Forex news for near trading on December 11, 2019
- Dollar falls after Powell cements his 'significant, persistent' mantra
- Powell Q&A: Inflation is barely moving up notwithstanding unemployment at 50-year lows
- Powell opening statement: US economic outlook remains favorable
- US Senator Chuck Grassley: I had a conversation Monday that told me tariffs won't be imposed on China
- Redline of the FOMC statement (spoiler: there isn't much change)
- The December 2019 dot plot and central tendencies from the Federal Reserve
- The full FOMC statement for December 2019
- FOMC leaves Fed funds rate at 1.50%-1.75%, as expected
- File this one under 'speculation' rather than reporting
- UK election: BMG research poll puts Conservatives head by 9 points
- Gundlach: The US dollar should be falling (and it eventually will)
- Gundlach: Jay Powell's comments in October were overlooked
- European shares move higher ahead of ECB and UK elections tomorrow
- Jamie Dimon: US consumer spending is still strong
- Iron ore price run helping to underpin Australian dollar
- US weekly EIA oil inventories +822K vs -3000K expected
- Barnier told MEPs that Johnson's plan to get EU trade deal in 11 months improbable
- China offers a reminder that it's not only US tariffs scheduled for Dec 15
- BofA CEO says consumer holiday spending was up double digits
- Canada Q3 industrial capacity fall to 81.7% from 83.3% last quarter
- US November CPI +2.1% y/y vs +2.0% expected
- The AUD is the strongest and the EUR is the weakest as NA traders enter for the day
The 1st big event of the week came and went today when the Fed kept rates unchanged as expected with a lower band of 1.50% and an upper band at 1.75%. The dot plot projected no rate changes in 2020 and a single rate rise in 2021 and 2022.
Other key events ahead include
- The ECB rate decision and 1st press conference from new President Christine Lagarde> The decision will be at 7:45 AM ET with the press conference at 8:30 AM ET tomorrow.
- Also tomorrow will be the UK general election where the markets are expecting PM Johnson to get just enough seats to have a majority (but there is some potential for an upset).
- The final big event will be the results of the US/China Phase one deal and/or if there will be new tariffs imposed by the US and China over the weekend.
For the event today, the US dollar was lower going into the Fed decision, and the greenback moved marginally lower soon after the decision. However, the dollar selling really intensified after the Fed chair said that it would take a "significant and persistent" rise in inflation for the Fed to move rates higher. The "Bond King" Jeffrey Gundlach reminded the market of that comment before the Fed decision. The Fed Chair obliged by repeating his conditions for a hike.
The phrase implied that indeed the Fed was in no hurry to raise rates. In an economy where unemployment remains low, job growth remains high and consumers are working, that was good news for stocks (the NASDAQ index rose by 0.44% and the S&P index rose by 0.29% after being lower earlier), helped send the dollar and yields lower (to year yields are down -3 point basis points and 10 year yields are down -5.2 basis points), and gold prices higher (up $10.88 or 0.74%).
Looking at the rank of the show is the weakest currencies, the AUD is ending as the strongest currency, while the USD moved to the weakest currency.
The rise in the AUDUSD started in the London session on the back of a move higher in iron ore prices. There were also technical breaks along the way that helped to propel the pair higher. By the end of the day the AUDUSD pair had traded in a low to high trading range of 85 pips. That was well above the 22 day average of 38 pips. Technically the price today bottomed at the 100 day moving average down at 0.68049, rose above the 100 and 200 hour moving averages around the 0.6830 level, and did not stop until the price extended up to 0.6889. The high price did extend briefly above a topside trend line on the daily chart at 0.6884, but backed off a little into the close. A move of that trend line could see the price extended toward the KEY 200 day moving average at 0.6909. The price has not CLOSED above its 200 day moving average since March 2018 (yes 2018 not 2019). That's a long time ago and will be a key level for both the buyers and the sellers (and the bias) going forward.
The EURUSD was a another pair that squeezed higher. The price for it moved above and below recent highs for the week at the 1.1095 area after the Fed decision, but surged higher on the Fed Chairs comments. The highs from last week at 1.1109 and 1.11158 did not provide much resistance. The price high extended up to 1.11443 before backing down toward 1.1132 into the close. Not far from the high price for the day sits the day moving average at 1.11525. That moving average level will be the key level going forward. Stay below it could see more corrective selling pressure. Move above and he bulls are feeling more confident.
The USDJPY trading higher and lower soon after the Fed decision, but the high price was able to stall below the pairs 200 day moving average at 108.779 (the post decision high reached 108.764). On the downside, the fall back below the 100 hour moving average at 108.639, led to more selling. The low for the day reached 108.46 which was just above the double bottom from this week's low and last week's low at 108.422. The pair rebounded to 108.556 into the session close. With the price is trading above the double bottom at 108.422, but below the 100 hour MA at 108.639, the buyers and sellers are battling it out for the next directional move. Use those levels as a barometer for traders going forward.
The GBPUSD rallied more modestly after the Fed decision and in the process did retest yesterday's high price at 1.32146. However, the price could not extend above the level (the high reached 1.32129 and backed off to 1.3195 near the close. As mentioned, the UK election tomorrow is the big event for that currency. The price is trading near the highest level since March going into the election.
The NZDUSD moved to the highest level since July, after moving above the early August high and 50% retracement at 0.65858. The price moved up to a high of 0.6602, but could not sustain momentum above that natural resistance level. There is also a trendline resistance on the daily chart about 0.6609 that helped stall the rally. The prices closing the day near the 50% retracement and August high at 0.6585.
That'll do for the day. Wishing all good fortune a new trading.
