Forex news for trading on May 4th, 2017
- BOC Gov. Poloz: Canada shows continuing shortfall in exports
- US major stock indices end the day little changed
- Why wages matters far more than just the timing of the next Fed hike
- Trump promises lower healthcare deductibles and premiums
- US crude oil futures settle at $45.52/BBL
- Healthcare bill passes in the House 217-213
- USD/CAD hits fresh 14-month high as the oil drop finally breaks the spirit of the bears
- NFIB small business survey shows some signs of tightness
- The Atlanta Fed GDPNow guesstimate for 2Q down to 4.2% from 4.3% last
- Obama endorsement helps Macron crush Le Pen like an ant under foot in IFOP French election poll
- Non-farm payrolls preview by the numbers for the April 2017 employment report
- We don't want to punish the UK over Brexit says Schaeuble
- Who's coming for a ride on the EURUSD 1.10 train?
- New lows: Oil doesn't care about OPEC anymore
- Draghi: Europe must act together to deal with challenges
- EU's Tusk warns about getting emotional over Brexit
- Here comes the OPEC deal chatter: Likely to extend and increase cuts
- Eurogroup could address Greek debt in the near future
- Iron ore is an anchor on the Australian dollar
- Russian oil minister says inclined toward extending OPEC production cut deal
- March 2017 Canadian trade balance -0.14bn vs -0.80bn exp
- March 2017 US International trade balance -43.7bn vs -44.5bn exp
- US Initial jobless claims 238k vs 248K est.
- US Q1 prelim unit labor costs 3.0% vs 2.7% q/q (annualized) expected
- The strongest and weakest currencies as NA traders enter for the day
In other markets today:
- Crude oil tumbled lower. It trades at $45.41 in after hours trading, down -$2.40 or -5.0%
- Spot gold is lower by -$9.50 to $1228.76.
- US bond yields are up with the 2 year at 1.305% up 1.2 bp. The 5 year at 1.881%, up 2.9 bp. The 10 year at 2.350%, up 3.2 bp. The 30 year at 2.996%, up 2.8 bp.
- US major stock indices ended the day little changed from the closing levels.
Economic releases in the US today showed unit labor costs rising by 3.0% for the 1Q, but that lowered productivity by -0.6%.
US trade balance had a lower deficit at -43.7B vs -44.5B. Canada had a trade deficit as well at -0.14B but that was less than the -1.00B estimate.
Initial jobless claims were better than expectations at 238K vs 248k estimate. Tomorrow the US will release the most recent employment statistics.
Finally, the US Factory orders for March came in less than estimates at +0.2% vs +0.4%, but durable goods orders were revised higher to +0.9% vs 0.7% from the 1st cut.
The weaker data helped to push the dollar a bit lower in the NY session.
Stocks - which were up in pre-market trading on the back of expectations the US House of Representatives would pass the revises health care bill - lost most of those gains into the opening as it became apparent, the US Senate would not follow the House's lead. That too helped to weaken stocks and the greenback a bit into the US opening. However, stocks ended up clawing back most of the earlier declines, and ended near unchanged on the day. PS the House did vote for the repeal and replace of the healthcare bill by a vote of 217-213 in the NY afternoon session.
In other markets, Crude oil futures tumbled nearly -5.0% in trading today and the price of other commodities fell as well. The Thomson/CRB index fell by -1.88%. That helped to keep the commodity currencies depressed, although the AUD, NZD and CAD all rebounded off multi month lows into the close. Technicals do matter.
As mentioned the US will release the employment statistics tomorrow at 8:30 AM ET (see preview here), with the expectations for NFP to show 190K new jobs were created in April. That is up from the 98K last month. The unemployment rate is expected to move back to 4.6% from 4.5% last month. Hourly earnings are expected to rise by 0.3% vs 0.2% last month (2.7% YoY - see Adam's post on earnings here). Recall last month was a disappointment but weather was to blame. Does that weather effect disappear.
Canada will also release employment statistics tomorrow with the net change in employment to add 10K vs 19.4K last month (Unemployment rate is expected to remain steady at 6.7%).
Of interest in the new trading day will be the cast of Fed officials who will be speaking.
- Vice Chair Fischer will speak at 11:30 AM ET
- Fed's William's will speak at 12:45 PM ET
- Fed's Rosengren, Evans and Bullard will all speak on a panel at 1:30 PM ET
- Fed's Yellen will be speaking at Brown University also at 1:30 PM ET.
The FOMC statement did not reference the balance sheet wind down this week. Will the Fed members spill some of the beans. The Fed is largely expected to hike rates at the June FOMC meeting and indications are that at some point in 2017, they will start to unwind part of the 4.4T balance sheet.
What are some of the key technical levels in play as traders prepare for the Employment report and Fed speak tomorrow?
The EURUSD trended higher in trading today. In the process the narrow trading range for the week was extended from around 60 pips to 112 pips. In fact the low to high range today, is the low to high range for the week. On the move higher, the pair is approaching a key trend line at the 1.1004 area (see post here). A move above that level in the new day opens up the upside for a potential move up toward 1.1100 and 1.1128 (61.8% of the move down from the May 2016 high).
The USDJPY did reach a new high going back to March 17 today and also tested a topside trend line at the 113.00 level (the high reached 113.04 - see detailed post here). Sellers against the key resistance trend line (and dollar selling), pushed the price through intraday support. The 100 hour MA at 112.139 (and rising) should be support on a test. The price has traded above the MA level since April 19th. On the topside, should the price renew the upside momentum (today was the first down day after 5 straight up days), the 100 day MA is up at 113.188. The price has been bellow the 100 day MA since March 17th. Be aware.
The GBPUSD fell below key support at 1.28597 in the London session today but better UK non mfg. ISM data reversed that break (see post here). The price rally took the price back above the 1.2900. Most of the NY session traded above that level. The 1.2930-36 is the next resistance target to get above (and stay above). On a correction lower, the 1.2900 level is as good a level to define bullish or bearish bias. If it can hold, traders may look for a test of the 1.3000 level by the time the week is up.
The USDCAD was reluctant to go higher for most of the NA trading session even though crude oil was sharply lower. Finally in the NY afternoon, a fall in oil toward $45.25, led to a quick pop higher (high reached 1.3776). The pair remains above the 100 hour MA at 1.3698 (and rising). That MA remains a risk defining level for longs.
Finally, the AUDUSD fell to the lowest level since Jan 11th and tested support at the 61.8% at the 0.73846 (see post here). The correction off that support level has been modest (to 0.7413). The 100 bar MA on the 5 minute chart is at 0.7400 currently and has started to move higher. Stay above the 0.7400 sounds like a logical plan for buyers trying to pick a bottom. A move below that level and all bullish bets are off for that pair.
That's it for me. Have a great day, night and for those in the Asian, Australian, New Zealand, have a great weekend.
-----------------------------------------------
Below is a snapshot of the winners and losers in the currency markets today.
