Forex news for NY trading on September 4th, 2018
- US stocks end the session modestly lower
- Barnier: Chequers plan 'dead' is dead and May should aim for Canada-style deal
- What's priced in for Wednesday's Bank of Canada decision
- Manfred Weber is quickly becoming the favorite for Juncker's job
- Crude oil settles at $69.87. New highs since July stall and gains erased.
- GM said to report 13% US auto sales drop, estimate was -7.7%
- There's a crack in the emerging markets dam
- Cable bounces back above 1.2850 after Irish border report
- Merkel: Goal is reach an agreement on Brexit but UK can't enjoy same rights
- Jon Kyl to be named as successor to John McCain
- USD remains the strongest of the majors today, but some pairs found some profit takers
- European officials planning workaround for Iran sanctions - report
- European stocks end mostly lower. Italy bucks the trend.
- Atlanta Fed GDPNow Q3 GDP 4.7% vs 4.1% prior
- Bob Woodward is coming out with a book on Trump and the details are out
- Dairy auction: New Zealand GDT price index -0.7%
- US August ISM manufacturing index 61.3 vs 57.6 expected
- US construction spending for July 0.1% vs. 0.4% exp.
- US August final Markit manufacturing PMI 54.7 vs 54.5 expected
- Carney: The core expectation is a Brexit deal but there will be a lot of headlines between then and now
- Canada August Markit PMI 56.8 vs 56.9 prior
- Carney: BOE doesn't have a forecast for a no-deal Brexit
- The USD is the strongest. The NZD is the weakest as NA traders enter
In other markets:
- Spot gold is down -$7.90 ore -0.66% at $1193.25
- WTI crude oil is down -$0.50 or -0.74% at $69.29.
- Bitcoin is up $60 at $7349.96. The high reached $7402. The low $7229.94.
US stocks are ending the day with modest declines but well off the session lows.
- The S&P is closing -4.82 or -0.17% at 2896.70. The low reached 2885.13. The low extended to 2900.18
- The Nasdaq is closing down -18.29 points or -0.23% at 8091.24. The high reached 8104.07. The low extended to 8042. 14
- The Dow is closing -12.34 points or -0.05% at 25952. The high reached 25971.72. The low reached 25805.95
In the US debt market, the yields moved higher with the yield curve steepening.
Last week, the 2 to 10 spread dipped below the 20 bps level. Today it is back up to near 25 bps as better data, helped to push yields higher today.
In the forex market, the US dollar entered the North American session as the strongest currency, and continued that trend in the morning session.
Helping the run higher was manufacturing data. The Markit manufacturing PMI came in higher at 54.7 vs. 54.5, but it was the ISM manufacturing index which showed incredible strength. The index rose to 61.3 vs 57.6 estimate. That reading was the highest reading since 2004. Below are some of the major component pieces:
- Production 63.6 vs 58.5 prior
- New orders 65.1 vs 60.2 prior
- Employment 58.5 vs 56.5 prior
Not bad and should be good news for the US employment report to be released on Friday. In other fundamental economic news today:
- US construction spending rose 0.1% - lower vs. the 0.4% expectations. Softening the blow was a rise in the revision to -0.8% from -1.1% previously reported.
- In Canada the August PMI came in near expectations at 56.8 vs 56.9.
The data helped to push the EURUSD to a new low for the day at 1.1529. However, when the price stalled at the swing low from August 23 - that happened to be at the same 1.1529 level - sellers turned to buyers and the price started to rebound back higher. A little after the London close, there was a headline that the "EU could adjust Irish border backstop to win Britain's approval in Brexit negotiations", that helped to push the pair (and the GBPUSD as well) higher. The pair is closing the day at NY session highs at 1.1585. That is still lower on the day, but well above the 1.1529 lows.
The GBPUSD is another pair that had news . Specifically, BOE Carney (and other BOE members) testified to Parliament Treasury committee. In addition to keeping the door open for staying as BOE Governor until the Brexit transition, Carney said the economy is operating as if there is a no-deal Brexit and that the vast majority of firms are not prepared for no Brexit. The testimony (and better US data) sent the GBPUSD toward the London morning low at 1.2810. That was just above the 61.8% retracement of the move up from the August 15 low at 1.28069. Like the EURUSD, buyers entered against the risk defining level and the price rebounded. The NY session high at 1.2869, tested the close from yesterday at 1.2867. The pair is closing off that level at 1.2852 (which is the midpoint of the move up from August 15).
The USDCAD continued the trend higher on the back of no-NAFTA prospects. The price reached a high of 1.32078 level. That was up from the 1.3086 close from yesterday. So it was a big move higher for that pair. The pair is closing near the highs at 1.3190.
The USDJPY moved above the 100 and 200 hour MA in the Asian session at 111.19 -20 area and apart from one quick dip below - that failed in a matter of minutes - stayed above those MA levels. Having said that, a swing area at the 111.48-51 stalled the rallies on no fewer than 6 hourly bars. That is a strong ceiling. So support at the 100/200hour MA at 111.19/20 and resistance at 111.48-507.
The NZDUSD was the weakest pair of the majors today and in the process moved to the lowest level since January 2016. However the low could only get below the 2018 August 15 low by 4 pips. That is not a runaway break. So traders will need to see more in the new day or we will likely see a corrective move higher (See post here)
A snapshot of the strongest and weakest is showing the USD ended the day as the strongest currency the NZD is the weakest.
