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.

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
EUR/USD
Bearish
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
Mixed
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
Gold
Bullish
GBP/USD
Bullish
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
  • (Market Alert) AUD/USD Sinks as China Suspends Economic Talks with Australia, Will Support Break? $AUDUSD #China #NDRC #Australia #AUD https://www.dailyfx.com/forex/market_alert/2021/05/06/AUDUSD-Sinks-as-China-Suspends-Economic-Talks-with-Australia-Will-Support-Break.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/MkAxeNTjQF
  • Wall Street Futures Update: Dow Jones (-0.015%) S&P 500 (-0.096%) Nasdaq 100 (-0.191%) [delayed] -BBG
  • The US Dollar may continue trading lower against ASEAN currencies, with USD/SGD and USD/THB eyeing key support ahead. USD/IDR and USD/PHP also exhibit bearish postures. Get your market update from @ddubrovskyFX here:https://t.co/A5n9A8NBy4 https://t.co/5Eud5rCxyc
  • Do you think Dow Jones will outperform Nasdaq in May?
  • RT @KyleR_IG: First gaslighting, and now the silent treatment. This isn't a healthy relationship.
  • NDRC halts activities under China-Australia economic dialogue [update via Bloomberg] - cites Australia's disruption of cooperations with China $AUDUSD slipping lower, falling to lows of the day, China is AU's largest trading partner, feeling disruption woes #AUD #NDRC https://t.co/xQ8W11UVL2
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Gold: 0.00% Oil - US Crude: -0.13% Silver: -0.37% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/rO6XynukTE
  • The US Dollar still remains under pressure against most ASEAN currencies heading into May. A busy week awaits the Indonesian Rupiah, Thai Baht, Philippine Peso and Singapore Dollar. Get your market update from @ddubrovskyFX here:https://t.co/Ed95511S7Y https://t.co/8lJQ0eheXN
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.13% 🇦🇺AUD: 0.05% 🇪🇺EUR: 0.03% 🇬🇧GBP: 0.01% 🇨🇭CHF: -0.05% 🇯🇵JPY: -0.13% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/5vSj1gpuhD
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 89.94%, while traders in France 40 are at opposite extremes with 81.32%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/w9YlTeEscN
DXY Plunging on Cloudy US Fiscal Policy Outlook

DXY Plunging on Cloudy US Fiscal Policy Outlook

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- Failure to pass healthcare reform has markets questioning the viability of US President Trump's ambitious fiscal stimulus plans.

- Lack of clarity over US fiscal outlook means faster Fed rate hike cycle is unlikely; two more rate hikes for 2017 in question now.

- The crowd has increased their net-short EUR/USD and net-long USD/JPY positions, which means a US Dolllar low may not have been found yet.

For the US Dollar, March couldn't have gone any worse. After the Federal Reserve made clear at their March 15 policy meeting that they had not factored US President Donald Trump's ambitious fiscal stimulus objectives into their Summary of Economic Projections (SEP), markets were given their clearest signal yet that the "Trump reflation trade" got far too ahead of itself.

As I wrote before I went on holiday last week, "the uncoordinated rollout of the Affordable Care Act replacement (ACA or Obamacare), the American Health Care Act (AHCA), is a poor litmus test for future policy endeavors. The logical assumption is, given the disdain by Republicans over the last 8 years towards the ACA, this should have been a straightforward legislative process now that the GOP controls the House, the Senate, and the White House, and thus, why would markets be correct in thinking that more ideologically challenging legislation like a $1 trillion infrastructure spending bill pass with much ease (if at all)?"

It seems that this fear for the US Dollar is being realized. If a bout of deficit spending is now unlikely to materialize, the Federal Reserve will have no reason to push up expectations for a faster-than-previously-anticipated rate hike cycle. As per the Mundell-Fleming framework (or IS-LM-BOP model), given the United States' high capital mobility, loose fiscal policy should lead to a rise in inflationary pressures, which in turn should necessitate tighter monetary policy from the Federal Reserve.

In reverse, the diminished prospect for fiscal stimulus means inflationary pressures won't rise to the degree previously thought, so the Fed won't be inclined to hike more than what's priced into markets already. In fact, a look at Fed funds futures this morning shows that two more rates in 2017 - the market's base case scenario - are being priced out. So, while market participants may not see a direct connection between the failed healthcare vote and the US Dollar's dive in recent days, it's certainly there. US Dollar bulls should be more than concerned at this point in time.

Read more: Weekly Trading Forecast: Trump Trade Reversal in the Works?

--- 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