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Kathy Lien

Kathy Lien

Kathy Lien is an Internationally Published Author and Managing Director of BK Asset Management. Her trading books include the following: 1) For beginners, “The Little Book of Currency Trading (2010, Wiley).” 2) THIRD edition of the highly acclaimed, internationally published “Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2015, Wiley).” 3) Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley) 4) High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia)

Articles by Kathy Lien

Euro Hits 4 Month Lows – Should You be Worried About CPI?

August 10, 2021

Euro Hits 4 Month Lows – Should You be Worried About CPI?
Daily FX Market Roundup 08.10.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
There’s just over 2 weeks to go before the Federal Reserve’s Jackson Hole Symposium and investors are buying U.S. dollars on the premise that the Fed will set the stage for tapering in September. The U.S. economy came roaring back this summer as vaccinations increased. Last week’s strong non-farm payrolls report sealed the deal for bets on monetary tightening. Consumer prices are due for release on Wednesday and a good number would reinforce expectations for taper in the fall, driving the dollar higher. USD/JPY, which rose to its highest level in 3 weeks could extend its gains towards 111 while EUR/USD, which dropped to

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Inflation, Gold and 3 Things Affecting Dollar

August 9, 2021

Inflation, Gold and 3 Things Affecting Dollar
Daily FX Market Roundup 08.09.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The economic calendar may not be as jammed pack this week compared to last but if today’s moves in commodities are a sign, this could be a very active week in the financial markets. Gold prices ended the day down 2% after dropping more than 4% at the start of Asia trade. Oil prices settled the day down about the same amount after bouncing off lows. The U.S. dollar was mixed at the start of the NY session but with Treasury yields turning positive, the greenback ending higher against all of the major currencies. These wild intraday swings can be explained by looking at 3 main factors affecting investor appetite and more specifically

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Dollar Rallies Ahead of #NFP – Will Jobs Report Beat?

August 5, 2021

Dollar Rallies Ahead of #NFP – Will Jobs Report Beat?
Daily FX Market Roundup 08.05.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The rally in stocks, rise Treasury yields and demand for U.S. dollars tell us that investors anticipate a strong non-farm payrolls report on Friday. The consensus forecast is 870K jobs which would be strongest increase since August and the whisper number is a million. On Wednesday, investors were caught off guard by the weak ADP private payroll number but since then their worries have been eased by other data sets. This morning for example we learned that jobless claims fell to a 3 week low as continuing claims dropped to pre-pandemic lows. July was a strong month for the U.S. economy with increased spending on leisure

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Payrolls Uncertainty Drives Wild Swings in Dollar

August 4, 2021

Payrolls Uncertainty Drives Wild Swings in Dollar
Daily FX Market Roundup 08.04.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The U.S. dollar ended the day sharply higher against all of the major currencies but not before wild swings that took USD/JPY below 109.00 and then back above 109.50. EUR/USD soared to 1.1900 at the start of the NY open but plunged towards an intraday low of 1.1836 before the London close. We haven’t seen big intraday reversals like this in a while and the culprit was non-farm payrolls confusion. Private payroll provider ADP reported significantly slower job growth in the month of July that sent the dollar tumbling lower but when non-manufacturing ISM was released, investors were relieved to see service sector job growth. After

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AUD Outlook: What IF the RBA Reverses Taper Call?

August 2, 2021

AUD Outlook: What IF the RBA Reverses Taper Call?
Daily FX Market Roundup 08.02.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The first week of August will be a busy one for the financial markets. Employment reports are due for release from the U.S., Canada and New Zealand along with central bank meetings in Australia and the U.K. August is traditionally a challenging month for stocks and today we got a glimpse of the potential seasonal impact. The Dow Jones Industrial Average hit a record high at the start of NY trade but gave up all its gains by the end of the day. U.S. data was weaker than expected with the ISM manufacturing index sinking to 59.5 from 60.6. Economists predicted a pickup in manufacturing activity but shortages of raw materials and

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3 Reasons Why Dollar Sold Off Post FOMC

