26 Jun 2018

FOREX Newsletter

      

FOREX Newsletter

June 26, 2018

 

Pulse of the Market

·      The U.S Dollar fell to two-week lows against the safe-haven yen in yesterday’s trading session

·      A fresh escalation in tensions between the U.S. and its trading partners sparked a flight to safety

·      Euro gained shrugging off Ifo survey data out of Germany that undershot economists’ forecasts

·      The Canadian Dollar was broadly lower yesterday as oil prices gave back some of Friday’s gains

The Greenback pulled back against all of the major currencies except for the loonie. The move had little to do with US data. Instead few positive developments abroad triggered profit-taking on long US dollar positions. Although their recoveries were muted by the beginning of the week losses the best performing currencies last week were the Swiss Franc and the Japanese Yen. The worst performers were the Canadian and New Zealand dollars. There are a number of forces pressuring the US dollar lower from profit taking, the drop in US stocks, and the slide in the US yields to President Trump’s relationship with the rest of the world. The US’ trade war also puts pressure on the markets and the US Supreme Court’s ruling that state sales tax can be collected from online retailers is bad news for stocks. Yet one very strong reason why investors won’t stop buying US dollars is the upward trajectory in US rates. Reports suggesting the U.S. was drawing up plans to block firms with at least 25% Chinese ownership from buying U.S. companies with industry changing technology, sent markets into risk-off mode, prompting a bid in safe haven currencies like the yen and Swiss franc, stifling the greenback. The yen and the Swissy are often sought in times of geopolitical tension or market turbulence because both countries have large current account surpluses. Positive U.S. economic data, showing New Home Sales topped expectations, drew a limited turnaround in risk sentiment. EUR/USD, meanwhile, rose 0.33% to $1.1692 shrugging off Ifo survey data out of Germany that undershot economists’ forecasts. The pound was a touch higher, with GBP/USD edging up 0.11% to 1.3276. The commodity linked currencies were broadly lower as oil prices gave back some of Friday’s strong gains as trade worries weighed. Oil prices had risen on Friday after major oil exporters agreed to a modest increase in production. The Australian dollar was lower in yesterday’s trading session, with AUD/USD down 0.52% to 0.7406. The Aussie had fallen to 13-month lows last week amid fears over the U.S. – China trade spat. The Canadian dollar was also weaker, with USD/CAD climbing 0.32% to 1.3310. The loonie hit a one-year low on Friday amid volatility in oil prices.

 

   

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
08:30 U.K BBA Loans for House Purchase (MAY) Medium   38250 38049
10:00 U.K CBI Reported Sales (JUN) Low   11 11
12:00 ECB Vice President De Guindos Speaks in Frankfurt Low      
13:00 S&P CoreLogic CS 20-City (MoM) SA (APR) Medium   0.4% 0.53%
13:00 S&P/Case-Shiller Composite-20 (YoY) (APR) Medium   6.8% 6.79%
13:00 S&P/Case-Shiller US Home Price Index (YoY) (APR) Medium     6.53%
14:00 U.S Richmond Fed Manufact. Index (JUN) Low   15 16
14:00 U.S Consumer Confidence Index (JUN) High   128 128
14:00 U.S Conf. Board Present Situation (JUN) Medium     161.7
14:00 U.S Conf. Board Expectations (JUN) Low     105.6
22:45 New Zealand Trade Balance (MAY) Medium   100m 263m

 

Euro

The single currency continued to hold a choppy range, largely unaffected by sub-forecast Ifo survey data out of Germany. The Ifo dropped to 101.8 from 102.3 in June, with the headline reading in line with Bloomberg consensus. The May number was revised up to 102.3, which means the reading actually improved marginally in the previous month. Overall, the EUR/USD traded with a low of 1.1627 and a high of 1.1711 before closing the day around 1.1705 in the New York session.

 

Yen

The Japanese Yen pair fell yesterday as worries about escalating trade tensions between the U.S and other leading economies kept risk appetite in check. The greenback was down 0.28 percent at 109.65 yen. The yen tends to benefit during geopolitical or financial stress as Japan is the world’s biggest creditor nation.  Overall, the USD/JPY traded with a low of 109.34 and a high of 110.02 before closing the day around 109.77 in the U.S session.

