20 Nov 2018

FOREX Newsletter

FOREX Newsletter

November 20, 2018
 

 

Pulse of the Market

·      The U.S Dollar fell to fresh lows against the Euro, Swiss Franc, and Japanese Yen

·      The NAHB housing market index failed to rebound like economists anticipated

·      A weaker than expected Eurozone current account balance failed to stop the euro from rising

·      Sterling bulls put up a fight as the currency trades higher for the second day in a row

It is a holiday week in the United States but yesterday’s moves in forex shows how important it is to not mistake less participation with consolidation. The U.S Dollar fell to fresh lows against the Euro, Swiss Franc, and Japanese Yen as stocks resumed their slide. The forex market will trade continuously but equity and bond markets in the U.S will be closed on Thursday with half days for both on Friday. Currencies actually have a history of breaking out or reaching new milestones the week of Thanksgiving. Just take a look at the charts below. Last year, EUR/USD and GBP/USD hit a 1 month high Thanksgiving Day while USD/JPY fell to a 2 month low the day before Thanksgiving. In 2016, the EUR/USD dropped to an 11 month low the week of Thanksgiving while USD/JPY rose to a 7 month high. There was no meaningful movement in sterling that year. In 2015, EUR/USD and GBP/USD fell to a 7-month low the week of Thanksgiving as USD/JPY consolidated. Fundamentally, there’s not much on the U.S calendar this week and it seems like any weakness in second tier reports is being used as an excuse to continue selling dollars. Yesterday, the NAHB housing market index failed to rebound like economists anticipated and this was enough to send the dollar spiraling lower. With the momentum skewed to the downside, investors completely ignored Fed President and FOMC voter Williams’ positive outlook – he described the economy as doing very well with job growth good. Today’s housing starts and building permits reports are not expected to alter the dollar’s trend. Meanwhile a weaker than expected Eurozone current account balance failed to stop the Euro from rising. Not only did EUR/USD end Friday above the 20-day SMA for the first time since September but it’s now also trading above the 200-SMA on the 4 hour, something that it hasn’t done in 2 months. Of all the regions in the world, the Eurozone and Canada have the most important economic reports scheduled for release this week and they are all due on Friday. Recent evidence suggests that the Eurozone economy is slowing and there’s a very good chance the PMIs will confirm that. Sterling bulls are putting up a fight as the currency trades higher for the second day in a row. The focus is Brexit – Prime Minister May is still working on getting a deal approved by Parliament while Tory MPs are focused on getting enough letters submitted for a no confidence vote. There will be intensive discussions this week according to May and its unlikely that they will amount to anything.

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
00:30 RBA Meeting Minutes (NOV 6) Medium      
07:00 German Producer Price Index (YoY) (OCT) Low   3.3% 3.2%
08:20 RBA’s Lowe gives speech in Melbourne High      
10:00 BOE’s Carney, Haldane, Cunliffe and Saunders Testify in London High      
13:30 U.S Housing Starts (MoM) (OCT) Medium   2.4% -5.3%
13:30 U.S Building Permits (MoM) (OCT) Medium   -0.8% -0.6%
18:00 Bank of Canada’s Wilkins Speech in Montreal Low      
23:30 Australia Westpac Leading Index (MoM) (OCT) Medium     -0.1%

 

Euro

The single currency traded higher. On the release front, there were no major events on the schedule. The Eurozone’s current surplus dropped sharply to EUR 16.9 billion, short of the forecast of EUR 24.2 billion. This marked the smallest surplus since July 2014. Today, the Eurozone releases PPI and the U.S publishes building permits and housing starts. Overall, the EUR/USD traded with a low of 1.1392 and a high of 1.1463 before closing the day around 1.1452 in the New York session.

 

Yen

The Japanese Yen pair posted slight losses yesterday. On the release front, Japan’s trade surplus rose to JPY 0.30 trillion, lower than the estimate of JPY 0.48 trillion. There are no major U.S. events on the schedule. The Bank of Japan has no plans to alter its ultra-accommodative monetary policy, as inflation remains well below the BoJ target of around 2 percent. Overall, the USD/JPY traded with a low of 112.40 and a high of 112.85 before closing the day around 112.53 in the U.S session.

