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Daily Fundamental ForexTime ( FXTM )

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Re: Daily Fundamental ForexTime ( FXTM )

Postby FXTM Official » Tue Oct 24, 2017 4:04 am

Daily Fundamental ForexTime ( FXTM )

AUD traders wait for CPI figures


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The Australian dollar has taken a beating in recent trading days, as the selling in it was mainly a result of the recent NZ election which dragged on the AUDUSD. This may come as a surprise, but there is some correlation between the two when it comes to their pairing with the USD. However, this selling has now stopped and markets are focused on the CPI data due out in coming days, which will provide some strong direction. The current expectation is a big rise in CPI data from 0.2% q/q to 0.8% q/q, which would bring inflation in that 2% target. Going further above the 2% target we can expect this to raise the attention of fixed rate markets who will be looking to see if this gives ammunition to the Reserve Bank of Australia to lift rates. The economy does seem to be bouncing back so this catalyst could lead to the bulls rushing back into the AUDUSD, as it continues to look stable and lack any political risk when compared to NZ at present - which has a degree.


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With all this in mind where to for the AUDUSD. Well there are two ways to look at it and a weaker USD is not the answer here. If we do see a weaker CPI result then I could see the AUDUSD whacked and pushed lower to support at 0.7729, but it shouldn't have a massive impact. On the upside if we saw a CPI reading that beat expectations and markets felt it might be sustained then I could see resistance at 07900 targeted, with long term upside potential of hitting further resistance levels at 0.8000. Either way you look at it there is potential for bigger movements in the AUDUSD and potentially the AUDNZD as well, but CPI figures will have a big impact on market sentiment for the rest of the week.

Shinzo Abe got what he wanted as he swept back into power after this weekend's elections and the USDJPY was quick to respond by losing some ground on the Monday open, as Yen bulls appeared in the market. The continuation of Abenomics will be interesting, it has been one of the greatest economic experiments of its time. The reality though is that it has not really caused the expected result and may have created more problems. Markets however are expecting that the Bank of Japan governor will be replaced and another more hawkish governor could be brought in to create further change from a monetary policy point of view.


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For the USDJPY traders it's a good time to be bullish, but also realise that the USDJPY does like big levels and to move sideways from time to time as well. Resistance at 114.258 thus far has been a hard ask for the market and I am expecting to see a real test here. If we can see a push through then further extensions to 115.322 are likely to be on the cards here. But USD strength will also need to hold up and it has suffered recently.


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Re: Daily Fundamental ForexTime ( FXTM )

Postby FXTM Official » Thu Oct 26, 2017 5:42 am

Daily Fundamental ForexTime ( FXTM )

Australian CPI sinks chances of rate rise


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The Australian dollar was thumped by the market today as CPI data missed the mark coming in at 0.6% (0.8% exp) leaving the market with a bitter taste in its month. On the back of higher oil prices and retail prices many had expected to see inflation lift and even hit the magic 2% inflation figure which might prompt the Reserve Bank of Australia into action. Sadly, it was not meant to be and the weaker figure coupled with global sentiment of weaker inflation in the mid range term means it's unlikely the RBA will get to raise rates anytime soon. So where to for the AUD? Well with the US government pushing its tax reform this could certainly boost the possibility of increasing US GDP and the USD for the most part. There has been a lot of weakness for the USD recently and that has boosted things, but for the most part it does seem realistic that they might be able to get it through. This would obviously play out well for the AUDUSD bears, especially if we continue to see weaker data in the long run.


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So far the AUDUSD bears have slashed down the charts at a blistering pace before hitting the 200 day moving average coupled with support around 0.7687 and pausing for a breather. Given the recent weakness in the commodity currencies I would not be surprised to see further falls down to the next level of support at 0.7624. Nevertheless, the AUDUSD does have a habit of bouncing back, so in the event it did I would expect the potential for it to modestly rise to 0.7748, but it would be hard pressed to get higher to resistance at 0.7821. In any case I do believe that the bears may hang around for some time yet and market traders are likely to target key support levels until they find any hope for the AUD.

