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
Bullish
GBP/USD
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
USD/JPY
Mixed
Gold
Bearish
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
Mixed
More View more
Real Time News
  • Oh, darn. https://t.co/Ad1n6Kp2tA
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.54%, while traders in USD/CAD are at opposite extremes with 69.21%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/UF0y0Sw797
  • $USDKRW up over 0.5% after BOK Governor hinted possibility of Q1 GDP contraction, bringing up rate cut potential depending on #coronavirus assessment. They are not considering tools such as QE but he did bring up that they have unconventional ones - https://t.co/sl3gYBKYd3 https://t.co/P13unLL4gh
  • Bank of Korea's Lee: It is possible South Korean GDP will contract in the first quarter, still have room to take actions if needed. Have unconventional tools to some degree -BBG
  • Bank of Korea's Lee: Two members opposed today's decision to hold rates -BBG
  • The #Euro may be close to resuming the downtrend against the US Dollar after managing a shallow recovery from support just below the 1.08 figure. Get your $EUR market update from @IlyaSpivak here: https://t.co/WJCO0fVagR https://t.co/ytCj6HqOVE
  • Bank of Korea's Governor Lee: Coronavirus outbreak affecting consumption and exports. Latest GDP view is based on virus peaking in March. Negative virus impact likely to be concentrated in 1Q -BBG
  • #Brazil benchmark equity index #Ibovespa suffered its biggest one-day decline since May 2017 and broke a 2-year uptrend after news broke that Latin America's largest country reported its first case of #Covid_19. It may be a painful session ahead when local markets open. https://t.co/YFLJD1gCVs
  • Bank of Japan's Kataoka: It is appropriate for the central bank to lower interest rates, BoJ should strengthen forward guidance. Coordination with fiscal policy very important -BBG
  • Looking at my majors-based #Yen index, #JPY could have quite the room to rally on average if there is a deeper turn in equities. The currency has still largely been consolidating since December on average and a break above the January and February highs could mark a bullish trend https://t.co/fIA4BeTmyf
USD Index Poised For Higher High, Deflation Dampens Outlook For Yen

USD Index Poised For Higher High, Deflation Dampens Outlook For Yen

2011-12-29 16:29:00
David Song, Currency Strategist
Share:

DJ FXCM Dollar Index

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10038.97

10063.25

10015.64

0.11

68.32%

USD_Index_Poised_For_Higher_High_Deflation_Dampens_Outlook_For_Yen_body_ScreenShot034.png, USD Index Poised For Higher High, Deflation Dampens Outlook For Yen

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) remains 0.11 percent higher on the day after moving 68 percent of its average true range, and the reserve currency may trade heavy over the next 24-hours as risk appetite returns to the foreign exchange market. Indeed, the much better-than-expected U.S. Pending Home Sales report has propped up market sentiment, but the rebound in risk-taking behavior could be short-lived as the outlook for 2012 remains clouded with high uncertainly. As the slowdown in global growth paired with the heightening risk for contagion drags on investor confidence, we may see the flight to safety gather pace in the following year, but fundamentals may play a greater role in 2012 as the recent developments dampen the scope for another large-scale asset purchase program.

USD_Index_Poised_For_Higher_High_Deflation_Dampens_Outlook_For_Yen_body_ScreenShot035.png, USD Index Poised For Higher High, Deflation Dampens Outlook For Yen

As the developments coming out of the world’s largest economy points to a more robust recovery, we should see the FOMC continue to soften its dovish tone for monetary policy, and the central bank may conclude its easing cycle in the following year as growth prospects improve. In turn, we should see the correlation between risk and the USD breakdown in 2012, and fundamentals are likely to dictate price action for the greenback as Fed officials talk down speculation for QE3. However, Fed Chairman Ben Bernanke may endorse a wait-and-see approach in the year ahead as the sovereign debt crisis threatens the global financial system, and the central bank head may keep the door open to expand policy further in order to shield the U.S. economy. Nevertheless, we still expect to see a higher high in the dollar index as it carves out a higher low in December, and we may finally get a run at the 78.6% Fibonacci retracement around 10,117 as market participation returns.

USD_Index_Poised_For_Higher_High_Deflation_Dampens_Outlook_For_Yen_body_ScreenShot036.png, USD Index Poised For Higher High, Deflation Dampens Outlook For Yen

Two of the four components weaken against the dollar, led by a 0.49 percent decline in the British Pound, while the Japanese Yen advanced 0.26 percent against its U.S. counterpart. Indeed, market participants are keeping a close eye on the USD/JPY as the recent decline in the exchange rate raises the risk for an intervention, but the weakening outlook for Japan could dampen the appeal of the low-yielding currency as the region faces an increased risk for deflation. As growth and inflation falter, we are likely to see the Bank of Japan take additional steps to stimulate the ailing economy, but the central bank may refrain from jumping into the FX market as the previous efforts have failed to materialize. In turn, the BoJ is likely to further expand its asset purchase scheme in 2012, but the central bank may face increased pressures to specifically target the local currency as it dampens the scope of seeing an export-led recovery.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong

To be added to David's e-mail distribution list, send an e-mail with subject line "Distribution List" to dsong@dailyfx.com.

Join us to discuss the outlook for the major currencies on the DailyFX Forums

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

DISCLOSURES

News & Analysis at your fingertips.