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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

Why EURO Could Rally on ECB Tomorrow

3 days ago

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

4 days ago

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?

5 days ago

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

9 days ago

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?

10 days ago

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

11 days ago

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

12 days ago

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

16 days ago

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

17 days ago

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

18 days ago

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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FX Breakouts or Fake outs? It Rests on NFPs

June 2, 2021

FX Breakouts or Fake outs? It All Rests on NFPs
Daily FX Market Roundup 06.02.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
This a big week for currencies but so far, we’ve seen nothing but consolidation. In today’s trade, the greenback strengthened against the New Zealand dollar and Swiss Franc, weakened versus sterling and the Canadian dollar and was unchanged against euro and the Japanese Yen.
The Federal Reserve’s Beige Book report confirmed what investors already knew – which is that the economy grew at a faster pace in April and May. There was little response to this report because the main focus is non-farm payrolls on Friday. The economy is improving but job growth slowed significantly in April. If hiring fails to pick up in May, currencies

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Central Banks Turn Hawkish. Will the Fed Trail Behind?

May 27, 2021

Central Banks Turn Hawkish. Will the Fed Trail Behind?
Daily FX Market Roundup 05.27.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
After weeks of tier one economic reports from all corners of the world, the lack of market moving data outside of the Reserve Bank of New Zealand’s rate decision meant the possibility of quiet consolidative trade. However that was the complete opposite of what we saw this week as the central banks of New Zealand and the U.K. dropped hints of tightening.
Sterling soared today on the back of Bank of England member Vlieghe’s comment that rates could rise as soon as the first half of next year if the job market recovers faster than expected. This was followed almost immediately by Prime Minister Johnson’s comment that there is

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Trading the RBNZ Rate Decision

May 25, 2021

Trading the RBNZ Rate Decision
Daily FX Market Roundup 05.25.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Tonight’s Reserve Bank of New Zealand monetary policy announcement is one of this week’s most important events. Next to the Bank of Canada who tapered asset purchases last month, the RBNZ is one of two central banks that could reduce stimulus this year. The housing market is on fire, commodity prices are on the rise, consumer spending rose more than expected and the unemployment rate dropped to 4.7% in the March quarter, well below the central bank’s 5% forecast.
Earlier this month, the central bank tightened their loan-to-value ratio to require all new investor loans to be less than 60% of the property value and owner-occupied loans to be

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Unconvincing Global Data Drives Investors Back into Dollar

May 21, 2021

Unconvincing Global Data Drives Investors Back into Dollar
Daily FX Market Roundup 05.21.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The U.S. dollar staged an end of week rally following unconvincing global data. On Thursday we had suggested that if upcoming economic reports reinforced the prospects of a stronger global recovery, money would flow out of dollars into those currencies. Unfortunately the PMI reports from the Eurozone, U.K. and Australia were mixed, giving investors little confidence that their high beta currencies deserved to be trading at lofty levels. Investors could have sold U.S. dollars for a number of reasons from lower Treasury yields to the rally in stocks and weaker existing home sales, but when they compared the consistent

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Will Friday Data Disappoint FX Traders?

May 20, 2021

Will Friday Data Disappoint FX Traders?
Daily FX Market Roundup 05.20.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Friday will be a busy day for forex traders with PMIs and retail sales reports scheduled for release from all corners of the world. Currencies are trading strongly ahead of these reports with investors looking forward to good data. The best performing currencies were the Australian and New Zealand dollars. Although Australia reported job losses instead of job gains in the month of April like economists anticipated, traders were encouraged by a lower unemployment rate and full time job growth. Retail sales and PMI numbers are due from Australia tonight and a further pickup in economic activity is likely. Treasury Secretary Kennedy

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FX: All About Inflation Tomorrow

May 18, 2021

FX: All About Inflation Tomorrow
Daily FX Market Roundup 05.18.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Weaker U.S. data is finally catching up to the dollar. The greenback traded lower against all of the major currencies on Tuesday following softer housing data. Building permits grew 0.3% in the month of April, down from 1.7% in March while housing starts dropped -9.5%. While housing demand is still very strong, the cost of raw materials like lumber have skyrocketed in recent months – in the 12 months to April, lumber prices rose more than 89%. Between weak job growth, the decline in spending, slowdown in manufacturing activity in the NY region and now housing, it was only a matter of time before the dollar sold off across the board as these

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FX: Will the Global Recovery Shine This Week?

May 17, 2021

FX: Will the Global Recovery Shine This Week?
Daily FX Market Roundup 05.17.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
For the past few weeks investors have been focused on the U.S. recovery and its impact on the U.S. dollar. They were sorely disappointed when non-farm payrolls and retail sales came out well under expectations, but so far the dollar’s losses have been limited. Even stocks which declined on Monday is off last week’s lows. This nonchalant attitude stems from the market’s confidence in the global recovery. While some Asia countries tightened coronavirus restrictions, European nations are easing them. The UK kicked off the week with less restrictions on travel and indoor dining. In the euro area, Spain ended their curfew last Sunday.

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FX Traders Unfazed by Weak US Data as Recovery Prospects Grow

May 14, 2021

FX Traders Unfazed by Weak US Data as Recovery Prospects Grow
Daily FX Market Roundup 05.14.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Forex traders were unfazed by weak data on Friday with currencies and equities extending their recoveries. Consumer spending stagnated in the month of April after soaring in March. Excluding the costs of autos, which have risen significantly in recent months, spending experienced an unexpected decline of -0.8% against 0.7% forecast. Industrial production growth also slowed and the University of Michigan’s consumer sentiment index plunged to 82.8 from 88.3. Economists were looking for sentiment to improve on the back of the record breaking moves in stocks.
While this month’s economic reports show the U.S. recovery

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Why US Retail Sales will Rock the Markets Friday

May 13, 2021

Why US Retail Sales will Rock the Markets Friday
Daily FX Market Roundup 05.14.2021
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Stocks rebounded sharply on Friday but the muted price action in currencies suggest that FX traders are not convinced the selling is over. The U.S. dollar gave back a small portion of yesterday’s gains against the Japanese Yen, Swiss Franc and New Zealand dollar, but was virtually unchanged versus euro and Aussie. Sterling was the only currency to extend its losses versus the greenback on profit taking after the pair hit 2 month highs on Monday.
It was a rollercoaster ride in the financial markets this week and volatility is not expected to subside tomorrow with the April U.S. retail sales report scheduled for release. Between

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