05 Dec 2018

FOREX Newsletter

FOREX Newsletter

December 05, 2018

 

Pulse of the Market

·      Safe-haven buying emerged after President Trump’s tweet raised fears that trade war was not over

·      Falling Treasuries were blamed for the leg lower in the greenback earlier in the session

·      The Pound Fell as Prime Minister Theresa May’s government was found in contempt of parliament

·      Goldman Sachs said it continued to recommend investors position for a “tactical bounce in USD/CAD

The U.S Dollar rose from lows against its rivals yesterday after the plunge in U.S Treasury yields stalled. Safe-haven buying emerged after President Donald Trump’s tweets raised fears that the trade war was not over. The U.S dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.11% to 96.86, but was above a session low of 96.31. Trump said in a tweet he was “Tariff Man,” reminding investors that he was not afraid to re-escalate trade tensions with China, scaling back optimism from a day earlier, prompting support for Treasuries and helping the greenback move off lows. Falling Treasuries were blamed for the leg lower in the greenback earlier in the session, as fears of an economic recession grew after short-dated Treasury rates rose above longer-dated rates, referred to as an inversion of the Treasury yield curve, a signal of a potential economic recession. Yields on two maturities at the front of the Treasury curve rose above longer-dated 5-year notes overnight Tuesday for the first time in more than a decade. The pound, meanwhile, reversed its gains from earlier after Prime Minister Theresa May’s government was found in contempt of parliament for refusing to release its full legal advice on Brexit. GBP/USD fell from a session high of $1.2839, which had followed hopes that Brexit could be canceled after a top European Officer said that UK should be able to unilaterally cancel its withdrawal from the EU. USD/CAD rose 0.45% to $1.3256 a day ahead of Bank of Canada’s interest rate decision, widely expected to remain unchanged at 1.75%. Ahead of the rate decision, Goldman Sachs said it continued to recommend investors position for a “tactical bounce in CAD vs. USD going into year-end,” citing expectations the Bank of Canada will continue to keep a January rate hike on the table. The markets were delighted with the results of a weekend meeting between President Trump and Chinese President Xi Jinping at the G-20 summit.

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
00:30 Nikkei Japan PMI Services (NOV) Medium     52.4
00:30 Australia Gross Domestic Product (YoY) (3Q) High   3.3% 3.4%
01:45 Caixin China PMI Services (NOV) Medium   50.8 50.8
08:55 Markit Germany Services PMI (NOV) Low   53.3 53.3
09:00 Markit Eurozone Services PMI (NOV) Low   53.1 53.1
09:30 Markit/CIPS UK Services PMI (NOV) Medium   52.5 52.2
10:00 Euro-Zone Retail Sales (YoY) (OCT) Medium   2.0% 0.8%
12:00 U.S MBA Mortgage Applications (NOV 30) Medium     5.5%
13:15 U.S ADP Employment Change (NOV) Medium   195k 227k
14:45 Markit US Services PMI (NOV) Low   54.4 54.4
15:00 Bank of Canada Rate Decision (DEC 5) High   1.75% 1.75%
15:00 U.S ISM Non-Manufacturing/Services Composite (NOV) High   59 60.3
15:30 DOE U.S Crude Oil Inventories (NOV 30) Medium     3577k
19:00 U.S Federal Reserve Releases Beige Book Medium      

 

Euro

The single currency traded sharply higher earlier in yesterday’s session but ended the day slightly lower. EU finance ministers agreed yesterday to give the euro zone ESM bailout fund new responsibilities, but delayed decisions on a euro zone budget and a deposit guarantee scheme after failing to reach an agreement. Overall, the EUR/USD traded with a low of 1.1317 and a high of 1.1417 before closing the day around 1.1341 in the New York session.

 

Yen

The Japanese Yen traded higher yesterday. The markets were delighted with the results of meeting between President Trump and Chinese President Xi Jinping at the G-20 summit. Trump had threatened to raise tariffs on all Chinese products from 10 percent to 25 percent on December 1, but the Chinese convinced Trump to hold off on the tariffs until March 1. Overall, the USD/JPY traded with a low of 112.55 and a high of 113.64 before closing the day around 112.76 in the U.S session.

 

British Pound

The British Pound traded higher at the start of the session following an unexpected piece of legal advice. The advocate general of the European Court of Justice said earlier today that the British government has the unilateral right to withdraw its notice of intent to leave the European Union. However, GBP ended the day lower against the U.S Dollar. Overall, the GBP/USD traded with a low of 1.2656 and a high of 1.2837 before closing the day at 1.2714 in the New York session.

