Analys från DailyFX
Yen Falls Back as Safety Demand Wanes after Chinese Data, Syrian ’Progress’
Talking Points
– August BoJ Minutes show board has faith in policies as confidence improves.
– Election-fueled optimism and stronger Chinese data have lifted the Australian Dollar.
– USDOLLAR working on a daily Hammer (bullish reversal candlestick).
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INTRADAY PERFORMANCE UPDATE: 09:35 GMT
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.01% (-0.74%prior 5-days)
ASIA/EUROPE FOREX NEWS WRAP
The Dow Jones FXCM Dollar Index hit fresh monthly lows this morning but has since regained all of its losses, in part to investors dropping the Japanese Yen amid improving risk-appetite. Accordingly, after losing nearly one percent over the past week, the USDOLLAR is working on a minor daily Hammer candlestick, a potential bullish reversal indicator.
The Yen’s pullback can be attributed to two factors in the wake of the weak August US labor market report, which initially stoked a sharp pullback in USDJPY and seemingly had set up the Yen for further advances. First, on the economic front, August Chinese Industrial Production grew faster than expected at +10.4% versus +9.9% (y/y); and August Chinese Retail Sales beat at +13.4% versus +13.3% (y/y).
Signs of a stabilizing China will help calm emerging market fears, reduce demand for the Yen, and boost demand for high beta currencies like the Australian Dollar. It is of little surprise then that the Australian Dollar, riding high as a new political administration ushers in hopes of a new economic age, has found itself back in the driver’s seat on Tuesday.
The second reason for the Yen pullback today is a possible ‘out’ in Syria for the United States and Russia. Apparently, at the G20 conference, Russian President Putin approached US President Obama about an international weapons sequester that would see any chemical weapons in Syria’s possession turned over to international authorities, so as to avoid airstrikes led by the United States.
Considering that we’ve seen the USDJPY drop in tandem with US Treasury yields on Syrian headlines, any such progress to avoid military conflict is seen as a bullish catalyst for risk-appetite; indeed, Gold and Silver are sliding today as well.
AUDJPY 5-minute Chart: September 9, 2013 Intraday
Taking a look at European credit, the Euro has failed to take advantage of higher core rates and softer peripheral ones, as it remains lower on the day versus the US Dollar. The Italian 2-year note yield has decreased to 2.010% (-4.2-bps) while the Spanish 2-year note yield has decreased to 1.669% (-5.1-bps). Likewise, the Italian 10-year note yield has decreased to 4.487% (-3.1-bps) while the Spanish 10-year note yield has decreased to 4.462% (-7.0-bps); lower yields imply higher prices.
Read more: Aussie Firms on Election Outcome – Rally Unjustified Given Economic Pitfalls
ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION
See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators. Want the forecasts to appear right on your charts? Download the DailyFX News App.
— Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
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What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
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You can follow Paul on Twitter at@PaulRobinonFX.
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EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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