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
Bullish
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
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
Mixed
USD/JPY
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
More View more
Real Time News
  • Major investment bank models have touted USD selling, given the outperformance in US equities relative to its counterparts over the past month. How is this likely to impact the month-end rebalancing? Find out from @JMcQueenFX here:https://t.co/MtNrHmXZpD https://t.co/d00z4019XE
  • The medium-term #gold outlook still seems favorable as the #Fed, #ECB and more keep rates around 0. Immediate event risk ahead includes the #RBA and #BoC interest rate decisions, US jobs data and Brexit. Get your gold market update from @ddubrovskyFX here: https://t.co/ABXy78LmUn https://t.co/rCALcGaKOL
  • The trio of central banks overseeing the commodity currencies have already cut their main rates to all-time lows. Get your market update from @CVecchioFX here: https://t.co/OSUXrN5P3j https://t.co/Cxt86jl28N
  • The Japanese Yen fell for a third consecutive week with price testing resistance into June open. Here are the levels that matter on the $USDJPY weekly technical chart. Get your #currencies market update from @MBForex here: https://t.co/1QPXP0g7Ew https://t.co/WUtXHoRoQX
  • $USDZAR: A rally from here could be an important tell as to whether the level seen as support previously (17.76) will turn into a point of resistance for sellers to lean against. Get your $USDZAR technical analysis from @PaulRobinsonFX here:https://t.co/TNsQ4JJu6E https://t.co/I4yCjs2ja0
  • The US dollar continued to sell-off this week and the greenback’s future will be decided by commentary from the White House and not the Federal Reserve over the coming days and weeks. Get your #currencies market update from @nickcawley1 here: https://t.co/lpHneO3s2h https://t.co/bZ5klohLNd
  • #Gold prices have continued to push higher as expectations have built for global Central Banks to remain very loose and passive with monetary policy for the foreseeable future. Get your $XAUUSD technical analysis from @JStanleyFX here: https://t.co/h5tF3kAZfd https://t.co/VAYy9FGHcQ
  • Major investment bank models have touted USD selling, given the outperformance in US equities relative to its counterparts over the past month. How is this likely to impact the month-end rebalancing? Find out from @JMcQueenFX here:https://t.co/MtNrHmXZpD https://t.co/YvoHlUsdVr
  • U.S. Market Analyst at https://t.co/JsVsSmefgR, Shain Vernier covers - ✔️ Safe haven assets in volatile markets ✔️ Central banks and governments ✔️ How will commodities trade in a recession Only on Trading Global Markets Decoded #podcast. Tune in here: https://t.co/1UmEzEbwiy https://t.co/X15k6b4ZyB
  • The month of May saw equities rise across the board. The #Dow Jones and #DAX 30 will look to hold above nearby support while the #Nasdaq 100 may look to attack all-time highs. Get your #equities market update from @PeterHanksFX here: https://t.co/dQxkG68R0I https://t.co/cgfcOs14qG
Dollar Steady Ahead of Rebound in Liquidity, NFP Countdown

Dollar Steady Ahead of Rebound in Liquidity, NFP Countdown

2012-07-05 02:34:00
John Kicklighter, Chief Strategist
Share:
  • Dollar Steady Ahead of Rebound in Liquidity, NFP Countdown
  • Euro Traders May Place Their Confidence in the ECB
  • British Pound Traders Expect an Increase in Bond Purchases from BoE
  • Australian Dollar’s Improved Rate Outlook May not be Enough
  • Japanese Yen: Officials Brace for Risk Appetite Tremors
  • Canadian Dollar Supported in Risk Vacuum by Energy Prices
  • Gold Ready to Hear ‘Stimulus’ from the ECB

Dollar Steady Ahead of Rebound in Liquidity, NFP Countdown

The Dow Jones FXCM Dollar Index managed to carve out its biggest advance this past session since the massive rally back on June 21. We shouldn’t, however, take this as a leading read on a new trend ahead of heavy event risk into the end of the week. Given the level of importance attributed to the financial health of the Euro region and the pace of growth for the world’s largest economy, the forthcoming ECB rate decision and June NFPs can dramatically alter the direction and pace of the capital markets. Instead, the greenback’s advance this past 24 hours session can be attributed to the lack of liquidity due to the holiday trading period. Without US capital markets online, there was a significant break in continuity should the remaining speculative element try to build into any significant position – unlikely ahead of meaningful event risk.

