Forex news for traders on April 7, 2017
- US Secretary of State Tillerson: Syrian airbase runways not a target in strikes
- Comments from China meetings coming out from Ross/Tillerson/Mnuchin
- White House: Shakeup of senior White House is false
- US crude oil futures settle at $52.24
- CFTC Commitment of Traders: GBP shorts trimmed a little but remain near record levels.
- Gold falls back to the unchanged levels
- ECB Mersch: Monetary policy is forward looking, effective.
- WSJ: Trump considering major shakeup of senior White House team
- Baker Hughes oil rig count rises for the 12 week in a row
- Dudley: Shedding bonds may lead only to a little pause in rate hikes
- Fed's Dudley: Fed should rethink parts of Dodd Frank including Volcker rule
- British UN Envoy: War criminal Assad has been put on notice by US air strike
- Gorsuch is confirmed to the US Supreme Court
- Atlanta Fed GDPNow forecast +0.6% vs 1.2% last
- NY Feds Nowcast estimate for Q1 GDP seen at 2.82% vs 2.87% last week
- Russian PM Medvedev: US were on the brink of clashing with Russia on Syria
- Canada Ivey PMI index 61.1 vs. 56.0 estimate
- Yields move back up and the USDJPY breaks higher
- Federal funds probability: 61% chance of Fed hiking in June vs 70% yesterday
- Canada net change in employment 19.4K vs. 5.7K est.
- March 2017 US non farm payrolls 98k vs 180k exp
- Non Farm Payroll data on its way at the bottom of the hour
In other markets today:
- US stocks were little changed in an up and down session. The S&P ended down -0.08%. The Nasdaq ended down -0.2%
- US bond yields are ending the session higher after falling sharply after the US airstrike in Syria. The 2 year yield rose to 1.286% , up 4.8 bp. The 10 year yield rose to 2.382% up 4.1 bp and the 30 year closed at 3.007% up 2.1 bp. The 10 year yield traded as low as 2.269% before rebounding and closing near the highs (high reached 2.384%)
- Spot gold ended up by $2.49 to $1254.45 but traded as high as $1272.74.
- WTI Crude oil closed the week at $52.29 up +0.59 or 1.14%
The trading day was supposed to be about US employment, with some China. It ended up being dominated by an US airstrike of a Syrian airbase in response to the chemical attack on civilians this week that left over 100 people dead. The bombing was intended to send a message from US President Trump and the markets were led by a rise in gold, a modest fall in US treasury yields. The US dollar was marginally higher.
When NY traders entered there was the US employment report to trade. The expectations was for a gain of 180K. There was some concerns that the report might be impacted by the harsh weather that hit the northeast last month and indeed it did. Non-farm payroll added 98K jobs, significantly below the 180 estimate. The prior two-months were also revised lower by a combined -38K. However, the unemployment rate (derived from household survey), showed a substantial increase in hiring - enough to lower the unemployment rate to 4.5% from 4.7% last month (est. was also 4.7%). Average hourly earnings rose by 0.2% (as expected) . The average weekly hours came in at 34.3 - below estimates of 34.4 but it was weather impacted.
The initial reaction saw the dollar move lower.
- The USDJPY fell to the 110.085 - taking out the lows from earlier in the day at 110.12 and the low from last week at 110.10, but only by a few pips.
- The EURUSD moved up to the 200 bar MA on the 4-hour chart at the 1.0663 but stalled.
- The USDCHF pierced the 100 hour moving hour for the first time since March 28th at 1.0032 but could only get to 1.0021 before snapping back higher.
- The GBPUSD raced up to 1.2450 but fell short of the 100 bar MA on the 4-hour chart at 1.2455. That MA stalled the fall on Wednesday and earlier in the Asian session before giving way in the early London morning session. Sellers were waiting against the old level.
"The Market" started to blame the weakness on weather and the dollar started the recovery.
Later in the session, Fed's Dudley, in response to a Q&A session, started to comment on the winding down of the Feds balance sheet. When he commented that the winding down would not impact the tightening cycle, the dollar got another boost across the board. Other markets also saw reversals of fortune.
- Gold was up $17. It erased all the gains.
- 10 year yield was down around 7 BPs to 2.27%. It ended up 4 BPS to 2.38%
- Stocks moved to session highs too
One market follows the other. They were all in sync once again.
In other news today:
- Canada employment was better than expected at +19.4K vs +5.7K. The unemployment rate remained steady at 6.7%.
- Canada Ivey PMI was better at 61.1 vs 56.0 last.
- US wholesale inventories increased by 0.4% (est +0.4%). Wholesale trade sales wer up +0.6%.
- Trump and his staff met with China's Xi. There was no formal joint release. Sec of State Tillerson, Treasury Secretary Mnuchen and Commerce Secretary Wilbur Ross each listed their accomplishment with regard to N. Korea and trade, but it was somewhat vague and well...without much substance. However, it was perhaps a start.
Technically:
- EURUSD is ending the day below its 100 day MA at 1.0623. At the low, a trend line on the daily was tested at 1.0587 (low reached 1.0580). That is the where the price is ending the week. Stay below the 100 day MA will be a key risk level for shorts next week. The next key support target comes ina at 1.0494 to 1.0520.
- The USDJPY is ending the week above the 200 hour MA at 111.01 (at 111.08). The high on the afternoon run up stalled just before the 100 bar MA on the 4-hour chart at 111.40. 111.00 on the downside and 111.40 on the upside are the close key levels with the buyers more in control
- The GBPUSD is closing below the 100 day MA at 1.2416. It is the first close below the MA since March 20th. The low today tested the 50% of the move up from the March 2017 low at 1.2361 (low reached 1.2360). A move below in the new week will have the pair probing toward 1.23000. In the back of traders minds is that the GBPUSD shorts are still rather chunky in this weeks commitment of traders report. The shorts can right but if there is some bullish news (whether on Brexit or from an economic data point), it could ignite short covering. Don't trade for a short covering rally unless the technicals turn more bullish though.
- USDJPY is ending the week above the key 100 day MA at 1.0079 level. This week, the 100 hour MA was a rock solid support line with the exception of a few minutes after the US employment. That MA is down at 1.0037 (and moving higher). SHould the price go below in the new week, it would be more bearish for the pair.
- The USDCAD continues to be a devil of a currency to trade (up and down), but support held near the 200 bar MA on the 4-hour chart today (at 1.33468) on the downside and against a topside trend line on the same chart (connects high from March 9 and April 4 on the 4-hour chart) at 1.3440.
