25 Oct 2018

FOREX Newsletter

    

FOREX Newsletter

October 25, 2018



Pulse of the Market 

·      The U.S Dollar remained near nine-week highs against basket of currencies in yesterday

·      Euro zone private sector activity grew at the slowest pace in more than two years

·      Bank of Canada opened the door to a faster pace of tightening as it raised interest rates

·      Sterling fell amid intensifying concerns about whether the UK can reach a Brexit agreement

The dollar remained near nine-week highs against other currencies yesterday, while the loonie surged after the Bank of Canada increased rates. The U.S dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.46% to 96.15. The Canadian dollar was higher, with USD/CAD down 0.47% t0 1.3022 after the Bank of Canada increased interest rates to 1.75% from 1.50%, as expected. The dollar inched up against the Japanese yen, with USD/JPY up 0.05% to 112.49. Meanwhile the euro was at its lowest level since August 17, after data showed that euro zone private sector activity grew at the slowest pace in more than two years in October, increasing concerns over the economic impact of trade wars. Worry over Italy’s budget also remained in focus after the European Union took the unprecedented step of rejecting Rome’s 2019 draft budget on Tuesday, amid concerns over the impact of increased spending on already high national debt levels. Sterling remained under pressure as Brexit talks stalled just five months until the UK is scheduled to leave the EU. The pound was near one-and-a-half month lows, with GBP/USD falling 0.62% to 1.2903. The Canadian dollar strengthened to a one-week high against its U.S. counterpart yesterday after the Bank of Canada opened the door to a faster pace of tightening as it raised interest rates, as expected, for the fifth time since July 2017. The central bank increased its key interest rate by 25 basis points to 1.75 per cent and said it would continue to hike to at least 2.5 per cent to keep inflation in check, while it dropped previous references to a gradual pace of tightening. The Canadian dollar is reacting to the removal of gradual from the Bank of Canada statement. The central bank targeted a neutral stance for interest rates, which it estimates to be between 2.5 per cent and 3.5 per cent. Money markets implied a policy rate of 2.43 per cent in December 2019, up from 2.37 per cent before the rate announcement. Gains for the loonie came even as the Dollar climbed to its highest in more than two months against a basket of other major currencies.

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
06:00 German GfK Consumer Confidence (NOV) Medium   10.5 10.6
08:00 German IFO Business Climate (OCT) Medium   103.1 103.7
08:00 German IFO Expectations (OCT) Medium   100.4 101
08:00 German IFO Current Assessment (OCT) Medium   106 106.4
11:45 European Central Bank Rate Decision (OCT 25) High   0.00% 0.00%
11:45 ECB Marginal Lending Facility (OCT 25) High   0.25% 0.25%
11:45 ECB Deposit Facility Rate (OCT 25) High   -0.4% -0.4%
12:30 U.S Advance Goods Trade Balance (SEP) High   -$75.1b -$75.8b
12:30 U.S Wholesale Inventories (MoM) (SEP) Medium   0.5% 1.0%
12:30 U.S Durable Goods Orders (SEP) High   -1.5% 4.4%
12:30 U.S Durables Ex Transportation (SEP) Medium   0.4% 0.0%
12:30 U.S Initial Jobless Claims (OCT 2) Medium   213k 210k
12:30 U.S Continuing Claims (OCT 13) Medium   1660k 1640k
14:00 U.S Pending Home Sales (YoY) (SEP) Medium     -2.5%

 

Euro

The single currency fell and the bloc’s government bond yields dropped after data showed business growth in the single currency area lost far more momentum than expected, as trade tensions and worries over Italy overshadow the economy. A survey showed euro zone business growth decelerated faster than anticipated as the final quarter of 2018 began.  Overall, the EUR/USD traded with a low of 1.1377 and a high of 1.1475 before closing the day around 1.1390 in the New York session.

 

Yen

The Japanese Yen pair strengthened after European data signaled that economic growth could be flagging across the euro zone. Weakness in the single currency supported the dollar index. The Japanese yen, often bought when broader markets slide, gave up its earlier gains, suggesting some renewed demand for risk-taking as stock markets rebounded. Overall, the USD/JPY traded with a low of 112.07 and a high of 112.72 before closing the day around 112.23 in the U.S session.

