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 Download
EUR/USD
Bullish
GBP/USD
Bearish
USD/JPY
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
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
Oil - US Crude
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
Bitcoin
Bullish
More View more
Real Time News
  • Commodities Update: As of 21:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.91% Gold: -3.62% Silver: -6.30% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/v39UFeYtB8
  • Trump: - Virus impact on market is unknown - Looking at decision on travel ban very soon - BBG
  • Last minute comeback in the MSCI #EmergingMarkets index as #Fed Chair Jerome Powell alluded to easing in the near-term. #EEM closed near Thursday's low as it worked to fill the gap - https://t.co/FS1nF8v6cu https://t.co/zlArwVk8kc
  • ...what really is concerning is that there are many out there that don't even know what i'm referring to because they haven't been in the market long enough to have experienced the last official bear market
  • How bad can it really be if Cramer isn't out there losing it saying the Fed has 'no idea how bad it is out there'?
  • -11.49%, the largest weekly decline in the #SP500 since October 2008 when it fell -18.20%. Prices at one point touched peaks from early 2018 #SPX #WallStreet #coronavirus https://t.co/mHGPYCp6Zg
  • Here is the $TLT Treasury ETF overlaid with the Treasury Volatility Index and volume for the ETF. Volatility is a record (only 5yrs of history) and volume was heaviest turnover on a weekly basis since Aug 2011 https://t.co/c3SLSUkSwu
  • The S&P 500 has led its fellow indices to the biggest single-week collapse since the 2008 financial crisis. Get your market update from @JohnKicklighter here: https://t.co/jhIVnU4Wgd https://t.co/ihGmW5tlQ1
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.05%, while traders in USD/CAD are at opposite extremes with 73.48%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/cJMIDd53Nr
  • Here is the $ACWI all-world equities ETF overlaid with the aggregate 10-year gov't bond yield for US, Germany, UK and Japan: https://t.co/zMNRrhSd1p
Dollar Struggles as Rate Disbelief Lingers, Euro and Yen Gain Ground

Dollar Struggles as Rate Disbelief Lingers, Euro and Yen Gain Ground

2016-04-30 02:12:00
John Kicklighter, Chief Currency Strategist
Share:
Dollar Struggles as Rate Disbelief Lingers, Euro and Yen Gain GroundDollar Struggles as Rate Disbelief Lingers, Euro and Yen Gain Ground

Fundamental Forecast for Dollar:Neutral

  • EURUSD and USDJPY present the most pertinent motivators for Dollar movement and both have weighed the Greenback
  • A long list of data releases is topped by the April NFPs while the round of Fed speakers will attempt to thaw rate hike doubts
  • See our 2Q forecasts for the US Dollar and market benchmarks on the DailyFX Trading Guides page

The Dollar dove to end this past week at its lowest level in 11 months. The extension of the currency’s slide from its 13-year high set back in late January (now down over 4.5 percent) was fueled by a distinct loss of traction in rate forecasts. Much of the Greenback’s advance these past years has been founded in one way or another from this projected yield advantage. As that fundamental lead eases, the currency loses lift. The question is how much of its lead will be lost to unfavorable winds? That is just as much a statement on the Dollar’s counterparts as it is reflection of the Federal Reserve’s course. There will certainly be plenty of mileposts throughout the coming week to shape speculation. And, if the tentative slip in risk trends gains purchase; we may find the dormant haven status finally return.

Looking back to this past week, I was expecting the Dollar to stabilize and even regain some lost ground on the basis that moderation from the central bank’s tone and/or softening of US growth would be discounted; and the currency would benefit from the fundamental disadvantage of its counterparts. However, the substantial strengthening of the currency’s primary crosses – the Japanese Yen and Euro –significantly overpowered the passive appeal in the Dollar. In the week ahead, the collective course of these crucial peers may exact as much influence on the Greenback’s course as its own fundamental docket.

To assess how much cross-currency pressure afflicts the Dollar, there are two factors to consider: the influence (liquidity) of the counterpart and its momentum. The Euro easily dominates the field of counterparts. Where, according to the BIS triennial report, the US Dollar is on one side of 87 percent of the world’s currency exchanges (so total of 200 percent); the Euro was second at 33 percent. When the Dollar is adrift, an engaged Euro can render the most indirect influence. With EUR/USD just below 1.1500 – the general zone of resistance back to the start of 2015 – the pressure is material. The Eurozone 1Q GDP report this past week set out a noteworthy beat and put the aggregate economy back above the level that it stood before the recent crisis. Yet, the performance is uneven and a solid foundation for appreciation is proving difficult to register.

The Japanese currency poses the greater threat to the Greenback. The rapid swell in the Yen this past week was a response to the recognition that the BoJ was not going to back shorts with the upgrade in accommodation they were expecting. Further advance for JPY would more likely come through failing confidence in the central bank’s ability to influence its exchange rate which in turn sees deleveraging of exposure aimed at front-running the BoJ and/or collecting the modest carry still left in the pairs. Genuine and market-wide risk aversion would be the more capable mode for this effort, but that would see the Dollar regain its haven status amongst other crosses – likely including the EUR/USD – and the Greenback would find a net inflow and advance.

While crosswinds from other currencies and the ever-foreboding sentiment collapse can lever a passive Dollar, the Greenback can also take charge of its own course. The fading interest in the US monetary policy advantage can be recharged if the event risk can override the market’s skepticism. Both data and Fedspeak will offer an opportunity to shake rate speculation to life. There is a long list of data including sentiment surveys, trade, factory and service activity, housing and credit; but the real weight rests with the April labor report on Friday. The wage figure is where the data still has room to lift the hawks. Fed officials may also maintain their effort to bridge the gap of market skepticism. As of Friday, there are 9 individual speeches scheduled and one panel. Will the market continue to ignore a persistent commitment to 50bps of hikes in 2016 or will belief start to creep in?

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

DISCLOSURES

News & Analysis at your fingertips.