25 Jun 2018

FOREX Newsletter

     

    FOREX Newsletter

  June 25, 2018

 

   Pulse of the Market

·      On Friday, U.S President Trump threatened to impose a 20% tariff on car imports from the EU

·      The Euro rose buoyed by data showing that second-quarter growth is likely to have been solid

·      The Pound rose to one-week highs after BOE revived expectations for an August rate hike

·      Chances of a Bank of Canada hike at the July 11 announcement fell to 54 percent from 70 percent

 

U.S inflation data will be in focus this week with the Federal Reserve has already flagged four interest rate hikes this year. The Fed’s preferred inflation measure; the core PCE price index is due on Friday. The third reading on first quarter U.S. GDP is due the day before and there will also be data on durable goods orders and consumer sentiment. The euro zone is to release a preliminary inflation estimate on Friday, while EU leaders are to hold a two-day summit in Brussels, which gets underway on Thursday. The euro rose on Friday, buoyed by data showing that second quarter growth is likely to have been solid and by fresh assurances from Italy’s new government that the country would not leave the euro area. The single currency received an additional boost after Greece secured debt relief and a cash infusion from the euro zone. EUR/USD was up 0.44% to 1.1654 in late trade, for a weekly gain of 0.39%. The gains in the euro pressured the dollar lower. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.37% at 94.19 late Friday. For the week, the index was down 0.63%. Despite its gains, the euro still remains vulnerable to political instability in the euro area and ongoing trade tensions. On Friday, U.S. President Donald Trump threatened to impose a 20% tariff on car imports from the EU. Trump’s threat came after the EU imposed tariffs on a range of U.S. imports in response to steel and aluminum tariffs from the White House. The dollar was almost unchanged against the yen late Friday, with USD/JPY at 109.96. For the week, the pair was down 0.61%. The pound rose to one-week highs on Friday, a day after a more hawkish Bank of England revived expectations for an August rate hike, but fears over a fresh period of uncertainty in Brexit negotiations checked gains. GBP/USD hit a high of 1.3315 before pulling back to 1.3263 in late trade. Elsewhere, the commodity-linked currencies strengthened on Friday following a modest increase in oil production by OPEC.  The Australian dollar bounced higher, with AUD/USD rising 0.92% to 0.7445, rebounding from the previous session’s 13-month lows of 0.7344. The Canadian dollar steadied against its U.S. counterpart on Friday after hitting an earlier one-year low, as investors pared bets on a Bank of Canada interest hike next month after weaker-than-expected domestic inflation and retail sales data. Canada’s annual inflation rate stayed unchanged at 2.2 percent in May, Statistics Canada data indicated, less than the 2.5 percent forecast by analysts.

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
05:00 Japan Leading Index CI (APR) Low     105.6
05:00 Japan Coincident Index (APR) Low     117.7
08:00 German IFO Business Climate (JUN) Medium     102.2
08:00 German IFO Expectations (JUN) Medium     98.5
08:00 German IFO Current Assessment (JUN) Medium     106
12:30 U.S Chicago Fed Nat Activity Index (MAY) Low     0.34
14:00 U.S New Home Sales (MoM) (MAY) Medium   0.5% -1.5%
14:30 U.S Dallas Fed Manufacturing Activity (JUN) Low     26.8

 

Euro

The single currency had a very bullish session on Friday, breaking above the 1.16 level significantly, and it looks as if the market continues to trying to recover from the mass selloff that we have seen after the ECB suggested that it was at least a year away from hiking interest rates. The market should continue to be driven by several different factors. Overall, the EUR/USD traded with a low of 1.1599 and a high of 1.1673 before closing the day around 1.1660 in the New York session.

 

Yen

The Japanese Yen held its gains versus a basket of currencies, as another weekly drop in U.S jobless claims was offset by a surprise fall in the Philadelphia Federal Reserve’s index on U.S Mid-Atlantic business activity. An index that gauges the greenback against the euro, yen, sterling and three other currencies was up 0.08 percent at 95.129.  Overall, the USD/JPY traded with a low of 109.78 and a high of 110.19 before closing the day around 109.97 in the U.S session.

