DailyFX US AM Digest: US Dollar Back to Weekly Open; Kiwi Awaits RBNZ Later
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It’s day three of what is a quiet week overall for Europe and North America, with the DXY Index trading within +/- 0.1% of its weekly open at the time this note was written. The US Dollar is not without drivers, however, as attention remains on progress for tax reform legislation on Capitol Hill. The lack of meaningful economic data is proving to be a depressing force in FX markets, with most major currencies trading within +/- 0.25% of their weekly open.
DailyFX Economic Calendar: Wednesday, November 8, 2017 – North American Releases
It’s another quiet economic calendar out of North America again on Wednesday, with no ‘high’ importance data releases. Instead, our focus shifts to the second half of the trading day in New York, when (technically Thursday in Wellington) the Reserve Bank of New Zealand meets for its second-to-last rate decision of 2017. Following the election of Jacinda Ardern as prime minister on October 19, the New Zealand Dollar has been pressured under the guise of a significant economic regime change in New Zealand. In what may have been a meeting in which policymakers employed a less dovish tone thanks to weakness in the NZD trade-weighted exchange rate and a rebound in inflation, the RBNZ is expected to be broadly neutral. Rates markets are pricing in August 2018 as the most likely period for the next rate hike ahead of today’s policy meeting.
DailyFX Webinar Calendar: Wednesday, November 8, 2017
NZDUSD: Retail trader data shows 71.0% of traders are net-long with the ratio of traders long to short at 2.45 to 1. In fact, traders have remained net-long since Oct 18 when NZDUSD traded near 0.71848; price has moved 3.5% lower since then. The number of traders net-long is 8.9% higher than yesterday and 9.9% lower from last week, while the number of traders net-short is 10.9% lower than yesterday and 26.7% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests NZDUSD prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed NZDUSD trading bias.
Five Things Traders are Reading
- “DXY Index Carving Out Sideways Range During Quiet Week” by Christopher Vecchio, CFA, Senior Currency Strategist
- “Technical Outlook for USD, Euro, Pound, Yen-Crosses & More” by Paul Robinson, Market Analyst
- “S&P 500, Dow Jones Flashing Signs of a ’Mini-top’” by Paul Robinson, Market Analyst
- “EUR Weakens as Bond Yields Fall; ECB Chatter Ahead” by Nick Cawley, Analyst
- “Brent Crude Oil Price Ripe For Correction Lower After OPEC Report” by Martin Essex, MSTA, Analyst and Editor
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