27 Ago 2018

FOREX Newsletter

 

FOREX Newsletter

August 27, 2018

 

Pulse of the Market

·      Investors focused on Powell comment that there’s no sign of inflation accelerating

·      The Single Currency climbed to its strongest level in 3 weeks on Friday

·      Sterling extended its recovery but the lackluster rally signals that investors are worried about Brexit

·      NZD was supported by this week’s stronger than expected second quarter retail sales

Fed Chair Jerome Powell’s comments at Jackson Hole sent the U.S Dollar lower against all of the major currencies on Friday. Powell confirmed that further gradual tightening will be needed but investors were not impressed and instead focused on his comment that there’s no sign of inflation accelerating and no elevated risk of it overheating. This along with the Fed minutes which showed concerns about trade, housing and emerging markets casted doubt on a December. Every piece of U.S data released last week also deteriorated with durable goods, existing and new home sales falling. Revisions to Q2 GDP, personal income, spending, Chicago PMI and the trade balance are due for release this week but we don’t think they will help the Dollar. Looking ahead it’s the end of the summer in Europe and North America and the week before a major holiday in the U.S. Most of the major event risks are behind us and with minimal data on the calendar liquidity will truly subside. Euro climbed to its strongest level in 3 weeks. Despite the persistent rise in Italian yields, U.S Dollar flows and short covering has taken the pair sharply higher. Sterling also extended its recovery but the lackluster rally signals that investors are still worried about Brexit. They are skeptical of the recent progress and unhappy about the reports that the October deadline for a Brexit deal could be pushed out by 4 weeks. Nonetheless, Michel Barnier the EU’s Chief Brexit negotiator said negotiations have reached the final stage and they will hold continuous talks from here forward. Barnier’s eagerness to cooperate is a breath of fresh air but the Irish border and other issues are difficult ones and until real agreements are made, investors could refrain from buying the currency. There were no major economic reports released last week and nothing substantial on the calendar last week. Technically, GBP/USD is in a downtrend as long as it remains below 1.2950. The New Zealand and Canadian Dollars also extended higher. NZD was supported by this week’s stronger than expected second quarter retail sales and a smaller than anticipated trade deficit but the data isn’t great because the annual trade deficit hit its largest level since March 2009. Dairy prices also fell further, which could reduce the value of dairy exports going forward. Central Bank Governor Orr said this past week their biggest challenge is getting inflation to rise and they haven’t ruled out cutting interest rates to achieve its target. Even if NZD/USD continues to recover, it may find it difficult to rise above the July high of .6860.

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
  German Retail Sales (YoY) (JUL) Medium     3.0%
01:30 China Industrial Profits (YoY) (JUL) Low     20.0%
08:00 German IFO Business Climate (AUG) Medium     101.7
08:00 German IFO Expectations (AUG) Medium     98.2
08:00 German IFO Current Assessment (AUG) Medium     105.3
08:00 Switzerland Total Sight Deposits CHF (AUG 24) Low      
12:30 U.S Chicago Fed Nat Activity Index (JUL) Low     0.43
14:30 U.S Dallas Fed Manufacturing Activity (AUG) Low     32.3
23:30 ANZ Roy Morgan Weekly Consumer Confidence Index (AUG 26) Low      

 

Euro

The single currency has been somewhat noisy during the session but in a good way. The market had beaten this currency down but it seems like fears about the Turkish lira and contagion are starting to drop off a bit. That’s a good sign, and it seems as if the attitude of traders around the world is the step back a bit. Overall, the EUR/USD traded with a low of 1.1533 and a high of 1.1638 before closing the day around 1.1623 in the New York session.

 

Yen

The Japanese Yen pair retreated further from 2-week highs amid a US dollar sell-off following Fed’s Powell speech at Jackson Hole. Earlier rose to 111.48, the strongest level since August 6 and recently printed a fresh daily low at 111.10. It was hovering near the lows, with the intraday bias pointing to the downside.  Overall, the USD/JPY traded with a low of 111.08 and a high of 111.46 before closing the day around 111.25 in the U.S session.

