Forex news for US trading on May 11, 2016.
- BAML abandons EUR/USD parity forecast in update
- ECB's Weidmann: Expansive monetary policy justified for now
- The US Budget deficit 354.6B in fiscal YTD vs 282.8B year earlier
- Morgan Stanley bearish on NZD, says USD/JPY may head to 95.00
- Goldman Sachs off to a tough start on USD/JPY bottoming call
- Italy leads European stock market fall
- Forex Trading Education: How you can use narrow ranges to your trading advantage
- Venezuelan oil imports (not Canadian) tumbled last week
- EIA weekly US oil inventories -3410K vs +750K expected
- Brazilian President could be impeached today
- April NIESR UK GDP estimate +0.3%
- S&P 500 slips lower after big gain yesterday
- Russian was burned in Doha and won't get back into bed with OPEC
- BOC's Wilkins: Neutral interest rate has declined
- A hint from BOC's Wilkins could send CAD right back down
The USD is ending the day as the weakest of the major currencies today. The greenback is lower against all the major currency pairs with the decline against the NZD leading the way. There was little in the way of economic releases today. Mortgage applications increased by 0.4% in the current week. The Monthly budget statement did little to move the market. Catalysts? Stocks were under pressure. Disney earnings were weaker after the close. Later there was a report that the FTC was looking into Google dominance in the search engine sector (I use Google...DO you? Probably). That helped push the stocks to lows. The major indices are closing near the lows with the S&P down -0.96%, the Nasdaq index fell -1.02% and the Dow was down -1.21%.
So where did the dollar lose. As mentioned the NZDUSD was the biggest mover. The major catalyst was the Financial Stability Report, but in the NY session, the pair did get an added nudge higher on a break of the 100 hour MA (see post here). That kicked the pair up to the 38.2% retracement at the 0.6844 level where the sellers said "that was enough). The pair has reversed back toward the 100 hour MA at the 0.6806 level where traders will test the resolve of the buyers at that key level in the new trading day.
The USDJPY was another pair that moved lower mainly in the Asian Pacific session, but also wandered lower in the London and North American session. Topside resistance against the retracement level was the early catalyst. Later, stock weakness and long liquidation was the likely "story" behind the fall. The 38.2% retracement of the move up from last Friday's low comes in at 108.25 and it also was and it was a stall floor area during the NA session on Monday and into the early Asian Pacific session on Tuesday. The 100 hour MA at 108.10 (and rising) will be another support level to test buying interest. Today was owned by the sellers.
The story of the EURUSD today was two-fold. One, the 61 pip trading range for the week was extended. It is now up to a whooping 89 pips (remember when the range per day was about 115 pips. A week's range at 89 pips is insulting!). The second story was the inability to get (well stay) above the 200 hour MA. That MA comes in at 1.14435. The high price moved to 1.1446 but that was it. The price decline off that MA level has been able to hold above the Monday high at 1.1419, but it is a nudge from heading back into the Monday, Tuesday and half of Wednesday trading range. Moving back into that range and then back below the 100 hour MA at the 1.1400 level, may well have traders reversing and thinking the 89 pip trading range extension might come to the downside. Watch 1.1414-19 for close support, and the 1.1397-1.1400 area as "line in the sand" type support in the new day.
The GBPUSD is another pair that rallied to the edge of key resistance (like the EURUSD) and found willing sellers. At the peak the price moved above the high for the week at 1.4477-1.4479, only to run into the 100 bar MA on the 4-hour chart at 1.4487. Yesterday, the same MA was tested but could not muster much enthusiasm above. If there is no bullish love, the sellers come in. The pair closed the day between trend line support below at 1.4412 and the aforementioned 100 bar MA on the 4-hour chart above at 1.4488 (the pair is trading at 1.4445 currently. Do you have a preference at the midpoint, or would you rather wait for either of the extremes and sit the middle part out? Most of the action in the month of May was to the downside, but there were buyers against the 100 day MA at the lows on Monday. So I guess I am not so shocked that "the market" is interested in trading the range.
For the USDCAD, Crude oil inventory data was a surprise miss to the downside (large drawdown). So oil prices went higher and so did the USDCAD. The corrective peak at roughly around 1.3000 on Monday sounds like a nice round level now. Look for traders to sell rallies with the 100 hour MA at 1.2916 to be a line in the sand (i.e. risk level for shorts).
Hoping all have a great day, afternoon and evening. Good fortune with your trading.
