Dagelijkse Markt Analyse 11 Januari 2019

DAGELIJKSE MARKT ANALYSE 3 JANUARI 2014


• Fed Officials’ Speaking Calendar in the Spotlight into the Week-End
• Gold Likely to Fall if Bernanke and Co. Signal “Taper” Continuity
• Crude Oil May Correct Higher as Inventory Data Shows Drawdown

All eyes are on a busy schedule of “Fed-speak” due in the final hours of the trading week. Charles Plosser and Jeffrey Lacker – Presidents of the Philadelphia and Richmond branches of the central bank respectively – as well as Governor Jeremy Stein and Chairman Ben Bernanke are all on the day’s docket.

Rhetoric reinforcing the likelihood of continued “tapering” of the Fed’s QE3 program in the months ahead is likely to boost the US Dollar against most of its top counterparts. Meanwhile, precious metalsare likely to decline amid eroding anti-fiat demand. Alternatively, a more cautious tone stressing the data dependence of near-term policy as well as the idea that “tapering” doesn’t amount to tightening may yield the opposite effect.

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DAGELIJKSE MARKT ANALYSE 7 JANUARI 2014

• Dollar, Equities Little Moved by Yellen Nomination for Fed Chair
• Yen Crosses Tumble Again, Not Yet Vicious Bear Cycle
• Euro Traders, Rate Watchers Await Inflation Data


The US Senate confirmed Janet Yellen’s nomination to lead the Federal Reserve when Chairman Bernanke’s term ends on January 31…but should that comfort over-exposed investors? Even those that are skeptical of the direct relationship between loose monetary policy and the robust optimism in US and global capital markets these past years cannot discount that the external support has buoyed risk trades to some degree. What happens when the recognition of that backstop’s limitations becomes the consensus? We may soon find out.

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DAGELIJKSE MARKT ANALYSE 8 JANUARI 2014

• Dollar Traders Look to Revive Taper Speculation on ADP
• Euro Inflation Plunge Increases ECB Stimulus Risk
• Yen Crosses Groping for Traction as Nikkei 225 Rebounds

Dollar Traders Look to Revive Taper Speculation on ADP
This past session, US Treasury yields dropped to a two-week low and the S&P 500 gathered itself for the first advance for the year. And yet, the dollar still managed to forge gains against all of its major counterparts. For the most part, the greenback’s gains were moderate; but the consistency in an unfavorable fundamental environment speaks to a possible underlying bias amongst the trading ranks heading into more eventful data and headlines. Outright bullishness, though, seems to be reserved for tangible fundamental cues that can leverage a competitive advantage for the world’s most liquid currency – whether that is on the basis of safe haven demand or relative yield. From the Dow Jones FXCM Dollar Index (ticker = USDollar), we see the currency struggling to overtake the resistance it heeded over the past three weeks at 10,720/700. We see the same hesitation with EURUSD at 1.3600, GBPUSD near 1.6300 and USDJPY below 105.50.

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DAGELIJKSE MARKT ANALYSE 9 JANUARI 2014

• Dollar Outlook Improves after Hawkish FOMC Minutes
• Euro: What’s the Probability of an ECB-Led Collapse?
• British Pound Traders Won’t Hold Their Breath for the BoE

Dollar Outlook Improves after Hawkish FOMC Minutes
A clear, hawkish tone from the FOMC minutes this past session fortified the central bank’s Taper bearing and in turn supported the dollar to further gains. Looking at the currency’s performance on the day, the unit advanced against all but the sterling – although the gains were relatively modest (between 0.2 and 0.5 percent). The restraint speaks volumes to technical trader who see meaningful dollar resistance for pairs like EURUSD and USDJPY in the immediate foreground. The same boundary is reflected on the Dow Jones FXCM Dollar Index (ticker = USDollar) which has held below 10,720 for the past three weeks. Yet, as this ceiling has held in place, progress in general has floundered – so much so that the Average True Range (ATR, a good volatility gauge) has dropped to its lowest level in 12 months. What does this mean? The market is exceptionally quiet for the dollar and a breakout is a high probability. Just in time for a Friday NFPs on the heels of the Taper…

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DAGELIJKSE MARKT ANALYSE 10 JANUARI 2014

• FX Markets to Look Past European Calendar, Focus on US Jobs Data
• Leading Indicators Hint Nonfarm Payrolls May Surprise to the Upside
• European FX to Underperform Against US Dollar on Pro-Taper News


Traders are likely to look past a lackluster economic calendar in European trading hours to focus on the much-anticipated US Employmentreport. Expectations suggest the economy added 197,000 jobs in December, marking a slight slowdown from November’s 203,000 increase. The Unemployment Rate is forecast to hold unchanged at 7 percent, a five-year low.


