02 Nov 2018

FOREX Newsletter

FOREX Newsletter

November 02, 2018

 

Pulse of the Market

·      U.S manufacturing growth slowed with the ISM index dropping to 57.7 from 59.8

·      Bank of England meeting combined with Brexit optimism sent sterling above 1.30

·      The Euro experienced strong gains in yesterday’s session because of short covering

·      The Canadian Dollar traded higher but its 0.5% gains were modest in comparison

The U.S Dollar traded lower against all of the major currencies on the first day of November and we can point to a few reasons for the decline. First and foremost, the greenback started the NY session under pressure with the sell-off gaining momentum on the back of softer US data. According to Challenger Grey & Christmas, layoffs surged in October, although more than half of the 153.6% increase was due to Verizon’s voluntary severance program. Manufacturing growth slowed with the ISM index dropping to 57.7 from 59.8, a consequence of the trade war. The dollar was also down because high risk currencies are up and part of this move is driven by the decline in Treasury yields and the corresponding rise in Eurozone, UK and Australian rates. Non-farm payrolls are scheduled for release today and despite yesterday’s decline in the dollar, the market is looking for strong jobs growth. Meanwhile, the big focus yesterday was the Bank of England meeting which combined with Brexit optimism sent sterling above 1.30. Yesterday’s 1.85% rally was the strongest one day gain for the pair this year. The BoE voted 9-0 to leave interest rates unchanged and lowered its growth forecasts for the year but instead of falling, sterling soared as the central bank talked rate hikes. According to the summary of the report, the MPC felt that “Were the economy to continue to develop broadly in line with the November Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate.” Governor Carney said a Brexit deal could release pent up investment demand but a no-deal Brexit could also lead to a major supply shock that could drive up inflation and interest rates. It was also a good day for other currencies such as EUR/USD, which rose 0.9%, AUD/USD which jumped 1.8% and NZD/USD which increased 2%. The Canadian Dollar traded higher but its 0.5% gains were modest in comparison. A stronger than expected Australian trade report helped AUD while NZD was supported by an uptick in job ads and house prices.

 

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
00:30 Australia Retail Sales Ex Inflation (QoQ) (3Q) Medium   0.4% 1.2%
07:00 German Import Price Index (YoY) (SEP) Low   4.5% 4.8%
08:15 Switzerland Retail Sales Real (YoY) (SEP) Medium   -0.1% 0.4%
09:30 Markit/CIPS UK Construction PMI (OCT) Medium   52 52.1
12:30 Canada Unemployment Rate (OCT) High   5.9% 5.9%
12:30 Canada Net Change in Employment (OCT) High   12.5k 63.3k
12:30 U.S Trade Balance (SEP) Medium   -$53.6b -$53.2b
12:30 U.S Change in Non-farm Payrolls (OCT) High   193k 134k
12:30 U.S Change in Private Payrolls (OCT) Medium   190k 121k
12:30 U.S Unemployment Rate (OCT) High   3.7% 3.7%
12:30 U.S Average Hourly Earnings (YoY) (OCT) Medium   3.2% 2.8%
14:00 U.S Factory Orders (SEP) Medium   0.5% 2.3%
14:00 U.S Durable Goods Orders (SEP F) Medium     0.8%
17:00 U.S Baker Hughes U.S Rig Count (NOV 2) Medium     1068

 

Euro

The single currency gained sharply in yesterday’s trading session as Euro zone government bond yields nudged higher following rallying stock markets and upbeat noises on Brexit talks dimmed the appeal of fixed income assets. Across the single-currency bloc, most 10-year debt yields were 1-2 bps higher on the day. Overall, the USD/JPY traded with a low of 1.1306 and a high of 1.1422 before closing the day around 1.1407 in the New York session.

 

Yen

The Japanese Yen traded higher yesterday. Japanese Final Manufacturing PMI improved to 52.9, but missed the forecast of 53.1 points. Japanese 10-year bonds were unchanged. In the U.S, unemployment claims ticked lower to 214 thousand. On the manufacturing front, ISM Manufacturing PMI disappointed, as it fell to 57.7 points. Overall, the USD/JPY traded with a low of 112.58 and a high of 112.98 before closing the day around 112.69 in the U.S session.

