Watch China, Milk for Kiwi Cues

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Watch China, Milk for Kiwi CuesWatch China, Milk for Kiwi Cues

Fundamental Forecast for the Kiwi: Bearish

The New Zealand Dollar continues to display a tight relationship with the bigger overall macro-theme of China and the larger overall threat of an Asian slowdown. Since China began their most recent descent on the heels of the December rate hike out of the Federal Reserve, the Kiwi hasn’t held up well at all. Eleven of the past twelve days have seen the Kiwi trade lower against the greenback (for a total move of -6.3%), and if we match it up with the Yen, it’s even worse – with the same 11 of 12 tally but an even larger move lower; with a full -8.45% lost against the Yen over that 12-day sequence. read more

US Dollar Slow To Respond to Risk Trends, Fed Keeping it Back?

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US Dollar Slow To Respond to Risk Trends, Fed Keeping it Back?US Dollar Slow To Respond to Risk Trends, Fed Keeping it Back?

Fundamental Forecast for Dollar: Bullish

  • Debate over the timing of the Fed’s next rate hike was drowned out by China, commodities and capital markets’ plunge
  • While risk aversion is broadening, the Dollar has yet to show it is serious about resuscitating its haven appeal
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The Dollar still carries the glow of last month’s Fed hike and there is a new – and traditionally favorable – wind blowing in the currency’s favor: risk aversion. Yet despite, the encouraging fundamental circumstances, the Greenback is showing little of the drive it had enjoyed the past few years. The equally-weighted USDollar Index has inched up to a 12-year high while the trade-weighted ICE Dollar Index is virtually unchanged. Drives for commodity-currency based majors (USDCAD, AUDUSD, NZDUSD) and the tumble in the Cable (GBPUSD) seem to have more to do with counterparts than the Dollar itself. EURUSD, the world’s most liquid currency pair, perhaps best reflects the situation with a minor anti-dollar close week-over-week. read more

Japanese Yen Shouldn’t be Strong, but it will Likely Continue Higher

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Japanese Yen Shouldn’t be Strong, but it will Likely Continue HigherJapanese Yen Shouldn’t be Strong, but it will Likely Continue Higher

Fundamental Forecast for Yen:Neutral

The near-term breakout in USD/JPY may gather pace next week should the Federal Open Market Committee (FOMC) along with the Bank of Japan (BoJ) highlight the deviating paths for monetary policy. read more

USD/JPY to Stage Larger Recovery on Hawkish Fed, Dovish BoJ

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USD/JPY to Stage Larger Recovery on Hawkish Fed, Dovish BoJUSD/JPY to Stage Larger Recovery on Hawkish Fed, Dovish BoJ

Fundamental Forecast for Yen:Neutral

The near-term breakout in USD/JPY may gather pace next week should the Federal Open Market Committee (FOMC) along with the Bank of Japan (BoJ) highlight the deviating paths for monetary policy. read more

New Zealand Needs a Relief Rally to Take Eyes Off RBNZ Rate Cut Bets

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New Zealand Needs a Relief Rally to Take Eyes Off RBNZ Rate Cut BetsNew Zealand Needs a Relief Rally to Take Eyes Off RBNZ Rate Cut Bets

Fundamental Forecast for the Kiwi:Bearish

  • New Zealand Dollar Ends Last Week With Strongest Rise Vs. USD in 3-Months
  • Weak CPI on Less Global Demand Keeps RBNZ Ripe for a Rate Cute This Week
  • For up-to-date and real-time analysis on the Kiwi and market reactions to economic factors currently ‘in the air,’ DailyFX on Demand can help.

Risk markets are no longer staring at the abyss as they were at the beginning of last week, which is benefitting markets like equities, Oil, & the New Zealand Dollar. From the start of the year, the New Zealand Dollar has been on its back foot as traders were quick to look at the slack of high-interest rates that the RBNZ could cutto get the economy running smoothly again. The apex of this ‘sell the kiwi against anything,’ move was after the disappointing CPI print on the 19th. read more

British Pound Shows Signs of Life – Can it Continue Higher?

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British Pound Shows Signs of Life – Can it Continue Higher?British Pound Shows Signs of Life – Can it Continue Higher?

Fundamental Forecast for British Pound: Bearish

The British Pound finally showed signs of life as it recovered from multi-year lows to finish the week higher versus the Euro and the US Dollar. It was the first week in four in which the GBP rallied versus the Greenback and the first time in eight it gained versus the Euro. What are the odds it will recover further off of recent lows? read more

US Dollar Traders on High Alert Amid GDP, FOMC, Market Volatility

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US Dollar Traders on High Alert Amid GDP, FOMC, Market VolatilityUS Dollar Traders on High Alert Amid GDP, FOMC, Market Volatility

Fundamental Forecast for Dollar:Bullish

  • Through trading at a 12-year high, the USDollar Index has struggled to make meaningful progress
  • While uncertain risk trends remain ahead, a horde of event risk ahead is anchored by a FOMC decision and US GDP
  • See our 1Q 2016 forecast for the US Dollar in our Trading Guides page.

Technically, the Greenback (USDollar specifically) has advanced for fourth consecutive weeks through Friday’s close. That’s an impressive run especially considering it is marking serial, 12-year high closes. That said, the run is virtually devoid of conviction – which is momentum from a price perspective. The lift the currency has found to its present lofty level was founded mainly through monetary policy, and the premium it afforded has been largely absorbed. Yet, that doesn’t necessarily mark the end of the bulls’ control. A divergent rate bearing will be revived with a range of rate decisions led by the Fed’s meeting. What’s more, the stronger the push of all those catalysts tracing back to risk trends; the closer the market comes to unleashing the Dollar’s haven appeal. read more