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November 19, 2019
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Forex

US Dollar Price Volatility Report: USD/JPY, AUD/USD, USD/CAD

US DOLLAR PRICE OUTLOOK EYES CONSUMER SENTIMENT DATA & US-CHINA TRADE HEADLINES:

  • The US Dollar has churned increased for 4 straight days because the buck extends its rebound amid falling FOMC fee minimize expectations
  • USD/JPY, USD/CAD and AUD/USD value motion comes into focus for Friday’s buying and selling session with US client sentiment knowledge, a Canadian jobs report and US-China commerce headlines anticipated
  • Enhance your market information with our free Forecasts & Trading Guides out there for obtain

The US Dollar superior steadily all through buying and selling Thursday pushed predominantly by ebbing FOMC fee minimize expectations and counterpart weak point. Another drop in Fed fee minimize odds was largely fueled by further proof that the US labor market stays on stable footing based on jobless claims knowledge in addition to bettering US-China commerce relations. Meanwhile, spot EUR/USD value motion swooned in response to Eurozone financial development forecasts getting minimize but once more.

On steadiness, the most recent basic developments helped push the DXY US Dollar Index comfortably above the 98.00 deal with to its highest studying since October 16. Though upward momentum lately exhibited by the US Dollar might quickly run out of steam because the broad DXY Index approaches an intimidating degree of technical resistance. A nearside impediment for US Dollar bulls to beat is highlighted by the 50-day easy shifting common and 38.2% Fibonacci retracement degree of the buck’s buying and selling vary since June 25. Nevertheless, plunging FOMC fee minimize odds might preserve offering the US Dollar with a optimistic tailwind.

US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (APRIL 15, 2019 TO NOVEMBER 07, 2019)

Chart created by @RichDvorakFX with TradingView

Traders will digest the most recent US Consumer Sentiment report slated to cross the wires Friday at 14:00 GMT and is about to cap off one other busy week of high-impact financial knowledge releases. The earlier US Consumer Sentiment report indicated a rebound within the headline determine with the present circumstances and future expectations elements each confirmed enchancment, which helped deter an inflow of recession fears. Likewise, US recession odds proceed to shrink pushed largely by three-straight FOMC fee cuts and bettering US-China commerce relations.

CONSUMER SENTIMENT INDEX PRICE CHART (UMICH SURVEY OF CONSUMERS)

Chart of US Consumer Sentiment Historical Data

That stated, one other extension increased in client sentiment may very well be facilitated by the Fed offering extra accommodative financial coverage and receding commerce conflict threat. USD value motion is predicted to proceed its latest advance if the UMich Consumer Sentient report signifies that buyers stay optimistic and will reiterate the Fed’s pivot away from its dovish stance. On the opposite, a materially worse-than-expected client sentiment report might trigger an aggressive repricing of FOMC fee cuts and would probably weigh negatively on the US Dollar. At the identical time, nonetheless, a pointy rise in recession threat might extra broadly preserve the US Dollar afloat given its standing as a safe-haven foreign money.

FOMC RATE CUT PROBABILITY (MARCH 2020)

FOMC Rate Cut Probability Chart March 2020

There is presently a 32.1% likelihood that the FOMC will minimize the goal Federal funds fee (FFR) by the March 2020 Fed assembly. This is down significantly from the 87.2% likelihood priced in by fee merchants a month in the past. Further enchancment in US financial knowledge stands to underscore the top of the Fed’s ‘mid-cycle adjustment’ and less-dovish shift in outlook, which might probably be supportive of the US Dollar. Conversely, a breakdown in US-China commerce talks or proof that financial fundamentals proceed to deteriorate might ship USD value motion swooning in response to an increase in FOMC fee minimize expectations.

US DOLLAR IMPLIED VOLATILITY & TRADING RANGES

US Dollar Price Chart Implied Volatility Trading Ranges USDCAD USDJPY AUDUSD

US Dollar implied volatility readings ticked increased headed into Friday’s buying and selling session however stay comparatively muted when taken in context. Aside from US Consumer Sentiment figures, the Fed’s Daly will communicate at 15:45 GMT whose remarks might trigger a large response in USD value motion, although not going. Nevertheless, USD/JPY, USD/CAD and AUD/USD come into focus owing to the basic catalysts on deck with potential to stir US Dollar volatility.

USD/JPY – The market’s response to US Consumer Sentiment knowledge might have the cleanest response in spot USD/JPY contemplating that the foreign exchange pair is basically pushed by modifications in threat urge for food and rate of interest expectations on account of its common use for the foreign money carry commerce. USD/JPY has surged increased up to now this month with spot costs notching the very best studying since May. If implied volatility and extrapolated buying and selling ranges are believed to be true, spot USD/JPY is predicted to fluctuate between 108.98-109.56 with a 68% statistical likelihood judging by the foreign money pair’s in a single day implied volatility studying of 5.1% derived from foreign exchange choices contracts.

USD/CAD – The loonie will probably be within the highlight throughout Friday’s buying and selling session seeing that the most recent Canadian Jobs report is due for launch at 12:30 GMT. Correspondingly, USD/CAD is liable to experiencing above-average gyrations in spot costs contemplating the high-impact nature of employment knowledge. USD/CAD is presently hovering close to the mid-point retracement of its most up-to-date bearish leg and Friday’s financial knowledge might present foreign exchange merchants with sufficient conviction to ship the foreign money pair towards the higher or decrease restrict of its options-implied buying and selling vary between 1.3133-1.3221. For additional perception on USD/CAD take a look at this Canadian Dollar Forecast – Will the BOC Capitulate & Cut?

AUD/USD – Last however not least the Aussie-Dollar can also be postured for above-average volatility with US-China commerce headlines dominating AUD/USD value motion. Most lately, the Trump administration confirmed its willingness to roll again tariffs on China in a last-minute concession to seal a phase-one commerce settlement. Uncertainty surrounding Sino-American commerce relations stays at massive, nonetheless, and will trigger an abrupt reversal in spot AUD/USD costs if progress between Washington and Beijing stalls or takes a flip for the more serious. AUD/USD is estimated to oscillate between Zero.6876-Zero.6922 judging by its in a single day implied volatility of 6.5%, which is under its 20-day common of 6.9%.

— Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market perception

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