This busy week for central bank decisions is capped by NFP on Friday at 12:30 GMT. Expectations are set at 230k jobs added.
DailyFX instructor Walker England discusses ways to trade the key employment report in today’s trading tip.
Jeremy Wagner, Head of DailyFX Education, tweeted this chart today:
“If 5 yr UST yields break higher, then $USDHUF $USDZAR likely to soar”
Follow Jeremy Wagner’s latest trade ideas on Twitter @JWagnerFXTrader
[I]Talking Points:[/I]
[ul]
[li]Rising FX volatility levels are amplifying the focus on and impact of monetary policy speculation
[/li][li]The US Dollar has seen the most hawkish shift in market positioning while Euro and Kiwi the most bearish
[/li][li]Key policy-related event risk next week will quickly indicate if the markets are over-stretched
[/li][/ul]
There has been a lot of speculation and polling conducted to provide predictions about the result of this Thursday’s Scottish referendum vote.
[B]Forex Strategy: GBPUSD vs NZDUSD Correlation[/B]
Jeremy Wagner’s article today lays out some strategies to trade through what is anticipated to be a highly volatile week.
Also, don’t miss our free webinar this Wednesday at 5:30pm British Summer Time (16:30 GMT) - Could the Scottish “Yes” be a good trading opportunity?
[I]Talking Points:[/I]
[ul]
[li]The Fed’s quarterly rate decision with updated forecasts and Yellen press conference is due today
[/li][li]A 9-week USDollar rally seems a full adjustment to a hawkish shift in tone, but markets are far from ready
[/li][li]We look at the scenarios for the dollar-based majors and broader capital markets for this critical event
[/li][/ul]
Watch DailyFX Chief Strategist John Kicklighter’s real time coverage of the FOMC Rate Decision on Wednesday at 17:45 GMT in our Live Trading Room.
Watch DailyFX Chief Strategist John Kicklighter’s real time coverage of the FOMC Rate Decision on Wednesday at 17:45 GMT in our Live Trading Room.
Quantitative strategist David Rodriguez just posted his weekly report on the Speculative Sentiment Index (SSI).
[B]Weekly Summary of Forex Trader Sentiment and Changes in Positioning[/B]
[B]Below is a summary of his calls:[/B]
[ul]
[li]EURUSD - Euro at Major Inflection Point
[/li][li]GBPUSD - GBP May Bounce, but Wait until After Scotland
[/li][li]USDJPY - US Dollar Targets ¥110 versus Japanese Yen
[/li][li]AUDUSD - Australian Dollar Remains a Sell until this Changes
[/li][li]GBPJPY - British Pound Could Hit Further Highs versus Japanese Yen
[/li][li]EURCHF - Euro Likely to Ignore SNB and Test SFr1.20
[/li][/ul]
More details on these trade ideas are available in the full report.
[I]Talking Points:[/I]
[ul]
[li]Protests in Hong Kong have led to another geopolitical flare up centered on the Emerging Markets
[/li][li]While the Hang Seng is more responsive to the developments, the HKD and CNH (Renminbi) are unusual
[/li][li]Trading Emerging Market assets and currencies is both an endeavor of unique fundamental aspects and “risk”
[/li][/ul]
[I]Talking Points[/I]
[ul]
[li]EURCAD short-side bias at vulnerable- key support 1.4053
[/li][li]Weekly opening range in focus heading into ECB
[/li][li]Event risk on tap this week
[/li][/ul]
In his weekly update on the Speculative Sentiment Index (SSI), quantitative strategist David Rodriguez discussing the following:
[ul]
[li]EUR/USD - Euro May have Set Significant Low versus the Dollar
[/li][li]GBP/USD - British Pound Remains in Clear Downtrend
[/li][li]USD/JPY - US Dollar Might have Topped versus Yen
[/li][li]AUD/USD - Australian Dollar Remains a Sell until this Changes
[/li][li]NZD/USD - New Zealand Dollar Shows Signs of Turnaround
[/li][li]EUR/CHF - Euro Remains in Downtrend versus Swiss Franc
[/li][/ul]
This Wednesday, FXCM will be hosting a live webinar on Price Action, a trading technique that can help you read the market and make trading decisions from chart-based price movement, rather than relying on indicators. You will also learn how to take advantage of our super-tight raw FX spreads in combination with a Price Action strategy.
In some instances, accounts for clients of certain intermediaries are subject to a markup.
This live webinar will be offered at 3 different times this Wednesday.
[ul]
[li]Price Action Webinar at 07:00 GMT - click here reserve your place
[/li][li]Price Action Webinar at 13:00 GMT - click here reserve your place
[/li][li]Price Action Webinar at 17:00 GMT - click here reserve your place
[/li][/ul]
The free Real Volume indicator from FXCMapps.com can be use to confirm breakouts, to confirm trends and to identify reversals.
Using volume to confirm breakouts
More details on how to use Real Volume to confirm trends and to identify reversals can be found in trading instructor Rob Pasche’s article on DailyFX.com.
Interesting analysis, thank you.
UPDATE: Central bank of Russia raised its short-term interest rate to 17% in a bid to “stem devaluation, inflation risks.”
David Rodriguez of DailyFX.com says "If the Central Bank of Russia is unable to stop further USD/RUB rallies via interest rate hikes and interventions, we believe that [B]the Russian government will effectively halt speculation on the domestic currency.
“If a trader is holding a position in the USD/RUB or any other RUB-based pair, this could mean that trades would be closed at a significantly unfavorable rate—likely causing losses for those on either side of the trade.”[/B]
In light of these risks, David Rodriguez discusses alternatives to trading the ruble directly in his article today.
In a follow up to his comments on the Russian ruble yesterday, David Rodriguez had this to say in his article today:
[i]"The risks of capital controls were a key reason we would avoid trading the Ruble and instead shifted our focus to other Emerging Market currencies—notably the Mexican Peso, South African Rand, and even the oil price-sensitive Norwegian Krone. Thus far the correlation has held fairly well as these currencies tumbled alongside the Ruble.
“If a trader believes the Russian Ruble will continue lower against the US Dollar, we believe that he or she would be better served trading proxies in other emerging market currencies.”[/i]
The US Dollar continues to register highs versus the Euro and British Pound, and the latest Speculative Sentiment Index (SSI) readings favor further USD gains against the majors until this changes. SSI compares the number of long positions to the number of short positions. Positive values indicator more of the former, while negative values indicate more of the latter.
[B]Weekly Summary of Forex Trader Sentiment and Changes in Positioning[/B]
For example, in the table above, SSI for EUR/USD is 1.42 which means there are 1.42 long positions for every short position. By contrast, SSI for NZD/USD is -1.09 meaning there are 1.09 short positions for every long. Since SSI is a contrarian indicator, the signal is to place a trade in the opposite direction from the majority.
Talking Points from this week’s volume report:
[ul]
[li][I]Multi-year lows in the euro, but volume still lacking[/I]
[/li][li][I]USD/JPY consolidation occurring on low turnover[/I]
[/li][/ul]
[B]Daily Volume Chart: EUR/USD[/B]
