17 Ago 2018

FOREX Newsletter

       

 FOREX Newsletter

 August 17, 2018
 

 

    Pulse of the Market

·      Turkey secured a lifeline from Qatar and their steps to curb Lira selling are working

·      U.S data fell short of expectations but the impact was limited

·      Data had a very little impact on the Euro with the Eurozone’s trade balance declining slightly

·      Sterling seems very weak and had a very tough time rallying despite very good data

 

All of the major currencies traded higher as improved risk appetite drove traders back into high beta currencies. U.S Chief Economic Adviser Larry Kudlow confirmed that the trade talks with China will resume next week while U.S trade negotiator Lighthizer said he’s hopeful that there will be a breakthrough on NAFTA in the next few days. U.S data fell short of expectations but the impact was limited by the fact that these second-tier reports won’t affect Fed policy. President Trump also seems to have made a U-turn on Dollar policy. Demand for U.S Dollars is still very strong, which explains why Japanese Yen crosses performed particularly well yesterday. The Euro is still vulnerable to additional losses, having rejected a move above 1.14. Turkey is not out of the woods especially after Treasury Secretary Mnuchin threw out threats of more sanctions if the American pastor is not released. But investors are worried about Italy, who saw its markets go on a rollercoaster ride on the back of Turkey’s troubles. The Eurozone’s current account balance and revisions to July CPI data are due today and unless there is a big change, the impact should be limited as well. Sterling, on the other hand, is very weak. Unlike some other major currencies, it had a very tough time rallying despite very good data. Retail sales rose 0.7% in the month of July, 3 times more than anticipated. Excluding auto fuel, consumer spending growth was even stronger. This report should have sent GBP/USD sharply higher and while it did trigger a 30 pip knee-jerk rally, the pair nose-dived just as quickly. The selling pressure in the pound is very strong and there seem to be no signs of let up even though short positions are at their highest level since May 2017. As a result, the risk of a move down to 1.26 is significant. Along the same lines, EUR/GBP could revisit 90 cents. The Australian and New Zealand dollars extended their gains today while the Canadian dollar remained under pressure. After selling off aggressively this month, we believe AUD/USD has found a bottom. It is too early to say whether this will be a short or long-term bottom but either way, we see further gains ahead for the pair. Australia reported mixed labor market data. Job losses were reported but the market shrugged off the headline miss in favor of fulltime job growth and the best unemployment rate in 6 years. The Canadian Dollar, on the other hand, extended its losses ahead of today’s CPI report. While Canadian data has been pretty good, today’s report could surprise to the downside because price pressures eased in the manufacturing sector according to IVEY PMI.

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
09:00 Euro-Zone Consumer Price Index Core (YoY) (JUL) Medium   1.1% 1.1%
09:00 Euro-Zone Consumer Price Index (YoY) (JUL) Medium   2.1% 2.0%
12:30 Canada Consumer Price Index (YoY) (JUL) High   2.5% 2.5%
14:00 U.S Leading Index (JUL) Medium   0.4% 0.5%
14:00 U.S U. of Mich. Sentiment (AUG) High   98 97.9
14:00 U.S U. of Mich. Current Conditions (AUG) Low     114.4
14:00 U.S U. of Mich. Expectations (AUG) Low     87.3
17:00 Baker Hughes U.S Rig Count (AUG 17) Medium      

 

Euro

The single currency gained slightly in yesterday’s session. On the release front, the German Wholesale Price Index dropped to 0.0%, short of the estimate of 0.5%. The Eurozone trade surplus narrowed to EUR 16.7 billion, missing the estimate of EUR 17.0 billion. The euro has endured a rough August, losing 2.7 percent in that time. Overall, the EUR/USD traded with a low of 1.1334 and a high of 1.1407 before closing the day around 1.1375 in the New York session.

 

Yen

The Japanese Yen had an uneventful week and that trend continued yesterday. On the release front, Japan’s trade surplus with the US dropped 22.1% in July. It was a busy day for U.S indicators. Building Permits improved to 1.31 million, matching the estimate. Housing starts remained at 1.17 million, short of the estimate of 1.27 million. Overall, the USD/JPY traded with a low of 110.44 and a high of 111.10 before closing the day around 110.88 in the U.S session.

