Forex Day Trading Blog

FX Market Summary 03-24-2014: Mixed Euro Data Undermines Rally

March 24th, 2014

The yen gained initial support on Monday from a weaker than expected Chinese PMI index which fell to an eight-month low of 48.1, but failed to sustain the gains and the dollar gradually rallied later in the Asian session on Monday as the Nikkei index rallied. There were further expectations that the Bank of Japan could move to further quantitative easing within the next few months as USD/JPY tested resistance in the 102.50 area.  The Australian dollar also proved to be resilient as AUD/USD rallied from lows close to 0.9050 following the Chinese data back to the 0.9100 region.

The latest CFTC positioning data recorded a further increase in net long speculative Euro positions and a sharp decline in net dollar longs which will make it difficult for the Euro to extend an recovery and created caution over dollar selling. EUR/USD was initially confined to narrow ranges around the 1.3800 level into early European trading and ahead of key PMI releases.

The Euro was boosted by much stronger than expected French PMI data with the composite index finally moving back above the 50 level and registering a 31-month high. EUR/USD spiked to the 1.3820 area as short-term players looked to take out stops.

Momentum was reversed quickly by weaker than expected German data and the Euro-zone release as a whole was close to expectations. There were generally downbeat comments from the Bank of Finland over growth prospects and comments that ECB interest rates were likely to stay low for a longer period. In response, there was a renewed EUR/USD decline to the 1.3760 area as support levels were probed without any immediate break.

GBP/USD was initially subjected to fresh selling pressure and retreated to lows at 1.6460 before finding relief and attempting to break back above short-term resistance around 1.6520. Sterling drifted did show some greater resilience into New York trading before edging lower again as longer-term technical indicators turned more bearish.

Demand for defensive assets was generally weaker in Europe with the Swiss franc underperforming on the Euro cross with a move to the 1.22 area as USD/CHF looked to break above resistance levels. The tone was more cautious in New York with the franc regaining some ground while USD/JPY retreated to lows below 102.20 as Wall Street opened significantly lower.

FX Market Summary 03-21-2014: Consolidation Dominates Price Action

March 21st, 2014

Consolidation was the dominant influence on Friday with narrow ranges encouraged during the Asian session by a market holiday in Tokyo. There was  a rally in Chinese equities on some speculation over a looser monetary policy which helped underpin risk appetite and kept yen demand in check. AUD/USD maintained a firer tone with moves towards the 0.91 level. USD/JPY was still unable to make significant headway as it held below the 102.50 level. Read the rest of this entry »

FX Market Summary 03-20-2014: Dollar Extends Fed Gains

March 20th, 2014

Modest expectations surrounding the Fed impact was confounded by aggressive price action following Wednesday’s policy statement and again during Yellen’s press conference.

There were no surprises surrounding the actual decision as the Fed announced a further US$10bn tapering of bond purchases to US$55bn. On their current assessment of the economy’s likely trajectory, the Fed is also expecting to complete the tapering process this year, most likely during the fourth quarter. There was an important change in forward guidance with a dropping of numerical thresholds such as an unemployment rate of 6.5% with a reversion to a more traditional method of analysing of a wide range of variables. Read the rest of this entry »

FX Market Summary 03-19-2014: Waiting For Yellen

March 19th, 2014

There was a wider than expected Japanese trade deficit for February with a seasonally-adjusted deficit of JPY1.13trn as exports rose 9.8% over the year. There will be further pressure to maintain currency competitiveness and support exports, but the weaker yen will also maintain upward pressure on import costs, illustrating BOJ policy dilemmas. USD/JPY held above 101.25 in Asia on Wednesday with gains limited by concerns surrounding further Chinese yuan losses. Read the rest of this entry »

FX Market Summary 03-18-2014: Sterling Drags Euro Lower

March 18th, 2014

Despite further unease surrounding the Chinese property sector and default risk, risk conditions were broadly stable during the Asian session on Tuesday with the dollar still struggling to make significant headway. AUD/USD also held firm as it attacked the 0.9100 area. EUR/USD drifted slightly weaker under the weight of EUR/JPY selling pressure as wider cross-related moves had a significant market impact during the day. Read the rest of this entry »