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
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
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/IgUIG55MbH
  • Supply constraints, rebounding global demand and rising inflation expectations may drive crude oil prices higher in the near term. Get your market update from @DanielGMoss here: https://t.co/ezPoAwcJt7 https://t.co/NMfk1cYSvE
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/G58J1dg6y3 https://t.co/OiRiBVeuzL
  • Crude Oil Prices Aiming Higher on OPEC Surprise, Inflation Expectations - https://www.dailyfx.com/forex/fundamental/forecast/weekly/title/2021/03/06/Crude-Oil-Prices-Aiming-Higher-on-OPEC-Surprise-Inflation-Expectations.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Moss&utm_campaign=twr $CL #Crudeoil #OOTT #OPEC https://t.co/AKvXWX9DLQ
  • Given the size of the rally in the eleven months preceding the beginning of the current decline a broader sell-off looks warranted. Get your market update from @PaulRobinsonFX here: https://t.co/UxZiSulpwB https://t.co/raXvlzkGbV
  • 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/lp0tmKS9WR
  • 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/3bOSIBeID9
  • Rising yields and US Dollar creates a weak environment for gold, which trades at a 9-month low. Get your market update from @JMcQueenFX here: https://t.co/lh6Qb2qxin https://t.co/MRAYe57e1A
  • RT @FxWestwater: US Dollar Fundamental Forecast: US Dollar Eyes Inflation Data After NFP Boost Link: https://www.dailyfx.com/forex/fundamental/forecast/weekly/usd/2021/03/06/US-Dollar-Fundamental-Forecast-US-Dollar-Eyes-Inflation-Data-after-NFP-Boost.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Westwater&utm_campaign=twr $DXY https://…
  • 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/NvEAeWkBP1
US Dollar: NFPs Versus Fading Volatility

US Dollar: NFPs Versus Fading Volatility

John Kicklighter, Chief Strategist
US Dollar: NFPs Versus Fading Volatility

Fundamental Forecast for Dollar:Neutral

  • Nonfarm Payrolls are one of the most market-moving US releases, but what does that mean for a market not moving?
  • See what live events will be covered analysts next week on the DailyFX Webinar Calendar
  • Watch the volume on dollar-based majors with the release of NFPS using the FXCM Real Volume indicator

Hope is high amongst traders that the low volatility environment that has forced many to change to a short-term approach or stay sidelined for near-perfect setups will end soon. Volatility is a critical ingredient to the dollar’s performance moving forward. Not only does the greenback represent a preferred safe haven – in demand when fear clouds the appeal of most other assts – but complacency has further dampened speculation surrounding the Fed’s policy plans. To jump start market swings or speculation of a more timely FOMC rate hike, we need volatility. Yet, given the confluence of a holiday liquidity drain with historically low levels of activity, it will be exceptionally difficult to jump start meaningful trends even with the help of June NFPs.

In analyzing the market: there are three different types of general forces that shape the environment. Technicals have offered up tantalizing setups for weeks. Though, for the most part, those opportunities have fizzled out shortly after triggering. Fundamentals can provide the drive that feeds trend and momentum as more investors recognize the change in expectations. Yet, a move on a trendline break and even the rise or fall of a major systemic theme is rendered powerless if there is no market to support the move. Volatility is both a reflection of participation and motivations – both of which are exceptionally deflated.

Recently, we have seen activity levels in the capital markets slide to seven year lows and those in the FX market slump to a record. This has resulted in large part from a collapse in interest rates, a swell in cheap funding and a dive in participation (volume). In the week ahead, this situation risks growing even more extreme. We are entering the ‘Summer Doldrums’ and the liquidity drain that occurs around the US Independence Day holiday we only further stress the situation.

The backdrop for activity will pose an ironic contrast to the scale of event risk on deck. At the center of a US calendar that includes sentiment surveys, manufacturing measures and Fed speeches is the June NFPs. This is one of the rare occasions that the labor data will be released on a Thursday due to the market holiday falling on Friday. Under more normal conditions, this data can generate substantial waves for risk trends. That is unlikely this go around – barring an extreme surprise – given traders will be shutting down early in the NY session to leave for the extended weekend.

Despite the curb on speculative interests due to this event, there is another facet to the jobs data that can carry forward and impact the dollar later: interest rate speculation. At the June 17 FOMC meeting, the central bank extended its Taper and laid out its forecasts. Notably, the interest rate forecasts suggested by the policy body are materially more aggressive than what is being priced in by the market. For example, the Committee’s average forecast of thebenchmark rate through the end of 2015 is 1.15 percent. The market is pricing in a 0.69 percent rate. There is plenty of room for speculation to adjust in this dynamic, and a capitulation by the market would mean a substantial dollar rally.

So, while there may be near-term hurdles for the dollar, the outlook presents a material skew in the bulls favor a little further out. Where the dollar is kept in check by the persistent but tepid equity market run, it is more likely to be proactive should risk aversion kick in. Meanwhile, interest rates – dictated by longer-term trends – are heading higher, and the market is undervaluing the return potential. The future looks favorable for the dollar…just not the immediate future.

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

DISCLOSURES