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Trump Infection May See Hedge Funds Play Catch-Up in Yen Longs By Bloomberg

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© Reuters. Trump Infection May See Hedge Funds Play Catch-Up in Yen Longs

(Bloomberg) — U.S. President Donald Trump’s coronavirus infection may provide the catalyst for hedge funds to catch up with asset managers’ bullish bets on the yen.

Leveraged funds are likely to buy the Japanese currency as the diagnosis triggers a surge in haven bids, reversing the small bearish position they held last week. This would bring them in line with portfolio managers who held a record amount of bullish bets. The yen rallied against all its major peers on Trump’s announcement Friday as investors sought refuge in the safest of assets.

The infection is rattling markets as traders seek to assess the possibilities, ranging from who else may have been infected to the impact on the U.S. presidential election. Nordea Investment Funds SA says it may cause the Trump administration to further harden its stance toward China. All the noise is likely to boost demand for the haven yen.

“A step up in yen buying along with equity markets potentially lining up with betting odds or polling that have Joe Biden in the lead suggest further yen strength is on the cards,” said Prashant Newnaha, a strategist at TD Securities in Singapore. “Although President Trump has indicated he will continue to fulfill his duties, many questions remain.”

The gained as much as 0.6% to 104.94 per dollar in afternoon trading in Asia on Friday.

The currency has broken major resistance levels in the past five months — first 106 in May followed by 105 in July, before testing 104.00 on Sept. 21. Options pricing indicates there’s an almost 80% chance that the Japanese currency will drop below 104 before the year-end.

“Technicals signal a rising likelihood of dollar-yen retrying 104 again in the coming days,” said Kengo Suzuki, chief foreign-exchange strategist at Mizuho Securities Co. in Tokyo. “In the near term, we will see more of those bets coming.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Retail Sales Data May Fuel USD/CAD Downtrend

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Canadian Dollar, USD/CAD, CAD/JPY, Bank of Canada, Inflation – Talking Points:

  • Progress in US fiscal aid talks appeared to firm market sentiment during APAC trade.
  • Retail sales and inflation data may dictate the outlook for the Canadian Dollar.
  • USD/CAD poised to extend declines as price tracks within price channel.
  • CAD/JPY eyeing a push to fresh monthly highs.

Asia-Pacific Recap

The haven-associated US Dollar and Japanese Yen continued to lose ground against their major counterparts during the Asian trading session, as progress in US fiscal stimulus negotiations appeared to firm market sentiment.

Gold and silver prices edged higher despite US 10-year Treasuries yields soaring above 80 basis points for the first time since June.

Australia’s ASX 200 index rose 0.12% and Japan’s Nikkei 225 index pushed back above the 23600 mark, as S&P 500 futures continued to trek higher.

Looking ahead, Canadian inflation data for September headlines the economic docket alongside speeches from European Central Bank President Christine Lagarde and Federal Reserve Governor Lael Brainard.

Canadian Dollar Outlook: Retail Sales Data May Fuel USD/CAD Downtrend

Market reaction chart created using TradingView

Retail Sales Data to Dictate CAD

Upcoming retail sales and inflation data may dictate the near-term outlook for the Canadian Dollar, after the Bank of Canada’s Business Outlook Survey showed that “business sentiment has improved but remains weak across all regions [and] businesses expect the pace of the recovery in their sales to slow”.

Surprisingly, despite business sentiment remaining “well below its historical average” and manufacturing sales for the month of August falling 0.6% more than the expected 1.4% decline, the Canadian Dollar has continued to outperform the haven-associated Japanese Yen and US Dollar in recent days.

Of course, this could be down to the recent resiliency seen in oil prices this month, in tandem with the renewed hopes of a pre-election fiscal stimulus package out of the US.

Nonetheless, the cyclically-sensitive currency has erased the losses it took after Tiff Macklem suggested that taking interest rates into negative territory is still a possibility, with the Bank of Canada Governor stating that although the central bank is “not actively discussing negative interest rates at this point”, it is still in “our toolkit and never say never”.

Canadian Dollar Outlook: Retail Sales Data May Fuel USD/CAD Downtrend

Canadian Dollar comparison chart created using TradingView

However, Macklem also voiced that “as much as a bold policy response was needed, it will inevitably make the economy and financial system more vulnerable to economic shocks down the road”, adding that “the bottom line is that the private and public sectors together need to be acutely aware of financial system risks and vulnerabilities as the economy recovers”.

This could indicate that Canadian policymakers are becoming more sensitive to the potential impact of alternative monetary policy measures and may hesitate to ease further in the absence of a notable deterioration in economic data.

With that in mind, the Canadian Dollar may continue to outperform the haven-associated Japanese Yen and US Dollar, if upcoming economic data encourages the Bank of Canada to retains it wait-and-see approach to monetary policy.

