Jason Alan Jankovsky Morning Dollar Briefing Dec 23rd
The USD is holding in tight ranges to start New York after a quiet two-way overnight session that saw the majors in tight ranges. Overnight news was thin and holiday trading conditions continue to add caution for risk appetite.
BOE minutes and the vote showed a 9-0 unanimous vote to keep QE if effect but Cable had little reaction preferring to stay within overnight ranges; low prints at 1.5922 held to the downside while the upside was limited to 1.5981 as traders did not press advantage either way. The tighter range in GBP held EURO in check as well; high prints at 1.4277 in early Asia with low prints at 1.4233 in early Europe. Traders note flows are minimal and largely technical and unless there is a surprise move from equities the rate appears firm above the 200 day MA; stops to the upside are likely placed close to 1.4350 area from the shorts some desks report.
USD/JPY tried to advance for a fresh two-month high making seven days in a row of higher action; high prints at 91.88 make for a technical double-top suggesting that the rate is losing upside momentum. Traders note that lows at 91.54 are above the previous resistance area adding some push to the bulls but the rate is expected to draw offers on a test of 92.00/20 area today.
USD/CHF tried again for the 1,.0500 handle with a high print at 1.0501 before backing off yet again; traders seem reluctant to push the pair beyond the figure suggesting that a top is forming for at least a modest pullback before the end of the year. Low prints at 1.0455 again keep the rate in a tighter range; stops from longs are likely in the 1.0400/1.0380 area near-term.
USD/CAD is holding losses this morning reaching new lows in early New York at 1.0514 finding light stops under the 1.0520/30 area as expected; high prints at 1.0580 continued to draw offers from technical sellers some desks report as the rate appears to be leading the USD pressure when it is there. Although the rate is lagging the USD recovery and is holding tech S/R during the recent lift against other pairs, traders warn that a break under the 1.0480 area could trigger a broad-based USD sell-off as the lift is reaching into key S/R area in the USDX and Loonie often leads a move when it is correlated across the index. Aggressive traders short the USD/CAD can look to ADD to open positions on a close today under the 1.0500 handle. In my view, the USD is consolidating gains before reversing into the end of the year. The recent lift is welcome to correct the oversold condition and now that sentiment is more neutral I think the Greenback will remain two-way with a firmer tone into the first quarter of the year. Expect volatility and a decent correction in the USD but as always be ready to get short the USD after this correction is over. Look for the Greenback to give back a bit of the past few days gains today after the US news this morning, expect profit-taking from the longs into tomorrow’s holiday shortened day.
We will be closed for the holidays after this morning here at Core Financial Group and will return with AM comments on Monday Jan. 4, 2010. Have a happy and safe holiday season.
Jason Alan Jankovsky
FOREX Analyst and Trader
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Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.
Jason Alan Jankovsky Morning Dollar Briefing Dec 22nd
The USD is mixed this morning after another whippy overnight session in thin volumes as expected; creating a bit of two-way action in EURO was Moody’s downgrade of Greece debt. Although the news was well-factored into the market the EURO did see a bit of lower action but held the lows and bounced into early New York.
UK GDP came in “less bad” than expected helping the GBP break under yesterday’s lows to find support at the 1.5990/1.6000 area before bouncing; traders note that in both pairs the action was driven by smaller accounts and was more of a knee-jerk reaction to the news and mostly a minor reaction. To start New York both pairs are holding back near the breakdown point and appear ready to lift as shorts cover ahead of US news due out shortly. Most analysts are expecting no change in the final Q3 GDP numbers suggesting a case of buy the rumor/sell the fact may be in the markets as the USD has made a solid rise into the holidays and profit-taking is likely from the longs. Further USD strength is expected to draw light offers as well making the case that the highs for the greenback are in for the holiday shortened week.