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DAGELIJKSE MARKT ANALYSE 13 JANUARI 2014

• Japanese Yen, Australian Dollar Rise as Asia Reacts to US Jobs Report
• Fed Unlikely to Abandon “Tapering” QE But Speculation Will Emerge
• Atlanta Fed Pres. Lockhart to Start Busy Week of Official Commentary


The Japanese Yen and the Australian Dollar advanced in overnight trade as Asian traders took their shot at responding to Friday’s disappointing US employment data. The two yield-sensitive currencies have been moving in lock-step with 10-year US Treasury yields, reflecting the impact of QE “taper” speculation. This dynamic has been thrown into reverse as markets ponder the possibility that the FOMC may have moved too soon to begin removing stimulus and will now be forced to reconsider.

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DAGELIJKSE MARKT ANALYSE 14 JANUARI 2014

• Dollar Hits One-Month Low Despite Biggest Drop for Stocks in Months
• British Pound Readies for Heavy Round of Inflation Data, Rate Speculation
• Yen Crosses Face First Serious Bear Wave in Three Months


Dollar Hits One-Month Low Despite Biggest Drop for Stocks in Months
The dollar’s performance Monday was not befitting of a safe haven currency…that is if the recent stumble in sentiment is legitimate. One of the market’s most persistent (complacent?) asset classes – US equities – dove to open the week. The S&P 500 dropped the most in two months (1.1 percent) while the Dow Jones Industrial Average suffered its largest slide since early October (1.1 percent). Given how unusual it is to see equities stumble, the move did not go unnoticed by risk watchers. And yet, the implications of stimulus-supported benchmarks slipping despite ‘favorable’ data (poor NFPs this past Friday) didn’t seem to run deep enough to leverage the greenback’s safe haven status.

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DAGELIJKSE MARKT ANALYSE 15 JANUARI 2014


• Dollar Recovers on Fed Taper Talk…but So Do Equities
• British Pound Refuses to Give Ground after Softer CPI
• Euro Advances Despite Risks Arising in Investment Appetite

Dollar Recovers on Fed Taper Talk…but So Do Equities
The dollar’s most audacious hope for a full blown bull trend evaporated this past session when the risk aversion move that opened the week was turned higher. Yet, a market-wide appeal for liquidity isn’t the only value the world’s most liquid currency has to offer. A hawkish round of Fed-speak doused speculation that the central banks Taper pace could be interrupted by last week’s disappointing December payrolls report. In response to sizable NFPs miss last Friday – the biggest since the November 2008 report – the dollar dropped from congestion and US equities eased higher. The fear / hope was that this poor data would signal an imminent risk to policy officials should they make a consistent pace out of December’s Taper. Where Atlanta Fed President Lockhart made traders second guess that concern on Monday, remarks from Dallas President Richard Fisher and Philadelphia President Charles Plosser fully revived expectations for another $10 billion QE reduction on January 29.

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DAGELIJKSE MARKT ANALYSE 16 JANUARI 2014

• Dollar on Cusp of Big Bull Trend Upgrade with CPI Ahead
• Euro: Perception of Stability Improved on ECB Stress Test Changes
• Australian Dollar Drops to 3-Year Low after Sharp Jobs Report Miss

Dollar on Cusp of Big Bull Trend Upgrade with CPI Ahead
Next to the S&P 500’s advance to fresh record highs, the most impressive performance in the market this past session was the US dollar’s charge to its own four-month high. This is a thematic contradiction to the greenback’s normal function as a safe haven currency. Yet, it has become abundantly clear that the currency does not need to fall back on volatility and its liquidity appeal to generate bullish sentiment. Of course, if sentiment were to collapse with panic driving investors to deleverage and seek out a stable market in which to hold their capital; the dollar would certainly shepherd capital into US Treasury and money markets. To maintain bullish potential through a ‘status quo’ scenario and be even better off during a ‘crisis’ puts the benchmark currency in a uniquely robust position.

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DAGELIJKSE MARKT ANALYSE 17 JANUARI 2014

• Dollar Progress Needs an Active Catalyst – Like Risk Aversion
• Euro Enjoys Capital Flows, Policy Makers Take Greater Risks
• Yen Crosses Fail to Take New Highs, BoJ Decision Next Week

Dollar Progress Needs an Active Catalyst – Like Risk Aversion
The US Dollar has won a three-day rally and trades at a four-month high. Yet, despite the impressive recovery from the NFP-induced slump, the currency is still noticeably lacking the kind of momentum and conviction that could survive a disruptive headline or equity market rally. In the list of prominent themes and scenarios, the dollar is well positioned to benefit a market that suffers a jolt of fear over investors’ ‘risk’ exposure and is on the front end of the monetary policy curve. A favorable bearing for certain circumstances though only matters when said circumstances are engaged. The speculative hit earlier this week was quickly curbed. And, while the greenback enjoyed the rebound in Taper speculation after the employment report, the yield hunt amongst the most liquid currencies is still restrained.

