DailyFX US AM Digest: US Dollar Rebounds as Yields Hit Multi-Year Highs

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The US Dollar is rebounding on Monday as a broad uptick in US Treasury yields is finally filtering through to the beleaguered greenback. The 2-year yield hit its highest level since 2008 while the 10-year yield hit its highest level since 2014, giving the US Dollar some breathing room against the Euro and the Japanese Yen, which have otherwise been on a tear versus the buck to start 2018. Traders may also look to US President Trump’s State of the Union address tonight to look for clues on the next significant piece of legislation: an infrastructure spending bill. Indeed, the US Dollar’s fate over the next 24-hours could easily be determined by the plans (if any) President Trump lays out tonight.

DailyFX Economic Calendar: Monday, January 29, 2018 – North American Releases

The North American economic calendar is devoid of Canadian releases on Monday, but has plenty of noteworthy US data already released or due out. Notably, the mix of Personal Income and Spending figures for December proved to meet or beat expectations, sending the DXY Index to its daily highs. Ahead of the ISM Manufacturing Index for January due out on Thursday, we’ll receive a major input with the release of the Dallas Fed Manufacturing Activity index at 10:30 EST/15:30 GMT today.

DailyFX Webinar Calendar: Monday, January 29, 2018

IG Client Sentiment Index Chart of the Day: EURUSD

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

EURUSD: Retail trader data shows 33.3% of traders are net-long with the ratio of traders short to long at 2.0 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.05353; price has moved 17.4% higher since then. The number of traders net-long is 17.8% higher than yesterday and 7.5% lower from last week, while the number of traders net-short is 2.4% higher than yesterday and 0.6% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.

Five Things Traders are Reading

1. “Traders Urged to Respond to Proposed European Rule Changes” by Martin Essex, MSTA, Analyst and Editor, and Luigi Guida, Market Analyst
2. “Euro Looks to Q4’17 GDP, January CPI Figures to Keep Rally Going” by Christopher Vecchio, CFA, Senior Currency Strategist
3. “FTSE Technical Analysis – Still at Risk of Testing Top of H2 2017 Range” by Paul Robinson, Market Analyst
4. “NEM (XEM) Exchange Hack Costs Coincheck Over $400 Million” by Nick Cawley, Analyst
5. “CoT Report: Euro & Crude Oil Speculators Become Even More Bullish” by Paul Robinson, Market Analyst

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