GBP high prints at 1.6102 failed to extend into the area where shorts might get nervous around the 1.6130/40 area encouraging more selling; low prints after the GDP news at 1.5993 putting the rate into the 200 day MA where bids are expected. The rate is back on the 1.6020/30 area in early New York.
EURO high prints at 1.4333 cleared light stops around 1.4320 from late shorts but then retested lows at 1.6264 before holding back near 1.4300; the rate is two-way in early New York with the downside needing a surprise to crack under the fib defense at 1.4270/80 area with any momentum. Despite being closed for a bank holiday in Japan the USD/JPY extended again to the upside clearing offers at 91.20 to rise to a high print at 91.49 where exporters were ready; the rate is firm around 91.30/40 area suggesting a try for stops over the 91.50 area for the next S/R area at 91.80; traders note volumes were light on the move.
USD/CHF high prints 1.0488 once again failing to follow USD strength elsewhere unable to gain the 1.0500 handle; traders note that solid offers appear willing above the 1.0480 area suggesting the rate has topped and will not make a try for 1.0500 before dropping to test support somewhere under 1.0380 area. Low prints at 1.0441 making for a tight range despite the whipsaw in CHF crosses the past few sessions.
USD/CAD is lower dropping from a high print at 1.0638 to make lows at 1.0553; the rate is on the defense holding near the 1.0580 area. Should US news be seen as negative for the greenback the rate could test the 1.0530 area quickly some desks report.
In my view, the USD continues to consolidate recent strength with holiday trade adding to the confusion. Look for today’s data to create some volatility with the Greenback to remain on the defense through the day.
Jason Alan Jankovsky
FOREX Analyst and Trader
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Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.
Jason Alan Jankovsky Morning Dollar Briefing Dec 21st
The USD is steady to mixed at the start of this holiday shortened week; overnight action was fairly quiet but did see slight volatility against some pairs but traders bemoan the lack of liquidity and whipsaw. Most action was technical as economic news was very light; most desks report current S/R areas are likely to hold throughout the day as there is little ahead of tomorrow’s news that is expected to be potentially market moving. Tuesday is a bank holiday in Japan so overnight action tonight is likely to be a follow-on technical evening; only a break above or below existing S/R during New York action is expected to create volatility during the overnight session.
GBP high prints at 1.6167 with lows at 1.6088; traders note cross-spreaders active in the EURO crosses creating a bit of whippy action in the rate. Most desks report that GBP is likely caught between 1.6088 and 1.6180 area for the rest of the week as it is very quiet across the board.
EURO high prints at 1.4361 with lows at 1.4278; the rate is on the highs into early New York and desks report stops likely above the 1.4420 area but don’t expect enough bids to get there this morning.
USD/JPY high prints at 90.67 with lows at 90.22 making today the first day in weeks the rate has held on the 90 handle; traders note that offers continue from exporters around the 90.50 area into 91.00 from last week suggesting topping but bids are expected from tech traders working the large bid wick from Friday. With Japan closed o Tuesday action is expected to be liquidation overnight.
USD/CHF high prints at 1.0484 with lows at 1.0388 matching lows seen late last week; traders note that the rate is likely due for a further lift should the SNB intervene in the EURO/CHF. Traders note that the USD/CHF is out of the intervention zone while EURO is still under threat; could be a whippy day in both pairs today.
USD/CAD high prints at 1.0701 trying hard to hold the 1.0700 handle but the rate is under pressure to start New York; low prints at 1.0562 breaking under the 1.0580 area finding stops under; traders note that technically the rate is still trapped in the consolidation zone suggesting more downside to under 1.0500 handle.
In my view, the USD is consolidating and range-trading with little chance of a break out either way; the Greenback is likely caught in a trading zone that won’t be threatened this week or next as the holidays keep volumes light and trading thin. Most desks are closed early on Wednesday and then through the holiday weekend; same story next week for New Years. Expect this week’s news to be largely a non-event unless there is a major surprise; USD won’t go anywhere I suspect.
