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

Australian Dollar Recovery at Risk on CPI Data, FOMC Meeting

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Fundamental Forecast for the Australian Dollar: Neutral

  • Conflicting cues abound as markets eye CPI data to inform RBA views
  • Hawkish FOMC statement may renew risk aversion, sink Aussie Dollar
  • See how FXCM traders are positioned in AUD/USD with DailyFX SSI

The Australian Dollar launched an aggressive recovery last week, posting the largest five-day advance in three months against a backdrop of firming risk appetite. Follow-through is far from assured however as a busy docket of high-profile event risk promises volatility and threatens to cap upside momentum. read more

GBP/USD to Rebound to Succumb to Dovish BoE, Upbeat NFP Report

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GBP/USD to Rebound to Succumb to Dovish BoE, Upbeat NFP ReportGBP/USD to Rebound to Succumb to Dovish BoE, Upbeat NFP Report

Fundamental Forecast for British Pound: Neutral

The Bank of England (BoE) interest rate decision is likely to heavily impact the British Pound next week with the central bank schedule to release its updated forecasts, and the near-term rebound in GBP/USD may continue to unravel should the Monetary Policy Committee (MPC) show a greater willingness to further delay the normalization cycle. read more

CAD Rally Stalls After Reversing Longest Losing Streak Since 1971

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CAD Rally Stalls After Reversing Longest Losing Streak Since 1971CAD Rally Stalls After Reversing Longest Losing Streak Since 1971

Fundamental Forecast for CAD: Bearish

Steven Poloz’s refrain of a Bank of Canada rate cut that had become the preferred bet as the Loonie dropped brought a magnificent reversal for the CAD. However, toward the end of the week, the CAD rally stalled and CAD-crosses looked to oil for direction. For a majority of the week, a ‘Dash for Trash’ in Oil assets seemed sustainable as news of a coordinated global oil production cut appeared in the making. However, on Thursday, the news became obvious that such a plan was unlikely to develop, and the elusiveness of such a plan made Oil and, therefore, CAD unable to hold gains. One oil trader, Gerrit Zambo of BayernLB stated, “Don’t think there are many experienced people that really think Russia or Saudi Arabia would considerably cut production as long as they have the possibility to sell into the market,” read more

BoJ Makes Stealth Move to Negative Rates, Pressure on to China

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BoJ Makes Stealth Move to Negative Rates, Pressure on to ChinaBoJ Makes Stealth Move to Negative Rates, Pressure on to China

Fundamental Forecast for Yen:Neutral

Confidence is a pretty important thing in a financial system. After all, in a fiat-based monetary system, all that we really have is faith. There’s no gold or silver backing the currency, and while I’m not saying that’s a ‘good’ thing since pretty much all of those regimes have failed, faith is of utter importance because, should trust wane investors may just sell out of your currency at an uncontrollable pace. This could lead to significant currency weakness as investors flock to anywhere but your currency, and all of those goods that you have to import all of the sudden begin to get very, very expensive. This is one of the reasons that negative rate-regimes have been avoided for so long: It could be potentially playing with fire (the inflationary kind). And this inflation isn’t of the ‘healthy’ variety. Just ask Russia. This even began to show signs in Canada earlier this week with reports of the Great Cauliflower Crisis; where four simple heads of Cauliflower could buy a full barrel of Oil. But this isn’t about cauliflower; we’re talking about history here. read more

Gold Boosted by Softer Fed Stance- Resistance at 1130

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Gold Boosted by Softer Fed Stance- Resistance at 1130

Gold Boosted by Softer Fed Stance- Resistance at 1130

Fundamental Forecast for Gold:Neutral

Gold prices are higher this week with the precious metal rallying nearly 1.8% to trade at 1117 ahead of the New York close on Friday. The move comes amid continued volatility in broader risk markets with the FOMC rate decision fueling speculation that the central bank will likely have to delay subsequent rate hikes. Although the dollar was weaker for the majority of the session, a late-week rally took the Dow Jones FXCM U.S. Dollar Index (Ticker: USDOLLAR) to fresh highs. Ongoing technical divergence however continues to suggest the greenback remains vulnerable- with bullion standing to gain from dollar softness. read more

Dollar Hits a 12-Year High, But Can NFPs and Sentiment Maintain Lift?

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Dollar Hits a 12-Year High, But Can NFPs and Sentiment Maintain Lift?

Dollar Hits a 12-Year High, But Can NFPs and Sentiment Maintain Lift?

Fundamental Forecast for Dollar: Neutral

  • The next FOMC decision is scheduled for March 16; and there is a wide gulf between the market’s and Fed’s outlook
  • Top event risk on the US docket are the January labor statistics and the Fed’s preferred inflation reading for December
  • See our 1Q 2016 forecast for the US Dollar in our Trading Guides page.

The USDollar closed at a fresh 12-year high this past week. Yet, the occasion of breaching such exceptional heights has repeatedly disappointed over the past year. For the Greenback, ‘breakouts’ have chronically lacked follow through. This isn’t just a technical shortfall, rather it is a sign of the lackluster fundamental drive behind the market. Divergent rate expectations, rising market volatility and a shift to consumer economies have all benefit the benchmark currency. However, this is not an endless well of strength. To project the Dollar further on already extended moves like those seen with EURUSD, GBPUSD and AUDUSD; a tangible upgrade is needed. Will we find it on the coming week’s docket or headlines? read more