Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
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FX Breakout Monitor: USD and safe-haven FX riding high
John J. Hardy
Global Head of Macro Strategy
Summary: Risk-off sentiment is pushing investors into USD, JPY and CHF.
Click here for the full FX Breakout Monitor report.
EURUSD is having a go at the cycle- and 12-month lows again, while the JPY and CHF safe havens have managed to match the broad USD strength today as risk sentiment has weakened anew on trade war fears. CAD has suddenly sapped back weaker after divergent recent strength.
The US dollar rally has intensified and broadened out today, with CAD and the EUR more squarely under the greenback’s thumb today as both EURUSD and USDCAD are looking at important breakout levels. We add a EURUSD short ahead of today’s close, with the risk that we are jumping the gun. Elsewhere, the USDCAD turnaround is easily the most remarkable shift relative to recent price action as CAD traders have woken up to the pressure from both weak risk appetite and weak oil prices after formerly celebrating some strong recent Canadian data and Trump’s cancellation of tariffs.
Breakout signal tracker
We add a EURUSD short signal to our tracker today at the price as of this writing, though theoretically we should wait for today’s closing level to ensure that the breakout lower has held into the close. If EURUSD closes today back above 1.1150 we may look to take the position off again. Tomorrow the AUDUSD signal for the AUDUSD short position expires and we could replace it with a USDCAD long if the latter closes above 1.3500 today.
EURUSD is having a go at the cycle- and 12-month lows again, while the JPY and CHF safe havens have managed to match the broad USD strength today as risk sentiment has weakened anew on trade war fears. CAD has suddenly sapped back weaker after divergent recent strength.
The US dollar rally has intensified and broadened out today, with CAD and the EUR more squarely under the greenback’s thumb today as both EURUSD and USDCAD are looking at important breakout levels. We add a EURUSD short ahead of today’s close, with the risk that we are jumping the gun. Elsewhere, the USDCAD turnaround is easily the most remarkable shift relative to recent price action as CAD traders have woken up to the pressure from both weak risk appetite and weak oil prices after formerly celebrating some strong recent Canadian data and Trump’s cancellation of tariffs.
Breakout signal tracker
We add a EURUSD short signal to our tracker today at the price as of this writing, though theoretically we should wait for today’s closing level to ensure that the breakout lower has held into the close. If EURUSD closes today back above 1.1150 we may look to take the position off again. Tomorrow the AUDUSD signal for the AUDUSD short position expires and we could replace it with a USDCAD long if the latter closes above 1.3500 today.
Today’s FX Breakout monitor
Page 1: EURUSD is having a go at a new downside breakout for the cycle – can the third time prove the charm after the prior two attempts were quickly reversed? We’ll see – the Monday session could prove the key one as we await the results of the EU Parliamentary elections Sunday evening. EURJPY is also poking to new lows for the cycle and could prove compelling for a trend continuation trade if this weak risk sentiment worsens further. Elsewhere, also note USDCAD once again trying to break higher.
Page 1: EURUSD is having a go at a new downside breakout for the cycle – can the third time prove the charm after the prior two attempts were quickly reversed? We’ll see – the Monday session could prove the key one as we await the results of the EU Parliamentary elections Sunday evening. EURJPY is also poking to new lows for the cycle and could prove compelling for a trend continuation trade if this weak risk sentiment worsens further. Elsewhere, also note USDCAD once again trying to break higher.
Page 2: mostly about extensions of recent trends here, but note the USDZAR and USDTHB looking at new cycle highs (the latter especially interesting after a sharp reversal), while USDRUB has bounced sharply after posting a new low yesterday on the weakening of EM and especially oil prices.
Chart: EURUSD
EURUSD having a look at new lows for the cycle here and thus also at 12-month lows. We have also marked the prior two breaks to show how the last two break attempts lower failed to lead anywhere – let’s see if the move can develop.
EURUSD having a look at new lows for the cycle here and thus also at 12-month lows. We have also marked the prior two breaks to show how the last two break attempts lower failed to lead anywhere – let’s see if the move can develop.
Chart: USDCAD
Bulls were burned on the last attempt by this pair to break higher; we’ll reserve judgment and post a signal on our tracker if the pair manages a solid close here solidly above 1.3500.
Bulls were burned on the last attempt by this pair to break higher; we’ll reserve judgment and post a signal on our tracker if the pair manages a solid close here solidly above 1.3500.
Chart: USDZAR
Emerging market currencies have taken the USD strength reasonably in stride lately, but USDZAR has bounced back today and is looking at the highs for the cycle again – we mark both the 19-day and 49-day highs here.
Emerging market currencies have taken the USD strength reasonably in stride lately, but USDZAR has bounced back today and is looking at the highs for the cycle again – we mark both the 19-day and 49-day highs here.
REFERENCE: FX Breakout Monitor overview explanations
The following is a left-to-right, column by column explanation of the FX Breakout Monitor tables.
Trend: a measure of whether the currency pair is trending up, down or sideways based on an algorithm that looks for persistent directional price action. A currency can register a breakout before it looks like it is trending if markets are choppy.
ATR: Average True Range or the average daily trading range. Our calculation of this indicator uses a 50-day exponential moving average to smooth development. The shading indicates whether, relative to the prior 1,000 trading days, the current ATR is exceptionally high (deep orange), somewhat elevated (lighter orange), normal (no shading), quiet (light blue) or exceptionally quiet (deeper blue).
High Closes / Low Closes: These columns show the highest and lowest prior 19- and 49-day daily closing levels.
Breakouts: The right-most several columns columns indicate whether a breakout to the upside or downside has unfolded today (coloured “X”) or on any of the previous six trading days. This graphic indication offers an easy way to see whether the breakout is the first in a series or is a continuation from a prior break. For the “Today” columns for 19-day and 49-day breakouts, if there is no break, the distance from the current “Quote” to the break level is shown in ATR, and coloured yellow if getting close to registering a breakout.
NOTE: although the Today column may show a breakout in action, the daily close is the key level that is the final arbiter on whether the breakout is registered for subsequent days.
The following is a left-to-right, column by column explanation of the FX Breakout Monitor tables.
Trend: a measure of whether the currency pair is trending up, down or sideways based on an algorithm that looks for persistent directional price action. A currency can register a breakout before it looks like it is trending if markets are choppy.
ATR: Average True Range or the average daily trading range. Our calculation of this indicator uses a 50-day exponential moving average to smooth development. The shading indicates whether, relative to the prior 1,000 trading days, the current ATR is exceptionally high (deep orange), somewhat elevated (lighter orange), normal (no shading), quiet (light blue) or exceptionally quiet (deeper blue).
High Closes / Low Closes: These columns show the highest and lowest prior 19- and 49-day daily closing levels.
Breakouts: The right-most several columns columns indicate whether a breakout to the upside or downside has unfolded today (coloured “X”) or on any of the previous six trading days. This graphic indication offers an easy way to see whether the breakout is the first in a series or is a continuation from a prior break. For the “Today” columns for 19-day and 49-day breakouts, if there is no break, the distance from the current “Quote” to the break level is shown in ATR, and coloured yellow if getting close to registering a breakout.
NOTE: although the Today column may show a breakout in action, the daily close is the key level that is the final arbiter on whether the breakout is registered for subsequent days.
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