Forex news for US trading July 12, 2016
- 'Go Big Or Fail' for Japan; USD/JPY rally a selling opportunity - Morgan Stanley
- Trading a trend move: GBPJPY up about 900 pips in two days
- Fed releases discount rate meetings
- ECB Linde: Inflation continues to be too low
- The Atlanta Fed GDPNow estimate 2.3% for 2Q
- Soft auction underscores low demand for bonds at low yields
- Preview: Don't expect aggressive BOE easing this week - Danske
- USDJPY moves closer to next targets
- EURGBP pushing the market around
- Talk of further stimulus is wrong says Bullard
- Bullards view on rates is closer to the markets view now
- IMF brushes off US Brexit risks 3 weeks after the vote
- UK Parliament to debate Brexit petition
- May 2016 US wholesale inventories 0.1% vs 0.2% exp m/m
- Bullard has no reason to forecast a US recession
- Is anyone really believing this run in USDJPY?
- OPEC cuts forecast for 2016 global economic growth to 3%vs 3.1% prev
- US NFIB small business optimism index June 94.5 vs 93.9 exp
The North American session was a continuation of the trends from the Asian Pacific and London morning session.
The USDJPY trended higher.
The GBPUSD trended higher and that combination led to the GBPJPY racing higher (>4% on the day for that pair).
For the JPY it was a continuation of the idea that PM Abe was to throw another kitchen sink in the pile (lots of kitchens in that house). Stocks also advanced once again with the Nasdaq closing back above 5000, the S&P closing at record highs, and - for those who like the Dow Industrial Average - it too closed at record levels. As Adam pointed out, when 10 year US bond yields are at 1.5% and the stock market goes up 1.5% in two days, buy stocks (oh there is something dangerous about saying that).
Meanwhile in the UK the market is realizing that a move from 1.500 to 1.3000, or 1.32000 or 1.3300 is still a pretty good stimulus - Brexit or no Brexit. With regard to the EURGBP, if it goes from 0.76 to 0.86, that is 13%.. In November it was down at 0.7000-0.7200. All it takes is some players creating an interest and you get a big move. That is what we saw today.
I would be remiss if I did not talk about the GBPJPY more in "the wrap". A range of about 650 pips. The change in pips was about 500 pips. That is on top of the 347 pip rise on Monday. The last few hours saw the pair come off about 85 pips. The post-Brexit day high came in at 139.00. Today we moved above that but did close below that level at 138.62. Getting back above that 139.00 level will be eyed in the new trading day. Back in the middle of June the price for this pair rose - from low to high - 1450 odd pips in 6+ days. This move is off a lower low. The 38.2% of the move down from the pre-Brexit high comes in at 140.693. That would be a target IF the trend move can keep the fire burning for another day. The 144.40 level is the 50% of the same move lower.
What about the EURUSD? A 71 pip trading range and pretty much unchanged on the day, relegates that pair to the category of "Also Ran" today. If it could have dropped out of the race and posted a DNF (for Did Not Finish), it would have done so. Unfortunately, it remained in the race and settled little changed. There are some who look at the last 10 or so days and see it extending forever into the future. My eyes are on the little nuances that might tip the bias one way or the other and keep the pair moving for a little more than 150 pips where 99% of the trading has taken place over the 10 day time period (from 1.1023 to 1.1169). Keep an eye out for a move away - even if it does not seem it will happen.
Below is a snap shot of the major currencies and how they fared vs. each other.