 

British Pound

The British Pound edged higher against the U.S Dollar and the majority of its other peers at the start of this week’s session as a defiant Theresa May pushes ahead with her controversial Brexit plan. Mrs. May promoted the deal by outlining how it will allow the UK to control immigration and lead to migration becoming more skills-based. Overall, the GBP/USD traded with a low of 1.2792 and a high of 1.2882 before closing the day at 1.2849 in the New York session.

 

Canadian Dollar

The Canadian Dollar edged lower against its U.S counterpart yesterday, straying close to the nearly four-month low touched last week, as oil prices slipped and global risk appetite remained in check. The price of oil, one of Canada’s major exports, fell by about 1 per cent in yesterday’s session, snapping a three-day streak of gains.  Overall, USD/CAD traded with a low of 1.3139 and a high of 1.3199 before closing the day at 1.3168 in the New York session.

 

Australian Dollar

The Australian Dollar was under pressure to start the new trading week yesterday, pulling back from multi-month highs struck on Friday. Renewed trade tensions between the United States and China are behind the latest selloff, helping to partially offset more cautious language from leading U.S Federal Reserve officials. Overall, AUD/USD traded with a low of 0.7275 and a high of 0.7323 before closing the day at 0.7290 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 49 and lies below the neutral zone. In general, the pair has gained 0.04%.

 

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 40 reading and lies below the neutral zone. On the whole, the pair has lost 0.14%.

 

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 56 reading and lies above the neutral region. In general, the pair has lost 0.84%.

 

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 62 and lies above the neutral region. On the whole, the pair has gained 0.16%.

  

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 39 and lies above the neutral region. In general, the pair has lost 0.48%.

 

Appendix

  

FOREX Closing Prices for November 19, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.14149 1.14631 1.13926 1.14528 0.0036
USD/JPY 112.823 112.856 112.402 112.535 -0.3120
GBP/USD 1.28355 1.28822 1.27921 1.28493 0.0019
USD/CHF 0.99959 1.00053 0.99226 0.99337 -0.0061
USD/CAD 1.31539 1.31997 1.31391 1.31681 0.0018
EUR/JPY 128.804 129.044 128.443 128.898 0.0490
GBP/JPY 144.833 145.292 144.269 144.6 -0.2040
CHF/JPY 112.836 113.294 112.607 113.252 0.3770
AUD/JPY 82.502 82.591 81.841 82.064 -0.6930
EUR/GBP 0.88917 0.89308 0.88654 0.89105 0.0014
EUR/CHF 1.14166 1.1421 1.13684 1.13778 -0.0034
GBP/CHF 1.28334 1.28663 1.27413 1.27639 -0.0062

  

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1339 1.1366 1.1409 1.1436 1.1480 1.1507 1.1550
USD/JPY 111.89 112.14 112.34 112.60 112.79 113.05 113.25
GBP/USD 1.2710 1.2751 1.2800 1.2841 1.2890 1.2931 1.2980
USD/CHF 0.9820 0.9871 0.9902 0.9954 0.9985 1.0037 1.0068
USD/CAD 1.3078 1.3108 1.3138 1.3169 1.3199 1.3230 1.3259
EUR/JPY 127.95 128.19 128.55 128.80 129.15 129.40 129.75
GBP/JPY 143.13 143.70 144.15 144.72 145.17 145.74 146.19
CHF/JPY 112.12 112.36 112.81 113.05 113.50 113.74 114.18
AUD/JPY 80.99 81.42 81.74 82.17 82.49 82.92 83.24
EUR/GBP 0.8808 0.8837 0.8874 0.8902 0.8939 0.8968 0.9004
EUR/CHF 1.1305 1.1336 1.1357 1.1389 1.1410 1.1442 1.1462
GBP/CHF 1.2590 1.2666 1.2715 1.2791 1.2840 1.2916 1.2965

 

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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