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Asia AM Digest: Canadian Dollar Hurt by Econ Data, Japan CPI Next

Asia AM Digest: Canadian Dollar Hurt by Econ Data, Japan CPI Next

Research, Research Team

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The anti-risk Japanese Yen and Swiss Franc were the best performing majors during Thursday’s session. For the Yen, its appreciation was quickly realized in the beginning of the day when Japanese stocks opened lower. Tokyo had a chance to react to the selling on Wall Street in the aftermath of Wednesday’s hawkish FOMC minutes.

Later in the day, US jobless claims falling to a 5-week low had no positive effect on the US Dollar. In fact, it underperformed and halted its 4-day winning streak. The greenback was more interested in inversely following Wall Street instead again. On this end, the S&P 500 climbed. However, the index reversed some of its gains towards the end of the day and finished just 0.1% higher.

Elsewhere, the British Pound initially did not do so well against most currencies when UK GDP growth missed expectations. Though it recovered against the weaker US and Canadian Dollar by the end of the day. Speaking off, the Lonnie was negatively impacted by worse-than-expected retail sales. The report showed that transactions declined by the most since March 2016, almost 2 years ago.

Looking ahead, the Japanese CPI report will cross the wires early into Friday’s session. A better-than-expected outcome here might translate into some Yen gains. Our Analyst David Cottle will begin covering said release 15 minutes before the data drops. You may join the session here.

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

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Retail trader data shows 40.6% AUD/USD of traders are net-long with the ratio of traders short to long at 1.46 to 1. In fact, traders have remained net-short since Dec 19 when AUD/USD traded near 0.75065; price has moved 4.2% higher since then. The number of traders net-long is 11.4% higher than yesterday and 16.0% higher from last week, while the number of traders net-short is 7.6% lower than yesterday and 3.2% higher from last week.

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

Five Things Traders are Reading:

  1. US Dollar Wipes Out Gains: Japanese Inflation as a Pivotal Driver by James Stanley, Currency Strategist
  2. Ichimoku Charts That Matter: Commodity FX Susceptible As Yen Rises by Tyler Yell, CMT, Forex Trading Instructor
  3. Dollar Drops Below 90.00 Before Buyers Step In: Japan, Canada CPI On Deck by James Stanley, Currency Strategist
  4. Sentiment Leaves Unclear Direction for GBP by the DailyFX Research Team
  5. USD/CAD Surges Into Resistance- Rally Vulnerable Ahead of Canada CPI by Michael Boutros, Currency Strategist

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