US AM Digest: DXY Eyes 90.00 Level; Trump Slams OPEC Over High Oil Prices
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USD: The DXY slowly but surely showing small signs of a recovery with the rise in treasury yields helping provide some much-needed support and suggesting better levels are to be had for the USD-index. Given the recent rise in global commodity prices this has led to a continued firming in inflation expectations, while yesterday’s Philly Fed report noted that price pressures were also on the rise, subsequently pushing the USD higher, which now is looking to make a retest of 90.00.
GBP: The Pound has well and truly lost its shine, having fallen over 2% from its post-Brexit high of 1.4377. Losses continued for the currency after some relatively cautious comments from BoE Governor Carney who acknowledged the recent mixed economic data, while he also suggested that the May meeting is not a done deal. Market pricing for a May rate hike is just shy of 50% (Prev. 80%) while expectations for a second hike this year lies at 5% (Prev. 40%). Support seen at the 50DMA (1.4030) before the psychological 1.4000 handle.
EUR:An air of caution for the Euro ahead of the ECB’s monetary policy decision next week (Apr 26th). Euro-Area growth appears to be cooling off with recent German data somewhat uninspiring while ZEW and IFO surveys indicated that the rising Euro has had an adverse effect, suggesting that calls for higher levels in EUR/USD may need to be re-evaluated. The pair back down to 1.2300, poised for its biggest weekly drop in two months. Near term support seen at 1.2275-80, while stronger buying interest is seen around 1.2215-20.
CAD: The Loonie fell sharply in the wake of soft inflation and retail sales figures, the latter seeing core retail sales falling to its lowest level since 2015 on a 3-month average basis. Alongside this, will uncertainty over a NAFTA, market pricing continues to push back rate hike calls by the Bank of Canada. USD/CAD now back at 1.2700 with a potential for a test of 1.2740 before a retest of the 1.2800 as the USD remains firm.
Oil: WTI and Brent crude futures fell over 0.5% this morning after President Trump slammed OPEC for rising oil prices, stating that oil is at an artificially high price and that they won’t be accepted, prompting Brent to hit lows of $72.49. Elsewhere, OPEC and Non-OPEC ministers reiterated their bullish outlook that the oversupply has almost been diminished, while ministers have also called for other nations to join the output cut agreement.
DailyFX Economic Calendar: Friday, April 20, 2018 – North American Releases
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IG Client Sentiment Index Chart of the Day: EURUSD
IG Market Positioning Suggests EURUSD May Trend Lower in the Near-Term
EURUSD: Data shows 40.8% of traders are net-long with the ratio of traders short to long at 1.45 to 1. In fact, traders have remained net-short since Apr 06 when EURUSD traded near 1.22799; price has moved 0.2% higher since then. The number of traders net-long is 9.5% higher than yesterday and 6.7% higher from last week, while the number of traders net-short is 6.8% lower than yesterday and 3.6% lower 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. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current EURUSD price trend may soon reverse lower despite the fact traders remain net-short.
Learn more about the IG Client Sentiment Index on the DailyFX Sentiment page
Five Things Traders are Reading
- “GBP/USD Falls Back to Trend Support from November” by Christopher Vecchio, Senior Currency Strategist
- “Charts for Next Week: USD Triangle, GBP/USD Support, EUR/JPY Pattern” by Paul Robinson, Market Analyst
- “GBPUSD Slides as Soft Data and Cautious Carney Temper May Rate Hike Bets” by Justin McQueen, Market Analyst
- “Ripple (XRP) Rallies Sharply After Binance News” by Nick Cawley, Market Analyst
- “FTSE Technical Outlook – 7300 Taken Out, Now What?” by Paul Robinson, Market Analyst
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--- Written by Justin McQueen, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.