Today’s trading session continues to exhibit the same “risk-off” mood from earlier sessions, with global financial markets trading under slight pressure, on the back of a sustained bounce in global bond markets, as well as modifications in central bank’s monetary policy positions..
During the later half of today’s Asian Trading Session, we witnessed the antipodean currencies (NZD & AUD) come under heavy selling pressure following the RBNZ’s (Reserve Bank of Australia) decision to keep their OCR steady at 1.75%, while alluding to an overtly dovish bias in their forward guidance. The central bank signaled that a rate cut will be their next likely move to accommodate for the slowing global growth, and stimulate their economy. This surprising shift in the RBNZ’s tone further convinced investors that global financial conditions may be worse than presumed, and this compelled investors to scale back on holdings in risk-oriented assets, and rotate into secure bonds or other safe haven assets. The Japanese Yen continues to benefit and is the strongest currency for the day, while the US Dollar remained neutral ahead of announcements during the US Economic Docket.
During the US Session, investors were looking to the January US Trade Balance figures for fresh direction, which came in better than expected at a deficit of -$51.1 billion, which was an improvement from last month’s figure at -$59.9 billion deficit in December. This announcement resulted in demand for the greenback since a narrowing of the trade balance would be supportive of growth in the 1st quarter (GDP), despite the bout of economic pessimism that has been hanging over markets since the turn of the year. Although this is the case, we are still witnessing US equities tumble lower on a combination of falling oil prices, and softer treasury yields.
For most of the webinar, we reviewed price action in USD/JPY, EUR/USD, GBP/AUD and Gold (XAU/USD) to identify technical setups that were forming in the market for trade entry.
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Marvin Perry has been an active trader within the Forex market since 2010. He attended the University of Illinois in Urbana/Champaign, and graduated in 2002 with a double major in Cell and Structural Biology and Chemistry. He currently serves as an FX instructor & Quantitative Analyst for the Forex Anatomy Private Trading Community called "The Lab", where he conducts live weekly trading webinars & instruction on Fundamental Analysis & Inter-Market Interpretations of dynamic asset classes and their influence on currencies.