Dollar Ends Congestion with Collapse
Following one of the quietest trading days in the Dow Jones FXCM Dollar Index's (ticker = USDollar) history, the currency suffered its biggest single-day selloff in a month and tumbled to lows not seen in six months. Now the question is whether this is the opening move in a new trend or merely a normalization to the extraordinarily tepid trading conditions as of late. First and foremost, it is important to appreciate that this was a dollar-based move. The greenback tumbled against all of its major counterparts - from a 0.4 percent drop versus the Euro to a 0.8 percent slump against the Australian dollar. And, these were not minor price developments for the core majors. EURUSD broke above 1.3900 and revived the market discussion over how committed the ECB is in keeping this pair from contributing to deflation. USDJPY took out 102 and a trendline that has shaped the pair's bull trend over the past 15 months. Meanwhile, GBPUSD extended its reach to a fresh five year high and has more than a few FX participants wondering whether the BoE may be anxious over its own currency's strength.
There are clearly two elements to the greenback's progress: the currency's own fundamental drive and the consequences it holds for its global counterparts. In this slump, a few convenient catalysts have been targeted. Some believe it was a delayed response to last week's NFPs while others suggest the OECD's updated forecasts or the recent trade report undermine Fed rate forecasts. Markets are nowhere near inefficient enough to produce such a delay. Meanwhile, neither Treasury yields nor swaps reflect a material change in trend for rate forecasts. If a major theme was not responsible for this spark, it is difficult to imagine a trend following on its heels. That doesn't mean momentum can't development; merely that we need something tangible for traders to unite around - perhaps Fed Chair Yellen will contribute to that today.
However, as we plot out the dollar's course, it is vital to remember that this is a relative market. If the greenback isn't proactive in finding its bearings, its counterparts can alter its value. That is a very considerable factor to remember with this currency. We have heard threats or seen action targeting a depreciation of the Euro, Japanese Yen, Chinese Yuan, Australian and
Euro Receives Further Encouragement for QE
Over the past weeks, we have heard numerous parties - Eurozone government heads, certain ECB members, foreign governments, and the IMF among others - encourage the ECB (
New Zealand Dollar: RBNZ Says 'May Intervene'
Reserve Bank of
Yen Crosses Unnerved by USDJPY's Slip
The Japanese yen was modestly higher against most of its major counterparts this past session and the S&P 500 - as a benchmark for risk appetite and carry demand in the FX market - has not devolved into a bear trend. However, USDJPY's drop Tuesday has put yen cross traders on high alert. These pairs are highly correlated, which means stability for the major can anchor errant moves. But traders are certainly aware of the risk that one break can start a landslide. Meanwhile, QE hopefuls noted Japanese PMI data this morning plummeted on the tax hike.
British Pound: Data Jump Leverages Rate Forecasts Higher
There was a variance in performance for the sterling between GBPUSD and the other crosses. The former hit multi-year highs in a clean jump while the others presented a more modest performance. The pound itself, however, had a robust fundamental backdrop to engage bulls - namely through rate expectations. PMI figures release this past session beat expectations and the OECD offered up a hefty upgrade to its
Chinese Yuan Posts Biggest Rally in 11 Months
For a currency that moves in a managed band, the Chinese Renminbi posted a hearty rally. USDCNH posted its biggest drop in 11 months Tuesday - a concerning point to do so given the publicity surrounding the pair's bull trend over the past months. Yet, when we look moves of similar magnitude going back the past few years, they rarely turn into lasting trends. Data and financing health will be important to watch.
Emerging Markets Post Uniform Advance Vs Dollar, Not Much Else
Against the US dollar, virtually all of the Emerging Market currencies posted gains. Yet, when we switch in more stable currencies to benchmark the risky group against; the statistics decay very quickly. From the risk backdrop, equities and high-yield assets were notably struggling. Pricing considerations aside, the standout advance in the group was the Russian Ruble which continues to suffer heavy volatility amid
Gold Weakness Masked by Dollar's Own Tumble
Retail Sales s.a. (MoM) (MAR)
Retail sales are expected to increase from a weak start to the year.
Retail Sales ex Inflation(QoQ) (1Q)
HSBC PMI Services (APR)
The deceleration in
HSBC PMI Composite (APR)
Unemployment Rate (APR)
Unemployment Rate s.a. (APR)
German Factory Orders s.a. (MoM) (MAR)
German Factory Orders are expected to continue its two month slowdown after two years of steadily increasing growth.
German Factory Orders n.s.a. (YoY) (MAR)
French Industrial Production (MoM) (MAR)
French industrial production is climbing from previous anemic levels including almost 2 years of contraction in the sector.
French Industrial Production (YoY) (MAR)
French Manufacturing Production (MoM) (MAR)
French Manufacturing Production (YoY) (MAR)
French Trade Balance (euros) (MAR)
Foreign Currency Reserves (APR)
Swiss Foreign currency reserves near all time highs.
New Car Registrations (YoY) (APR)
New car registration has shown consistently upward trend since 2010.
Markit Italian Purchasing Manager Index Retail (APR)
After a tough year of contraction in 2012, composite PMI has climbed back steadily in 2013 but the recent weakness threatens to push
Markit French Purchasing Manager Index Retail (APR)
Markit German Purchasing Manager Index Retail (APR)
Markit Euro-Zone PMI Retail (APR)
MBA Mortgage Applications (
US MBA applications are cyclical and often rebound after periods of decline.
US Nonfarm Productivity (1Q P)
Important, qualitative measures to support labor and inflation expectations
Unit Labor Costs (1Q P)
Building Permits (MoM) (MAR)
Consumer Credit (MAR)
US Consumer credit has been fairly stable since the financial crisis.
RICS House Price Balance (APR)
Survey has shown strong increases throughout 2013
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