Jason Alan Jankovsky
FOREX Analyst and Trader
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Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.
Jason Alan Jankovsky Morning Dollar Briefing Dec 18th
The USD is slightly weaker to start New York after a whippy two-way overnight session that saw the majors gain to mid-range from yesterday’s losses; traders note that comments from Greece’s FinMin and German IFO index adding a bit of volatility to the EURO and the EURO crosses. Greece’s FinMin suggested that possibly
Fitch will downgrade debt following Moody’s downgrade yesterday saw EURO drop to a low print at 1.4307 before recovering; IFO came out a bit more than expectations whipsawing the rate back to the highs before settling mid range. High prints in the EURO at 1.4412 before dropping back in late Europe to the 1.4350 area. Traders note that volumes remain on the thinner side as expected possibly adding to volatility.
GBP low prints at 1.6110 with highs at 1.6249; action has been fairly subdued with the rate mostly following EURO overnight. Trader note some action for GBP crosses on the buy side in Asia but for the most part Cable is range bound with an inside range day so far today.
USD/JPY challenged the upside for a high print at 90.35 making a double top from yesterday’s highs; tech traders note that the rate is holding below the ichimoko cloud base suggesting a bearish scenario for today; the rate dropped in early Asia for a low print at 88.88 where breakout bids were expected above 88.80 area. A pullback to close under the 89.50 area today likely will show a near-term top in the rate for a test of support under 88.80 most analysts say.
USD/CHF is backing off the highs unable to score the 1.0500 handle overnight; high print at 1.0496 before falling back as whippy action in the EURO spilled over into the CHF. Low prints at 1.0386 found bids ahead of first support at 1.0380 and the rate is bidding back to the 1.0430 area in early New York. Traders note that a solid close under the 1.0400/20 area opens the door for a USD sell-off back to the 1.0280 area near-term.
USD/CAD is drifting in light trade as well keeping a fairly subdued profile this morning; high prints at 1.0726 keeping the cap in play above 1.0730/40 area. Low prints at 1.0633 found light stops under 1.0650 some desks report suggesting that the 1.0660/80 area is still seen as pivotal; the rate is holding under 1.0660 to start New York arguing that the top may be in for the week. In my view, the USD rally yesterday was overdone and today’s inside ranges for most pairs suggest that the bulls have used their powder with a little help from the late bears but the force in the market appears to remain corrective.
There is no US data due today or Monday and likely that means technical trade for the next 48 trading hours. Expect two-way consolidation with a downside bias for the Greenback today; the correlation with equities and commodities may put pressure on the USD today as well with Oil higher and “witching day” in equities. Look for the USD to hold near the bottom of the day’s ranges by the close as longs square books ahead of the holiday-shortened week next week.
Jason Alan Jankovsky
FOREX Analyst and Trader
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Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.
Jason Alan Jankovsky Morning Dollar Briefing Dec 17th
It was a big night for the USD as follow-on buying lifted the Greenback into stops triggering active bids across the board powering the USD to new multi-month highs against all pairs. Coordinated action against equities and commodities helped to add upside pressure to the USD and traders note that short-covering from large names was seen at each technical level as the Greenback scored highs several times before finally seeing some capping into early New York. Overnight news was seen as supportive for the USD as well; UK retail sale broke a six-month winning streak to come in below expectations adding a bit of additional pressure to Cable as stops were triggered.
GBP was under pressure from the start of Asia holding under the 1.6350 area early dropping into stops layered under 1.6320, 1.6280 and deeper; eventual low prints in late Europe at 1.6079 finally found bids but the rate feels heavy to start New York most desks report.
Spillover pressure from EURO was also part of the rout as traders sold into the break under 1.6150 when EURO broke under 1.4450. EURO found layers of stops unabated under 1.4500, 1.4450 and 1.4420 before bouncing but the lift was short-lived as sellers continued to liquidate longs; stops under 1.4400 and 1.4380 drove the pair to a low print at 1.4327 breaking all levels of support in the process. Bids appeared in size under 1.4340/50 area but not before sovereigns and large names took heat on the way down.