 

British Pound

The British Pound staged its 3rd straight day of gains after a bullish statement by the BOE last week regarding interest rates but some say the big picture, namely the actions surrounding Brexit will keep the currency from sustaining any meaningful rally. The European Union summit due to take place this week is seen as crucial to the pounds direction. Overall, the GBP/USD traded with a low of 1.3219 and a high of 1.3289 before closing the day at 1.3281 in the New York session.

 

Canadian Dollar

The Canadian Dollar weakened against its U.S counterpart yesterday as worries over an escalating trade dispute between the United States and other leading economies weighed on stocks. Canada exports many commodities, including oil, and runs a current account deficit so its economy could also be hurt if the flow of trade or capital slows. Overall, USD/CAD traded with a low of 1.3267 and a high of 1.3322 before closing the day at 1.3298 in the New York session.

 

Australian Dollar

The Australian Dollar has been under pressure this year, losing close to 9% against the greenback since late January. Divergent monetary policy settings between the Reserve Bank of Australia (RBA) and the US Federal Reserve, along with ongoing trade tensions between the United States and its other major trading partners, has weighed on the Aussie despite a solid bounce on Friday. Overall, AUD/USD traded with a low of 0.7394 and a high of 0.7440 before closing the day at 0.7406 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 0.23%.

 

 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 40 reading and lies below the neutral zone. On the whole, the pair has lost 0.06%.

 

 

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 38 reading and lies below the neutral region. In general, the pair has lost 0.51%.

 

 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 55 and lies above the neutral region. On the whole, the pair has gained 0.25%.

 

  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 38 and lies below the neutral region. In general, the pair has gained 0.08%.

 

 Appendix

  

FOREX Closing Prices for June 25, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.16654 1.17116 1.1627 1.17054 0.0045
USD/JPY 109.903 110.027 109.349 109.774 -0.1970
GBP/USD 1.32671 1.32891 1.32192 1.32812 0.0017
USD/CHF 0.98764 0.98883 0.9854 0.98708 -0.0006
USD/CAD 1.32714 1.33224 1.32679 1.32989 0.0028
EUR/JPY 128.222 128.821 127.262 128.513 0.2970
GBP/JPY 145.829 146.162 144.669 145.772 -0.0850
CHF/JPY 111.246 111.465 110.645 111.241 -0.1210
AUD/JPY 81.74 81.767 80.953 81.402 -0.4200
EUR/GBP 0.87907 0.88173 0.87791 0.88137 0.0022
EUR/CHF 1.15225 1.15551 1.14876 1.15531 0.0038
GBP/CHF 1.3105 1.31887 1.30565 1.31095 0.0010

   

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1566 1.1597 1.1651 1.1681 1.1736 1.1766 1.1820
USD/JPY 108.73 109.04 109.41 109.72 110.08 110.39 110.76
GBP/USD 1.3167 1.3193 1.3237 1.3263 1.3307 1.3333 1.3377
USD/CHF 0.9819 0.9837 0.9854 0.9871 0.9888 0.9905 0.9922
USD/CAD 1.3216 1.3242 1.3270 1.3296 1.3325 1.3351 1.3379
EUR/JPY 126.02 126.64 127.58 128.20 129.14 129.76 130.69
GBP/JPY 143.41 144.04 144.91 145.53 146.40 147.03 147.89
CHF/JPY 109.95 110.30 110.77 111.12 111.59 111.94 112.41
AUD/JPY 80.17 80.56 80.98 81.37 81.80 82.19 82.61
EUR/GBP 0.8751 0.8765 0.8789 0.8803 0.8828 0.8842 0.8866
EUR/CHF 1.1441 1.1464 1.1509 1.1532 1.1576 1.1599 1.1644
GBP/CHF 1.2916 1.2986 1.3048 1.3118 1.3180 1.3250 1.3312

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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