Forex new for New York trading on November 2, 2017
- N. Korea: US bombers flew over Korean Penisula on Thursday
- Apple earnings beat on top and bottom line. EPS come in $2.07 vs. estimate $1.87
- Dow has a record close. S&P up marginally. Nasdaq near unchanged.
- Despite all the news today, the pound was still the story
- Bitcoin surged to $7400 area today, but backs off. Trading back below $7000.
- Former Dallas Fed President Richard Fisher spills on Powell
- Fed's Powell: Economy has made substantial progress
- Jerome Powell nominated as Federal Reserve Chairman
- There are three major stories about the Democratic party today
- As we await the Fed chair decision, a look at Powell
- BOE's Carney: UK economy seeing more balance growth
- Treasury Secretary Mnuchin: We need to reform the entire tax code
- European major indices mixed. Germany's DAX down a little after big run higher yesterday.
- Spanish judge issues European arrest warrant for separatist leader Puigdemont
- Hedge fund titan Robert Mercer to quit on January 1
- Mandatory corporate repatriation tax could rankle some stocks
- US 10-year yields fall further away from 2.40%
- Highlights of the US tax plan: Would lower corporate tax rate to 20% from 35%
- Even more from Carney: Getting inflation back to 2% will help make Brexit a success
- More from Carney (2): UK in a relatively unusual period of underperformance compared to others
- More from Carney: "Gently rising" rates are consistent with inflation falling back over the next year
- BOE's Carney says it's where inflation is heading that concerns us
- Q3 US preliminary unit labor costs +0.5% vs +0.4% expected
- US initial jobless claims 229K vs 235K expected
- Pound tumbles on Bank of England guidance despite hike
- BOE Inflation Report: CPI to peak at 3.2% in Oct vs c.3% previous forecast
- BOE hikes bank rate by 0.25% to 0.5%
In other markets, the snapshot at the end of the trading day shows:
- Spot gold up $1.38 or 0.11% at $1276
- WTI crude oil futures up $.43 or 0.77% at $54.72
- US treasury yields are lower on the day. Two-year 1.608%, -0.3 basis points. Five-year 2%, -1.8 basis points. 10 year 2.345%, -2.7 basis points. 30 year 2.8255%, -3.2 basis points
- US stock indices closed mixed. S&P 500 index up 0.49 points or +0.02%. NASDAQ composite index down 1.592 points or -0.02%. Dow industrial average up 81.25 points or +0.35%
- Apple after the close announced strong earnings and revenues with strong guidance for the first quarter.
It was a wild day in the Forex market today.
The Bank of England interest-rate decision was as expected with the central bank raising rates for the first time in a decade to 0.5% From 0.25%. What was not expected was the relatively dovish comments from the BOE and Carney. The central banker coined a new phrase "gently rising" rates, which the market interprets as the equivalent of a tickle here and there. So the GBP felll more than -1.36% vs all the major currencies.
Later in the US session, the Senate tax plan was released with all sorts of changes proposed (see Adam's excellent post here). Now...most was leaked out beforehand but seeing it all together highlights the scope of the proposed changes.
The problem with such a comprehensive package, is the potential for the compromises to make it a shadow of itself when it is said and done. There may also be so many things that it falls flat on it's face (and they are forced to go back to the drawing board).
Nevertheless, the spin doctors were out in full force and we need to prepare for more to come in the future.
The USD, although up 1.36% vs. the GBP, the rest of the major currencies advanced vs the USD (the dollar fell). Interest rates fell as well which runs counter to the idea that the tax plan would push growth up to 4%. The forex and the debt markets voted (at least for the day) that it would not, or maybe did not have a chance of getting done.
In other news today for the record, Jerome Powell was officially chosen as the next Fed chair. He will take charge - assuming he is approved by Congress - on February 3rd. Yellen is expected to oversee one more hike in December. Like the tax bill, this appointment was well telegraphed.
In economic data today, the US initial jobless claims remain low at 229K vs 235K estimate. Non-Farm Productivity rose 3% (vs 2.6%) and Unit labor costs rose 0.5% vs 0.4% estimate. Not bad numbers overall.
Tomorrow the US Labor department will release the October employment report. Canada will also release there jobs data. Australia retail sales will be released in the new trading day as well.
Some levels to eye in the new day:
For the EURUSD the pair sits between the 200 hour MA above at 1.1685 and the 100 hour MA below at 1.1635. The 200 week MA is between those extremes at 1.1669. Those levels will be barometers for bullish or bearish going forward.
The USDJPY fell below the 200 and 100 hour MAs at 113.74 and 113.698 on selling after the tax plan, but did recover. A move back below those levels would be more bearish. On the topside, a trend line on the hourly chart cuts across at 114.198. Above that and there is a triple top (close enough) between 114.38 and 114.49 (highs from May, July and October). KEY. KEY LEVEL.
On the GBPUSDs tumble lower, it fell below the 100 day MA at 1.30797. In September and October, the price tested that MA a number of times and found buyers. The fall below is more bearish (stay below). The 1.3017 is the 38.2% of the move up from the Jan 2017 low (range for the year). That would be the next major target on continued bearishness in the pair.
As mentioned, the AUDUSD retail sales will be released in the new trading day. Today, the AUDUSD moved back above the 200 day MA at 0.7696 (after 5 days below the key MA). That MA level is now risk for longs (or there should be buyers on dips). However if the price does move below, the bears are back in control. Look for stops and selling on that break. On the topside, the 38.2% of the move down from the October 13 high comes in at 0.7728. The swing low from October 6th comes in at 0.7731. That area if busted on the upside, should solicit more buying.
