Forex news for NY trading on October 14, 2016
- US stocks end the day with little changes. Blue chips lead the way
- Feds Dudley: Expects rate hike in 2016
- CFTC commitment of traders: JPY longs slashed by 23K
- Oil is where all the hijinks happen into the close now
- Corporate earnings are high on the list of risks next week
- Euro surpasses US dollar as the currency of online casinos
- US 30 year yield highest since June 23rd
- Yellen: Labor market-inflation relationship seems weaker
- BOE's Shafik: The fall in GBP is likely to push up inflation
- Baker Hughes US oil rig count 432 vs 428 prior
- USDJPY falls back below support area/104.00 level
- The sterling kicker runs out of steam for the FTSE
- Atlanta Fed Q3 GDPNow 1.9% vs 2.1% prior
- New York Fed GDP estimate edges higher for Q3, jumps for Q4
- BOE's Carney: We're not going to have some magic number to watch in the exchange rate
- USD/CAD will break your heart
- Michigan's Curtin: Inflation expectations are remarkable
- US August business inventories +0.2% vs +0.1% expected
- Michigan sentiment for October(P) 87.9 vs 91.8 est.
- Canada August existing home sales +0.8% vs -3.1% expected
- BOE's Forbes: Recent inflation has not picked up as fast as expected
- Rosengren: Fed's balance sheet could be adjusted to steepen yield curve
- US Sept PPI +0.3% m/m vs +0.2% m/m exp
- September 2016 US advance retail sales 0.6% vs 0.6% exp m/m
- The strongest and weakest currencies as NA traders enter for the day
Fundamentally, the US retail sales showed that the headline number was up an impressive +0.6% but the control group which gets fed to GDP (Retail sales less food, auto dealers, building materials and Gas stations) rose by a lower than expected +0.1% (est +0.4%). PPI was also released and it came in a little higher than expected. Business inventories rose by 0.2% (est +0.1%) while the Michigan consumer sentiment fell sharply to 87.9 from 91.2. The estimate was for rise to 91.8. Concerns about the election weighed on consumer sentiment. Inflation expectations remain subdued.
Fed Chair Yellen gave a speech in the NY afternoon session(after London traders had exited), and here comments were largely more dovish. Although she spoke more theoretically, she did seem to suggest (at least to me) that she is still confused about what is driving the new normal. Nevertheless, her comments did not imply the Fed would not sneak in a rate hike in December.
So with data and other influences a bit mixed, the dollar was a bit mixed as well. The greenback ended up rising against some currencies and falling against others. Let's review.
The EURUSD was one currency that fell from the start of the day, and continued to fall into the close. In fact for the week, the high was on Monday - just a few hours into the trading week - and the low happened in the last hour of trading on Friday. So the day was congruent with what we saw this week. Technically, this week, the pair kept a lid at the 100 week MA (at 1.1194)- and in the downward trend move - fell below a trend line support line and 50% of the 2016 trading range at around the 1.1090 area (remember that area on corrections higher next week). That gives the sellers the upper hand again and suggests the potential for more downside in next weeks trading. Now there is support at the 1.0952, 1.0938 and 1.0909 to contend with - so be aware - but unless, the pair can move back above the 100 hour MA - currently at the 1.1046 (and moving lower), the sellers remain in control.
Last Friday was the crash in the GBPUSD that took the pair to as low as 1.1491 (down 1000+ pips according to Reuters). As we know, the market price corrected on that Friday so the week started around the 1.2400 level. A sharp fall on Tuesday had the pair trading below 1.2100 (low reached 1.2087) but for the rest of the week, the market price traded higher and lower, higher and lower, higher and lower. The consolidation swings allowed the 100 hour MA to catch up and that MA was tested at the highs of trading today (at around 1.2252). The MA line (the price actually moved above the line for a brief moment) did attract sellers, however, and the price drifted lower into the close. A trend line connecting low for the week on the hourly chart, cut across at the 1.2169 level. That is where the selling, in the last few hours of trading,stalled. Next week, that line will be the early focus for traders.
The USDJPY rallied into the NY opening on stronger stocks (the USDJPY and JPY crosses were influenced by the stock market moves this week - or so it seemed). However, later the stocks started to give up gains, and we saw a rotation back down and toward the 100 hour MA at 103.84. Support against that MA held, and the pair moved back into the middle of the NA trading session range (closed at 104.12). The early focus next week will be on the 100 hour MA. Be aware.
The NZDUSD is ending the week just above the 100 hour MA at the 0.7078. The high for the day stalled ahead of the 200 hour MA at 0.7121. Do we go below on Monday and test the lows at 0.7034 again, or hold and test the 200 hour MA (break?) at 0.7121?
The USDCAD fell back below the 200 day MA today at 1.31878. Honestly, the pair traded above and below the MA line all week (the high stalled against last weeks high at 1.3312 area) If the selling continues pay attention to the 100 day MA at 1.30221. In September, the last test, found early buyers against that level.
The dollar moves this week show it lost the most ground against the CAD and rose the most vs the EUR.
Markets today:
- Spot gold down $6 to 1252
- WTI Crude futures down $0.11 to $50.32
- US 10 year yield 1.8012% + 6 basis points
- S&P index unchanged on the day
- The strongest currency on the day: AUD. The weakest EUR. The USD was mixed. Rising against the EUR, GBP, JPY, CHF, but falling against the AUD, and CAD. The NZD was unchanged.
