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
Bearish
USD/JPY
Bullish
Gold
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
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
  • Have you been catching on your @DailyFX #podcast "Global Markets Decoded"? Catch up on them now, before new episodes release! https://t.co/mk1w1DM2Rh https://t.co/rEVhCnC0vY
  • Asia’s vast and growing importance to the world economy is not yet matched by the presence of a currency trading center to rival the established order. Get your update on market drivers in Asia here: https://t.co/r3Ku0p9dw1 https://t.co/I1AA0UEyWq
  • Geopolitical developments send #oil prices soaring or falling. Get your market update from @MartinSEssex here:https://t.co/XVXLyG8vjq #OOTT https://t.co/o4zt4pmSzc
  • The $USDINR may fall as the Nifty 50 rises after the US and China avoided tariff escalation and Indian CPI increased at its fastest pace since July 2016 amid on onion shortage. Get your market update from @ddubrovskyFX here:https://t.co/iXLf98geXL https://t.co/uVwbkkkl09
  • My weekend trading video: 'A #Dow and Yuan Retreat Could Break 2019's Bullish Complacency' https://www.dailyfx.com/forex/video/daily_news_report/2019/12/14/A-Dow-and-Yuan-Retreat-Could-Break-Break-2019s-Bullish-Complacency.html?CHID=9&QPID=917719
  • The $USD may extend declines against its ASEAN counterparts after the Fed rate decision. The Philippine Peso and Singapore Dollar are attempting key technical breakouts. Get your market update from @ddubrovskyFX here:https://t.co/JoPLb4Oi2q https://t.co/fKzeBlWaCx
  • Negative yielding government bonds – What are they telling us? Find out from @nickcawley1 here: https://t.co/F6JuhmrvPT https://t.co/Mf9e1cgWmR
  • The #Euro jumped higher to challenge range resistance capping upside progress since mid-October. Signs of ebbing momentum warn it may be back on defense soon. Get your market update from @IlyaSpivak here: https://t.co/MGqVDEWhUD https://t.co/rQRxJAmLWi
  • RT @zerohedge: Is The Market Up This Week? Just Ask The Fed's Balance Sheet https://t.co/6p01J9yAZ8
  • $USD: "The US Dollar is making a last-ditch effort to cling onto a key technical support level after dropping 3% from its 2019 high as risk appetite roars and the Fed inflates its balance sheet." - via @DailyFX Full Analysis: https://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2019/12/14/us-dollar-outlook-fx-volatility-rising-from-extreme-lows-usd-levels-to-watch.html https://t.co/87cITJPVQa
Dollar Fails to Find its Footing on NFPs, Risk Appetite in Charge of Price Action Next Week

Dollar Fails to Find its Footing on NFPs, Risk Appetite in Charge of Price Action Next Week

2010-03-06 00:19:00
John Kicklighter, Chief Currency Strategist
Share:

Dollar Fails to Find its Footing on NFPs, Risk Appetite in Charge of Price Action Next Week

In bygone months, a modest surprise in the US non-farm payrolls (NFP) statistics or a warning from China that it would step up its efforts to cool a possible asset bubble was all that was needed to spur the dollar to a meaningful drive. However, today’s markets are not so clear cut. Both of these scenarios would play out on the final trading day this week; and yet, the benchmark currency would ultimately end the session little changed. In fact, over the past month, the dollar index has moved little more than 100 pips. So, while there have been a few remarkable swings to develop from various majors, the greenback itself is distinctly range bound. This stability wouldn’t be so remarkable if it did not stand at odds to impressive bullish trends for equities and commodities this past week. In fact, the Dow Jones Industrial Average advanced Friday to its highest close since January 20th while crude climbed to a level last tested on January 11th. Notably, both of these benchmarks are within stone’s throw of their respective 16-month highs. Yet, in contrast, the dollar is just off its own highs. This is an extraordinarily turn of events considering the US dollar has played the role of safe haven over the year-and-a-half. Does this mean that the currency has fully decoupled from underlying sentiment? No. More likely, the absence of a clear drive in risk trends has allowed the greenback to strengthen its own fundamental foundation.