July 28, 2021

3 Reasons Why Dollar Sold Off Post FOMC
Daily FX Market Roundup 07.28.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The U.S. dollar traded lower against most of the major currencies on the back of the Federal Reserve’s monetary policy announcement. EUR/USD rose to its strongest level in nearly 2 weeks while USD/JPY dropped back below 110. Interestingly enough, Fed Chairman Powell did not appear overly concerned about Delta.
In the press conference he said, “What we’ve seen is with successive waves of COVID over the past year and some months now, there has tended to be less in the a way of economic implications from each wave. We’ll see whether that is the case with the delta variety. But it’s certainly not an unreasonable expectation.”
This implies

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Fed Preview – Two 5 Letter Words that could Make or Break Dollar

July 27, 2021

Fed Preview – Two 5 Letter Words that could Make or Break Dollar
Daily FX Market Roundup 07.27.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The U.S. dollar traded lower against the euro and Japanese Yen ahead of Wednesday’s Federal Reserve’s monetary policy announcement. This sell-off was driven by a combination of lower yields and weaker economic data. New home sales which were expected to rebound in June declined for the second month in a row. With existing and new home sales falling, the overheated housing market could finally be cooling. Ten year Treasury yields also dropped 4.4% as the S&P 500 ended the day lower for the first time in 6 trading days.
It is widely believed that the July FOMC statement will remain virtually unchanged. From the

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FX: 10 Things to Watch this Week

July 26, 2021

FX: 10 Things to Watch this Week
Daily FX Market Roundup 07.26.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Taking a look at the economic calendar, it is set to be a busy week for the forex market. There’s a central bank rate decision, GDP, inflation and employment reports scheduled for release. A number of big tech companies have earnings reports and with U.S. stocks hitting a new record high on Monday, investors will be watching those results carefully as major disappointments could trigger widespread profit taking.
Here are the 10 most important things to watch this week:
1. US Federal Reserve monetary policy announcement
2. Big Tech Earnings
3. US Q2 Advance GDP
4. EZ Q2 Advance GDP
5. Canada GDP
6. Eurozone CPI
7. Australian CPI
8. Canadian CPI

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FX Outlook: What to Expect for EURO Post ECB

July 22, 2021

FX Outlook: What to Expect for EURO Post ECB
Daily FX Market Roundup 07.22.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The European Central Bank’s monetary policy announcement was the most important event this week but it did not inspire any breakout moves for EUR/USD. This of course is exactly what central bankers hoped for which is limited volatility when big announcements are made. For the ECB, their first major inflation change in two decades was announced earlier this month and today, the central bank made the change in forward guidance official. EUR/USD initially traded above 1.1830 but by the London close, it dropped below 1.1760 intraday. We talked about the possibility of EUR/USD rallying after the rate decision in yesterday’s note, but the

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Why EURO Could Rally on ECB Tomorrow

July 21, 2021

Why EURO Could Rally on ECB Tomorrow
Daily FX Market Roundup 07.21.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
On the eve of the European Central Bank’s monetary policy announcement, Euro dropped to a 3 month low versus the U.S. dollar. Everyone expects the ECB to maintain their dovishness especially after they tweaked their inflation target but the relatively minor declines in EUR/USD this month suggests that sellers may be exhausted. This poses a risk for anyone anticipating further losses in EUR/USD following the ECB announcement. The central bank has given traders plenty of time to price in dovishness and their decision to set a new inflation target two weeks before their policy decision was intended to mitigate volatility when the details are

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Turnaround Tuesday – Why Some Currencies Recovered & Others Didn’t

July 20, 2021

Turnaround Tuesday – Why Some Currencies Recovered & Others Didn’t
Daily FX Market Roundup 07.20.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Stocks bounced back sharply on Tuesday as the S&P 500 erased nearly of Monday’s losses. Investors were relieved that Treasury yields stopped falling but beyond that, there was no specific news or catalyst. The COVID-19 delta variant is a big worry but as long as hospitalizations and serious complications are limited in countries with high vaccination rates, investors are buying the dips. That could change quickly but for now, medical experts and government leaders continue to believe that more widespread vaccination is the solution to slowing the spread of the delta variant.
With that said, most of the major

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How Did Euro Escape Losses as Stocks Tumbled?

July 19, 2021

How Did Euro Escape Losses as Stocks Tumbled?
Daily FX Market Roundup 07.19.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The sharp sell-off in U.S. stocks on Monday drove currencies sharply lower. While monetary policy is an important long term driver of currency flows, risk appetite has the most significant short-term influence on currency movements. Sentiment is king because when investors are nervous nothing else matters. We saw that today with the Yen and Swiss crosses tumbling on the back of the steepest decline in stocks since October.
Investors are nervous about the Delta coronavirus variant, rising prices and how taper actions of some central banks could impact the markets. Over the weekend, new restrictions were imposed across Asia as

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Dollar Snaps Back Ahead of Retail Sales

July 15, 2021

Dollar Snaps Back Ahead of Retail Sales
Daily FX Market Roundup 07.15.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
For the past few weeks, the U.S. dollar has oftentimes moved in a completely opposite direction from Treasury yields. That trend continued on Thursday as the greenback shrugged off losses in 10 year rates to trade higher against all of the major currencies. Federal Reserve Chairman Powell may not be as eager to normalize monetary policy as other central banks but U.S. data could force his hand. According to the latest report, jobless claims fell to a new post-pandemic low of 360K. Manufacturing activity in the Philadelphia region slowed but the Empire state index hit a record high. June retail sales numbers are due for release tomorrow

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USD Dollar Drops but Why Did NZD Rally and Not CAD?

July 14, 2021

USD Dollar Drops but Why Did NZD Rally and Not CAD?
Daily FX Market Roundup 07.14.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Central banks are taking bigger leaps to normalize monetary policy and investors are wondering If the Federal Reserve is next. On Wednesday, the Reserve Bank of New Zealand shocked investors by suddenly halting asset purchases. Although hawkishness was widely anticipated with a number of local banks forecasting a November rate hike, most expected the RBNZ to taper not cease asset purchases. But “more persistent consumer price inflation pressure,” that is “expected to build over time due to rising domestic capacity pressures and growing labor shortages,” prompted more aggressive action from the central bank. Unlike other

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Forex Preview: Powell Testimony, Rate Decisions and Data

July 13, 2021

Forex Preview: Powell Testimony, Rate Decisions and Data
Daily FX Market Roundup 07.13.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The U.S. dollar traded sharply higher on Tuesday against all of the major currencies on the back of red hot consumer price growth. CPI rose 0.9% in the month of June, up from 0.6% in May and against a 0.5% forecast. On an annualized basis, consumer price inflation jumped 5.4%, the largest increase in 12 years. Core prices rose 4.5%, the fastest rate since 1991. While everyone expected price pressures to increase, today’s report illustrates how significant the problem has become. Not only are prices rising sharply but the increases are more widespread which means prices can remain high for longer. This is particularly

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My Favorite Currency This Week

July 12, 2021

My Favorite Currency This Week
Daily FX Market Roundup 07.12.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
This is a busy week for the financial markets. There are 3 central bank monetary policy announcements along with inflation, employment and consumer spending numbers scheduled for release from all corners of the globe. Federal Reserve Chairman Jerome Powell will also deliver his semi-annual testimony on the economy and monetary policy. With these big event risks on the calendar, there are no shortage of market moving opportunities. The action heats up tonight with the release of Chinese trade data and U.S. consumer prices. Nothing was missed on Monday as there were no major economic reports released.
Still the S&P 500 and Nasdaq climbed to new all

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What Drove USDJPY Below 110

July 8, 2021

What Drove USDJPY Below 110
Daily FX Market Roundup 07.07.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Ask anyone and they will agree that economic activity in the U.S. is picking up with businesses enjoying a much needed post pandemic recovery. The airports were packed when I traveled to and from Hawaii last week with restaurants booked far in advance. The Federal Reserve recognizes this resurgence in demand and based on the last central bank meeting minutes, a growing number of policymakers think asset purchases need to be reduced sooner than anticipated.
Yet USD/JPY dropped below 110 as U.S. stocks and Treasury yields declined because incoming data suggests that the recovery may be weaker than feared and when extra unemployment benefits expire in

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FOMC Minutes Highlight FX Policy Divergences

July 7, 2021

FOMC Minutes Highlight FX Policy Divergences
Daily FX Market Roundup 07.07.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The June FOMC minutes confirms that the Federal Reserve is edging closer to tapering asset purchases. According to today’s release, “various participants mentioned that they expected the conditions for beginning to reduce the pace of asset purchases to be met somewhat earlier than they had anticipated at previous meetings.” The U.S. dollar edged slightly higher on the back of the release as the Fed minutes support renewed greenback demand. U.S. policymakers are growing more comfortable with the idea of reducing asset purchases and an announcement could be made as quickly as the fourth quarter of 2021.
There’s little question that

