Dollar Drifts Lower Against Euro but USDJPY Surges

DailyFX

  • Dollar Drifts Lower Against Euro but USDJPY Surges
  • Euro Rebound after Greece Indecision Remarkable…Or is It?
  • Japanese Yen: Third 1 Percent Plus, USDJPY Rally in Two Weeks
  • Australian Dollar Confused by RBA Stevens, Boosted by Chinese Data
  • British Pound Looks for a Sixth Straight Advance after BoE Minutes
  • Canadian Dollar: Low Speculative Volume Leverages Data Volatility Risk
  • Gold Consolidates, Volatility Measure Says Breakout Soon

New to FX?Watch thisVideo; For live market updates, visitDailyFX’s Real Time News Feed

Dollar Drifts Lower Against Euro but USDJPY Surges

There were two different views of the dollar. Looking at the equally-weighted Dow Jones FXCM Dollar Index (ticker = USDollar), we find the currency marking its highest close in three months having posted a tense reversal from the closely-watched 10,000 level. Yet, when we look across the majors, the single currency doesn’t look nearly as convincing. In fact, the dollar fell against more than half of its major counterparts through Wednesday with notable runs from EURUSD (posting an aggressive intraday reversal) and GBPUSD (now working on its sixth consecutive advance). Where does this disparity come from? A lack of conviction - or ‘momentum’ to the trader.

It is true that more than half of the majors (the most liquid, dollar-based pairings) were showing losses for the benchmark currency. However, the average loss was only 0.1 percent. Gain or loss, these pairings were showing moderate moves through the day – that is with the exception of USDJPY. A pair that doesn’t have its roots in tempered risk appetite trends, USDJPY was free to reflect unfettered changes in underlying strength. The 1.0 percent rally for the pair was more a reflection of yen weakness, but this pair is still historically imbalanced and will continue to gradually trend in this direction for months to come. Moving away from the highlights, the more important takeaway on the day was the general level of activity.

We know that the world’s premier safe haven currency performs best when global investors are scrambling for a harbor from rough financial seas. The outlook for growth, yields and financial stability are all certainly still unbalanced; but to be a dollar driver, they must be active. That is job for general market conditions. Traders must be fretting these considerations. However, fear usually abates when participation fades – and that is exactly what we are facing. With Wednesday’s close, the US market is essentially offline for the rest of the week (due to the Thanksgiving holiday). Though only one region of global trading, this particular segment accounts for a considerable portion of speculative activity and it is often the session where we see new risk-based trends developed. We often look at fundamentals for our bearings as traders, but it is market conditions that determines whether event risk or technical break will carry influence. And, given the distinct relationship between volume, volatility and investor sentiment; a slight ‘risk on’ bias (dollar bearish) is easy to maintain. Bottom line, though, big moves are unlikely.

Euro Rebound after Greece Indecision Remarkable…Or is It?

While the euro managed only a modest gain against the US currency on the day Wednesday; the fact that it closed in the green at all after its fundamental hit is impressive. The top event risk for euro (which also happened to be the top update for the entire Forex market) was the EU Finance Ministers’ announcement that they had once again rolled back a necessary decision on Greece’s funding crisis. EU President Juncker had said before the meeting that a ‘definitive decision’ would be made in this gathering on the next steps of handling the country’s pressing rescue needs. Instead, officials merely offered empty remarks of praise and rescheduled to meet again on Monday, November 26 (this time ‘definitive decision’ seemed conspicuously absent). A market that is keenly aware of the long-term troubles in the Euro-area and growing fed up with half-measures would normally punish the currency for this move. Yet, without a full speculative depth, this bearish news is artificially dulled.

Japanese Yen: Third 1 Percent Plus, USDJPY Rally in Two Weeks

The yen has collapsed over the past week. In fact, since the beginning of its recent plunge with the open on November 14, the smallest decline the currency has made is the 3.3 percent tumble against the Australian dollar. The biggest: the 5.0 percent dive against the Euro. These are risk-sensitive pairs, so we could theoretically attribute some of this performance to risk aversion, but we can see the yen’s inherent weakness through USDJPY. This pair has posted three, one percent-plus rallies in the span of a week. We haven’t seen this level of bullish consistency since back in the first half of 2009. While there is a strong probability of a yen correction should we find a heavy risk aversion move sometime next week (unlikely to happen this week), Japanese officials’ desperation in driving the currency lower will likely ensure its pain.

