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Wall Street chalked up its third consecutive day in the green, but this did little to shore up the dollar as traders take on more risk. The Loonie was also in a weak spot while the Japanese yen gave back some of its intraday gains.
There were hardly any reports released during the session, allowing traders to book some profits from earlier in the day.
- U.S. NFIB Small Business index up from 104.9 to 106.9 vs. 106.2 forecast
- Fed Chairman Powell sworn in as new central bank head
- Powell: “We will remain alert to financial stability risks.”
- Powell: Fed in the process of “gradually normalizing” rates
Signs of weakening risk appetite?
Although U.S. equity indices managed to end another day in positive territory, they seem to have hung on by the skin of their teeth and commodities are looking mixed.
- Dow 30 index is up 39.18 points to 24,640.45 (+0.16%)
- S&P 500 index is up 6.94 points to 2,662.94 (+0.26%)
- Nasdaq is up 31.55 points to 7,013.51 (+0.45%)
It’s also worth noting that risk aversion lingered for the most part of the London session, so it’s not surprising that market participants are starting to take it easy.
- Gold is up $6.89 to $1329.72 per troy ounce (+0.52%)
- WTI crude oil dropped to $58.90 per barrel (-0.64%)
- Brent crude oil slipped to $62.56 per barrel (-0.20%)
Fed Chairperson Powell officially sworn in
The lack of any other market-moving reports left traders with no choice but to pay extra close attention to Fed Chairperson Powell’s prepared remarks during his official swearing in ceremony.
In particular, analysts took note of the fact that he pledged to remain alert to any financial stability risks, interpreting this as a potential reason for the Fed to stay cautious while equities keep climbing.
Powell also mentioned that the Fed is in the process of gradually normalizing interest rates. He noted:
“Monetary policy has continued to support a full recovery in labor markets and a return to our inflation target; we have made great progress in moving much closer to those statutory objectives.”
Of course he tipped his hat to former Fed heads Bernanke (Man, I miss this dude!) and Yellen, adding that he is grateful for their leadership and advice.
Major Market Mover(s):
The yen continued to rake in gains against most of its peers, perhaps taking full advantage of dollar weakness. However, the lower-yielding currency was unable to hold on to its winnings by the end of the session.
USD/JPY tumbled to a low of 107.41 then recovered to 107.69, GBP/JPY is down to 149.81, AUD/JPY found support around 84.30 then rebounded to 84.61, and EUR/JPY carried on with its climb from the previous session to a high of 133.37.
The Loonie extended its dismal performance from the London session to end up as the worst-performing currency of the day.
USD/CAD jumped to a high of 1.2625 then retreated to 1.2600, CAD/JPY tumbled to a low of 85.17, EUR/CAD is up to the 1.5600 mark, and NZD/CAD rose to a high of .9196.
Watch Out For:
- 11:50 pm GMT: Japanese preliminary GDP q/q (0.2% expected, 0.6% previous)
- 2:00 am GMT: New Zealand quarterly inflation expectations (2.0% previous)