News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/jZHcyAZ5SU
  • Further your forex knowledge and gain insights from our expert analysts on EUR with our free guide, available today: https://t.co/XtydfV5wS6 https://t.co/Iw9haaHAnn
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sr63f https://t.co/raO3gCGqQ6
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here: https://t.co/8A1QhwMVKo https://t.co/rWVlBs6H3c
  • The update to the US Consumer Price Index (CPI) is likely to sway the US Dollar during the Federal Reserve’s blackout period as the central bank braces for a transitory rise in inflation. Get your weekly $USD forecast from @DavidJSong here: https://t.co/JTuP7CLlyi https://t.co/tOvqn3Gdpc
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/s5dn4ZKnku
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACyvdZ https://t.co/6VjW5FEiQW
  • Global stocks bounce back from recent pullback as key resistance levels lie ahead. Get your weekly equities forecast from @HathornSabin here: https://t.co/wXSWo1JygD https://t.co/vWVaSEQTXT
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here: https://t.co/t9FlspUVZz https://t.co/9kfBu04auM
  • Dealing with the fear of missing out – or FOMO – is a highly valuable skill for traders. Not only can FOMO have a negative emotional impact, it can cloud judgment and overshadow logic. Learn how you can control FOMO in your trading here: https://t.co/lgDf5ddzFV https://t.co/8GJ6OQYgnW
US Dollar Dethroned, Japanese Yen Soars as US Rates Implode

US Dollar Dethroned, Japanese Yen Soars as US Rates Implode

Justin McQueen, Strategist

US Rates, S&P 500, Euro, JPY Price Analysis & News

  • US Rates Implode Extending US Equity Rout
  • Carry Compression Supports Euro and Japanese
  • Currency Volatility Catching Up to VIX

Uncertainty remains rife across global equity markets as US yields implodes. The 10yr Treasury yield hit an all-time low after briefly dipping below 0.70%, in turn, US equity futures continued to head lower with the S&P 500 falling 2.6%. Yesterday, we highlighted that cross-asset volatility remains elevated and thus keeping equity markets tilted to the downside. At the same, currency volatility (Figure 1) has also played catch up with the volatility observed in the equity market. Subsequently, the Euro, Japanese Yen have been among the outperformers against its major counter parts. Keep in mind, that these two currencies had been heavily shorted among traders, therefore short unwinds have exacerbated recent gains.

Figure 1: Currency Volatility Beginning to Follow the VIX

US Dollar Dethroned, Japanese Yen Soars as US Rates Implode

US Dollar Capitulation as Euro and Japanese Yen Surge

Despite an emergency 50bps Fed rate cut, money markets have continued to aggressive price in additional easing with another 50bps cut expected at the March meeting. The Fed appears to be backed into a corner, in which the Fed is forced to ease further in order to counter unwarranted tightening of financial conditions from not acting. Alongside this, with the Federal Reserve attempting to get ahead of the curve with an inter-meeting cut, this has done little to dispel market uncertainty. Alongside this, with other G10 central banks with limited policy space, a sizeable compression in yield differential have subsequently pushed the US Dollar lower, most notably against the Euro and Yen, which broke through 1.1300 and 1.0500 respectively.

US Dollar Dethroned, Japanese Yen Soars as US Rates Implode

Source: Refinitiv, DailyFX

US Coronavirus Cases to Spike?

Risks remain tilted to the downside for equity markets and with coronavirus cases beginning to pick up in the US. Safe-havens may continue to outperform the broader with gold prices attempting to challenge $1700. That said, those playing close attention to the US treasury curve would have noticed that the recent bull-steepening, typically an ominous sign for risk appetite.

Fear the Steepening of the US Treasury Curve

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

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

DISCLOSURES