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
Oil - US Crude
Bearish
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
  • Heads Up:🇸🇬 GDP Growth Rate YoY Final due at 00:00 GMT (15min) Expected: -1.5% Previous: 1% https://www.dailyfx.com/economic-calendar#2020-05-26
  • Heads Up:🇸🇬 GDP Growth Rate QoQ Final due at 00:00 GMT (15min) Expected: -7.4% Previous: 0.6% https://www.dailyfx.com/economic-calendar#2020-05-26
  • 🇳🇿 Balance of Trade Actual: N$1267M Previous: N$722M https://www.dailyfx.com/economic-calendar#2020-05-25
  • 🇳🇿 Balance of Trade Actual: N$1,267M Previous: N$672M https://www.dailyfx.com/economic-calendar#2020-05-25
  • Heads Up:🇳🇿 Balance of Trade due at 22:45 GMT (15min) Previous: N$672M https://www.dailyfx.com/economic-calendar#2020-05-25
  • Crude oil prices wilted in Asia on Friday despite a strong start as news that China will impose more stringent control over Hong Kong saw a broad retreat for market risk appetite. Get your #oil market update from @DavidCottleFX here: https://t.co/89SH5T3315 https://t.co/awlGiVCVpc
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.17% 🇦🇺AUD: 0.14% 🇬🇧GBP: 0.13% 🇨🇭CHF: -0.03% 🇪🇺EUR: -0.06% 🇯🇵JPY: -0.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/WHghrcxnkR
  • RT @FirstSquawk: MORE THAN 90 COUNTRIES REQUEST IMF BAILOUT
  • Heads Up:🇰🇷 Consumer Confidence due at 21:00 GMT (15min) Previous: 70.8 https://www.dailyfx.com/economic-calendar#2020-05-25
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.50% Gold: -0.32% Silver: -0.55% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/kxAE18eIBf
Dollar Reaches Fresh Five-Year High with Little Enthusiasm

Dollar Reaches Fresh Five-Year High with Little Enthusiasm

2014-11-25 04:09:00
John Kicklighter, Chief Strategist
Share:

Talking Points:

  • Dollar Reaches Fresh Five-Year High with Little Enthusiasm
  • Euro Rebounds as ECB Ranks Break on Push Towards Open Stimulus
  • Yen Crosses Heading for Breakout as Currency Warning Weighs

Dollar Reaches Fresh Five-Year High with Little Enthusiasm

Another day and another five-and-a-half year high for the Dow Jones FXCM Dollar Index (ticker = USDollar). Yet, Monday’s advance hardly reflects the level of gusto we would normally expect of a market hitting a multi-year peak or trough. Volume across the majors tapered and performance was unbalanced. The Dollar managed to gain versus the Japanese Yen and commodity bloc, but it would lose ground against the European currencies. For a currency that is drawing much of its strength indirectly from the relative depreciation of its most liquid counterparts, inconsistency can indicate serious trouble for this nearly five-month bull trend.

Looking at the fundamental backdrop for the Dollar itself, the calendar items would offer up weak resistance to speculation of an earlier first Fed rate hike. The Chicago Fed’s National Activity Index for October disappointed expectations but was still in positive territory – indicating economic growth. Along similar lines, Markit’s Composite PMI for November cooled for a fifth consecutive move; but it nevertheless remains in expansionary territory (above 50). A more tepid view of US growth certainly curbs optimism, but the economy’s contrast to the Eurozone and Japan is still marked enough to confer relative strength. Ahead, the docket fills out as the week is crammed into a calendar shortened by the holiday. The second reading of US 3Q GDP and a round of housing data (FHFA and CaseShiller) will likely be headline darlings. However, the more economically material event risk is the November consumer sentiment survey and two bond auctions (2-year fixed-rate and 5-year Treasury sales). Eurodollar and Fed Fund futures are currently pricing in a 0.50 and 0.79 percent benchmark rate by December 2015.

