Dollar Finds Relief with First Advance in 11 Days, Will it Last?
A break in the speculative feedback loop worked in the US dollar's favor Monday. TheDow Jones FXCM Dollar Index (ticker = USDollar) posted its first gain in 11 trading days - ending the worst run for the benchmark since 2006. We could just write this off as a side effect of liquidity and little more, but a look at the market's performance around holidays seems to highlight something of statistical relevance. Over the past 12 months, breaks in the transmission of risk trends from session to session due to US holidays tend to align to changes in direction and/or tempo for the S&P 500, USD and VIX Volatility Index. There are certainly additional circumstances that play into this situation, but current conditions present a very interesting picture. The dollar's tumble and US equity market's rally has played out with a limited fundamental engine. The moves seem more born out of routine than dedication. Breaking the trance as significant technical milestones come into view puts the drive at far greater risk of turn. Looking ahead to the first active US session, watch for the TIC capital flows and 4Q New York Fed debt figures.
British Pound Back in the Spotlight Today with CPI Data
The Bank of
Yen Crosses Slow to Respond to BoJ Policy 'Changes'
The yen crosses are up across the board this morning following the
Euro: Investors Confidence in Europe Growing According to Fitch
A Fitch fixed income investor survey reported a growing optimism in Euro-area fundamentals. Only one-third of respondents believed ongoing recessions on the region could cause fresh credit problems (a three-year low) and a similar percentage believed developed EU member sovereign markets were still at risk. This is a good gauge of the investor optimism that has lubricated the capital inflow back into the Eurozone and its high, post-crisis rates of return - something we have also seen in record low short-term Italian and Spanish yields.
Australian Dollar, Risk Find Limited Traction on Chinese Lending Figures
Though the Australian dollar has found its bearings through the early trade Tuesday, the week's open was not particularly encouraging for the currency. Lacking high-level data through Monday's open, there was still an active fundamental backdrop for the currency to latch onto in Chinese event risk. On Saturday, the world's second largest economy reported new loan growth surged the most in three years with a 1.3 trillion yuanswell, while aggregate financing expanded the most on record. Alongside reports this morning that foreign direct investment through January jumped an incredible 16.1 percent, this reads like an open tap for Chinese growth. Yet, there were issues. Non-performing (bad) loans hit their highest level since
New Zealand Dollar Finds Little Additional Traction on Data
A quick look at rate expectations measured through overnight swaps, we find the market still sees a 96 percent chance that the RBNZ will hike rates on
Emerging Markets Volatility Bumps Ahead on Rate Decisions, Investment Data
The Emerging Market's biggest member (
Gold Extends February Run to 7 Percent
A rebound from the dollar didn't turn gold off its bull run Monday. On the spot market, the metal advanced for the sixth time in seven trading days and closed at its highest level since
Japan Machine Tool Orders (JAN F)
Italy Trade Balance (DEC)
Current Account /Trade Balances serve as relative measures of inflows to outflows. Positive current account balances tend to lead to capital appreciation and vice versa.
Eurozone Current Account Balance (DEC)
Slovenia Unemployment Rate (DEC)
Almost all of these figures serve as vital indexes for inflation. Although positive inflation data may appear to reflect a negative position for those long on the GBP, it may inversely benefit them as positive inflation data frequently serves as a catalyst for interest rate hikes. The effect of the inflation data remains ambiguous however as the BoE has stated that they are hesitant to impose rate hikes in the midst of a recovering housing market.
Investor sentiment is another indicator of present and future demand for the Euro.
Turkey Central Bank Rate Decision (EM)
Canada Capital Flows (DEC)
Extremely volatile over past 5 years
Like Machine tool orders, the
US Releases CPI Revisions
US TIC Capital Flows (DEC)
NY Fed Releases H'hold Debt & Credit Report (4Q)
US Housing Market Index - NAHB (FEB)
Chile Central Bank Rate Decision (EM)
Rates down 0.5% since
Australia Leading Index - Conference Board (DEC)
The index and economic expansion are positively related.
South Korea External Debt (4Q) (EM)
SK's External Debt has steadily increased relative to its GDP.
Upcoming Events & Speeches
RBA Meeting Minutes Released
Bundesbank's Dombret to Speak on German, EZ Economy
EU Finance Ministers Meet (
ECB's Praet to Speak on Fixing Finance
ECB's Liikanen to Speak
US to Sell 3-Month | 6-Month Bills
Fed Open Board Meeting on Bank Supervision
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