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
Mixed
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • UK PM Johnson says virus restrictions likely to last 6-months $GBP
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/38gTDn8ejP https://t.co/CjCiVL0C9q
  • 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/S9CEcBm5Qe https://t.co/0gQ60Dd1S5
  • Optimism $GBP https://t.co/UjSo3Dpthr
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.44%, while traders in NZD/USD are at opposite extremes with 70.05%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/n7ePyLk3EB
  • Heads Up:🇧🇷 BCB Copom Meeting Minutes due at 11:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-22
  • Commodities Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.13% Gold: -0.34% Silver: -1.88% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/1fgVHj1F6Z
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.12% 🇳🇿NZD: 0.01% 🇨🇦CAD: -0.03% 🇨🇭CHF: -0.17% 🇬🇧GBP: -0.19% 🇪🇺EUR: -0.28% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/2CA80kFhl2
  • Coming up at half past the hour. Do join me if you can, using the link below https://t.co/RAiCJNLuSC
  • Indices Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Germany 30: 1.18% FTSE 100: 0.49% France 40: 0.40% US 500: 0.22% Wall Street: -0.03% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/Jb7LZOruhP
US Dollar Fate Not In US Hands As Data Focus Shifts To ECB And BoJ

US Dollar Fate Not In US Hands As Data Focus Shifts To ECB And BoJ

2017-07-17 21:00:00
Tyler Yell, CMT, Currency Strategist
Share:

Highlights:

  • Dollar rebound in heavy doubt per futures markets betting on Fed action
  • AUD at technical tipping point as CFTC shows longs pile in
  • Crude Oil finds resistance as OPEC compliance on cuts drop
  • Sentiment Highlight: Bullish AUD/USD as retail short positions increase 47.1% WoW

What is a Dollar Bull to do in the current environment? While Janet Yellen did tell Congress last week that inflations course from here is uncertain, the Fed will continue to focus on raising rates. As I’ve shared in my Closing Bell webinars, this almost completely is due to a dual-focus of the balance sheet run off and financial conditions.

The Fed has mentioned that they want to be able to assist the economy by cutting rates if the business cycle crests as the Fed is unwinding their balance sheet (they’ve mentioned they do not want to stop once they start as it could sting the economy). Also, financial conditions are easier now when measured by the Chicago Fed National Financial Conditions Index (NFCI) since the summer of 2014. Per the NFCI, the Fed is essentially getting free-hikes in much the same manner that Alan Greenspan did as financial conditions remain easy despite a “tightening” Fed. However, despite the tightening, the dollar remains weak, and recent CFTC positioning shows leveraged funds have the largest net short USD trade since 2014. Maybe there is something to financial conditions after all.

Either way, the bond market is not buying what the Fed is selling. The Eurodollar futures market is pricing in a little over one hike in 2018 while the Fed is stating they'll provide three. If easy conditions remain per the NFCI, the Fed could hold true. However, it's also possible that if conditions tighten, the Fed could begin to get out-hiked in 2018 by rival central banks.

Next, going to Australia, the Australian Dollar is on the cusp of a breakout that is being watched attentively as Copper and other Base metals ride the wave of Chinese output. In the options space, AUD/USD implied volatility over the coming month is near the highest level in 30-days. Copper is trading at the highest level in 4-months on Chinese data. Monday’s high on AUD/USD of 0.7838 broke above the 2016 high and aligns with the sentiment picture below that further gains could be seen. This week, Australia will look to add momentum to last month’s impressive jobs number and if it’s able to do so, the hedge funds per the CFTC that are holding a large net-long position will be rewarded and will likely add given the lack of abundant breakouts and trading opportunities in the current environment.

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

Looking to Crude Oil, Bulls would likely do well to curb their enthusiasm. While positioning does show that institutional short positions unwound the most in four weeks, production in OPEC is up showing the compliance is dropping. On a positive note, the Contango in WTI for Dec.17-Dec.18 has narrowed the most in nearly two weeks, which combines with positioning to support the pull back. However, there remains a mountain of resistance that Crude would need to break through for an even Bullish picture to emerge.

Recommended: Crude Oil Rises Into 55-DMA On 5% Weekly Gain, Production Rises

Join Tyler in his Daily Closing Bell webinars at 3 pm ET to discuss tradeable market developments.

Closing Bell’s Top Chart: July 17, 2017, US Oil rallies into resistance, can Bulls push it higher?

US Dollar Fate Not In US Hands As Data Focus Shifts To ECB And BoJ

Chart Created by Tyler Yell, CMT

Tomorrow's Main Event:GBP Consumer Price Index (YoY) (JUN)

IG Client Sentiment Highlight:Bullish AUD/USD as retail short positions increase 47.1% WoW

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.

US Dollar Fate Not In US Hands As Data Focus Shifts To ECB And BoJ

AUDUSD: Retail trader data shows 24.6% of traders are net-long with the ratio of traders short to long at 3.06 to 1. In fact, traders have remained net-short since Jun 04 when AUDUSD traded near 0.74595; price has moved 4.5% higher since then. The number of traders net-long is 23.6% higher than yesterday and 25.8% lower from last week, while the number of traders net-short is 12.1% higher than yesterday and 47.1% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUDUSD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed AUDUSD 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