Euro Rebounds as ECB Ranks Break on Push Towards Open Stimulus

Last week, the FX market closed on a very dovish view from ECB President Mario Draghi. The central banker maintained a tone of exasperation towards economic trouble and insinuated greater monetary policy support may be needed to overcome economic stagnation and dis-inflation. With EURUSD close to shifting a tide a decade in the making (a break of 1.2000 could significantly embolden the bears), the market is anxious to see the policy group scale up to the same magnitude of stimulus as the Fed or BoJ programs before it. Yet, doubt is starting to creep in. Data this past session was a modest counterbalance to the dovish drive. The German IFO business sentiment survey unexpectedly improved for the first time in seven months. More troublesome for the bears though was the discord arising from ECB members in scheduled speeches. Council member Nowotny replied to a question that extra stimulus coming as early as Q1 2015 could be ‘too early’. Much more distinct in his remarks, noted-hawk Jens Weidmann said there are “high legal hurdles” to quantitative easing. As much dovishness has been priced into the Euro these past six months, moderation can be treated as ‘bullish’.

Yen Crosses Heading for Breakout as Currency Warning Weighs

Japan’s collective monetary policy regime is arguably the world’s most aggressive with the Fed closing the tap on QE3. Yet when is that dovish bias fully priced? USDJPY has advanced over 4,000 pips since the BoJ first hinted at stimulus in 2H of 2012. Left to its own devices, the market would likely take its complacent cues on other markets and continue to let the trend ride. However, there are internal conflicts arising for Japan’s policy regime. BoJ Governor Kuroda this morning sounded an optimistic tone on growth and the policy bearings, but the BoJ minutes were mixed on both. Hanging over the market is Finance Minister Aso’s warning last week that the Yen may have fallen too far, too fast.

Chinese Renminbi Posts Biggest Daily Drop in 8 Weeks

Major monetary policy changes from China are typically unexpected and carry a heavy impact on the local financial market. Last week’s surprise PBoC rate cut – the first in two years – led to a clear run in global equities and capital market benchmarks. In FX, the announcement led to the Chinese Renminbi’s biggest drop against the US Dollar (USDCNH) since September 29 which would also represent the fourth largest jump for the exchange rate for the year. Immediate follow through, however, looks just as restrained as the previous two swells.

Swiss Franc: SNB President Warns Against Gold Vote, Yields Signal Market Expects More

Swiss National Bank President Thomas Jordan made another plea to the country this past weekend to encourage a ‘No’ vote on the upcoming Gold Referendum vote. The bill that would require a significant increase in the bank’s purchases of gold threatens to significantly diminish the group’s ability to execute its monetary policy efforts. Whether the referendum passes or not, the market is increasingly aware of the pressure on EURCHF’s 1.2000-floor by external factors. With rates driving towards zero, the probability of new stimulus efforts seems to be rising.

Emerging Markets Show Limited Follow Through to PBoC Rate Cut, Rubles Extends Rally

The impressive 3.2 percent rally from the MSCI Emerging Market ETF this past Friday (the sharpest in 14 months) would find little follow through at the start of this new week. The PBoC’s rate cut added another round of global stimulus leverage, but the amplitude from subsequent waves of support seems to be drawing less and less global satisfaction. Meanwhile, the Russian Ruble has rallied for a sixthday through Monday.

Gold Breakout Pressure Builds as Central Bank Commitments Questioned

At the end of the past week, ECB President Draghi’s vow to spur inflation as quick as possible and China’s rate cut moved the global stimulus needle. And yet, gold barely budged. Monday, dissension within the ECB and BoJ ranks has sapped the anti-currency appeal of the commodity; but once again, the currency remains stoic. The steady outflow of speculative funds in ETFs and futures may be blunting its sensitivity.

**Bring the economic calendar to your charts with the DailyFX News App.

ECONOMIC DATA

GMT

Currency

Release

Survey

Previous

Comments

23:50

JPY

Corporate Service Price (YoY) (OCT)

3.60%

3.50%

Its rate of increase increased after the sales tax was raised in April 2014

2:00

NZD

Reserve Bank of New Zealand 2-Year Inflation Expectation (4Q)

2.23%

Inflation expectations have been declining in the past 3 quarters. Recently, New Zealand’s inflation is at 1% YoY which is at the lower end of the RBNZ inflation target.

2:00

CNY

Conference Board China Leading Econ Index (OCT)

7:00

EUR

German Private Consumption (3Q F)

0.30%

0.10%

Germany’s economy has been slowing down this year. Weakness in the Eurozone and China has been weighing on exports which make up a large percentage of Germany’s GDP.

7:00

EUR

German Government Spending (3Q)

0.20%

0.10%

7:00

EUR

German Capital Investment (3Q)

-0.80%

-2.30%

7:00

EUR

German Construction Investment (3Q)

-0.30%

-4.20%

7:00

EUR

German Exports (3Q)

1.40%

0.90%

7:00

EUR

German Domestic Demand (3Q)

-0.30%

0.10%

9:30

GBP

BBA Loans for House Purchase (OCT)

38500

39271

Has been trending lower this year.

