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
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
GBP/USD
Mixed
USD/JPY
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
Gold
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
Bitcoin
Bullish
More View more
Real Time News
  • The #Euro is grinding through support guiding the four-month upswing against the US Dollar, hinting that resumption of the broader downtrend may be around the corner. Get your market update from @IlyaSpivak here: https://t.co/lHhewnDqCf https://t.co/knIYvGF2cr
  • EUR/USD Technical Analysis: Euro Downtrend May Have Restarted - https://www.dailyfx.com/forex/technical/home/analysis/eur-usd/2020/01/24/EURUSD-Technical-Analysis-Euro-Downtrend-May-Have-Restarted.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #EURUSD #technicalanalysis https://t.co/AbwUdLh4mt
  • The Japanese Yen has faded into 2020 as market risk appetite has held up and hit demand for haven assets. $USDJPY now challenges a key medium-term downtrend, but hasn’t topped it yet.Get your market update from @DavidCottleFX here:https://t.co/4X6vgCgkB7 https://t.co/tkgAOlDdtU
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.06% Gold: -0.10% Silver: -0.10% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/LwLCxnO6eM
  • Forex Update: As of 03:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.06% 🇯🇵JPY: 0.03% 🇬🇧GBP: -0.00% 🇨🇦CAD: -0.01% 🇪🇺EUR: -0.03% 🇨🇭CHF: -0.06% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/UT2Vl3reju
  • The US Dollar rose as the Singapore Dollar, Malaysian Ringgit and Philippine Peso fell on #Coronavirus fears. What is the technical outlook for $USDIDR, $USDSGD, $USDMYR and $USDPHP? #ASEAN - https://www.dailyfx.com/forex/technical/article/special_report/2020/01/24/USDIDR-USDSGD-USDMYR-USDPHP-Coronavirus-Impact-on-Trends.html?CHID=9&QPID=917702 https://t.co/hCnmsObRuS
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.22%, while traders in US 500 are at opposite extremes with 76.20%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/x0bKaNAhmU
  • The $USD may fall against the Swedish Krona and Norwegian Krone if commentary from officials at the Davos forum uplift market mood and pressure haven-linked currencies. Get your market update from @ZabelinDimitri here:https://t.co/SZAG0yMu3d https://t.co/CY7vQwuEL1
  • So far this week, #GBP has been the best-performing #G10 currency against #USD with +0.78% spot-returns while #NOK has been the worst with -0.96% [delayed]
  • 🇳🇿 NZD Credit Card Spending (YoY) (DEC), Actual: 3.4% Expected: N/A Previous: 4.5% https://www.dailyfx.com/economic-calendar#2020-01-24
Dow Leads a Charge and EURUSD a Dollar Retreat Amid Trade War Headlines

Dow Leads a Charge and EURUSD a Dollar Retreat Amid Trade War Headlines

2018-06-07 01:16:00
John Kicklighter, Chief Currency Strategist
Share:

Talking Points:

  • What was an uneven day for sentiment swung to the bulls in the New York session, lead by a 1.4 percent Dow rally
  • Despite the reach for yield and capital gains, the headlines Wednesday were dominated by trade wars and forecast for the G-7
  • Gains for the Euro, Pound and Aussie Dollar come with differing degrees scrutiny given their mixed backdrops

Do you want to learn how to trade event risk? Download the strategy guide on for trading news events on theDailyFX Trading Guides page.

You Couldn't Tell Concern Over Trade Wars was Growing

There was a definitive, bullish bearing behind the speculative markets this past session - a remarkable feat given the tenor of headlines surrounding a favorite theme of late: trade wars. Looking at the relative performance across different asset classes, it was clear that there was a change in sentiment not along the lines of market type but rather time frame. In contrast to the restrained performance offered up by European indices Wednesday, the US benchmarks offered a more heady charge. Starting from a more material discount, the key stock leaders produced impressive gains paced by the Dow's 1.4 percent rally. Both the blue chip index and the S&P 500 produced technical breakouts from multi-month ranges. Yet, for perspective, this progress is still well within the wide trading spans carved out following February's dramatic tumble from record highs. From the Nasdaq Composite and the Russell 2000, the day earned a fresh record high, but tempo was far more restrained. To balance the assumption that this was just an equities performance, we would also see impressive gains for the EEM Emerging Market ETF, the HYG junk bond ETF, Treasury yields and Yen crosses. The question is not whether there was a 'risk' fluctuation but rather will it last.

