Category: Daily Look

Dollar poised to improve on six week highs



A lack of major economic releases yesterday meant for a slow day of trading but overnight the Yen has seen a little action as USDJPY hits a three week high just pushing up against the 102.00 level.  A surprise rise in unemployment to 3.7% and weaker retails sales in Japan gave traders an excuse to sell the Yen as they perceive the chances of further QE having increased, despite words form BOJ board member Koji Ishida giving away little in a speech overnight.
Things should warm up a little from today onwards as we have a speech from the UK’s MPC member Ben Broadbent this morning, now the deputy governor for monetary policy and seen as one of the more hawkish voting members and then consumer confidence data from the US later this afternoon.  This is likely to be a market mover as it’s one of the key metrics the Federal Reserve watch since the US economy is so heavily reliant on the consumer.
The emphasis remains on the dollar and whether it can add to the gains it has made so far this month hovering around six week highs.  Against sterling and the euro, the dollar has made good ground in recent weeks with cable remaining below the 1.7000 level and EURUSD seemingly anchored to just above 1.3400.  Despite diverging central banks, in respect of the BOE and Federal Reserve, some of the UK data has softened leading to a protracted bout of profit taking in GBPUSD, which is susceptible to seeing further downside especially if this afternoon’s US consumer confidence, which is expected to rise from 85.2 to 85.3, comes in higher.

Further reading:

EUR/GBP Nudging A Key Breakout Resistance Area

NZD/USD spills the milk – falls to lower support

Dollar remains currency of  the month for July

Dollar remains currency of the month for July

As we enter the last few days of July we can safely say that it’s been the dollar recovery that’s been one of the outliers of the month.  The dollar index is up almost 2%, past June’s highs and closing in on the 2014 high and it’s the euro that’s felt the brunt of this

German Weltschmerz Hammers Markets

German Weltschmerz Hammers Markets

It appears that the famously cheerful Germans aren’t feeling quite so optimistic lately.The euro is holding near an eight-month low and global markets are limping into the weekend after the Ifo German business confidence survey fell for a third month running. The closely watched benchmark fell to 108, crushing market expectations around the 109.50 mark –

Sterling succumbs

Sterling succumbs

The break back below the 1.70 level on cable yesterday reflected the extent of the dollar recovery seen during July, but also the more balanced view being taken towards the possibility of higher UK rates this year.  Weaker than expected retail sales also put downward pressure on the UK currency early on during yesterday’s session. 

Aussie is the center of attention

Aussie is the center of attention

The dollar continues to assert itself, rising for 7 of the past 10 sessions on the dollar index, but it’s by no means universal.  The Aussie is the main exception, having risen nearly 0,5% vs. the dollar over the past two weeks. The overnight activity here has seen a brief push above the 0.9450 area,

US dollar gaining strength

US dollar gaining strength

So far this month (and quarter) there has been a more dominant trend towards dollar strength.  It’s happening around 6 months later than anticipated, but nevertheless it is emerging.  Earlier in the month, this was coming on the back of interest rates moves working in the dollar’s favour (2Y market rates), but we are also

Dollar sensitivity

Dollar sensitivity

The bigger risk events for currency markets fall into the latter half of the week, meaning that for now majors are constrained to relatively tight ranges with little impetus to breakout either side. The most notable move overnight has been with the Aussie. There were some fears that the RBA Governor Stevens could be more

Why FX volatility remains low

Why FX volatility remains low

The crisis in the Ukraine and the wider pressure being put upon Russia over the weekend is the main point of focus for markets at the start of the week. So far, the impact on FX markets has not been major or sustained, with EURUSD constrained to a 30 pip range for the most part

Ukraine On The Membrane

Ukraine On The Membrane

Geopolitical risks are weighing on market sentiment this morning, after the downing of a Malaysian Airlines flight over Ukraine yesterday. With the tragedy likely to raise tensions between Russia and the West, traders are entering the weekend in defensive positions. Stock indices are broadly down, while crude oil and the Japanese yen are seeing aggressive

Tensions in Ukraine and the Middle East shape investor sentiment

Tensions in Ukraine and the Middle East shape investor sentiment

Geopolitical tensions have come to the fore once again and investors are shunning risk assets.  Classic moves into the Yen, gold and dollar were the theme of yesterday’s session and once again questions are being raised about the sustainability of the equity market strength with the rally now looking a little long in the tooth. This morning