The UK has always been struggling with the recent Brexit negotiations but thus far FTSE 100 traders have managed to avoid the brunt of it. Not to so much today as global equity markets took a big tumble, despite growth forecasts being upgraded in the US. Markets at the moment seem quite skitterish and we are starting to see long candles, which means traders are getting very aggressive to defend these bullish positions at times.


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The FTSE 100 is a fantastic case of this as we saw an aggressive dive today, followed up by some aggressive buying shortly after to bring it back into line. Support was touched at 7436, but traders were quick to defend this level, but the bears still took considerable ground. The 200 day is moving up the chart and if we break through support at 7436 then I would expect an extension further down to this level. Resistance levels can still be found at 7551 and 7600, with the potential to breakthrough looking very remote at present.


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Re: Daily Fundamental ForexTime ( FXTM )

Postby FXTM Official » Wed Nov 01, 2017 9:23 am

Daily Fundamental ForexTime ( FXTM )

Currencies stay range bound ahead of Fed’s decision


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It is a quiet Wednesday in the currency markets. Traders are favoring to remain on the sidelines ahead of multiple key risk events, including the Federal Reserve monetary policy decision later today; the Bank of England’s rate decision on Thursday; President Trump’s nomination of the next Fed Chair; the U.S. tax reform announcement and Friday’s NFP report.

Today’s FOMC meeting will not be accompanied by an update on economic projections, nor by a press conference. Traders have to act on very few amendments on a 500 words statement. The main theme is unlikely to change, and the Fed will stick to its plans of gradual tightening. However, recent economic releases have shown significant improvement in the U.S. economic activity, and GDP has grown 3% for two consecutive quarters, suggesting that we may see slight, positive changes in assessing economic activity.

Despite an uptick in headline inflation in September, core CPI continued to miss estimates, and remained below the targeted 2%. Thus, I expect little to no change on inflation assessment.

Overall, the Fed will likely meet market expectations, by keeping interest rates unchanged in November, and signal a rate hike in its final meeting in December.

President Trump’s nomination for Fed Chair on Thursday could easily overshadow today’s statement, especially if Fed Governor Jerome Powell is not his first choice. Powell has been supportive of Janet Yellen's policy of gradual tightening in monetary policy; thus, I do not expect big moves in Treasuries, or the U.S. dollar, if he is nominated. However, if Stanford University’s Professor of Economics, John Taylor, is nominated instead, expect big moves in Treasury yields and the dollar, which could appreciate sharply against its peers. According to Taylor rule, a forecasting model that determines where interest rates should be, based on targeted inflation and full employment, interest rates should be much higher the current levels.

The Kiwi was the only outperforming currency today, surging 1% against the dollar after labor market statistics showed that the cost of labor grew 1.9%, and the unemployment rate fell to a nine-year low. If wages continue to show signs of strengthening, the Reserve Bank of New Zealand will likely start raising rates next year, as opposed to earlier forecasts of tightening in 2019.


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Re: Daily Fundamental ForexTime ( FXTM )

Postby FXTM Official » Fri Nov 03, 2017 3:47 am

Daily Fundamental ForexTime ( FXTM )

Markets poised for Nonfarm Payroll


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The build up has begun for tomorrows NFP announcement and the market is betting big time on a strong result of 313K; this is a very large expectation, but it makes a lot of sense when you consider the seasonal impact that Christmas has on markets. Labour markets certainly boom during this period and even part time workers are considered part of the work force. I will say one thing, with such a large number it will be hard to beat, and I'm not certain that markets will take kindly to anything below the 313K, so it could be the NFP of the year on this basis. Markets will also be digesting the recent announcement that Powell will take over from Yellen as the FED chair. The markets thus far have been positive regarding this, with a number of heavy weight finance figures speaking out in favour of him. Many had expected a hawk, but the reality is that he's likely to take over from the Yellen framework and continue it in the short to medium term until he has a good grasp of the situation.

