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.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bearish
USD/JPY
Mixed
Gold
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
Oil - US Crude
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
Bitcoin
Bearish
More View more
Real Time News
  • MACD who? The Moving Average Convergence Divergence (MACD) is a technical indicator which simply measures the relationship of exponential moving averages (EMA). Find out how you can incorporate MACD into your trading strategy here: https://t.co/ZNs4Qi8ieG https://t.co/7NYdsv43yx
  • European Opening Calls From IG: #FTSE 7450 -0.09% #DAX 13774 -0.11% #CAC 6103 -0.13% #AEX 628 -0.22% #MIB 25419 -0.23% #IBEX 10067 -0.17% #STOXX 3857 -0.22%
  • Heads Up:🇨🇭 CHF Industrial Output w.d.a. (YoY) (4Q) due at 07:30 GMT (15min), Actual: N/A Expected: N/A Previous: 8.0% https://www.dailyfx.com/economic-calendar#2020-02-20
  • GBP/USD Technical Analysis: British Pound Trend Reversal in Play - https://www.dailyfx.com/forex/technical/home/analysis/gbp-usd/2020/02/20/GBPUSD-Technical-Analysis-British-Pound-Trend-Reversal-in-Play.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #GBPUSD #technicalanalysis https://t.co/R74kxDFLc7
  • 🇪🇺 EUR German GfK Consumer Confidence (MAR), Actual: 9.8 Expected: 9.8 Previous: 9.9 https://www.dailyfx.com/economic-calendar#2020-02-20
  • Heads Up:🇪🇺 EUR German GfK Consumer Confidence (MAR) due at 07:00 GMT (15min), Actual: N/A Expected: 9.8 Previous: 9.9 https://www.dailyfx.com/economic-calendar#2020-02-20
  • Have you joined @DailyFX @facebook group yet? Discuss your #forex strategies and brush up on your skills with us here: https://t.co/jtY1G7g8yx https://t.co/YZQdz0J9Qx
  • The #Euro may retrace higher before resuming a selloff that brought the single currency to the lowest level in close to three years against the US Dollar. Get your market update from @IlyaSpivak here: https://t.co/6tE2Xibkiw https://t.co/LW8VClzEHx
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.26%, while traders in France 40 are at opposite extremes with 85.07%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/o7bhcPUReq
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇨🇭CHF: 0.02% 🇯🇵JPY: 0.00% 🇨🇦CAD: -0.06% 🇬🇧GBP: -0.08% 🇦🇺AUD: -0.39% 🇳🇿NZD: -0.40% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/9hDuPgcn3f
Glitter of Hope of US Budget Deal Sends Dollar Up, 'Risky' FX Higher

Glitter of Hope of US Budget Deal Sends Dollar Up, 'Risky' FX Higher

2013-10-08 11:57:00
Christopher Vecchio, CFA, Sr. Currency Strategist
Share:

Talking Points:

- Day eight of the US government shutdown and few signs of resolution.

- US debt limit hit on October 17 (9 days).

- Signs of cracks in Democrat strategy has markets hoping a deal could emerge.

To receive this report in your inbox every morning, sign up for Christopher’s distribution list.

INTRADAY PERFORMANCE UPDATE: 11:00 GMT

MAJORS

AUD

CAD

CHF

EUR

GBP

JPY

NZD

(vs USD)

+0.52%

-0.05%

-0.20%

-0.04%

-0.04%

-0.39%

+0.23%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.05% (-0.30%prior 5-days)

ASIA/EUROPE FOREX NEWS WRAP

The first kinks in the Democrats armor were exposed late-Monday when it appeared that a schism in negotiating tactics between the White House and Senate Democrats emerged. Comments made by advisors close to President Barack Obama suggest that the executive branch is open to a short-term extension of the debt limit, likely to around the Thanksgiving holiday; while Senate Democrats want to make no such compromise.

The mere whiff of the scent that a default could be avoided has investors surreptitiously putting capital back into higher yielding FX, specifically the “carry trade,” with the Australian and New Zealand Dollars boasting respectable gains against the safe havens, the Japanese Yen and the Swiss Franc. For all intents and purposes, the US Dollar is middling along only down -0.05% against a basket of the Australian Dollar, the British Pound, the Euro, and the Japanese Yen; hopeful, positive US fiscal developments are allowing the greenback to at least tread water here.

Whether or not these rumors pan out, only time will tell; I think we’re looking at fool’s gold here rather than bullion itself. Neither party has yet to put forward a sincere gesture – a bill, for example – that would set in motion plans to end the government shutdown and raise the debt ceiling. Moreover, it makes even less sense that the White House and Senate Democrats – who have gained in polling figures in recent days with Congressional Republicans bearing the brunt of blame for the shutdown – would cave this ‘far away’ from the US debt deadline; which will occur in 9 days on October 17.

Coming out of the US fiscal issues, I remain confident in my recent pivot in Euro outlook, that the Euro should remain elevated through such turmoil and eventually gain afterwards. Looking back to 2011, the EURUSD only lost -0.5% in the following day after the US lost its ‘AAA’ rating from Standard & Poor’s; -0.2% within five days; and finished the month up by +0.9%.

The EURUSD was able to maintain price despite the Euro-Zone’s issues flaring up (Greece) and the US fiscal problems; with the Euro component in a healthier position, why would the result be any more negative? Moreover, in light of the US government shutdown and ensuing debt limit debate – factors that were listed at the September policy meeting – it is increasingly unlikely that the Federal Reserve tapers QE3 in October, leaving December as the last opportunity to taper in 2013

EURUSD 5-minute Chart: October 8, 2013 Intraday

Glitter_of_Hope_of_US_Budget_Deal_Sends_Dollar_Up_Risky_FX_Higher_body_x0000_i1027.png, Glitter of Hope of US Budget Deal Sends Dollar Up, 'Risky' FX Higher

Taking a look at European credit, mixed action across the continent has had a neutral impact on the Euro.The Italian 2-year note yield has increased to 1.653% (+3.8-bps) while the Spanish 2-year note yield has increased to 1.355% (+3.8-bps). Likewise, the Italian 10-year note yield has increased to 4.339% (+5.3-bps) while the Spanish 10-year note yield has increased to 4.251% (+5.0-bps); higher yields imply lower prices.

Read more: Japanese Yen Rallies, Aussie Suffers as US Fiscal Issues Remain Elevated

ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION

Glitter_of_Hope_of_US_Budget_Deal_Sends_Dollar_Up_Risky_FX_Higher_body_Picture_1.png, Glitter of Hope of US Budget Deal Sends Dollar Up, 'Risky' FX Higher

See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators. Want the forecasts to appear right on your charts? Download the DailyFX News App.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

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

DISCLOSURES

News & Analysis at your fingertips.