05 Nov 2018

FOREX Newsletter

    

FOREX Newsletter

November 05, 2018

 

Pulse of the Market

·      250K jobs were created last month in the U.S which was more than the market’s 200K forecast

·      The Midterm Elections scheduled on Tuesday and monetary policy announcement on Thursday

·      Stronger German inflation and employment data were offset by weaker Eurozone Q3 GDP growth

·      The uptrend in USD/CAD remains intact after last week’s economic reports

 

The U.S Dollar traded higher on the back of the non-farm payrolls report but it was the confusion around US-China trade relations that caused the sell-off in equities and spillover to currencies. The main takeaway from the jobs report is that it is good enough for the Fed to raise interest rates in December. 250K jobs were created last month, which was more than the market’s 200K forecast but this improvement was offset by the downward revision in September and the slowdown in wage growth. Traders were disappointed to hear that despite President Trump’s tweet about a constructive conversation with President Xi, Chief Economic Advisor Kudlow is not optimistic about US-China relations because there hasn’t been any massive movement on trade and more importantly, they have not been asked to draft a China deal. What’s even more confusing is that after these comments, Trump said he thinks a deal with China could happen. At the end of the day while Trump and Xi could meet at the G20 meeting at the end of the month it remains to be seen whether anything substantial will come out of the meeting. As stocks resumed their slide, investors flocked into the safety of US dollars and if stocks continue to fall, the greenback will resume its rise. There are two big events for the dollar next week – the Midterm Elections on Tuesday and the Federal Reserve’s monetary policy announcement on Thursday. According to the latest opinion polls, the Democrats could take control of the House with the Republicans maintaining its majority in the Senate. While the Federal Reserve is widely expected to leave interest rates unchanged and reiterate their plans to raise interest rates in December, the tone of the FOMC statement could be more cautious. As for the euro, the currency saw little change over the past week. Stronger than expected German inflation and employment data were offset by weaker Eurozone Q3 GDP growth and sentiment. Not much has changed for the euro but on Friday. The Australian and New Zealand dollars will also be in focus with Reserve Bank monetary policy announcements from both nations.

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
  New Zealand Dairy Auction Whole Milk Powder MT (NOV 6) Medium     $2,729
00:00 Australia TD Securities Inflation (YoY) (OCT) Medium     2.1%
01:00 BOJ Kuroda speaks in Nagoya High      
01:45 Caixin China PMI Composite (OCT) Medium     52.1
01:45 Caixin China PMI Services (OCT) Medium     53.1
09:00 Switzerland Domestic Sight Deposits CHF (NOV 2) Low      
09:30 Markit/CIPS UK Services PMI (OCT) Medium     53.9
09:30 Markit/CIPS UK Composite PMI (OCT) Medium     54.1
09:30 Euro-Zone Sentix Investor Confidence (NOV) Low     11.4
12:45 ECB Vice President Guindos Speak in Brussels Low      
14:45 Markit US Services PMI (OCT) Low     54.7
14:45 Markit US Composite PMI (OCT) Low     54.8
15:00 U.S ISM Non-Manufacturing/Services Composite (OCT) High   59.5 61.6

 

Euro

The single currency fell against the U.S Dollar on Friday losing ground to five of the other seven major currencies as the calendar turned from October to November. There are no ‘high’ rated German or Eurozone data releases in the coming week, meaning the only potential domestic catalyst in the days ahead is progress around Italy’s budget. Overall, the USD/JPY traded with a low of 1.1370 and a high of 1.1454 before closing the day around 1.1389 in the New York session.

 

Yen

The Japanese Yen finished October as the best performing currencies, but its start to November has been inauspicious, to say the least. Changes in retail trader positioning seem to indicate that Japanese Yen weakness may be on the short-term horizon. Investor sentiment was given a further shot in the arm on Friday. Overall, the USD/JPY traded with a low of 112.53 and a high of 113.30 before closing the day around 113.19 in the U.S session.

