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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

Panic Selling Could Drive These Currencies to Fresh Lows

2 days ago

Panic Selling Could Drive These Currencies to Fresh Lows
Daily FX Market Roundup Feb 25, 2020
Panic selling continued to hit the financial markets on Tuesday as investors head for the exit. The Dow Jones Industrial Average lost another 800 points which is approximately 3%. Germany confirmed another case of coronavirus, this time from a patient who visited Milan while Switzerland reported its first case also from Italy. Europe’s open borders is becoming a serious problem for virus containment and according to the US’ Center of Disease Control, a pandemic is inevitable. They expect the virus to spread in the US and warned that it could take 12 to 18 months before a vaccine is developed, though human trials could begin as quickly as 6 weeks. Markets are selling off because investors

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Market Crash Hits FX. Here’s One Way to Stop the Selloff

3 days ago

Market Crash Hits FX. Here’s One Way to Stop the Selloff
Daily FX Market Roundup Feb 24, 2020
Fears of a global pandemic sent equities and currencies tumbling lower. On an intraday basis, the Dow Jones Industrial Average fell more than 1,000 points erasing all of this year’s gains. Today’s move was the single biggest one day decline on a point basis for the Dow since February 2018. For currencies, USD/JPY was hit the hardest and its decline dragged all of the Yen crosses lower. Japanese markets were closed overnight but when they open this evening, USD/JPY, which dropped below 111 should move closer to 110. While US stocks fell 6 out of the last 7 trading days, today was the first meaningful move. In theory such a big move should lead to more panic selling but gap opens are more

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Week Ahead – Will Dollar Extend its Might?

13 days ago

Week Ahead – Will Dollar Extend its Might?
Daily FX Market Roundup Feb 14, 2020
Happy Valentines Day! We want to take this opportunity to express our love to our readers ¬– you keep this site going!
February has been a great month for the US dollar and US stocks. The Dow Jones Industrial Average climbed to record highs and even as stocks pulled back towards the end of the week, the declines were modest given recent gains. Most importantly we have not seen days of back to back triple digit declines which would be the first sign of sustainable risk aversion. The coronavirus makes central bankers, investors, businesses and every day citizens nervous but investors have been able to look past the virus’ impact.
The US dollar is king because coronavirus helps the greenback – it shines a

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How Far Can EURO Fall?

14 days ago

How Far Can EURO Fall?
Daily FX Market Roundup Feb 13, 2020
Everyone wants to know how much further the euro can fall. Not only has it been in a downtrend since the beginning of the month, but it lost value 8 out of the last 9 trading days and on the one day that it rallied, the increase was modest at best. Investors have beaten the currency down to its lowest level since April 2017. In order to gage how much further the pair can fall, we have to understand why its losing value as quickly as we’ve seen.
6 Reasons for EURO’s decline
We can identify at least six reasons for EUR/USD’s decline and they mostly have to do with divergence between the EZ and US economies
1. ECB defends the need for low rates and teases the possibility of more stimulus. Whereas the Fed is comfortable

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FX: Powell Downplays Virus Impact, NZ Rate Decision Next

16 days ago

FX: Powell Downplays Virus Impact, NZ Rate Decision Next
Daily FX Market Roundup Feb 11, 2020
Most of the major currencies rebounded against the US dollar on Tuesday thanks in part to an earlier pullback in Treasury yields and new record highs for US equities. Although stocks came off its highs to end the day unchanged, currencies held onto their gains. Federal Reserve Chairman Jerome Powell’s semi-annual testimony on the economy and monetary policy is this week’s biggest event. Judging from the reaction in the dollar and the Dow, investors liked what he had to say. Powell feels that the economy is in a good place, fundamentals supporting household spending is strong and while the coronavirus driven slowdown in China is likely to have some effects on the US, it is too early to say

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Euro Hits 4 Month Lows, Six Straight Days of Losses

