03 Jul 2018

FOREX Newsletter

       

FOREX Newsletter

July 03, 2018

  Pulse of the Market

·      ISM manufacturing data for June showed an uptick to a reading of 60.2 from 58.7

·      The Commerce Department yesterday showed construction spending increased 0.4% in May

·      The Japanese currency was unmoved by the Bank of Japan’s tankan business sentiment survey

·      The British Pound fell toward an eight-month low against the U.S Dollar yesterday

The U.S Dollar rose against its rivals buoyed by upbeat U.S economic data pointing to underlying strength in the economy reaffirming investor expectations that the economy would be the least affected in a potential trade war with its trade partners. The U.S dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.63% to 94.82. ISM manufacturing data for June showed an uptick to a reading of 60.2 from 58.7, beating expectations for a reading of 58.4. A reading above 50 in the ISM index indicates an expansion, while a reading below 50 indicates a contraction in manufacturing, which accounts for about 12% of the U.S. economy. A separate report from the Commerce Department on Monday, meanwhile, showed construction spending increased 0.4% in May. That was slower than the 0.5% growth economists had forecast. The upcoming $34 billion of U.S. tariffs on Chinese imported goods slated for July 6 drew support for the greenback as traders bet that the U.S. would fare better in a potential trade war than its trade partners as domestic growth remains strong. Unless worries of a full blown trade war evaporate in the second half of 2018, investors are likely to continue buying safe-haven currencies, including the dollar, Japanese yen and Swiss franc. The dollar was also supported by a plunge in the euro as fresh political uncertainty in Germany roiled the single currency after German Chancellor Angela Merkel’s interior minister offered to quit amid a disagreement over migration policy. GBP/USD fell 0.60% to $1.3132 despite UK manufacturing data topping economists’ estimates as investors fret an upcoming Brexit cabinet meeting due later in the week. This week investors will get the chance to parse through the minutes of the Federal Reserve’s June meeting on Thursday, after they return from Wednesday’s Independence Day holiday. The Fed hiked interest rates in June and signaled for the first time that they could lift rates four times this year so market watchers will be focusing on the discussions around the inflation outlook and trade war fears. On Friday, attention will shift to the U.S. employment report for June for an update on the health of the labor market. The report is expected to show that hiring cooled.

 

  

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
01:30 Australia Building Approvals (YoY) (MAY) Medium   9.9% 1.9%
04:30 Australia RBA Cash Rate Target (JUL 03) High   1.50% 1.50%
08:30 Markit/CIPS UK Construction PMI (JUN) Medium   52.5 52.5
09:00 Euro-Zone Producer Price Index (YoY) (MAY) Low   2.7% 2.0%
09:00 Euro-Zone Retail Sales (YoY) (MAY) Medium   1.6% 1.7%
12:30 Canada MLI Leading Indicator (MoM) (MAY) Low     0.1%
13:30 RBC Canadian Manufacturing PMI (JUN) High     56.2
14:00 U.S Factory Orders (MAY) Medium   0.0% -0.8%
14:00 U.S Durable Goods Orders (MAY F) Medium   -0.5% -0.6%
22:30 Australia AiG Performance of Service Index (JUN) Medium     59
23:01 U.K BRC Shop Price Index (YoY) (JUN) Low     -1.1%

 

Euro

The single currency received a setback after German Chancellor Angela Merkel was dealt a fresh blow when her interior minister offered to quit in an escalating row over migration policy. In yesterday’s trading session, the euro fell 0.6 percent. It racked up its third consecutive monthly loss against the dollar in June. Overall, the EUR/USD traded with a low of 1.1590 and a high of 1.1681 before closing the day around 1.1640 in the New York session.

 

Yen

The Japanese Yen pair started the third quarter on a positive note yesterday, benefiting from mounting global trade tensions, as investors scooped up the greenback as a safe-haven bet. The dollar further extended gains after the Institute for Supply Management’s manufacturing index showed a reading of 60.2, higher than the market forecast. Overall, the USD/JPY traded with a low of 110.58 and a high of 111.04 before closing the day around 110.90 in the U.S session.