 

British Pound

The British Pound was under pressure against the dollar amid reignited fears about the possibility of a no-deal Brexit. The three-week low for sterling against the dollar comes amid revived dollar strength and continued fears about the progress of Brexit negotiations in Britain. Concerns are growing about the possibility and severity of a no-deal Brexit. Overall, the GBP/USD traded with a low of 1.2865 and a high of 1.2989 before closing the day at 1.2879 in the New York session.

 

Canadian Dollar

The Canadian Dollar spiked up against its major counterparts yesterday, as the Bank of Canada lifted its benchmark rate by a quarter point, as expected. The BoC hiked its overnight rate to 1.75% from 1.50%. The decision was in line with forecasts. The bank said that it expects inflation to remain close to the 2% target through the end of 2020. Overall, USD/CAD traded with a low of 1.2966 and a high of 1.3097 before closing the day at 1.3053 in the New York session.

 

Australian Dollar

The Australian Dollar rose into the yesterday’s mid-week session as it tracked the Chinese stock market in its recovery off multi-year lows, and analysts at both Westpac and Commerzbank are suggesting it could move higher still. But was unable to hold on to its gains and ended the day slightly lower against the Dollar Overall, AUD/USD traded with a low of 0.7066 and a high of 0.7104 before closing the day at 0.7068 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 37 and lies below the neutral zone. In general, the pair has lost 0.86%.

 

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 38 reading and lies below the neutral zone. On the whole, the pair has lost 0.96%.

  

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 40 reading and lies below the neutral region. In general, the pair has lost 0.52%.

  

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 50 and lies above the neutral region. On the whole, the pair has gained 0.09%.

 

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 46 and lies above the neutral region. In general, the pair has lost 0.49%.

 

Appendix

 

FOREX Closing Prices for October 24, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.14702 1.14754 1.13775 1.13905 -0.0079
USD/JPY 112.421 112.724 112.071 112.23 -0.1940
GBP/USD 1.29816 1.29896 1.28654 1.28793 -0.0103
USD/CHF 0.99472 0.99878 0.99398 0.9976 0.0029
USD/CAD 1.30815 1.30976 1.29669 1.30538 -0.0028
EUR/JPY 128.96 129.194 127.747 127.855 -1.1110
GBP/JPY 145.95 146.279 144.407 144.566 -1.4010
CHF/JPY 112.979 113.192 112.381 112.469 -0.5220
AUD/JPY 79.633 79.997 79.129 79.222 -0.4150
EUR/GBP 0.88332 0.88471 0.88139 0.88421 0.0008
EUR/CHF 1.14114 1.14168 1.13528 1.13653 -0.0045
GBP/CHF 1.29153 1.29264 1.28358 1.28507 -0.0064

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1256 1.1317 1.1354 1.1414 1.1451 1.1512 1.1549
USD/JPY 111.31 111.69 111.96 112.34 112.61 112.99 113.27
GBP/USD 1.2709 1.2787 1.2833 1.2911 1.2957 1.3036 1.3082
USD/CHF 0.9900 0.9920 0.9948 0.9968 0.9996 1.0016 1.0044
USD/CAD 1.2851 1.2909 1.2981 1.3039 1.3112 1.3170 1.3243
EUR/JPY 125.89 126.82 127.34 128.27 128.78 129.71 130.23
GBP/JPY 142.02 143.21 143.89 145.08 145.76 146.96 147.63
CHF/JPY 111.36 111.87 112.17 112.68 112.98 113.49 113.79
AUD/JPY 78.03 78.58 78.90 79.45 79.77 80.32 80.64
EUR/GBP 0.8788 0.8801 0.8822 0.8834 0.8855 0.8868 0.8888
EUR/CHF 1.1276 1.1314 1.1340 1.1378 1.1404 1.1442 1.1468
GBP/CHF 1.2725 1.2780 1.2816 1.2871 1.2906 1.2962 1.2997

 

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

 

Disclaimer

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