19 Jul 2018

FOREX Newsletter

     

FOREX Newsletter

July 19, 2018

Pulse of the Market

·      U.S housing starts tumbled 12.3% to a seasonally adjusted annual rate of 1.173 million units

·      A slump in the British Pound to September lows limited U.S Dollar weakness

·      Weaker U.K inflation data dented expectations for a Bank of England rate hike

·      China’s Ministry of Commerce warned of further measures in response to aluminum and steel tariffs

The Dollar was unchanged against its rivals yesterday as gains on the back of a slump in the pound were offset by soft U.S economic data showing subdued housing market activity. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.04% to 94.77, down from a session high of 95.18. Housing starts slumped to a nine-month low as both higher mortgage rates and elevated costs for labor and materials weighed on the housing market, government figures showed yesterday. Housing starts tumbled 12.3% to a seasonally adjusted annual rate of 1.173 million units last month, the Commerce Department said. The report also highlighted a 2.2% decline in building permits to a rate of 1.273 million units. That was the lowest level since September 2017. Analysts, however, claimed the duo of weaker reports did not signal that the housing recovery had “shorted out.” While labor also remains in short supply and pricey, we believe the greatest impediment to homebuilding right now is that fewer projects pencil out. That said, the housing recovery has not shorted out. Market participants were also monitoring Fed Chairman Jay Powell’s testimony before the House Financial Services Committee yesterday. Reaction in currencies was muted as Powell offered little new insight on monetary policy. A slump in the pound to September lows limited dollar weakness as weaker U.K. inflation data dented expectations for a Bank of England rate hike despite calls from analysts insisting that inflation was strong enough to support an August rate hike. U.K. inflation data likely won’t deter the Bank of England from raising the interest rates in August. But a further fall in core inflation will make a second rate hike in 2018 unlikely. U.K. consumer prices rose 2.4%, unchanged from May and missing expectations of a 2.6% reading. Core inflation slipped to 1.9%, falling below the Bank of England’s 2% target. The greenback also gave up gains against safe-haven currencies such as the yen and Swiss franc after China’s Ministry of Commerce warned of further countermeasures in response to U.S. steel and aluminum tariffs.

 

   

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
01:30 Australia NAB Business Confidence (2Q) Medium     7
01:30 Australia Employment Change (JUN) High   16.5k 12.0k
01:30 Australia Unemployment Rate (JUN) High   5.4% 5.4%
06:00 Japan Machine Tool Orders (YoY) (JUN) Low     11.4%
08:30 U.K Retail Sales Ex Auto Fuel (YoY) (JUN) Medium   3.7% 4.4%
08:30 U.K Retail Sales Inc Auto Fuel (YoY) (JUN) Low   3.5% 3.9%
12:30 Canada ADP Publishes June Payrolls Report Low      
12:30 U.S Initial Jobless Claims (JUL 14) Medium   221k 214k
12:30 U.S Continuing Claims (JUL 07) Medium   1725k 1739k
12:30 U.S Philadelphia Fed Business Outlook (JUL) Medium   21.5 19.9
14:00 U.S Leading Index (JUN) Medium   0.5% 0.2%
23:30 Japan National Consumer Price Index (YoY) (JUN) High   0.8% 0.7%
23:30 Japan National Consumer Price Index Ex-Fresh Food (YoY) (JUN) Medium   0.8% 0.7%

 

 

Euro

The single currency fell and the yen slid to a six-month low as the dollar extended its rally following bullish comments from U.S. Federal Reserve Chairman Jerome Powell about the strength of the U.S. economy. In his closely watched congressional testimony on Tuesday, Powell said he saw the United States on course for years more of steady growth. Overall, the EUR/USD traded with a low of 1.1600 and a high of 1.1663 before closing the day around 1.1637 in the New York session.

 

Yen

The Japanese Yen pair surged in yesterday’s trading session. The Fed is expected to have hiked a total of four times in 2018 to tackle rising inflationary pressures. The dollar index rose to 95.267, up 0.3 percent on the day and just below its 95.531 12-month high hit in June. The dollar rallied to as high as 113.14 against the yen, its strongest since January 9. Overall, the USD/JPY traded with a low of 112.69 and a high of 113.11 before closing the day around 112.82 in the U.S session.

