Forex Today: US Dollar Holds Advance

Solid risk-off sentiment continues to dominate markets, with the US Dollar continuing to advance against the Yen and European currencies, as most stock markets trade lower yesterday, although a smal recovery is seen during the Asian session.

1. Risk sentiment continues to be poor, with stock markets trading lower almost everywhere yesterday. However, the Asian session today has seen some minor recoveries. The NASDAQ 100 Index seems to have made a technical breakdown below the former key support at 14657, while both this index and the S&P 500 Index reached new 3-month low prices yesterday.
2. In the Forex market, the US Dollar remains the strongest major currency, with the USD/JPY currency pair in focus as it made a new 11 month high yesterday at ¥149.18 with the Bank of Japan openly threatening intervention but failing to take any concrete action. The US Dollar has also again reached new long-term highs against the European currencies the EUR, GBP, and CHF with a very clear directional trend. Trend traders in the Forex market will be most interested in being long USD/JPY and short EUR/USD as these are the two major Dollar pairs which have historically tended to trend most reliably.
3. Many commodities are trading lower in the current risk-off environment, with Gold and Silver falling yesterday. However, the price of Crude Oil is rising firmly, threatening to regain the multi-month high it made a few days ago above $92.60. A few soft commodities are mostly holding value, but none are breaking to new highs.
4. Yesterday’s release of US CB Consumer Confidence data came in a little weaker than expected.
5. Australian CPI (inflation) data came in as expected at 5.2%, a small rise from last month’s annualized rate.
6. The ECB’s Holzmann said it is not certain terminal rate has been reached yet, holding out the prospect of further rate hikes beyond the current rate of 4.50%.
7. There are no data releases of high importance scheduled today, so it might be a relatively quiet day in the markets, although the recent solid risk-off sentiment may well continue to drive current trends forward.