22 Oct 2018

FOREX Newsletter

FOREX Newsletter

October 22, 2018

 

   Pulse of the Market

·      This week investors will be looking ahead to Friday’s data on U.S third quarter growth

·      Data on Friday showed that sales of U.S existing homes fell for a sixth straight month in September

·      British Prime Minister Theresa May is prepared to drop a key demand on the Irish border

·      Data showing that Canadian retail sales and inflation were weaker than expected last month

 

The U.S Dollar was lower on Friday as bond yields continued to hold near a one-week high, while the euro was higher. The U.S dollar index, which tracks the greenback against a basket of other currencies, fell 0.13% to 95.60. Treasury yields were higher, with the United States 10-Year note at 3.192%, not far from a one-week high of 3.211% on Thursday. Bond yields rose after hawkish Fed minutes on Wednesday showed the central bank’s conviction in gradually increasing interest rates in December and beyond. The dollar rose against the yen, with USD/JPY gaining 0.29% to 112.52. Elsewhere, the pound and euro recovered from monthly lows. The British Pound rose 0.17% to 1.3040 despite a hard Brexit looking more likely. The euro was slightly higher, with the Euro increasing 0.22% to 1.1479 after European Economic Affairs Commissioner Pierre Moscovici played down the EU’s dispute with Italy’s budget. He said the EU had only sent a letter to Rome and it would be a long process going forward. Italy is expected to reply to the EU letter today. The Australian dollar was higher despite China posting lower than expected third-quarter GDP. The loonie was lower after core inflation rose less than expected and retail sales fell in August. This week investors will be looking ahead to Friday’s data on U.S third quarter growth, while monetary policy decisions from the European Central Bank and Bank of Canada will also be in focus. The GDP data is expected to show that U.S. economic growth slowed in the third quarter from the second when the economy grew at its fastest pace in four years. Investors will also be getting an update on the health of the U.S. housing market, which has been hit by rising borrowing costs as a result of Fed rate hikes, with the release of figures on new and pending home sales. Data on Friday showed that sales of existing homes fell for a sixth straight month in September, in what was the largest decline in more than two years. The ECB is expected to keep interest rates on hold at its meeting on Thursday, ahead of the expected end of its monetary stimulus program in December. The Canadian dollar steadied against the greenback on Friday but held near a five-week low hit after domestic data showing a slowdown in inflation was supportive of the Bank of Canada maintaining a gradual approach to interest rate hikes. The annual inflation rate in September dipped to 2.2 percent from 2.8 percent as price pressures from gas and air travel eased. Analysts had forecast an annual rate of 2.7 percent.

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
01:00 Remarks by RBA’s Debelle in Sydney Low      
04:30 Japan All Industry Activity Index (MoM) (AUG) Medium   0.4% 0.0%
07:00 Japan Convenience Store Sales (YoY) (SEP) Low     1.0%
08:00 Switzerland Total Sight Deposits CHF (OCT 19) Low      
09:00 Euro-Zone Government Debt-Gross Domestic Product Ratio Low     86.7%
12:30 Canada Wholesale Trade Sales (MoM) (AUG) Low     1.5%
12:30 U.S Chicago Fed Nat Activity Index (SEP) Low     0.18
22:30 ANZ Roy Morgan Weekly Consumer Confidence Index (OCT 21) Low      

 

Euro

The single currency recovered from one-week lows against the U.S. dollar on Friday as investors took profits on bets against the currency after it was burdened this week by concerns about Italy’s spending proposals and Britain’s plans to exit the European Union. The single currency had dropped on Thursday. Overall, the EUR/USD traded with a low of 1.1431 and a high of 1.1533 before closing the day around 1.1521 in the New York session.

 

Yen

The Japanese Yen fell on Friday as easing tensions in the U.S stock market and higher U.S Treasury yields helped the Dollar/Yen close higher last week. It was a relatively tame week in the Forex markets compared to the previous week’s volatility. Last week, the U.S Dollar firmed against a basket of major currencies. Overall, the USD/JPY traded with a low of 112.12 and a high of 112.62 before closing the day around 112.50 in the U.S session.

