Forex news for NY trading on July 5, 2018
- Big day for the Nasdaq. Trade tariffs and US employment tomorrow.
- Scott Pruitt, embattled EPA administrator, resigns
- Crude oil futures settle down -$1.20 at $72.94
- FOMC meeting minutes: Saw intensified risks around trade policy
- USDMXN falls to key support target
- Iran's OPEC Governor: Oil prices above $100 is yet to come and Trump is the one to blame
- On the agenda for upcoming NATO and Trump/Putin meetings
- European stocks close higher on trade hope
- Saudi Arabia has pumped 10.448B BPD in June
- EIA crude oil inventory shows a build of 1245K vs -5000K expected
- June ISM non-manufacturing 59.1 vs 58.3 expected
- Initial jobless claims 231K vs 225K expected
- US June ADP employment +177K vs +190K expected
- The EUR is the strongest. The JPY is the weakest as NA trader enter
- US ADP employment is coming up next
In other markets near the end of day shows:
- Gold up $2 to $1256.69
- WTI crude down -$1.00 or -1.44% at $73.07.
- S&P rose 0.86%
- Dow rose 0.75%
- Nasdaq rose 1.12%
- 2 year up 2.8 bps to 2.5527. 10 year up 0.3 bps to 2.8345%, 30 year 2.947%, down -1 bp
The USD ended the day mixed with declines vs the EUR and NZD, modest gains vs the JPY, GBP and CHF and near unchanged vs the CAD and AUD.
The weakest currency was the JPY. Stronger gains stock gains in Europe (Dax up 1.19%, Cac up 0.86% and UK FTSE up 0.4%) and US (Nasdaq up 1.12%) helped to weaken the JPY on risk off flows.
Having said that, the USDJPY spent most of the US day trading above and below the 100 hour MA at 110.65 (where the pair is trading now).
On the news front today, the ADP job gains came in a little weaker than expectations at 177K vs 190K expected, but the prior month was revised higher. Initial claims were also a little weaker at 231K vs 225k expectations.
Later the ISM non-manufacturing came out better than expectations at 59.2 vs 58.3 expected. The employment component did fall, but new orders rose. Recall that earlier this week, the ISM Manufacturing also came in quite solid at 60.2. vs. 58.5.
Overall, the data was not bad today (or recently) but the market is more focused on the US employment report due tomorrow at 8:30 AM et.
The forex market did finds some price action movement from a report the German's did not think UK PM May's Brexit plan was workable. That send the GBPUSD down to support in the 1.3203-16 area where support buyers leaned on the test. The fall, took back all the gains seen earlier in the trading day.
Later in the afternoon, the Fed minutes from the June meeting confirmed the Fed is on a hike path but that there are more risks in the economy from trade. Nevertheless, they expect to reach a neutral policy level in 2019.
IN the new trading day, in addition to the US jobs reports, the US - barring some last minute change of heart - will impose $34B of tariffs on China in retaliation for IP theft. That - again unless there is a change of heart from China - will be followed by an equal $34B rise in tariffs of US goods.
How the tit for tat goes from there is not 100% sure but Trump has said there will be $16B more to come and maybe much more after that. Good news today, on the trade front was that there is hope the EU and US could get their tariffs on autos both down to 0%. The EU imposed a 10% tariff on US autos, while the US imposes a 3% tariff on EU cars. It would make sense to put that threat to bed especially since the Europeans are not all that in love with US cars anyway, while US consumers still fancy a Benz, BMW, or Audi.
