Tag Archives: dollar
Will The Fed Tolerate A Stronger USD For Longer? – Credit Agricole.
Given that US financial conditions have tightened of late, investors will also want to know if the Fed will tolerate further tightening (eg, USD appreciation). The Fed should deliver a 25bp rate hike but may keep its economic and policy outlook little changed, opting to wait for more economic data and details on the upcoming Trump stimulus. At the same time, Yellen may signal willingness to tolerate further tightening in US financial conditions in view of the latest rebound in US inflation expectations and given the resilience of risk sentiment at home and abroad.
Given the latest USD underperformance, the bigger surprise for the FX markets could be indications that the Fed would tolerate higher UST yields and a stronger USD for longer, as well as any potential revisions to the 2018 dot-plot to reflect the recent drop in the unemployment rate below the Fed’s NAIRU.
This could help USD regain some lost ground vs commodity and risk-correlated G10 currencies if further tightening in global conditions starts eroding market risk sentiment. AUD could be vulnerable to potential disappointments from the upcoming data out of Australia and China. We keep open our short AUD/USD trade.*
The BoE, the SNB and the Norges Bank will also meet next week but should keep policy unchanged. That said, the MPC could see the latest disappointing UK data as confirmation of its cautious macro outlook and reiterate it will keep policy very accommodative in the face of surging cost–push inflation. This could keep the headwinds in place for GBP against USD. EUR/GBP could start consolidating after the recent sell-off following the Italian referendum and December ECB meeting.
Forex Volume Set To Rise. USD JPY To Stabilize – Credit Agricole.
Article Courtesy of Credit Agricole.
The views expressed in this article are the opinion of Credit Agricole FX market analysts. Please feel free to share.
The holiday season is in full swing and for some this may mean that markets will settle down as liquidity dries up in the coming weeks.
Our evidence suggests that Forex volume tends to go up in August, however, data releases and events can trigger renewed spikes of short-end vol across G10. It remains to be seen whether the combined effect of the multitude of idiosyncratic shocks will be sufficient to fuel a broader risk off move. Even so, we have added to our portfolio a long XAU/CHF trade as a risk-off hedge. Another interesting strategy is to identify cheap FX volatility to benefit from accentuated market moves on the back of event risks and thin market liquidity ahead.
Next week’s data calendar is laden with data releases like US non-farm payrolls, and events like the BoE Inflation report and the RBA policy meeting.
The BoE inflation report may struggle to exceed the dovish market expectations ahead of the August inflation report, and that could help GBP consolidate more broadly. We remain long GBP/CHF going into the release. Investors are looking for another solid US payroll and earnings data.
JPY should remain in the spotlight ahead of the announcement of Abe’s fiscal stimulus next week. We expect Japanese stocks to recover some more as a result and that should help USD/JPY stabilize.
Ahead of the RBA, markets see a greater than 50% chance of a rate cut. We also see a non negligible risk of policy action and stick to our tactical AUD/USD short. The FX options markets do not seem to be pricing in a significant scope for spot moves making AUD short-term gamma an interesting buy as well.
That said, we remain bulls on AUD/NZD over the longer-term, and expect the upcoming NZ unemployment and inflation expectations data to fuel rate cut expectations ahead of the August RBNZ meeting, and keep the cross supported. Potential disappointments from Chinese PMI data could keep both antipodean currencies under pressure against USD.
Recording of a Price Action Short Trade on Euro Dollar Tuesday 16th April.
Here is a new recording of a high probability trade that i took this afternoon on Euro Dollar.
Please excuse my presentation skills as this is only the second time i have made a recording of a trade, so i am pretty bad at it at the moment. 🙂
I don’t like recording my Forex trading, but a few people have asked me to do this so i am giving it a go.
This trade is a short trade on Euro Dollar that netted me 24 pips.
I hope you enjoy the recording.
If you want to learn more about what i do please drop me an email or give me a ring.
Have a great trading day. 🙂
Weekend Update. Non Farm Payroll Numbers See Dollar Strengthen.
Better than expected non farm payroll numbers out of the US saw Dollar strengthen today, which saw Cable hit fresh lows and Euro Dollar drop 150 pips in 45 minutes.
This week has been a tough week to be honest, the price action has been pretty poor and big moves on the back of news has made it difficult to trade this week.
Monday was a pretty poor day, the pairs were moving in a pretty tight range, so pips were hard to come by. We did take one trade though. The trade was a long trade on Cable at 15040 up to 15070 for 30 pips.
Tuesday was a much better day. We took 4 trades for a total of 113 pips. All the trades were on Cable. We took it long at 15116 up to 15139 for 23 pips. We took it short at 15194 down to 15154 for 40 pips. We took it short again at 15128 down to 15098 for 30 pips. And then long again 15095 up to 15115 for 20 pips.
Wednesday we took 2 trades. Cable short at 15097 down to 15067 for 30 pips. We also took Euro long at 12966 up to 12980 for 14 pips.
Thursday we took 1 trade. Cable long at 15000 up to 15066 for 66 pips.
Today we took 3 trades for a total of 121 pips. Euro long at 13196 up to 13224 for 28 pips. This was before the non farm payroll numbers. We also took it long again after the NFP at 12966 up to 13004 for 38 pips. The price came back down again to test the low, so we took it long again at 12959 up to 13014 for 55 pips.
Total trades for the week 11. Total pips 374.
Not a great week compared to recent weeks, but 100 pips per week is my target, so we have far exceeded that target again. 🙂