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What Drop in Yields Ahead of Fed Minutes Means for Dollar

July 6, 2021

What Drop in Yields Ahead of Fed Minutes Means for Dollar
Daily FX Market Roundup 07.06.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The June FOMC meeting minutes is one of this week’s key event risks. The Federal Reserve grew less dovish last month by opening the door to the discussion of reducing asset purchases but since then disappointing U.S. data has investors questioning the timing of taper and ruling out an interest rate hike. Although Friday’s non-farm payrolls report showed the strongest job growth in 10 months, average hourly earnings and the jobless rate fell short of expectations. Today, the Institute of Supply Management reported a slowdown in service sector growth with their non-manufacturing index falling from 64 to 60.1. This was not

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USDJPY at 15 Month Highs & What to Expect from BoE

June 23, 2021

USDJPY at 15 Month Highs & What to Expect from BoE
Daily FX Market Roundup 06.23.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The U.S. dollar rose to its strongest level against the Japanese Yen in 15 months. Equities and currencies benefitted from Federal Reserve Chairman Powell’s reassurance that 1970s rapid rise in inflation is “very, very unlikely.” With the central bank’s confidence, investors drove up risk assets. Japanese Yen crosses performed the best with USD/JPY rising above 111 intraday. A stronger appetite for risk is one of the main reasons why demand for sterling and the commodities outpaced the dollar and the greenback’s gains were limited to the yen, Swiss Franc and euro. Given the recent softness in U.S. data, the Fed wants a

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FX Risk Aversion Deepens – What to Expect Next Week

June 18, 2021

FX Risk Aversion Deepens – What to Expect Next Week
Daily FX Market Roundup 06.18.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Currencies and equities extended their sell-off on Friday as risk aversion in the financial markets deepened. The Dow Jones Industrial Average over 400 points for the tenth straight day. Today’s decline was the biggest one day slide since February. The market heard the Federal Reserve loud and clear this week and are preparing for an inevitable reduction in asset purchases. Stocks are selling off because less central bank bond buying is generally negative for bond prices and positive for yields. A rise in yields leads to a rise in borrowing costs which can hit the bottom line for U.S. businesses. Interestingly enough, despite

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USD/JPY Pulls Back but Dollar Bulls in Control

June 17, 2021

USD/JPY Pulls Back but Dollar Bulls in Control
Daily FX Market Roundup 06.17.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Investors continued to buy U.S. dollars on Thursday despite weaker than expected Philadelphia Fed manufacturing index and jobless claims. Market participants are convinced that these disappointments will fade as the economy improves because the Federal Reserve’s upgraded economic projections gave everyone the confidence that the recovery will gain traction. With that said, USD/JPY fell from its highs after U.S. data. Other major currencies quietly trickled lower versus the greenback. The dollar maintained its bid because the Federal Reserve gave bulls everything they hoped for on Wednesday. They admitted that it may be time to

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Are the Dollar’s Post FOMC Gains Sustainable?

June 16, 2021

Are the Dollar’s Post FOMC Gains Sustainable?
Daily FX Market Roundup 06.16.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Investors drove the U.S. dollar sharply higher on Wednesday after the Federal Reserve signaled an earlier interest rate hike. Thirteen out of eighteen policymakers now see as many as two rate hikes by the end of 2023. In March, only seven members saw a move in 2023 with the majority looking for rates to remain unchanged into 2024. This dramatic shift in expectations was motivated by stronger than expected growth and inflation. The improvements in the U.S. economy have clearly convinced policymakers that “inflation could turn out to be higher and more persistent than we expect,” according to Federal Reserve Chairman Jerome Powell.

