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
EUR/USD
Mixed
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • #Gold saw its worst performance the past 5 days in 5 months as longer-dated government bond yields in developed countries rose Could this be the beginning of a turning point in #XAUUSD? https://www.dailyfx.com/forex/fundamental/forecast/weekly/chf/2020/08/15/Gold-Price-Outlook-Will-XAUUSD-Brush-off-Worst-Week-in-5-Months.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/x2Indk3b7P
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/PT09ZsIOCa
  • The US #Dollar may rise, buoyed by haven demand as fiscal stimulus talks stagnate and swelling tensions between Washington and Beijing sink trade talks. Get your #currencies update from @DanielGMoss here: https://t.co/Wcw9PDUr67 https://t.co/gnYZYl6aLV
  • Upside in #CrudeOil struggling ahead of #OPEC meeting. Cartel likely to maintain wait and see approach. Get your #commodities update from @JMcQueenFX here: https://t.co/gNHHKoTUzm https://t.co/eF40DRIBJ5
  • #Gold had some big moves last week, and while vol is expected to die down a bit, it will be important to see if gold can hold its ground in the coming days/weeks. Get your #metals update from @PaulRobinsonFX here: https://t.co/N8a84hRnHN https://t.co/3fjodPHTDm
  • The S&P 500's refusal to hit a record and Dollar's anchor to range this past week is sign of summer liquidity conditions, but the quiet is not insurmountable. 'S&P 500 Record and Dollar Break Look to Stimulus and Trade to Override Seasonality' https://www.dailyfx.com/forex/video/daily_news_report/2020/08/15/SP-500-Record-and-Dollar-Break-Look-to-Stimulus-and-Trade-to-Override-Seasonality-.html https://t.co/mbvPkdQfYl
  • Get your snapshot update of the of relative currency strength and exchange status from around the globe here: https://t.co/DmhBkcMZBK https://t.co/kFk6ccU3Sk
  • 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/ADSC4sIHrP https://t.co/aXSB0bG3y0
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/1G7CRsegRX https://t.co/i342ipPuvW
  • Why financial market traders must monitor both monetary and fiscal policy? Find out from @MartinSEssex here:https://t.co/Fkzk88Y5gm https://t.co/tHp0Nb3Tr5
When Do US Interest Rates Begin to Surge with USD/JPY?

When Do US Interest Rates Begin to Surge with USD/JPY?

2013-01-11 20:54:00
Jamie Saettele, CMT, Sr. Technical Strategist
Share:

For the purposes of this article, I’m referring to the most commonly quoted US fixed income instrument-the 10 year Treasury note yield. The yield dropped to a record low in 2012 (July closing low was 1.49%) and has inched higher over the last 6 months to 1.88%. ‘Long the US bond market’ (akin to short yield) is undoubtedly a crowded trade. The public, investment professionals, pension funds, etc. piled into the bond market at the highs after ignoring the rally for most of the last 3 years. Such activity is characteristic of a market turn.

‘Has the bond market topped?’ isn’t as important a question however as ‘at what level would the market inflict the most pain on the most participants?’ In other words, when do increasing yields (declining bond and note values) become a story and what would the implications be for the FX market?

10 Yr. Treasury Note Futures

When_Do_US_Interest_Rates_Begin_to_Surge_with_USDJPY_body_tenyearspecs.png, When Do US Interest Rates Begin to Surge with USD/JPY?

Prepared by Jamie Saettele, CMT

Speculative positioning on 10 year Treasury note futures highlights the herd behavior that governs all markets. The majority finally bought (literally) into the trend of rising treasuries (declining yields) at what is so far the top. Such activity is consistent with a significant turn.

10 Yr. Treasury Note Futures

When_Do_US_Interest_Rates_Begin_to_Surge_with_USDJPY_body_tenyear.png, When Do US Interest Rates Begin to Surge with USD/JPY?

Prepared by Jamie Saettele, CMT

In order to gauge the level at which increasing yields (declining bonds) become a story, we need to find where the most activity took place. A record futures volume was generated in August 2011, so the August 2011 close (the closing price is viewed as most important) is the obvious candidate for our ‘critical level’. The August 2011 close was defended in March 2012, which ended up being the low for all of 2012. It’s comforting that the market has validated this level as one of importance. The corresponding level for yields is 2.22% (see next chart). 2.22% is the point of maximum vested interest and therefore the level that many may decide to exit the bond market (and send yields higher). If this happens, then expect extreme intraday market moves across major markets, especially the USDJPY.

When_Do_US_Interest_Rates_Begin_to_Surge_with_USDJPY_body_Picture_2.png, When Do US Interest Rates Begin to Surge with USD/JPY?

Prepared by Jamie Saettele, CMT

USDJPY and US 10 Yr. Treasury Note Futures (Inverted)

When_Do_US_Interest_Rates_Begin_to_Surge_with_USDJPY_body_yen.png, When Do US Interest Rates Begin to Surge with USD/JPY?

Prepared by Jamie Saettele, CMT

It is well documented that currency markets ebb and flow with the change in yield differentials (the cost of money). Decreasing yield differentials in recent years, especially in 2012, can be cited for the lack of trends in USD based pairs. If yields continue to tick higher, then expect trends to reappear. The USDJPY has already broken out but increasing US yields would intensify the move and shift focus to the 2010 and 2009 highs at 9500 and 10144.

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

To contact Jamie e-mail jsaettele@dailyfx.com. Follow me on Twitter for real time updates @JamieSaettele

Subscribe to Jamie Saettele's distribution list in order to receive actionable FX trading strategy delivered to your inbox.

Jamie is the author of Sentiment in the Forex Market.

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

DISCLOSURES

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.