 

Canadian Dollar

The Canadian Dollar edged higher in yesterday’s Asian trading hours, after sharp gains at the start of the week. On the release front today, the Bank of Canada is expected to maintain the benchmark rate at 1.75%. The Canadian dollar started the week with sharp gains after the U.S and China agreed to a truce in the tariff war. Overall, USD/CAD traded with a low of 1.3161 and a high of 1.3264 before closing the day at 1.3259 in the New York session.

 

Australian Dollar

The Australian Dollar has touched a multi-month peak in a knee jerk reaction to a pause in the Sino-US trade dispute, though there was plenty of caution about the prospects of a lasting peace. The White House said President Donald Trump told Chinese President Xi Jinping that he would not boost tariffs on US$200 billion of Chinese goods on January 1 if Beijing agreed to buy an unspecified amount of US goods. Overall, AUD/USD traded with a low of 0.7324 and a high of 0.7391 before closing the day at 0.7334 in the New York session.

 

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is issuing a bullish stance. The Relative Strength Index is above 43 and lies below the neutral zone. In general, the pair has lost 0.86%.

 

Sterling-Yen

Currently, GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 38 reading and lies below the neutral zone. On the whole, the pair has lost 0.83%.

  

Aussie-Yen

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is indicating a bullish stance. The Relative Strength Index is above 56 reading and lies above the neutral region. In general, the pair has lost 1.03%.

 

Euro-Sterling

This cross is currently trading above 14, 50 and below 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 59 and lies above the neutral region. On the whole, the pair has lost 0.05%.

 

Sterling-Swiss

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 37 and lies below the neutral region. In general, the pair has lost 0.09%.

 

Appendix

  

FOREX Closing Prices for December 04, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.13523 1.14173 1.13171 1.13417 -0.0010
USD/JPY 113.626 113.642 112.557 112.76 -0.8790
GBP/USD 1.2723 1.28378 1.26566 1.27147 -0.0007
USD/CHF 0.99773 0.9989 0.99285 0.99726 -0.0005
USD/CAD 1.31966 1.32644 1.31616 1.32598 0.0064
EUR/JPY 128.992 129.018 127.596 127.908 -1.1080
GBP/JPY 144.58 144.734 142.817 143.381 -1.1960
CHF/JPY 113.833 113.859 112.838 113.036 -0.8210
AUD/JPY 83.606 83.635 82.536 82.724 -0.8620
EUR/GBP 0.89201 0.8943 0.88878 0.89165 -0.0004
EUR/CHF 1.13278 1.13462 1.13037 1.1312 -0.0015
GBP/CHF 1.26958 1.27546 1.2644 1.26816 -0.0012

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1200 1.1259 1.1300 1.1359 1.1400 1.1459 1.1501
USD/JPY 111.25 111.90 112.33 112.99 113.42 114.07 114.50
GBP/USD 1.2454 1.2555 1.2635 1.2736 1.2816 1.2918 1.2997
USD/CHF 0.9877 0.9903 0.9938 0.9963 0.9998 1.0024 1.0059
USD/CAD 1.3090 1.3126 1.3193 1.3229 1.3296 1.3331 1.3398
EUR/JPY 125.91 126.75 127.33 128.17 128.75 129.60 130.17
GBP/JPY 140.64 141.73 142.55 143.64 144.47 145.56 146.39
CHF/JPY 111.61 112.22 112.63 113.24 113.65 114.27 114.67
AUD/JPY 81.20 81.87 82.30 82.97 83.39 84.06 84.49
EUR/GBP 0.8833 0.8861 0.8889 0.8916 0.8944 0.8971 0.8999
EUR/CHF 1.1253 1.1278 1.1295 1.1321 1.1338 1.1363 1.1380
GBP/CHF 1.2522 1.2583 1.2632 1.2693 1.2743 1.2804 1.2853

 

Sources:  News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)

 

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

The firm or its staff members may trade on their own account and may from time to time hold or act as market makers in investments mentioned in this document. Please note that the firm makes no warranty, expressed or implied, as to the accuracy or completeness of the information and opinions herein. All parties are advised to seek independent professional advice as to the suitability of any products and to their tax, accounting, legal or regulatory implications. City Credit Capital (UK) Ltd is authorized and regulated by the Financial Conduct Authority, reg 232015.