17 days ago

Euro Hits 4 Month Lows, Six Straight Days of Losses
Daily FX Market Roundup Feb 10, 2020
Investors have been selling euros since the beginning of the month. Granted there’s been only six days of trading, the consistency is worrying. The sell-off in EUR/USD took the pair to its weakest level in 4 months but in reality the September low is also a 2.5 year low. The problem for the euro is that the outlook is beginning to worsen. Last week’s German industrial production and retail sales numbers were ugly and those numbers don’t even include the impact of coronavirus. This week, we’ll get the Eurozone data along with German and EZ fourth quarter GDP. None of these numbers are expected to be good and if that proves to be the case, EUR/USD could easily slip below the September low of

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Making Sense of USD Rally, Dow Selloff Post NFP

20 days ago

Making Sense of USD Rally, Dow Selloff Post NFP
Daily FX Market Roundup Feb 7, 2020
Many investors are scratching their heads about why US stocks fell sharply after this morning’s non-farm payrolls report. Some media outlets blame the move on concerns about China’s economy and profit taking after a strong week. However a deeper look into the details of the jobs report quickly reveals underlying weakness. The unemployment rate was expected to stay at 3.5% but it rose to 3.6% and most worryingly, wage growth missed expectations. With the Chinese economy slowing, this is the first sign of similar trouble ahead for the US economy. Federal Reserve officials have expressed little concern about the impact of coronavirus but fear can be a powerful driver of consumer and business demand.

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FX: How to Trade January Non-Farm Payrolls

21 days ago

FX: How to Trade January Non-Farm Payrolls
Daily FX Market Roundup Feb 6, 2020
The next 24 hours will be an exceptionally busy one for the financial markets. The latest trade numbers are due from China along with US and Canadian employment reports. The greenback extended its gains on Thursday against all of major currencies, touching 110 versus the Japanese Yen in the process. The Dow Jones Industrial Average climbed to fresh record highs as equities rose for the fourth consecutive day. Strong earnings combined with an announcement from China that they will reduce tariffs on a $75 billion worth of US imports allowed animal spirits to seize US assets. Investors expect non-farm payrolls to be strong as Federal Reserve Presidents downplay coronavirus impact. Earlier this week, San

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US Dollar – What Makes it the Strongest of Them All

22 days ago

US Dollar – What Makes it the Strongest of Them All
Daily FX Market Roundup Feb 5, 2020
The Dow Jones Industrial Averages is heading back to record highs as the World Health Organization confirmed 3,100 new cases in China over the last 24 hours. There are also two cruise ships quarantined in Asia that is stranding more than 5,000 passengers. One would assume reports like these would drive equities and currencies lower but overnight, a Chinese media outlet reported that a research team had found an effective drug to treat people with the virus. Although the World Health Organization came out within hours to refute the existence of effective therapeutics, investors shrugged their warning off in favor of optimism. Eventually the virus will peak and with the world racing to develop a

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Its Central Banks vs. Coronavirus

23 days ago

Its Central Banks vs. Coronavirus
Daily FX Market Roundup Feb 4, 2020
Currencies and equities traded sharply higher today with the Dow soaring more than 400 points intraday. Based on this rally and the strong performance in USD/JPY, it would be easy to assume that coronavirus fears are easing and investors are moving on. However, we have not even seen the beginning of the impact of the virus on economic data and the only thing masking the pain is Chinese stimulus. On Monday, Chinese banks were urged to provide liquidity, the government sent out guidances to limit short selling, cut interest rates by 10bp, and injected $175 billion into the banking system. Overnight, the central bank provided even more liquidity through reverse repos and confirmed that the “national team” of

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RBA – Dovish Hold or Proactive Cut?

24 days ago

RBA – Dovish Hold or Proactive Cut?
Daily FX Market Roundup Feb 3, 2020
January has proven to be a crushing month for risk. Currencies and equities sold off hard as trade war fears gave way to concerns of a global coronavirus pandemic. China, the world’s manufacturing floor is basically shut down and countries across the globe are closing down borders to prevent the virus from spreading. Even if China manages to get the virus under control and cases peak, it will be sometime before business returns to normal. The coronavirus could become the death knell for growth this year, especially in the Asia Pacific region. The world has become reliant on China for sourcing and demand which is a big reason why we do not believe that Monday’s recovery in risk and relief rally in currencies

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Is Bank of England Ready for a Rate Cut?

