Forex trading news for July 12, 2017.
- Dow closes at a record high. S&P and Nasdaq up strongly.
- Here's what it looks like when a central bank signals a hike and then delivers
- Nomura takes profit on EUR/USD longs. Here's why
- US crude oil futures settle at $45.49, up $0.45
- What's priced in for the Bank of Canada after the rate hike
- Nigeria will support a cap on its oil production
- Fed's George: Favors starting to trim balance sheet in near future
- Fed's Beige Book: Wage pressures noted amongst high and low skilled workers
- BOJ to raise growth outlook - report
- Does The ECB care about a higher euro? - Credit Agricole
- US sells 10-year notes sell at 2.325% vs 2.320% WI bid
- They caught the gold coin thieves, but haven't found the coin
- European stocks end with solid gains
- Poloz Q&A: We need to targeting future inflation
- Poloz: Need to carefully gauge impact of higher rates
- Yellen: Inflation will be a key factor in our deliberations
- Yellen Q&A: There are lags but jobs market will put upward pressure on wages and prices
- DOE Crude oil inventories for the July 7th week -7564K vs -2450K est.
- Canadian dollar soars after Bank of Canada delivers hawkish hike
- Bank of Canada hikes rates to 0.75% from 0.50%
- Amazon says Prime Day was biggest shopping event ever. That's not good news for retail
- US dollar slips after Yellen steers clear of any hawkish hints
- The EURUSD whips around on Yellen headlines.
- Fed's Yellen: Inflation response to economy is key uncertainty
BOC preview: Why rush to hike and then deliver a dovish hike?
In other markets today, the end of the day snapshot shows:
- Spot gold up $2.25 to $1220.05
- WTI crude oil up $0.39 or 0.87% to $45.43
- US stocks are ending the session with good gains. Dow closes at a record high up 123 points or 0.57%. The S&P index is up 0.73%. The Nasdaq is up 1.10%. In Canada where the BOC raised rates by 0.25 bp, the TSX index fell -0.3%.
- European stocks also did really well (a number of the indices also moved away from or above 50 day MAs too - Dax, Cac, UK FTSE, Spain's Ibex. The Dax was up 1.52%. The Cac was up 1.59%. The UK FTSE was up 1.19%
- US yields were lower after Fed's Yellen sounded more dovish at her testimony in Washington. 2 year down -3.2 bp. 10 year down -4.2 bp. 30 year down -3.8 bp.
Hey....It is not every day that you get news of a hike in interest rates (sans US and Mexico). Today was one of those days.
The BOC raised rates by 0.25% to 0.75% from 0.50%. That was the first hike in over 10 years and the first change since July 2015 when they lowered to the 0.5% level The Bank of Canada started to hint of the hike one month ago. As Adam posted (Here's what it looks like when a central bank signals a hike and then delivers), the movement in the USDCAD since that "hint", has been quite dramatic. The CAD is the strongest of the major currencies, rising by 5.75%. That blows away the competition. The EUR was a distant second at up 2.02%. Moreover, the reaction today was quite positive as well for the loonie. It not only rose by 1.29% vs the USD, but also tacked on strong gains against the other major currency pairs (EUR up 1.71%, GBP up 0.98%, CHF up 1.45%, JPY up 0.63% - see chart below). Today was Canada Day. A hike in rates, with hawkish undertones. and a 260 pip trading range in the USDCAD with most in the downward direction (higher CAD).
The Bank of Canada hike, relegated Fed's Yellen's testimony off the ForexLive front page (it still was important). Yellen testified in front of House Financial Services Committee today and will do it again in front of the Senate Banking committee tomorrow. Her comments were more dovish and it helped to weaken the greenback vs the GBP, JPY, CAD, AUD and NZD. Specifically, the comment - also expressed by Lael Brainard yesterday - that the Fed "does not have to hike all that much to hit neutral", was the focus of the market and the reason for more dollar weakness. Yes, she also said the Fed is likely to hike gradually going forward, but maybe they won't especially if inflation does not start to pick up and/or there is sub par growth. Regarding the end of QE, the Fed chair was also not specific about when the Fed would start taking back QE, but still said it was likely. The market price action was more dollar bearish, but the price action was still choppy. Also, the EURUSD tried to go higher (weaker dollar) but failed and it ended the day heading sharply lower. That rise vs the EUR, bucked the trend seen vs the other currencies.
What are the charts saying to me in the new trading day?
As mentioned, the EURUSD headed lower after a volatile up and down price action in the first hour or so of trading. Recall that yesterday the price of the EURUSD closed above the key 1.1435-65 level. That level has been a key ceiling going back to Feb 2015. Yesterday's close above the 1.1465 level, was only the 7th one since Feb 2015. So what was the encore today? Fail and move/close below at 1.1411. So in the new day by chart is saying buyers failed. Sellers more in control. A move above 1.1435 would muddy the water. Also although the price is lower on the day, the 200 hour MA stalled the fall as well. Therefore, if the price cannot get below that MA at 1.1392 (we are only 20 pips away from the level), the sellers may also turn the beat around.
As mentioned the USDCAD tumbled lower today and in the process traded at the lowest level since June 23rd, 2016 when the pair bottomed at 1.26768. The low today reached 1.2679 - just a few pips from that low. The price is closing the day at 1.2750. What levels should provide corrective resistance in the new day and keep the sellers in firm control? The low from August 2016 low came in at 1.27617. That is close risk coming into the day. Above, that and the 38.2% of the day's trading range at 1.27788 should keep a lid on the pair. What would not be good for the bears now that the USDCAD has broken to the new 2017 low extremes, is a move above 1.2820. That is the low from Sept 2016 and a broken trend line on the hourly chart as well.
The GBPUSD moved higher today. The action was helped by better employment numbers released in the London morning session. The pair did stall near the 100 hour MA at 1.2888. A move above that level will be eyed if the pair is to continue what was started today.
The AUDUSD also moved higher today and in the process, retested the highs from July 4th at 0.7682. That level held (the high reached 0.7684 and 0.7682 at the intraday's extremes). Do the sellers keep a lid on the pair against the level and rotate back toward the 0.7658? Or is the level broken and a run to the June 30 high at 0.77119 initiated. The pair closed at 0.7677.
That's if from me. Have a great day. Good fortune with your trading.
