Moon Blots out the dollar

Moon Blots out the dollar

Another squally trading session overnight to celebrate the first total solar eclipse to hit the continental US in 99 years.

A definite downside dollar bias emerged overnight, although recent ranges were respected. But with few particular dollar triggers amid a sparsely populated economic calendar, the market could be doing little more than  getting their last licks in before a more active global calendar later in the week,
There were few attention grabbers on a very sombre Monday trading session as the market was left recirculating headlines in thinly traded conditions.

The Dollar slide appears to be associated with a WSJ report stating that “Draghi is likely to layout the end of Europes QE”. This article has reignited top side interest in the Euro after those pesky anonymous ECB sources threw ice water on the notion just last week. Despite the questionable risk rewards, speculators can not resist the temptation to front run a possible central bank policy shift; the allure is just too strong.

Also, a Bloomberg report that stated Gary Cohn is emerging as the “clear front-runner” for the nomination to succeed Yellen as Fed Chair according to a National Association for Business Economics survey. Having Trump’s top economic advisor manning the Holy Grail of central bankers would put the presidents stamp on the FED. While Cohn does not have a track record on monetary policy, In 2015, Cohn questioned Yellen for preparing to hike rates, saying she had “no legitimate argument to raise rates without inflation being close to – or having some inkling that it’s approaching – 2%.” Regardless of his current monetary views  the uncertainty over the next Fed Chairperson is cause enough for a short-term  short dollar punt

EURO
1.2000 chatter is back in vogue this morning as the market is reading way too much into the WSJ article. Given the recent ECB minutes, it’s unlikely Draghi is looking to ignite an aggressive EURO rally.

Japanese Yen

The market remains unpretentiously biased towards ‘risk-off’”. In the absence of a Jackson Hole hawkish surprise from Dr Yellen, we should expect the USDJPY rallies to remain capped near term.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes