Forex trading news for April 5, 2017
- US stocks gives up ALL the stinking gains....
- USDJPY falls to NY session lows as Nasdaq turns negative
- US Crude oil futures settle at $51.15
- The dollar is moving back lower after FOMC meeting minutes
- FOMC meeting minutes: Most Fed officials saw reinvestment shift warrranted
- Trump speaking tough on Syrian chemical attack
- Geopolitics: Trump calls chemical attack in Syria horrible and unspeakable
- Le Pen to get 25% (unch.) in 1st round. Macron at 24.5% (-0.5%)
- European major indices ending the day with mixed results
- Trump Politics: Bannon removed from National Security Council role in shakeup
- Crude oil moving back toward support at $51.00
- EU Dombrovskis: Need to ensure level playing field on passporting rights
- EIA weekly US oil inventories 1.566m vs -150k exp
- Forex technical analysis: I won't say anything about the EURUSD narrow range
- March 2017 US ISM non-manufacturing PMI 55.2 vs 57.0 exp
- March 2017 US Markit services PMI final 52.8 vs 53.1 exp
- Inflation drives policy not asset prices says BOE's Vlieghe
- The strongest and weakest currencies for the day
A snapshot of other markets:
- S&P index down -0.31%. Nasdaq down -0.58%. Dow down -0.20%. They were all up sharply earlier in the day.
- US yields are lower. 2 year 1.226%, -2.6 bp, 10 year 2.33%, -3 bp, 30 year 2.97% -2.1 bp
- Spot gold was down -$13.00 to $1243. It is ending the day unchanged at $1256
- WTI Crude oil is trading at $50.88 after hours. That is now down -$0.16 or -0.33%. The $51.00 is a key technical level for oil.
The dollar got off to a good start today when the ADP employment report showed a gain of 263K vs 185K est. The prior month was revised lower from the 298K oversized gain (to 245K). The two month average of 254K is great at this point of the business cycle. So the dollar moved higher. Stocks also gained at the opening.
Later in the NY session the ISM service data was not as good with the Markit US service composite coming in 52.8 vs 53.1. Then the ISM non manufacturing also disappointed at 55.2 vs 57.0. Both were still above the 50 level but not as good as the market expected.
The data gave traders another reason to not do anything and that is what transpired until the Fed minutes came out.
Lately the Fed minutes have not really moved the needle much. Today, the market would be focused on whether the Fed talked more reducing the Fed's 4.5T balance sheet. Well, they said they did talk about it. The details of the what, when, how, how much or whether it would impact the tightening cycle. So once again the Fed will have some explaining to do down the road. They made their bed. They now have to live in it.
In addition they said that "Some Fed officials viewed stock prices as ' quite high'". Now that Lacker was reentering the private sector (along with Tarullo) maybe they were the one's looking to depress stock prices now that they would be able to buy again. Just joking.
Another headline talked of the uncertainty on how fiscal policy may affect the economy with "some" not expecting any impact until next year.
That headline became more important after Senate Majority Leader Ryan spoke shortly thereafter how the House, Senate and President was not on the same page with regard to tax policy AND that it might take longer than health care to resolve.
So no repeal of Obamacare. No wall. No new lower corporate tax rates. No new tax cuts. And this with a Republican House and Senate. No nothing.
Stocks started to retreat (Dow went from up about $200 to down -41 at the close), and so did the dollar with the USDJPY leading the way. Bond yields also moved lower as a US without fiscal stimulus is equal to <2% growth (we've seen that over the last few years). If that is the case, who needs the Fed then. Gold was down around -$13.00 and ended unchanged.
Oh yeah, we are moving into a key meeting this weekend with China Xi where Trump will look to tackle trade imbalances with China AND what to do about North Korea which is sending off test missiles toward Japan. They are meeting at White House South and to make matters worse, Xi does not play golf. So it is all business. The meeting will be another defining moment for the President who so far has not been that successful with the big stuff he has promised (health care, immigration, the wall, taxes, etc). Syria is also another powder keg situation. He rattled a saber and spoke strongly about the situation today. He also criticized the Obama administration for not acting appropriately in the past. Trump pretty much said "wait and see" what his reaction will be, but he pretty much painted himself in a corner. By the way his once buddy Putin denies involvement.
Will the house of cards start to crumble? If so, maybe the bond market has been onto something of late (10 year down from 2.63% to 2.33% currently.
All that above is a snapshot of what happened and what is yet to come. The picture can change of course, but there could be some risks that could see stocks down, bond yields lower, gold up and dollar moving to safe havens (and out of risk), but also understand things can blow over too and the US employment report is supposed to show good gains. So watch the technicals too.
So what are some of the major pairs doing?
The EURUSD remains mired in a narrow range for the week (55 pips). At some point we will get a move out of the range and see an extension. The low at 1.0634 was taken out by 1 pips today. That did not work. The topside high comes in at 1.06887 for the week. That high was also reached today taking out the old high of 1.0680. So the range for the day, is also the range for the week and both are very narrow. Look for a break and run at some point.
The USDJPY pretty much did a lap higher - helped by the ADP. The high was able to extend back above the 200 and then 100 hour MAs at 111.00 and 111.127 respectively. The high stalled near the 61.8% of the move down from Friday's high at 111.455, and then tumbled all the way toward the low for the day at 110.53 (the afternoon low reached 110. 55). On the move higher, the pair had to stay above the 111.00 to keep the bulls/buyers in control. It did not. Now the 111.00 becomes the line in the sand above to stay below if the bears are to remain in control. Watch for interim resistance at 110.77 now/
GBPUSD traded higher in the London session on the back of Service PMI data (55.0 vs 53.5 est). Technically, the pair bottomed today near the 100 day MA at 1.2416. At the highs, the price traded above and below the 100 and 200 bar MAs at 1.2479-83. That is where we trade now.
IF there is a flight into the safety of the CHF, the USDCHF has the 100 hour MA at 1.0019 to get below. You can add the 1.0000 parity level as well. On the topside, the pair stalled just below the 100 day MA at 1.0079.
THe AUSUSD has the risk of being a risk off play. If so, the 200 day MA at 0.7553 will be a level to get and stay below. For the NZDUSD a break below 0.6950 is more bearish.
With employment on Friday and stuff out of Washington, the Fed, China, Syria, etc, all in flux markets can be in flux as well. How that is manifest will be reflected in the price action and the technicals. Find your levels that mean something and if you have a bias, lean against your risk defining levels in case you are wrong. If the market goes your way, take partial or book some pips. If it does not go your way, don't risk a lot. PS lower trading volumes too.
