Forex trading news for APril 26, 2017
- US stocks can't hold onto gains. End marginally lower.
- The market wanted a bit more of a plan
- Nomura on the ECB meeting trade
- Oil falls back into negative territory as the inventory bump fades
- Ryan and McConnell say Trump tax plan to serve as guidepost
- House could soon pass one-week government funding bill - report
- Read the one-page summary of Trump's tax plan
- Most moderates still opposed to healthcare reform bill, Dent says
- Kevin O'Leary to quit Canadian politics
- US sells 5-year notes at 1.875% vs 1.870% WI
- Looks like healthcare bill now has enough Republican support
- It's like Brexit for Canada and Mexico
- ECB preview: Is this Draghi's last chance to talk down the euro?
- CHMC sees strong evidence of problematic conditions in Canadian housing
- March 2017 French jobseekers report 3508.1k vs 3446.9k exp
- White House prepares Executive Order to quit NAFTA
- JPMorgan lowers Q1 growth forecast to +0.4%
- Europe just about carves out some gains at the close
- Weekly DOE US oil inventories -3641K vs -1750K expected
- US Steel is going to need a lot more protectionism
- Canada February retail sales -0.6% vs 0.0% expected
- The strongest and weakest currencies as NA traders enter for the day
In other markets:
- US stocks ended the session with small losses but most of the gains during the day and indices closed at the lows. In Europe, the Dax, CAC and UK FTSE ended higher but off the highs. Canada's S&P/TSX was not so lucky. It fell by 0.53% - near the lows for the day.
- The US yields are lower on the day with most of the move lower coming after the tax plan was announced. 2 year is lower by 1 bp to 1.269%. 10 year is down 3 bp to 2.301% (the high reached 2.348%). 30 year at 2.958%, down 3 bp
- Spot gold is ending up 5.35 points or +0.42%
- Crude oil is trading -$0.27 to $49.28.
In the forex market during the North American session, the dollar moved higher earlier in the day on the expectations of the Trump tax plan, but some of those gains were eroded by the close.
There was no economic releases out of the US today. In Canada, retail sales came out weaker than expectations at -0.6% MoM vs +0.0% estimate, but the ex Auto was better at -0.1% vs -0.3% estimate. So although lower on a MoM basis, the figures were mixed vs expectations.
In other fundamental news, there was chatter that Trump had ordered a full review of NAFTA with rumblings that there would be a full repeal and redo. That was not helpful to the value of the loonie, and USDCAD moved higher in the day. The USDMXN was also impacted as it moved sharply higher.
Weekly DOE oil inventories were released and there was a greater than expected draw down of inventories. That was good for a spike in oil, to a $50.20 high. However, by the the end of the day, the price was trading back down at $49.28. The bullish news for oil is that the price held just above the 200 day MA at the $48.93 level. The low traded to $48.94. Key support held, BUT the failure to stay above $50 has buyers a bit concerned.
Then there was the Trump tax plan. A one page handout accompanied the announcment from Mnuchin/Cohn. The plan was painted with "broad strokes". The theme was to simplify the tax code and provide tax relief especially for middle income households.
For example, charitable and home deduction interest would continue to be a deduction, but there would be no others. That is a sticky ones for the Wall Street types who have been able to deduct high state and local taxes on their country estates. Under the plan, no such deductions would be allowed. The plan also called for 3 brackets instead of 7, repealing the estate and Alternative Minimum Tax and lowering the business tax rate. Nevertheless, there remains a lot of questions and the lobbyist are likely descending on Washington to raise bloody hell as I type. This is just the beginning and quite frankly, it seemed to be somewhat hastily put together at that. Time will tell how it all pans out.
In the markets today, as mentioned the USD was the strongest at the start and extended the gains as London traders exited. However, some of those gains were eroded by the end of the day. For pairs like the GBPUSD, USDJPY and USDCHF, they were all virtually unchanged on the day. The dollar was stronger by about 0.50% vs the EUR, but ended up by only 0.16%.
Some technical highlight for some of our favorite pairs:
The EURUSD held above the 200 day MA at 1.0839 (the low could only get to 1.0855) BUT the high after the Trump tax plan stalled at the 1.0900-1.0910 resistance area. Get and stay above that level will be eyed by the bulls in the new day. Absent that, and we head back lower again. The afternoon high reached 1.0911.
The USDJPY fell below the 200 bar MA on the 4-hour chart into the close at 111.02. The pair is closing right around that level. Traders will decide in the new day which side of that line it wants to trade.
The GBPUSD has been trading between 1.2860 and 1.2754 since just after the UK election announcement spike. Today that topside level at 1.2860 was tested not once (in the early NY session) but twice (after the tax announcement moves). Each time sellers leaned. We are trading at 1.2848 into the close of the day - still within striking distance. A break above could/should attract buyers. REMEMBER, there remains a lot of speculative shorts in the GBP (at least as per the commitment of traders report).
The AUDUSD tested the 50% retracement level today and held that line (see post here). The NZDUSD fell below trend line support at the 0.6910 area and stayed below it during the NY session (see post here). The lowest low going back to June 2016 comes in at 0.6861. The low today reached 0.6871 and bounced. So 0.6861 to 0.6910 are the support and resistance targets below and above.
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Below are the % changes of the major currencies vs each other . The CHF was the stronges while the NZD was the weakest.
