Forex: US Dollar Targets Losses, but Trading Defensively into January

RELATED QUOTES

SymbolPriceChange
^USDOLLAR11,956.01+63.77
USDJPY=X101.8100+1.272

us_dollar_trading_forecast_body_Picture_5.png, Forex: US Dollar Targets Losses, but Trading Defensively into January

US Dollar Targets Losses, but Trading Defensively into January

Fundamental Forecast for US Dollar: Bearish

A fresh wave of Quantitative Easing from the US Federal Reserve was enough to push the US Dollar (ticker: USDOLLAR) lower cross the board, and current price momentum leaves short-term trading outlook in favor of Greenback losses.

The US Federal Open Market Committee (FOMC) announced an extension of monetary policy easing policies and the US Dollar’s reaction left little doubt on traders’ opinions of the move. An impressive Friday sell-off left the Greenback at fresh 7-monthlows against the Euro. A comparatively limited week of event risk ahead suggests that volatility may slow, but recent Fed actions will place increased scrutiny on any surprises in upcoming US economic data.

The final revision to Third Quarter US GDP growth could force some sharp short-term swings in the US currency, while late-week Personal Income and Spending as well as PCE Deflator results may affect inflation and employment expectations. Consensus forecasts call for an effectively unchanged GDP print, while economists predict that national Personal Income and Spending jumped considerably in November.

The Fed committed to a further $45 billion in monthly purchases of long-term Treasury securities, and it tied the otherwise open-ended easing to national unemployment rates at 6.5 percent and annualized inflation of 2.5 percent. In effect this means that any US Nonfarm Payrolls and inflation reports could carry significant weight on Fed expectations and, by extension, the US Dollar.

Such a dynamic helps explain why the US Dollar may have fallen sharply in the hours following a below-forecast US Consumer Price Index inflation data print on Friday. But more broadly, the fact that we are in the final weeks of the year tells us that lower liquidity may exacerbate short-term price swings. Caution is urged in what could be a choppy week of trading ahead.

Foreseeable event risk is likewise limited across major currency pairs, but traders should keep an eye on Japanese election results due Sunday, December 16 and a Bank of Japan interest rate decision on the 20th. The Japanese Yen itself is obviously the most likely currency to show strong moves following both events, but JPY weakness can likewise help explain why the Dow Jones FXCM Dollar Index has held onto key support near 9930.

As always, any distractions with the US Fiscal Cliff negotiations could affect financial markets. Yet if history is any guide, we expect politicians to wait until the very last minute to announce any sort of deal on tax and spending cuts.

Uncertainty surrounding financial markets has been an important theme through 2012, and recent trends suggest we may finish much as we began—with many more questions than answers. We will look to trade defensively into the end of the year and avoid getting caught up in sharp intraday volatility. – DR

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up to David’s e-mail distribution list via this link.

Contact David via

Twitter at https://www.twitter.com/DRodriguezFXFacebook at http://www.Facebook.com/DRodriguezFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Japan PM pledges to invest $30 bn in Africa by 2018
    Japan PM pledges to invest $30 bn in Africa by 2018 AFP News - 10 minutes ago

    Japan will pour $30 billion of investments into Africa by 2018, including $10 billion in infrastructure development, Prime Minister Shinzo Abe said Saturday at a summit in Nairobi. Abe is using the conference to meet dozens of leaders from across … More »

  • German finance minister says ECB's low interest rates 'harmful'
    German finance minister says ECB's low interest rates 'harmful' Reuters - 1 hour 15 minutes ago

    German Finance Minister Wolfgang Schaeuble on Saturday renewed his criticism of the European Central Bank's low interest rates, saying they were particularly damaging for people saving up for their retirement. "In the long run, the consequences of … More »

  • Japan’s Abe Dangles $30 Billion at Africa Leaders in Nairobi (1) Bloomberg - 1 hour 30 minutes ago

    The Asian economy’s planned investment in the continent of 1.2 billion people shows it has “faith in Africa’s future,” Abe told the heads of states gathered in Kenya’s capital, Nairobi, for the sixth Tokyo International International Conference on … More »

  • Stada shareholder AOC pushes through board reshuffle
    Stada shareholder AOC pushes through board reshuffle Reuters - 1 hour 48 minutes ago

