Thursday, July 17, 2014

Risk off | Consumer sentiment in the US later today

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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