Forex news for NY trading on August 4, 2016
- US stocks end little changed on the day
- Philly Fed's Harker: Fed will continue to monitor global economy
- Infograph: A look at the trends in the US employment picture
- WTI Crude oil settles at $41.93/BBL
- More Carney: This time on UK Channel 4 news
- The bell rings the fourth time at the lows in the GBPUSD
- Little support at support in the USDCAD
- A 6.2 magnitude earthquake shakes Iwo Jima
- Fitch: BOE stimulus cushions but will not offset Brexit shock
- EURGBP doing a little backtracking
- BOE Carney: "We haven't thrown everything at it"
- Atlanta Fed GDPNow estimate for 3Q up to 3.7%
- European provisional closes for the day. It's an up day.
- AUDUSD making new day highs
- Pick a number, win a prize in our Non-farm payrolls competition
- Carney on BBC: Rehashes comments from earlier
- Carney's back! More comments to hit shortly - Livesquawk
- June 2016 US factory orders -1.5% vs -1.8% exp m/m
- The bar room brawl is settling a bit.
- Carney's done his bit now it's over to you Theresa May
- GBPUSD moves back above resistance at 1.3161. Now support.
- US initial jobless claims 269k vs 265k exp
- Carney: We did not cut more than 25bps because we used other measures
- Carney: This is the appropriate response to the underlying conditions
- I'm not a fan of negative rates and we have other tools to use if needed says Carney
- Carney: BOE can act quickly and has done so
- GBPUSD continues to tumble as Carney speaks
- BOE Inflation Report press conference: Decision to leave the EU marks a "regime change"
- BOE action - Overdue or overkill and what does it mean for the pound?
- UK's Hammond says BOE and government have tools needed to support the economy
- BOE warn of higher near term inflation due to sterling's weakness
- BOE Quarterly Inflation Report: Biggest downgrade of GDP from one report to another
- BOE cuts interest rates to 0.25% vs 0.25% exp Extends QE by £70bn
The BOE cut interest rates by 25 basis points and increased QE purchases by 70B to 435 pounds (60 bonds/10 corporate bonds). The package was a bit higher than expectations and led to a sharp decline in the GBP. The currency was the weakest of the major pairs - falling against all the major pairs.
After some initial gyrations that saw the GBPUSD move lower - only to snap right back - the sellers entered and kept the pressure on the pair for most of the trading day. In the process, the pair fell below the 100 bar MA on the 4-hour chart and stayed below that level (currently at 1.3214). That MA provided support going back to the end of July and into early August, so falling below that MA is significant from a technical perspective. Closer in, the pair fell below the 50% of the move from the Brexit low. That level comes in at 1.3135. Sellers are in control.
EURGBP also had a big move in trading today - helping to pressure the GBPUSD in the process. That currency pair moved up to key resistance against prior swing highs/lows going back to early July at the 0.8484-92 area. The pair moved up to a high of 0.8496 before backtracking to the 0.8470 area. It is closing near within the resistance area at 0.8486. A move above this area in the new trading day should increase the bullishness for the pair (and potentially the bearishness for the GBPUSD).
The EURUSD initially moved in sympathy with the GBPUSD's weakness, and moved to a session low at 1.1113. The pair then caught a bid in response to the move higher in the EURGBP. The correction higher moved up to the 1.1148 level - short of key resistance at the 1.1153-59. Stay below that level, and the bears remain in control and I would expect a test of the 1.1100. level in the new trading day (the 200 hour MA is up to 1.1105 currently). Move above that level and the 100 hour MA at 1.1173 will be eyed.
The USDJPY continued to waffle near the lows with little change from the close yesterday. The continued consolidation has brought the 100 hour MA closer to the price. The price is going out at 101.22 while the 100 hour is at 101.62 (and moving lower). Traders are likely happy to rid the oversold condition with the consolidation and make the next trading decision on the back of the US employment report which will rock the forex market tomorrow at 8;30 AM ET/1230 GMT. A stronger number, will have the pair moving back above the 100 hour MA and toward the next targets at the 102.11 and 102.85-103.00 area.
The USDCAD held resistance against the 100 hour MA in the London morning session. IN the North America session, the price started to fall as oil prices moved higher. Stops were triggered on a move below the 200 bar MA on the 4-hour chart at the 1.3010 level. That sent the price to a low at 1.2994 but buyers entered and rallied the pair about 35 pips from the low. The pair is ending the day at the 1.3017 level - just above the 200 bar MA at the 1.3010 level. That level will be the barometer for bullish/bearish in the new trading day.
The AUDUSD was the strongest currency of the major currencies. Against the USD, the AUDUSD took out the August high at 0.7637 and also trend line resistance on the 4-hour chart at the 0.7631 level. However, the pair is going out just below those levels at 0.7626. Will the sellers start to put a lid on the pair in the new trading day? The RBA monetary policy statement will be released in the new trading day. Has the market already discounted the statement? Watch that technical levels for "market" clues.
In the NY trading day, the market will be positioning for the US employment report. The expectations are for the US to add about 180K jobs and for the employment rate to tick to 4.7%. Last month the report rebounded with a jobs gain of 287K after a woeful report in May of 11K. A number like 180K would be near the 2016 average of 172K and would be indicative of a healthy job market. Average hourly earning are expected to rise by 0.2% MoM and 2.6% YoY. Like the BOE decision risk will be increased so be careful. We are in the summer months and liquidity conditions are suspect. So plan your trade accordingly.
Below is a snapshot of the % changes of the major pairs vs each other.