 

British Pound

The British Pound rose the most in nine months on reports that London is close to sealing a financial services deal with Brussels.  A British official said London was close to agreeing on a deal giving UK-based financial services firms basic access to European Union markets. The BoE kept interest rates on hold on Thursday but kept its options open. Overall, the GBP/USD traded with a low of 1.2760 and a high of 1.3033 before closing the day at 1.2997 in the New York session.

 

Canadian Dollar

The Canadian Dollar gained sharply as the U.S Dollar was broadly lower yesterday. The Canadian dollar declined 1.9 percent in October, its worst monthly performance since February, as optimism after a deal to revamp the NAFTA was overshadowed by a plunge in global stocks. Over the same month, the U.S. dollar climbed 2 percent.  Overall, USD/CAD traded with a low of 1.3066 and a high of 1.3166 before closing the day at 1.3083 in the New York session.

 

Australian Dollar

The Australian Dollar edged higher yesterday after the country’s trade surplus swelled to a near two-year peak in September helped by a bumper run in resource exports, while the New Zealand dollar was also buoyant. Data from the Australian Bureau of Statistics (ABS) showed the country’s trade surplus climbed to A$3.02 billion when analysts had looked for A$1.7 billion. Overall, AUD/USD traded with a low of 0.7070 and a high of 0.7207 before closing the day at 0.7250 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 45 and lies below the neutral zone. In general, the pair has gained 0.65%.

 

Sterling-Yen

Currently, GBP/JPY is trading above 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 53 reading and lies above the neutral zone. On the whole, the pair has gained 1.62%.

  

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 58 reading and lies above the neutral region. In general, the pair has gained 1.69%.

  

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 39 and lies below the neutral region. On the whole, the pair has lost 1.00%.

 

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 60 and lies above the neutral region. In general, the pair has gained 1.18%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix

 

 

FOREX Closing Prices for November 01, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.13092 1.14227 1.13066 1.14072 0.0096
USD/JPY 112.941 112.984 112.587 112.695 -0.2290
GBP/USD 1.27641 1.30332 1.27607 1.29972 0.0233
USD/CHF 1.0086 1.00896 0.99985 1.00192 -0.0064
USD/CAD 1.31553 1.31667 1.30664 1.30838 -0.0071
EUR/JPY 127.751 128.742 127.593 128.568 0.8290
GBP/JPY 144.168 146.858 144 146.475 2.3280
CHF/JPY 111.949 112.653 111.84 112.447 0.4890
AUD/JPY 79.864 81.228 79.827 81.189 1.3530
EUR/GBP 0.88595 0.88626 0.87555 0.87714 -0.0089
EUR/CHF 1.14082 1.14468 1.14012 1.14302 0.0023
GBP/CHF 1.2875 1.30482 1.28634 1.30239 0.0152

 

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1219 1.1263 1.1335 1.1379 1.1451 1.1495 1.1567
USD/JPY 112.13 112.36 112.53 112.76 112.92 113.15 113.32
GBP/USD 1.2555 1.2658 1.2828 1.2930 1.3100 1.3203 1.3373
USD/CHF 0.9891 0.9945 0.9982 1.0036 1.0073 1.0127 1.0164
USD/CAD 1.2944 1.3005 1.3045 1.3106 1.3145 1.3206 1.3245
EUR/JPY 126.71 127.15 127.86 128.30 129.01 129.45 130.16
GBP/JPY 141.84 142.92 144.70 145.78 147.56 148.64 150.41
CHF/JPY 111.16 111.50 111.97 112.31 112.79 113.13 113.60
AUD/JPY 78.87 79.35 80.27 80.75 81.67 82.15 83.07
EUR/GBP 0.8623 0.8689 0.8730 0.8797 0.8838 0.8904 0.8945
EUR/CHF 1.1360 1.1380 1.1405 1.1426 1.1451 1.1472 1.1497
GBP/CHF 1.2724 1.2794 1.2909 1.2979 1.3094 1.3163 1.3278

 

 

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.