US dollar

Short term outlook
Bullish
Medium term outlook
Bullish
DAILY UPDATEThe US dollar is slightly higher against all major currencies today. The buck is currently the strongest against the yen. Yesterday, the US dollar was mostly lower as US Treasury bond yields fell. After finding buyers around 2.96% last night, 10-year US Treasuries are currently yielding 2.99%. After making a higher-high, the next area of resistance for the US dollar index (DXY) is above 94. Support today is around 92.50. DXY is currently trading at 93.90.  Turning to recent developments, both initial jobless claims and home sales figures were below estimates. The month-over-month housing price index for March was also below estimates. The figures had a limited impact on foreign exchang...

Euro

Short term outlook
Bearish
Medium term outlook
Bearish
DAILY UPDATEThe euro is currently mixed. The common currency is strengthening against all major currencies except the US dollar and the British pound. Yesterday, EUR/USD ended the day slightly higher and traded above 1.17 for the entire session. Following recent weakness, support for EUR/USD is now at 1.16, while resistance is also lower at 1.18.  Turning to recent developments, the ECB continues to play down the (fairly obvious) slowdown in the Eurozone's fortunes. According to meeting minutes published yesterday: "recent data and survey results pointed to some moderation in the pace of growth since the start of the year, but were so far considered to remain consistent with a solid and broad-base...

British pound

Short term outlook
Bearish
Medium term outlook
Bearish
DAILY UPDATEPound sterling is currently mixed. The pound is currently flat against the euro and the Japanese yen, stronger against the Canadian dollar and the Australian dollar, and selling off against the US dollar. Yesterday, GBP/USD ended the day slightly higher. Today, the pair has given up most of yesterday's gains and continues to head lower. Today's support (1.33) and resistance (1.36) levels for GBP/USD remains the same. As the currency remains in a bearish trend (especially against the US dollar), GBP/USD is more likely to keep testing the area below 1.33.  Turning to recent developments, yesterday's April retail sales figures were significantly ahead of estimates and accelerated from the...

Japanese yen

Short term outlook
Neutral
Medium term outlook
Bearish
DAILY UPDATEThe Japanese yen is mixed today. The yen is weakening against the US dollar, but fairly stable against other currencies. Yesterday, USD/JPY found buyers at 109, and continues to move up today. Following yesterday's move, support for the pair is currently at 109.20 (today's opening price), while resistance is closer to 111.50.  Turning to recent news from Japan, the year-over-year Tokyo price index was below expectations. As the outlook for both growth and inflation remain weak, expectations for tighter monetary policy are falling. For now, this is keeping the currency in a bearish trend, especially against the US dollar. As we have written before, the yen serves as a proxy for inflatio...

Australian dollar

Short term outlook
Neutral
Medium term outlook
Bearish
DAILY UPDATEThe Australian dollar is mostly higher today. The Aussie is currently strengthening against all major currencies except the US dollar. Yesterday, the Aussie ended the day flat against the euro and the British pound, but made small gains against the US dollar. As AUD/USD edges towards resistance (0.76) the pair is less likely to keep strengthening. Support for the pair (0.7450) remains a long way down. The current balance of risks and the currency's bearish trend means that shorting AUD/USD remains attractive.  Turning to recent developments, there are no significant updates today. The primary driver behind the currency remains the outlook for emerging markets (and China in particular)....

Canadian dollar

Short term outlook
Bearish
Medium term outlook
Bearish
DAILY UPDATEThe Canadian dollar is mostly weaker today. The loonie is selling off against the US dollar, the euro and the Australian dollar, while rising against the British pound and the Japanese yen. Yesterday, USD/CAD continued to move up. As the pair faces resistance closer to 1.30, USD/CAD has room to keep rising (i.e. the Canadian dollar can fall further). Support is now at 1.280 thanks to recent gains.  Turning to recent NAFTA developments, Reuters is reporting that Mexico has made a new offer regarding US auto demands. According to a source, Mexico is showing "more flexibility" after the White House announced that it is initiating a Section 232 investigation into auto imports (which is lik...

Gold

Short term outlook
Bearish
Medium term outlook
Bearish
DAILY UPDATEGold prices are currently flat. Yesterday, the precious metal moved up sharply. Gold was helped by the fact that both the US dollar and Treasury yields moved lower. Looking at the US dollar index, or DXY, the index fell to around 93.77 yesterday after the Fed signaled its comfort with higher inflation earlier this week. US Treasury yields also ended the day lower. 10-year US Treasuries found support around 2.96% yesterday and are currently yielding 2.98%. Gold support (around $1,275) and resistance (around $1,310) remain at similar levels.  Today, the precious metal is flat. So far, gold is not reacting to today's strength in the US dollar index (currently at 94). As we have written be...