 

British Pound

The British Pound found a relief at the end of a trying week, rallying sharply in the past hour amid a news report provided hope for a Brexit breakthrough in the coming days. UK government was prepared to drop its Irish border demands as a way to help ease the path towards securing an agreement with the EU. Overall, the GBP/USD traded with a low of 1.3009 and a high of 1.3102 before closing the day at 1.3068 in the New York session.

 

Canadian Dollar

The Canadian Dollar took a dive on Friday, flipping into negative territory versus its U.S rival following economic data that missed consensus estimates. Consumer price inflation for September read 2.2% year-on-year, compared with the FactSet consensus of 2.7%. For the month, Canada actually recorded disinflation of 0.4%, versus 0.1% inflation expected. Overall, USD/CAD traded with a low of 1.3025 and a high of 1.3130 before closing the day at 1.3104 in the New York session.

 

Australian Dollar

The Australian Dollar ended Friday’s trading session higher. Aussie has sold off extensively in 2018, falling between 6% and 8% against its major counterparts – now some analysts are saying the declines have been so hefty the currency may be bottoming. But forming a bottom is one thing – starting a new trend higher is quite another.  Overall, AUD/USD traded with a low of 0.7087 and a high of 0.7148 before closing the day at 0.7118 in the New York session.

 

Euro-Yen

EUR/JPY is trading below 14 and above 50, 100 days moving average. Fast stochastic is giving a bullish tone and MACD is issuing a bearish stance. The Relative Strength Index is above 46 and lies below the neutral zone. In general, the pair has gained 0.89%.

 

Sterling-Yen

Currently, GBP/JPY is trading below 14 and above 50, 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 48 reading and lies below the neutral zone. On the whole, the pair has gained 0.70%.

  

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 45 reading and lies below the neutral region. In general, the pair has gained 0.58%.

 

Euro-Sterling

This cross is currently trading below 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 45 and lies below the neutral region. On the whole, the pair has gained 0.20%.

 

Sterling-Swiss

This cross is trading above 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 58 and lies above the neutral region. In general, the pair has gained 0.41%.

 

Appendix

  

FOREX Closing Prices for October 19, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.14511 1.15333 1.14315 1.1521 0.0070
USD/JPY 112.158 112.629 112.122 112.504 0.3210
GBP/USD 1.30162 1.31026 1.30094 1.30682 0.0053
USD/CHF 0.99543 0.99759 0.99478 0.99551 0.0000
USD/CAD 130831 1.313 1.30254 1.31049 0.0022
EUR/JPY 128.452 129.662 128.441 129.631 1.1440
GBP/JPY 146.002 147.31 145.997 147.04 1.0150
CHF/JPY 112.634 113.069 112.558 112.98 0.3210
AUD/JPY 79.57 80.455 79.515 80.083 0.4600
EUR/GBP 0.87956 0.8831 0.87736 0.88139 0.0018
EUR/CHF 1.1400 1.14898 1.13896 1.14699 0.0070
GBP/CHF 1.29587 1.30532 1.2955 1.30108 0.0052

  

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1355 1.1393 1.1457 1.1495 1.1559 1.1597 1.1661
USD/JPY 111.70 111.91 112.21 112.42 112.71 112.93 113.22
GBP/USD 1.2924 1.2967 1.3018 1.3060 1.3111 1.3153 1.3204
USD/CHF 0.9915 0.9932 0.9943 0.9960 0.9971 0.9988 1.0000
USD/CAD 1.2939 1.2982 1.3044 1.3087 1.3148 1.3191 1.3253
EUR/JPY 127.61 128.02 128.83 129.24 130.05 130.47 131.27
GBP/JPY 144.94 145.47 146.25 146.78 147.57 148.10 148.88
CHF/JPY 112.16 112.36 112.67 112.87 113.18 113.38 113.69
AUD/JPY 78.64 79.08 79.58 80.02 80.52 80.96 81.46
EUR/GBP 0.8724 0.8749 0.8781 0.8806 0.8839 0.8864 0.8896
EUR/CHF 1.1310 1.1350 1.1410 1.1450 1.1510 1.1550 1.1610
GBP/CHF 1.2861 1.2908 1.2959 1.3006 1.3058 1.3105 1.3156

 

 

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.