Dollar U-Turns 

US equities turned lower overnight as the US Consumer Confidence Index printed well below market expectations.

The WTI traded heavy after Russia appeared to backtrack from any production cap accord. We could see further pressure on equity markets because oil prices plunged in late NY trade after the API reported a much larger than expected build in US crude inventories, which surged to 4.8 million barrels cancelling out last week’s 5.2 million barrel draw.

Fixed income volatility remains tepid ahead of next week’s dearth of Central Bank meetings.

The USD rallied early in New York but ran into a bout of trader long dollar anxiety, which heightened after the US consumer confidence figure fell acutely for October and had negative revisions for September. The sentiment index fell from 104.1 to 98.6 versus 101.5 expected. The fall in the Consumer Index is a clear sign that the divisive build up to the US election is weighing on consumer optimism, as consumer views on the present situation, expectations for the future and jobs all declined.

Japanese Yen 

After trading to 104.80, the USDJPY made an abrupt U-turn on the data, which highlights just how sensitive traders are to US economic data and as the markets run hyper-twitchy ahead of the US election.

Lower oil prices will likely weigh on risk sentiment short term, despite the USDJPY remaining tentatively supported on dips; short term momentum is certainly lower in early APAC trade. Given how intrinsically bearish the market’s view on risk sentiment is these days, the fear is that current longs could get squeezed if equity markets tumble.

Moving forward, the JPY should continue trading with a softer bias versus the USD as yesterday’s break above the 104.35 resistance was a constructive move for USD bulls.

Interest rates differential could suggest a move higher in USDJPY. If the week closes above 104.50, it could open the door for an aggressive move to 106, as it would signal that the market is comfortable entering into a higher USDJPY range.

 

Australian Dollar 

After tracking the Canadian Dollar most of the Asia session yesterday, sentiment then shifted to the broader USD bias overnight. The AUD had a relatively resilient 24 hours, as it was initially buffered after China’s iron ore futures popped to a new 2016 high and as the Dalian exchange on Iron Ore surged 6% to limit up.

In the NY session, the AUD remained supported, but markets are trading mixed ahead of the key Australia’s Q3 CPI data.

The Q3 CPI data came in much better than expected with the headline printing .7 % vs. .5 % Q o Q, and the trimmed mean at .4% in line with expectation. Certainly, a Goldilocks number for  the RBA that indicates inflation if ticking higher supporting the notion that developed economies are re-inflating  ex-Japan , which basically cements the consensus view that the RBA will remain on hold through year end.

 

Chinese Yuan

The PBOC is allowing greater flexibility in the USDCNH trading band, so activity is running well above average as trade position is for further Yuan depreciation heading into year-end.

Overnight, the USDCNH sold on the back of the broader USD sell off, and the weaker long USDCNH positions were stopped out on a break of 6.78 level. The markets are very controlled as open market forces are dictating recent Yuan moves.

 

 

Malaysian Ringgit

The Ringgit had a good day yesterday as foreign investor appetite for MYR bonds picked up, outweighing the negatives from political risk and current account narrowing. I suspect that investors are looking at the current political risk premium and have fixed the MYR relative to the rest of USDASIA. We could see some bargain hunting take shape in the days ahead.

SPI Asset Management provides forex, commodities, and global indices analysis, in a timely and accurate fashion on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.

Our publications are for general information purposes only. It is not investment advice or a solicitation to buy or sell securities.

Opinions are the authors — not necessarily SPI Asset Management its officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.

Recommended Content


Recommended Content

Editors’ Picks

USD/JPY off lows, stays pressured near 142.50 ahead of BoJ policy decision

USD/JPY off lows, stays pressured near 142.50 ahead of BoJ policy decision

USD/JPY has bounced off lows but remains pressured near 142.50 in the Asian session on Friday. Markets turn risk-averse and flock to the safety in the Japanese Yen while the Fed-BoJ policy divergence and hot Japan's CPI data also support the Yen ahead of the BoJ policy verdict. 

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold consolidates near record high, bullish potential seems intact

Gold consolidates near record high, bullish potential seems intact

Gold price regained positive traction on Thursday and rallied back closer to the all-time peak touched the previous day in reaction to the Federal Reserve's decision to start the policy easing cycle with an oversized rate cut.

Gold News
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
XRP eyes gains as Ripple gears up for stablecoin launch, Grayscale XRP Trust notes rising NAV

XRP eyes gains as Ripple gears up for stablecoin launch, Grayscale XRP Trust notes rising NAV

Ripple (XRP) gained 2.3% since the start of the week. The altcoin’s gains are likely powered by key market movers that include Ripple USD (RUSD) stablecoin, Grayscale XRP Trust performance and the demand for the altcoin among institutional investors.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures