Forex news for NY trading on November 28, 2018.
- Nasdaq up over 200 points. Dow up 600 points
- The US government might know what's in your Bitcoin wallet
- UK government proposes five days of Brexit deal debate
- Crude oil sniffs the $50 level. Bounces.
- UBS has three big forex trade ideas for 2019
- BOE Brexit forecasts adds more evidence to politicisation of the central bank
- US sells 7-year notes at 2.974% vs 2.980% WI
- Powell Q&A: Estimates of neutral rate and maximum employment highly uncertain
- Powell turns dove, markets roar and US dollar sinks
- BOE Carney: BOE is ready for any Brexit outcome
- Fed's Powell: Rates 'just below' neutral range
- European major indices end the session mixed
- BOE Brexit analysis: Worst case would lead to 8% fall in GDP in short term, 25% fall in GBP
- Bitcoin found buyers. Move above 100 hour MA and 200 hour MA good for bulls
- ECB leaning towards tweaks to QE reinvestment policy - report
- US weekly crude oil inventories +3577K vs +1000K expected
- Richmond Fed manufacturing index 14 versus 15 expected
- US October new home sales 544K vs 575K expected
- The tide of public opinion is slowly turning on the Brexit deal
- Trump hints at auto tariffs in tweet
- ECB's Lane: No current plan to raise interest rates
- US advance goods trade balance -77.25B vs -77.0B estimate
- US wholesale inventories for October +0.7% versus +0.4% estimate
- US Q3 advance GDP (second reading) 3.5% vs 3.5% expected
- The GBP is the strongest. The CAD is the weakest as NA trader enter for the day
In other markets:
- Spot gold up $5.80 or 0.48% at $1220.82. The lower US dollar helped to push the price of gold higher
- WTI crude oil futures are down $1.16 or -2.25% at $50.40. The low traded to new year lows at $50.06 but could not push below the psychological $50 level.
- Bitcoin on Coinbase is trading up $532 at $4297. That is a 14% surge. Technically, the digital currency moved above it's 100 hour moving average at $3847 and its 200 hour moving average at $4111. If the price can stay above the 200 hour MA, the bulls are more in control. The $4500 level is the next target on the topside.
The day today saw the revision to the 3Q GDP came in as expected at 3.5%,. There was a bigger and record goods trade deficit in the US. The inventories were higher (not so great). The new home sales were much weaker than expectations.
However, what the market was really waiting for was, what would Fed Chair Powell say during his speech at the NY Economic Club.
When the headline came out saying "No preset policy path, rates 'just below' neutral range", the market jumped all over that:
- The USD sold off
- Stocks soared.
I can't say that rates came tumbling lower, but the 2 year yield fell a few BPS but the 10 year actually went up a little (steeper curve), but the 10 year is down from close to 3.3% (now 3.06%). So perhaps it was already discounted a bit. Below are the highs, lows and ranges for the US notes and bonds.
Did I say the stocks soared?
Indeed they did. Looking at the changes and ranges, the US indices did open higher on China trade and Powell hopes, and although the trade piece will not be known until the weekend, the Powell hopes were better than expected, and it led to buying and more buying and even more buying. The market took it on the chin since peaking last month and traders were scrambling to get back in. Below are the final numbers for the US (the indices closed pinned to the highs). European shares closed before the fireworks were ignited. They may have some catch up in tomorrow's trade (all things equal).
In the forex market, the dollar is ending as the weakest of the majors. The NZD and AUD benefited from the risk on trade. They were neck and neck for the strongest currency winner today.
For the EURUSD, the high to low price range before Powell was 34 pips. The day is ending with a range of 121 pips. In the process, the pair moved above back above the 100 hour MA at 1.1336 and the 200 hour MA at 1.1372. The high reached 1.1387 into the NY afternoon and consolidated back lower into the close. Going forward, close support comes in at 1.1357. More conservative support comes in at 1.1336-44 where the 100 hour MA and 38.2% retracement of the November range is found. Stay above, keeps the bulls more in control.
The GBPUSD had a more up and down day leading into the speech on Brexit anxiety. The dollar selling sent the pair from 1.2746 to a cluster of resistance in the 1.2800-17 area. When that area was broken, the price shot higher to 1.2846. Into the new day, the 100 hour MA at 1.2804 and the 200 hour MA at 1.2813 will be eyed as support levels for buyers to lean against (risk) if the buyers are to remain in control. More upside would target the 38.2% of the November move at 1.28554 and then a key ceiling area at 1.2882. A move above 1.2882 would be a more bullish signal for the GBPUSD.
The USDJPY moved higher to test a topside trend line at 114.066. That level stalled the rally. The comments sent the pair tumbling toward the 100 hour MA below at 113.374 (currently). The low for the day reached 113.43 and is closing up at 113.649 (higher stocks helped to slow the decline). Should dollar selling resume in the new day, the 100 hour MA and 38.2% comes in at 113.37. That will be a key barometer for the bulls and bears going forward. A break would be more bearish.
The NZDUSD was one of the weakest currency pairs on the day. The surge higher took the price above the 200 day MA at 0.68644 and above the November high at 0.68828. The high price reached 0.6886. The price is dipping a bit into the close but has been able to stay above the key 200 day MA. That be a be a key bullish/bearish bias level into the new trading day.
What a day for the dollar and for stocks. Has the dollar peaked? Is the selling in stocks over? Unfortunately, with G20 ahead and the important Trump/Xi meeting, we will likely have to wait for the results and early indications are that the odds of a deal, may not be that easy. Time will tell though.
