Forex news for NY trading on November 14, 2019.
- US major indices close mixed/a little changed
- FOXBusiness' Lawrence: Another deputy level trade talk between US/China trade teams today
- WTI crude oil futures settle at $56.77
- Mexico central bank cuts overnight rate to 7.5% from 7.75%
- FT: US/China are struggling to complete phase 1 deal
- More from Fed's Bullard: Expects US job growth the slowdown
- Feds Kaplan: Sees US economy growing by little more than 2% this year
- More Bullard: Need a measured approach to monetary policy making
- More from Fed's Williams: Want to think where economy will be in 1 to 2 years
- SNB Maechler: SNB willing to intervene in FX market as necessary
- Fed's Bullard: Yield curve in a more normal state. Could be bullish for the economy
- Fed's Williams: US economy, monetary policy in a good place
- US House Speaker Pelosi: USMCA deal break through could be imminent
- Crude oil inventories build 2219K vs 1500K estimate
- More from Fed's Powell: There is nothing in the US economy that is booming
- ECB Knot: I would not give up on current inflation target
- Fed's Powell speaks before the House Budget Committee.
- US agricultural secretary welcomes China's lifting of ban on US poultry products
- ECB Knot: Conditions are not currently an impediment to growth
- Fed's Clarida: US economy at or close to Fed's twin goals
- Canada new housing price index for September 0.2% versus 0.1% estimate
- US initial jobless claims 225K versus 215K estimate
- US PPI final demand for October 0.4% versus 0.3% estimate
- The JPY is the strongest and the AUD is the weakest as the NA session begins
In other markets:
- Spot gold is trading up $7.50 or 0.51% at $1471.04
- WTI crude oil futures are trading down $0.30 or -0.53% at $56.82
In the US stock market the major indices closed mixed in down and up session. The final numbers are showing:
- The S&P index rose 2.59 points or 0.08% at 3096.63
- The NASDAQ composite index fell -3.08 points or -0.04% to 8479.02
- The Dow industrial average fell -1.63 points or -0.01% at 27781.96
The S&P index closed at record highs once again. The Dow just missed by the -1.63 point decline . The Nasdaq has now missed closing at new all time highs for two consecutive days. Having said that, the index is withing 7 points of its all time high at 8486.09 (vs the close at 8479.02).
The chart below shows the % high, low and close for the major North American and European indices. The European stock were mostly lower in trading today.
In the US debt market today, yields continued their move lower from recent highs. The high yield last week reached 1.9713%. The low today reached down to a low of 1.8032%. That's a 17 basis point decline over the last week of trading. The 100 day moving average for the 10 year is just below the low yield today at 1.7899%. A move below that moving average level would tilt the bias back to the downside. Be aware.
A look at the highs, lows, changes and current levels for the major points on the yield curve are outlined in the table below.
The economic calendar in the US included initial jobless claims and PPI data. The claims data showed a move up to 225K from 211K last week. That was also higher than the 215K estimate. A crack in the claims data, but it is the just the first. If it becomes trend, that would be a worry.
For producer prices, the month-to-month headline number was a little bit higher than expected at 0.4%, but the YoY values show declines from the previous month (Ex food and energy came in at 1.6% versus 2.0% last month). So overall, although prices were a bit higher than expectations, the producer prices remain contained.
For the 2nd day in a row, Fed Chair Powell testified on Capitol Hill. this time before the House Budget Committee.
Today Powell characterized the economy as a "star economy", and he does not see a recession. He said that there is nothing in today's economy that is booming which could lead to a "bust" (which is good). He feels that the US economic outlook is still positive and that the economy is in a very strong position. He did warn that the US debt is growing faster than the economy and is unsustainable. The trade tensions have contributed to a manufacturing recession this year. Finally he said that the Fed has less room to cut in the low rate environment.
The Fed chair was joined today by no fewer than four other Fed officials. Fed's Clarida, Williams, Bullard and Kaplan all spoke at some point in the day.
- Clarida said that the US economy is at or close to the Fed's twin goals. He sees no evidence that rising wages are putting ask excessive upward pressure on inflation, but that the inflation was close to the Fed's 2% goal.
- Williams used the cliche that the US economy, monetary policy is in a "good place". He was a little more dovish in that he said too low inflation is a greater concern than to high inflation and that he anticipates that slower global growth will affect the US economy.
- Bullard has lost his dovish bias and has joined the "wait and see" camp (like Fed Chair and others). He now hopes the US economy can get a bit better growth due to rate cuts and hopes productivity improvements might push growth above 2% (CLICK HERE and HERE for comments)
- Kaplan expects the US economy did to grow a little more than 2% this year and does not see a recession in 2020. He is worried about corporate debt, and worries about the debt growth. He does not see inflation running away and added that low inflation gives the Fed latitude to run the economy hotter, however he did not mentioned additional cuts.
In the forex market today, the JPY and GBP were the strongest and the AUD was the weakest.
The USDJPY trended lower and cracked below a lower trend line at 108.55 in the New York session. That sent the price down to retest the 200 bar moving average on the 4 hour chart at 108.35 and then the swing low from October 23 at 108.24. Those 2 levels did attract some debt buying. The afternoon rebound in the US stocks also helped to drag this pair off the lows. The price is closing above the 200 bar moving average on the 4 hour chart at 108.35. That level will be a barometer for the bulls and bears in the new day. Move back below would be more bearish and may have traders looking toward the low for the week at 107.878 in the new trading day.
The AUDUSD fell sharplyin the Asian session after the Australia employment data came out much weaker than expectations. The selling continued in the New York session until the pair hit the 61.8% retracement of the move up from the October low to the October high at 0.6769. Traders leaned against the level and there was a modest bounce into the close to 0.6787. In the new trading day, on more upside corrective action, the 50% retracement at 0.67996 (call it 0.6800) will be eyed for sellers. Stay below would keep the sellers in control. On the downside, break below the 61.8% retracement at 0.6769 and the sellers can continue the probe to the downside.
The GBPUSD caugth a bid after the New York session low based against the 100 hour moving average. The inability to move below that key barometer, gave buyers the reason to take the price higher. They push the price above the 200 hour moving average at 1.2848 and then ran up through the 50% retracement of the move down from the October 31 high. That level came in at 1.28715. The last 6 hours of trading was spent consolidating above that 50% retracement level. The high price reached 1.2887. Into the new day, the high price for the week is up at 1.2896. That would be the next bullish hurdle for traders to get to and through. On the downside the close support comes in at that 50% retracement level at the 1.28715. A move back below could shift the bias more to the downside once again.
For the Asian traders, wishing you all a happy and healthy weekend. Thank you for your support.
