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
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
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
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/G58J1dg6y3 https://t.co/UmubxiDXGc
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqhRoMG https://t.co/e4G1gTGhex
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/pS48NIuwqX
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/arxYmtQeUn https://t.co/gFVVZTGbe1
  • Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price, it is essential to develop a sound understanding of how to read currency pairs. Learn how to read quotes here: https://t.co/CNtqrKWDBY https://t.co/nHXiNJhLes
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/h0TmJcZeqr
  • $USDCAD sold off aggressively last week, putting it into position to test the important 2017 low; trading bias is neutral to bearish. Get your market update from @PaulRobinsonFX here: https://t.co/sphxUAW9TB https://t.co/ZhsTeJOOM8
  • Get your snapshot update of the of top level exchanges and key index performance from around the globe here: https://t.co/d8Re5anlG5 https://t.co/qP96xmgDVn
  • The pro-risk Australian Dollar may extend gains after the record miss in US jobs data, amplifying dovish rhetoric from the Federal Reserve and keeping the Dow Jones and S&P 500 intact. Get your market update from @ddubrovskyFX here: https://t.co/yf8mPX3O3W https://t.co/uCCmjaxUhF
  • Who else is keeping close tabs on Dogecoin $DOGE this weekend? All eyes on Elon Musk @elonmusk, the proverbial 'Dogefather,' and his Saturday Night Live @nbcsnl performance kicking off at 11:30PM ET. The #crypto is already looking nice and perky following that trendline break! https://t.co/nrQsnlUqWj https://t.co/4lOz6NLQTG
US Dollar Steady ahead of January FOMC Meeting; US-China Trade Talks

US Dollar Steady ahead of January FOMC Meeting; US-China Trade Talks

Christopher Vecchio, CFA, Senior Strategist

Talking Points

- The January FOMC meeting is the first at which Fed Chair Powell will begin giving press conferences each meeting moving forward.

- The potential economic impact of the December-January government shutdown – as well as the high odds of another come mid-February – should lead the FOMC to a broadly neutral, observational tone today.

- Retail traders have neutralized their Euro and US Dollar positions as prices have settled in recent days.

Looking for longer-term forecasts on the US Dollar? Check out the DailyFX Trading Guides.

The US Dollar (via the DXY Index) has gained modest ground in the run-up to the Federal Reserve’s January policy meeting amid offsetting moves in the British Pound (slightly higher) and the Euro (slightly lower). Headlines regarding the Brexit negotiations continue to pour out, although it’s becoming difficult to see a path forward from here if the EU’s position is that the UK can’t renegotiate its Withdrawal Agreement.

Elsewhere, US Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He are meeting in Washington in order to find a way to avoid the next round of tariffs being imposed at the start of March. As it stands, the 90-day détente ends on March 1, and on March 2, tariffs on $200 billion worth of US-imported goods from China. After the arrest and publicly declared intent to prosecute Huawei CFO Meng Wanzhou, it makes sense that the current talks might not be that productive at all.

January FOMC Meeting Brings New Procedure

The Federal Reserve has had a bit of a communication problem the past few months, and the January FOMC meeting may be the first effort to clear up any misunderstandings.

It’s important to recall the evolution of Fed Chair Jerome Powell’s commentary in recent months. On October 3, 2018 he indicated that be believed that ‘rates are long way from neutral,’ implying that many more rate hikes were coming. Then, on November 28, he seemingly hedged, saying that ‘rates are close to neutral,’ implying that the Fed was nearing the end of its hike cycle. At the FOMC meeting on December 20, the Fed’sglide path of interest rates was reduced. Most recently, on January 4, Fed Chair Powell said that he was ‘open to changing normalization,’ in effect striking the Powell Put.

Normally, a January FOMC meeting wouldn’t give the opportunity for the Fed Chair to clarify his prior remarks in a ‘live’ setting. Starting this week, all FOMC meetings moving forward will feature a press conference by the Fed Chair, whereas previously, press conferences were only held at the quarterly meetings that produced a new Summary of Economic Projections. In theory, this makes the January meeting ‘live.’

In reality, rates markets are pricing in a greater chance of a rate cut than a rate hike at the forthcoming meeting. Amid the US-China trade war’s growing global impact, the crash in energy prices during Q4’18, and more recently, the US government shutdown, it stands to reason that Fed Chair Powell and the FOMC will be keeping rates on hold for the coming months. To this end, Fed Chair Powell is likely to strike a neutral tone calling for more observation of economic data to suss out the impact of the shutdown before more policy tightening may be deemed appropriate.

DXY Index Price Chart: Daily Timeframe (June 2018 to January 2019) (Chart 1)

US Dollar Steady ahead of January FOMC Meeting; US-China Trade Talks

Yesterday we said that “The lack of cohesion among indicators and candlesticks suggests that more price development is necessary before a directional move occurs; traders should anticipate choppy trading moving forward.” This lack of cohesion persists, with the DXY Index below its daily 8-, 13-, and 21-EMA envelope still, but now price has started to rise back above the trendline from the December and January swing highs. Daily MACD remains below its signal line, but Slow Stochastics continue to push higher, now through its median level. Accordingly, it still holds that DXY Index needs to move outside of the 95.65-97.71 consolidation that formed between mid-October and early-January before a directional move is sought after. Even then, support would be close by at the 2019 low at 95.03. Choppy trading should persist over the coming days.

Read more: DXY Index Stalls as Markets Await Brexit Vote; Gold Breakout Continues

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

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

DISCLOSURES