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Asia AM Digest: Euro Falls as German Coalition Crumbles, USD Gains

Asia AM Digest: Euro Falls as German Coalition Crumbles, USD Gains

Research, Research Team

Get the Asia AM Digest every day before Tokyo equity markets opensign up here!

The Euro dropped to start the trading week following reports that German coalition talks have collapsed. Japanese trade balance figures passed by without a significant response from FX financial markets considering the results’ limited implications for BOJ monetary policy.

The US Dollar is correcting cautiously higher after suffering a second consecutive weekly loss. From here, politics might overshadow the week’s stock of economic news including PMI survey data and minutes from the last FOMC meeting, according to Senior Currency Strategist Ilya Spivak.

Risk aversion defined price action on Friday. The Yen led lower-yielding funding currencies including the Swiss Franc and the Euro upward while the high-beta Australian and New Zealand Dollars tumbled following news that Special Counsel Robert Mueller has subpoenaed the Trump campaign.

DailyFX Economic Calendar: Asia Pacific (all times in GMT)

Asia AM Digest: Euro Falls as German Coalition Crumbles, USD Gains

DailyFX Webinar Calendar20 October 2017

Cross-Market Weekly Outlook (05:30 GMT) with Ilya Spivak

FX Week Ahead: Strategy for Major Event Risk (12:30 GMT) with Christopher Vecchio

US Market Opening Bell (14:30 GMT) with Jeremy Wagner

Holiday and Systemic Liquidity (19:00 GMT) with John Kicklighter

IG Client Sentiment Index Chart of the Day: GBP/USD

Asia AM Digest: Euro Falls as German Coalition Crumbles, USD Gains

CLICK HERE to learn more about the IG Client Sentiment Index

Retail trader data shows 51.8% of traders are net-long GBP/USD, with the ratio of traders long to short at 1.07 to 1. The number of traders net-long is 12.7% lower than yesterday and 16.1% lower from last week, while the number of traders net-short is 11.3% lower than yesterday and 2.8% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current GBP/USD price trend may soon reverse higher despite the fact traders remain net-long.

Five Things Traders are Reading

  1. Euro Wilts As Marathon German Coalition Talks Collapse by David Cottle, Analyst
  2. Weekly Trading Forecast: US Politics May Trump Economics Again by DailyFX Research Team
  3. Risk Assets Steady Before Holiday Week, Weigh Practical Trading by John Kicklighter, Chief Currency Strategist
  4. Foundations of Technical Analysis: Real World Applications by Michael Boutros, Currency Strategist
  5. USD/JPY Weakness to Persist on Dovish FOMC Minutes by David Song, Currency Analyst

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