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The Daily Edge is authored by Ivan Delgado, Market Insights Commentator at Global Prime. The purpose of this content is to provide an assessment of the market conditions. The report takes an in-depth look of market dynamics, factoring in fundamentals, technicals, inter-market. Feel free to follow Ivan on Twitter & Youtube. Make sure you join our discord room if you’d like to interact with Ivan and other like-minded traders. Also, find out why Global Prime is the highest rated broker at Forex Peace Army.
The USD suffered a V-shaped tuaround, in other words, in a matter of hours its outlook went from steady bullish to now head into Friday with clear fragility to further losses. The culprit, after correlating price action to fundamental news, has been attributed to a surprisingly low US PMI read, paired with soft new home sales in the US. In stark contrast, the resumption of a risk aversion with both equities and global yields experiencing sharp slides led to the strong appreciation of the Yen (and Swissy). The Canadian Dollar, amid the continuous collapse in the price of Oil in a risk-off environment, succumbed for the second day in a row, while the Sterling also traded primarily lower, even if the overall weak performance was much more contained as the market appears to have fully priced in the resignation of Theresa May as British PM. The three currencies that managed to keep up with the Yen (and Swissy), albeit at a significant distance, were the Euro, the Aussie, and the Kiwi, in what’s seen as a rise on the demerits of the USD only.
* The Information is gathered after scanning top publications including the FT, WSJ, Reuters, Bloomberg, ForexLive, Institutional Bank Research reports.
Yesterday, I concluded that the overall risk environment was such that I felt inclined to think we were on the cusp of another round of ‘risk off’ on Thursday. Long and behold, the pendulum has effectively moved quite aggressively back into risk aversion mode as both US equities and US yields revert back to bearish tendencies from a micro and macro standpoint. The S&P 500, as our bellwether, resumed its downtrend with the technical backing of a bearish structure playing out. In the fixed-income space, the hammering of US yields follows a week-long of consolidation, with the extension of the selloff quite impressive as the US 30y yield makes a fresh low at 2.73%.
In the currency space, the Yen, alongside the Swissy (not covered in the report), were the absolute stars, in what’s a clear reflection of ‘true risk off’ flows. Granted, the bearish tuaround in the USD was not quite the scenario one would have expected as part of the ‘risk off’ script playing out, with the fall being almost fully attributed to a raft of negative US fundamentals. When tuing the attention to China’s assets, both the stock index performance in Shanghai and the USD/CNH, continue to imply that a protracted trade dispute between the US and China on trade is here to stay, which should remain at the core of one’s macro assessment to fade spells of overextended ‘risk appetite’.
EUR/USD: V-shaped Structure Negates Bearish Bias
GBP/USD: Range Formation, Risk Of Head Fakes
USD/JPY: Sharp Selloff On Perfect Intermarket Bearish Storm
AUD/USD: Buyers Retu To Break Topside Of The Range