Forex news for trading on June 1, 2017.
- A hat trick on the major indices today. S&P, Nasdaq and Dow close at record levels
- President Trump: US to withdrawal from Paris climate accord (its official)
- US crude oil futures settle at $48.36
- Forex technical education: Do you see what I see in the USDJPY 5M chart?
- June forex seasonals: Australian dollar shines in June
- The Atlanta Fed GDPNow estimate rises to 4.0% from 3.8% for 2Q
- Fired FBI director Comey will testify in Senate on June 8
- Geopolitics: US, China like to propose that UN security council blacklist more N Koreans
- European stocks end mostly higher on the day
- Weekly US oil inventories -6428K vs -3000K expected
- Fed's Powell: It's tough to see balance sheet falling below $2.5 trillion
- US construction spending -1.4% vs 0.5% est
- May ISM manufacturing index 54.9 vs 54.8 expected
- Two-out-of-three ain't bad: US auto sales numbers mixed
- Markit final May US manufacturing PMI 52.7 vs 52.5 expected
- Initial jobless claims 248K vs 238K expected
- May ADP employment +253K vs +180K expected
- The strongest and weakest currencies as NA traders enter for the day
A snapshot of other markets shows:
- Stocks close at record levels for the S&P (up 0.76%), Nasdaq (up 0.78%), Dow up 0.65%)
- US bond yields up but off high yields. 2 year 1.297%, up 1.6 bp. 5 year 1.7648%, up 1.3 bp. 10 year 2.214%, up 1.2 bp. 30 year 2.867%, unchanged
- Spot gold $1266.41, down -$2.45 or -0.20%
- WTI crude oil $48.08, down -$0.24 or 0.48%
It is the day before the Employment report and there were three employment statistics released today.
- ADP private sector employment increased by 253K vs an estimate of 180K. The ADP is supposed to mirror the private payroll data. That is expected to rise by 175K. The correlation is not always that great but 253K (or 200K or 180K or 160K and maybe even 120K) is enough to have the market think the Fed will tighten on June 14th.
- The initial jobless claims came at 248K. This was higher than the 238K estimate (and 235K last week) but it is not a change in trend
- The ISM Manufacturing employment component, showed the employment component rising to 53.5 from 52.0.
As a result, all systems are go for a decent number tomorrow, the Fed to tighten and that helped to support the USD in trading today.
A summary of other lesser economic data today shows:
- US construction spending fell by -1.4% vs +0.5% but the prior month was revised to +1.1% from -0.2% (really? Can't they get closer?) It was weaker but the public sector spending is the drag YoY, but the private sector has healthy gains from a year ago.
- US weekly oil inventories saw a larger than expected draw down. That sent oil initially to the upside, but resistance against the 100 hour MA at $49.22 stalled the rally technically (the high reached $49.17). The price is ending the day near lows levels at $48/bbl.
- Trump officially announced the withdrawal of the US from the Paris climate control. The deal maker considered the deal a burden and unfair to the US and said he would welcome renegotiation with the other 190+ countries. The world thinks differently and have said the terms of the accord are not negotiable. Trump lost a friend in Elon Musk and other business leaders. Nevertheless, the stocks were buoyed by his speech/announcement as jobs will be created and America will be first.
- Fed's Powell comment that he sees a balance sheet fall to below 2.5 trillion as being tough. The comment is in reaction to a Fed report showing a balance sheet reduction from the current 4.5T to 2.5T by 2022. He does favor a tightening but wants to see inflation at the target 2% too.
As far as individual currencies today:
- The EURUSD fell to the lows of the day after the ADP report but found willing support buyers against the 200 hour MA and 38.2% retracement of the move up from the Tuesday low on the hourly chart at the 1.1200 area. The low reached 1.12015. The high correction price stalled against the swing high from last Friday at 1.1233. Those levels are the close support and close resistance into the new day.
- The USDJPY tracked the 100 bar MA on the 5 minute chart but stalled toward the end of the trading day (see post here). The pair moved back above the 100 hour MA at 111.05 and the 111.29 respectively giving the pair a more bullish bias going into the new trading day. The 61.8% of the down from the May 24th high comes in at 111.494 and that level stalled the rally. A move above should solicit more buying with 111.73, 112.12 and the 100 day MA at 112.26 upside targets. A move back below the 200 and 100 hour MA (at 111.05) will have selling intensify.
- The GBPUSD tested what life was like above the 200 hour MA and the 50% retracement at 1.2900 to 1.2907. The high made it to 1.2914, but quickly rejected the break. Technically, the 1.2900 -07 remains resistance above. ON a move lower the 1.2845 is where the 100 hour MA is located. The price moved below that level in trading today, but could not close an hourly below the level.
- The USDCAD waffled back and forth in trading for most of the day. However, after oil prices moved higher after the inventory data, the price tested the 200 and 100 hour MAs below (at 1.3472). Those levels held support, and by the end of the day, the price was up testing the 50% of the move down from the May 18 swing high at 1.3527. A move above that level in the new day should see more buying with 1.3539 and 1.3550 (100 bar MA on 4-hour chart) as the next targets. The buyers remain in control above the 200 hour MA (at 1.3472). The question is, "Is there more upside momentum?". It will probably need more oil downside.
- The AUDUSD was the biggest moved in trading today. The pair got its start in the Asian session after stronger retail sales, were offset by weaker China data. Technically the price cracked back below the 0.7400 level in the NY afternoon session (it is the 61.8% of the move up from the May low as well as a natural technical level), and that makes that level a risk level on the upside for the pair. If it is to go higher, get above 0.7400 again.
US employment tomorrow. Canada will not be releasing employment until next Friday. UK construction PMI will also be eyed.
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Below is the end of day snapshot of the winner and lowers in the currency market today (major currencies). The USD is the strongest. The AUD is the weakest.
