DailyFX US AM Digest: US Dollar Drops for Four Straight Days Before Stabilizing

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The US Dollar has stabilized today after slipping for four consecutive days, including yesterday following the release of the September FOMC meeting minutes. Growing concerns about persistently low inflation neutralized the otherwise hawkish implication of a near-unanimous belief that a December rate hike is appropriate.

Elsewhere, the British Pound took a turn lower midway through the European session following the joint press conference between the EU’s Michel Barnier and the UK’s David Davies. It’s becoming increasingly clear that the Brexit negotiations are going nowhere fast, and with UK Prime Minister Theresa May’s grip on power waning, it appears market participants are expressing more concern with an increased probability of a ‘hard Brexit’ scenario down the road.

DailyFX Economic Calendar: Thursday, October 12, 2017 – North American Releases

The North American economic calendar today offers a plethora of data releases, particularly from the United States, but nothing that carries a ‘high’ importance tag. Accordingly, with some of the US data – the weekly claims reports – still skewed by the impact of the hurricanes in September, there is a strong likelihood that much of it will be barely glanced at, if not ignored outright.

There is an event in Washington, D.C. today featuring policymakers from the BOC, ECB, and Fed, but a roundtable discussion among a cross-section of policymakers from different central banks – without the presence of the central banks heads like Janet Yellen – carries a low degree of probability for revealing anything new about policy intentions to the market.

DailyFX Webinar Calendar: Thursday, October 12, 2017

DailyFX US AM Digest: US Dollar Drops for Four Straight Days Before Stabilizing

IG Client Sentiment Index Chart of the Day: USDJPY

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DailyFX US AM Digest: US Dollar Drops for Four Straight Days Before Stabilizing

Learn more about the IG Client Sentiment Index on the DailyFX Sentiment page

USDJPY: Retail trader data shows 40.2% of traders are net-long with the ratio of traders short to long at 1.48 to 1. The number of traders net-long is 2.5% higher than yesterday and 6.7% lower from last week, while the number of traders net-short is 0.7% higher than yesterday and 33.6% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDJPY 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 USDJPY trading bias.

Five Things Traders are Reading

  1. “Canadian Dollar Under Pressure on NAFTA, Easier Oil Prices” by Martin Essex, MSTA, Analyst and Editor
  2. “DXY Losing Bullish Posture, Broad US Dollar Outlook Turns Neutral” by Christopher Vecchio, CFA, Senior Currency Strategist
  3. “NZD/USD Technical Analysis: NZ Dollar Ready to Turn Higher Again?” by Ilya Spivak, Senior Currency Strategist
  4. “EUR/USD Continues to Climb as Spain Imposes Deadline on Catalonia” by Martin Essex, MSTA, Analyst and Editor
  5. “DAX & CAC Technical Analysis: Consolidation Patterns to Lead Higher” by Paul Robinson, Market Analyst

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