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
Mixed
USD/JPY
Bearish
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
Bearish
More View more
Real Time News
  • Event risks for tomorrow includes $EUR German Unemployment Change, $EUR German CPI (YoY) (FEB P), $CAD Gross Domestic Product (YoY) (DEC), USD Advance Goods Trade Balance (JAN), and USD PCE Core (YoY) (JAN) https://www.dailyfx.com/calendar?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr https://t.co/FZ5drmWDeb
  • Reminds of this scene in Austin Powers https://t.co/tiDJVLM99F
  • Well, that was a terrible session for equity bulls. It is not good to be fully committed to a market view especially when traditional value methods call such stark attention to circumstances. As the saying goes "strong convictions, weekly held"
  • Ouch https://t.co/Ci8Txfpf98
  • US Equity Close: $DJI -1,196 (-4.44%) $SPX -138.5 (-4.44%) $NDX -414.3 (-4.61%) $RUT -56.5 (-3.64%) $VIX +10.1 (+36.47%)
  • Indices Update: As of 21:00, these are your best and worst performers based on the London trading schedule: US 500: 0.07% Wall Street: -0.03% Germany 30: -2.00% France 40: -2.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/OoZaNhSRFB
  • Fed's Evans says it is too early to respond with monetary policy to the coronavirus impact, but what about responding to the financial market's response to the coronavirus?
  • And, here is the $DXY Dollar Index overlaid with rate forecasts derived from Fed Funds futures through end of the year (flipped to align to textbook expectations) https://t.co/AvOauBbs2u
  • I smell desperation. Here is the $SPX overlaid with the forecast for rate cuts through the end of 2020. Pricing in 72 bps of easing. Shouldn't ask what the Fed will do but rather what can they practically achieve with their efforts... https://t.co/BCrOAIO1zC
  • Stocks edge to new daily lows with the $SPX trading beneath 3,000 https://t.co/CM1NBZGPzq
Stocks Surge as Investor Appetite Halts Dollar Advance- Index Slumps

Stocks Surge as Investor Appetite Halts Dollar Advance- Index Slumps

2011-10-18 21:58:00
Michael Boutros, Technical Strategist
Share:
Stocks_Surge_as_Investor_Appetite_Halts_Dollar_Advance-_Index_Slumps_body_Picture_2.png, Stocks Surge as Investor Appetite Halts Dollar Advance- Index SlumpsStocks_Surge_as_Investor_Appetite_Halts_Dollar_Advance-_Index_Slumps_body_Picture_3.png, Stocks Surge as Investor Appetite Halts Dollar Advance- Index Slumps

The greenback modestly lower at the close of a volatile US trading session with the Dow Jones FXCM Dollar Index (Ticker: USDollar) sliding 0.20%. Equity markets pared early losses and continued to trade higher into the afternoon hours when news that Germany and France had agreed to increase the EFSF bailout fund by €2 trillion saw stocks break higher. The Guardian report was refuted just moments after with markets sharply paring the majority of the late-day rally. The major averages were markedly higher nonetheless with the Dow, the S&P, and the NASDAQ advancing 1.58%, 2.04%, and 1.63% respectively. Strong corporate earnings and hopes for some sort of resolution this weekend from the EU meeting in Cannes France regarding the European debt crisis have continued to support risk sentiment despite yesterday’s sharp sell-off.

The greenback was higher early in US trade as investors sought refuge amid a lackluster performance in European equities. Dollar gains were slowly eroded throughout the course of the day however as sentiment shifted and stocks steadily advanced. The index closed above the key 38.2% Fibonacci extension taken from the June 2010 and November 2010 crests at 9745. A hold above this level remains paramount for the greenback with a break below eying the 50-day moving average at 9700. Note that daily relative strength looks poised to break below RSI support at 45, suggesting the index may not have the momentum needed to break interim resistance at 9825.

