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DailyFX US AM Digest: US Dollar Claws Back Losses Mid-week

DailyFX US AM Digest: US Dollar Claws Back Losses Mid-week

Research, Research Team


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The US Dollar has rebounded after losses defined the first trading day of the year, but price action remains muted as trading volumes remain low – in part due to the holiday, in part due to the introduction of the MiFID II regulations in Europe. In the vacuum of otherwise interesting price action, US President Trump’s social media presence has reverberated around the world as the prospect of nuclear conflict with North Korea was revived. However, as many of his tweets have proven to be just blusterous politicking, risk markets have taken little notice of the war of words for the time being: the US NASDAQ hit an all-time high above 7000 yesterday, while the US S&P 500 crossed 2700 for the first time this morning.

DailyFX Economic Calendar: Wednesday, January 3, 2018 – North American Releases

The North American economic calendar remains light on the whole, although there are several ‘high’ importance data releases that have and should move markets further. The December US ISM Manufacturing report surprised to the upside, suggesting a more robust pace of expansion among US manufacturers. However, with the Employment sub-index losing ground, the report’s otherwise positive glow was somewhat muted. Later today, the December FOMC Meeting Minutes will show a Fed divided over the pace of rate hikes in 2018.

DailyFX Webinar Calendar: Wednesday, January 3, 2018

IG Client Sentiment Index Chart of the Day: GBPUSD

Learn more about the IG Client Sentiment Index on the DailyFX Sentiment page

GBPUSD: Retail trader data shows 35.8% of traders are net-long with the ratio of traders short to long at 1.79 to 1. The number of traders net-long is 3.7% lower than yesterday and 22.2% lower from last week, while the number of traders net-short is 17.8% higher than yesterday and 41.8% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBPUSD-bullish contrarian trading bias.

Five Things Traders are Reading

  1. “USD Rebounds, but Out of Favor at Start of 2018” by Christopher Vecchio, CFA, Senior Currency Strategist
  2. “Webinar: Bitcoin Overshadowed by Altcoin Surge” by Nick Cawley, Analyst
  3. “ECB Policymakers Hint at Tightening of Euro-Zone Monetary Settings” by Martin Essex, MSTA, Analyst and Editor
  4. “GBP/USD Continues to Move Higher, Brexit Levels in View” by Nick Cawley, Analyst
  5. “Japanese Yen Technical Analysis: USD/JPY Weakness Not Yet Proven” by David Cottle, Analyst

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