowest level in close to three years against the US Dollar. Get your market update from @IlyaSpivak here: https://t.co/6tE2Xibkiw https://t.co/vfFbt3Q7NT
  • LIVE NOW: In this session, Currency Analyst @ZabelinDimitri will analyze the cross-asset impact of geopolitical risks affecting markets in the week ahead. https://www.dailyfx.com/webinars/146770987
  • The $USD gained versus SGD and IDR despite a “risk-on” tone in markets, boosted by strong declines in the Euro. What is the week ahead for USD/SGD, USD/IDR, USD/PHP and USD/MYR? Get your market update from @ddubrovskyFX here: https://t.co/3zCSbkEQ2c https://t.co/edBGpLGUPg
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.90% Silver: 0.52% Gold: 0.04% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/AGzdmphrrt
  • LIVE IN 30 MIN: In this session, Currency Analyst @ZabelinDimitri will analyze the cross-asset impact of geopolitical risks affecting markets in the week ahead. https://www.dailyfx.com/webinars/146770987
Why the Real Doomsday Isn't October 17

Why the Real Doomsday Isn't October 17

2013-10-15 23:10:00
Kathy Lien, Technical Strategist
Share:

There’s a misconception out there that the US will automatically run out of cash on October 17 and immediately default on its debt, and while that’s not entirely true, the risks are growing more dire by the hour.

For the past two weeks, investors have been hopeful that Congress would pass a bill to re-open the government and avoid the first ever US debt default, but now 15 days into the shutdown and with less than 36 hours to go before the Treasury reaches its borrowing limit, the optimism is fading fast.

Stocks resumed their slide today, carry trades were liquidated, and the US dollar (USD) extended its losses against most major currencies after the White House rejected the House proposal and talks in the Senate broke down.

To date, currencies and equities are seeing a controlled selloff, even after rating agency Fitch put the US credit rating on negative watch, although many investors fear that the dollar will collapse if the US defaults on its debt.

Thankfully, October 17 is a soft, and not a hard deadline. While we would certainly like to see a deal reached before this Thursday, at this stage, it is growing increasingly unlikely. Last month, US Treasury Secretary Jack Lew said "We estimate that on October 17, the Treasury would have only approximately $30 billion to meet our country's commitments. This amount is far short of net expenditures on certain days, which can be as high as $60 billion.”

The key words there are "certain days." The US government won't automatically miss its first bond payment exactly on October 17, but it could happen shortly thereafter. To buy some more time, the government could prioritize certain payments, but this strategy is not sustainable, especially since there is a major benefits payment due on November 1, which is the day many consider to be the real doomsday.

While we expect the dollar to extend lower if the October 17 deadline passes without some kind of deal being struck, we don't expect the greenback to instantly drop another 5% or 10%. If Congress manages to pass a bill to raise the debt ceiling and re-open the government by Monday, it would still be enough time to avoid a default.

Read Special Report: Lesser-Known Facts About Trading the Debt Crisis

Japan Kicks off 53-Day “Diet Session”

The breakdown in the US budget talks drove the Japanese yen (JPY) sharply higher against all major currencies on Tuesday, and if there is no deal by tomorrow, we could see another 1% slide in the JPY crosses. USDJPY, in particular, could erase all of its recent gains and drop below 97.

Over the next 24 hours, the market's risk appetite will continue to be the primary driver of currency flows. The yen will fall if Congress magically produces an eleventh-hour deal, but if it fails, we expect the yen to move lower as more investors liquidate out of JPY crosses.

However, the US isn’t the only country whose politics are worth watching. Last night, Japanese Prime Minister Shinzo Abe kicked off the government's extraordinary 53-day “diet session.” During this session, policymakers will finalize the details of the 5-trillion-yen stimulus package, which is being called the “Third Arrow of Abenomics.”

This will entail important discussions regarding a reduction in the corporate tax rate and various tariffs, and while flushing out Abenomics won't be easy, the heightened encouragement of foreign direct investment is clear.

The Japanese government hopes to establish special economic zones with less regulation in hopes of boosting business investment. The 53-day session runs until December 6, after which lawmakers are expected to announce the details of their plans. That’s quite a long time, though, especially considering the imminent risk of the US breaching its debt limit, so for that reason, Japanese fundamentals have taken a backseat to the troubles in the US.

By Kathy Lien of BK Asset Management

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

DISCLOSURES

News & Analysis at your fingertips.