 

British Pound

The British Pound rallied quite nicely against the US dollar during the day on Friday, breaking above the 1.3250 level. By making a fresh, new high, it is a good sign, but at this point there is a significant amount of resistance above as well. Ultimately, we have a lot of work to do if we are going to turn things around. Overall, the GBP/USD traded with a low of 1.3237 and a high of 1.3313 before closing the day at 1.3263 in the New York session.

 

Canadian Dollar

The Canadian Dollar held on to its positive tone, albeit seemed lacking any strong follow-through buying interest, however, price action remains supportive of positive momentum in US dollar’s favor. US Dollar Index is trading near one-year’s high in the 95.00 area. The downside remained cushioned amid a weaker tone surrounding crude oil prices. Overall, USD/CAD traded with a low of 1.3260 and a high of 1.3380 before closing the day at 1.3270 in the New York session.

 

Australian Dollar

The Australian Dollar has rallied rather significantly against the US dollar during trading on Friday, slicing above the 0.74 level. The Australian dollar is showing more resiliency than many other currencies, so it’ll be interesting to see how far this can run. Overall, I think short-term buyers will run the show, but eventually, bearishness will return. Overall, AUD/USD traded with a low of 0.7371 and a high of 0.7441 before closing the day at 0.7441 in the New York session.

 

Euro-Yen

EUR/JPY is trading below 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 45 and lies below the neutral zone. In general, the pair has gained 0.46%.

 

 

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 43 reading and lies below the neutral zone. On the whole, the pair has gained 0.19%.

 

 

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 indicating a bullish stance. The Relative Strength Index is above 43 reading and lies below the neutral region. In general, the pair has gained 0.87%.

 

  

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 52 and lies above the neutral region. On the whole, the pair has gained 0.37%.

 

  

 

Sterling-Swiss

 

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is indicating a bullish tone. The Relative Strength Index is above 36 and lies below the neutral region. In general, the pair has lost 0.25%.

 

 

 

 

 Appendix

 

FOREX Closing Prices for June 22, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.16019 1.16736 1.15992 1.16603 0.0058
USD/JPY 109.967 110.199 109.783 109.971 0.0040
GBP/USD 1.32393 1.33131 1.32374 1.32639 0.0023
USD/CHF 0.99155 0.99236 0.98715 0.98766 -0.0040
USD/CAD 1.3314 1.338 1.32605 1.32706 -0.0042
EUR/JPY 127.612 128.582 127.479 128.216 0.5870
GBP/JPY 145.646 146.624 145.464 145.857 0.2830
CHF/JPY 110.886 111.397 110.769 111.362 0.5100
AUD/JPY 81.106 81.9 80.988 81.822 0.7040
EUR/GBP 0.87586 0.88035 0.87499 0.87918 0.0033
EUR/CHF 1.15064 1.15485 1.14962 1.15156 0.0009
GBP/CHF 1.31292 1.31751 1.30832 1.30991 -0.0033

 

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1541 1.1570 1.1615 1.1644 1.1690 1.1719 1.1764
USD/JPY 109.35 109.57 109.77 109.98 110.19 110.40 110.60
GBP/USD 1.3154 1.3196 1.3230 1.3271 1.3306 1.3347 1.3381
USD/CHF 0.9805 0.9838 0.9858 0.9891 0.9910 0.9943 0.9962
USD/CAD 1.3108 1.3184 1.3227 1.3304 1.3347 1.3423 1.3466
EUR/JPY 126.50 126.99 127.60 128.09 128.71 129.20 129.81
GBP/JPY 144.18 144.82 145.34 145.98 146.50 147.14 147.66
CHF/JPY 110.33 110.55 110.96 111.18 111.58 111.80 112.21
AUD/JPY 80.33 80.66 81.24 81.57 82.15 82.48 83.06
EUR/GBP 0.8706 0.8728 0.8760 0.8782 0.8814 0.8835 0.8867
EUR/CHF 1.1439 1.1468 1.1492 1.1520 1.1544 1.1572 1.1596
GBP/CHF 1.2971 1.3027 1.3063 1.3119 1.3155 1.3211 1.3247

 

 

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

 

 

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