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For the NFP traders, the metal markets is always the big calling when it comes to movements. Gold has thus far been creeping up on whatever USD weakness it can find, which is not surprising as the bulls are always there. Any NFP weakness tomorrow could see gold catapulted above the current resistance level at 1281 with the potential to even break through 1295 if it's quite bad. In the event it's a very strong result and in line with expectations then 1267 and 1247 are likely to be key levels of support for the gold market. All the moving averages at present are not likely to impact any shifts upwards or downwards so it will be a case of playing of key price levels that the market can digest at this present time.

It was also a big day for the British market as the Bank of England raised interest rates by 25 basis points, leaving the intraday banking rate at 0.5%. This move had been widely expected, but the comments afterwards helped drive the pound down and encourage the doves in the market as the Bank expected inflation to taper off (as the pound stabilised) and also Brexit would bring uncertainty to the market causing issues in the long run.

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The big benefactor of this was of course the FTSE 100 which lifted sharply on the news as the bulls rushed in to take advantage, and as the UK oil producers showed strong earnings as well. The market is now poised to have another crack at resistance at 7600 and NFP could be a catalyst which could push it through tomorrow as well. In the event that markets fall back down support at 7551 and 7436 is likely to be key levels, and markets will be looking to stop the rot if anything does transpire.


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Re: Daily Fundamental ForexTime ( FXTM )

Postby FXTM Official » Tue Nov 07, 2017 3:09 am

Daily Fundamental ForexTime ( FXTM )

RBNZ set for change on new government mandate



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The New Zealand government continues to be in the eye of traders as the current changes to the Reserve Bank of New Zealand look to be fast tracked. So far what we know is that the focus will not only be on inflation, but almost full employment for the NZ economy. This should come as no surprise given the recent elections and the want for the government to change to focus on this. Additionally, there is the need for a change on current FX policy which could have far reaching impacts on the NZ economy, as the current minor party (NZ first) wants to see the RBNZ intervene in FX markets to help drive export markets and keep the NZD lower. This has been seen as futile in the past given the RBNZ being quite small compared to world markets, so it could cause minor issues going forward. Either way markets are not currently upbeat regarding the prospects of the NZDUSD, but I believe the NZD is starting to stabilise compared to other currencies and is showing the odd signs of the bulls back in the market.


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So far the NZDUSD bull have managed to claw back a considerable amount of ground in the face of uncertainty in the NZ economy. For me resistance at 0.6960 is the current strong level that is holding back any further gains on the charts, the reason being is that no one knows the current direction of the NZ market after elections. If it was positive then I would expect a jump to 0.7029, but a potential slow down shortly after this jump. In the event we did see minor falls on the charts then support could be found at 0.6891 and 0.6834 respectively, with the ability to go lower as markets are considerably more bearish after the recent election.

Oil has been one of the big jumpers on the charts as markets have been quick to worry about the situation in Saudi Arabia recently. The anti corruption crackdown has taken a few high profile heads, and the markets are worried about the state of play from the world's largest oil producer. Certainly, there have been drawdown's on global oil supplies, but the shakeup of affairs could have the largest impact in the long run and drive oil prices higher in the short term.


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So far Oil bulls have charged forward and knocked out support at 56.17 as the oil markets continued to run higher. Resistance level can be found at 59.08 and 62.12 on the charts with the potential to go higher if more political uncertainty presents itself. There is also the potential for charts to dip lower and support can be found at 56.17 and 50.21 as the market looks to drift lower as news looks more promising potentially.


