Thanksgiving FX breakouts

Kathy Lien BKTraders and Prop Traders Edge

Traditionally investors expect the financial markets to be quiet and consolidative during shortened trading weeks. There’s usually less participation and less liquidity as investors square their positions and close their books early. 2020 has been a year like no other and we would not be surprised to see new multi-month highs and lows set in currencies this week. In fact, there’s precedent. EUR/USD and USD/JPY actually have a history of breaking out or reaching new milestones Thanksgiving week. Just take a look at the charts below:

In 2019, USD/JPY hit a 6 month high the day before Thanksgiving while EUR/USD hit a 1 month low the day after Thanksgiving. There were no milestones in 2018, but in 2017 EUR/USD and GBP/USD hit a 1 month high Thanksgiving day while USD/JPY fell to a 2 month low the day before Thanksgiving. In 2016, the EUR/USD dropped to an 11 month low the week of Thanksgiving while USD/JPY rose to a 7 month high. There was no meaningful movement in sterling that year. In 2015, EUR/USD and GBP/USD fell to a 7-month low the week of Thanksgiving as USD/JPY consolidated. In most cases, the trend that was in place immediately before the holidays continued.

We are far away from any multi-month highs or lows in USD/JPY, but EUR/USD’s 2 month high is within 100 pips. History cautions us not to be complacent over the next 24 to 72 hours. US markets are closed on Thursday but currencies continue to trade around the clock in other parts of the world. There are a number of US economic reports scheduled for release on Wednesday including revisions to Q3 GDP, personal income, personal spending, new home sales and durable goods. There could be big moves but its more likely to come from coronavirus headlines or President Trump’s political actions.

Author

Kathy Lien

BKTraders and Prop Traders Edge

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.