Forex news for NY trading on March 27, 2018
- WTI crude oil futures settle at $59.41
- It's telling that so many votes are switching on May's promise to quit
- Another harsh takedown of Stephen Moore
- 40 ERG members have switched to backing May's deal, 40 others undecided - report
- The DUP hasn't changed its mind on the Brexit deal - report
- Dallas Fed survey offers some insight into US shale profitability
- May told MPs she will quit when Brexit delivered
- US sells 5-year notes at 2.172% vs 2.162% WI
- European stocks end the day mixed
- Chatter is that third meaningful vote will come on Friday
- Is the DUP about to cave?
- UK parliament business motion passes
- Odds of a Fed rate cut before year-end continue to rise
- Atlanta Fed GDPNow moves up to 1.5% from 1.3% prior
- US EIA weekly oil inventories +2800K vs -2500K expected
- US Q4 current account -$134.4B vs -$130.0B expected
- US bond market continues to scream warning signals but here's the real issue
- US January trade balance -$51.1B vs -$57.0B expected
- Canada January international merchandise trade balance --4.25B vs -3.55B expected
- The JPY is the strongest while the NZD is the weakest as North American traders enter for the day
In other markets:
- Spot gold is down -$6.30 or -0.48% at $1309.36
- WTI crude oil is down -$0.55 or -0.92% at $59.39. DOE data today showed a build of 2800K (vs -2500K drawdown estimate).
- Bitcoin rose $87 to $4000 on Coinbase. The high reached $4032. The low extended to $3908.
In other markets today, US stocks closed lower but well off the lows. The low in the Nasdaq index held support at the 200 hour MA at 7580 (low reached 7582 - close enough). The price will have to go below that level to turn the bias more bearish.
European shares ended the session mixed. Below are the changes and ranges for the major stock indices.
In the debt market, US yields ended down with the 2 year down the most (-6.0 bps). The US auctioned 5 year notes at 2.172%. That was 1 bp above the WI level. Not a strong bid. The Bid to cover came in at 2.35x which was in line with the 6 month average. The tail was in contrast to the stellar 2 year auction yesterday, where the auction yield was less than the WI level by about 1 bp.
The 5 year yield fell the least on the yield curve as a result, but overall, the fall in yields. The fall was helped by comments from Trump Fed nominee Moore who said he would approve an immediate 50 bp cut if his nomination was approved.
In Europe, the 10 year yields were also mostly lower on the day.
Economically, the US showed a much better than expected trade deficit of -51.1B vs -57B estimate.
- Exports +0.9% vs -1.9% prior
- Imports -2.6% vs +2.1% prior
Imports from China were down 9% y/y with capital goods imports down. Tariffs and a slower economy seem to be contributing.
The lower deficit helped to increase the Atlanta Fed GDPNow tracker for the 1Q to 1.5% from 1.3%.
I can't really say the news helped to send the USD higher, but it may have helped a little. The USDs move higher today, was more influenced by a tumbling NZD and AUD predominantly on the back of a shift in sentiment by the RBNZ to lowering rates as the next likely move.
The other news was the horse jockeying between the lawmakers as they prepared and debated to vote on alterntives to the PMs plan (indicative votes). In the runup to those plans/votes, the PM told the 1922 Committee of party backbenchers, "I am prepared to leave this job earlier than I intended in order to secure a smooth and orderly Brexit".
That seemed to have started to turn some of the tide toward coming to an agreement on the PMs plan - including some ERG members and other anti-May antagonists including Jacob Rees-Moog, Boris Johnson and Iain Duncan Smith. However, an ERG spokesman - late in the day - did say that there is "no way enough votes" that are switching to May's deal. It seems May's deal will need the support from some Labour members.
The GBPUSD did make a play to the upside on the hope for a deal with the pair moving to new week highs above the 1.3261 level. The high got to 1.3268. However, as news that there still was not enough votes, the price rotated back lower. UGH. When will it all end?
Anyway, below is a snapshot of the strongest and weakest currencies. The GBP is indeed the strongest. The NZD is the runaway weakest.
Some technical views into the new day:
- GBPUSD held the 200 hour MA at 1.32124 in the NY afternoon. Earlier in the NY morning session, the price held above the 100 hour MA at 1.31867. That area - between 1.31867 and 1.32124 is a neutral area. Move below, would be more bearish. Although the break to new highs failed today as the horse jockeying went on, the bulls are still a little more in control above those MA levels
- The EURUSD had an up and and down day but is ending the day near the lowes for hte day at 1.12437. On more weakness, the 1.1221 (lows from March 11) and 1.1175 (low from March 7th) will be targets. If the traders are to turn move bullish - even by a little - a move back above the low from last Friday at 1.1273 , and a downward trend line near the same level, would be needed. that would be the minimum for buyers to take some control from the sellers.
