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. See our updated Privacy Policy here.

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
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
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
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
  • Chinese stocks rallied following PBOC's liquidity injection: - CSI 300 (+1.49%) - Hang Seng Index (+1.16%) - Hang Seng Tech Index (+2.23%) https://t.co/7j4DJu6YZD
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/reRmDe1Ksp https://t.co/hwp2EU0zEm
  • "Wall Street Futures Update: Dow Jones (+0.39%) S&P 500 (+0.12%) Nasdaq 100 (+0.04%) [delayed] -BBG"
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Silver: 0.61% Gold: 0.23% Oil - US Crude: 0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/UQpIKV2jEZ
  • Natural gas prices have recaptured a key trendline after a major heatwave sent energy demand in the United States soaring. Get your market update from @FxWestwater here:https://t.co/7DdcMrObKp https://t.co/G3OuF7Y5IB
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.17% 🇦🇺AUD: 0.11% 🇪🇺EUR: 0.10% 🇬🇧GBP: 0.06% 🇨🇦CAD: 0.04% 🇯🇵JPY: 0.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/lqLaaO04eh
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 90.38%, while traders in France 40 are at opposite extremes with 70.61%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/KYpAOemcJX
  • The US Dollar may gain versus ASEAN currencies like the Singapore Dollar, Thai Baht and Philippine Peso after the Fed projected 2 rate hikes by the end of 2023. All eyes on US PCE data. Get your market update from @ddubrovskyFX here:https://t.co/LaLVW8FFHI https://t.co/Y0FoP7A5ZW
  • Dow Jones Rebound May Lift Sentiment for Nikkei 225 and ASX 200 https://www.dailyfx.com/forex/market_alert/2021/06/25/Dow-Jones-Rebound-May-Lift-Sentiment-for-Nikkei-225-and-ASX-200.html https://t.co/G6PRAUQbla
  • Increased rate bets following June's FOMC rate decision roiled markets, including commodities. Crude oil received a boost on Iran's election, while gold and copper look to incoming inflation data out of the US. Get your market update from @FxWestwater here:https://t.co/iGAO4dasIU https://t.co/iwDTDzgaHg
The Central Bank Trade Evolved, Strongest with Dollar and Risk Aversion

The Central Bank Trade Evolved, Strongest with Dollar and Risk Aversion

John Kicklighter, Chief Strategist

Talking Points:

• Analysis of and adaptation to central bank efforts has been a key dynamic of successful trading for for years

• The 'Central Bank Trade' refers to a number of methods to take advantage of these groups' heavy-handed influence

• Extremes in policy, speculative reach and a confluence of bearings has changed the influence of this driver

See how retail traders are positioning in the majors using the SSI readings on DailyFX's sentiment page.

The 'Central Bank Trade' can refer to different aspects of current monetary policy's influence on the markets and the opportunity of trading the influence/distortion. That said, there is one consistency across these different definitions: they have changed substantially over the past few years. If you continue to approach the markets with the same assumptions shaped around this fundamental theme that were employed back in 2009 to mid-2015, it is likely to end in confusion and frustration.

Among the most common interpretations of the Central Bank Trade for FX traders looks to pit hawkish versus dovish counterparts. This has presented some remarkably large opportunities over the past years. EUR/USD dropped from 1.1400 to 1.0500 in approximately 10 months largely owing the severe disparity in policy bearings between the Fed and European Central Bank (ECB). A similar scenario arose for the Japanese Yen. The currency dropped across all its major counterparts over the course of years as the Bank of Japan (BoJ) made a concerted effort to devalue its currency via stimulus efforts. Yet, in the past year, we have seen pushes to even more greater extremes on the dovish side generate gains not losses for the Euro and Yen. This reflects a distinct drop in the 'effectiveness' of monetary policy and a skew to a standard trade interpretation.

Another common method to assess and invest on monetary policy is analyzing its influence in the aggregate. The rise of stimulus and central bank balance sheets the world over charged a global reach for yield that motivated a benchmark like the S&P 500 to one of its most consistent advances (between 2011 and 2015) seen in modern history. Front running the collective swell in financial assets drew the same kind of mentality for investment seen in previous bubbles - like the Dot-com bubble between 1997 and 2000. Yet, the same transition to desperation and complacency is showing throw in this current phase. We discuss the evolution and pitfalls of this important market dynamic in today's Strategy Video.

To receive John’s analysis directly via email, please SIGN UP HERE

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

DISCLOSURES