Forexlive Americas FX news wrap: ECB/Draghi fail to convince the market that the EU has turned the corner.

Forex news for NY trading on June 14, 2018

In other markets, the snapshot shows:

Spot gold is is up $3.14 or 0.24% at $1302.43
WTI crude oil futures were up $.35 or 0.51% at $67
Bitcoin is higher by $400 at $6647. There was an SEC story saying that the SEC does not consider bitcoin and ether a security because of the decentralization of the instrument. The market ran with the story and took the price back above the 100 hour MA at $6442 and the 200 hour MA at $6625 (see post here)

IN the US stock market, price action was mixed. The Nasdaq was the strongest. The S&P rose modestly. The Dow fell modestly. Financials did poorly. Media and growth stocks did the best.

US yields were dragged down (flatter yield curve too) by lower European yields:

2 year 2.565%, -0.2 bps
5 year 2.805%, -2.3 basis points
10 year 2.933%, -3.3 basis points
30 year 3.053%, -3.2 basis points

The snapshot of the forex gainers and decliner shows the USD is the strongest, while the EUR is the weakest.

The dollar was king. The EUR was the dog.

There were two major catalysts for the moves.

US retails sale
ECB/Draghi

For the US retail sales, they advanced by 0.8%. That was double the 0.4% expectations. The ex-auto and control group were also better than expected (click here) at 0.9% vs 0.5% expected and 0.5% vs 0.4% expected. Revisions were also higher.

What is the impact of the numbers?

With consumption 2/3 of US GDP, higher retail sales are a big impact. Most estimates for GDP were revised higher. Here is a sample of the estimates now:

Amhearst Pierpoint 4.9%
Oxford economics, 4.9%
Atlanta Fed, 4.8%
Moody's, 4.0%
Goldman Sachs, 3.9%
CNBC GDP tracker 3.9%
Barclays, 3.7%
Bank of America, 3.7%

It is looking more like 4% vs 3% for Q2.

The dollar moved higher on the back of the data.

Regarding the ECB, although the central bank indicated that they would cut bond buying by $15 euro starting in September and stop all buying at the end of December, those moves did not come without a caveat dependent on the market. In addition they said that rates would not be lowered until the end of summer 2019.

Draghi in his press conference was less than convincing that he loved/believed in the idea. He harped on the risks, he spoke about keeping the ECBs "optionality" open, he said the ECB did not talk about reinvestment of the maturing proceeds. Later there was a mixed "sources" report that "ECB Policymakers split over wording of stimulus end, rate hike".

The market was not fooled.

The EURUSD is closing the day at the lows. The range was a whooping 290 pips from the high to the low. That compares to an average range of 97 pips. The pair is closing near the swing low from November 2017 at 1.1553 (at 1.1565). The pair did trade lower at the end of May at 1.1509, but that break was quickly reversed. We are within 50-60 pips of that low. A break below and the pair is trading at the lowest level since July 21, 2018. Does anyone see a retest of the 100 and 200 week MAs at 1.1416 area? Could be there, faster than you think.

The dollars move was not limited to the EUR.