Can the Dollar hold onto its strength against a week of data and rate decisions?

November 4, 2014

Unsurprisingly, the Dollar Yen keeps on rising now having reached the 104 level. The trading strategy of selling Yen seems to be quite simple and obvious as the BOJ had determined would provide further easing. Personally, I think the BOJ board may even add more bets in the future if the result of this round of QQE is unsatisfactory. The mid-to-long term target may be the 124-125 area which was the peak of 2007. Actually now, I can’t tell when this rally will stop in the short run.

USDJPY 041114 | Vantage FX

European currencies are relatively stronger and rebounding against the Dollar. The Sterling rose to 1.60 in response to the news that UK manufacturing growth unexpectedly accelerated to the fastest pace in three months in October. The reading increased to 53.2 as UK domestic demand was strong enough to offset the slowing exports to the Euro region.

GBPUSD 041114 | Vantage FX

The commodity currencies fell on the concerns of China’s slowdown. The China official non-manufacturing PMI dropped to a 9-month low of 53.8. Along with the lower manufacturing PMI released last weekend, it shows the Chinese are still moving in a downward path, most likely affected by the depressed real estate market.

NZDUSD 041114 | Vantage FX

Watch out as it looks like the Kiwi Dollar seems ready to break the 0.77 support level.

The Asian stock markets showed little change. The Shanghai Composite rose 0.41% to 2430. ASX 200 lost 0.36% to 5507. In the European stock markets, the UK FTSE was down 0.89%, the German DAX edged down 0.81% and the French CAC Index fell 0.92%. The US market fell after refreshing an all-time high. The S&P 500 closed flat at 2018. The Dow rose 0.14% to 17366, while the Nasdaq Composite Index gained 0.18% to 4639.

It is a big day ahead for Australian traders before they can enjoy the Melbourne Cup. Retail Sales and Trade Balance will be released at 11:30 AEST and the RBA Rate Statement will be out at 14:30 AEST which is expected as no change on the rate. The US and Canada Trade Balance will be out at midnight.

Have a great trading day!

Anthony


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