 

British Pound

The British Pound advanced against rivals yesterday as traders responded to official data showing spending on the high street rising faster than was expected during July, drawing a line under the surprise slump seen back in June. UK retail sales rose by 0.4% during July, up from the -0.5% contraction seen back in June  Overall, the GBP/USD traded with a low of 1.2683 and a high of 1.2752 before closing the day at 1.2713 in the New York session.

 

Canadian Dollar

The Canadian Dollar was nearly unchanged against its U.S counterpart yesterday after a planned oil pipeline from Alberta to Nebraska met with a setback, offsetting domestic data that showed a rise in factory sales. Canadian factory sales grew by 1.1 per cent in June from May, thanks largely to a rebound in petroleum and coal products. Overall, USD/CAD traded with a low of 1.3111 and a high of 1.3172 before closing the day at 1.3154 in the New York session.

 

Australian Dollar

The Australian Dollar correlation with the tumbling offshore Yuan reached the strongest on record in August as investors entwine the two nations’ fortunes. It’s a clear sign of Australia’s vulnerability to a slowdown in China that’s being exacerbated by U.S tariffs. Australia’s currency is under fire as the economy caps a 27th recession-free year amid accelerating growth. Overall, AUD/USD traded with a low of 0.7213 and a high of 0.7284 before closing the day at 0.7259 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 30 and lies below the neutral zone. In general, the pair has gained 0.38%.

 

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 25 reading and lies below the neutral zone. On the whole, the pair has gained 0.24%.

 

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 also indicating a bearish stance. The Relative Strength Index is above 34 reading and lies below the neutral region. In general, the pair has gained 0.37%.

 

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 55 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 also indicating a bearish tone. The Relative Strength Index is above 27 and lies below the neutral region. In general, the pair has gained 0.43%.

 

 

Appendix

 

FOREX Closing Prices for August 16, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.13446 1.14077 1.13344 1.13755 0.0029
USD/JPY 110.693 111.104 110.44 110.882 0.1270
GBP/USD 1.26966 1.27522 1.26836 1.27132 0.0015
USD/CHF 0.99374 0.99728 0.99914 0.99662 0.0029
USD/CAD 1.31397 1.31722 1.31116 1.31544 0.0011
EUR/JPY 125.602 126.467 125.26 126.139 0.4750
GBP/JPY 140.563 141.302 140.184 140.973 0.3440
CHF/JPY 111.361 111.783 111.166 111.216 -0.2650
AUD/JPY 80.11 80.797 79.806 80.485 0.2960
EUR/GBP 0.89337 0.89581 0.8932 0.89464 0.0010
EUR/CHF 1.1274 1.13454 1.12615 1.13384 0.0064
GBP/CHF 1.26182 1.26755 1.26024 1.26719 0.0054

 

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1264 1.1299 1.1337 1.1373 1.1411 1.1446 1.1484
USD/JPY 109.85 110.14 110.51 110.81 111.18 111.47 111.84
GBP/USD 1.2612 1.2648 1.2680 1.2716 1.2749 1.2785 1.2818
USD/CHF 0.9999 0.9995 0.9981 0.9977 0.9962 0.9958 0.9944
USD/CAD 1.3059 1.3085 1.3120 1.3146 1.3181 1.3207 1.3241
EUR/JPY 124.24 124.75 125.44 125.96 126.65 127.16 127.86
GBP/JPY 139.22 139.70 140.34 140.82 141.46 141.94 142.57
CHF/JPY 110.38 110.77 110.99 111.39 111.61 112.01 112.23
AUD/JPY 78.94 79.37 79.93 80.36 80.92 81.35 81.91
EUR/GBP 0.8907 0.8919 0.8933 0.8946 0.8959 0.8972 0.8985
EUR/CHF 1.1201 1.1231 1.1285 1.1315 1.1369 1.1399 1.1453
GBP/CHF 1.2551 1.2577 1.2624 1.2650 1.2697 1.2723 1.2771

 

 

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.