No conviction

No conviction

Picking bottoms   on the USD is an exercise in futility even more so after the washout in near-term currency ranges  that transpired this week

Indeed, a risk-off point of view continued to influence the market structure overnight with global interest rates rallying; traders becoming increasingly long on theory but short on execution when it comes to rationalizing a flatter the US yield curve

The Euro 

To be honest, there are few plausible explanations as to why EUR USD got paid at 1.1859 overnight other than when risk-off mode permeates, and with few EU politic fissures hitting the headlines; the EURO performs admirably as a funding currency.
But other than the than the EUR ramp, the markets have become little more than a pin the tail on the donkey exercise, and despite lower lows and lower highs on the USD this week, there are signs an intransigent greenback is getting ready to stare down the bears. ( forever the eternal USD bull)

Japanese Yen

The break of 113 was nowhere near as severe as anticipated. But with the Nikkie on a massive losing streak from this point forward, it should be a risk-off storyline given that the Tokyo sell-off was the core driver behind this weeks move.
The Australian Dollar

With a mere 25 bps priced in the 2018 rates curve and the RBA downgrading their inflation trajectory, is there any better signal to Sell the AUD?

Weak wages are not a new theme in Australia but yesterday’s data all but reinforced the notion that things are likely to get worse

The AUD employment figures have sparked a small short-covering move on the revisions, but with traders in a fade mode, the AUDUSD is unlikely to challenge.7625

Employment change was +3.7k vs 18.8k expected. However looking at the details, part-time employment fell -20.7k, undermining the +24.3k in full-time jobs. As a consequence, the unemployment rate unexpectedly edged lower to 5.4%.

The initial decision was AUD lower on the headline, but the currency has since recovered

EM Asia FX

The long end of the US rates curve is driving sentiment.After yesterday USD  regional meltdown with USDKRW plunging below the 1110 support level and USDPHP broke through  51.00 I think its safe to say investors like Asian currencies despite the sell-off in regional equities.  Ok so there is a massive break in logic but price action must be respected.

 

 

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