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Re: Daily Fundamental ForexTime ( FXTM )

Postby FXTM Official » Wed Nov 08, 2017 5:13 am

Daily Fundamental ForexTime ( FXTM )

Euro bears continue to swipe


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The Euro has been a star over the previous months, but it's becoming more and more lacklustre as the ongoing Spanish drama is still a thorn in the side of the Euro-zone. While investors love a bit of volatility, the Euro-zone seems to keep battling crisis after crisis trying to hold everything together as more moles pop every month to be whacked. Is there cause for concern? Well markets seem to think so as of late, and event EU retail sales figures y/y jumping to 3.7% (2.8% exp) were not enough to fight of the bears. Additionally, the US saw a strong JOLTS job openings figure of 6.09M (6.08M) which shows that the labour market in the US continues to not be at capacity. This can also be seen in the fact that wages have not grown as fast as economists had expected, which points to slack in the labour market that can still be filled. It would seem though that we are close capacity in the next year or two in the US if there are no negative economic events.

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So for the Euro bulls it's been a tough ride over the past few weeks and the head and shoulders pattern that did occur is likely to keep going with bears taking full advantage. Target support levels for the market will be found around 1.1519 and 1.1433, with the potential for further lows if we see any further weak news on Catalonia. If we do see the bulls come back into the market I would expect to see resistance be strong around 1.1621 and 1.1719 on the charts. Additionally, the 20 day and 50 day moving average should be watched as dynamic resistance levels which daily traders have been respecting as of late. However, for the most part there is a clear trend of bearish sentiment which has the potential to continue for some time.

NZ dollar traders also went short today as the Global Dairy Index came in at -3.5%, obviously this is quite big news for traders as the Dairy industry accounts for 7% of New Zealand's GDP. But further to this we have the RBNZ rate statement due out tomorrow, and many are expecting some fireworks here. Not in the sense of a rate rise, but in the sense that change is in the wind with the new government wanting it to have stronger mandates. It will be a case of wait and see, and the prospect of a new governor is on the cards as well with the new left wing government.

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For the NZDUSD traders there has been a failure to breach anything above the 70 cent market, which continues to act as a psychological barrier at present. Markets thus far are looking bearish and swinging lower just coming up short of support at 0.6891. There is further potential for moves lower to 0.6834 and 0.6802 on the charts. I would be surprised to see it spring back up higher, but if it does the 70 cent mark is likely to be a hard stop for the pair.


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Re: Daily Fundamental ForexTime ( FXTM )

Postby FXTM Official » Mon Dec 11, 2017 8:56 am

Daily Fundamental ForexTime ( FXTM )

Bitcoin future trading kicks off; Investors awaiting central banks decisions



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Trading bitcoins entered a new phase today, after Chicago’s CBOE listed the first futures contract on the cryptocurrency. The initial reaction was beyond expectations with the futures contract climbing more than 20% and triggering two trading halts. CBOE’s website experienced unprecedented traffic which may well have sent a new benchmark, the frenetic activity lead to delays and outages. So far, it seems professional investors aren’t willing to bet against the bitcoin, despite the many warnings of a bubble that will burst soon. Many traders aren’t even interested in the price direction, but the listing of the futures contract on CBOE and later next week on the CME, will provide them an arbitrage trading opportunity due to the vast pricing differences. However, the arbitrage trading will lead to improved price efficiency and probably less volatility. After volatility settles down, the focus will return to the price direction.

Central Banks Meetings

Currency markets were trading in tight ranges early Monday with the dollar slightly weaker against its major peers. Expectations of the Fed hiking rates on Wednesday, stands at 90.2% according to CME’s Fedwatch tool which means the disappointment in wage growth won’t shift the needle for US monetary policy. However, it isn’t the rate hike that will move the dollar on Wednesday, it’s the tone, economic projections and the dot plot. Given that we’re getting closer to a deal on tax reforms, the Fed might become slightly more hawkish. It remains to be seen whether this will shift up the Fed’s dots for future interest rate expectations.

The European Central Bank and Bank of England are also meeting this week. Despite no substantive monetary policy changes expected, the language might still move the Euro and the Pound.