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FOMC Preview – Taper Talk and Impact on Dollar

June 15, 2021

FOMC Preview – Taper Talk and Impact on Dollar
Daily FX Market Roundup 06.15.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The outcome of Wednesday’s Federal Reserve monetary policy announcement could set the stage for how the U.S. dollar and currencies trade over the next month. With that in mind, the greenback maintained its bid ahead of rate decision. USD/JPY hovered near 2 month highs above 110 as EUR/USD held below 1.2150. Today’s U.S. economic reports were supposed to have a big impact on trader positioning into FOMC and the fact that investors ignored weaker reports is an important sign of how sentiment is skewed into the event. They continue to look past weak data in favor of rising prices and a stronger recovery.
Retail sales fell -1.3% in

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Bond Yields Soar but the Dollar Struggles to Follow

June 14, 2021

Bond Yields Soar but the Dollar Struggles to Follow
Daily FX Market Roundup 06.14.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Treasury yields traded sharply higher on Monday ahead of the Federal Reserve’s monetary policy announcement. The 2.7 percent rally in ten year yields and decline in the Dow Jones Industrial Average reflects the market’s belief that the central bank will begin discussions about reducing purchases this week. Typically, taper talk coincides with broad based dollar gains but the greenback was unchanged against sterling and lost value against euro, Canadian, Australian and New Zealand dollars. USD/JPY broke through 110 and USD/CHF knocked against 90 cents but the lack of consistency in the dollar’s overall performance suggests that

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Dollar Soars as Investors Cue into FOMC

June 11, 2021

Dollar Soars as Investors Cue into FOMC
Daily FX Market Roundup 06.11.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The U.S. dollar ended the week higher against all of the major currencies with today’s rally a delayed reaction to Thursday’s inflation report. Stronger than expected consumer confidence also helped to boost demand for U.S. dollars ahead of next week’s Federal Reserve monetary policy announcement. U.S. policymakers have insisted that the increase in inflation is transitory with disappointing consumer spending and labor market numbers discouraging taper talk next week.
However many central banks in weaker recovery positions have begun the process of policy normalization by reducing asset purchases so there’s growing belief that it is high

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EURO Unfazed by US CPI and ECB Steadiness

June 10, 2021

EURO Unfazed by US CPI and ECB Steadiness
Daily FX Market Roundup 06.10.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
There were no fireworks for the U.S. dollar today despite the biggest jump in U.S. inflation since August 2008. Normally, the greenback would spike on a sharp rise in consumer prices but it ended the day lower against most major currencies. A hot CPI report was widely anticipated but also consistently downplayed by Federal Reserve officials. Still the Fed meets next week and today’s report escalates the growing concern about the central bank’s complacency and the danger that inflation will not fall as readily as they anticipate.
While the 5% year over year increase in prices will force the Fed to upgrade their inflation projections

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Big Day Ahead of EURO – What to Expect from ECB

June 9, 2021

Big Day Ahead of EURO – What to Expect from ECB
Daily FX Market Roundup 06.09.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Euro has a big day ahead with a monetary policy announcement and U.S. inflation report on the calendar. Between these two events, the European Central Bank meeting is generally more market moving but the U.S. dollar shot higher at the equity open, recovering earlier losses ahead of CPI release. There’s little doubt that inflation is on the rise but the Federal Reserve has made it very clear that they see this increase as temporary. With retail sales and non-farm payrolls falling short of expectations, effectively justifying the central bank’s caution, a strong inflation report won’t increase the chance of taper talk in June.

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Dollar Rally Fizzles as NFP Disappointment

June 4, 2021

Dollar Rally Fizzles as NFP Disappointment
Daily FX Market Roundup 06.04.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The U.S. jobs report was a major disappointment and the dollar fell sharply against all of the major currencies in response as 10 year Treasury yields slipped nearly 4%. Turns out, the decline in consumer confidence, lower service and manufacturing ISM employment measures were the most telling leading indicators for non-farm payrolls. Despite widespread re-openings, job creation did not live up to lofty expectations. Payrolls rose by only 559K against expectations for 671K increase. This is a solid number by any measure but investors can say goodbye to taper talk in June. With two subpar job reports, the Federal Reserve who meets

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Dollar Soars Ahead of Payrolls but Can the Rally Last?

June 3, 2021

Dollar Soars Ahead of Payrolls but Can the Rally Last?
Daily FX Market Roundup 06.03.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The U.S. dollar traded sharply higher against all of the major currencies on Thursday with USD/JPY closing above 110 for the first time since April which is a sign that investors are positioning for a strong report. Last month’s jobs number was abysmal with U.S. companies adding only 266K new workers. Economists are looking for job growth to more than double in May but the problem is that other U.S. indicators favor a softer report.
Although weekly jobless claims fell below 400K for the first time since the pandemic began and ADP reported a very strong increase in private payrolls, continuing claims ticked up and the

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