Dow Leads a Charge and EURUSD a Dollar Retreat Amid Trade War Headlines

The Headlines Reflect Retaliations and Warnings in Trade Wars ahead of G-7

Gains in speculative appetite is not particularly extraordinary, but it is unusual when the headlines behind dominant fundamental themes add weight to persistent fears. Trade wars have earned remarkable trend and volatility from the currency and capital markets these past weeks and months, so we know there is considerable weight behind the systemic risk. And, we were not light for headlines on this particular topic Wednesday. Mexico announced it was imposing $3 billion in tariffs on US imports in response to the latter's triggering the metals' duty this past Thursday. The European Union was also reportedly preparing additional tariffs on American goods to start in July. Looking to deflect anger, President Trump's top economic advisor, Larry Kudlow, gave a press conference in which he suggested global trade was broken and their aim was fair, robust growth for the US and world economies. The reassurances rung hollow to its trade partners, and that will no doubt be stated at the upcoming G-7 leaders summit Friday and Saturday. Removing the sovereign perspective of the trade wars, the World Bank warned the recent wave of tariffs could lead to an economic and financial future akin to what we faced in 2008. Also related, the United Nations updated its global foreign direct investment figure for 2017 with a troubling downward revision to a 23 percent drop for the year. Considering this happened before the recent troubles for global trade, it is clear what that the future does not look particularly encouraging.

Dow Leads a Charge and EURUSD a Dollar Retreat Amid Trade War Headlines

Euro and Pound Shift Priority to Support Advances

Another remarkable sign of speculative reach was the fact that European indices managed the performance they did against growing anticipation for the European Central Bank (ECB) to spell out its retreat from extreme easing. There is a clear link between unprecedented easing (zero benchmark rates and unorthodox QE) and the exceptional performance of financial markets. It only stands to reason that removing this pillar of speculation will promote its ultimate collapse. That said, there is a near-term positive connotation in such a change in tack for the currency. The ECB's chief economist, Peter Praet, Wednesday further fueled expectation that the group would signal the end of stimulus next week. With that lever, the euro posted a notable advance that earned EURUSD the break of its inverted head-and-shoulders pattern. For the Pound, the focus has moved away from the motivation for the Bank of England (BoE) to Brexit. That said, the headlines related to the UK's divorce from the EU have not been particularly promising. Reports that Brexit Minister David Davis was adding pressure on the Prime Minister as she struggles to set a clear course in negotiations. Despite these concerns and the forthcoming crunch votes, the Sterling still marked an advance on the day - with notable hold for EURGBP and GBPUSD starting to threaten a meaningful turn.

Dow Leads a Charge and EURUSD a Dollar Retreat Amid Trade War Headlines

Data Keeps the Aussie Dollar Tempo, Feeds Loonie Uncertainty

The Aussie Dollar faced yet another day of fundamental charge. This time around, the compass setting was again set to bullish. Following Monday's wave of bullish data and the neutral RBA, 1Q GDP for Australia beat expectations by posting 1.0 percent growth that beat expectations and doubled the previous quarter's growth. AUDUSD has added yet another technical break to its belt while AUDJPY is in the middle of posting a break through zone resistance at 84.50/00. The question is whether we have seen enough of a push to transition break into trend. The Canadian Dollar received the opposite motivation. While the trade report for April offered an improvement to help tamp down the concern over the growing tension with the United States, the Ivey manufacturing survey for May made it clear that there were clear costs to sentiment. The Loonie gave up gains made earlier on the day, but it didn't progress its retreat of the past few weeks. We discuss all of this and more in today's Trading Video.

Dow Leads a Charge and EURUSD a Dollar Retreat Amid Trade War Headlines

If you want to download my Manic-Crisis calendar, you can find the updated file here.

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

DISCLOSURES

News & Analysis at your fingertips.