News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Bearish
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
Wall Street
Mixed
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Are you new to trading? Technical analysis of charts aims to identify patterns and market trends by utilising different forms of technical chart types and other chart functions. Get a refresher on technical analysis or begin building your knowledge here: https://t.co/qV3c7a4YR3 https://t.co/POGWDIkqqz
  • USD hegemony is at risk thanks to changes in the global economy and the long-term consequences of the US-China trade war. Get your market update from @CVecchioFX here: https://t.co/5GO9UrvO4y https://t.co/H76jNJJxU5
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out https://t.co/c51s3IBcEu https://t.co/1TiEWCbJ6t
  • Use this technical analysis pattern recognition skills test to sharpen your knowledge: https://t.co/Qgz89PTxnu https://t.co/fN2mfHgpON
  • The formation of several bullish technical patterns suggests that the haven-associated Japanese Yen is at risk of further losses against the Euro and Australian Dollar. Get your market update from @DanielGMoss here:https://t.co/qxQwHgD9Ey https://t.co/ym73tgtHLn
  • Natural gas is moving lower after weather models pointed to warmer-than-average temperatures across much of the US. Get your market update from @FxWestwater here:https://t.co/HuXPXu5PFU https://t.co/ytHqOoHnxQ
  • Gold and silver prices may continue to rise in the coming months on the back of falling real rates of return and the prospect of additional fiscal support under a Biden administration. Get your market update from @DanielGMoss here:https://t.co/OMNoNHn2vZ https://t.co/155l4SQU6P
  • Will the Swiss Franc find reprieve after recent losses against the Canadian and New Zealand Dollars as NZD/CHF and CAD/CHF uptrends face key chart barriers? Find out from @FxWestwater here:https://t.co/c89gcaNhTt https://t.co/vkLRsG8KEn
  • The Australian Dollar may be at risk of losses against the New Zealand Dollar after an unexpectedly high NZ inflation reading sent AUD/NZD towards challenging short-term rising trend support. Get your $AUD market update from @ddubrovskyFX here:https://t.co/JoaUMTv80S https://t.co/Hl4I8Gl7Ez
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sZLTs https://t.co/6lPNDoWZAw
US Dollar May Rise as Markets Stockpile Cash Despite Fed Rate Cuts

US Dollar May Rise as Markets Stockpile Cash Despite Fed Rate Cuts

Ilya Spivak, Head Strategist, APAC

US DOlLAR, FEDERAL RESERVE, RATE CUTS – Talking Points:

  • Fed rate cuts sink bond yields, but credit conditions are not improved
  • Markets may be stockpiling cash, signaling worries about crisis ahead
  • US Dollar may resume 2-year uptrend on growing liquidity premium

Financial markets have been betting on a dovish turn in Fed monetary policy since late 2018 as a downturn in global economic growth that started to set in earlier that year deepened. Priced-in expectations for the target Fed Funds rate 12 months into the future plunged, pulling benchmark bond yields lower along the way.

Fed interest rate cuts drive Treasury bond yields lower

Chart created with TradingView

FED STRUGGLING TO DELIVER STIMULUS WITH INTEREST RATE CUTS

Curiously, that does not seem not seem to have loosened credit conditions in a meaningful way. The object of rate cuts is to reduce the cost of borrowing, encouraging consumption and investment to boost growth. Data from Bloomberg suggests that has not occurred.

Financial conditions loosened in anticipation of the rate cut cycle in the first quarter of 2019. Since early may however, they have been tightening anew even as the Fed policy outlook has become ever-more dovish. Put simply, Fed stimulus does not seem to be transmitting into the broader credit markets.

Federal Reserve interest rate outlook vs US financial conditions

This is an ominous sign, suggesting that market participants find the Fed’s efforts as an insufficient bulwark against whatever turmoil looms ahead. To that end, they appear to be stockpiling cash for whatever crisis-inspired shortage emerges rather than letting it flow into the markets.

US DOLLAR MAY RISE AS MARKETS PUT PREMIUM ON LIQUIDITY

This might explain how the US Dollar has managed to rise rather than fall so far this year even as the Fed has transitioned from hiking to cutting interest rates. The most widely-used global currency is the undisputed liquidity haven, putting a premium on its value when cash is in demand.

This might provide the fundamental backdrop for the Greenback to launch the next phase in the uptrend from early-2018 lows. As outlined in the latest US Dollar technical forecast, a corrective pullback akin to the one witnessed late last year may precede the “phase 3” of the structural ascent.

US Dollar price chart - weekly

US Dollar average chart created with TradingView

US DOLLAR TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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

DISCLOSURES