13:30

USD

Gross Domestic Product (Annualized) (3 Q)

3.30%

3.50%

US economy has been recovering strongly over the years with the unemployment rate falling. Growth forecasts project a more controlled pace of expansion, but one that is materially firmer than the EU or Japan

13:30

USD

Personal Consumption

1.90%

1.80%

The Core PCE is the Fed’s most preferred measure of inflation. Despite the recovery in the US economy, the Core PCE is expected to remain below Fed inflation target of two percent.

13:30

USD

Gross Domestic Product Price Index

1.30%

1.30%

13:30

USD

Core Personal Consumption Expenditure (QoQ) (3Q)

1.40%

1.40%

13:30

CAD

Retail Sales (MoM)

0.50%

-0.30%

Recently showed contraction since September

13:30

CAD

Retail Sales Less Autos (MoM)

0.30%

-0.30%

14:00

USD

S&P/Case-Shiller Composite-20 (YoY) (SEP)

4.60%

5.60%

House prices have been rising this year on a yoy basis. However, the rate of increase has been trending lower this year.

15:00

USD

Consumer Confidence (NOV)

96

94.5

Has been trending higher this year.

GMT

Currency

Upcoming Events & Speeches

1:00

JPY

BOJ Governor Kuroda Speaks in Nagoya

4:00

JPY

BOJ Deputy Governor Nakaso Speaks in Tokyo

4:45

JPY

BOJ Governor Kuroda to Hold Press Conference after Speech

9:05

AUD

RBA's Lowe Gives Speech at Annual Business Economists' Dinner

10:00

EUR

Bundesbank Releases Financial Stability Report

10:00

GBP

BOE's Jun Cunliffe & Ian McCafferty Publishes Annual Reports

10:00

GBP

BOE Governor Mark Carney Speaks in London

10:00

EUR

EC OECD Economic Outlook

16:30

USD

US to Sell $13 Bln in 2-Year Fixed Rate Notes

18:00

USD

US to Sell $35 Bln in 5-Year Note

SUPPORT AND RESISTANCE LEVELS

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

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

CLASSIC SUPPORT AND RESISTANCE

EMERGING MARKETS 18:00 GMT

SCANDIES CURRENCIES 18:00 GMT

Currency

USD/MXN

USD/TRY

USD/ZAR

USD/HKD

USD/SGD

Currency

USD/SEK

USD/DKK

USD/NOK

Resist 2

14.0100

2.3800

12.7000

7.8165

1.3650

Resist 2

7.5800

6.1750

7.2900

Resist 1

13.6800

2.3000

11.8750

7.8075

1.3250

Resist 1

7.5000

6.0900

7.0000

Spot

13.5823

2.2315

11.1048

7.7548

1.2974

Spot

7.4186

5.9681

6.7772

Support 1

13.0300

2.0700

10.2500

7.7490

1.2000

Support 1

6.7750

5.8000

6.3145

Support 2

12.8350

1.7500

9.3700

7.7450

1.1800

Support 2

6.0800

5.7300

6.1300

INTRA-DAY PROBABILITY BANDS 18:00 GMT

\CCY

EUR/USD

GBP/USD

USD/JPY

USD/CHF

USD/CAD

AUD/USD

NZD/USD

EUR/JPY

Gold

Res 3

1.2573

1.5766

117.89

0.9723

1.1367

0.8812

0.8030

146.88

1214.79

Res 2

1.2548

1.5738

117.55

0.9700

1.1347

0.8790

0.8008

146.50

1207.54

Res 1

1.2523

1.5709

117.21

0.9677

1.1327

0.8769

0.7986

146.12

1200.28

Spot

1.2473

1.5652

116.54

0.9632

1.1286

0.8726

0.7943

145.36

1185.78

Supp 1

1.2423

1.5595

115.87

0.9587

1.1245

0.8683

0.7900

144.60

1171.28

Supp 2

1.2398

1.5566

115.53

0.9564

1.1225

0.8662

0.7878

144.22

1164.02

Supp 3

1.2373

1.5538

115.19

0.9541

1.1205

0.8640

0.7856

143.84

1156.77

v

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

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

Sign up for John’s email distribution list, here.

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

DISCLOSURES

News & Analysis at your fingertips.