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
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
GBP/USD
Bearish
USD/JPY
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
Gold
Mixed
Oil - US Crude
Bearish
Bitcoin
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
More View more
Real Time News
  • US Equity Index Update (Tuesday Close): $DJI +0.00% $SPX +0.16% $NDX +0.27% $RTY +0.09% $VIX -0.08%
  • Indices Update: As of 21:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.01% US 500: 0.01% Germany 30: -0.13% France 40: -0.20% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/kiOU1azgBo
  • RT @PeterMehlos: @JStanleyFX Nobody thoroughly covers more markets & various financial vehicles in an hour than @JStanleyFX. Once again sha…
  • $SPX sits slightly above it's opening level going into the final minutes of the trading day https://t.co/qp73niLrDA
  • RT @LiveSquawk: Trump Advisers Exploring Income-Tax Proposal To Cut Middle-Class Rate To 15% - WP https://t.co/KvqRauKmyf
  • US Dollar Resistance Test: Trade or Fade USD, EUR/USD, AUD/USD https://www.dailyfx.com/forex/fundamental/article/drivers_of_price_action/2019/11/12/us-dollar-resistance-test-usd-trade-or-fade-eurusd-audusd-js55.html
  • White House Advisor Kudlow: - New tax plan will not be released for a few months $SPX
  • $USDCNH surging to session highs following Trump's speech earlier today at NY Eco Club and latest remarks from Kudlow on CNBC stating there will be no tariff adjustment until China deal finalized, though possible tariff rollback would be part of phase one https://t.co/7eRGag1nH6
  • White House Advisor Kudlow: - Trump asked that we look at a tax cut 2.0 $SPX
  • Canadian #Dollar Outlook: $USDCAD Breakout Fizzles- #Loonie Levels - https://t.co/ol2eOI2y6i https://t.co/a8KNyMKy4I
US Dollar Gains on Rising US Recession Fears Which May Boost Yen

US Dollar Gains on Rising US Recession Fears Which May Boost Yen

2019-05-28 23:00:00
Daniel Dubrovsky, Analyst
Share:

Asia Pacific Market Open Talking Points

  • US Dollars rises on risk aversion, fears of a US recession as S&P 500 tumbles
  • Anti-risk Japanese Yen may gain if Asia markets echo declines on Wall Street
  • New Zealand Dollar looks to commentary from RBNZ Governor Adrian Orr

Trade all the major global economic data live as it populates in the economic calendar and follow the live coverage for key events listed in the DailyFX Webinars. We’d love to have you along.

US Dollar Benefits in Risk Aversion

The highly-liquid US Dollar aimed higher on Tuesday, benefiting from a bout of risk aversion that saw the S&P 500 and Dow Jones close 0.84% and 0.93% lower. This occurred despite better-than-expected local consumer confidence data, 134.1 versus 130.0 anticipated in May. While polling suggests that consumers are feeling great despite the uptick in US-China trade war fears, financial markets seem to think otherwise.

As an example, Tuesday’s US 2-year government bond auction saw an uptick in the bid/cover ratio from 2.51 to 2.75, reflecting greater demand for what is essentially a risk-free asset. Meanwhile, the yield returned at 2.13%, down from 2.36% prior on the same amount of debt auctioned ($40.0b). Looking at the chart below, the S&P 500 declined alongside bond yields as the US Dollar rose.

US 2-Year Bond Yields, S&P 500 and US Dollar

US Dollar Gains on Rising US Recession Fears Which May Boost Yen

Chart Created in TradingView

US Recessionary Signals Rise

Simultaneously, the spread between US 10-year note and 3-month bill inverted deeper, surpassing lows seen back in March. While this is typically seen as a recessionary signal, it is important to note that there should be persistency in the inversion for it to be meaningful. Keep in mind that the Fed’s effort to unwind QE in the aftermath of the 2008 financial crisis is pushing yields at the front-end of the curve higher and contributing to the inversoin.

US Yield Curve: 10-Year vs. 3-Month

US Dollar Gains on Rising US Recession Fears Which May Boost Yen

Chart Created in TradingView

Wednesday’s Asia Pacific Trading Session

The anti-risk Japanese Yen outperformed on Tuesday, and if Asia Pacific equities echo declines seen on Wall Street, it could advance further. Curiously, the similarly-behaving Swiss Franc suffered, perhaps due to concerns from the aftermath of the European Parliamentary Elections. Meanwhile, the New Zealand Dollar looks to commentary from RBNZ Governor Adrian Orr as he speaks to Parliament.

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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

DISCLOSURES

News & Analysis at your fingertips.