30 Jul 2018

FOREX Newsletter

     

FOREX Newsletter

July 30, 2018
 

 

Pulse of the Market

·      The Commerce Department said Friday GDP increased at a 4.1% annual rate in the April-June period

·      U.S President Donald Trump has expressed displeasure over the Dollar’s strength

·      The ECB kept to its planned timetable to move away from its accommodative monetary policy

·      Canada runs a current account deficit, so economy could be hurt if the flow of trade or capital slows

The U.S Dollar edged lower against its rivals Friday after a preliminary reading of second-quarter U.S economic growth showed the economy grew at its fastest pace in nearly four years. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.14% to 94.44. The dollar had traded as high as 94.71 intraday. Gross domestic product increased at a 4.1% annual rate in the April-June period, the Commerce Department said Friday in its first estimate, in line with economists’ forecast. The strong GDP data was driven by a surge in consumer spending aided by tax cuts, but was partially offset by negative contributions from private inventory investment and residential fixed investment. Analysts questioned the sustainability of growth, however, as the benefits from fiscal stimulus on economic growth are expected to wane next year. While we expect the economy to remain strong in the near-term, we see growth slowing sometime next year as fiscal stimulus fades and tighter monetary conditions begin to bite. The subdued session for the dollar helped the euro steady from a slump on Thursday, when European Central Bank President Mario Draghi reiterated that rates would remain on hold until next year. EUR/USD rose 0.16% to $1.1662, but the pair remained on track to post a weekly loss. USD/JPY fell 0.38% to Y110.81 as traders remained cautions on initiating large positions in the pair as the Bank of Japan is expected to tweak policy at its meeting next week. Even a small move towards less accommodative policy by the Bank of Japan could see the Japanese yen strengthen materially. The Canadian dollar was little changed against its U.S. counterpart on Friday as the loonie held on to this week’s gains even after data showed the U.S economy expanded at its fastest clip in nearly four years.

 

  
Time(GMT)   Economic Release IMP Actual Forecast Prior
07:00 Switzerland KOF Leading Indicator (JUL) Medium   101.5 101.7
08:30 U.K Net Consumer Credit (JUN) Medium   1.4b 1.4b
08:30 U.K Net Lending Sec. on Dwellings (JUN) Medium   4.0b 3.9b
08:30 U.K Mortgage Approvals (JUN) Medium   65.5k 64.5k
09:00 Euro-Zone Economic Confidence (JUL) Low   112.0 112.3
09:00 Euro-Zone Industrial Confidence (JUL) Low   6.7 6.9
09:00 Euro-Zone Services Confidence (JUL) Low   14.2 14.4
09:00 Euro-Zone Consumer Confidence (JUL) Low   -0.6 -0.6
12:00 German Consumer Price Index (YoY) (JUL) High   2.1% 2.1%
14:00 U.S Pending Home Sales (YoY) (JUN) Medium     -2.8%
14:30 U.S Dallas Fed Manufacturing Activity (JUL) Low   31.0 36.5
22:45 New Zealand Building Permits (MoM) (JUN) Medium     7.1%
23:01 U.K GfK Consumer Confidence (JUL) Medium   -9 -9
23:30 Japan Jobless Rate (JUN) Medium   2.3% 2.2%
23:50 Japan Industrial Production (YoY) (JUN) Medium   0.6% 4.2%
23:50 Japan Loans & Discounts Corp (YoY) (JUN) Medium     2.6%

 

Euro

The single currency fell on Thursday, declining the most in a month, as the European Central Bank clung to its easy money policy and signaled no change in its timetable to move away from ultra-low rates or end its bond purchase program. In addition to the euro, the greenback strengthened against other major currencies. Overall, the EUR/USD traded with a low of 1.1619 and a high of 1.1662 before closing the day around 1.1655 in the New York session.

 

Yen

The Japanese Yen posted slight gains in the Friday session. On the release front, Tokyo Core CPI edged higher in July, posting a gain of 0.8%. This beat the forecast of 0.7%. In the U.S, Advance GDP gained 4.1% in the second quarter, just shy of the estimate of 4.2%. This marked the strongest quarter of economic growth since 2014. Overall, the USD/JPY traded with a low of 110.77 and a high of 111.23 before closing the day around 110.97 in the U.S session.