USD/JPY rallied to clear stops above the 90.00 handle for a high print at 90.26 before offers capped the move; the rate is back below the 90.00 handle to start New York but traders say the upside appears favorable for US action.
USD/CHF rallied to clear resistance above the 1.0460 area lifting to a high print at 1.0508 before pausing; traders note that active bids were seen from model accounts into the 1.0480 area suggesting piling on into the rally but the rate is firm to start New York.
USD/CAD finally cleared resistance at 1.0660/80 area lifting to a high print at 1.0738 before dropping back; traders note that a close above the 1.0660 area today argues for a further rally to test highs at the 1.0800 area.
Across the board the USD is finding buyers and depending on how US data is seen today more gains to test new highs is likely unless the bears decide to offer dollars at this resistance level. Traders note volumes were moderate and orderly in all pairs suggesting a coordinated move on the rally.
In my view, the USD rally is welcome to correct the oversold condition and it is apparent that some panic buying of USD was involved. The Greenback has made a substantial move in a short period of time and that seems like short-covering and book-squaring more so than a change in trend. I would look for more two-way action to consolidate the gains seen the past three days and the one-way nature of overnight action suggests fast-money accounts are trying to press their advantage; without follow-through from this level a reversal is increasingly likely so be nimble if holding USD longs. Look for US data to encourage another round of short-covering as the news is likely “baked in the cake”; volatility is the rule today.
Jason Alan Jankovsky
FOREX Analyst and Trader
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Also available my first book: Trading Rules that Work
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Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.
Jason Alan Jankovsky Morning Dollar Briefing Dec 16th
The Greenback is under a bit of pressure this morning after failing to follow-through to the upside as consolidation trade dominated most of the overnight action; offers appeared to be thicker as the USD challenged the weekly highs in some pairs but so far the tone is corrective off the highs with no real signs of heavy volume ahead of US data this morning. Sovereign interest has been reported by some desks on the offer but trade remains largely two-way and technical to start New York; some pairs are on their highs against the USD in early trade suggesting that the Greenback will drift lower ahead of the London fix this morning.
GBP high prints in early New York at 1.6370 just above the high end of the recent four-day consolidation range of 1.6350; should the rate hold here or higher into the fix some desks see potential for a further advance to the 1.6400/20 area is short order as late shorts get squeezed. Low prints at 1.6231 were unable to find stops said to be resting again under the 1.6220/30 area with bids said to be ready ahead of 1.6200 area. Further upside stops are likely in the 1.6420/30 area.
EURO is under upward pressure reaching a high print in early New York at 1.4580 clearing offers from sovereigns at 1.4550 area; traders note that a clear break above the 1.4580 area opens the door for a recovery attempt to 1.4620/30 near-term with more upside ahead of 1.4680 area of known offers. Low prints at 1.4509 in early Asia found large bids rumored to be protecting the 1.4500 option barrier.
USD/JPY tried to match yesterday’s highs but failed with a high print at 89.87 before drifting back to test lows; the rate is hovering around the 89.40/50 area after making lows at 89.38 in late Asia. Traders expect a pullback under 89.00 handle if EURO advances above the 1.4620 area as the EURO/JPY spread narrows.
USD/CHF is dropping back from the try for the 1.0400 handle; high prints overnight at 1.0425 went offer as the rate makes a double-top from yesterday; low prints in early New York at 1.0367 as the rate flirts with dropping back under the 50 hour MA. Traders note that a solid close back under the 100 day MA opens the door for a sharp drop to challenge the 1.0280 area near-term. USD/CAD continues to grind sideways under the 1.0660 area of strong resistance; high prints at 1.0628 were on thinner volumes some desk report with a dip below 1.0600 picking up a bit of a momentum push. Low prints in early New York at 1.0582 holding close-by support but stops are likely building under the 1.0560/70 area possibly accelerating the rate for a try closer to 1.0520 area.