29 days ago

Is Bank of England Ready for a Rate Cut?
Daily FX Market Roundup 01.29.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The Federal Reserve’s monetary policy announcement proved to be marginally negative for the dollar. The central bank raised their IOER rate but described this as a small technical adjustment. Chairman Powell highlighted the ongoing strength in the economy but also expressed concerns about uncertainties including the virus. Most importantly the central bank made it clear they are not pleased with low inflation and want prices to move towards their goal, which is not a ceiling. On liquidity and repos, he admitted that repo may play a role as a backstop to support rate control but the aim is liquidity and they are prepared to adjust the

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3 Questions for the Fed

January 28, 2020

3 Questions for the Fed
Daily FX Market Roundup 01.28.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
After experiencing its largest one day decline in months, stocks rebounded on Tuesday. While some investors may hope that the worse is over, it is important to realize that the full effects of the coronavirus has not been seen. More cases are being reported as a growing number of countries restrict travel from China. The world is scrambling to contain the coronavirus and individuals are doing their own part through limited self-isolation and minimizing exposure to big crowds. This is true throughout Asia but slowly people in other parts of the world are following suit. The fear of catching the virus is still very real which is why risk aversion could

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FX Kicks Off with Big Losses, Fear Trade to Spread

January 27, 2020

FX Kicks Off with Big Losses, Fear Trade to Spread
Daily FX Market Roundup 01.27.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Between the Federal Reserve and Bank of England’s monetary policy announcements, investors had been bracing for big week in the financial markets. However nothing matters more right now than the Wuhan virus. Currencies and equities sold off hard as investors worry about the mounting deaths in China, growing cases abroad and the impact on the Chinese economy. Here in the US, travel stocks have been hit particularly hard but few asset classes have been spared as investors liquidate in fear of more losses. Panic and fear are powerful drivers of market flows and typically when the sell-off begins it can be faster and deeper than most

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FX Fear Trade Gains Traction

January 23, 2020

FX Fear Trade Gains Traction
Daily FX Market Roundup 01.23.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Currencies sold off sharply today as the coronavirus virus spreads to new countries. China may be aggressively trying to contain the virus but as we warned in yesterday’s note, the respite should be brief as more cases will be reported before it all peaks. The direct impact on China and neighboring economies is a key concern but in an overbought market where record highs were made on a near daily basis, a serious disease like this one is bound to have a significant impact even if ground zero is far from US borders. Fear is a powerful driver of market flows and in many cases can lead to quick and aggressive corrections. The Japanese Yen has been the

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Will ECB Spark Big FX Moves Like BoC?

January 22, 2020

Will the ECB Spark Big FX Moves Like BoC?
Daily FX Market Roundup 01.22.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
After Tuesday’s broad based decline in equities, currencies and Treasury yields many investors believed that further losses were likely. Increased risk aversion is a serious possibility but today there was a semblance of calm in the financial markets. China’s coronavirus is spreading but with the country’s transparency and their dramatic decision to cease all outbound travel from Wuhan, a move not taken during the SARS epidemic, investors are hopeful that the virus can be contained. Many Chinese have already canceled their travel plans and in Wuhan a city of 11 million people, it will be nearly impossible to leave. The number of infected

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Coronavirus FX Selloff, CAD Prime for Bank of Canada Breakout?

January 21, 2020

Coronavirus FX Selloff, CAD Prime for Bank of Canada Breakout?
Daily FX Market Roundup 01.21.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The most influential story for the financial markets today was reports that the first US case of coronavirus from China has been confirmed. This deadly virus from China is spreading across the globe creating concerns about the impact on travel and consumer spending. There’s no question that economic activity in Asia will be affected as we head into one of the busiest travel weeks in China. Often touted as the world’s biggest human migration, about 3 billion trips are expected this holiday season. Unfortunately many families could decide to stay home during this seven day holiday, which would directly impact the

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Great Week for Dollar, Euro Recovery Ahead?

