The
tragedy of the loss of the airliner over Ukraine together with the commencement
of Israeli ground operations in Gaza combined yesterday to remind markets that
geopolitical tensions in various regions could affect the nascent recovery in
global economies. In Forex, the result was a flight to the old safe havens,
namely the US dollar, the Yen and gold. This signifies that, for now, risk is “off”.
The
USDJPY pair, in particular, was pushed down firmly below its 200 day Exponential
Moving Average (EMA). The rate is also now describing a descending triangle on
the daily chart, which is bearish. In Technical Analysis terms, apparent one-off
incidents can wind up causing what technicians call “structural effects” that
can have repercussions long after they have ceased to be immediate. Many trends
begin in this manner. In any event, the expectation not that long ago, of a
great number of market participants, that the Dollar Yen pair was on an
uninterruptable path to 105.00 Yen to the buck seems now but a distant memory.
Consumer sentiment in the US later
today
Later
in the global day today, at around 13:55 GMT, we will have this month’s
Reuters/Michigan Consumer Sentiment Index in the USA. Regarded as a leading indicator,
this is well observed by markets. The expectation this time round is that it
will show a rise, so any disappointment would be a negative for the US dollar.
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