In my view, the USD is remaining in solid two-way consolidation and is likely to drop further today after the news; the top of the range appears secure and volumes suggest that range trade is the rule through the end of the week. Barring any major surprises I think we can expect the USD to return to mid range by Friday’s action, Look for the USD to drift lower most of the day today.
Jason Alan Jankovsky
FOREX Analyst and Trader
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Also available my first book: Trading Rules that Work
Currently an Amazon.com top 100 bestseller under Finance/Futures
Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.
Jason Alan Jankovsky Morning Dollar Briefing Dec 15th
The USD is firmer this morning rising through previous S/R levels against most pairs to reach a fresh two-month high in the USDX; the USD is now slightly beyond its 100 day MA but traders still are viewing the rise cautiously preferring to argue the rise is corrective and not the beginning of a new trend. Adding fuel to this argument is the high number of technical analysts who were hopelessly bearish only six weeks ago now advising customers to get long the Greenback ahead of the rise that is sure to come in 2010!
In my view, when analysts flip in larger numbers it is almost a sure sign of a return the other way; although still bullish USD from the lows I would suggest buying a pullback and not chasing the USD as it reaches deeper tech S/R. GBP dropped back to the low end of the range following EURO’s dip under last week’s lows; low prints in Cable at 1.6221 still holding the support area ahead of 1.6200 and 1.6180 areas.
High prints in Tokyo at the open at 1.6314 unable to extend above Monday’s New York closing levels. The rate is heavily traded overnight by GBP cross spreaders some desks report with pressure mainly from the sell side; failing to break under support is encouraging short-covering and outright bids.
EURO dropped through support at 1.4620, 1.4600 and 1.4580 to find stops under the 1.4550 area for a low print at 1.4524 before bouncing back to the 1.4550 area; traders note semi-official names and a few sovereigns buying on the way down with large interest under the 1.4550 area ahead of 1.4520 area. Aggressive traders can look to the buy side of the rate as the dip under 1.4550 puts the rate back into the buy zone from June/July and completes a Fib retracement from earlier in the year.
USD/JPY climbed steadily despite continuous selling by exporters above the 89.00 handle; high prints in late Europe at 89.46 with upside seen capped at the 89.80 area on further strength; low prints at 88.57 ahead of the Tokyo open.
USD/CHF also rallied to the 100 day MA and scored stops beyond the 1.0380 area for a high print at 1.0411 before finding offers; lows at 1.0308 ahead of Tokyo as well. Traders note that a close above the 100 day MA would seriously dampen bearish enthusiasm but a test and fall back would likely cement the corrective undertone of the recent USD rise.
USD/CAD also on the march higher but failing to extend significantly; high prints at 1.0650 again under the 1.0660/80 area suggesting topping as resistance appears firm. Low prints at 1.0552 overnight holding the lower end of the range.
In my view, the rally in the Greenback is welcome and I would expect further gains into Q1 2010 but the tone remains corrective and large names are ready to sell into this up move; I think the USD has a lot more two-way action ahead of it to end the year and likely today’s data will inspire some profit taking by the early longs; look for the USD to hold these upper-end prices and lose some ground during the day. The highs for the week may be in for the Greenback and a solid sell wick on the daily charts would signal that today.
Jason Alan Jankovsky, FOREX Analyst and Trader
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Also available my first book: Trading Rules that Work
Currently an Amazon.com top 100 bestseller under Finance/Futures
Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.