January 17, 2020

Great Week for Dollar, Euro Recovery Ahead?
Daily FX Market Roundup 01.17.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The US dollar wraps up another good week with gains against most of the major currencies. The only exceptions were the Swiss Franc which climbed to its strongest level in 3 months and the Canadian dollar, which held onto its recent gains. Investors brushed off softer US inflation data in favor of stronger retail sales, manufacturing activity and pickup in housing starts. However stabilization in US yields and the record breaking moves in US stocks are the primary reasons why investors are piling into US dollars. In the week ahead, there’s very little to deter the greenback’s positive outlook as there are no major market moving economic

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Dollar Bulls Charge Ahead as Data Validates Rally

January 16, 2020

Dollar Bulls Charge Ahead as Data Validates Rally
Daily FX Market Roundup 01.16.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The Dow Jones Industrial Average climbed to fresh record highs while the US dollar rose to its strongest level in 8 months against the Japanese Yen on the back of stronger retail sales. After weeks of disappointing economic reports, investors wanted to see data validate the rallies so they jumped on the report when it released, driving equities and currencies higher. Is the US economy out of the woods? Certainly not, but given how the market shrugged off softer releases like non-farm payrolls and CPI, a strong report was bound to have a bigger impact on the greenback than a weak one. Despite slower wage growth, consumer spending

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Will 2020’s First NFP Report Help the Dollar?

January 9, 2020

Will 2020’s First NFP Report Help the Dollar?
Daily FX Market Roundup 01.09.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
It has been a good week so far for the US dollar and on the eve of the first employment report of the year, the greenback extended its gains against all of the major currencies. The rally was fueled by the record breaking moves in US stocks and encouraging words from Federal Reserve Presidents. Bullard for example sees a soft landing this year, Evans described the economy as being in a good place, Barkin is encouraged by the jobs report and pace of holiday spending while Kaplan sees 2-2.5% GDP growth in 2020 with possibly even stronger growth if the headwinds ease. The initial panic following Iran’s retaliation to the killing of a key

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First Full Week of FX Trade to Kick Off with a Bang

January 3, 2020

First Full Week of FX Trade to Kick Off with a Bang
Daily FX Market Roundup 01.03.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
As January kicks off, profit taking has been the primary trading theme in FX. For the second day in a row, all of the major currencies traded sharply lower on the back of renewed geopolitical tensions and softer economic data. According to the latest reports, manufacturing activity in the US contracted at its fastest pace in more than a decade. FOMC minutes confirmed that rates will stay low for long and unemployment rolls in Germany rose more than expected. Yet what made investors the most nervous was US-Iran relations and the possibility of a forceful revenge by Iran on the US after President Trump confirmed that a top

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Dollar and Euro’s Election Year Trading Behavior

January 2, 2020

Dollar and Euro’s Election Year Unique Trading Behavior
Daily FX Market Roundup 01.02.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
On this first official trading day of 2020, we want to take a look at the most important / influential event of the year – the US Presidential election. From rewriting the US/Canada/Mexico trade deals to imposing harsh tariffs on the US and other parts of the world, President Trump’s policies reshaped the global economy. While he can take credit for presiding over record breaking moves in US stocks, his policies also led to slower growth across the globe. Another 4 years of Trump and the US could have drastically different relationships with many countries. However that’s not our immediate concern because the Presidential

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FX: Most Important Themes of 2020

December 31, 2019

FX: Most Important Themes of 2020
Daily FX Market Roundup 12.31.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
On this last trading day of the year, we want to take a look at some of the most important themes of 2020.
For the forex market in particular, we see four primary drivers –
1. US-China Trade War – US and China trade relations will remain front and center. In early January, we expect the Phase 1 trade deal to be signed but the broader trade war may last past 2020. The key question is whether it will worsen or stabilize ahead of the November election. There’s no question that it will in a major issue for all Presidential candidates but more tariffs in 2020 would only restore risk aversion and risk sending stocks tumbling lower. One of President

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Year in Review: What Shaped FX in 2019