Now, we look ahead to a period that will certainly be active for headlines and has considerable potential to tap into underlying risk trends – and thereby shack the dollar to life. The European rate decision (which I cover in detail below) will act a critical qualifier for how the market will interpret the Euro-region’s financial prospects following the EU Summit last week. Skepticism followed almost immediately after the substantial programs early Friday morning last week. If the central bank doesn’t provide a better footing, hesitation could translate it outright selling of not only the euro but risk-related assets in general. Of course, with the NFPs behind the European even, we need a clear outcome to encourage a run. Furthermore, with the 2Q global GDP (with China) and 2Q US earnings session beginning the following week; the distraction to momentum ratio is high. Of course, if it all lines up to the general outlook for growth and yields (bearish), it could feed an incredible trend.

Euro Traders May Place Their Confidence in the ECB

Expected volatility (often considered the best measure of ‘risk’ or ‘fear’) for the currency market stands not far from the four-year low the index plunged back in late April. Any contrarian trader would say that is an interesting position to be in considering the heavy event risk we are heading into through the remainder of this week. Both risk and euro traders are on high alert with the upcoming ECB rate decision on deck for 11:45 GMT. This particular meeting carries far more weight than any of the previous gatherings over the past few years because it may be treated as a necessary complement to last week’s EU Summit. While the policy agreements that were listed by the authorities after the first day of that meeting were substantial, a market that has grown cynical after too many botched rescue attempts over the past years honed in on the lack of detail for implementation. And, for good reason. Germany, Finland and the Netherlands have all alluded to opposition to the promised programs.

So, what is the market looking for in this ECB decision? There are two underlying considerations to the policy meeting: how it affects the yield potential of the Euro and whether it supports the Summit promises. The euro – like anything else – has an element of risk and reward to it. The ‘reward’ component is roughly set by its benchmark yield. Cutting the rate from its current 1.00 percent lowers that income potential. It could also contribute to stabilizing financial instability for the region, but there is likely very marginal return for speculative confidence at this level. The more critical aspect is whether the central bank announces additional stimulus efforts (reactive the SMP, a new LTRO or something else). That would fortify confidence not just for the euro region but broader financial markets. Tension is high and expectations are low.

British Pound Traders Expect an Increase in Bond Purchases from BoE

Though the Bank of England is scheduled to deliberate on monetary policy in the upcoming session as well – and will very likely increase its bond purchasing program – the market will give it only a fraction of the attention that will be paid to the ECB. For the sterling, a boost to the stimulus effort will act to devalue the currency and will do little to produce a firewall to the Euro-area’s building crisis. After the close 4-5 vote to keep bond purchases at 325 billion sterling last month, a boost this go around seems likely. That said, the BoE’s balance sheet is still far smaller than its major counterparts. As such, this program does little to curb global sentiment trends. Pound traders should watch the MPC newswires closely, but expect more from the ECB spillover than direct efforts of the Bank of England.

Australian Dollar’s Improved Rate Outlook May not be Enough

The Aussie dollar slipped modestly against the safe haven dollar Wednesday, but there was little pace on the move. Retail sales data for May offered a positive bearing with a fifth monthly advance, but that was offset by a 10-month low in Chinese service sector activity. Rate expectations have kept the Aussie dollar buoyant (not 76bps of cuts in 12 months), but active risk trends or risk aversion are critical here.

Japanese Yen: Officials Brace for Risk Appetite Tremors

Bank of Japan Governor Shirakawa was on the wires early Thursday morning reflecting on the uncertainties in the global market and vowing to do everything needed to ensure financial stability for the country. This is a timely warning as we head into a period that carries a high threat of volatility thanks to the ECB rate decision and NFPs on Friday. Japanese officials are bracing for impact, but will not likely act even under duress.

Canadian Dollar Supported in Risk Vacuum by Energy Prices

I usually talk down the USDCAD correlation to energy prices because they often follow the same underlying fundamental drive (rather than one influencing the other). However, with risk appetite trends sidelined and most of the other major themes on hold Wednesday, the big move from US crude this past week moves to the forefront of active drivers for this particular exchange rate. That said, risk will likely take over again.

Gold Ready to Hear ‘Stimulus’ from the ECB

Over the past week, gold has moved back towards the top of a multi-month wedge pattern (often considered the harbinger of an impending breakout) while ETF holdings of the precious metal hit a new record high of more than 77.5 million ounces. As a safe haven, the metal could react to a disappointment from the ECB that undermines market-wide sentiment. However, the dollar would more likely win out and drive gold lower. What gold traders want is a move that boosts European stimulus, to further leverage the commodity’s anti-fiat appeal.

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

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

ECONOMIC DATA

Next 24 Hours

GMT

Currency

Release

Survey

Previous

Comments

23:50

JPY

Japan Buying Foreign Bonds (Yen) (JUN 29)

869.7B

Yen declined against all major currencies in terms of total return since January 2012.

23:50

JPY

Japan Buying Foreign Stocks (Yen) (JUN 29)

18.2B

23:50

JPY

Foreign Buying Japan Bonds (Yen) (JUN 29)

-313.9B

23:50

JPY

Foreign Buying Japan Stocks (Yen) (JUN 29)

50.4B

USD

ICSC Chain Store Sales (YoY) (JUN)

1.7%

12 month trending decline.