Canadian Dollar Outlook: Retail Sales Data May Fuel USD/CAD Downtrend

DailyFX Economic Calendar

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USD/CAD Daily Chart – Descending Channel Guiding Price Lower

From a technical perspective, the USD/CAD exchange rate’s outlook remains skewed to the downside, as price continues to track within the confines of a Descending Channel after failing to break back above confluent resistance at the 21-day moving average (1.3200) and 38.2% Fibonacci (1.3228).

The development of the RSI and MACD indicator hints at swelling bearish momentum, as both oscillators continue to track firmly below their respective midpoints.

With that in mind, a daily close below the October 13 swing-low (1.3099) would probably signal the resumption of the primary uptrend and carve a path for price to test key support at the 50% Fibonacci (1.3039).

Conversely, a reversal higher could be in the offing if the psychologically imposing 1.3100 mark successfully stifles buying pressure, with a break back above the 21-DMA (1.3200) potentially generating a test of Descending Channel resistance and the October 15 swing-high (1.3259).

Canadian Dollar Outlook: Retail Sales Data May Fuel USD/CAD Downtrend

USD/CAD daily chart created using TradingView

CAD/JPY Daily Chart – Eyeing a Push to Fresh Monthly Highs

CAD/JPY rates appear to be gearing up for a push to fresh monthly highs, as price bounces away from the sentiment-defining 200-MA (79.75) and breaks back above resistance at the July high (80.14).

With the RSI strengthening above its neutral midpoint and the MACD indicator travelling comfortably in positive territory, the path of least resistance seems higher.

That being said, given the RSI has yet to snap its downtrend extending from the June extremes and price hasn’t breached the October high (80.60), a near-term pullback is certainly not out of the question.

Nevertheless, a daily close above the monthly high (80.60) would probably generate a more impulsive topside push and potentially bring key resistance at the August high (81.58) into focus.

On the other hand, failure to break to fresh monthly highs may inspire would-be sellers and ignite a short-term pullback towards the Ascending Triangle uptrend, if support at the July high (80.14) gives way.

Canadian Dollar Outlook: Retail Sales Data May Fuel USD/CAD Downtrend

CAD/JPY daily chart created using TradingView

— Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

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GBP/USD Extends Gains, Brexit Talks to Resume

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GBP/USD Price Analysis & News

  • Brexit Talks Set to Resume
  • GBP/USD Extends Gains to Session Highs

Brexit Talks Set to Resume GBP/USD Extends Gains

Brexit talks are set to resume, a headline that shouldn’t be a surprise to many given the renewed optimism, but enough to give the Pound an added push towards session highs. The source report also noted that the aim is for a deal by mid-November with confirmation of the decision to restart talks expected within the next 24hours. Keep in mind however, that mid-November had been previously highlighted as a new Brexit deadline date if talks were to continue. Alongside this, EU’s Barnier and UK’s Frost are due to speak for the third time in as many days, where we may receive further clarity on the latest reports.

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That said, the Pound had been notably firmer prior to the reports after EU’s Barnier noted that compromise is needed on both sides to reach a deal, which marked a slight change in message from last week, where the EU emphasised that the UK needed to compromise.



of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily -16% 26% 7%
Weekly -6% 27% 13%

GBP/USD 1-Minute Chart: Daily Time Frame

Brexit Latest: GBP/USD Extends Gains, Brexit Talks to Resume

Source: IG

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USDJPY Price Hits a One-Month Low as the US Dollar Continues to Crumble

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USDJPY Price, News and Analysis:

  • US dollar basket below 93.00.
  • USDJPY heads lower as support breaks.
  • IG client sentiment is mixed.

The US dollar continues to leak lower and the dollar basket (DXY) is now below a noted short-term support level around 93.00. The main driver of the move – as we mentioned here at the weekend – is the ongoing US stimulus bill discussion. Tuesday’s more positive tone for an agreement has weighed further on the US dollar and taken it through its short-term support. The DXY is looking oversold currently, so a small short-term rebound cannot be ruled out.

US Dollar (DXY) Daily Price Chart (February – October 21, 2020)

USDJPY Price Hits a One-Month Low as the US Dollar Continues to Crumble

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The Japanese Yen has pulled in a small bid today as well, exacerbating the move lower. A look at CHFJPY shows the recent run higher has stopped and turned lower today, suggesting that the Japanese Yen is today’s preferred safety play. USDJPY today touched a low of 104.87, a new one-month low and if sentiment remains negative, two recent swing-lows between 104.00 and 104.19 come into play. The CCI indicator suggests the market is oversold but not at recent extreme levels.

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USDJPY Daily Price Chart (April – October 21, 2020)

USDJPY Price Hits a One-Month Low as the US Dollar Continues to Crumble



of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily -5% -13% -8%
Weekly -7% -21% -13%

IG client data show 57.00% of traders are net-long with the ratio of traders long to short at 1.33 to 1.The number of traders net-long is 6.50% lower than yesterday and 8.93% lower from last week, while the number of traders net-short is 1.14% lower than yesterday and 8.98% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/JPY prices may continue to fall.Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USD/JPY trading bias.

What is your view on the Japanese Yen – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.





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