Perhaps one of the most remarkable (and overlooked) events this past week was when the US three-month Libor rate overtook its Japanese counterpart for the first time since August. This short-term, market-based yield is a benchmark for either the rate of return that can be expected on investments or the cost of lending in a country, depending on its level relative to global counterparts. For both the dollar and yen, this rate is used to gauge the currency’s appeal as a funding unit (a role these two have competed for throughout 2009). With the US yield surpassing its counterpart, the dollar is not immediately ushered to the status of a carry currency. Rather, with this change, international investors will be far less interested in using the greenback to fund future carry positions. Ultimately, this was an inevitable flip given the nation’s respective policy agendas (the Fed is already tightening while the BoJ is contemplating further expanding its stimulus) and the consistency at which the Japanese benchmark has held at or near zero over the past decade. Nonetheless, the actual reversal in roles has a very prominent effect on price action. No doubt this contributed to the conflicting nature of today’s dollar stability and the stark rally amongst the yen crosses.

For those looking only to the economic docket for trend and volatility, today’s big-ticket release was a notable letdown. The data wouldn’t disappoint per se; but the hope that a notable surprise (one way or the other) would spark a meaningful dollar rally was squashed by labor statistics that would not stray far from the official consensus. Against an official consensus forecast for 68,000 jobs lost through February, the government reported 36,000 were lost. Many economists and market commentators have suggested that had detrimental weather not been a factor in the month, the net reading would have been positive. Furthermore, the unemployment rate unexpectedly held steady at 9.7 percent, representing the fourth month that the level of jobless has either held unchanged or contacted. In sum, these are figures that extend a notable trend toward improvement; but they do not alone command market participants’ attention. Looking ahead to next week, indicators like retail sales and consumer confidence carry even less weight when it comes to short-term market-impact. Therefore, the potential for a renewed dollar trend likely still resides with sentiment. Though the dollar has seen its correlation weekend, it almost certainly has not broken.

Related: Discuss the US Dollar in the DailyFX Forum, Dollar Retraces Gains as Sentiment Improves, Policy Speculation Eases

Euro Traders Unperturbed by a Lack of a Greece Rescue Plan from the EU

Though the euro would not end the week on a particularly strong note, the currency’s ability to ward off another round of heavy selling is nonetheless impressive. The absence of selling pressure is particularly remarkable considering the European Union would not deliver clear steps for a bailout plan for Greece should the economy require assistance. Rumors and reports have suggested policymakers have crafted a 25 billion euro support package should the country be backed into a corner; but for this to truly provide assurances to the international financial market, those that would potentially buy Greek debt or invest in the nation would need to see concrete measures. Without promises to act, officials could once again fall back on flimsy assurances and call for Greece to further slash its finances. Yet, an overall assessment of the progress made on this situation this past week offers some hope. The 4.8 billion euros in additional austerity cuts from Greece, consistent assurances that the EU would step in should assistance be needed and banishing any idea that outside support would be necessary (such as loans from the IMF) have all brightened the outlook. On the other hand, this is not to be taken as evidence that all is well in the Euro area. A turn in the balance of greed in fear for the market could easily tip the scales; and there are now new calls for Spain to draw up deficit cutting plans.

British Pound Slowly Retraces Losses as Inflation Pressures Temporarily Offset Deficit Concerns

A modest recovery in risk appetite and a pickup in upstream inflation data offered the British pound notable relief through Friday. Through the sterling is not grouped among the high-yield crowd, the currency nonetheless benefits from notable improvements in sentiment after the oppressive plunge the unit suffered over the past few weeks. Essentially, a rise in risk appetite is merely the absence to continue selling the sterling. In fundamental news, the economic calendar would see only one round of economic data: the producer price index figures. This data is not as market moving as the consumer-level inflation figures; but it nonetheless has its influence on monetary policy forecasts. After BoE Governor opined that the surge in price pressures leading into the last rate decision was temporary, this upstream swell increases the probability that it is actually a lasting state. At 4.1 percent annual growth in the output figure, pressures are at their highest level since December of 2008.

Japanese Yen Plunges as Investor Sentiment Firms and Rumors of Further BoJ Easing Circulate

Though there was no scheduled event risk of real merit from the Japanese docket, the currency would nevertheless end up being one of the biggest movers on the day. The currency plunged through day partly due to the rise in risk appetite (and the subsequent shift of the dollar outside of the funding currency realm); but also due to rumors that stimulus may be soon increased. A news report suggested that the BoJ may discuss expanding its stimulus at its next meeting – having just initiated a 10 trillion yen lending facility this past December.

For Real Time Forex News, visit: http://forexstream.dailyfx.com/

**For a full list of upcoming event risk and past releases, go to www.dailyfx.com/calendar

0305cal

0305pivots

Written by: John Kicklighter, Currency Strategist for DailyFX.com
E-mail: jkicklighter@dailyfx.com

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

DISCLOSURES

News & Analysis at your fingertips.