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
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
GBP/USD
Bearish
USD/JPY
Bearish
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • The Australian Dollar and New Zealand Dollar tend to rise with stocks. They have recently fallen despite gains in the #SP500. What does this mean for $AUDUSD and $NZDUSD ahead? #AUD #NZD #RBA #RBNZ - https://www.dailyfx.com/forex/fundamental/article/special_report/2020/01/17/AUDUSD-NZDUSD-Outlook-Looks-Past-Stocks-to-Rate-Cut-Bets.html?CHID=9&QPID=917702 https://t.co/ddf2fV7Kyl
  • A few snippets from today's commentary. Check out the link below for the full story (via @DailyFX). https://t.co/I31tuq764r https://t.co/x0BaiOFA1P
  • Have you joined @DailyFX @facebook group yet? Discuss your #forex strategies and brush up on your skills with us here: https://t.co/jtY1G7g8yx https://t.co/e2YrN3dBrl
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 98.00%, while traders in France 40 are at opposite extremes with 79.59%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/UL7hqSD2Ki
  • US Dollar Forecast: $USD Lacking Impetus Ahead of Consumer Sentiment #Forex traders shift focus away from US-China trade deal headlines - perhaps toward the monthly release of #ConsumerSentiment data for volatility and clues on the Greenback's next move https://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2020/01/16/us-dollar-forecast-usd-lacking-impetus-ahead-of-consumer-sentiment.html
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.11% 🇦🇺AUD: -0.02% 🇯🇵JPY: -0.03% 🇨🇭CHF: -0.05% 🇬🇧GBP: -0.06% 🇨🇦CAD: -0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/Kxcb9EtIWb
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.45% France 40: 0.26% Wall Street: 0.07% US 500: 0.00% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/I5YIsKQAog
  • 🇯🇵 JPY Tertiary Industry Index (MoM) (NOV), Actual: 1.3% Expected: 1.0% Previous: -5.2% https://www.dailyfx.com/economic-calendar#2020-01-17
  • The $JPY has weakened as a bounce-back in risk appetite saps haven-asset demand. However, the old uptrend line still provides clear resistance. Get your market update from @DavidCottleFX HERE:https://t.co/IMhgQ9jbF9 https://t.co/I7087olftk
  • Heads Up:🇯🇵 JPY Tertiary Industry Index (MoM) (NOV) due at 04:30 GMT (15min), Actual: N/A Expected: 1.0% Previous: -4.6% https://www.dailyfx.com/economic-calendar#2020-01-17
Commodity Currencies Rally, Japanese Yen Struggles as Fiscal Year Ends

Commodity Currencies Rally, Japanese Yen Struggles as Fiscal Year Ends

2012-03-26 13:45:00
Christopher Vecchio, CFA, Sr. Currency Strategist
Share:

Fundamental Headlines

- Frontier Currencies Irresistible as Naira Yields More – Bloomberg

- Pimco’s Gross says Fed May ‘Hint’ at QE3 at April Meeting – Bloomberg

- U.S. Needs Faster Growth to Lower Unemployment: Bernanke – Reuters

- Merkel Backs Boost to Bailout Fund – WSJ

- U.K. Seeks Probe into China Death – WSJ

European Session Summary

Higher yielding currencies and risk-correlated assets rallied for the second consecutive day on Monday following slightly better than expected data out of the Euro-zone. Following the German IFO’s survey, capital flows turned on a dime, with funds headed towards the commodity currencies and the Euro and away from the safe havens, the Japanese Yen and the U.S. Dollar. Even if there is a shift to risk-aversion this week, I expect the Yen to remain weaker as the end of March presents a unique opportunity: Japan’s fiscal year ends (more on this in a moment).

Compounding the bullish Euro-zone data and the seasonality effect on the Japanese Yen, Federal Reserve Chairman Ben Bernanke reignited hopes of a third round of quantitative easing, as expected. Ahead of U.S. equity markets opening, Chairman Bernanke said that the recent decline in the unemployment rate was “somewhat out of sync” with recent economic growth. He went on to say that "To the extent that this reversal has been complete, further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies."

To me, this is a clear sign that the Fed is going to begin legitimately discussing another easing package as soon as the April meeting. I expect that if this is legitimate, we will need to see QE3 hopes “priced” back into the market, which should lead to a rally in higher yielding currencies and risk-correlated assets. Bottom line: Japanese fiscal year end and a more dovish Fed chairman should be bearish the Japanese Yen and U.S. Dollar the next two weeks.

AUDJPY 5-min Chart: March 26, 2012

Commodity_Currencies_Rally_Japanese_Yen_Struggles_as_Fiscal_Year_Ends_body_Picture_10.png, Commodity Currencies Rally, Japanese Yen Struggles as Fiscal Year Ends

Charts Created using Marketscope – Prepared by Christopher Vecchio

Overall, the Australian Dollar was the top performing major currency in the overnight, appreciating by 0.73 percent against the U.S. Dollar. Similarly, the other commodity currencies, the Canadian and New Zealand Dollars, were up by 0.63 percent and 0.67 percent, respectively, at the time this report was written. The European currencies were up modestly as well, with the British Pound, the Euro, and the Swiss Franc gaining 0.46 percent each. The Japanese Yen was the only currency to underperform the U.S. Dollar on the day, with the USDJPY up 0.60 percent.

Seasonally speaking, the Japanese Yen tends to depreciate from mid-March to early-April as companies move funds around for tax exemption then repatriate said funds just a few weeks later (thereby lifting the Yen). This would suggest to look for a weaker Yen in the days ahead (a push higher by AUDJPY, NZDJPY, and USDJPY) before a deeper retracement by said pairs in three weeks.

24-Hour Price Action

Commodity_Currencies_Rally_Japanese_Yen_Struggles_as_Fiscal_Year_Ends_body_Picture_7.png, Commodity Currencies Rally, Japanese Yen Struggles as Fiscal Year EndsCommodity_Currencies_Rally_Japanese_Yen_Struggles_as_Fiscal_Year_Ends_body_Picture_1.png, Commodity Currencies Rally, Japanese Yen Struggles as Fiscal Year Ends

Key Levels: 14:05 GMT

Commodity_Currencies_Rally_Japanese_Yen_Struggles_as_Fiscal_Year_Ends_body_Picture_4.png, Commodity Currencies Rally, Japanese Yen Struggles as Fiscal Year Ends

Thus far, on Monday, the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is trading lower, at 9920.46 at the time this report was written, after opening at 9950.29. The index has traded mostly lower, with the high at 9998.41 and the low at 9917.07.

--- 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.