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
Oil - US Crude
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
Wall Street
Bullish
Gold
Mixed
GBP/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
USD/JPY
Bearish
More View more
Real Time News
  • Forex trading, which is the act of exchanging fiat currencies, is thought to be centuries old – dating back to the Babylonian period. Learn about the history of Forex here:https://t.co/ePTJlbUP7c https://t.co/fA7G42tGcH
  • Get your snapshot update of the of relative currency strength and exchange status from around the globe here: https://t.co/DmhBkd4B0k https://t.co/8cM3NQIvom
  • Technical indicators are chart analysis tools that can help traders better understand and act on price movement. Learn more about the importance of technical analysis here: https://t.co/NpC1D8y4Aa https://t.co/tEpCHQDoVW
  • A punny excerpt: “Already the exchanges between Mr. Barnier and his counterpart David Frost, have – apropos to his name – sent a chilling message about bilateral trade talks”. https://t.co/OkFCvUZs2H
  • #BritishPound May Fall on #Virus-Hit GDP Data, #Brexit Stalemate ⬇️ https://www.dailyfx.com/forex/fundamental/forecast/weekly/gbp/2020/08/08/British-Pound-May-Fall-on-Virus-Hit-GDP-Data-Brexit-Stalemate.html
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/BuFKivwj2h
  • 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/QXaLbmFSjd
  • The anti-risk Japanese #Yen may rise versus currencies like the $AUD and $NZD on US-China tensions and fiscal stimulus woes which sank the Nasdaq 100 at the end of last week. Get your #currencies update from @ddubrovskyFX here: https://t.co/Kw0fYCHEcw https://t.co/jiQBPpzat3
  • The #Dollar is down than 3% year-to-date with the index responding to trend support at multi-year lows. Here are the levels that matter on the $DXY weekly technical chart. Get your #currencies update from @MBForex here: https://t.co/MVnF5VDoeN https://t.co/TP2k8u9sXN
  • Why financial market traders must monitor both monetary and fiscal policy? Find out from @MartinSEssex here:https://t.co/Fkzk88Y5gm https://t.co/ioGWvplvt7
Led by EUR/USD & USD/JPY, DXY May Have Bottomed

Led by EUR/USD & USD/JPY, DXY May Have Bottomed

2017-02-15 13:04:00
Christopher Vecchio, CFA, Senior Strategist
Share:

Talking Points:

- DXY Index breaks through the critical 101.03 level thanks to Fed Chair Yellen.

- EUR/USD & USD/JPY the best places to trade USD strength if US yields move up; if CPI misses today, AUD/USD may be the best opportunity.

- Keep an eye on short-term positioning shifts as traders turn against the US Dollar with the DailyFX Speculative Sentiment Index.

Join me at 8:15 EST/13:15 GMT for live coverage of the US CPI & Advance Retail Sales (JAN) reports.

There are two important data releases this morning as DXY Index trades through 101.03 (our crucial level over the past several weeks), but we're focused on one in particular: the US CPI report. According to a Bloomberg News survey, US consumer prices increased by +0.3% m/m again in January, or by +2.4% from +2.1% (y/y). The core readings should be similar, at +0.2% m/m (unch), and at +2.1% from +2.2% (y/y).

These figures aggregately are just starting to push through the Fed’s +2.0% medium-term target, which not only means they should be strong enough to keep the Fed on track to hike rates at least twice this year, but perhaps begin to raise expectations for a move in March (only a 36% chance of a hike, per Fed funds futures). A faster rate of inflation may be the result of the tightening labor market, which has accelerated wage growth in recent months.

Chart 1: DXY Index 4-hour Timeframe (December 26, 2016 to February 14, 2017)

Led by EUR/USD & USD/JPY, DXY May Have Bottomed

These data will come against the backdrop of Fed Chair Janet Yellen testifying on Capitol Hill. In particular, the context in which the data is occurring - potentially before a wave of fiscal stimulus - is important. After six years of sclerotic US fiscal policy, there are high odds that gridlock in Washington D.C. ends now that Republicans control the House, the Senate, and the Presidency. Since 1965, there have only been 18 years in which one party has had singular control of the government; and during those years, the US structural budget deficit has increased just short of +0.5% per year.

This is, of course, the gist of the “Trump reflation trade”: the combination of tax cuts and infrastructure, or deficit spending collectively, will help push inflation expectations higher, thus necessitating tighter US monetary policy. In other words, the path of rate normalization could be faster than previously expected if fiscal stimulus transpires as rumored.

If US yields are able to continue pushing higher around today's data, that bodes well not only for DXY (thus weakness in EUR/USD and strength in USD/JPY), but also in risk-sensitive pairs like AUD/JPY or inflation hedges like US equity markets.

Webinar Schedule for Week of February 12 to 17, 2017

Monday, 7:30 EST/12:30 GMT: FX Week Ahead: Strategy for Major Event Risk

Wednesday, 6:00 EST/11:00 GMT: Trading Q&A

Thursday, 7:30 EST/12:30 GMT: Central Bank Weekly

Read more: DXY Peeks Over the Wall, but Yet to Clear Key Level

--- Written by Christopher Vecchio, Senior 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.

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.