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.

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
Bullish
Oil - US Crude
Bearish
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
Bearish
Gold
Bearish
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
More View more
Real Time News
  • WTI crude oil prices (WTI) lost 4.7% so far this week. Demand concerns and a rising US Dollar sent crude oil prices lower on Thursday. Cloudy economic recovery prospects weighed on sentiment, despite falling US crude inventories. https://t.co/nVHCe4DX3g
  • Based on recent price action in the US Dollar, might... $USDSGD $USDMYR $USDPHP $USDIDR ...be heading higher next? Check out my latest #ASEAN technical update here - https://www.dailyfx.com/forex/technical/article/special_report/2020/09/24/US-Dollar-Comeback-Ahead-USDSGD-USDMYR-USDPHP-USDIDR.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/9sIQFVeydt
  • Wall Street Futures Update: Dow Jones (-0.393%) S&P 500 (-0.418%) Nasdaq 100 (-0.653%) [delayed] -BBG
  • An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Stay up to date on the most important global economic data here: https://t.co/JdvW6HNuqV https://t.co/FXpr6RibWT
  • Markets attempted pull risk trends out of their dive this past session, but sentiment (via $SPX) ultimately returned to its bearish course. Meanwhile, $EURUSD is consistent with its reversal. My video for today: https://www.dailyfx.com/forex/video/daily_news_report/2020/09/24/EURUSD-Extends-its-Dive-as-Late-Day-Selloff-Puts-SP-500-On-Verge-of-Correction.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/Q6JZKW2B1y
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.57%, while traders in EUR/GBP are at opposite extremes with 64.76%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/JHNAiIgVLv
  • Forex Update: As of 04:00, these are your best and worst performers based on the London trading schedule: 🇨🇭CHF: 0.11% 🇪🇺EUR: -0.02% 🇯🇵JPY: -0.06% 🇨🇦CAD: -0.08% 🇳🇿NZD: -0.22% 🇦🇺AUD: -0.33% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/im3IxxDQ3y
  • Indices Update: As of 04:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.15% US 500: 0.12% FTSE 100: -0.94% Germany 30: -1.00% France 40: -1.04% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/X6mMfIY6HW
  • The US Dollar, British Pound, and Euro will all be closely watching key geopolitical developments in North America (Powell testimony), the UK (Brexit talks) and Europe (EU summit). Get your market update from @ZabelinDimitri here:https://t.co/q4AJW6PTCu https://t.co/e0rwBFOnqX
  • RT @stlouisfed: The current recession has in many ways been more extreme than the Great Depression, yet the economy is projected to recover…
Yellen Keeps USD on Downward Trajectory, BoC Catapults CAD With Hike

Yellen Keeps USD on Downward Trajectory, BoC Catapults CAD With Hike

2017-07-12 21:00:00
Tyler Yell, CMT, Currency Strategist
Share:

Highlights:

Wednesday was not a good day for those who woke up with short exposure on the Canadian Dollar. While the bar was high for the Bank of Canada, led by Governor Stephen Poloz, it’s fair to say Poloz & Co. cleared the hurdle by noting the output gap (potential GDP less actual GDP) in the Canadian economy was closing causing fixed income traders to price in another hike later this year. Short-term Canadian yields continued their impressive run to close the gap to US 2 year yields. In May, near the time USD/CAD traded as high as 1.3795, the spread between the US 2Yr Yield to the CA 2 Yr Yield was 63.5 bps. The fall in the sovereign spread expresses the view that over the coming years the Fed reference rate was expected to hold a significant premium over the Bank of Canada. After Wednesday’s rate hike, the spread between the sovereign yields fell to 15.6bps and helps to explain the sharp reversal lower in USD/CAD since May (see chart below).

Trading CAD? You may like this: USD/CAD Plummets As BoC Does Not Look To Be One And Done.'

Another point traders should keep in mind is that while the Canadian Dollar has done the heavy lifting in the near 6% drop in the last 2-months, the trend could continue lower if USD weakness were to accelerate. On Wednesday and Thursday, Fed Chair Janet Yellen expressed concern and uncertainty about how much and when inflation would respond while adding that US rates will not need to rise much to reach “neutral.” In Fed speak, the neutral rate is known as the level at which the Fed is neither accommodating or tightening. If US inflation weakness persists (we get CPI on Friday to confirm), the neutral rate will continue its long-term trend lower, and a weaker USD would likely be the result.

Catch up to date reactions when economic data is released from LIVE DailyFX Webinars

As Yellen was speaking, a market in addition to USD/CAD that had traders attention was USD/JPY. A rather strong reversal from Tuesday’s high of 114.50 to below 113 on Wednesday. Since March, USD/JPY has found resistance at the 114.50/115 zone and a further drop in UST 10Y yields, which hold a near decade high correlation to USD/JPY would likely reapply pressure to USD/JPY that has been absent since early June. The Bank of Japan will meet on July 20 to announce their rate decision that is fully expected to stay at -0.10%, but a further announcement on Yield Curve Control could provide volatility in USD/JPY.

Good news! Our Q3 forecasts are fresh and ready to light your path. Click here to access for FREE.

What appeared to be a day in which Crude Oil would rally off long-term support when the DoE showed the US experienced the largest supply drop since September remained a disappointment for Bulls. WTI did manage to settle above $45, but an OPEC report showed that current production is above implied 2018 demand according to their first 2018 outlook. Some trader may be encouraged by the announcement of an extraordinary OPEC meeting on July 17, but two rounds of production cuts leave the market in doubt that OPEC can provide the ‘shock and awe’ that was expected.

JoinTylerin hisDaily Closing Bell webinars at 3 pm ETto discusstradeable market developments.

Closing Bell’s Top Chart: July 12, 2017, LT USD/CAD chart shows breakdown may mirror H1 2016 Drop

Yellen Keeps USD on Downward Trajectory, BoC Catapults CAD With Hike

Chart Created by Tyler Yell, CMT

Tomorrow's Main Event:USD Fed Chair Yellen Testifies Before Senate Banking Panel

IG Client Sentiment Highlight: EU Equity Bears fighting a trend that does not want to quit

The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.

Please add a description for the image.

France 40: Retail trader data shows 41.8% of traders are net-long with the ratio of traders short to long at 1.39 to 1. The number of traders net-long is 38.8% lower than yesterday and 28.3% lower from last week, while the number of traders net-short is 83.3% higher than yesterday and 46.4% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests France 40 prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger France 40-bullish contrarian trading bias. (Emphasis mine)

Germany 30: Retail trader data shows 31.5% of traders are net-long with the ratio of traders short to long at 2.17 to 1. The number of traders net-long is 33.9% lower than yesterday and 34.9% lower from last week, while the number of traders net-short is 43.1% higher than yesterday and 46.5% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Germany 30 prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Germany 30-bullish contrarian trading bias. (Emphasis mine)

---

Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

To receive Tyler's analysis directly via email, please SIGN UP HERE

Contact and discuss markets with Tyler on Twitter: @ForexYell

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

DISCLOSURES