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. See our updated Privacy Policy here.

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
Wall Street
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
More View more
Real Time News
  • Slippage can be a common occurrence in forex trading but is often misunderstood. Understanding how forex slippage occurs can enable a trader to minimize negative slippage, while potentially maximizing positive slippage. Learn about FX slippage here: https://t.co/Blrl0uF2Ct https://t.co/VXiNCuR3bF
  • The Spinning Top candlestick pattern forms part of the vast Japanese candlestick repertoire with its own distinct features. Gain a better understanding of the spinning top candlestick here: https://t.co/DWm7cBMUg9 https://t.co/9SC4I69oi7
  • The European Central Bank will consider it a job well done if there is no movement in EUR/USD or the Euro crosses before, during or after Thursday’s policy announcements by its Governing Council. Get your weekly Euro forecast from @MartinSEssex here: https://t.co/TCTonpE9Ik https://t.co/qq6TTaPtLE
  • Further your forex knowledge and gain insights from our expert analysts @ddubrovskyFX and @FxWestwater on JPY with our free Q4 market analysis guide, available for free today.https://t.co/mzeJ5x73N3 https://t.co/zll2sxL4ja
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/Js6SNdNj9y
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here: https://t.co/kIIBffEMi7 https://t.co/MqFQ9uS26R
  • Further your forex knowledge and gain insights from our expert analyst @ @MartinSEssex and @DColman on EUR with our free Q4 market analysis guide, available for free today.https://t.co/YwV249fojQ #Dailyfxguides https://t.co/BvfOW4QwZ9
  • MACD who? The Moving Average Convergence Divergence (MACD) is a technical indicator which simply measures the relationship of exponential moving averages (EMA). Find out how you can incorporate MACD into your trading strategy here: https://t.co/ZNs4Qi8ieG https://t.co/6cn6OK6M7w
  • RT @Stephanie_Link: 84% of $SPX companies have beaten EPS estimates to date for Q3, which is tied for the 3rd highest percentage since 2008…
  • What is #NFP and how can you trade it? Find out: https://t.co/XJWS04IF9j https://t.co/iV9lPzPDtc
Market Attention Shifts to Yen, BOJ as US Dollar Eases Post-FOMC

Market Attention Shifts to Yen, BOJ as US Dollar Eases Post-FOMC

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- Fed funds still pricing in June 2017 as most likely period for first hike.

- Bar for BOJ action is high, which means propensity for disappointment is too.

- FX volatility set to remain high - it's the right time to review risk management principles to protect your capital.

At first blush, the Federal Reserve's policy statement yesterday, despite there being no change in rates as expected, was a touch more hawkish than anticipated. Optimism over recent improvement in the labor market and relaxation of concerns over foreign market developments (cough cough, Brexit) highlighted a Fed that is backing away from its pseudo-crisis posturing and instead flipping back into the data dependency mode.

While these slight changes to the FOMC's outlook, coupled with the fact that there was a dissenter calling for a rate hike, leads us to believe that there was more than a spirited debate at the FOMC meeting. Indeed, in three weeks' time when the July FOMC minutes are released, there should be signs that several policymakers are closer to calling for an outright hike, if not for overriding caution for exogenous risks. Therefore, in September, we;ll be looking for the Fed to reinsert language into its policy statement that it is preparing to hike at one of the forthcoming meetings - akin to the 'hawkish holds' we saw in September and October 2015.

While the undercurrents of the FOMC are nuanced and likely indecipherable to most market participants in the near-term (hence the US Dollar pullback), there is one place to look that highlights the stability of the market's pricing around the FOMC (and therefore the major reason not to look for significant US Dollar weakness just yet): rate expectations.

Fed funds implied probabilities barely moved over the past 24-hours, with today seeing only a -4% less chance of a hike in December 2016 compared to yesterday, and likewise, only a -4% less chance of a hike in June 2017. This is not a material shift lower in expectations by any means.

Accordingly, it seems that the minor US Dollar weakness resulting from yesterday's FOMC meeting are simply weak hands being shaken out (there was a 12% chance of a hike yesterday pre-FOMC - some market participants were very wrong and had to reverse their positions in all likelihood, contributing to the minor pullback).

Until interest rate expectations fall back materially, there is little reason to believe that the US Dollar is beginning its next leg lower at present time.

See the video (above) for (another) discussion on the Bank of Japan and the Japanese Yen, as well as technical considerations in EUR/USD, GBP/USD, USD/JPY, AUD/USD, and the USDOLLAR Index.

Read more: Preview for July FOMC Meeting and Outlook for US Dollar

--- Written by Christopher Vecchio, Currency Strategist

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, please fill out this form

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

DISCLOSURES