Jason Alan Jankovsky Morning Dollar Briefing Dec 14th
The USD remains in two-way action again starting with Asian action; most major pairs initially gained in Tokyo before the USD sold-off a bit into European trade. Opening New York the Greenback is about unchanged against most pairs but is higher against the Yen as traders react to a slightly better than expected Tankan report overnight. Traders note that there is very little news due out today and most expect a quiet two-way technical day through the end of New York. Equities and Gold are also two-way visiting both sides of unchanged in overnight action; traders expect a bit of follow-on buying in equities after Friday’s better news and solid close. Likely the Greenback will have a flat day today with the majors continuing to hold recent S/R levels.
GBP high prints overnight at 1.6326 reaching the top end of the recent range again before dropping back; low prints in early Asia just under 1.6200 at 1.6189 making for a test of the lows again. Traders note solid two-way interest with most desks reporting technical trade.
EURO rose to a high print at 1.4885 after starting on the defense in Asia; low prints at 1.4597 at the open went bid right away as Yen crosses were bought ahead of Japan news. Traders note the rate is due for a corrective rally to test the breakdown area closer to 1.4750 again this week suggesting tech traders may try to lift the rate into near-term S/R.
USD/JPY was under steady upward pressure after the start of Tokyo trade but stalled at a high print at 89.32 before beginning a steady decline into European trade; low prints in London at 88.67 before lifting to the 89.00 handle again in early New York. Traders note steady selling of the pair from last Friday also adding to some pressure in USD across the board.
USD/CHF high print 1.0361 at the Asian open before a steady decline to a low print at 1.0294 before bouncing; traders note a very quiet start to the pair so far overnight.
USD/CAD also very quiet; high prints at 1.0659 in late Europe after starting on the offense in Asia with a low print at `1.0565 going bid in the afternoon; traders note the rate is now bumping up against tech S/R between 1.0660/80 and a fall back from here will likely cause a rotation back to the bottom of the range as tech traders step-up at the top.
In my view, the Greenback continues in correction mode but is really not following-through at this point. With a light day for news and the markets in end-of-year trading mode it is difficult to see the USD breaking out to the upside without a lot of help; more likely the USD will hold current ranges until the start of next year suggesting this week may be a slide back to the bottom of the range. Should USDX hold above the 75.00 handle on a correction again I think you will see a lot of buyers coming in to push the majors off the highs. Traders sentiment is corrective and most expect at least one more test of recent S/R before the USD either resumes the downtrend or corrects further. Look for a quiet day today and most action inside existing ranges.
Jason Alan Jankovsky, FOREX Analyst and Trader
Toll Free in the US: 1-866-435-9959
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Join me for my daily FOREX newsletters and LIVE FOREX briefings; click here for details
Check out my latest book: The Art of the Trade
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Also available my first book: Trading Rules that Work
Currently an Amazon.com top 100 bestseller under Finance/Futures
Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.
Jason Alan Jankovsky Morning Dollar Briefing Dec 11
It was a very quiet overnight session for the USD as the majors held in tight ranges awaiting more market input; some desks report that equities and commodities failing to move much in either direction is contributing to the malaise in the Greenback as well. With the high correlation to equities and commodities it is likely that until DJIA or Gold breaks to a new high or extends the lows the majors will have a continued range trade. Traders note that US data this morning could add a bit of volatility to the markets as there is a heavier focus on how well retailers will do this holiday season; more sales means potentially a faster recovery adding to the potential for job growth but most older traders are bracing for less-than-stellar news for the next month or two of retail sales.
GBP lifted back over the 1.6300 handle for a high print at 1.6339 finding offers at 1.6350 area waiting; low prints at 1.6259 in early Asia as the rate holds a very tight range. Traders note some interest from sovereigns on the lows but also large names into the highs suggesting more range trade until a breakout either way.
EURO followed GBP higher but still failed to take out significant highs with a high print at 1.4750 missing stops said to be building in the 1.4750/60 area; offers said to be waiting above 1.4780 suggesting the rate will not see the 1.4800 handle again this year; Low prints at 1.4708 again keeping a very tight range ahead of US data.
