23 Nov 2018

FOREX Newsletter

FOREX Newsletter

November 23, 2018

 

Pulse of the Market

·      Markets and banks in the U.S were closed yesterday for the Thanksgiving holiday

·      The U.S Dollar was slightly lower as safe-haven demand remained subdued after a rebound in stocks

·      The U.S Department of Labor reported Wednesday that initial jobless claims rose by 3,000

·      Cable gained after reports that negotiators have made another breakthrough on the path to Brexit

 

The U.S Dollar ticked lower against a currency basket yesterday as a cautiously optimistic mood in markets dampened safe haven demand, while the euro edged higher amid hopes for a resolution to the row over Italy’s budget. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, edged down to an overnight low of 96.44 and was at 96.47. The dollar had weakened slightly on Wednesday following reports that the Federal Reserve could pause its rate rise cycle as early as next spring. The Fed is expected to raise rates for a fourth time this year at its December meeting. The U.S Dollar pulled back against most of the major currencies on Wednesday except for the Japanese Yen and Swiss Franc. The resilience of USD/JPY continues to surprise considering that most of today’s U.S. economic reports missed expectations. Durable goods orders dropped -4.4%, jobless claims increased and the University of Michigan Consumer Sentiment Index was revised lower. While existing home sales beat, it is becoming very clear that the momentum in the U.S economy is easing. The British pound gained sharply yesterday after reports that UK and EU negotiators have made another breakthrough on the path to Brexit. European Council President Donald Tusk said on Thursday morning that a political declaration on the UK and EU’s future relationship “agreed at negotiators’ level and agreed in principle at political level.” Prior to Tusk’s comments, an EU official said on Thursday morning that a 20-page declaration had been finalized ahead of an EU summit on Sunday where Prime Minister Theresa May hopes to have the Brexit divorce deal signed off. The news, which marks another major step forward in the Brexit process, sent the pound flying higher, gaining as much as 1.1% against the dollar. The Euro was a touch higher, with EUR/USD gaining 0.16% to trade at 1.1402 amid hopes that the row between Italy’s government and the European Union over Rome’s 2019 budget, which is in breach of euro zone fiscal rules, can be resolved. The Canadian dollar edged higher yesterday as the greenback broadly fell and Canada’s government weighed a proposal which could help soften the blow from price discounts on heavy crude generated by pipeline congestion.

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
00:30 Nikkei Japan PMI Manufacturing (NOV) Medium     52.9
07:00 German Gross Domestic Product w.d.a. (YoY) (3Q) Medium   1.1% 1.1%
08:30 Markit/BME Germany Manufacturing PMI (NOV) Medium   52.2 52.2
08:30 Markit Germany Services PMI (NOV) Medium   54.5 54.7
09:00 Markit Eurozone Manufacturing PMI (NOV) Medium   52.0 52.0
09:00 Markit Eurozone Services PMI (NOV) Medium   53.6 53.7
13:30 Canada Retail Sales (MoM) (SEP) Medium   0.0% -0.1%
13:30 Canada Consumer Price Index (YoY) (OCT) High   2.2% 2.2%
14:45 Markit US Manufacturing PMI (NOV) Medium   55.8 55.7
14:45 Markit US Services PMI (NOV) Medium   55.0 54.8
14:45 Markit US Composite PMI (NOV) Medium     54.9

Euro

The single currency briefly rallied to the day’s highs in yesterday’s session after Britain and the European Union agreed in principle to a text setting out their future relationship before a summit on Sunday. However, gains were limited as focus turned on the minutes of the European Central Bank’s October meeting. Overall, the EUR/USD traded with a low of 1.1379 and a high of 1.1432 before closing the day around 1.1401 in the New York session.

 

Yen

The Japanese Yen ticked higher against the U.S Dollar in yesterday trading session. On the release front, Japanese National Core CPI posted a gain of 1.0%, unchanged from the previous release. This matched the forecast. Markets and banks in the U.S were closed for the Thanksgiving holiday and there are no U.S events on the schedule. Overall, the USD/JPY traded with a low of 112.86 and a high of 113.21 before closing the day around 112.92 in the U.S session.

