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The US Dollar is working on a second consecutive daily doji bar, highlighting the relative calm across most of FX markets in the first half of this week. But with the Bank of Canada meeting tomorrow and the European Central Bank meeting on Thursday, volatility is likely to pick up across the board. Perhaps the most meaningful development that past week has been that politics have slowly worked their way back into the mainstream as a major influence in FX markets.
Tensions remain high between the EU and the UK as the Brexit negotiations press on, leaving the British Pound adrift. Investors have been spooked by the prospect of economic reforms from freshly minted New Zealand Prime Minster Jacinda Ardern, sending the New Zealand Dollar to multi-week lows versus a basket of currencies. Over the weekend, the Japanese Yen gapped lower after Japanese Prime Minister Shinzo Abe received overwhelming support in the general election, securing his party’s supermajority in the Lower House of the National Diet; given that Abe’s tenure has coincided with sweeping economic reforms leading to Japanese Yen weakness, the path may be clear for the next wave of policy reform.
DailyFX Economic Calendar: Tuesday, October 24, 2017 – North American Releases
The North American economic calendar is light again on Tuesday, with no ‘high’ importance events and no data due from Canada at all. Nevertheless, today brings a few more meaningful economic data releases than yesterday. The preliminary October Markit PMI readings provide a contemporaneous insight into the state of US growth, which we’ll get an official update on this Friday when the initial Q3’17 US GDP report is released.
DailyFX Webinar Calendar: Tuesday, October 24, 2017
IG Client Sentiment Index Chart of the Day: USDJPY
Learn more about the IG Client Sentiment Index on the DailyFX Sentiment page
USDJPY: Retail trader data shows 52.4% of traders are net-long with the ratio of traders long to short at 1.1 to 1. The number of traders net-long is 17.8% higher than yesterday and 7.4% higher from last week, while the number of traders net-short is 2.5% higher than yesterday and 2.8% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDJPY-bearish contrarian trading bias.
Five Things Traders are Reading
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- “EUR/USD Technical Analysis: Major Topping Pattern in the Works?” by Ilya Spivak, Senior Currency Strategist
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