Forex News for NY trading on September 1, 2016:
- US Auto sales for August come in weaker than expectations at 16.98 (est 17.2M)
- Forex technical analysis: Just charts (with a few comments on the chart)
- Goldman Sachs: The big picture is a big dollar boost
- Infograph: Trends in US Employment
- Oil is down 10.5% since last Friday's high
- Fed's Mester: Don't expect 200K new jobs every month
- US stocks off lows. Averages mixed.
- EURUSD looking toward next topside targets
- 7.2 earthquake hits off coast New Zealand
- Atlanta Fed GDPNow forecast dips to 3.2% in the latest release
- Fed's Mester: US economy has made 'significant strides'
- ECB's Nowotny: We live in a world with low rates, less inflation
- Forex technical analysis: AUDUSD failing? Moved above the 100 hour MA but stalls
- European stocks give up gains. End the day lower.
- Weak auto sales are a notable sub-plot today
- ISM data throws a monkey wrench in the dollar buying
- US dollar slumps after construction and manufacturing data
- US construction spending for July comes in at 0.0% vs. 0.5% estimate
- August ISM manufacturing index 49.4 vs 52.0 expected
- Markit final US PMI 52.0 vs 52.1 prior
- RBC Canada manufacturing PMI 51.1 vs 51.9 prior
- Forex technical analysis: GBPUSD keeping buyers in control
- Daily currency trading falls to $5.1 trillion from $5.4 trillion - BIS
- Risk-reward argues for buying the US dollar against EUR, GBP And JPY - RBS
- US Initial jobless claims 263K vs. 265K estimate
- US second quarter final non-farm productivity -0.6% vs -0.6% expected
- The strongest and weakest currencies as NA traders enter for the day
- Canada's Trudeau says recent relationship with China has become "distant and unfocused"
- US Challenger job cuts Aug yy -21.8% vs -57.1% prev
The NY session started with most of the fireworks focused on the GBP and related crosses. The UK PMI data was much stronger than expected and that sent everything with GBP attached to higher pound values.
Later when the US ISM data came out weaker than expectations (49.4 vs 52.0 estimate), the dollar started to weaken against all currency pairs. In addition, some cross pairs reversed as focus shifted from the GBP to the other pairs. So EURGBP rallied and GBPJPY reversed course. Construction spending was weaker than expectations at 0.0% vs +0.5% estimate but if you include the revisions which went from -0.6% to +0.9%, the combined levels were actually better than expectations. US Auto sales were also weaker at 16.98 Mln pace vs. 17.2 Mln estimate and 17.88 Mln last month.
How did the dollar do overall? Weak. weak. weak. The dollar was the weakest of all the major currency pairs - falling against each of the majors.
Here are some highlights:
- US stocks are ending the day unchanged/higher, with the Nasdaq up 0.27%, S&P is down -0.09%, the Dow is up +0.10%
- WTI is down -2.65%
- US 10 year bond yields are down about 2 BP to 1.5646$
In the major currency pairs, the EURUSD spent the day conveniently trading between the 100 and 200 day MAs. They come in at 1.1213 on the topside and 1.1121 on the downside. IN between is the 50% midpoint of the years trading range. With the NFP tomorrow, the market- if given the chance - will look to center between key levels and let the event decide. The price is between the extremes.
For the GBPUSD, it was encouraged by both the strength of the UK PM data and the weakness of the US ISM data. However technically, it ran out of steam near a topside trend line at 1.3328 (the high stalled at 1.3317) on the daily chart (connecting the high price from June 29 and July 15).
For the USDJPY the 103.50 is the midpoint of the two month trading range. Today, the pair squeezed above it, but failed after the weaker data out of the US.
The NFP report is tomorrow at 8:30 AM ET. With Monday being a holiday in the US, and the risk that traders are still on holiday that increases trader risk. Market risk, event risk and liquidity risk will all be at elevated levels. However, the end of summer is right around the corner, the Fed says they are live, but data needs to cooperate. If the report tomorrow is stronger - regardless of what the Fed does on Sept 21 does not really matter. What matters is what the market start to price in. Right now the market is not really pricing in the possibility. On the other extreme, a weaker number still has the ability to weaken the dollar from the modest but supportive move of late. If the number comes in as expected, I don't know what the market does honestly. The traders may simply look to call it a week early and enjoy the final days of summer before starting up again next week.
