29 Oct 2018

FOREX Newsletter

 

FOREX Newsletter

October 29, 2018

 

 

Pulse of the Market

·      U.S gross domestic product decelerated a bit to a still solid 3.5% annual rate in the third quarter

·      U.K Chancellor Philip Hammond is under pressure to commit to a spending boost

·      European Central Bank (ECB) decision fails to impress Euro to US Dollar exchange rate traders

·      The Canadian dollar slumped to a six-week low before paring its decline against the U.S Dollar

 

The third quarter US gross domestic product data bettered forecasts this afternoon, clocking in at 3.5% on the quarter. While this still represents a slowdown from the strong growth seen in the second quarter investors took encouragement from the data, pushing the US Dollar (USD) higher against its rivals. As the figure is likely to add further fuel to the hawkish outlook of the Federal Reserve the odds of a December interest rate hike remain high. The Euro remained under pressure after European Central Bank President Mario Draghi indicated the central bank could extend its asset purchase program. He said Thursday at the post-decision press conference that accommodation remained necessary. The central bank made no changes to its monetary policy, as expected. The US Dollar (USD) benefitted notably from the Euro’s weakness over the last week. While this has been the primary cause of USD gains, the US currency has also found support on recent US data which has continued to indicate that the economic outlook is strong. Thursday saw the publication of the US durable goods orders results from September, which beat forecasts by only falling from 4.6% to 0.8% rather than the predicted drop from 4.5% to -1%. US pending home sales from September were stronger too, climbing from -1.9% to 0.5% rather than the forecast -0.1%. Since the European Central Bank (ECB) decision has passed investors are turning their attention towards key data due for publication in this week. The British Pound ended the day almost flat against the Dollar. The Canadian dollar slumped to a six-week low against its U.S. counterpart on Friday before paring its decline, as a sell-off in global stock markets offset the boost the loonie got earlier in the week from a Bank of Canada interest rate hike. Stock markets around the world fell as better-than-expected U.S. economic data did little to ease anxiety over disappointing corporate profits and trade wars. Canada’s central bank on Wednesday raised its key interest rate by 25 basis points to 1.75 per cent, its fifth hike since July 2017, and said it might speed up the pace of future hikes given that the economy was running at almost full capacity and did not need any stimulus.

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
09:30 U.K Net Consumer Credit (SEP) Medium 1.1b
09:30 U.K Net Lending Sec. on Dwellings (SEP) Medium 2.9b
09:30 U.K Mortgage Approvals (SEP) Medium 66.4k
12:30 U.S Personal Income (SEP) Medium 0.3% 0.3%
12:30 U.S Personal Spending (SEP) Medium 0.4% 0.3%
12:30 U.S Real Personal Spending (SEP) Medium 0.2%
12:30 U.S Personal Consumption Expenditure Deflator (YoY) (SEP) Low 2.2%
12:30 U.S Personal Consumption Expenditure Core (YoY) (SEP) High 2.0%
13:45 U.S Fed’s Evans Speaks at Conference on Regional Competitiveness Low
14:30 U.S Dallas Fed Manufacturing Activity (OCT) Low 28.1
23:30 Japan Job-To-Applicant Ratio (SEP) Low 1.63
23:30 Japan Jobless Rate (SEP) Medium 2.4%

 

Euro

The single currency fell sharply across the board after ECB President Draghi’s press conference on Thursday, as it was revealed that while the QE program will end in December, that doesn’t mean other programs couldn’t be started up. There is no risk of contagion from Italy’s budget crisis in the EU but the euro zone is not prepared enough to face a new economic crisis, French Finance Minister said on Sunday. a high of 1.1419 before closing the day around 1.1399 in the New York session.

 

Yen

The Japanese Yen was the best performing currency last week, extending its run as the best performer in October. Friday’s price action among the JPY-crosses suggests exhaustion in the short-term, but weekly charts continue to point towards gains. Retail traders remain net-short the Japanese Yen, despite the whipsaw price action at the end of last week. Overall, the USD/JPY traded with a low of 111.35 and a high of 111.42 before closing the day around 111.89 in the U.S session.

 

British Pound

The British Pound fell to an over two-month low as risk aversion continued favoring the Dollar during the first half of the day, but finished the week at 1.2825, as the American currency eased on the back of a mixed Q3 GDP report and some profit-taking ahead of the weekend. UK’s Chancellor Philip Hammond warned that a no-deal Brexit will jeopardize budget plans. Overall, the GBP/USD traded with a low of 1.2775 and a high of 1.2839 before closing the day at 1.2828 in the New York session.

 

Canadian Dollar

The Canadian Dollar slumped to a six-week low on Friday before paring its decline, as a sell-off in global stock markets offset the boost the loonie got earlier in the week from a Bank of Canada interest rate hike. Canada runs a current account deficit and exports many commodities, so its economy could suffer if the flow of trade or capital slows. Overall, USD/CAD traded with a low of 1.3066 and a high of 1.3157 before closing the day at 1.3093 in the New York session.

 

Australian Dollar

The Australian Dollar continued its death-spiral in early Friday trading session when it fell to a new two-year low but ended the session off its lows as the Greenback weakened and analysts are now looking to this week’s wage data for clues about where it will head next. Third-quarter inflation data due out next week is unlikely to improve the Australian Dollar’s fortune, according to analysts at TD Securities. Overall, AUD/USD traded with a low of 0.7019 and a high of 0.7102 before closing the day at 0.7088 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 34 and lies below the neutral zone. In general, the pair has lost 0.20%.

 

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 34 reading and lies below the neutral zone. On the whole, the pair has lost 0.35%.

  

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 0.30%.

 

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 57 and lies below the neutral region. On the whole, the pair has gained 0.13%.

  

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 42 and lies above the neutral region. In general, the pair has lost 0.16%.

 

Appendix

  

FOREX Closing Prices for October 26, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.13728 1.14198 1.13342 1.13999 0.0027
USD/JPY 112.412 112.427 111.357 111.894 -0.4980
GBP/USD 1.28154 1.28397 1.27752 1.28289 0.0012
USD/CHF 0.99929 1.00248 0.99617 0.99666 -0.0027
USD/CAD 1.307 1.31573 1.30664 1.30936 0.0024
EUR/JPY 127.847 127.881 126.609 127.574 -0.2500
GBP/JPY 144.077 144.185 142.747 143.565 -0.5020
CHF/JPY 112.475 112.486 111.53 112.235 -0.1920
AUD/JPY 79.575 79.58 78.53 79.314 -0.2360
EUR/GBP 0.88723 0.88944 0.88597 0.88841 0.0012
EUR/CHF 1.13654 1.13837 1.13406 1.1364 -0.0003
GBP/CHF 1.28075 1.28311 1.27827 1.27878 -0.0020

  

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1264 1.1299 1.1349 1.1385 1.1435 1.1470 1.1521
USD/JPY 110.29 110.82 111.36 111.89 112.43 112.96 113.50
GBP/USD 1.2725 1.2750 1.2790 1.2815 1.2854 1.2879 1.2919
USD/CHF 0.9881 0.9921 0.9944 0.9984 1.0007 1.0047 1.0070
USD/CAD 1.2963 1.3015 1.3054 1.3106 1.3145 1.3197 1.3236
EUR/JPY 125.56 126.08 126.83 127.35 128.10 128.63 129.37
GBP/JPY 141.38 142.06 142.81 143.50 144.25 144.94 145.69
CHF/JPY 110.73 111.13 111.68 112.08 112.64 113.04 113.59
AUD/JPY 77.65 78.09 78.70 79.14 79.75 80.19 80.80
EUR/GBP 0.8830 0.8845 0.8864 0.8879 0.8899 0.8914 0.8934
EUR/CHF 1.1299 1.1320 1.1342 1.1363 1.1385 1.1406 1.1428
GBP/CHF 1.2722 1.2752 1.2770 1.2801 1.2818 1.2849 1.2867

 

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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