Australian Dollar Confused by RBA Stevens, Boosted by Chinese Data

The Australian dollar has a long going on fundamental. First and foremost, risk trends have been tempered and carry a slight bullish bias due to market conditions. Adding to that Aussie bullishness traders are riding off the IMF’s reserve currency consideration and the positive showing from the Chinese manufacturing PMI report this morning. That said, RBA Governor Stevens hinted that further cuts could be easily tipped.

British Pound Looks for a Sixth Straight Advance after BoE Minutes

It is already five consecutive, daily advances for GBPUSD with Wednesday’s close and the open this morning looks like cable bulls want to make it six. We haven’t seen that level of consistency since April 27. We look back to that run, and we see the biggest bearish reversal this year – and naturally it is easy to draw correlation. However, these are abnormal conditions; and this climb has proven especially slow.

Canadian Dollar: Low Speculative Volume Leverages Data Volatility Risk

Considering a good portion of the speculative market will not be online through the final 48 hours of trading week, we know it will be difficult to develop trends. On the other hand, that lack of market depth also leverages speculative changes (aka volatility). That sets up notable Canadian data on the docket – retail sales – to generate far more response from FX traders than they are used to seeing.

Gold Consolidates, Volatility Measure Says Breakout Soon

Gold has moved deeper into its congestion pattern. In fact, the metal is carving out its second smallest average daily range in three months. That is fitting given the backdrop on risk trends that influences the dollar and thereby the precious metal that plays its primary alternative store of wealth. Tame activity levels is reasonable, but things are a little too quiet. The CBOE’s gold volatility index is at its lowest level on record…

**For a full list of upcoming event risk and past releases, go to www.dailyfx.com/calendar

ECONOMIC DATA

Next 24 Hours

GMT

Currency

Release

Survey

Previous

Comments

1:45

CNY

HSBC Flash Manufacturing PMI (NOV)

49.5

Bank’s own index could shift to expansion

8:30

EUR

German PMI Manufacturing (NOV A)

46

46

German manufacturing and services still expected to continue decline; Greece is again focus

8:30

EUR

German PMI Services (NOV A)

48.4

48.4

8:00

EUR

French PMI Services (NOV P)

45

44.6

Zone-wide indices also reflect shrinking strength; monetary stimulus could make up for fiscal austerity

8:00

EUR

French PMI Manufacturing (NOV P)

44

43.7

9:00

EUR

Euro-Zone PMI Composite (NOV A)

45.9

45.7

9:00

EUR

Euro-Zone PMI Services (NOV A)

46

46

9:00

EUR

Euro-Zone PMI Manufacturing (NOV A)

45.6

45.4

11:00

GBP

CBI Trends Total Orders (NOV)

-20

-23

First medium-importance data after Olympics may reflect continued downward trend

11:00

GBP

CBI Trends Selling Prices (NOV)

7

7

13:30

CAD

Retail Sales (MoM) (SEP)

0.5%

0.3%

Canadian retail sales steady, reflecting moderate consumer spending

13:30

CAD

Retail Sales Less Autos (MoM) (SEP)

0.5%

0.4%

15:00

EUR

Euro-Zone Consumer Confidence (NOV A)

-25.8

-25.7

Unresolved debt problems hurting confidence

GMT

Currency

Upcoming Events & Speeches

-:-

USD

US Markets Closed for Thanksgiving Holiday

7:30

JPY

Bank of Japan Releases Monthly Report on Financial Development

SUPPORT AND RESISTANCE LEVELS

To see updated SUPPORT AND RESISTANCE LEVELS for the Majors, visit Technical Analysis Portal

To see updated PIVOT POINT LEVELS for the Majors and Crosses, visit our Pivot Point Table