 

British Pound

The British Pound has been rather noisy and sideways during the trading session on Friday as we awaited jobs figures. This makes a lot of sense though, because we are trying to come to terms with the idea of being at the 1.30 handle, an area that of course is a large come around, psychologically significant figure. Overall, the GBP/USD traded with a low of 1.2949 and a high of 1.3039 before closing the day at 1.2968 in the New York session.

 

Canadian Dollar

The Canadian Dollar dipped against a broadly stronger greenback, reversing from an earlier one-week high, after the release of domestic jobs data that was not firm enough to raise bets for another BOC interest rate hike next month. The Canadian economy added 11,200 jobs in October on full-time hiring, and the unemployment rate fell to 5.8 per cent. Overall, USD/CAD traded with a low of 1.3046 and a high of 1.3116 before closing the day at 1.3098 in the New York session.

 

Australian Dollar

The Australian Dollar extended its rally on Friday as an apparent de-escalation in the U.S.-China trade war gave market confidence a significant boost in Asian trade but ended by the end of the U.S session Aussie reversed all its gains and ended the day lower against the U.S Dollar. The Australian dollar climbed 0.5 percent earlier in the session. Overall, AUD/USD traded with a low of 0.7180 and a high of 0.7256 before closing the day at 0.7195 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 48 and lies below the neutral zone. In general, the pair has gained 0.29%.

 

Sterling-Yen

Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish tone and MACD is indicating a bearish stance. The Relative Strength Index is above 54 reading and lies above the neutral zone. On the whole, the pair has gained 0.23%.

 

Aussie-Yen

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 60 reading and lies above the neutral region. In general, the pair has gained 0.32%.

  

Euro-Sterling

This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 41 and lies below the neutral region. On the whole, the pair has gained 0.10%.

 

Sterling-Swiss

This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is indicating a bearish tone. The Relative Strength Index is above 58 and lies above the neutral region. In general, the pair has lost 0.07%.

 

Appendix

  

FOREX Closing Prices for November 02, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.14056 1.14544 1.13708 1.13896 -0.0018
USD/JPY 112.68 113.304 112.538 113.191 0.4960
GBP/USD 1.30014 1.30391 1.29497 1.29683 -0.0029
USD/CHF 1.00191 1.00468 0.99663 1.0034 0.0015
USD/CAD 1.30857 1.31168 1.30463 1.30985 0.0015
EUR/JPY 128.506 129.303 128.349 128.936 0.3680
GBP/JPY 146.505 147.233 146.262 146.809 0.3340
CHF/JPY 112.424 113.205 112.258 112.772 0.3250
AUD/JPY 81.205 81.909 80.997 81.452 0.2630
EUR/GBP 0.877 0.87987 0.87661 0.878 0.0009
EUR/CHF 1.14279 1.14527 1.14031 1.14295 -0.0001
GBP/CHF 1.3028 1.30421 1.29659 1.30143 -0.0010

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1272 1.1321 1.1355 1.1405 1.1439 1.1489 1.1523
USD/JPY 111.95 112.25 112.72 113.01 113.48 113.78 114.25
GBP/USD 1.2843 1.2896 1.2932 1.2986 1.3022 1.3075 1.3111
USD/CHF 0.9904 0.9935 0.9985 1.0016 1.0065 1.0096 1.0146
USD/CAD 1.2987 1.3017 1.3058 1.3087 1.3128 1.3158 1.3199
EUR/JPY 127.47 127.91 128.42 128.86 129.38 129.82 130.33
GBP/JPY 145.33 145.80 146.30 146.77 147.27 147.74 148.25
CHF/JPY 111.34 111.80 112.29 112.75 113.23 113.69 114.18
AUD/JPY 80.08 80.54 81.00 81.45 81.91 82.36 82.82
EUR/GBP 0.8732 0.8749 0.8765 0.8782 0.8797 0.8814 0.8830
EUR/CHF 1.1355 1.1379 1.1404 1.1428 1.1454 1.1478 1.1503
GBP/CHF 1.2897 1.2931 1.2973 1.3007 1.3049 1.3084 1.3125

 

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

 

Disclaimer

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