Will the Fed support further rotation in stocks?

Tech shares have been in focus over the past two weeks after the S&P tech index plunged more than 4% between 29-Nov and 05-Dec, before recovering last week. The fall in Teck stocks wasn’t accompanied by a selloff in other sectors, particularly the financials which have been on the rise. This is a classic type of rotation with active managers balancing their portfolios before year end. Tax reforms don’t seem to be of great support to Tech firms, given that their effective tax rate is considered to be the lowest in the U.S. Meanwhile, it’s a big deal for the rest of the U.S, with financials having an effective tax rate of more than 30%. The new Fed Chair, Jerome Powell will likely speed up deregulation for the financial sector which will drive more inflows. And of course, higher interest rates for 2018 will further support the banks' profit margins. That’s why the trajectory of interest rates in 2018 will likely lead to more portfolio balancing before year end.

EU Summit

The breakthrough in Brexit talks on Friday was a great relief for policymakers, who can now move to phase-2 of the talks. Interestingly though, Sterling instead of rising sharply, dropped on the news. Investors seem reluctant to buy Sterling as they view the next phase more complicated than the first. They want to see details of the transition agreement and trade talks concluded before buying Sterling. I don’t think the EU summit on Friday will reveal much, but blessings from EU leaders might lend some support to the Pound.



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Re: Daily Fundamental ForexTime ( FXTM )

Postby FXTM Official » Fri Dec 15, 2017 4:45 am

Daily Fundamental ForexTime ( FXTM )

US retail sales beat expectations


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It's been a funny day for the USD as it slipped lower on Tax legislation worries. For the most part it has fallen around two senators who are keen to fix the current child tax credits. In reality this is something republicans are likely to help remedy in order to get this bill over the final hurdles and in front of the president to sign before Christmas. However, for me the big mover - and what might have a much more interesting impact - was of course today's retail sales which lifted sharply to 0.8% m/m (0.3% exp). This is a very strong move just ahead of the December rush season and in return we could expect to see GDP forecasts raised for the 4th quarter going forward. I would be surprised if we didn't see solid earnings this season in the equity markets as well given the huge rises in consumer and business confidence. For now it would seem the Trump effect might be still there after all heading into the new year.

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One of the key areas this was felt was on the USDCAD which was swinging heavily today, not only on the USD weakness but also Bank of Canada comments which pushed up the chances of a rate hike for March next year. For the most part the USDCAD has been ranging for some time, and it has struggled to break through the major resistance level at 1.2921, which has so far seemed like an impossibility at present. One of the main reasons also has been the 200 day moving average bearing down on that level which of course adds further pressure. At the same time the swing lower today failed to stay below support at 1.2759 which leads me to believe that the bulls are still in this market despite the Canadian recovery we've seen. If the bulls do leap back into the market 200 day moving average will be the key level to close above, and if we do close above then expectations are that we could see a move upwards to the 1.3000 level. For now though it's a case of waiting to see if the ranging does stop and the trends continue.

The other key one to watch out for is the AUD, with the market likely to be looking forward now to next week's RBA minutes on the economy and their thoughts after the most recent unemployment figures. We could certainly see the case made for a potential rate rise in the future, but for now it's a case of wait and see - even though the market is fairly bullish.

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Chart wise, and it's clear the AUDUSD bulls are back in fashion and looking to make up some ground. After the positive news yesterday and weak USD it is a surprise to see that it has failed to climb higher to the 200 day moving average and resistance at 0.7687. I still believe this is a key level to watch and if we do see further extensions it could lead to bigger things. For now though like the USDCAD it's a case of wait and see as the market looks to enter Friday trading.



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Re: Daily Fundamental ForexTime ( FXTM )

Postby FXTM Official » Thu Dec 21, 2017 8:30 am

Daily Fundamental ForexTime ( FXTM )

Equities reaction muted on tax breakthrough; Watch the bond market



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Asian markets woke up on Thursday to the news that Republicans had passed the long-awaited tax bill. President Trump is now just a pen stroke away from overhauling the tax code. Interestingly there aren’t any fireworks on the announcement of Trump’s Christmas gift; because as expected, the good news is already priced in.

