16 Nov 2018

FOREX Newsletter  

FOREX Newsletter

November 16, 2018

 

Pulse of the Market

·      U.S retail sales rebounded with a gain of 0.7% in October, after a decline of -0.1% a month earlier

·      Japan’s economy contracted in the Q3, as GDP fell 0.3%, which was in line with expectations

·      The sterling tumbled after British ministers resigned in protest against a draft Brexit agreement

·      Australia’s economy created 32.8k new jobs during October, up from 7.8k in September

The U.S Dollar was higher yesterday as jobless claims data remained in line with a strong economy, supporting a Federal Reserve rate increase. The U.S Dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.32% to 96.97. The number of people who filed for unemployment assistance in the U.S. rose by 2,000 to a seasonally adjusted 216,000 from the previous week’s total of 214,000. The numbers give support to the Federal Reserve gradually increasing interest rates. Investors are also looking ahead to comments from Federal Reserve Chair Jerome Powell in Houston, Texas. On Wednesday, Powell said the U.S economy was strong and indicated that the central bank will continue to raise rates in 2019, albeit at a gradual pace. The sterling tumbled yesterday after British ministers resigned in protest against a draft Brexit agreement, rekindling fears of a chaotic departure for Britain from the European Union in 4-1/2 months. Traders flocked into the perceived safety of the dollar and yen as the pound swung wildly this week over Brexit. On Thursday, British Prime Minister Theresa May said she won the backing of her senior ministers for a draft divorce deal, but many in her government are unconvinced and on Friday her Brexit minister Dominic Raab, and other ministers, resigned. Heightened political uncertainty in the UK kept the pound on volatile ground. Japanese Yen gained yesterday despite Japan’s economy contracted in the third quarter, as GDP fell 0.3%, which was in line with expectations. This marked the second decline in the past three quarters, raising alarm bells about the health of the Japanese economy. The contraction can be attributed to natural disasters which hit Japan, including an earthquake, as well as the toll from the escalating global trade war. This has taken a bite out of Japanese exports, as the U.S-China tariff battle has hurt the export-reliant Japanese economy. The Australian Dollar swept higher against all rivals after official data showed the Antipodean labor market going from strength-to-strength in October, but some analysts are warning that things might already be about as good as they are likely to get for the Aussie.

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
07:00 German Wholesale Price Index (YoY) (OCT) Low 3.5%
08:30 ECB President Draghi Speaks in Frankfurt High
10:00 Euro-Zone Consumer Price Index Core (YoY) (OCT) Medium 1.1% 1.1%
10:00 Euro-Zone Consumer Price Index (YoY) (OCT) Medium 2.2% 2.1%
13:00 Bundesbank President Weidmann Speaks in Frankfurt Low
13:30 Canada International Securities Transactions (Canadian dollar) (SEP) Low 2.82b
13:30 Canada Manufacturing Sales (MoM) (SEP) Low 0.1% -0.4%
14:15 U.S Industrial Production (MoM) (OCT) Medium 0.2% 0.3%
14:15 U.S Capacity Utilization (OCT) Low 78.2% 78.1%
14:15 U.S Manufacturing (SIC) Production (OCT) Medium 0.2% 0.2%
16:00 U.S Kansas City Fed Manf. Activity (NOV) Low 10 8
18:00 U.S Baker Hughes U.S. Rig Count (NOV 16) Medium 1081
21:00 U.S Net Long-term TIC Flows (SEP) Medium $131.8b

 

Euro

The single currency gained earlier in the session but closed almost unchanged. Reports out of Italy that Prime Minister Giuseppe Conte was looking to work with the EU over his government’s 2019 budget, which has been rejected by Brussels, to avert massive fines had earlier helped support Italian government bond markets and the euro. Overall, the EUR/USD traded with a low of 1.1269 and a high of 1.1361 before closing the day around 1.1326 in the New York session.

 

Yen

The Japanese Yen gained yesterday. On the release front, it was a busy day in the US. Retail sales rebounded with a strong gain of 0.7% in October, after a decline of -0.1% a month earlier. Core retail sales jumped 0.8%, after a gain of 0.1% in September. Elsewhere, the Philly Fed Manufacturing Index fell sharply to 12.9, shy of the estimate of 20.1 points. Overall, the USD/JPY traded with a low of 113.07 and a high of 113.68 before closing the day around 113.62 in the U.S session.