Stocks_Surge_as_Investor_Appetite_Halts_Dollar_Advance-_Index_Slumps_body_Picture_4.png, Stocks Surge as Investor Appetite Halts Dollar Advance- Index Slumps

A closer look at the index shows the dollar holding above the 50% Fibonacci retracement taken from the August 1st advance at 9730 after breaking out of the descending channel formation yesterday. Interim support rests here with subsequent floors seen at 9700 and the 61.8% retracement at 9633. Topside resistance holds at 9800 backed by the 38.2% retracement at 9825 and 9900.

Stocks_Surge_as_Investor_Appetite_Halts_Dollar_Advance-_Index_Slumps_body_Picture_5.png, Stocks Surge as Investor Appetite Halts Dollar Advance- Index Slumps

The greenback declined against two of the four component currencies highlighted by a 1.24% decline against the Australian dollar. The aussie nearly doubled the day’s advance after rumors of a German/French agreement to expand Europe’s bailout fund hit newswires. Although the data was refuted, the aussie continues to remain well-supported at these levels as broader market sentiment improves. The pound was the worst performer of the lot, down 0.13% against a weaker dollar. As noted in this morning’s Winners/Losers report, the sterling remains under pressure after UK September CPI matched record highs at 5.2% y/y. With the BoE committing an additional £75 billion in bond purchases earlier this month and concerns about domestic growth and exposure to the European crisis mounting, the pound is likely to remain under considerable pressure. Traders will be eying minutes from the last BoE policy meeting tomorrow morning with investors eagerly eyeing the data for insight into the central bank’s outlook and plans to keep the recovery on proper footing.

Tomorrow’s economic docket is highlighted by September CPI and housing data. Inflation in the world’s largest economy is expected to hold within its recent range with consensus estimates calling for a print of 3.8% y/y, with the core figure expected to increase to 2.1% y/y from 2.0% y/y. Although the Fed has stated that inflation expectations are well anchored at these levels, today’s stronger than expected PPI print has trader closely eying tomorrow’s CPI data.

Investors also get an update on the housing sector tomorrow with September housing starts expected to rise by 3.6% m/m with the addition of 592K starts. Consensus estimates call for building permits to ease however, with expectations for a contraction of 2.4% m/m last month after a previous addition of 3.2% m/m. Last on tomorrow’s calendar is the Fed’s Beige Book at 1800GMT where investors will be combing though the report for an updated assessment of current economic conditions in the Federal Reserve’s twelve districts. The greenback remains at risk here, with a continued rally in risk likely to put the dollar back on the defensive as investors go back on the hunt for yields. However with the EU meeting scheduled for this weekend, traders may favor safety as markets wait to hear the proposed plan to save the Euro-region.

Upcoming Events

Date

GMT

Importance

Release

Expected

Prior

10/19

12:30

MEDIUM

Consumer Price Index (MoM) (SEP)

0.3%

0.4%

10/19

12:30

HIGH

Consumer Price Index (YoY) (SEP)

3.8%

3.8%

10/19

12:30

MEDIUM

Consumer Price Index Ex Food & Energy (MoM) (SEP)

0.2%

0.2%

10/19

12:30

HIGH

Consumer Price Index Ex Food & Energy (YoY) (SEP)

2.1%

2.0%

10/19

12:30

MEDIUM

Consumer Price Index Core Index s.a. (SEP)

-

226.014

10/19

12:30

MEDIUM

Consumer Price Index n.s.a. (SEP)

-

226.545

10/19

12:30

LOW

Housing Starts (MoM) (SEP)

3.6%

-5.0%

10/19

12:30

MEDIUM

Housing Starts (SEP)

592K

571K

10/19

12:30

LOW

Building Permits (MoM) (SEP)

-2.4%

3.2%

10/19

12:30

MEDIUM

Building Permits (SEP)

610K

620K

10/19

18:00

MEDIUM

Fed's Beige Book Economic Survey

-

-

Written by Michael Boutros, Currency Analyst with DailyFX.com

To contact Michael emailmboutros@dailyfx.comor follow him on Twitter @MBForex.

To be added to Michael’s email distribution list, send an email with subject line “Distribution List” to mboutros@dailyfx.com

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

DISCLOSURES

News & Analysis at your fingertips.