In fact, the reaction was more evident in fixed income markets. U.S. 10-year bond yields traded above 2.5% for the first time since March 2017, allowing the yield curve to steepen after flattening for most of 2017. The spread between 2-year and 10-year treasury bonds climbed more than 12 basis points, reaching 63 basis points, after falling to its lowest level in a decade last week. The spike in long-term bond yields is supposed to be positive for the U.S. dollar, as it suggests the Federal Reserve should become more aggressive in tightening policy next year. However, the dollar’s reaction was muted because there’s another side to this story. The additional supply of U.S. bonds due to the unfunded tax cuts, will probably make U.S. treasuries less attractive in the longer run, and given that most central banks are trying to catch up with the Federal Reserve, yields in Europe and other markets are also anticipated to move higher in 2018, thus narrowing the interest rate differentials gap.

The enormous expected increase in U.S. deficit will also put the U.S. sovereign credit rating at risk. If any of the credit agencies- Standard & Poor’s, Moody’s or Fitch downgrades the U.S. sovereign rating, yields will spike even higher. However, the impact on the dollar won’t necessarily be positive, with the opposite reaction being more likely.

The Yen’s reaction was also muted to Bank of Japan’s monetary policy decision. As expected, the central bank kept interest rates unchanged at -0.1% and maintained its 10-year bonds yield target at around 0%. Given that weak inflation is expected to continue dominating the monetary policy outlook, I don’t expect any significant change in policy next year. Thus, the Japanese Yen will continue to take its cue from risk appetite/aversion in equity markets for the foreseeable future.

Euro traders are awaiting the outcome of today’s Catalonia’s election. Polls are suggesting that it will be a tight race between the Catalan Republican Left party, which supports independence and Ciudadanos which is in favor of a unified Spain. Given that the election is not expected to be decisive and parties may form coalitions to govern, the risk of tensions flaring with Madrid again, remain limited.



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Re: Daily Fundamental ForexTime ( FXTM )

Postby FXTM Official » Thu Dec 28, 2017 9:25 am

Daily Fundamental ForexTime ( FXTM )

Dollar selloff in final trading week of 2017



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With only two trading sessions remaining for 2017, liquidity dried up across the global markets. This has been obvious in U.S. and European equities, where volumes dropped significantly. However, some investors continued to tweak their portfolios slightly, leading to insignificant price action. I don’t expect equities to deviate much throughout Thursday and Friday.

Interestingly though, traders continued selling off the U.S. dollar. One could blame Wednesday’s U.S. consumer confidence report which fell from a 17-year high, but the dollar was declining before the release. I think the best explanation for the dollar weakness is the sharp fall in U.S. Treasury yields.

10-year bond yields dropped 7 basis points on Wednesday, to reverse almost 50% of the gains from mid-December towards last week, where yields broke above 2.5% for the first time since March 2017.

Despite appetite for risk sending Asian equities to record highs on Thursday, the safe haven Yen is outperforming its major currency peers. USDJPY dipped below 113 for the first time in six trading days after the release of Bank of Japan meeting minutes. Some members are considering tightening monetary policy, if the economy continues to improve next year. This would be a significant shift in strategy for a Central Bank thought to be the last to exit the unconventional stimulus packages. However, I don’t think the BoJ will move anytime soon due to subdued inflation; but, given the lack of liquidity, moves in currency markets may be exaggerated.

Commodity currencies are also enjoying a decent upside, after copper prices rallied to their highest level in almost four years.Oil prices remained close to a two and a half year high, and gold hit a one- month high. Considering that no Tier One economic reports will be released, the Aussie, Kiwi, and Loonie will continue to follow commodity prices direction.



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