    Activist investor Active Ownership Capital (AOC) succeeded in convincing shareholders of Stada (STAGn.DE) to remove the German drugmaker's supervisory board chairman in a voting marathon, but failed to install its candidate in the post. The … More »

  • Japan pledges $30 billion for Africa over next three years Reuters - 2 hours 11 minutes ago

    Japanese Prime Minister Shinzo Abe told African leaders on Saturday that his country will commit $30 billion in public and private support for infrastructure development, education and healthcare expansion in the continent. Resource-poor Japan has … More »

  • Iran detects malware in petrochemical plants, says not linked to recent fires Reuters - 2 hours 25 minutes ago

    Iran has detected and removed malicious software from two of its petrochemical complexes, a senior military official said on Saturday, after announcing last week it was investigating whether recent petrochemical fires were caused by cyber attacks. … More »

  • A monumental task: Getting Mainers to support a new park
    A monumental task: Getting Mainers to support a new park Associated Press - 2 hours 45 minutes ago

    Among the empty storefronts on once-bustling Penobscot Avenue, longtime resident Jean McLean stood in her art gallery, the sole employee left at a business that once had three. "Right now, it's pretty ... … More »

  • Exclusive - Iraq plans to sell oil through Iran if talks with Kurds fail Reuters - 3 hours ago

    Iraq's government would consider selling crude through Iran should talks with the autonomous Kurdish region on an oil revenue-sharing agreement fail, a senior oil ministry official in Baghdad told Reuters. Iraq's State Oil Marketing Organisation … More »

  • Iraq willing to play active role in propping up oil prices - minister
    Iraq willing to play active role in propping up oil prices - minister Reuters - 3 hours ago

    Iraq is willing to play an active role within OPEC to support oil prices, its oil minister Jabar Ali al-Luaibi said on Saturday, without clarifying whether it was prepared to back a possible agreement to freeze output. "Iraq is seeking to play an … More »

  • Exlusive - Iraq plans to sell oil through Iran if talks with Kurds fail
    Exlusive - Iraq plans to sell oil through Iran if talks with Kurds fail Reuters - 3 hours ago

    Iraq's government would consider selling crude through Iran should talks with the autonomous Kurdish region on an oil revenue-sharing agreement fail, a senior oil ministry official in Baghdad told Reuters. Iraq's State Oil Marketing Organisation … More »

  • When death comes to stay: one Italian village's story
    When death comes to stay: one Italian village's story AFP News - 4 hours ago

    Nowhere was hit harder by the earthquake that brought death and devastation to a remote corner of central Italy this week than Saletta. Fewer than 20 people are permanent residents of the picturesque hamlet. On Wednesday, with the population … More »

  • Stronger Case for Fed Rate Rise Increases Volatility in Asia Bloomberg - 4 hours ago

    The Fed next meets Sept. 20-21 just hours after the Bank of Japan announces the results of its comprehensive review and decides policy, with Bank of Japan Governor Haruhiko Kuroda saying the review wouldn’t lead to a shrinking of policy. "A rate … More »

  • US, Russia move closer to new Syria ceasefire after talks
    US, Russia move closer to new Syria ceasefire after talks AFP News - 7 hours ago

    Washington and Moscow have made key steps towards agreeing a new ceasefire in Syria, but a final deal has not been reached, US Secretary of State John Kerry and his Russian counterpart said after talks Friday. Kerry and Russian Foreign Minister … More »

  • VTTI says it resumes operations at Malaysia terminal Reuters - 10 hours ago

    SINGAPORE, Aug 27 (Reuters) - VTTI, the storage unit of world's largest oil trader Vitol, said late on Friday it has resumed operations at its Malaysia terminal ATT Tanjung Bin (ATB). "The suspension ... … More »

  • Most Read on Bloomberg: Good-But-Busted ETFs, Drifting Stocks Bloomberg - 10 hours ago

    (Bloomberg) -- The most-read Bloomberg News reports from the past week are listed below. The rankings are based on daily statistics through Aug. 27. … More »

  • China July industrial profits rise, buoyed by increased sales, falling costs Reuters - 12 hours ago

    Profits earned by China's industrial firms grew at their fastest pace in four months in July, aided by a pick-up in sales and reduced costs, the statistics bureau said on Saturday. Profits in July rose 11.0 percent to 523.01 billion yuan, the … More »