December 30, 2019

Year in Review: What Shaped FX in 2019
Daily FX Market Roundup 12.30.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
2019 has been a busy year for the financial markets. The biggest driving forces were trade war, global easing, Brexit and record breaking moves in US stocks. Hong Kong dissolved into political chaos and President Trump became the third President in the history of the United States to be impeached by the House. One would expect that these political developments would have made investors nervous and drive stocks lower but all of the major indices across the globe enjoyed gains. In the US, the Dow Jones Industrial Average rose more than 20%, the S&P 500 is up nearly 30%, the DAX is up 25%, FTSE is up more than 12%, the Nikkei gained 19% and

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Does New Year Mean New Breakouts in FX?

December 27, 2019

Does New Year Mean New Breakouts in FX?
Daily FX Market Roundup 12.27.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
In this last full trading week of 2019, the US dollar pulled back against all of the major currencies. It has actually been a rough month for the greenback, but the declines come after a strong November. In general, 2019 has been a good year for the dollar but it peaked at the end of September with losses accelerating in December. The New Zealand and Australian dollars performed particularly well this month, enjoying the strongest gains as both currencies hit 4 month highs. The Reserve Bank of Australia has been one of the most accommodative central banks but after 3 rounds of easing including a cut in October the Australian dollar finally

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Boxing Day FX Rally

December 26, 2019

Boxing Day Rally in FX
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

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Dollar Risks – Impeachment, Data, North Korea

December 23, 2019

Dollar Risks – Impeachment, Data, North Korea
Daily FX Market Roundup 12.23.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
First, I’d like to wish all of our readers a very happy holiday. It has been a genuine pleasure writing for you this year and I hope that you’ve enjoyed my commentary. We’ve got some exciting announcements in the coming year so please look out for our emails.
It should be no surprise that trading was quiet on Monday, which was the last full day of for the markets before the Christmas holidays. For anyone who hasn’t taken the next 2 weeks off, its half day for most traders on Tuesday with all markets closed on Wednesday. Although US markets reopen on Thursday, many European and Asian markets remain closed for Boxing Day. Less

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Stocks Hit Record Highs, Pushing USD Higher

December 20, 2019

Stocks Hit Record Highs, Pushing USD Higher
Daily FX Market Roundup 12.20.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
On the last full week of 2020 trading, US stocks hit record highs. This strong performance combined with better than expected data breathed new life into the US dollar on Friday. The greenback ended the day up against all of the major currencies except for the Australian dollar and sterling. However on a weekly basis, it is not nearly as strong, rising only versus the euro and sterling, falling against the Swiss Franc, Australian and New Zealand dollars and holding steady against other currencies.
Personal incomes grew more than expected, the personal consumption component of Q3 GDP was revised higher along with the University of

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US Dollar Pulls Back on Softer Data, Pre-Holiday Flows

December 19, 2019

US Dollar Pulls Back on Softer Data, Pre-Holiday Flows
Daily FX Market Roundup 12.19.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The US dollar traded lower against all of the major currencies today following weaker than expected data. Existing home sales, declined more than anticipated in the month of November, manufacturing activity ground a halt while jobless claims ticked higher. Alone, none of these reports are exceptionally market moving but together ahead of the holidays they were enough to drive USD/JPY to a 5 day low. Reports that the US and China will sign the Phase 1 deal in January encouraged some who like a set timeline but discouraged others who hoped for more definitive action. At the end of the day, the Phase 1 deal has not been signed,

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Rate Decisions Ahead for FX

December 18, 2019

Rate Decisions Ahead for FX
Daily FX Market Roundup 12.18.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
In the next 24 hours, the economic calendar is jam packed with market moving data but whether or not currencies respond to these events remain to be seen. There will be 2 monetary policy announcements – one in Japan and another in the U.K. Employment numbers are also scheduled for release from Australia followed by retail sales data from the UK. US existing home sales and Philadelphia Fed index are also on the calendar but these reports should not have much impact on the greenback. Instead, the only currencies that could see big moves are AUD, GBP and NZD. On Wednesday, the US dollar traded higher against all of the major currencies except for the

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