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FX Breakout Monitor: Risk-off fades again, USD broadly stronger
John J. Hardy
Chief Macro Strategist
Summary: Risk sentiment has managed to maintain an even keel on the latest US-China trade news and through today’s US economic data. This has seen a broadly firm US dollar, together with firmness in oil-related currencies like NOK and CAD. On the weak side, GBP and AUD continue to suck wind.
A brief update today (we will return with the monitor next week as Friday is a holiday here in Denmark). Most interesting development today has been the USD and CAD rising back to the top as risk appetite has largely brushed off causes for fresh concern on the US-China trade tensions front (the blacklisting of Huawei). In the weak column today we have especially sterling and the AUD.
Breakout signal tracker
Will review opportunities early next week – for now, just keeping the lone open AUDUSD short.
Breakout signal tracker
Will review opportunities early next week – for now, just keeping the lone open AUDUSD short.
Today’s FX Breakout monitor
Page 1: the JPY crosses a bit less heavy today as risk appetite has managed to so far brush off bad news. Sterling has been on a blistering run lower and bumps up against the 200-day moving average soon in EURGBP.
Page 1: the JPY crosses a bit less heavy today as risk appetite has managed to so far brush off bad news. Sterling has been on a blistering run lower and bumps up against the 200-day moving average soon in EURGBP.
Page 2: NOK resurgent on strong oil prices and on the cusp of new highs versus the SEK. No consistent message from EM, though we have noted a rise in credit spreads against EM’s favour. The gold rally so far a one-day wonder and looking more so if the price action fades well back below 1290.
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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