 

 

05 Dec 2018

Daily Market View

Daily Market View

Wednesday, December 05, 2018
          U.S Stock Market

 

DJIA S & P 500 NASDAQ
25046 2701.75 6802.50
-3.10% -3.24% -3.80%

U.S stocks plunged, with the Dow Jones Industrial Average tumbling almost 800 points, as a litany of concerns wiped out the rally in risk assets. Trade-sensitive shares sank as angst mounted that the U.S and China made no meaningful progress on the trade front this weekend. Financial shares got hammered as the yield curve continued to flatten, with the latest nudge from a hawkish comment by a Federal Reserve official. Losses accelerated and trading volumes in S&P 500 futures spiked after contracts for broke below their 200-day moving average. Adding to the risk aversion was news that U.K. Prime Minister Theresa May’s push to avoid a so-called “hard Brexit” may be at risk. President Donald Trump suggested Tuesday that he could extend a 90-day truce in his trade war with China, while his top White House economic adviser backtracked from the president’s announcement that Beijing had agreed to reduce tariffs on U.S.-made cars. Traders are even starting to bet that the Fed will cut interest rates as soon as 2020.

 

Major Economic Releases for Today
Period Event GMT Forecast Previous

nov

Nikkei Japan PMI Services 00:30 52.4

3Q

Australia Gross Domestic Product (YoY) 00:30 3.3% 3.4%

nov

Caixin China PMI Services 01:45 50.8 50.8

oct

Euro-Zone Retail Sales (YoY) 10:00 2.0% 0.8%

nov

U.S MBA Mortgage Applications 12:00 5.5%

nov

U.S ADP Employment Change 13:15 195k 227k

dec

Bank of Canada Rate Decision 15:00 1.75% 1.75%

nov

U.S ISM Non-Manufacturing/Services Composite 15:00 59 60.3

nov

DOE U.S Crude Oil Inventories 15:30 3577k
Dow Jones Industrial Average

The Dow Jones Industrial Average declined 3.10%. The best performers of the session on the Dow Jones Industrial Average were Procter & Gamble Company, which fell 0.01% or 0.01 points to trade at 93.31 at the close. Meanwhile, Verizon Communications Inc. fell 0.12% or 0.07 points to end at 58.09 and Johnson & Johnson was down 0.12% or 0.18 points to 146.03 in late trade. The worst performers of the session were Caterpillar Inc., which fell 6.93% or 9.63 points to trade at 129.32 at the close. Boeing Co declined 4.85% or 17.46 points to end at 342.50 and Intel Corporation was down 4.75% or 2.38 points to 47.75.

 

NASDAQ 100

The NASDAQ index lost 3.80%. The top performers on the NASDAQ Composite were Pernix Therapeutics Holdings Inc. which rose 41.63% to 0.575, American Electric Technologies Inc. which was up 37.96% to settle at 1.490 and Novelion Therapeutics Inc. which gained 32.65% to close at 1.300. The worst performers were Determine Inc. which was down 25.04% to 0.494 in late trade, ConforMIS Inc. which lost 22.46% to settle at 0.56 and Smaaash Entertainment Inc. which was down 19.64% to 2.67 at the close.

Oil

Oil prices pared gains in a volatile trade yesterday as fears flared that demand would stall due to a trade war between the U.S and China, and as Russia remained a stumbling block to a deal to cut global crude supply. U.S President made clear he would revert to tariffs on China if the two sides could not resolve their differences. The comments put a damper on market enthusiasm that drove oil about 4 percent higher on Monday after Trump and Chinese counterpart Xi Jinping agreed at a meeting of the Group of 20 industrialized nations to pause an escalating trade dispute. In Monday’s session, expectations of a production cut by the OPEC and its allies, when they meet on Thursday and Friday in Vienna, had also supported prices. OPEC and its allies are working towards a deal to reduce oil output by at least 1.3 million barrels per day, four sources said yesterday, adding that Russia’s resistance to a significant production cut was so far the main stumbling block.