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DAGELIJKSE MARKT ANALYSE 20 JANUARI 2014

• Crude oil rally capped after disappointing US consumer confidence data
• Quiet economic calendar, US holiday cloud fundamental direction cues
• Gold prices are testing a critical technical resistance zone near $1256/oz

Crude oil failed to hold above the psychologically significant US$95 level on Friday following a disappointing US consumer confidence reading from the University of Michigan. The move mirrored a wider deterioration in risk appetite, with the benchmark S&P 500 stock index issuing its weakest close in four days. The result likewise encouraged gold prices higher, which may have reflected traders pondering the possibility that a softer US recovery may derail the Fed’s “tapering” of QE asset purchases, boosting anti-fiat demand.

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DAGELIJKSE MARKT ANALYSE 21 JANUARI 2014

• Dollar Faces Imminent Technical Break, Will Taper Help?
• Euro Crisis Premium Continues to Plunge after Ireland Upgrade
• New Zealand Dollar Rallies as 4Q CPI Leverages Hike Expectations

Dollar Faces Imminent Technical Break, Will Taper Help?
The Dow Jones FXCM Dollar Index (ticker = USDollar) has worked itself into a tight, approximately 30-point range on the boarders of easily recognizable technical levels. For technical traders, this is a situation that says ‘breakout risk’. General market conditions add to the probability of a rebound in activity levels. Monday trading was noticeably curtailed by the absence of US banks. With one of the major financial centers offline for a market holiday (Martin Luther King Jr.), the transmission of risk trends was disrupted and the result was a slow start to the week for market-wide speculative trends. With liquidity filling out in the upcoming session and boundaries at hand, volume can easily stoke volatility. The question is what direction this market move takes.

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DAGELIJKSE MARKT ANALYSE 22 JANUARI 2014

• Dollar’s Asia Session Break Lacking for Follow Through
• British Pound Traders Look to Jobs, Minutes to Support Bull Run
• Yen Crosses Will Struggle with Progress Without BoJ Confidence

Dollar’s Asia Session Break Lacking for Follow Through
Having carved out a meager 30-pip range over the past three active trading days, the Dow Jones FXCM Dollar Index (ticker = USDollar) made a bid for a bearish technical break this morning. As an equally-weighted index between the four most frequently traded majors, it was difficult to track down the impetus for the suggestive move: the AUDUSD’s rally. The pair rallied sharply in the quiet Asia trading session on the back of a strong Australian inflation report. This data taps into the kind of competitive monetary policy that has generated many of the underlying trends we have seen develop in the FX market over the months. Yet, does the antipodean’s rate forecast really have that much influence over the dollar? Not likely. Much of the greenback’s buoyancy over the past months has originated with the market’s belief in the FOMC Taper and the premium that can add to US rates – not to mention the advantage it provides via the negative global repercussions of the world’s largest safety net rolling back. Yet, the scale of the US markets pits it against bigger players such as the Euro-area and Asia’s bigger financial centers (Japan and China). This bearish breakdown, therefore, will likely dry up unless Taper speculation stalls or an S&P 500 breakout offers another distraction.

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DAGELIJKSE MARKT ANALYSE 23 JANUARI 2014

• Euro May Not Find Lasting Support in Upbeat Headline PMI Result
• Aussie Dollar Sold as Soft Chinese PMI Data Weighs on RBA Outlook
• Japanese Yen Outperforms as Nikkei Drop Fuels Safe-Haven Demand

The preliminary set of January’s Eurozone PMI figures headlines the economic calendar in European hours. The region-wide aggregate index is expected to show manufacturing- and service-sector growth accelerated in January, with activity expanding at the fastest pace since June 2011. An upbeat result may not necessarily translate into lasting Euro strength however as traders what the outcome means for ECB monetary policy prospects.

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DAGELIJKSE MARKT ANALYSE 24 JANUARI 2014

• Stocks Plunge….Dollar Drops
• Yen Crosses Suffer Biggest Single-Day Drop in 7 Months
• Euro Rallies Despite Risks Theme, Trades Growing Concerned

Stocks Plunge….Dollar Drops
Fear swept through parts of the global financial market Thursday, generating exceptional volatility for some of the most exposed assets. And yet, in this confidence stumble, the dollar would suffer the indignity of a bearish performance of its own. That is an unusual outcome for FX market’s most renowned reserve currency. Some take this as a sign that benchmark is no longer the safe haven it once was – perhaps because the Fed’s Taper shift is unnerving investors or long-term development issues (such as a persistently rising debt load) are eroding its global standing. However, before we suspect the barometer is faulty, we should first check the actual financial pressure.

