Forex news for trading on May 31, 2017...
- US stocks end the day down, but could have been much worse...
- The best forex trade in May had an antipodean flavor
- Gold touches five-week high. Six reasons for the rally
- Crude oil futures settle at $48.32
- The Fed's Beige Book: Most districts reported modest, moderate growth
- ECB's Nowotny: It's possible that inflation rates will remain low in long term
- Poll puts Theresa May ahead by six points as race narrows
- The SNB's Jordan does his usual rant against franc strength
- Amongst all the volatility, this is probably the most-important chart
- Weidmann says ECB should start to discuss whether and when to adjust guidance
- More of the Fed's Williams comments on price level targeting
- Russian deputy fin min says oil bulls will be disappointed for a long time
- Chicago PMI revised/corrected to 59.4 from 55.2 earlier today
- Cable ignores the polls and rips through the fix
- US April pending home sales -1.3% vs +0.5% m/m expected
- May Chicago PMI 55.2 vs 57.0 expected
- Theresa May: The only poll that matters is the June 8 election
- US will exit Paris climate change deal - reports
- ECB's Lautenschlaeger: ECB should prepare to slowly reduce stimulus
- More from Kaplan: Inflation not running away from us
- Canada Q1 GDP q/q annualized +3.7% vs +4.2% expected
- Fed's Kaplan: Inflation is slow and uneven but don't think trend deteriorating
- The strongest and weakest currencies as NA traders enter for the day
A snapshot of other markets at the close:
- US stocks ended the day with modest declines. S&P down -0.05%. Nasdaq down -0.08%. Dow down -0.10%
- US yields are little changed from yesterday's close. 2 year 1.2818%, unchanged. 5 year 1.7516%, unchanged. 10 year 2.204%, down -0.5 bps. 30 year 2.8664%, down 1 bp.
- Spot gold up $6 or +0.48% to $1269.25
- WTI Crude $48.74, down $-0.91 ore -1.83%
The US dollar was mixed in trading today with the greenback falling vs the EUR, CHF and GBP, and rising vs the AUD, NZD and CAD. It was little changed vs. the JPY.
Fundamentally, the greenback was influenced by some weaker US data. The Chicago PMI typically has a limited impact on the market. Today was not one of those days (some technical breaks may have also contributed). The regional manufacturing index came out weaker than expected at 55.2 vs 57.0 estimate. That was enough to push the greenback lower - mainly against the GBP, EUR and JPY (the commodity currencies were less impacted as oil, iron ore, CRB commodity index were going lower in trading today).
A short time later, pending homes sales were also weaker (supply was the excuse once again) . That weakness - not matte the excuse - did not help the sentiment.
Around the London 4 PM fixing time, there seemed to be another run to the downside in the greenback on the back of month end flows. That pushed pairs like the EURUSD, GBPUSD and USDJPY toward their high extremes vs. the greenback.
Ironically, the piece of data that started the dollars selling, stalled the fall a short time later when the Chicago PMI was revised corrected as European/London traders looked to exit. Instead of being lower at 55.2, the actual number was higher at 59.4. The rest of the day saw a minor retracement in the impacted currencies.
In central back speak today:
- Fed's Kaplan said that inflation is slow but he does not think the trend is deteriorating
- ECB Lautenschlaeger says the ECB should start to reduce its bond buying QE and Weidmann said the ECB should start to adjust guidance.
- SNBs Jordan lamented about the CHFs strength. The CHF was the strongest currency today, so his comments did not have a big impact (although the CHF was only up marginally against the EUR (up 0.17%))
- Finally the Feds Beige book said that growth was modest/moderate.
Technically for some of the major currency pairs:
- EURUSD: The EURUSD had two catalysts for its move higher today. One was the price held support in the 1.1161-71 area (see post here). The other was a move above and away from its 100 and 200 hour MAs (at 1.1182 and 1.1197 respectively. The holding of support and breaking of MA resistance, helped to propel the pair to the swing highs from Friday's trade (at 1.12335), and Thursday's trade at 1.12497. As mentioned above, the correction to the Chicago PMI (and technical resistance at the 1.12497 level) stalled the rally at a high price of 1.11517. The price wandered lower into the close. In the new day, it is about getting through that 1.1250 level. If it can keep the upside momentum going, the May 23rd high at 1.1268 followed by the November election day spike high at the 1.1300 level, will be eyed. Where do the bulls/buyers start to question the move today? A move below 1.1200 will likely have traders looking for the "extended bullish move toward the 1.1300 level", to start to think "the market" has other directional plans for the pair.
- USDJPY: The USDJPY traded lower in a below average trading range of about 74 pips. The price low came in at 110.475. That was a few pips below one of the May 18 swing lows at 110.51.. The other low from that day reached 110.23. That remains a downside target on continued weakness in the new trading day (PS the 200 day MA is at 110.165 which should make the area around 110.20 a tough nut to crack). The price closed around 25 pips above the 110.51 level at 110.75. If I were to say things are looking more bullish, a move above the 100 hour MA at 111.12 (and moving lower) would be the 1st step. The 200 hour MA at 111.319 would be the 2nd step.
- GBPUSD: The GBPUSD was a tale of two days. The Asian day saw the price move lower on a YouGov poll that showed the lead from the conservatives was dwindling away (even said they would lose control of parliament). The 2nd day was the rally in the NY session that saw the price move above the 100 hour MA at 1.2844 (currently), and the 200 bar MA on the 4-hour chart at 1.2879. The run higher stalled between the 200 hour MA (currently at 1.2913) and the 100 bar MA on the 4-hour (at 1.2920). In the early minutes of the new trading day, the price has moved back below the 200 bar MA on the 4-hour chart at 1.2879. Can it stay below that level, is what traders should be focused on in the new trading day. If so, a move back toward the 100 hour MA at 1.2844 would be the next target.
- AUDUSD: Lots of data is scheduled to come out in Australia. Shortly before the close, I outlined the key level for traders to eye. You can find that post by clicking here.
- USDCAD: Lower oil prices and lower GDP, helped to push the USDCAD higher in trading today. The price moved above the 200 hour MA at 1.3475. That is also where a downward sloping trend line cuts across (well it is a few pips lower now). That MA will be eyed as support now. Stay above is more bullish. Having said that, the rally higher stalled ahead of the 50% of the move down from the May 18th high at 1.3527. We trade in between support at 1.3470-75 and resistance at 1.35275. In the middle it is a coin flip, but if the 1.3475 level is tested, look for dip buyers on the test with stops below 1.3466.
Have a great night.
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Below is a snapshot of the % changes of the major pairs vs each other. The CHF and EUR are the strongest, while the AUD and CAD are the weakest.
