Head of FX Strategy
Summary: An extremely low volatility market, but the USD is pushing higher and breaking out in an increasing number of pairs, including an attempt higher versus the euro and Aussie today. Sterling is trying to perk up as well, while SEK has stumbled again after an aggressive extension higher intraday.
The link below takes you to the latest FX Breakout Monitor, a concise PDF overview of all current and recent price breakouts for the short and medium term for major FX pairs and spot silver and gold.
Today’s Breakout monitor
Below is a snap of the full list of currency pairs we track for the breakout monitor. Note the sea of deep blue in the ATR readings for the majority of the pairs in the universe we cover, something that requires that the trading ranges are in the lowest 15% of the last one thousand observations.
Despite the low volatility, the US dollar continues to make waves, edging to new highs for a third day versus the Singapore dollar (SGD), looking at a new high close versus CAD and AUD today and even threatening to break higher versus gold and silver and euro.
Elsewhere, action is mostly muted and we note that one of the more interesting technical breaks of late – the EURSEK push down through the recent range lows, is backfilling badly today – typical of the action in the Scandies of late.
Sterling is looking higher again versus the CHF and the rather weak euro, possibly setting up an extension after the prior surge failed to yield much for sterling bulls. Still, a lot of event risk uncertainty ahead of the December 12 UK elections.
Today’s Breakout Highlight: AUDUSD
As we are writing this post, the AUDUSD is pushing on the local pivot that is the last real support line ahead of the sub-0.6700 lows (note that the pair has not close below that round figure in over a decade), though the nominal low daily close for the cycle is 0.6786. The broadly firmer USD gives some confidence, but the very compressed trading ranges and a number of false breaks virtually all over FX of late are cause for concern for momentum traders. The key data from the US is up next week ahead of the subsequent week’s FOMC meeting. In Australia, the RBA’s Lowe will be out speaking later today.
AI: The good, the bad, and the bubble
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The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
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As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
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Ole S. Hansen,
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As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist
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