24 Ago 2018

FOREX Newsletter

      

FOREX Newsletter

August 24, 2018

 

Pulse of the Market

·      The main focus will be the Federal Reserve’s annual economic symposium at Jackson Hole today

·      There was no specific driver for the slide in the British pound

·      Economic activity in the Eurozone expanded at a faster pace in August according to the PMIs

·      Political troubles in Australia sent the Australian dollar tumbling more than 1%

The U.S Dollar is back but the Australian Dollar is in trouble. After falling in the front of the week, the greenback regained momentum yesterday to trade higher against all of the major currencies. Nothing came out of trade talks between the U.S. and China – both parties moved ahead with tariffs on $16B worth of goods so the focus shifts to the Federal Reserve’s annual economic symposium at Jackson Hole. It’s a 3-day meeting that begins tonight and all of the major speeches will be made today starting with Jerome Powell’s remarks. This will be his first symposium as Fed Chair. We know BoC Governor Poloz will be attending but BoJ Governor Kuroda will be skipping the event and its not clear whether BoE Governor Carney, who did not attend last year will appear at the event. Earlier this week, President Trump sent the Dollar tumbling when he lamented about Fed tightening. It is not the first time that we’ve heard the President criticize his Fed Chief and it won’t be his last. However, the best way for Powell to handle Trump’s comments is to ignore them. There’s no winning in going against his boss or agreeing with him which would suggest that the central bank has lost its independence. So the only response is no response at all. The Fed may slow down tightening, but it won’t be because of Presidential pressure. On the other hand, Powell could have a lot to say about trade and the global economic outlook which is slowing. According to the FOMC minutes, even before Jackson Hole, policymakers were worried about trade, housing, and emerging markets. If Powell suggests that this could affect the U.S’ economy outlook, the Dollar could take a hit. Investors will be looking for any indication of a possible slowing of Fed tightening. Not only could it be necessary because of slower growth but the yield curve is at risk of inverting which is troubling for many businesses and policymakers. Meanwhile, political troubles in Australia sent the Australian Dollar tumbling more than 1%. Prime Minister Turnbull faces another leadership challenge tonight or over the weekend after his own party pulled their support. Adding fuel to the fire was the Australian government’s decision to ban Chinese maker Huawei from participating in the build-out of the 5G infrastructure on security grounds. The news is sure to further aggravate the already shaky Sino-Australian relations and could be a source of constant pressure on Aussie. The pair dropped below the .7300 figure and appears poised for a test of .7200. The recovery in the U.S. dollar also sent euro and sterling lower but the euro was the day’s most resilient currency thanks to comments from BUBA President Jens Weidmann and economic data.

 

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
06:00 German Domestic Demand (2Q) Low   0.6% 0.4%
06:00 German Gross Domestic Product n.s.a. (YoY) (2Q) Medium   2.3% 2.3%
08:30 U.K BBA Loans for House Purchase (JUL) Medium   40500 40541
12:30 U.S Durable Goods Orders (JUL) High   -0.5% 0.8%
12:30 U.S Durables Ex Transportation (JUL) Medium   0.5% 0.2%
14:00 U.S Fed Hosts Annual Jackson Hole Central Banking Symposium High      
14:00 U.S Powell to Discuss Economy and Monetary Policy at Jackson Hole High      
17:00 Baker Hughes U.S Rig Count (AUG 24) Medium      

 

Euro

The single currency turned lower against the US Dollar Thursday after ISH Markit surveys revealed a further slowdown in the Eurozone’s manufacturing sector during August, suggesting the continental economy is yet to rebound from the slowdown seen at the start of the year. IHS Markit’s Eurozone manufacturing PMI fell to 54.6 in August. Overall, the EUR/USD traded with a low of 1.1528 and a high of 1.1598 before closing the day around 1.1537 in the New York session.

 

Yen

The Japanese Yen pair has posted broad gains in yesterday’s session. In the U.S, employment claims edged lower to 210 thousand, beating the estimate of 215 thousand. New Home Sales fell to 627 thousand, well short of the estimate of 641 thousand. This was the second housing report in as many days to miss expectations.  Overall, the USD/JPY traded with a low of 110.50 and a high of 111.29 before closing the day around 111.27 in the U.S session.