Crude oil

Short term outlook
Bullish
Medium term outlook
Bullish
DAILY UPDATECrude oil prices are currently slightly lower - both Brent and WTI are down today. Yesterday, crude oil benchmarks fell sharply after Russian Energy Minister Alexander Novak suggest that Russia and Saudi Arabia will hold talks to discuss scaling back output cuts. Saudi Arabian Energy Minister Khalid al Falih is currently in St Petersburg for talks with his Russian counterparts. As traders price in the end of OPEC's supply restrictions, the commodity is falling further. There is likely to be a good buying opportunity for crude oil today as WTI is nearing support ($70). The is less true for Brent, where support is around $77.50. Resistance for WTI is currently at $72.50, while the same is b...

In this week’s Commitments of Trader’s Report, speculators continue to sell assets inversely correlated to the US dollar. The biggest changes can be seen in falling speculator net positions in the Australian dollar, the Swiss franc, and gold. Net positions in other assets inversely correlated to the dollar including the euro, the British pound, the Canadian dollar and crude oil are also lower thi…

Published 

In our last take on the outlook for gold, we wrote that the combination of slowing growth outside the United States and rising inflation meant more weakness lay in store for the precious metal. When both US growth and inflation are high, the Fed is more likely to raise rates with the aid of supportive data. In an environment where US growth is outperforming its major peers, the US dollar also ten…

Published 
Tags: Gold

Looking at this week’s Commitments of Traders Report, speculators are selling inflation-sensitive currencies including the Japanese yen and the Swiss franc. The British pound remains out of favor following both poor economic data and weak guidance from the Bank of England. Finally, speculators also dumped positions in the Australian dollar, thanks to ongoing US-China trade tensions. The net resul…

Published 

In our last commentary on the Japanese yen, we wrote that the currency was looking excessively weak against the euro. In particular, we stated that bullish catalysts driving EUR/JPY were at risk as speculator positioning in both long euro and short yen trades were looking extreme. In addition, we flagged changes to the Bank of Japan’s “yield curve control” program as a potential risk for yen stre…

Published 
Tags: Japanese yen

In our previous analysis on the pound, we claimed that the number of catalysts driving the currency’s bullish trend were running out. At the time, we warned that the rally was running out of momentum, but did not see any evidence that would suggest adopting a bearish stance. Following recent weakness in the British pound, we downgraded our longer-term outlook on the currency to bearish on April 2…

Published 

In this week’s Commitments of Traders Report, speculators continue to sell positions inversely correlated to the US dollar. As a proportion of total interest, the most meaningful declines this week were in Swiss franc, British pound, and gold net positions. Other assets such as the euro, Canadian dollar, Australian dollar and crude oil also suffered from falling net speculator positions. As a res…

Published 

In our previous commentary on the US dollar, we warned that a weak dollar was hiding significant risks in growth-sensitive assets such as equities and European currencies. As the world’s reserve currency, the buck is inversely correlated to most financial assets because most cross-border lending is conducted in dollars. Thanks to a slowdown in economic growth outside the United States coupled wit…

Published 
Tags: US dollar

This week’s Commitments of Traders Report includes quite a few meaningful changes in speculator positions in major currencies and commodities. In recent history, changes have been fairly insignificant. Specifically, net positions in the euro, the British pound and gold are all down this week. On the flip side, net positions are higher in commodity currencies such as the Australian dollar and the …

Published 

In our previous take on the Australian dollar in late February, we wrote that falling commodity prices, an ongoing slowdown in China, and weak domestic conditions (looking at both economic data and monetary policy expectations) were significant headwinds for the currency. Beyond economic indicators, quantitative signals also suggested that the bullish trend was running out of steam. We downgraded…

Published 

Last week, we wrote that weakness in the US dollar is masking growing risks. As equities, commodities and corporate credit are inversely correlated to USD, investors need to pay attention to the risk of a US dollar rebound. Since early 2017, gold prices have gradually strengthened. As the precious metal serves as a barometer for US dollar liquidity, the clear message from gold was that monetar…

Published 
Tags: Gold

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