CLASSIC SUPPORT AND RESISTANCE EMERGING MARKETS 18:00 GMTSCANDIES CURRENCIES 18:00 GMT

Currency

USD/MXN

USD/TRY

USD/ZAR

USD/HKD

USD/SGD

Currency

USD/SEK

USD/DKK

USD/NOK

Resist 2

15.5900

2.0000

9.2080

7.8165

1.3650

Resist 2

7.5800

6.1875

6.1150

Resist 1

15.0000

1.9000

9.1900

7.8075

1.3250

Resist 1

6.8155

5.9190

5.8200

Spot

13.0279

1.8005

8.9630

7.7510

1.2252

Spot

6.7137

5.8086

5.7114

Support 1

12.5000

1.6500

8.5650

7.7490

1.2000

Support 1

6.0800

5.5840

5.6000

Support 2

11.5200

1.5725

6.5575

7.7450

1.1800

Support 2

5.8085

5.3350

5.3040

INTRA-DAY PROBABILITY BANDS 18:00 GMT

Currency

EUR/USD

GBP/USD

USD/JPY

USD/CHF

USD/CAD

AUD/USD

NZD/USD

EUR/JPY

GBP/JPY

Resist. 3

1.2936

1.6053

83.14

0.9452

1.0022

1.0464

0.8225

106.91

132.75

Resist. 2

1.2911

1.6029

82.95

0.9435

1.0007

1.0443

0.8208

106.62

132.43

Resist. 1

1.2887

1.6006

82.76

0.9418

0.9992

1.0423

0.8190

106.34

132.11

Spot

1.2838

1.5959

82.38

0.9383

0.9962

1.0382

0.8155

105.76

131.47

Support 1

1.2789

1.5912

82.00

0.9348

0.9932

1.0341

0.8120

105.18

130.83

Support 2

1.2765

1.5889

81.81

0.9331

0.9917

1.0321

0.8102

104.90

130.52

Support 3

1.2740

1.5865

81.62

0.9314

0.9902

1.0300

0.8085

104.61

130.20

v

--- Written by: John Kicklighter, Chief Strategist for DailyFX.com

To contact John, email jkicklighter@dailyfx.com. Follow me on twitter at http://www.twitter.com/JohnKicklighter

Sign up for John’s email distribution list, here.

Additional Content:Money Management Video

Trading the News Video

The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. Forex Capital Markets, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. Forex Capital Markets, L.L.C.® does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. Forex Capital Markets, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.

Rates

View Comments (0)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • Wondering How You Could Save on Home Insurance?

    Get a quote from Farmers Insurance and discover how you could save. Speak with an agent to get the knowledge you need to make an informed decision.

    AdChoicesFarmers InsuranceSponsored
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

    Bloomberg
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • Venture Capitalist Makes Case Against 'Shark Tank'

    If you watch the TV show "Shark Tank" as entertainment and not to obtain a startup education, you will be benignly inspired by fellow entrepreneurs. "Shark Tank" is a reality competition show that features entrepreneurs pitching business ideas to a panel of potential investors, referred to as…

    The Wall Street Journal
  • AARP® Auto Insurance Program from The Hartford

    50+? Request a free quote and you could save $404* on Auto Insurance from The Hartford!

    AdChoicesThe HartfordSponsored
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

    Reuters
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Don't care about Alibaba? Here's why it may matter

    When the Alibaba Group Holding prices its initial public offering Thursday, small businesses in particular will be watching. Founder Jack Ma -the former English-teacher-turned-dot-com billionaire-has touted his e-commerce platform as a way for smaller merchants to expand their international…

    CNBC
  • Hyundai Elantra: Features & Benefits Come Standard

    More interior space, alloy wheels standard, 145 HP. Explore all the features and benefits of the Elantra at the Hyundai Official Site.

    AdChoicesHyundai®Sponsored
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • Play

    Hilsenrath: Fed Still Sees 2015 for Rate Increase

    WSJ's Jon Hilsenrath discusses the Federal Reserve's decision to hold steady on interest rates, but the central bank foresees a rate increase by early 2015. Photo: Getty.

    WSJ Live
  • Boeing may have outfoxed Musk, but it could have bigger problems

    Elon Musk is arguably one of the greatest entrepreneurial minds of the 21st Century, but he was outsized an old school aerospace giant. Boeing won the bulk of NASA’s contract for a space taxi.  One of the other companies vying for the deal is SpaceX, the company headed by Tesla’s Musk, will get a…

    Talking Numbers
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • The New 2015 Sonata®: A Step Above the Competition

    There's a Sonata® that's perfect for you, and this is your chance to build it! Visit the Hyundai® Official Site to customize your 2015 Sonata® today!

    AdChoicesHyundaiSponsored
  • 6 Things Debt Collectors Wish You Knew

    The work debt collectors do is not popular, and has become increasingly derided by those who don’t like what we do or simply don’t know the facts about debt collection. Too often, debt collection is painted with a broad brush to create a portrait that isn’t accurate, and doesn’t properly educate…

    Credit.com