  • 4 Lessons I Learned After Marrying My Foreigner Wife DollarsAndSense.sg - 13 hours ago

    Discuss your past. Discuss your future. The post 4 Lessons I Learned After Marrying My Foreigner Wife appeared first on DollarsAndSense.sg. … More »

  • Business Highlights Associated Press - 15 hours ago

    ___ Yellen suggests rate hike is coming but offers no timetable Federal Reserve Chair Janet Yellen said Friday that the case for raising interest rates has strengthened in light of a solid job market and ... … More »

  • California governor signs bill banning coal-export funding Associated Press - 16 hours ago

    California Gov. Jerry Brown signed legislation Friday banning state transportation funding for new coal export terminals. The bill represents a victory for environmentalists as they campaign aggressively ... … More »

  • Dollar rises following Yellen remarks on rate hikes AFP - 17 hours ago

    The dollar rose Friday against the euro, the yen and the British pound following remarks from the US central bank favoring a near-term increase in interest rates. In a much-anticipated address, US Federal ... … More »

  • Global markets drift after Yellen speech
    Global markets drift after Yellen speech AFP News - 17 hours ago

    European and US equities markets were split on Friday after US Fed chief Janet Yellen suggested interest rates could rise in the near-term. In words carefully parsed by market watchers, Yellen said recent months had seen conditions in the US … More »

  • How the Dow Jones industrial average fared on Friday Associated Press - 18 hours ago

    Stocks ended on a weak note Friday after Federal Reserve officials said the case has strengthened for raising interest rates above the super-low levels that have helped fuel a seven-year bull market. Phone ... … More »

  • Stocks end mostly lower after Yellen speech
    Stocks end mostly lower after Yellen speech Associated Press - 18 hours ago

    Stocks ended mostly lower on Friday after Federal Reserve officials said the case has strengthened for raising interest rates above the super-low levels that have helped fuel a seven-year bull market. ... … More »

  • UN ready to help Colombia peace deal
    UN ready to help Colombia peace deal AFP News - 18 hours ago

    The UN Security Council on Friday warmly welcomed the historic peace deal reached between Colombia's government and FARC rebels, and pledged to help ensure the agreement takes hold. The council met behind closed doors two days after the Bogota … More »

  • Kerry, Lavrov hold marathon Syria talks
    Kerry, Lavrov hold marathon Syria talks AFP News - 18 hours ago

    US Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov held marathon talks in Geneva on Friday for an expected push towards resuming peace talks for war-ravaged Syria. Asked during a break how the meeting was proceeding, Lavrov … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.129+0.001+0.78%
    N21.SI
    1.855-0.040-2.11%
    MC0.SI
    2.84+0.02+0.71%
    C52.SI
    4.22-0.05-1.17%
    Z74.SI
    0.58-0.01-1.69%
    5TP.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.29+0.08+38.10%
    5VI.SI
    0.36+0.07+22.03%
    BPF.SI
    0.192+0.030+18.52%
    AYD.SI
    0.27+0.04+17.39%
    BLU.SI
    0.40+0.05+14.29%
    BFK.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.205-0.055-21.15%
    BTJ.SI
    0.34-0.06-15.00%
    BCD.SI
    0.39-0.06-13.33%
    AYB.SI
    0.31-0.04-11.43%
    5VP.SI
    0.24-0.02-9.43%
    BAZ.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3582+0.0051+0.38%
    USDSGD=X
    1.5196-0.0071-0.47%
    EURSGD=X
    1.7809-0.0034-0.19%
    GBPSGD=X
    74.6820+0.437+0.59%
    SGDJPY=X
    5.7047-0.0235-0.41%
    SGDHKD=X
    2.9663+0.0023+0.08%
    SGDMYR=X
    9,748.1885-70.3965-0.72%
    SGDIDR=X
    4.9062-0.0141-0.29%
    SGDCNY=X
    1.0263-0.0043-0.42%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,324.00-0.60-0.05%
    GCZ16.CMX
    18.63+0.14+0.76%
    SIU16.CMX
    95.80-0.72-0.74%
    ^XAU
    2.080.00+0.10%
    HGU16.CMX
    47.29-0.04-0.08%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.24+0.08
    ^FVX
    1.63+0.06
    ^TNX
    2.30+0.03
    ^TYX