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Amid early signs of another bond market ‘taper tantrum’ taking hold in US Treasury markets, investors’ bubble of unabated optimism that marked the first days of 2018 has been popped. In tandem, bonds, stocks, and the US Dollar are all falling. Making matters worse for wear is news out of Japan that the BOJ will start tapering their QE program, giving plenty of room for the Japanese Yen to break out of a multi-week consolidation against the US Dollar.

DailyFX Economic Calendar: Tuesday, January 9, 2018 – North American Releases

DailyFX US AM Digest: US Dollar Back Near Yearly Lows

A saturated North American (really, just American) economic calendar on Wednesday offers many points of interest but not many points of action. There are no ‘high’ rated events on the day, and the only ‘medium’ importance event due up the rest of the morning is in the form of the weekly DOE Crude Oil Inventories update. As US President Trump and Congressional Democrats and Republicans try to hammer out an immigration deal to avoid a government shutdown, traders’ best bet is to keep an eye on the DailyFX Real Time News feed for updates.

DailyFX Webinar Calendar: Tuesday, January 9, 2018

DailyFX US AM Digest: US Dollar Back Near Yearly Lows

IG Client Sentiment Index Chart of the Day: USDJPY

DailyFX US AM Digest: US Dollar Back Near Yearly Lows

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

USDJPY: Retail trader data shows 61.7% of traders are net-long with the ratio of traders long to short at 1.61 to 1. In fact, traders have remained net-long since Dec 29 when USDJPY traded near 113.214; price has moved 1.5% lower since then. The percentage of traders net-long is now its highest since Nov 24 when USDJPY traded near 111.492. The number of traders net-long is 16.7% higher than yesterday and 10.4% higher from last week, while the number of traders net-short is 15.7% lower than yesterday and 11.2% 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

  1. “USD Dunks on Early Signs of Another ’Taper Tantrum’” by Christopher Vecchio, CFA, Senior Currency Strategist
  2. “Technical Analysis for USD/JPY, Euro & GBP Crosses, Gold & More” by Paul Robinson, Market Analyst
  3. “Ethereum Price Soars to New High, Ripple Roiled” by Nick Cawley, Analyst
  4. “GBPUSD Losses to Continue on UK Political Risks” by Martin Essex, MSTA, Analyst and Editor
  5. “Yuan Plunges After PBOC Changes Managed Regime, What to Expect Next?” by Renee Mu, Currency Analyst

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