Forex news for NY trading on June 27, 2018
- Nasdaq tumbles as market worries about trade
- Poloz Q&A: Canada always has its head in the oven and it's feet in the freezer
- Bullard: There is a risk that we’ll go too far, too fast
- USDCAD swings lower and back higher on Poloz comments.
- BOC's Poloz: 'Financial markets understood our message' from May
- Poloz knows something we don't
- Crude oil futures have back-to-back +3% gains
- US Supreme Court Judge Anthony Kennedy to retire
- Rosengren: Wages have not risen rapidly yet
- US sells 5-year notes with a small tail
- Fed's Rosengren: Best policy is to not overshoot sustainable unemployment rate
- European stocks finishing with gains. 10 year yields are lower.
- WTI crude breaks the May high and hits the best level since 2014
- Kudlow: Trump is not retreating on China
- Atlanta Fed GDPNow dips to 4.5% from 4.7% last
- US EIA weekly oil inventories -9891K vs -3000K expected
- US May pending home sales -0.5% vs +0.5% expected
- US advance goods trade balance for May -$64.8B vs -$69.0B estimate
- April prelim US durable goods orders -0.6% vs -1.0% expected
In other markets:
- Spot gold is down -$6.48 or -0.51% at $1252. 57
- WTI crude oil futures are trading up $1.86 or 2.64% at $72.39 in after-hours trading. At the close the contract was higher, closing up over 3% for the 2nd consecutive trading day
US stocks closed lower:
- S&P index fell -23.43 points or -0.86% at 2699.63
- NASDAQ fell -116.54 points or -1.54% at 7445.08
- Dow fell -165.52 points or -0.68% at 24117.59
In the US debt market:
- 2 year 2.504%, -2.9 basis points
- 5 year 2.6969%, -4.9 basis points
- 10 year 2.827%, -5.0 basis points
- 30 year 2.969%, -5.6 basis points
European stocks closed higher today with the UK FTSE up 1.1%, the German DAX up 0.93% and France's CAC up 0.87%
10-year yields in Europe were lower with
- Germany down -1.9 basis points,
- UK -5.8 basis points,
- France -2.4 basis points
In trading today, the US dollar moved higher and was the strongest of the major currencies (the NZD was the weakest, ahead of the RBNZ decision).
The emerging market currencies were hammered and that helped to drag the dollar higher against all the major currencies too. The US is still expecting to have >4% growth in the 2nd quarter which would make it hard for the Fed to not continue to hiking process.
The problem is the Trump trade tariffs (and trade policy in general) is being looked at by the debt market and stock market as bad news for the economy going forward. The 2-10s are down to 32 basis points now. Traders have earmarked two more hikes as to when the yield curve will be inverted and saying "recession is coming".
Meanwhile, the stock market was down with the bullet-proof Nasdaq leading the way (the major indices were higher at the opening). Another bad omen for the economy is that the financial ETF - the XLF - fell for the 13th day in a row. HMMMM. This is despite the 1st part of the bank stress test showing banks could withstand a 2008-2009 type event and the 2nd part - to be released tomorrow - likely to give the banks the go ahead on dividend and/or bank buybacks. That is not a good sign.
Nevertheless, as mentioned the dollar was the king today. I guess it is better than the alternative, but a rising dollar is not going to make the trade situation better, will it?
Helping the dollar was some technical breaks.
EURUSD: The EURUSD started the day by holding support against the 100 hour MA. In the early European session, that MA line was broken, then the 200 hour MA and 50% retracement was broken in the early NY session at 1.16177 and 1.16132 respectively. The rest of the day was spent stepping lower with the pair reaching a low of 1.1539. Swing lows from June 15 to June 21 reached 1.1542, 1.1530 and 1.1507 (low for the year) and will be targets in the new day on more selling. PS The May low reached 1.1509. So the June low at 1.1507 and May low at 1.1509 make for a key floor that if broken could ignite some more downside fireworks.
GBPUSD: The GBPUSD is ending the day just a few pips off the 2018 low at 1.31012 (from last week). Today, the pair got its bearish hat on when the price high in the late Asian/early European session could not get above the 200 hour MA at 1.3233 (the high reached 1.32328). That was the invitation to sell. The low for the day stalled at 1.31058, just 4-5 pips above the June 21 (and 2018) low at 1.31012. The pair trades at 1.3116 into the new trading day with dip buyers against the low, likely having stops on a move below the 1.3100 level.
USDJPY: The USDJPY spent the NY session moving higher (when stocks were higher in the morning) and moving lower in the afternoon, when stocks started to give up the gains and yields moved lower. The move higher was helped when the price moved above the 50% retracement at 110.129 (move down from the June 15 high) and 200 day MA at 110.188. The high reached 110.48. The move back lower fell to a low of 110.14 - between the 50% and the 200 day MA. We are trading just above the 200 day MA at 110.25 at the close. Buyers who bought against support are hoping for the key levels to hold in the new day. If not, a break below the 110.129-18 area will solicit more selling with the 200 hour MA at 110.056 and the 100 hour MA at 109.854 targets.
USDCAD: The USDCAD has been in a range of 1.32525 to 1.33807 for 7 plus days with BOCs Poloz on the speaking agenda late in the NY session. Surely, he would give the USDCAD a shove one way or another especially with the July 11 meeting coming up and the market 60-40 on a hike. Well, he was a little cautionary with his comments but the chance of a hike still sits around 50-50. The USDCAD moved to high of 1.3385 - just 4 or so pips above the June 22 high and then backed off. The pair trades around 1.3335 at the close, and back toward the middle of the range. The 100 hour MA at 1.3301 and rising 200 hour MA at 1.3277 are support targets in the new day. The price has not traded below the 200 hour MA since June 14.
