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
More View more
Real Time News
  • GBP/USD has flattened overnight after its strongest rally in a month on Thursday. The British currency has been under pressure recently as an energy crisis has caused a number of gas providers to go bankrupt. Get your market update from @HathornSabin here:https://t.co/3D8s2eIVWv https://t.co/JDGNwKYyOn
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sIauS https://t.co/JIT5it2HAt
  • Gold could suffer further near-term losses due to rising U.S. Treasury yields and a weak technical picture for price action. Get your weekly gold forecast from @DColmanFX here: https://t.co/g9QvH3L4It https://t.co/Vz98E0Bl9U
  • Gold has been trending lower after failing to clear resistance in the $1835 area earlier this month. Get your $XAUUSD market update from @DColmanFX here:https://t.co/3hm1g3BHgf https://t.co/MdTQKEBCBx
  • Key break here in the 10-year #Treasury yield as it rises to the highest since late June Took out 1.4230 resistance, and the 100-day SMA Eyes now on the 38.2% Fib extension at 1.4775 Also potential falling resistance from March https://t.co/4cI6l210ui
  • The move in rates after this week’s FOMC has continued and the 10 year yield has pushed up to a fresh two-month-high. Get your market update from @JStanleyFX here:https://t.co/CRWhuZ3sxD https://t.co/svHHqN2Zz8
  • S&P 500 contending with its proverbial ‘line in the sand’ as bulls and bears battle for directional control. How we close/trade around the 50-day moving average could serve as a noteworthy bellwether for risk trends headed into next week. I remain cautious below ~4,480. $SPX $ES https://t.co/qogkjs1Sx2
  • USD/JPY trades to a fresh monthly (110.57) amid the pickup in longer-dated US Treasury yields, and the exchange rate may stage a larger advance over the coming days. Get your market update from @DavidJSong here:https://t.co/dlNXOrJnM9 https://t.co/LCQd26W1zF
  • US yields continue to climb, with the 10-year Treasury yield trading above 1.45% $ZN $ZB https://t.co/N4EDfwD3nZ
  • $USDJPY bull thesis appears quite constructive. Technicals show topside breakout above trend resistance following a period of consolidation. Bond yields providing the fundamental catalyst. Eyes on Aug/YTD highs. A broad-based deterioration in market sentiment poses downside risk. https://t.co/AazskXGjHq
Forex: US Dollar Targets Losses, but Trading Defensively into January

Forex: US Dollar Targets Losses, but Trading Defensively into January

David Rodriguez, Head of Product
us_dollar_trading_forecast_body_Picture_5.png, Forex: US Dollar Targets Losses, but Trading Defensively into January

US Dollar Targets Losses, but Trading Defensively into January

Fundamental Forecast for US Dollar: Bearish

A fresh wave of Quantitative Easing from the US Federal Reserve was enough to push the US Dollar (ticker: USDOLLAR) lower cross the board, and current price momentum leaves short-term trading outlook in favor of Greenback losses.

The US Federal Open Market Committee (FOMC) announced an extension of monetary policy easing policies and the US Dollar’s reaction left little doubt on traders’ opinions of the move. An impressive Friday sell-off left the Greenback at fresh 7-monthlows against the Euro. A comparatively limited week of event risk ahead suggests that volatility may slow, but recent Fed actions will place increased scrutiny on any surprises in upcoming US economic data.

The final revision to Third Quarter US GDP growth could force some sharp short-term swings in the US currency, while late-week Personal Income and Spending as well as PCE Deflator results may affect inflation and employment expectations. Consensus forecasts call for an effectively unchanged GDP print, while economists predict that national Personal Income and Spending jumped considerably in November.

The Fed committed to a further $45 billion in monthly purchases of long-term Treasury securities, and it tied the otherwise open-ended easing to national unemployment rates at 6.5 percent and annualized inflation of 2.5 percent. In effect this means that any US Nonfarm Payrolls and inflation reports could carry significant weight on Fed expectations and, by extension, the US Dollar.

Such a dynamic helps explain why the US Dollar may have fallen sharply in the hours following a below-forecast US Consumer Price Index inflation data print on Friday. But more broadly, the fact that we are in the final weeks of the year tells us that lower liquidity may exacerbate short-term price swings. Caution is urged in what could be a choppy week of trading ahead.

Foreseeable event risk is likewise limited across major currency pairs, but traders should keep an eye on Japanese election results due Sunday, December 16 and a Bank of Japan interest rate decision on the 20th. The Japanese Yen itself is obviously the most likely currency to show strong moves following both events, but JPY weakness can likewise help explain why the Dow Jones FXCM Dollar Index has held onto key support near 9930.

As always, any distractions with the US Fiscal Cliff negotiations could affect financial markets. Yet if history is any guide, we expect politicians to wait until the very last minute to announce any sort of deal on tax and spending cuts.

Uncertainty surrounding financial markets has been an important theme through 2012, and recent trends suggest we may finish much as we began—with many more questions than answers. We will look to trade defensively into the end of the year and avoid getting caught up in sharp intraday volatility. – DR

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up to David’s e-mail distribution list via this link.

Contact David via

Twitter at http://www.twitter.com/DRodriguezFXFacebook at http://www.Facebook.com/DRodriguezFX

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

DISCLOSURES