Forex news for NY traders on May 30, 2017.
- US stock indices end the day in the red
- US launches first-ever test to intercept ICBMs
- US 10 year yield moves toward key support area
- US crude oil futures settle down -$0.14 on the day.
- Forex technical analysis: NZDUSD trades at highest level in nearly 3 months
- Q&A Brainard: Wants balance sheet unwind to be both gradual and predicatable
- Brainard shifts the rate-hike debate to September
- Mexico Central Bank Carsten: Rate hikes should not affect growth expectations
- European stocks end the day lower (near mid ranges)
- Atlanta Fed GDPNow estimate rises to 3.8% from 3.7%
- June 14 Fed hike odds rise after data slate
- German foreign minister tries to cool off Merkel-Trump row
- Dallas Fed manufacturing index 17.2 vs +15.0 expected
- US May consumer confidence 117.9 vs 119.8 expected
- More on the ECB sources story that sent the euro higher
- US 20-city house price index +5.89% vs +5.61% y/y expected (NSA)
- Bond unimpressed by the PCE data
- Canada current account balance -14.05B vs -12.0B est
- Canada Industrial Prod Prices 0.6% vs. 0.8% last Raw Material Prices 1.6% vs -1.6% last
- US April core PCE 1.5% y/y vs 1.5% y/y expected
- Germany May CPI flash mm -0.2% vs -0.1% exp
- Euro spikes higher on reports that ECB to discuss removing easing bias at June meeting
- Fed's Kaplan sees two more rate hikes in 2017
In other markets today:
- Spot gold is trading down -$6.45 to 1263.13
- WTI Crudie is trading down $-0.28 to $49.52
- US 2 year yield are lower. 2 year 1.2857%, down -0.7 bp. 5 year yield 1.754%, down 3.4 bp. 10 year yield 2.2063%, down 4 bps. 30 year 2.876%, down 3.5 bps
- US stocks ended lower on the day. It was the first decline after 7 straight gains. S&P down -0.12%. Nasdaq down -0.11%. Dow down -0.24%.
Today, US Core PCE came out +0.2% (vs +0.2% estimate) and the YoY came in at 1.5% vs 1.6% last month. The YoY is the lowest since December 2015 after peaking near 1.8%. It is going the wrong way.
Later in the trading day, Fed governor Lael Brainard spoke about her concerns about inflation being too low. The PCE is a favorite of the Fed and it remains well below the 2.0% preferred level (there are some on the Fed who would like to see inflation above the target since it has been so low for so long).
Other data in the US showed Personal spending and income each up 0.4% for the month (as expected). The S&P/Case Schiller home price index rose 0.87% for the month and is up 5.89% for the year. Consumer confidence from the Conference board fell to 117.9 vs 119.8 estimate but remains near the highest levels (and only dipped slightly from the most recent peak).
The US dollar was not in a run away mood today, but the lower inflation gave the pair a little softer bias today. Helping the cause, was lower bond yields which saw the 10 year note yield move toward the 2.20% level. The low in April came in at 2.165% and in May at 2.17%. The 200 day MA is also at that area. Should yields continue to move toward that level and should there a be a break, that might be a technical catalyst for a run toward 2.00% in the 10 year which in turn should soften the dollar further. However, note that the yield is approaching that key support level, and it just as easily could help lead to a rebound in yields and the US dollar as well. So just be aware that 2.16% is a key level for the 10 year.
Technically...
- The USDJPY is closing below the 1.1100 level after weakness in the NY session saw the price move lower. The pair fell below the 110.86 level which was a double bottom from May 23rd and May 26th. We are not too far from the level, but have stayed below in the NY afternoon session. That level (and 111.00) will be eyed as close resistance in the new trading day. Stay below and the 110.23 low form May 18th becomes the next downside target. Move above and the 200 hour MA at 111.38 becomes the target.
- The EURUSD has traded above and below its 100 and 200 bar hour MAs which are converged at 1.11875. The low today was reached in the Asian session just above the 38.2% of the move up from the May low at 1.11038. If that is it for the correction, it is not much. The bulls do need to get and stay above that 1.11875 level though.
- The GBPUSD rallied up to the 100 hour MA in the early NY session at 1.2881. The high reached 1.2887 and the price started to rotate back lower. The low stalled at the 50% and 200 bar MA on the 5-minute chart (it was also the close from Monday see post here) at the 1.2839 area. The price is closing at 1.2857. Above is the 100 hour mA at 1.28748 (and moving lower). The 200 bar MA on the 5 minute chart is higher now at 1.2850 but is a close technical level in the new day. Move below and sellers are more in control. On the topside, the decision is easy....get and stay above the 100 hour MA.
- The USDCAD rallied early in the North American session on the back of a widening current account deficit and lower oil prices, but failed on a break of its 200 hour MA (was the first break since May 15th). The fall has taken the price back down to its 100 hour MA at 1.3453 in the NY afternoon session. The price decline has stalled. So we end the day with support against the 100 hour MA at 1.3453 and resistance against the 200 hour MA at 1.3490 (and moving lower).
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Below is a snapshot of the % changes for the major currencies vs each other today.