 

British Pound

The British Pound dropped against the dollar and euro in yesterday’s trading session, after Brexit secretary Dominic Raab unveiled the first of his department’s contingency plans for a no-deal exit from the EU. As it has been stated by European officials that the Brexit talks are heading into their final chapter. Overall, the GBP/USD traded with a low of 1.2803 and a high of 1.2917 before closing the day at 1.2811 in the New York session.

 

Canadian Dollar

The Canadian Dollar weakened, pulling back from a two-week high the day before, as the greenback rose broadly ahead of a speech today by Fed Chairman. The U.S dollar snapped a five-day losing streak, as a new round of U.S-Chinese punitive trade tariffs boosted the greenback and the annual Federal Reserve conference began in Jackson Hole, Wyoming.  Overall, USD/CAD traded with a low of 1.2990 and a high of 1.3096 before closing the day at 1.3079 in the New York session.

 

Australian Dollar

The Australian Dollar fell sharply as leadership jostling reached fever pitch in yesterday’s session, undermining confidence in the government and Australian assets in the eyes of global investors. Markets are used to political turmoil and dysfunction in Australia, but certain developments may have prompted a knee-jerk reaction yesterday, Overall, AUD/USD traded with a low of 0.7238 and a high of 0.7354 before closing the day at 0.7247 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 51 and lies above the neutral zone. In general, the pair has gained 0.13%.

 

Sterling-Yen

Currently, GBP/JPY is trading below 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 42 reading and lies below the neutral zone. On the whole, the pair has lost 0.16%.

  

Aussie-Yen

Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is indicating a bearish stance. The Relative Strength Index is above 39 reading and lies below the neutral region. In general, the pair has lost 0.18%.

  

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 64 and lies above the neutral region. On the whole, the pair has gained 0.27%.

 

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 lost 0.51%.

 

Appendix

  

FOREX Closing Prices for August 23, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.15955 1.15981 1.15285 1.15378 -0.0061
USD/JPY 110.556 111.298 110.5 111.27 0.7010
GBP/USD 1.29078 1.29174 1.2803 1.28111 -0.0103
USD/CHF 0.98302 0.98647 0.98202 0.98599 0.0028
USD/CAD 1.29926 1.30969 1.29905 1.30793 0.0079
EUR/JPY 128.209 128.744 127.894 128.392 0.1680
GBP/JPY 142.708 142.986 142.398 142.55 -0.2270
CHF/JPY 112.423 112.939 112.354 112.82 0.3430
AUD/JPY 81.227 81.31 80.54 80.626 -0.6470
EUR/GBP 0.8982 0.90216 0.89682 0.90059 0.0024
EUR/CHF 1.14008 1.14057 1.13626 1.13785 -0.0024
GBP/CHF 1.26896 1.26967 1.26228 1.26308 -0.0065

 

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1442 1.1485 1.1512 1.1555 1.1581 1.1624 1.1651
USD/JPY 109.95 110.22 110.75 111.02 111.55 111.82 112.34
GBP/USD 1.2656 1.2729 1.2770 1.2844 1.2885 1.2958 1.2999
USD/CHF 0.9787 0.9804 0.9832 0.9848 0.9876 0.9893 0.9921
USD/CAD 1.2908 1.2949 1.3014 1.3056 1.3121 1.3162 1.3227
EUR/JPY 127.09 127.49 127.94 128.34 128.79 129.19 129.64
GBP/JPY 141.72 142.06 142.30 142.64 142.89 143.23 143.48
CHF/JPY 111.88 112.12 112.47 112.70 113.05 113.29 113.64
AUD/JPY 79.57 80.06 80.34 80.83 81.11 81.60 81.88
EUR/GBP 0.8922 0.8945 0.8976 0.8999 0.9029 0.9052 0.9082
EUR/CHF 1.1316 1.1339 1.1359 1.1382 1.1402 1.1425 1.1445
GBP/CHF 1.2530 1.2576 1.2604 1.2650 1.2677 1.2724 1.2751

 

 

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.