 

British Pound

The British Pound fell toward an eight-month low against the dollar after stronger-than-expected manufacturing sector data failed to temper investors’ concerns about a Brexit cabinet meeting later in the week. The pound has slumped recently on fears that Prime Minister May will run out of time to agree a deal with the EU for life after Britain leaves the bloc next year.  Overall, the GBP/USD traded with a low of 1.3093 and a high of 1.3207 before closing the day at 1.3144 in the New York session.

 

Canadian Dollar

The Canadian Dollar continued to rise against its developed world rivals yesterday but fell relative to the US Dollar and Yen, both so called safe-haven currencies, in a telling sign of what may be to come for the Loonie now the 2018 Mexican election has vaulted an outsider candidate into the highest office of the country. Overall, USD/CAD traded with a low of 1.3137 and a high of 1.3222 before closing the day at 1.3187 in the New York session.

 

Australian Dollar

The Australian Dollar was one of the biggest losers in yesterday’s trading session, AUD / USD was down by 0.82%, but closely shadowed by other major pairs, as the Buck continues to outperform its peers. Also, weighing on the Australian Dollar is lower metal prices and soft Chinese stock markets.  Overall, AUD/USD traded with a low of 0.7308 and a high of 0.7403 before closing the day at 0.7319 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 also issuing a bearish stance. The Relative Strength Index is above 50 and lies above the neutral zone. In general, the pair has lost 0.21%.

 

 

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 44 reading and lies below the neutral zone. On the whole, the pair has lost 0.31%.

  

 

Aussie-Yen

Currently, the cross is trading below 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 41 reading and lies below the neutral region. In general, the pair has lost 0.71%.

  

  

Euro-Sterling

This cross is currently trading above 14, 50 and 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 60 and lies above the neutral region. On the whole, the pair has gained 0.11%.

  

  

Sterling-Swiss

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is indicating a bullish tone. The Relative Strength Index is above 35 and lies below the neutral region. In general, the pair has lost 0.15%.

 
 

 

Appendix

  

FOREX Closing Prices for July 02, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.16706 1.1681 1.1590 1.16407 -0.0046
USD/JPY 110.645 111.044 110.584 110.907 0.2130
GBP/USD 1.32007 1.32071 1.30934 1.31442 -0.0066
USD/CHF 0.99014 0.99637 0.99006 0.99369 0.0035
USD/CAD 1.31461 1.32227 1.31371 1.31872 0.0052
EUR/JPY 129.15 129.476 128.395 129.082 -0.2680
GBP/JPY 146.079 146.464 145.162 145.771 -0.4560
CHF/JPY 111.714 111.955 111.158 111.628 -0.1850
AUD/JPY 81.84 82.077 80.951 81.395 -0.5850
EUR/GBP 0.88386 0.8867 0.88332 0.88566 0.0010
EUR/CHF 1.15572 1.15675 1.15326 1.15663 -0.0005
GBP/CHF 1.30732 1.3082 1.30328 1.30611 -0.0019

 

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1502 1.1546 1.1593 1.1637 1.1684 1.1728 1.1775
USD/JPY 110.19 110.39 110.65 110.85 111.11 111.31 111.57
GBP/USD 1.2976 1.3035 1.3089 1.3148 1.3203 1.3262 1.3317
USD/CHF 0.9841 0.9871 0.9904 0.9934 0.9967 0.9997 1.0030
USD/CAD 1.3056 1.3097 1.3142 1.3182 1.3228 1.3268 1.3313
EUR/JPY 127.41 127.90 128.49 128.98 129.57 130.07 130.65
GBP/JPY 143.83 144.50 145.13 145.80 146.44 147.10 147.74
CHF/JPY 110.41 110.78 111.21 111.58 112.00 112.38 112.80
AUD/JPY 79.75 80.35 80.87 81.47 82.00 82.60 83.12
EUR/GBP 0.8804 0.8818 0.8838 0.8852 0.8871 0.8886 0.8905
EUR/CHF 1.1509 1.1521 1.1543 1.1555 1.1578 1.1590 1.1613
GBP/CHF 1.2986 1.3009 1.3035 1.3059 1.3084 1.3108 1.3134

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

 

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