Forex trading news for NY on January 18, 2017
- US stock indices end the session mixed
- Yellen Q&A from SF speech
- Productivity still a headwind for Yellen
- US dollar moves higher after Yellen comments
- Fed's Yellen: Next rate hike depends on economy 'over the coming months'
- US crude oil futures settle at $51.08 barrel
- Fed's Beige book. Many districts see job mkt tightening. Wages gain.
- Former US President George HW Bush and wife Barbara admitted to ICU
- Australian dollar breaks intraday support as commodities slide
- Kashkari has the only appropriate answer on factoring in Trump promises
- BOC's Wilkins: Lots of slack in jobs. Poloz: We're largely in same space as before
- The winners and losers at the European close
- Poloz: We need to be mindful of CAD value versus other currencies than USD
- Bank of Canada Q&A: Poloz says a rate cut remains on the table if downside risks materialize
- So far, so good for the oil agreement says OPEC's Barkindo
- Bank of Canada's Poloz: We're particularly concerned about US trade policy
- There may be more Brexit job moves than previously thought says JPM's Dimon
- Fed's Kaplan says China vulnerable to bouts of instability; watching closely
- Bet against Trump with a USD/JPY short - UBS
- The buck is back on soggy ground after US data
- Fed's Kaplan: A strong dollar is also a headwind for inflation
- January 2017 US NAHB housing market index 67 vs 69 exp
- Bank of Canada leaves rates unchanged at 0.50%, as expected. Hikes growth forecast
- Trump will send Canada formal NAFTA renegotiation letter within days
- Fed's Kaplan: We should hike and think about trimming balance sheet
- December 2016 US industrial production 0.8% vs 0.6% exp m/m
- December 2016 US CPI 2.1% vs 2.1% exp y/y
In other markets:
- US stocks were mixed: S&P index rose by 0.18%. Nasdaq increased by 0.31%. Dow was down -0.11%
- US bond yields were higher and that helped propel the dollar. 2 year yield up 6.4 bp to 1.217%. 10 year up 10.2 bp to 2.427%. 30 year bond yield moves back above the 3% level to 3.01% up 8 bp
- Spot gold fell -$13.00 or 1.06%
- Silver was down -0.82%
- Crude oil futures were down -2.1%
The CAD got hit in trading today as the Gov. of the BOC Poloz kept the door open for a further rate cut if downside risks materialize. One concern is US trade policy under the new President elect Trump. The expectations are that the NAFTA treaty will be one of the first things of focus once the new President takes office. The combination sent the CAD lower. It, along with the JPY were the dog currencies of the trading day.
If the focus was on selling the CAD (and JPY), there was also a focus on buying the USD.
In the US, CPI came in about as expected at +0.3%, but the headline YoY moved to 2.1% from 1.7%. Also real average hourly earnings rising by a healthy 0.8%. Later in the day, the Fed's Beige book spoke how employment was getting tighter and although wages were under control, there were shortages of skilled workers.
US Industrial production increased by a greater than expected +0.8% (vs 0.6% estimate) and that too was good news for the dollar.
The final kick for the greenback came when Fed chair Yellen spoke more confidently about the path of rate hikes. The news was not necessarily a huge surprise - and she did also lament the productivity headwinds that she expects to continue to see going forward - but she was confident that rates would move steadily higher into 2019 when they would reach a more normal level. Now nothing is guaranteed but 10 year yields increased back above 3% (up over 10 basis points and the dollar found a bid. IN fact the greenback is closing the session near its highest levels against each of the major currencies.
So what has the changes done to the technicals for some of the major currency pairs?
USDCAD. A big mover on the day was the USDCAD - rising by 1.67%. BOC Gov. Poloz was bit more dovish on economic concerns. While Yellen outlined a path toward more neutral rates. The combination made for a trending market to the upside. Technically, the USDCAD first pushed above the 100 hour MA at 1.3123 (the first test held), and then the 200 hour MA at 1.31648. The move above that MA was the first breach since December 30th. After the Yellen comments, the price was kicked even higher,with the pair adding another 100 pips above the 200 hour MA. At the close, the pair is pushing right against the 100 day MA at 1.3269. That SHOULD stall the rise for now. However, iIt was just yesterday that the USDCAD was breaking and closing below the 200 day MA. 24-hours later, the pair has reversed 250 pips higher. If there is a correction in the start of the new trading day, I would think that 1.3208 to 1.3220 should attract buyers.
EURUSD. The EURUSD was confined to a fairly narrow trading range for the day of 59 pips for most of the NY session. The pair was moving up and down. However, the highs in both the London morning session and the NY session stalled just below the 1.0706 level. HMMM. That level corresponded with the 38.2% of the move down from the Election Day high. We needed to break and stay above that retracement level in order to make a run higher (see video from the weekend by clicking here). We traded above that level (to 1.0718) both yesterday and at the beginning of trading today, but each of the moves above the 1.0706 level, ended up stalling below the prior highs. Moreover, the last two highs (in London morning session and the NY session high) came up short of the 1.0706. level Anyway, the Yellen kick to the downside (dollar higher) extended the range to a more respectable 88 pips for the day, and also took the price below the 100 hour MA at 1.06443 currently (that is now resistance into the new day). The tide has turned a bit more bearish in the EURUSD. PS the close from Friday was 1.0638. We are now trading at 1.0630. So we are now negative on the week. PSS. The 200 hour MA at 1.0607 will be the next key test (watch 1.0617 too). A move below those levels and we could see more momentum selling.
USDJPY. The USDJPY - like the EURUSD - slow played the bullish USD cards. The low for the day was in the early Asian session. The range was a respectable 100 pips into the NY session, but the price rise stalled near the low from Monday at 113.61. Yellen comes along and the pair goes another 120 pips higher. In the new trading day, the price has a key overhead target at the 200 hour MA and 38.2% retracement of the move down from the Jan high. That comes in at 114.87. Get above and the 115.20 becomes the next target. I look for support to hold at 114.15-30 now.
AUDUSD: In Australia the jobs report will be released. Technically, the pair moved lower (higher USD) in the NY session BUT the price fall stalled near the 100 hour MA, the 100 day MA and the 200 day MA which all come in between 0.7500 and 0.7507. The price closed the day just above that level (the low for the day reached 0.7501). It seems like the market will be making a bullish or bearish move away from that area dependent on the jobs report. KEY. KEY. KEY area.
Finally, the NZDUSD moved above the 100 day MA and closed above that MA yesterday at the 0.7147 level. Today (after peaking at 0.72187) the price moved back below 100 day MA. So much for that break. The 100 day MA is now a topside resistance level again.
Below is a snapshot of the percentage changes of the major currencies vs each other near the end of the trading day.
