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
Oil - US Crude
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
Wall Street
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
GBP/USD
Mixed
USD/JPY
Bearish
More View more
Real Time News
  • Human error in the forex market is common and often leads to familiar trading mistakes. These trading mistakes crop up particularly with novice traders on a regular basis. Learn about the top ten trading mistakes and how you can avoid them here: https://t.co/i8E2AXtzF3 https://t.co/Hny2HMYo4I
  • (Weekly Fundamental) Australian Dollar Outlook: Tied to Biden Stimulus Bets, S&P 500, US Dollar, Treasuries $AUDUSD #SP500 #stimulusbill #USD https://www.dailyfx.com/forex/fundamental/forecast/weekly/aud/2021/01/16/Australian-Dollar-Outlook-Tied-to-Biden-Stimulus-Bets-SP-500-US-Dollar-Treasuries.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/H7aus0Aljt
  • The inside bar pattern occurs regularly within financial markets. Incorporating the inside bar strategy can enhance a trader's market analysis. Find out how more here: https://t.co/E3EWOYTYNw https://t.co/7zI3p6UNVs
  • Bank of Japan to mull widening of its long-term yield band -BBG $USDJPY
  • While the rise in longer-dated Treasury yields have been impressive as of late, March highs remain a key focus for resistance The medium-term uptrend remains intact, maintained by rising support from August Fading fiscal stimulus expectations (size) may sour yields ahead https://t.co/L3vBcF0ts7
  • 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/vFJ8zmphMm
  • While the US Dollar has been holding its ground, its downside bias against the Singapore Dollar, New Taiwan Dollar Thai Baht and Indonesian Rupiah remains intact as it hovers at support. Get your market update from @ddubrovskyFX here: https://t.co/p7gAztWuVG https://t.co/zB1pOS6U4D
  • The $VIX is now running 227 trading days above the 20 handle. It is also working its way quickly into a dead-end descending triangle. These don't really break lower... https://t.co/39Pr7YrQ08
  • WTI Crude amongst the many market participants taking a hit today, down almost 3% $WTI $USD https://t.co/eg2phm1wUO
  • The power of suggestion: even though the market recognized the mistake with mixing Tesla founder Musk's suggestion to use the Signal app with the stock SIGL, it is still trading >2,000% above pre-remark levels and maintains heavy volume. Us speculators are an interesting people
US Dollar Forecast: Nearing the Bottom as COVID-19 Cases Soar?

US Dollar Forecast: Nearing the Bottom as COVID-19 Cases Soar?

2020-07-13 17:00:00
Christopher Vecchio, CFA, Senior Strategist
US Dollar Forecast: Nearing the Bottom as COVID-19 Cases Soar?

Fundamental Forecast for the US Dollar: Neutral

  • The US Dollar (via the DXY Index) continues to struggle, as the Euro’s surge alongside gains by US equities and gold prices has diminished demand for the world reserve currency.
  • Incoming inflation and retail sales data may not yield hopes for a sharp V-shaped recovery in the United States during Q3’20.
  • The IG Client Sentiment Index shows that retail traders are moderating their positioning in both EUR/USD and USD/JPY rates.
USD Forecast
USD Forecast
Recommended by Christopher Vecchio, CFA
Get Your Free USD Forecast
Get My Guide

US Dollar Out of Vogue

The US Dollar (via the DXY Index) remains on a slow descent lower, weighed down by the recent surge in coronavirus cases that has become the albatross around its neck. As Europe moves closer to re-opening, Australia and New Zealand avoided significant economic damage, and even Canada avoided a significant surge in cases, the juxtaposition in the level of support needed to keep the US economy afloat – the relative easing between the Federal Reserve and other central banks – continues to grow wider.

US Economic Calendar Starting to Rot

The economic calendar over the coming week will provide a conflicted view of the US economy. To a certain extent, much of the optimism garnered over May and June data thus far now appears out of data, insofar as the reporting periods for the June data closed prior to the surge in coronavirus cases in Arizona, California, Florida, and Texas – the latter three constituting the top three states by population as well as three of the top four states by GDP.

The June US consumer price index set to be released on Tuesday, July 14 is likely to show a rebound in price pressures, but this may be in part due to the reporting measurement period. The headline reading is due to rebound to +0.6% from +0.1% y/y, while the core reading is set to steady at +1.1% from +1.2%. Of note, these readings will indicate that real US Treasury yields will stay in negative territory – a positive backdrop for commodities, particularly gold and silver prices.

Elsewhere during the week, the June US retail sales report on Thursday, July 16 may deflate expectations for a V-shaped recovery: due in at +5% from +17.7% m/m, the data does not look all that impressive – especially because it is just beginning to capture the period when Arizona, California, Florida, and Texas have undergone their significant coronavirus surges.

Atlanta Fed GDPNow Q1’20 Growth Estimate (July 9, 2020) (Chart 1)

US Dollar Forecast: Nearing the Bottom as COVID-19 Cases Soar?

Based on the data received thus far about Q2’20, the Atlanta Fed GDPNow forecast is looking for growth at -35.5% annualized. The Blue Chip estimate has been consistent in projected between a -25% and -35% annualized reading for several weeks. The next Q2’20 Atlanta Fed GDPNow forecast will be released on Thursday, July 16.

Federal Reserve Interest Rate Expectations (July 10, 2020) (Table 1)

US Dollar Forecast: Nearing the Bottom as COVID-19 Cases Soar?

The state of the US economy has given traders little reason to expect the Federal Reserve to withdraw its unprecedented level of monetary support. In fact, looking at the Fed fund rates curve, traders are not only expecting interest rates to stay where they are through December 2021, there is exactly a 50% chance that the Fed will introduce negative interest rates by January 2022.

While a long time into the future, this pricing offers an interesting perspective: it can be resolved in either direction, that interest rate cut expectations can be dragged forward meaningfully still, just as expectations for a normalizing Fed could appear so far into the distant future. Nevertheless, it’s a noteworthy development that these contracts are now being quoted to begin with.

US Dollar Net-Short Futures Positioning (Chart 2)

US Dollar Forecast: Nearing the Bottom as COVID-19 Cases Soar?

Finally, looking at positioning, according to the CFTC’s COT for the week ended July 7(the most recently available data around the July 4holiday), speculators held steady their net-short US Dollar positions at 4.9K contracts, the same amount held in the week prior. Net-short US Dollar positioning has flat for the past four weeks after the sharp longs liquidation in May.

Traits of Successful Traders
Traits of Successful Traders
Recommended by Christopher Vecchio, CFA
Traits of Successful Traders
Get My Guide

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

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

DISCLOSURES