RJO FuturesCast

Daily Futures Market News, Commentary, & Insight


Global Currencies: A Monetary Tug of War

Posted 05/02/2019 8:59AM CT | Ian Bannon

Currency futures have been in a tug of war this week as investors are searching for direction amid mixed corporate earnings and ambiguous economic data across the globe. Thursday morning, the USD opened at 97.355 and has inched up in early trade. As the U.S. labor market remains strong and investor sentiment has been positive lately, the Fed report yesterday took a more neutral stance opposed to their recent dovishness. Despite this, the dollar continued to extend its downtrend on what appears to be safe haven liquidation after last week’s upsurge. Support in the June USD is seen at 97.015, and if morning strength persists, then target resistance will be observed at 97.62. Any extension above this level could cause a run back to last week’s highs based on relative U.S. economic strength. Tomorrow’s jobs report will be impactful.

 Across the globe, other developed economies seem to be mixed. Recent Chinese weakness and the lack of a trade deal thus far is providing support to the Japanese yen. The June yen has broken out of its consolidating low pattern last week and crept upward. There appears to be a bottoming pattern in the yen, but it will not turn around overnight. Due to foreign currencies trade against the dollar, weakness in the USD will need to be observed to see a thorough reversal in the yen or the euro. We expect to see this develop throughout the latter half of this year, as U.S. inflation is low, but accelerating, which will weigh on the dollar. As for the British pound, this week’s strength is likely to dwindle, as UK mortgage approvals came in lower than expected in addition to soft consumer credit readings. Technically, the pound is entrenched in deep bear tracks over the last 3 months. Keep in mind, the dollar is the reserve currency of the world, and its movement is inversely related to other currencies

Japanese Yen Jun ’19 Daily Chart

Japanese Yen Jul '19 Daily Chart

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Ian Bannon

Market Strategist
an graduated from Purdue University with a degree in Economics and a focus on international business. Ian got started trading individual stocks before finding an interest in futures. He managed his own account before joining RJO Futures in 2019.
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