 

British Pound

The British Pound has drifted a bit lower during the trading session on Friday, as we continue to see the US dollar show signs of strength. The GDP coming out of America should be strong, and as a result I think that the market should favor the dollar, but I also believe that the 1.30 level underneath is the floor. There should be plenty of demand in that area. Overall, the GBP/USD traded with a low of 1.3080 and a high of 1.3129 before closing the day at 1.3103 in the New York session.

 

Canadian Dollar

The Canadian Dollar was little changed against its U.S counterpart on Friday as the loonie held on to this week’s gains even after data showed the U.S. economy expanded at its fastest clip in nearly four years. For the week, the loonie gained 0.7 percent. It has been boosted by stronger-than-expected domestic data and easing of trans-Atlantic trade tensions.  Overall, USD/CAD traded with a low of 1.3039 and a high of 1.3076 before closing the day at 1.3056 in the New York session.

 

Australian Dollar

The Australian Dollar gained in Friday’s session helped by the decline in U.S Treasury yields, which made the greenback a less-desirable asset. The drop in yields was in response to concerns that current GDP growth is unsustainable as lingering trade tensions with China are likely to be a drag on the economy in the second half of 2018. Overall, AUD/USD traded with a low of 0.7368 and a high of 0.7412 before closing the day at 0.7402 in the New York session.

 

Euro-Yen

EUR/JPY is trading above 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 44 and lies below the neutral zone. In general, the pair has lost 0.08%.

 

 

Sterling-Yen

Currently, GBP/JPY is trading above 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 39 reading and lies below the neutral zone. On the whole, the pair has lost 0.23%.

  

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 also indicating a bearish stance. The Relative Strength Index is above 46 reading and lies below the neutral region. In general, the pair has gained 0.16%.

 

  

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 issuing a bullish signal. The Relative Strength Index is above 57 and lies above the neutral region. On the whole, the pair has gained 0.15%.

 

Sterling-Swiss

This cross is trading above 14, 50 and below 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is indicating a bullish tone. The Relative Strength Index is above 41 and lies below the neutral region. In general, the pair has gained 0.02%.

 

Appendix

 

FOREX Closing Prices for July 27, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.16409 1.16629 1.1619 1.16568 0.0015
USD/JPY 111.211 111.231 110.778 110.977 -0.2280
GBP/USD 1.3106 1.31291 1.30803 1.31038 -0.0003
USD/CHF 0.99419 0.99764 0.99297 0.99435 0.0004
USD/CAD 1.30693 1.30769 1.30398 1.30568 -0.0014
EUR/JPY 129.475 129.503 129.104 129.381 -0.1040
GBP/JPY 145.775 145.798 145.244 145.439 -0.3400
CHF/JPY 111.821 111.904 111.299 111.574 -0.2780
AUD/JPY 82.051 82.276 81.834 82.152 0.1350
EUR/GBP 0.88819 0.88975 0.8872 0.88934 0.0013
EUR/CHF 1.15739 1.16036 1.15652 1.15923 0.0020
GBP/CHF 1.30308 1.30673 1.30181 1.30316 0.0003

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1586 1.1602 1.1630 1.1646 1.1673 1.1690 1.1717
USD/JPY 110.31 110.54 110.76 111.00 111.21 111.45 111.67
GBP/USD 1.3031 1.3056 1.3080 1.3104 1.3129 1.3153 1.3177
USD/CHF 0.9877 0.9903 0.9923 0.9950 0.9970 0.9997 1.0017
USD/CAD 1.3002 1.3021 1.3039 1.3058 1.3076 1.3095 1.3113
EUR/JPY 128.76 128.93 129.16 129.33 129.55 129.73 129.95
GBP/JPY 144.64 144.94 145.19 145.49 145.74 146.05 146.30
CHF/JPY 110.68 110.99 111.28 111.59 111.89 112.20 112.49
AUD/JPY 81.46 81.65 81.90 82.09 82.34 82.53 82.78
EUR/GBP 0.8852 0.8862 0.8878 0.8888 0.8903 0.8913 0.8929
EUR/CHF 1.1532 1.1549 1.1570 1.1587 1.1609 1.1625 1.1647
GBP/CHF 1.2962 1.2990 1.3011 1.3039 1.3060 1.3088 1.3109

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.