Forex news for trading on June 13, 2017.
- S&P and Dow has record closes. Nasdaq still working on reversing declines.
- The momentum has shifted in the Russia-Trump investigation
- Sessions: My answer about meeting with Russians at confirmation hearings was taken out of context
- US crude oil futures settle up $0.38 or 0.82%
- Safe haven assets are the Achilles heel of emerging markets
- May: Brexit talks remain on course and will begin next week
- Coalition of US attorney generals files suit against Trump for energy efficiency standards
- Libya targets 1 million barrels per day of production by end of July
- US sells 30-year bonds at 2.870% vs 2.875% WI
- Trump says healthcare bill will be generous and 'shockingly good'
- What's priced in for the FOMC decision
- Trump's personal lawyer summoned to testify on Sept 5
- ECB's Smets looking for more evidence of domestic inflation
- TD sees risk of USD/CAD falling below 1.30 in Q4
- EU and IMF deal on Greece still elusive
- Mnuchin: Trump growth goal may involve difficult budget choices
- A deal between UK Conservatives and DUP largely done - BBC
- May US PPI +2.4% y/y vs +2.3% y/y expected
- The strongest and weakest currencies as NA traders enter for the day
In other markets:
- Spot gold is trading up $0.74 or 0.06% to $1266.64
- Crude oil futures are up $0.41 or 0.89% to $46.49
- US yields are mixed but little changed: 2 year 1.363% up 0.8 bp. 5 year 1.7797%, unchanged. 10 year 2.209%, -0.5 bp. 30 year 2.864%, -0.4%
- S&P closed at a record high (up 0.45%). Dow closed at a record high (up 0.44%). Nasdaq is closing up 0.73% but still about 100 points off the record high close.
The FOMC decision is tomorrow. That is a "story" that has the potential to move the USD one way or the other. The decision will be released at 2:00 PM ET/1800 GMT, with Chair Yellen's press conference to follow at 2:30 PM ET/1830 GMT. The Fed is fully expected to raise the target rate by 0.25 bp, will announce GDP, inflation and employment central tendencies, give projections on rate rises going forward (will they slow the pace?), and may also spell out plans for tapering of the balance sheet that is expected to start up in September. That is a lot of stuff that can cause the dollar to move.
The US will also release retail sales tomorrow (at 8:30 AM ET/1230 GMT) that could be a catalyst for a dollar move before the FOMC decision.
Today, those "stories" were still a day (+) away, and the market traded that way versus many of the other currencies despite a higher than expected US PPI release (click here). In fact, the dollar was virtually unchanged vs. the EUR, JPY, CHF, and AUD on the day.
The main movements in the dollar today were against the GBP and CAD (with the NZD outperforming the greenback).
What were the catalysts for each?
The GBP was impacted by better than expected CPI data. The YoY rose to 2.9%, well above the 2.7% estimate. That, along with a technical break, sent the GBPUSD (and GBP pairs) marching higher.
For the CAD, hawkish comments from Bank of Canada's Wilkins yesterday were followed by more of the same rhetoric from BOCs Poloz today. That change in policy direction, sent the CAD higher (the USDCAD lower).
The GBP ended up outpacing the CAD to the upside, and even ended the day with a small 0.08% gain against the loonie. But it was nip and tuck with all the other major pairs losing ground against those currencies. Below is a look at the % changes of the major currencies vs each other. PS the JPY was the weakest with most of its declines against the GBP and the CAD (not a surprise).
What are some of technicals driving the major currency pairs vs the USD, as we head into the new trading day?
As mentioned above, the GBPUSD trended higher for most of the day and in the process was able to extend above a trend line resistance line on the hourly/4-hour chart in the NY session. The move to the upside, took the price closer to a key upside resistance at the 1.2765-74 area (the high reached 1.2756). Both the 38.2% AND a key swing level going back to April comes in at that area. In the new trading day, on a continued rise, there should be some pause at the level with stops above.
The USDCAD continued it's trend lower today and in the process moved away (to the downside) from its 200 day MA at 1.3330. The low for the pair worked down to a swing level at the 1.3208-11 area.. Between Jan 24th and Feb 22nd 2017 there were three distinct swings at that 3 pip wide level. In April, the price fell to within 12 pips of the area before moving higher. Today saw the price swing back to the upside. AFTER reaching a low of 1.3211. A temporary bottom may be in place for the loonie if that key support can hold in the new trading day.
The EURUSD traded in a 40 pip trading range today. The 1.1200 level was a key floor during most of the London and NY session. In the NY afternoon session, the level was breached but momentum could only take the price to a low of 1.1191. The price closed back above the 1.1200 level and that level will be a close "bullish above/bearish below" barometer for the pair into the new trading day.
The AUDUSD remains in a 47 pips trading range (with most trading in a 40 pip range), over the last 5 trading days. The 0.7521-24 is support, while the 0.7566 is a ceiling level for the pairs. In between sits the 100 day MA (at 0.7555), the 100 hour MA (at 0.7540) and the 200 day MA at 0.75305 (see chart below). At some point, the market will figure it out and there will be break outside the confined range.
Good fortune with your trading.....