 

British Pound

The British Pound extended Tuesday’s losses after the government narrowly won a vote on its Brexit proposal, underlining the political divisions that have hampered efforts to agree on a united front in negotiating with Brussels. The two-year Treasury yield, most sensitive to the market’s views on changes in Fed policy, has risen to a decade-high.  Overall, the GBP/USD traded with a low of 1.3008 and a high of 1.3117 before closing the day at 1.3068 in the New York session.

 

Canadian Dollar

The Canadian Dollar rose against the U.S dollar, reversing earlier losses after President Donald Trump said he may negotiate separate trade deals with Mexico and Canada. This is not the first time that Trump had suggested bilateral deals with Mexico and Canada, as he vowed to revamp the 24-year old North American Free Trade Agreement (NAFTA). Overall, USD/CAD traded with a low of 1.3159 and a high of 1.3257 before closing the day at 1.3166 in the New York session.

 

Australian Dollar

The Australian Dollar was a shade lower, extending the retreat from Tuesday as the US dollar rose across the board, climbing to a six-month high against the yen, after Federal Reserve Chairman Jerome Powell gave an upbeat outlook for the US economy and reinforced views that the Fed was on track to steadily hike interest rates. Overall, AUD/USD traded with a low of 0.7341 and a high of 0.7405 before closing the day at 0.7392 in the New York session.

 

 

Euro-Yen

EUR/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also issuing a bullish stance. The Relative Strength Index is above 64 and lies above the neutral zone. In general, the pair has lost 0.21%.

 

Sterling-Yen

Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 52 reading and lies above the neutral zone. On the whole, the pair has lost 0.38%.

 

 Aussie-Yen

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 61 reading and lies above the neutral region. In general, the pair has gained 0.09%.

  

Euro-Sterling

This cross is currently trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is also issuing a bearish signal. The Relative Strength Index is above 65 and lies above the neutral region. On the whole, the pair has gained 0.16%.

    

Sterling-Swiss

This cross is trading above 14, 50 and below 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 38 and lies below the neutral region. In general, the pair has lost 0.45%.

Appendix

  

FOREX Closing Prices for July 18, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.16593 1.16635 1.16006 1.16372 -0.0022
USD/JPY 112.842 113.119 112.691 112.82 -0.0420
GBP/USD 1.3117 1.3117 1.30084 1.3068 -0.0045
USD/CHF 0.99996 1.00329 0.99809 0.99877 -0.0012
USD/CAD 1.31901 1.32573 1.31596 1.31664 -0.0022
EUR/JPY 131.575 131.753 130.86 131.329 -0.2710
GBP/JPY 148.036 148.207 146.84 147.452 -0.5620
CHF/JPY 112.821 112.991 112.625 112.927 0.0930
AUD/JPY 83.353 83.516 82.808 83.446 0.0760
EUR/GBP 0.88866 0.893 0.88721 0.89037 0.0014
EUR/CHF 1.1661 1.16673 1.16003 1.1625 -0.0036
GBP/CHF 1.31182 1.3137 1.30105 1.30541 -0.0059

  

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1541 1.1571 1.1604 1.1634 1.1667 1.1697 1.1730
USD/JPY 112.21 112.45 112.63 112.88 113.06 113.30 113.49
GBP/USD 1.2903 1.2956 1.3012 1.3064 1.3121 1.3173 1.3229
USD/CHF 0.9916 0.9949 0.9968 1.0001 1.0020 1.0053 1.0072
USD/CAD 1.3034 1.3097 1.3132 1.3194 1.3229 1.3292 1.3327
EUR/JPY 129.98 130.42 130.88 131.31 131.77 132.21 132.66
GBP/JPY 145.43 146.13 146.79 147.50 148.16 148.87 149.53
CHF/JPY 112.34 112.48 112.70 112.85 113.07 113.21 113.44
AUD/JPY 82.29 82.55 83.00 83.26 83.71 83.96 84.41
EUR/GBP 0.8816 0.8844 0.8874 0.8902 0.8932 0.8960 0.8990
EUR/CHF 1.1527 1.1564 1.1594 1.1631 1.1661 1.1698 1.1728
GBP/CHF 1.2871 1.2941 1.2997 1.3067 1.3124 1.3194 1.3250

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

 

 

Disclaimer

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