Boxing Day FX Rally | DZHI - DZH International 

Boxing Day FX Rally

  • Kathy Lien
  • 27 December 2019

Boxing Day FX Rally 


Daily FX Market Roundup 12.26.19


By Kathy Lien, Managing Director of FX Strategy for BK Asset Management


All of the major currencies benefitted from the post Christmas / Boxing Day rally.No major economic reports were released today but in this otherwise quiet day, risk appetite benefitted from a slightly stronger US jobless claims report. The main catalyst however were reports from China that they are in the process of organizing a Phase 1 trade deal signing ceremony. Throughout these discussions, China has been lukewarm about the trade agreement, expressing less enthusiasm than the US but today's comments is the strongest confirmation to date that there will be no reneging on the deal. The Chinese also said they are examining ways to stimulate the economy by lowering financing costs and investors were relieved that reports of a North Korea missile test was unfounded.


So while the outlook for the global economy remains grim with US data falling short of expectations throughout the month of December, the continual de-escalation of risks that plagued the markets throughout 2019 has helped extend the risk rally.USD/JPY rose to its strongest level in May while EUR/USD hit 1.11. The best performing currencies however were sterling and the New Zealand dollar. Investors liked the European Commission's Vice President Timmerman's "love letter" to the UK, welcoming them back into the EU whenever they desire.


The rest of the major currencies including the New Zealand dollar benefitted from the China news.Asian markets reopen on Friday but with no major economic reports scheduled for release, risk appetite will continue to drive FX flows. Higher highs and higher lows in EUR/USD signal a potential move to 1.1150. However the rallies in the Australian and New Zealand dollars are becoming overextended. According to recent data, USD/CAD should be trading higher and not lower.


Looking ahead, next year will be one where relative growth plays a much bigger role in currency trade.The recovery in the US economy is losing momentum but if other central banks like the Reserve Bank of Australia or the Bank of Canada lower interest rates before the Fed, their currencies could pull back more quickly.  


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About the Author
Kathy Lien
Kathy Lien is Managing Director and Founding Partner of BKForex. Having graduated New York University’s Stern School of Business at the age of 18, Ms. Kathy Lien has more than 13 years of experience in the financial markets with a specific focus on currencies

Ms. Kathy Lien is Managing Director of FX Strategy for BK Asset Management and Co-Founder of Her career started at JPMorgan Chase where she worked on the interbank FX trading desk making markets in foreign exchange and later in the cross markets proprietary trading group where she traded FX spot, options, interest rate derivatives, bonds, equities, and futures.

In 2003, Kathy joined FXCM and started, a leading online foreign exchange research portal. As Chief Strategist, she managed a team of analysts dedicated to providing research and commentary on the foreign exchange market.

In 2008, Kathy joined Global Futures & Forex Ltd as Director of Currency Research where she provided research and analysis to clients and managed a global foreign exchange analysis team. As an expert on G20 currencies, Kathy is often quoted in the Wall Street Journal, Reuters, Bloomberg, Marketwatch, Associated Press, AAP, UK Telegraph, Sydney Morning Herald and other leading news publications.

She also appears regularly on CNBC’s US, Asia and Europe and on Sky Business. Kathy is an internationally published author of the bestselling book Day Trading and Swing Trading the Currency Market as well as The Little Book of Currency Trading and Millionaire Traders: How Everyday People Beat Wall Street at its Own Game all published through Wiley. Kathy’s extensive experience in developing trading strategies using cross markets analysis and her edge in predicting economic surprises serve key components of BK’s analytic techniques.