Forex news for NY trading on July 2, 2018.
- US stocks close slightly higher as tech shares rally
- Mexico economic advisor comes out swingin'
- The EURUSD back retesting early NY session break point
- Crude oil settles at $73.94, down -$0.21
- Trump: If WTO don't treat us properly, we will be doing something
- The Atlanta Fed GDPNow index rises to 4.09% from 3.83%
- Report: All 12 boys and football coach are found alive
- UK PM May: Real differences remain between EU and UK on northern Ireland
- EU stocks end the day with declines
- US construction spending for May 0.4% vs. 0.5% expected
- US June ISM manufacturing index 60.2 vs 58.5 expected
- Markit US June manufacturing PMI 55.4 vs 54.7 expected
- Lopez-Obrador says he will seek to continue NAFTA
- Leaders of Germany's coalition to meet this evening to try to resolve crisis
- The USD is the strongest while the NZD feels the downside heat in early NA trading
In other markets as the NY session comes to a close:
- Spot gold is down $11 or -0.8% $1242.09
- WTI crude oil futures and $.17 or -0.23% at $73.98
- Bitcoin on Coinbase is closing of $272 at $6619.84
The US stock market opened lower, went lower and then recovered all the declines, closing at the highs for the day:
- S&P index close up 8.34 points or 0.31% at 2726.71
- NASDAQ composite index closed up 57.384 points or 0.76% at 7567.68
- Dow closed up 35 points or 0.15% at 24307
European shares were not so fortunate:
- German DAX closed down -0.55%
- UK FTSE closed down -1.17%
- France's CAC closed down -0.8%
In the US debt market yields are ending marginally higher yield curve flattening:
- 2 year 2.5485%, up 2.0 basis points
- 5 year 2.755%, +1.7 basis points
- 10 year 2.869%, +0.9 basis points
- 30 year 2.992%, +0.3 basis points
European yields were unchanged to lower in the 10 year sector:
- Germany unchanged
- France -0.7 basis points
- UK -2.3 basis points
- Spain -2.4 basis points
- Italy -2.8 basis points
- Portugal -2.5 basis points
In the World Cup, Brazil beat Mexico 2–0 and Belgium came back from a 2–0 deficit to win against Japan 3-2. Sweden vs. Switzerland, and England vs. Columbia play tomorrow.
Today in the forex market, the flow of funds was focused on the safe haven currencies including the US and JPY and away from the risk off currencies like the AUD and the NZD. The final snapshot at the end of the day shows the USD is the strongest, while the AUD is the weakest.
The day started off with tensions from trade concerns (once again). The stories remain the same (and can pop up at any time) but can shift from US vs. China, US vs. EU, US vs Canada or US vs Mexico (or US vs NAFTA). Relatively new on that list is the US vs the whole WTO. Trump stated last week he was thinking about leaving the WTO and today said, "If the WTO doesn't treat us (i.e., the US) properly, we will be doing something". If you are going to war with all countries on trade, it makes sense to not have some 3rd party sticking their nose in the skirmishes especially if you have the upper hand, which Trump is betting he will have against all the other nations. This process will continue on, until it is all over.
The stock market opened lower and went lower. That led to buying of the USD. Later the focus was on some better ISM data (came in at 60.2 vs 58.5 expected). That too helped the greenback Overall, the dollar was higher when the US traders entered and added on to the gains in the US session.
Fundamentally, although the construction spending was revised lower in April (from 1.8% to 0.9%), the ISM data apparently covered for that revision in spending. As a result, the Atlanta Fed GDPNow index rose to 4.1% from 3.8% on Friday. Recall, it fell from 4.5% to 3.8% on that day. Getting back above 4.0% helped US rates to move a little higher, and give the dollar buyers something to build more gains on. Remember it is summer and the World Cup is going on, so it does not take a whole lot of muscle to push the market.
For the EURUSD the price at the open was pushing the 200 bar MA on the 4 hour chart at 1.1688. The price couldn't get above that level. So the price rotated lower and through the 100/200 hour MAs at the 1.1623 area. The low for the day did find support at the 1.1694-99 area (swing area - see post here). A late day German agreement between CSU leader and German Chancellor Merkel was resolved, and that helped to push the EURUSD back above the MA levels and toward the middle of the range.
The GBPUSD stalled in the Asian session near a swing level at 1.3203-16 and at the start of the NY session fell away from the 100 hour MA at 1.3158. The low extended to 1.3134 before rebounding into the close back to the 100 hour MA at 1.3146.
The USDJPY did more up and down waffling in trading today, but was able to find support near an upward sloping trend line. The problem with that bullish view, is the that highs were limited. Japan was playing in the World Cup which may have put traders on hold (and it did not end well after blowing a 2-0 lead in the 2H). For a technical look at the pair, click here.
The NZDUSD fell below a lower trend line today, accelerating the fall lower. The price moved to a low of 0.6689 but rebounded modestly to the underside of the lower broken trend line at the close (at 0.6712). A move above will have traders looking for more of a corrective move in the new day as the trend remains more to the downside. Perhaps a failure below and move back above, will the line will give brave buyers, more courage.
Have a good day, evening, night to all.