1:30

AUD

Trade Balance (Australian dollar) (MAY)

-500M

-203M

The decline in commodity prices may lead to wider trade gap.

10:00

EUR

German Factory Orders s.a. (MoM) (MAY)

0.0%

-1.9%

German PMI showed contraction of the manufacturing sector, but slight improvement.

10:00

EUR

German Factory Orders n.s.a. (YoY) (MAY)

-6.0%

-3.8%

11:00

USD

MBA Mortgage Applications (JUN 29)

--

-7.1%

June had the highest spike in applications since January.

11:00

GBP

Bank of England Asset Purchase Target

375B

325B

Rate Swaps are pricing in an 11% chance of a rate cut.

11:00

GBP

Bank of England Interest Rate Decision

0.50%

0.50%

11:30

USD

Challenger Job Cuts (YoY) (JUN)

66.7%

Early indicator of the upcoming NFP and labor outlook for the medium term.

11:45

EUR

European Central Bank Interest Rate Decision

0.75%

1.00%

Rate Swaps pricing in a 45.4% chance of a rate cut.

12:15

USD

ADP Employment Change (JUN)

100K

133K

Forecasting another disappointing NFP data for June.

12:30

USD

Initial Jobless Claims (JUN 30)

385K

386K

12:30

USD

Continuing Claims (JUN 23)

3305K

3296K

14:00

USD

ISM Non-Manufacturing Composite (JUN)

53.0

53.7

IMS manufacturing declined during June.

GMT

Currency

Upcoming Events & Speeches

8:30

EUR

Spain to Sell 3, 4 and 10 Year Debt

9:30

EUR

Ireland to Sell €500 Mln in 3 Month Debt

12:30

EUR

ECB President Mario Draghi Holds Press Conference

SUPPORT AND RESISTANCE LEVELS

To see updated SUPPORT AND RESISTANCE LEVELS for the Majors, visitTechnical Analysis Portal

To see updated PIVOT POINT LEVELS for the Majors and Crosses, visit ourPivot Point Table

CLASSIC SUPPORT AND RESISTANCE

EMERGING MARKETS 18:00 GMT

SCANDIES CURRENCIES 18:00 GMT

Currency

USDMXN

USDTRY

USDZAR

USDHKD

USDSGD

Currency

USDSEK

USDDKK

USDNOK

Resist 2

15.5900

2.0000

9.2080

7.8165

1.3650

Resist 2

7.5800

5.6625

6.1150

Resist 1

15.0000

1.9000

8.5800

7.8075

1.3250

Resist 1

6.5175

5.3100

5.7075

Spot

13.3294

1.8065

8.1384

7.7549

1.2664

Spot

6.9098

5.9357

5.9887

Support 1

12.5000

1.6500

6.5575

7.7490

1.2000

Support 1

6.0800

5.1050

5.3040

Support 2

11.5200

1.5725

6.4295

7.7450

1.1800

Support 2

5.8085

4.9115

4.9410

INTRA-DAY PROBABILITY BANDS 18:00 GMT

Currency

EUR/USD

GBP/USD

USD/JPY

USD/CHF

USD/CAD

AUD/USD

NZD/USD

EUR/JPY

GBP/JPY

Resist. 3

1.2666

1.5729

80.55

0.9695

1.0217

1.0392

0.8132

101.36

125.94

Resist. 2

1.2632

1.5695

80.37

0.9669

1.0196

1.0363

0.8108

101.03

125.58

Resist. 1

1.2598

1.5662

80.19

0.9642

1.0174

1.0334

0.8084

100.69

125.22

Spot

1.2529

1.5594

79.83

0.9588

1.0132

1.0277

0.8037

100.02

124.50

Support 1

1.2460

1.5526

79.47

0.9534

1.0090

1.0220

0.7990

99.35

123.77

Support 2

1.2426

1.5493

79.29

0.9507

1.0068

1.0191

0.7966

99.01

123.41

Support 3

1.2392

1.5459

79.11

0.9481

1.0047

1.0162

0.7942

98.68

123.05

v

--- Written by: John Kicklighter, Senior Currency Strategist for DailyFX.com

To contact John, email jkicklighter@dailyfx.com. Follow me on twitter at http://www.twitter.com/JohnKicklighter

To be added to John’s email distribution list, send an email with the subject line “Distribution List” to jkicklighter@dailyfx.com.

Additional Content:Money Management Video

Trading the News Video

The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. Forex Capital Markets, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. Forex Capital Markets, L.L.C.® does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. Forex Capital Markets, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.

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

DISCLOSURES

News & Analysis at your fingertips.