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
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
Oil - US Crude
Bearish
Wall Street
Bullish
Gold
Bearish
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
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
  • Indices Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.35% US 500: 0.34% FTSE 100: -0.51% Germany 30: -1.56% France 40: -1.59% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/xXvjSjlt9p
  • Last week, USD/CAD reversed from an over two-week low and pointed higher. Will today’s US inflation numbers (13:30UK) boost the pair’s rally? #USD/CAD, #USinflation, #USD https://t.co/c0BVB3drY6
  • Join @MartinSEssex 's #webinar at 6:30 AM ET/10:30 AM GMT to learn more about trading #sentiment Register here: https://t.co/XUUPRefAXX https://t.co/JDikSRdPyY
  • There are many different types of forex orders, which traders use to manage their trades. While these may vary between different brokers, there tends to be several basic FX order types all brokers accept. Learn about different FX order types here: https://t.co/lIJdiz4xSz https://t.co/H8mFeHAyDS
  • 💶 Industrial Production YoY (MAY) Actual: -20.9% Expected: -20% Previous: -28.7% https://www.dailyfx.com/economic-calendar#2020-07-14
  • 💶 ZEW Economic Sentiment Index (JUL) Actual: 59.6 Previous: 58.6 https://www.dailyfx.com/economic-calendar#2020-07-14
  • 🇩🇪 ZEW Current Conditions (JUL) Actual: -80.9 Expected: -65 Previous: -83.1 https://www.dailyfx.com/economic-calendar#2020-07-14
  • 🇩🇪 ZEW Economic Sentiment Index (JUL) Actual: 59.3 Expected: 60 Previous: 63.4 https://www.dailyfx.com/economic-calendar#2020-07-14
  • 💶 Industrial Production YoY (MAY) Actual: -20.9% Expected: -20% Previous: -28% https://www.dailyfx.com/economic-calendar#2020-07-14
  • Heads Up:🇩🇪 ZEW Current Conditions (JUL) due at 09:00 GMT (15min) Expected: -65 Previous: -83.1 https://www.dailyfx.com/economic-calendar#2020-07-14
Don't Call it a Comeback (Yet): U.S. Dollar Rebound Back on Track

Don't Call it a Comeback (Yet): U.S. Dollar Rebound Back on Track

2012-02-14 14:58:00
Christopher Vecchio, CFA, Senior Strategist
Share:

Fundamental Headlines

- Retail Sales in U.S. Rise, Below Forecasts – Bloomberg

- U.S. Volcker Rule Faces Harsh Critics as Date Nears – Bloomberg

- Moody’s Warns May Cut AAA-Rating for U.K. and France – Reuters

- Greek Economy Shrinking Rapidly – WSJ

- Obama Seeks New Taxes on Rich – WSJ

European Session Summary

Higher yielding currencies and risk-correlated assets took a step backwards in the overnight, erasing yesterday’s gains following the Greek parliament passing the next round of austerity measures on Sunday. The seeds were sown early for a risk-off day, as Moody’s Investors Services downgraded Italy, Portugal, and Spain, while warning it could cut the ‘AAA’ ratings of Austria, France, and the United Kingdom. Although the commodity currencies staged a brief comeback shortly after European trading opened, high beta assets were trading close to their session lows ahead of trading in New York.

Ahead of the North American open, data out of the United States was hardly constructive enough to buck the flight to safety on Tuesday. On the back of disappointing automobile sales figures, the Commerce Department reported that retail sales grew by a meager 0.4 percent in January, half of the estimated 0.8 percent rise forecasted, according to a Bloomberg News survey. Taking a closer look at the data, sales excluding automobiles climbed by 0.7 percent, above expectations, marking the biggest gain since March 2011.

Although it has not been reflected in the headline readings yet, data prints like today’s retail sales figure underscore the fragile nature of the American recovery and her growth prospects going forward. For starters, the participation rate in the United States is at its lowest level in three decades, suggesting that the labor market is getting worse rather than better; the 8.3 percent unemployment rate is terribly misleading. Furthermore, as per the most recent spending figures, Americans are spending less as prices increase. This highlights the important relationship of real wage growth, in so far as to say that if wages don’t keep up with the rate of inflation, consumers will spend less money. Consequently, with the savings rate at its lowest rate in nearly five years, it is clear that aggregate effect of the aforementioned data will eventually lead to a downturn in the U.S. economy later this year, without another massive intervention effort by the Federal Reserve (one which I am vehemently opposed against).

USD/JPY 5-min Chart: February 14, 2012

Dont_Call_it_a_Comeback_yet_US_Dollar_Rebound_Back_on_Track_body_Picture_10.png, Don't Call it a Comeback (Yet): U.S. Dollar Rebound Back on Track

Charts Created using Marketscope – Prepared by Christopher Vecchio

Overall, while the commodity currencies were among the biggest losers, the Japanese Yen was actually the worst performer on the day. The USD/JPY is now trading at its highest exchange rate since January 25. This comes after the Bank of Japan announced another stimulus package totaling ¥10 trillion ($128 billion), to be used to boost asset purchases in order to help pull the country out of a two decade long deflationary spiral.

As discussed in this week’s Japanese Yen Weekly Fundamental Forecast, I expect these measures to fail once more, and that the simple effort of flooding the market with liquidity has and will prove ineffective. The USD/JPY is expected to continue to strengthen over the course of the year, as investors send money back into the U.S. economy, as the Federal Reserve holds back on another round of quantitative easing, and the Bank of Japan continues to talk down and intervene in the Yen.

24-Hour Price Action

Dont_Call_it_a_Comeback_yet_US_Dollar_Rebound_Back_on_Track_body_Picture_7.png, Don't Call it a Comeback (Yet): U.S. Dollar Rebound Back on TrackDont_Call_it_a_Comeback_yet_US_Dollar_Rebound_Back_on_Track_body_Picture_1.png, Don't Call it a Comeback (Yet): U.S. Dollar Rebound Back on Track

Key Levels: 14:10 GMT

Dont_Call_it_a_Comeback_yet_US_Dollar_Rebound_Back_on_Track_body_Picture_4.png, Don't Call it a Comeback (Yet): U.S. Dollar Rebound Back on Track

Thus far, on Tuesday, the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is trading higher, at 9805.55 at the time this report was written, after opening at 9771.92. The index has traded mostly higher, with the high at 9817.89 and the low at 9771.49.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, send an e-mail with subject line "Distribution List" to cvecchio@dailyfx.com

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

DISCLOSURES

News & Analysis at your fingertips.