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
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
GBP/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
More View more
Real Time News
  • Heads Up:🇬🇧 Retail Sales ex Fuel YoY (AUG) due at 06:00 GMT (15min) Expected: 2.5% Previous: 1.8% https://www.dailyfx.com/economic-calendar#2021-09-17
  • Heads Up:🇬🇧 Retail Sales YoY (AUG) due at 06:00 GMT (15min) Expected: 2.7% Previous: 2.4% https://www.dailyfx.com/economic-calendar#2021-09-17
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here: https://t.co/t9Flsqcxo9 https://t.co/bx1oliPB4J
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePTpzSI https://t.co/U40lgEA8K7
  • New Zealand Dollar Vulnerable as NZD/USD Eyes Falling Wedge - #NZDUSD chart https://t.co/9AGaZsMFmF
  • (Gold Briefing) Gold Price Outlook Turns to UofM Sentiment as US Dollar, Treasury Yields Rally #Gold #XAUUSD #USD #Bonds https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/commodities/2021/09/17/Gold-Price-Outlook-Turns-to-UofM-Sentiment-as-US-Dollar-Treasury-Yields-Rally.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/p7VdFesUb1
  • Consolidation or bull flag? A bull flag is a continuation pattern that occurs as a brief pause in the trend following a strong price move higher. Learn how to better spot these formations here: https://t.co/yOEvLjKnct https://t.co/XPtqedJjyk
  • Crude and Brent oil are on track to extend higher as Gulf Coast supply disruptions and a positive OPEC report bolster sentiment. Uranium is on a massive surge, aided by the famous Wall Street Bets group. Get your market update from @FxWestwater here:https://t.co/XrpV0jcy8e https://t.co/m6XH4n43UQ
  • The Australian Dollar has retraced from August lows when looking at AUD/JPY and AUD/CAD. However, the AUD/NZD downtrend is intact, will a reversal there appear as well? Find out: https://t.co/8LmgqLLGJO https://t.co/yy64N01p2b
  • PBOC injects net 90 billion Yuan in open market operations - Yuan reference rate set at 6.4526 per USD - BBG
USD Sell Off Hits Pause as Government Shutdown Looms

USD Sell Off Hits Pause as Government Shutdown Looms

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- After dropping to more than a three-year low yesterday, the DXY Index is trading higher for the first time since January 9.

- Return of US liquidity after holiday may not mean the US Dollar automatically catches a bid as true price discovery resumes thanks to the looming government shutdown.

- Retail trader sentiment points to a bearish trading environment for most USD-pairs.

Upcoming Webinars for Week of January 14 to 19, 2018

Wednesday at 6:00 EST/11:00 GMT: Mid-week Trading Q&A

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

See the full DailyFX Webinar Calendar for other upcoming strategy sessions

The US Dollar (via the DXY Index) is working on its first day in the black since January 9, but whatever incremental gains were built up during the Asian trading session on Tuesday have started to fade through European hours ahead of the US cash equity open. Even though the economic docket is lighter today out of the US, traders will be paying increased attention to the US Dollar in the coming days.

While the return of liquidity after a market holiday may typically that traders will try and reverse some of the price action in illiquid markets, the US Dollar isn't enjoying the return of higher participation rates for one reason: the looming US federal government shutdown this Friday.

Price Chart 1: DXY Index Daily Timeframe (June 2017 to January 2018)

USD Sell Off Hits Pause as Government Shutdown Looms

For a few weeks, it seemed as if the passage of the tax reform bill would buy the White House and Congressional Republicans some good will on Capitol Hill and among the public at large. Yet still less than a month removed from the tax legislation being signed into law, it appears that US fiscal policymakers are still the collective albatross around the US Dollar's neck that they were back in 2017.

Now, the burden for the US Dollar to carry is that of a potential government shutdown quickly approaching this Friday. With Democrats holding out on a funding deal as a way to bring Republicans to the table on immigration, partisan tendencies may very well get in the way of a comprehensive solution besides 'kicking the can down the road' on the budget once more. A lack of clarity on US fiscal policy, particularly when one singular party is in control of the White House, the Senate, and the House of Representatives, is proving to hurt the US Dollar more and more.

What this all means for traders is that any short-term rebound that we see in the DXY Index without accompanying headlines suggesting a government shutdown will be avoided is a rebound that should be sold, not treated as a bottoming effort. Nor should traders put too much weight on other information as they search for catalysts.

Today's UK CPI data is a good example of something superficially important. Unlike inflation reports in previous months, the December release barely matters to the British Pound. Markets know that the November rate hike was a one-off event; it was not the beginning of a rate hike cycle. Inflation will need to persist above +3% through Q1'18 if rates markets are going to pull forward the timing of the next hike - currently pegged at August 2018 - in a meaningful way that impacts the Sterling.

Read more: FX Markets Look to UK & EZ CPI, BOC Rate Decision, Aussie Employment

--- Written by Christopher Vecchio, CFA, 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