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The anti-risk Japanese Yen was the best performing major on Monday, boosted towards the second half of the day as Wall Street took a plunge. There, tech shares were weighed down as US President Donald Trump renewed attacks on Amazon.com. The NASDAQ 100 closed 2.74% lower.
Sentiment-linked currencies like the New Zealand and Australian Dollars suffered. The US Dollar swung between gains and losses. The decline in stocks seemed to have befitted the greenback from a ‘safe haven’ aspect. However, local bond yields also fell which probably weighed on the currency.
Meanwhile, the Canadian Dollar could have had a much worse day. Along with sentiment, crude oil prices also took a hit which perhaps amplified Loonie weakness. However, towards the end of the day Mr. Trump was reported pushing for a NAFTA deal within the next 2 weeks. The Canadian Dollar quickly gave up some of its losses as this development crossed the wires.
Looking ahead, we will get April’s RBA rate decision early into Tuesday’s session. No rate hike is expected there and overnight index swaps envision just a 32.3% chance that one may happen by the end of the year. Our Analyst David Cottle will begin covering the monetary policy announcement 15 minutes before it crosses the wires. Join the webinar here and see how the event affects the Australian Dollar.
DailyFX Economic Calendar: Asia Pacific (all times in GMT)
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IG Client Sentiment Index Chart of the Day: NZD/USD
CLICK HERE to learn more about the IG Client Sentiment Index
Retail trader data shows 40.2% of NZD/USD traders are net-long with the ratio of traders short to long at 1.49 to 1. In fact, traders have remained net-short since Mar 20 when NZD/USD traded near 0.7178; price has moved 0.6% higher since then. The number of traders net-long is 3.9% lower than yesterday and 8.8% lower from last week, while the number of traders net-short is 10.1% higher than yesterday and 2.6% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests NZD/USD 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 NZD/USD-bullish contrarian trading bias.
Five Things Traders are Reading:
- AUD/USD to Eye Fresh 2018-Lows on Wait-and-See RBA by David Song, Currency Analyst
- Dow Jones Correction Gets Underway, US Dollar Finds Footing by Jeremy Wagner, CEWA-M, Head Forex Trading Instructor
- Weekly Technical Perspective on S&P 500, AUD/USD and AUD/JPY by Michael Boutros, Currency Strategist
- ISM Prices Hit Seven-Year High; Tariffs Cause Concernby Dylan Jusino, DailyFX Research
- Weekly Technical Outlook: Monthly Open Trade Setups- Levels to Knowby Michael Boutros, Currency Strategist
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