 

Precious and Base Metals

Gold rose to its highest in more than five weeks yesterday as the dollar sagged after the United States and China agreed a 90-day pause on fresh trade tariffs, while palladium hit a record high, leaving it about $4 short of parity with bullion. Palladium rose more than 2 percent to $1,231.50 per ounce, after scaling an all-time high of $1,235. The market is structurally in a significant deficit, so there are clearly concerns about that. We’ve got a lot momentum and positive investor sentiment flowing into the market at the moment. The metal, used mainly used in emissions-reducing auto catalysts for vehicles, has gained about 48 percent since mid-August, but not all analysts think the price is justified. The high price premium on palladium is not justified in our opinion because car sales have been fairly weak on all key markets of late. U.S. tariffs have been threatened on imports of cars and car parts from the European Union. Meanwhile, spot gold rose for the second straight session, up 0.6 percent at $1,238.90. Prices touched $1,241.10 earlier in the session, their highest since Oct. 26. U.S. gold futures were up 0.4 percent at $1,244.70 per ounce. The dollar weakened against its major peers, pressured by a thaw in trade tensions between Washington and Beijing, making gold cheaper for holders of other currencies. Primarily it is the weaker dollar that is providing assistance and that will be the key driver in the short term. However, it is going to find it difficult to sustain the current rally unless there is even more dollar weakness, simply because the overall investor sentiment for riskier assets has improved and that would prove to be a drag in the short term. The temporary freeze on further hostilities in the trade war sparked a global rally in equity markets on Monday. Global trade tensions over the past few months have seen investors opt for the safety of the U.S currency rather than bullion, a traditional safe haven asset. Among other precious metals, spot silver rose 1 percent to $14.52 per ounce.

 

 

Traditional Agricultures

Soybeans were little changed yesterday as dealers awaited concrete indications that China will resume its huge imports of U.S soy halted by the trade war between the two countries. Corn and wheat are being undermined by the lack of strength in soybeans.

 

Futures Settlement Price Tuesday, December 04, 2018
Instrument Contract Open High Low Settlement Net Change
DJIA DJM18 25835 25837 25016 25046 -800
S & P 500 SPM18 2789.75 2790.25 2697 2701.75 -89.25
NASDAQ 100 NDM18 7054.25 7055 6788 6802.5 -256
Hang Seng HSH18 27108 27292 27037 27266 -15
Nikkei 225 NKH18 22590 22600 22015 22035 -570
FTSE 100 FTH18 7055 7098.5 6924.5 6940 -153
Gold GCJ18 1243.8 1244.4 1239.2 1240.2 -3.4
Silver SIK18 1459.5 1461 1449 1452 -7
Copper HGK18 275.85 276.95 275.5 276.1 0.25
Crude Oil CLK18 53.1 54.52 52.41 52.56 -0.49
Wheat WK18 521.25 521.75 519.5 520.25 -1.75
Soybeans SK18 903.25 912.5 899.25 911.25 5.75
Corn CK18 383 383.75 382.5 383.5 -0.75

 

Daily Swings  (The Pivot Levels)
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2
DJM18 23941 24479 24762 25300 25583 26121 26404
SPM18 2575.83 2636.42 2669.08 2729.67 2762.33 2822.92 2855.58
NDM18 6441.67 6614.83 6708.67 6881.83 6975.67 7148.83 7242.67
HSH18 26850 26943 27105 27198 27360 27453 27615
NKH18 21248 21632 21833 22217 22418 22802 23003
FTH18 6702.83 6813.67 6876.83 6987.67 7050.83 7161.67 7224.83
GCJ18 1232.93 1236.07 1238.13 1241.27 1243.33 1246.47 1248.53
SIK18 1435.00 1442.00 1447.00 1454.00 1459.00 1466.00 1471.00
HGK18 273.97 274.73 275.42 276.18 276.87 277.63 278.32
CLK18 49.70 51.05 51.81 53.16 53.92 55.27 56.03
WK18 517.00 518.25 519.25 520.50 521.50 522.75 523.75
SK18 889.58 894.42 902.83 907.67 916.08 920.92 929.33
CK18 381.50 382.00 382.75 383.25 384.00 384.50 385.25

 

 Source: – News & Quotes (Courtesy:  Reuters)                                                                    

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.

The firm or its staff members may trade on their own account and may from time to time hold or act as market makers in investments mentioned in this document. Please note that the firm makes no warranty, expressed or implied, as to the accuracy or completeness of the information and opinions herein. All parties are advised to seek independent professional advice as to the suitability of any products and to their tax, accounting, legal or regulatory implications. City Credit Capital (UK) Ltd is authorized and regulated by the Financial Conduct Authority, reg 232015.