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The US Dollar is pushing back higher today on the back of weakness in the Euro and the Japanese Yen. The Bank of Japan rate decision overnight offered few surprises, with the BOJ clearly staying in its aggressive dovish stance and working hard to retain the mantle of the world’s most dovish central bank. As of the end of September, the BOJ owned 45% of all outstanding Japanese government bonds, a sign of their long-term commitment to helping the Japanese economy. Elsewhere, the Euro was knocked back despite better Q3’17 Euro-Zone GDP figures, as the initial October Euro-Zone Consumer Price Index came in softer than anticipated. Just last week at the ECB policy meeting President Mario Draghi made clear that rates will remain low for a prolonged period of time as Euro-area inflation remains below the ECB’s +2% medium-term target; the data today does nothing to convince market participants otherwise.
DailyFX Economic Calendar: Tuesday, October 31, 2017 – North American Releases
The first half the North American economic data featured Canadian GDP for August, which came in weaker than expected on both the m/m and y/y prints. Even though this wasn’t a quarterly GDP report, it still proved market moving as USD/CAD from near 1.2840 to a session high of 1.2915 thereafter. Later today, the October US Consumer Confidence report will be released. While considered a ‘high’ importance event, it is at the lower end of the spectrum; as a sentiment reading, it is a ‘soft data’ release that market participants have been overlooking in recent months.
DailyFX Webinar Calendar: Tuesday, October 31, 2017
IG Client Sentiment Index Chart of the Day: EURUSD
Learn more about the IG Client Sentiment Index on the DailyFX Sentiment page
EURUSD: Retail trader data shows 40.2% of traders are net-long with the ratio of traders short to long at 1.49 to 1. The number of traders net-long is 4.6% lower than yesterday and 6.6% higher from last week, while the number of traders net-short is 11.4% higher than yesterday and 9.5% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EURUSD-bullish contrarian trading bias.
Five Things Traders are Reading
- “EUR/USD Head & Shoulders Still Valid; Asymmetric Risk for GBP/USD” by Christopher Vecchio, CFA, Senior Currency Strategist
- “Technical Outlook for Gold Price, Crude Oil, Copper, DAX & More” by Paul Robinson, Market Analyst
- “EUR/USD Stymied on Strong Growth, Weak Inflation Backdrop” by Nick Cawley, Analyst
- “FTSE: Strong Sterling Reaction on BoE May be Needed to Break It Free” by Paul Robinson, Market Analyst
- “NZD/USD Technical Analysis: NZ Dollar Rebound Brewing Ahead?” by Ilya Spivak, Senior Currency Strategist
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