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
Bullish
USD/JPY
Bullish
Gold
Bullish
Oil - US Crude
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
Bitcoin
Mixed
More View more
Real Time News
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Gold: 0.27% Silver: 0.13% Oil - US Crude: -0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/tKWjH8JR4b
  • $USDJPY Daily Pivot Points: S3: 108.09 S2: 108.31 S1: 108.41 R1: 108.63 R2: 108.75 R3: 108.97 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • RT @Mij_Europe: A shorter extension – maybe 2 or 3 weeks - is possible to allow the Withdrawal Agreement Bill to get through the Commons. I…
  • RT @Mij_Europe: So what's going on with the French position on Brexit? Some thoughts after chats. Senior French officials say their positio…
  • Following the recent rise in $CADJPY, signs are beginning to show that the bullish momentum is slowing after the failure to maintain a foothold above the 83.00 handle.Get your CAD/JPY technical analysis from @malkudsi here: https://t.co/UPvJMJN0H4 https://t.co/9gTjVhQO4X
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.65%, while traders in France 40 are at opposite extremes with 78.30%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/CEhthdynhp
  • $EURUSD Daily Pivot Points: S3: 1.1056 S2: 1.1096 S1: 1.1113 R1: 1.1153 R2: 1.1175 R3: 1.1214 https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • UK's Javid says budget will still be announced on November 6th, would only be prevented by a no-deal Brexit $GBP $EUR
  • RT @ycharts: In light of CEO departure announcements from $UAA & $NKE, we analyzed how companies with recent leadership changes performed r…
  • Ford cuts their outlook for the fiscal year, citing lower volume in China and warranty costs $F
DXY, EUR/USD Hit Pause While Asian, EM FX Burn

DXY, EUR/USD Hit Pause While Asian, EM FX Burn

2016-11-11 12:40:00
Christopher Vecchio, CFA, Sr. Currency Strategist
Share:

Talking Points:

- DXY Index back at the October highs as EUR/USD steadies just above $1.0850, the October low.

- Asian currencies, EM FX hit hard as reality sets in that the period of cheap, export-led growth - unbounded globalization - is coming to an end between Brexit and President-elect Trump.

- It's Veteran's Day in the US (Armistice Day everywhere else), so take a moment to remember those who served.

Market activity may quiet down during the European and North American trading hours today as many market participants will be taking holiday for Veteran's Day/Armistice Day. While bond markets have a recommended close by SIFMA, US equity markets will remain open. The economic calendar is fairly light overall, and incoming US economic data reporting before the election may carry less significance going forward, given the dramatic shift in US fiscal policy that's currently being priced into markets.

In spite of the holiday today, however, there has not been a cessation of hostilities among the Asian and emerging market currencies. The reactions we're seeing are very much tied to President-elect Trump. One of his core campaign pledges was to take on a more protectionist view: labeling China as a currency manipulator; slapping a tariff on Chinese goods; withdrawing from the TPP deal; and renegotiating NAFTA.

In sum, these prospective policy shifts point to only one possible conclusion: the Asian and emerging market growth miracle - fuelled by weak FX rates, cheap credit, and overwhelming demand from Western economies - is coming to an end. Of course, there is a potential to kick off a trade war - long-end US yields have been rising rapidly, perhaps a sign of a foreign sovereign dumping Treasuries? - but it's far too soon to travel down that counterfactual path.

Certainly, EM currencies have had it worse than DM currencies. While EUR/USD has reversed sharply this week, it still finds itself hovering over the mid-October swing lows near $1.0850. Concurrently, the DXY Index, constituted by nearly 60% Euro, continues to hold below its October swing highs around 99.10. Somewhat obviously, we'd be hard pressed to believe that DXY can breakout without EUR/USD breaking down, or vice-versa.

See the above video for a technical review of the DXY Index, EUR/USD, GBP/USD, AUD/USD, USD/JPY, USD/CAD, USD/MXN, and Crude Oil.

Read more: Trump Reflation Trade Fueling US Yields, US Dollar Rally

--- 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

News & Analysis at your fingertips.