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
Bullish
GBP/USD
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
USD/JPY
Mixed
Gold
Bullish
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
Bitcoin
Mixed
More View more
Real Time News
  • The term ‘Ichimoku,’ literally means ‘one glance,’ in Japanese. Ichimoku, or the one glance indicator, is considered to be a self-contained system in the fact that no additional indicators are necessary. Learn more about the 'one glance' indicator here: https://t.co/T7o7W9C0Ro https://t.co/7bhBfWvEkR
  • Support and resistance are the cornerstone of technical analysis, making it the foundation that you build your knowledge on. Build a stronger foundation here: https://t.co/yXLaRpl90I https://t.co/85JHunf2Xf
  • Many traders ask how a trading method that is 77 years old is applicable today. Learn about the Gartley pattern and see how you can incorporate it into your trading style here: https://t.co/2yPmGH0XvT https://t.co/rtqUKZSdn1
  • Recessions can devastate the economy and disrupt the fortunes of individuals, businesses, and investors. But economic decline in the business cycle is inevitable, and your trading can be defined by how you respond to crisis. learn how to prepare here: https://t.co/e4CnobJCss https://t.co/ywv7RVP9qY
  • Crude oil prices may rise on supply-disruption fears after the outcome of the Iran election, but sentiment from #coronavirus fears may derail Brent’s recovery ahead of the G20 summit. Get your crude #oil market update from @ZabelinDimitri here: https://t.co/83iTphwaWv #OOTT https://t.co/RgQku64XyW
  • The Australian Dollar remains severely weighed down by #coronavirus worries and a lack of domestic data points will probably keep that story in the driving seat. Get you $AUDUSD market update from @DavidCottleFX here: https://t.co/qswUnnXVwR https://t.co/NyZ0iEpILm
  • While Sino-US trade jitters are temporarily abating, China-Swedish trade tensions are rising as a part of a political contagion of growing economic hostilities between nations across the world. Get your market update from @ZabelinDimitri here:https://t.co/F1fVoyzoz5 https://t.co/uOLKRebXB1
  • #DidYouKnow the global trade volumes dropped by close to 10% amid the Great Recession. Want to know your #tradewars history? Get it here: https://t.co/f4loFVzX6w https://t.co/GDTFHvUIf7
  • The spread of #coronavirus promises a global economic hit at a time when the global economy is perhaps especially ill-equipped to deal with one. Growth-correlated assets are vulnerable. Get your market update from @DavidCottleFX here: https://t.co/0If0Jw7c2P https://t.co/mph6z70XeF
  • The $JPY continues to struggle against the US Dollar but there seems little appetite to push USD/JPY much beyond a range which has tended to reassert itself since late last year. Get your market update from @DavidCottleFX here: https://t.co/iaVfPSuXy4 https://t.co/1QPhJmYlQv
US Debt Deal Looks Close - AUD/JPY and S&P 500 Offer Clues

US Debt Deal Looks Close - AUD/JPY and S&P 500 Offer Clues

2013-10-11 10:24:00
Christopher Vecchio, CFA, Sr. Currency Strategist
Share:

Talking Points:

- Day eleven of the US government shutdown and a short-term deal (approximately six-weeks) is said to be in the works.

- US debt limit hit on October 17 (6 days).

- US Advance Retail Sales off the calendar due to government shutdown; US U. of Michigan Confidence remains.

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

INTRADAY PERFORMANCE UPDATE: 09:45 GMT

MAJORS

AUD

CAD

CHF

EUR

GBP

JPY

NZD

(vs USD)

+0.31%

+0.10%

+0.41%

+0.41%

+0.12%

-0.24%

+0.85%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): +0.13% (+0.29%prior 5-days)

ASIA/EUROPE FOREX NEWS WRAP

Even though Democrats led by the White House rejected House Republicans' plans to raise the debt limit for six-weeks (there was no provision to reopen the government), investors have happily noted the shift in negotiating parlance by diving head first back into riskier asset pools. The Australian and New Zealand Dollars, which bended but didn’t break this week, are leaders alongside the Euro, which remains supported by its own shifting sentiment thanks to the European Central Bank.

So as markets perhaps front-run the six-week debt limit extension news – US 1-month generic T-bill yields have slid, as have yields of bills due in the second-half of October, while debt redeemable six-weeks out has started to see price decline/yields increase (when the supposed debt limit extension would end) – equity markets around the globe are looking through the negotiating period and instead tuning into the fact that the US government shutdown has now likely precipitated a further non-taper by the Federal Reserve at its October policy meeting.

US fiscal headlines will continue to rattle markets and there of course remains the seemingly diminishing possibility that no deal emerges. For the time being, it seems that markets are discounting such a scenario entirely. Two charts suggest to me that “risk” is shifting back “on.” First, the AUDJPY:

AUDJPY 8-hour Chart: September 27 to October 11, 2013

US_Debt_Deal_Looks_Close_US_Debt_Deal_Looks_Close_-_AUDJPY_and_SPX500_Offer_Clues_body_x0000_i1027.png, US Debt Deal Looks Close - AUD/JPY and S&P 500 Offer Clues

On the H8 chart, price has closed above ¥92.38, former swing resistance in the downtrend from the September highs, and resistance this past week briefly. Furthermore, the 8-/21-/55-EMA structure on short-term timeframes through H8 show full bullish continuity (ST > MT > LT); momentum is turning higher for the “carry trade.”

The next chart is the fair value S&P 500 futures contract, which as the headline barometer of risk for US assets is showing signs of a bullish breakout:

SPX500 Daily Chart: June 18 to October 11, 2013

US_Debt_Deal_Looks_Close_US_Debt_Deal_Looks_Close_-_AUDJPY_and_SPX500_Offer_Clues_body_x0000_i1028.png, US Debt Deal Looks Close - AUD/JPY and S&P 500 Offer Clues

The day after the Federal Reserve’s non-QE3 taper the S&P 500 topped, and has since then traded in a descending channel (black descending channel on chart) that nearly saw major support break: the uptrend that has guided price since November 2012 (with prior tests of support coming in December 2012, June 2013, and August 2013) (grey ascending channel on chart).

Although price closed below this channel support for two consecutive days, a Doji on the second day close suggested a potential pause in selling. Furthermore, the Doji appeared at a short-term channel support, the parallel taken from the August 2 and September 19 highs measured to the August 28 low (blue ascending channel on chart).

Between yesterday and thus far today, two events have developed in the S&P 500 futures contract: the descending channel from the September 19 high broke amid a bullish candlestick cluster on the daily chart (Morning Star); price has retaken the year-long ascending channel as the EMAs have shifted higher (momentum becoming more bullish).

If FX markets and equity market futures are offering signs in the wake of the US fiscal negotiations, it’s that investors are gearing for a risk-positive landscape as short-term bullish technical breakouts form in “risky” asset classes. In context of the news, diminished US fiscal risks and prolonged easy monetary policy from the Fed would support improved risk appetite.

Read more: Demand for Safety Falls as Yellen Nomination Overshadows Budget Impasse

ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION

US_Debt_Deal_Looks_Close_US_Debt_Deal_Looks_Close_-_AUDJPY_and_SPX500_Offer_Clues_body_Picture_1.png, US Debt Deal Looks Close - AUD/JPY and S&P 500 Offer Clues

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.