Forex news for trading on April 3, 2017.
- Stocks making a comeback as the market heads to the finish line
- Feds Harker supports 2 more rate hikes this year
- US auto sales comes in at 16.53M annualized seasonally adjusted for March. Tesla stockholder don't care.
- WTI crude oil futures settle at $50.24
- Forex technical analysis: USDCHF finding some reluctance against MA/retracement resistance
- USDCAD tests 50% retracement. Highs from last few weeks
- Snapchart: EURGBP tests 100 day MA
- SF Fed: Rates have greater economic impact than thought
- Europe dresses in red for the first trading day of April
- Atlanta Fed GDPNow up to 1.2% from 0.9% last
- We need more government backed innovation to spur productivity says IMF's Lagarde
- JPY pairs hit the skids
- USDJPY falls through 111.00 as April kicks off with mixed messages
- BOC Business outlook survey: Modest recovery/Signs of strengthening demand
- Data ok, but dollar falls
- US construction spending for February 0.8% vs. 1.0% estimate
- March 2017 US ISM manufacturing PMI 57.2 vs 57.2 exp
- March 2017 US Markit manufacturing PMI final 53.3 vs 53.5 exp
- March 2017 Canada Markit manufacturing PMI 55.5 vs 54.7 prior
- 10 dead and 20 injured in St Petersburg Metro explosion
- The strongest and weakest currencies as NA traders enter for the day
In other markets:
- Spot gold is up by $3.54 or 0.28% to $1252.98
- WTI Crude oil is ending at $50.26, down -$0.34 or -0.67%
- 2 year yield is 1.226%, -2.8 bp
- 10 year yield is 2.324%, -6.2 bp
It was a quiet Monday for some pairs like the EURUSD (39 pips), USDCHF (30 pips) , AUDUSD (pips) and NZDUSD (29 pips). For other pairs, the GBPUSD (91 pips), USDJPY (73 pips) and USDCAD (111 pips) the ranges were more normal. The JPY crosses ke EURJPY and GBPJPY were also more lively and had more normal trading ranges.
The USDJPY and the JPY crosses were more trendy to the downside. Lower US interest rates (10 year yield down -6.2 bp) and a leaky stock market (although rallied off the lows) helped lead to a safety bid in the JPY pairs.
The GBP was weaker for most of the day as UK Markt PMI unexpectedly declined. The GBPUSD did stall near technical support in the NY session though. The EURGBP also stalled at technical resistance which put an end to GBP weakness in the NY afternoon session.
IN the news today, US data was not too bad (should have been supportive), but there was some dollar selling reasons too.
The good:
- ISM manufacturing came in as expected but New orders were pretty good at 64.5 and employment jumped to 58.9. I thought that was pretty good.
- Construction spending was up 0.8% which was less than 1.0% estimate but the prior month was revised higher to -0.4% from -1.0%.
The not so good:
- US auto sales came in weaker than expectations at 16.53M vs. 17.47M est.
There was also a terrorist bomb go off in St. Petersburg which may have led to a flight into the relative safety of the JPY and perhaps US debt instruments as well. With the 10 year yield down so much, it certainly had an impact on the greenback (especially the JPY pairs).
The Fed's Harker spoke about raising 2 more times in 2017 (that is par for the course). He did not talk about getting rid of QE like other members spoke about last week.
Finally, the BOC Business outlook survey was released. The results suggested a modest recovery in business sentiment after a two-year period of weakness. The CAD was weaker into the report but went sideways/corrected into the close.
What do the technicals say for some of the major currency pairs?
The EURUSD traded up and down. In the NY session there was a move to new session lows, but that 'break" (if you can call it a break) could only extend the trading range some 8 pips. At the lows the pair tested trend line support on the hourly chart (see chart below). That gives me a little more confidence for a bounce in the new trading day.
The GBPUSD did most of the selling in the London morning session. Nevertheless, there was a little more downside in the US session. That fall took the price down to the 50% of the move up from last weeks low to the high on Friday at 1.2466 level. The 100 hour MA was also near the level. The pair trades between support at 1.2466 and resistance against the 200 hour MA at 1.2493 going into the new trading day. There are reasons to expect a fall (concerns about Brexit) but there are also reasons to think the pair has most (if not all) of the bad already priced in. So trade the technical breaks is my suggestion.
The EURGBP pushed higher for most of the trading day as the GBPUSD charged lower. However, once it reached the 100 day MA at 0.8554 (see post), the buyers started to take profit. Stay below is more bearish. Move above, and we should see more buying.
The USDCHF traded more like the EURUSD today - in a very tight up and down range. The high for the pair did find sellers against the 200 bar MA on the 4-hour chart AND the 61.8% of the move down from the March high (at 1.01698) to the March low (at 0.98128) at the 1.00334 level. The price wandered down to 1.0015 by the close. In the new trading day, a move below the 1.0000 level will be eyed to keep sellers happy. The 100 hour MA comes in at 0.9983 and that too is a target. A move above 1.0033 should solicit more buying.
The RBA is expected to keep rates unchanged when they announce at 12:30 AM ET/530 GMT. The AUDUSD's high today came in around the 0.7638 level. That is where the 100 and 200 bar MA on the 4-hour chart is found. IF the statement is such to give the AUDUSD a bid, look for that level to be broken and the bias to switch back to the upside. ON the downside, a move below 0.7587-89 (low from last week and today's trading) should open the door for further selling.
For the USDJPY, the pair sold off below the 100 hour MA at 111.08. The 50% of the move up from last weeks low comes in at 111.147. Once the price fell below that level, the price stayed below. It is a close risk level for shorts. A move higher wall also need a break back above the 100 hour MA at 111.32. Be aware. On the downside, getting below and staying below the 110.615 to 110.728 area would be needed to solicit more selling.
Below is a snap shot of the % changes of the major currencies vs each other.