USD/JPY is the only rate firming into resistance with high prints at 88.99 lifting over the 88.80 area suggesting potential upside recovery but volumes are low and traders report exporter offers at 88.50/80 with more layered above. Should the rate clear 89.00 on a closing basis the rate could stage a recovery to the 89.80 area next week but the general bearish sentiment suggests the rate will close back under 88.00 handle for the week. Low prints at 88.18 ahead of Tokyo open suggests a grind higher after Thursdays two-way action.
USD/CHF low prints at 102.37 in early New York after highs at 1.0275 failed to attract bids. Traders note solid interest to buy on dips suggesting the downside may be limited to 1.0200 area on whipsaw.
USD/CAD continues to grind between 1.0460 and 1.0600 near-term with high prints at 105.34 with lows at 1.0487 making for a tight range mid-way in the recent established range.
In my view, today’s close is crucial for the USD bulls as the sentiment and price action continues to signal that the recent USD strength is corrective into end of year rather than developing new trend. A solid close beyond recent ranges would likely begin shifting the bears to a more neutral stance; most larger traders have likely lightened up on existing shorts leaving the market vulnerable to further short-squeeze should the USD threaten open trade gains for those players. Look for today’s US data to offer a bit of whipsaw and if equities take a dive on the news look for the USD to break higher; should that result in a new weekly high in some pairs expect a firmer close and a stronger week next week.
Jason Alan Jankovsky, FOREX Analyst and Trader
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Trading in off-exchange foreign currency transactions (FOREX) involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading in FOREX is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, or trade discussion are subject to change at any time.
From Alternative Latin Investor: “Special FX”: Forex themes as 2009 draws to a close
Our last article focus on the widespread impact of change engineered by ongoing challenges to conventional wisdom and considered various trading styles that have subsequently evolved due to increased volatility and price turbulence within FX markets.
Not much has altered since although it’s fair to say markets have calmed down somewhat as players mull financial and behavorial effects to date on business conditions. With a degree of stability returning, players are turning their attention toward the debate on future expectations for FX market conditions, for example attempting to understand the increasinglly elevated status of and need for non-deliverable forward contracts and potential deregulation of ‘minor‘ currency markets as the currency world slowly, perhaps ironically, evolves.
Why ironically? Because FX is one of the faster-moving asset classes as far as execution, yet anecdotal evidence shows that even inevitability is always resisted (at least initially) by the human element; despite the advancement of technology, human resources is still the major component of influence in the world of currency trading and therefore can cause devlopments to move more slowly and more randomly than might otherwise be expected. For example, how many textbook traders would have expected the USD to remain so relatively steady during a bout of Quantitative Easing (QE), or simply put, printing money? The human factor cannot be underestimated because psychology must definitely have played a role in determining the USD’s floating market value, defying the odds against almost inevitalble devaluation. Players are buying USD even though algo systems and modelers may have specified QEto be a key component of a ‘sell‘ strategy.
Nevertheless, technological improvements are continuously underway and the topic of FX markets facing fresh regulatory issues in the U.S. and Europe may also have impacted recent psychology. This holds true despite obvious potential efficiency improvements that would be attainable in certain instances if people pushed beyond the limits human comfort zones. That‘s an issue not faced by the robots, black-box models or dark pools, which are emotionless and all about the price at a given point in time rather than what the price might be after an event.
The fanfare and buzz that continues to surround the asset class of Forex has been accompanied by reminders through observations and analysis that although entry into the Forex market perhaps rightly generates a great deal of excitement, developing and executing an FX plan efficiently is of far more importance than the speed of its completion. This theme is highlighted by the growing phenomenon of managed accounts and the boom in retail FX volumes, where significant non-correlated returns can be achieved—and not necessarily with leverage. The prospect of ‘easy money‘ is a common but potentially misleading theme in this market space, and it is worthwhile to consider professional advice before deciding to bet the farm on where the markets might be heading.
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