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DAGELIJKSE MARKT ANALYSE 27 JANUARI 2014

• Euro May Not Find Lasting Support from Upbeat German IFO Survey
• US New Home Sales Data to Offer Limited Pre-FOMC Direction Cues
• Yen Falls as Canadian, Aussie and NZ Dollars Recover in Asian Trade

Germany’s IFO Survey of business confidence headlines the economic calendar in European trading hours. Expectations call for the headline Business Confidence index to rise for a third consecutive month to hit the highest level since July 2011. An upbeat result may not offer a meaningful boost to the Euro however.

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DAGELIJKSE MARKT ANALYSE 28 JANUARI 2014

• British Pound Heads into 4Q GDP on a Rate Hike High
• Dollar Losing Safe Haven Traction as Emerging Market Pressure Eases
• Euro Holds Despite Renewed Greece Tension, Wavering Investment Appetite

British Pound Heads into 4Q GDP on a Rate Hike High
Top event risk for the coming 24 hour period goes to the British pound. On the UK docket for the upcoming session, we have the fourth quarter (4Q) GDP release. This is a particularly meaningful piece of event risk as its economic breadth and natural media-impact can generate substantial interest rate speculation. Yield forecasts have arguably stood as the pound’s strongest fundamental driver over the past six months – a period in which the currency has rallied between 14 and 3 percent against all of its counterparts. Changes in rate speculation can be more influential than current rates as capital moves to take advantage of the further inflow expected as higher returns are realized. Yet, has the market over-extended itself in its sterling expectations? While buoyant CPI levels and an unemployment rate that has dropped to within arm’s reach of BoE’s forward guidance target, the central bank will likely attempt to change expectations. A ‘disappointing’ GDP could ease their effort.

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DAGELIJKSE MARKT ANALYSE 29 JANUARI 2014

• Dollar to See a Breakout Regardless of FOMC Outcome
• British Pound Mixed after ‘In-Line’ 4Q GDP Reading
• New Zealand Dollar: A Rate Decision Not to Overlook

Dollar to See a Breakout Regardless of FOMC Outcome
Heading into this week’s top event risk, the Dow Jones FXCM Dollar Index (ticker = USDollar) has worked itself into a position that necessitates a breakout. That looks like a perfect marriage of build up and catalyst from the FOMC rate decision. Yet, despite its technical predicament and the ominous approach of a key catalyst, clearing this congestion does not necessarily mean there is a new trend in store for the benchmark currency. Engaging risk aversion after years of leveraged investment into record high asset prices is difficult to muster. However, all the elements are there to feed the fire should the initial spark catch.

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DAGELIJKSE MARKT ANALYSE 30 JANUARI 2014

• Dollar Finds Little Impetus from Fed Taper, 4Q GDP Ahead
• Euro Heads into Event Risk: Spain GDP, German Employment
• New Zealand Dollar Drops after Expected RBNZ Hold

Dollar Finds Little Impetus from Fed Taper, 4Q GDP Ahead
As expected, the Federal Open Market Committee (FOMC) decided to cut its immense QE3 stimulus program by another $10 billion. Yet, as sensitive as risk trends have been this past week, the news didn’t spark a broader unwind of exposure. The S&P 500 – as a measure of investor appetite – retreated in the wake of the news, but key levels of implicit support (like the confluence at 1,775) remained standing through the media wave. In turn, the greenback would fail to gain the safe haven bid that could have complimented the building appeal related to the United States’ improved position in the ‘stimulus wars’. What does this mean for the financial markets and the dollar?

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DAGELIJKSE MARKT ANALYSE 31 JANUARI 2014

• Dollar Advances Despite Tempered Growth as Rate Outlook Builds
• Euro Drops on Lending Data, Inflation Data to Draws ECB Attention
• Yen Crosses Try to Recover as Risk Lingers, Data Weighs QE Need

Dollar Advances Despite Tempered Growth as Rate Outlook Builds
Despite a rebound in equities, the US Dollar offered up a strong performance through this past session. In fact, the 10-day rolling correlation between the greenback and benchmark S&P 500 (a favored risk appetite measure) is 0.71 – a strong, positive relationship. There is growing skepticism over the dollar’s traditional place on the risk-reward scale. Yet, regardless of whether the currency is warping its natural response to ‘risk on’; it is a significantly bullish evolution for a currency that would otherwise drop under the weight of its safe haven status. Under this current dynamic, the dollar stands to appreciate gradually in fair market weather and surge forward should panic drive capital into the Treasuries and other deeply liquid US markets. But where has this appetite for the dollar come from?

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