 

British Pound

The British Pound has taken off after reports that UK and EU negotiators have made another breakthrough on the path to Brexit. European Council President Donald Tusk said yesterday morning that a political declaration on the UK and EU’s future relationship “agreed at negotiators’ level and agreed in principle at political level.” Overall, the GBP/USD traded with a low of 1.2767 and a high of 1.2926 before closing the day at 1.2875 in the New York session.

 

Canadian Dollar

The Canadian Dollar edged higher against its U.S counterpart yesterday as the greenback broadly fell and Canada’s government weighed a proposal which could help soften the blow from price discounts on heavy crude generated by pipeline congestion. Recent weakening in the price of U.S oil has added to headwinds for Canada’s oil patch. Overall, USD/CAD traded with a low of 1.3179 and a high of 1.3242 before closing the day at 1.3186 in the New York session.

 

Australian Dollar

The Australian Dollar is undervalued and its Kiwi counterpart trades at a premium to fair value, according to analysts at Westpac. AUD/USD is 2% below fair value, arguably carrying too much weight from Australian political risks and the US-China trade war. The Australian Dollar has been hit hard in 2018 by a combination of factors.  Overall, AUD/USD traded with a low of 0.7232 and a high of 0.7266 before closing the day at 0.7252 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 50 and lies below the neutral zone. In general, the pair has gained 0.06%.

 

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 46 reading and lies below the neutral zone. On the whole, the pair has gained 0.67%.

 

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 54 reading and lies above the neutral region. In general, the pair has lost 0.24%.

 

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 53 and lies above the neutral region. On the whole, the pair has lost 0.63%.

  

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 43 and lies above the neutral region. In general, the pair has gained 0.89%.

 

Appendix

  

FOREX Closing Prices for November 22, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.13811 1.14326 1.13797 1.14016 0.0018
USD/JPY 113.052 113.218 112.866 112.924 -0.1300
GBP/USD 1.27736 1.2926 1.27679 1.28756 0.0101
USD/CHF 0.9945 0.99549 0.99199 0.99491 0.0005
USD/CAD 1.32296 1.32429 1.31796 1.31869 -0.0042
EUR/JPY 128.708 129.079 128.65 128.787 0.0730
GBP/JPY 144.433 145.924 144.236 145.416 0.9660
CHF/JPY 113.651 113.86 113.428 113.45 -0.2240
AUD/JPY 82.068 82.227 81.666 81.897 -0.1930
EUR/GBP 0.89091 0.8921 0.8839 0.88529 -0.0056
EUR/CHF 1.13204 1.13552 1.1317 1.13442 0.0023
GBP/CHF 1.27061 1.28313 1.26952 1.28177 0.0113

 

  

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1324 1.1352 1.1377 1.1405 1.1430 1.1458 1.1482
USD/JPY 112.44 112.65 112.79 113.00 113.14 113.35 113.49
GBP/USD 1.2629 1.2698 1.2787 1.2857 1.2945 1.3015 1.3103
USD/CHF 0.9893 0.9906 0.9928 0.9941 0.9963 0.9976 0.9998
USD/CAD 1.3100 1.3140 1.3163 1.3203 1.3227 1.3266 1.3290
EUR/JPY 128.17 128.41 128.60 128.84 129.03 129.27 129.46
GBP/JPY 142.77 143.50 144.46 145.19 146.15 146.88 147.84
CHF/JPY 112.87 113.15 113.30 113.58 113.73 114.01 114.16
AUD/JPY 81.07 81.37 81.63 81.93 82.19 82.49 82.76
EUR/GBP 0.8739 0.8789 0.8821 0.8871 0.8903 0.8953 0.8985
EUR/CHF 1.1284 1.1301 1.1322 1.1339 1.1361 1.1377 1.1399
GBP/CHF 1.2595 1.2645 1.2732 1.2781 1.2868 1.2918 1.3004

 

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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