 

British Pound

The British Pound has reversed direction on Friday and posted gains. In North American trade, GBP/USD is trading at 1.2845, up 0.26% on the day. On the release front, the number of mortgages approved by major UK banks dropped to 39.6 thousand, shy of the estimate of 40.6 thousand. Brexit continues to hover over the British economy like a dark cloud. Overall, the GBP/USD traded with a low of 1.2797 and a high of 1.2879 before closing the day at 1.2849 in the New York session.

 

Canadian Dollar

The Canadian Dollar strengthened on Friday, recovering from an earlier one-week low as oil prices rose and a speech by Fed Chairman Jerome Powell helped boost stocks and weaken the greenback. Powell outlined a steady, surprise-free course for monetary policy in a speech at the annual central banker’s symposium in Jackson Hole, Wyoming. Overall, USD/CAD traded with a low of 1.3008 and a high of 1.3101 before closing the day at 1.3035 in the New York session.

 

Australian Dollar

The Australian Dollar got a little boost at the end of the week as its home country got a new Prime Minister, but AUD/USD remains severely battered and, indeed, at lows not seen since the start of 2016.  Former Treasurer Scott Morrison has replaced Malcolm Turnbull as leader of the Liberal Party which governs in a coalition. Turnbull lost the confidence of his party so Morrison becomes Australia’s sixth Prime Minister since 2007. Overall, AUD/USD traded with a low of 0.7236 and a high of 0.7342 before closing the day at 0.7327 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 57 and lies above the neutral zone. In general, the pair has gained 0.71%.

 

Sterling-Yen

Currently, GBP/JPY is trading above 14 and below 50, 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 45 reading and lies below the neutral zone. On the whole, the pair has gained 0.27%.

  

Aussie-Yen

 

Currently, the cross is trading above 14 and below 50, 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 49 reading and lies below the neutral region. In general, the pair has gained 1.09%.

 

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 70 and lies above the neutral region. On the whole, the pair has gained 0.46%.

  

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 0.01%.

 

Appendix

  

FOREX Closing Prices for August 24, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.15376 1.16384 1.15334 1.16232 0.0085
USD/JPY 111.236 111.468 111.085 111.252 -0.0180
GBP/USD 1.28137 1.28792 1.27976 1.28493 0.0038
USD/CHF 0.9857 0.98635 0.98091 0.98319 -0.0028
USD/CAD 1.30791 1.3101 1.30089 1.30359 -0.0043
EUR/JPY 128.375 129.396 128.366 129.298 0.9060
GBP/JPY 142.563 143.214 142.493 142.941 0.3910
CHF/JPY 112.842 113.279 112.762 113.176 0.3560
AUD/JPY 80.614 81.67 80.567 81.508 0.8820
EUR/GBP 0.90036 0.90503 0.89999 0.90471 0.0041
EUR/CHF 1.13776 1.14273 1.13721 1.1427 0.0049
GBP/CHF 1.26289 1.26479 1.26071 1.26322 0.0001

 

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1453 1.1493 1.1558 1.1598 1.1663 1.1703 1.1768
USD/JPY 110.69 110.89 111.07 111.27 111.45 111.65 111.83
GBP/USD 1.2723 1.2760 1.2805 1.2842 1.2886 1.2924 1.2968
USD/CHF 0.9752 0.9780 0.9806 0.9835 0.9861 0.9889 0.9915
USD/CAD 1.2904 1.2957 1.2996 1.3049 1.3088 1.3141 1.3180
EUR/JPY 127.61 127.99 128.64 129.02 129.67 130.05 130.70
GBP/JPY 141.83 142.16 142.55 142.88 143.27 143.60 143.99
CHF/JPY 112.35 112.56 112.87 113.07 113.38 113.59 113.90
AUD/JPY 79.72 80.15 80.83 81.25 81.93 82.35 83.03
EUR/GBP 0.8964 0.8982 0.9015 0.9032 0.9065 0.9083 0.9115
EUR/CHF 1.1335 1.1354 1.1390 1.1409 1.1446 1.1464 1.1501
GBP/CHF 1.2569 1.2588 1.2610 1.2629 1.2651 1.2670 1.2692

 

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.

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