 

British Pound

The British Pound tumbled yesterday after British ministers resigned in protest against a draft Brexit agreement, rekindling fears of a chaotic departure for Britain from the European Union in 4-1/2 months. Traders flocked into the perceived safety of the dollar and yen as the pound swung wildly this week over Brexit. Overall, the GBP/USD traded with a low of 1.2722 and a high of 1.3028 before closing the day at 1.2772 in the New York session.

 

Canadian Dollar

The Canadian Dollar edged higher against the U.S Dollar, extending its recovery from a nearly four-month low the day before as oil prices rebounded. The price of oil, one of Canada’s major exports, recouped some of the previous session’s slide on the growing prospect of OPEC and allied producers cutting output at a meeting next month. Overall, USD/CAD traded with a low of 1.3153 and a high of 1.3246 before closing the day at 1.3175 in the New York session.

 

Australian Dollar

The Australian Dollar climbed higher in yesterday’s trading session. The local currency yesterday clung to gains after signs of a possible thaw in Sino-US trade relations prompted a bout of short-covering, though it remained within recent well-worn ranges. Figures on Australian wage growth showed some pick-up. Overall, AUD/USD traded with a low of 0.7227 and a high of 0.7296 before closing the day at 0.7281 in the New York session.

 

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is issuing a bullish stance. The Relative Strength Index is above 47 and lies below the neutral zone. In general, the pair has gained 0.18%.

 

Sterling-Yen

Currently, GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is indicating a bullish stance. The Relative Strength Index is above 42 reading and lies below the neutral zone. On the whole, the pair has lost 1.66%.

 

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 63 reading and lies above the neutral region. In general, the pair has gained 0.61%.

 

Euro-Sterling

This cross is currently trading above 14, 50 and below 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bearish signal. The Relative Strength Index is above 59 and lies above the neutral region. On the whole, the pair has gained 1.87%.

 

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 42 and lies above the neutral region. In general, the pair has lost 1.60%.

 

Appendix

  

FOREX Closing Prices for November 15, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.13093 1.13611 1.12692 1.13261 0.0018
USD/JPY 113.57 113.688 113.079 113.625 0.0240
GBP/USD 1.2992 1.30284 1.2722 1.27724 -0.0217
USD/CHF 1.00632 1.00776 1.00339 1.00648 0.0007
USD/CAD 1.32394 1.32469 1.31538 1.31755 -0.0064
EUR/JPY 128.453 129.031 127.745 128.712 0.2320
GBP/JPY 147.573 147.9 144.234 145.108 -2.4530
CHF/JPY 112.823 112.999 112.468 112.858 -0.0470
AUD/JPY 82.135 82.862 82.055 82.659 0.5000
EUR/GBP 0.86996 0.88869 0.86968 0.88678 0.0163
EUR/CHF 1.138 1.14181 1.13423 1.14021 0.0023
GBP/CHF 1.30762 1.30949 1.28068 1.28564 -0.0209

 

  

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1185 1.1227 1.1277 1.1319 1.1368 1.1411 1.1460
USD/JPY 112.63 112.86 113.24 113.46 113.85 114.07 114.46
GBP/USD 1.2347 1.2535 1.2653 1.2841 1.2960 1.3147 1.3266
USD/CHF 0.9996 1.0015 1.0040 1.0059 1.0084 1.0102 1.0127
USD/CAD 1.3044 1.3099 1.3137 1.3192 1.3230 1.3285 1.3323
EUR/JPY 126.68 127.21 127.96 128.50 129.25 129.78 130.53
GBP/JPY 139.93 142.08 143.59 145.75 147.26 149.41 150.93
CHF/JPY 112.02 112.24 112.55 112.78 113.08 113.31 113.61
AUD/JPY 81.38 81.72 82.19 82.53 83.00 83.33 83.80
EUR/GBP 0.8557 0.8627 0.8747 0.8817 0.8938 0.9007 0.9128
EUR/CHF 1.1281 1.1312 1.1357 1.1388 1.1433 1.1463 1.1509
GBP/CHF 1.2456 1.2631 1.2744 1.2919 1.3032 1.3207 1.3320

 

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.