29 Nov 2018

FOREX Newsletter

      

FOREX Newsletter

 November 29, 2018

 

Pulse of the Market

·      Federal Reserve Chairman Jerome Powell said that interest rates are just below neutral

·      Investors are also focused on the G20 summit in Buenos Aires on Friday and Saturday

·      Euro zone members aim to agree reforms to make their currency union more resilient

·      The Canadian dollar weakened to a five-month low against its U.S. counterpart yesterday

The U.S Dollar tumbled from two-week highs yesterday after Federal Reserve Chairman Jerome Powell said that interest rates are just below neutral, raising expectations that the U.S. central bank is closer to the end of its rate hike cycle. Powell said the policy rate, at 2-2.25 percent, is now “just below” the broad range of estimates of neutral, which in September was 2.5-3.5 percent. That contrasts with comments on Oct. 3 when Powell said the Fed might raise rates past neutral, adding that they are probably “a long way” from that point. The Fed has not raised the rates in order to gain ground on neutral between Oct. 3 and today, so therefore his view of the economy has declined. The dollar has been under pressure in recent weeks on signs that the Fed might reduce the pace of rate increases amid slowing global growth, peak corporate earnings and the escalating trade tensions. U.S President Donald Trump has also expressed frustration with Fed rate hikes. Trump said in a Washington Post interview on Tuesday that he was “not even a little bit happy” with the Fed chairman and that the central bank’s policies are hurting the economy. Minutes from the Fed’s Nov. 7-8 meeting, to be released today, will next be evaluated for further indications of how many more times the U.S central bank is likely to hike interest rates. Investors are also focused on the G20 summit in Buenos Aires on Friday and Saturday, where Trump and his Chinese counterpart, Xi Jinping, are scheduled to discuss contentious trade matters. German Finance Minister Olaf Scholz said yesterday he wants euro zone reforms to include changing the European Stability Mechanism bailout fund to a European Monetary Fund (EMF) to support members’ states when needed. The British Pound was already higher before the government’s analysis of Brexit scenarios report was released yesterday. The beleaguered currency actually managed to climb further higher – hitting the $1.28.

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
06:45 Switzerland Gross Domestic Product (YoY) (3Q) High   2.9% 3.4%
07:45 French Gross Domestic Product (YoY) (3Q) Medium   1.5% 1.5%
08:55 German Unemployment Change (000’s) (NOV) High   -10k -11k
08:55 German Unemployment Claims Rate s.a. (NOV) High   5.1% 5.1%
09:30 U.K Net Consumer Credit (OCT) Medium   1.0b 0.8b
09:30 U.K Net Lending Sec. on Dwellings (OCT) Medium   3.5b 3.9b
09:30 U.K Mortgage Approvals (OCT) Medium   64.5k 65.3k
10:00 Euro-Zone Consumer Confidence (NOV) Low   -3.9 -3.9
13:00 German Consumer Price Index (YoY) (NOV) High   2.4% 2.5%
13:30 U.S Personal Income (OCT) Medium   0.4% 0.2%
13:30 U.S Personal Spending (OCT) Medium   0.4% 0.4%
13:30 U.S PCE Core (YoY) (OCT) High   2.1% 2.0%
13:30 U.S Initial Jobless Claims (NOV 24) Medium   220k 224k
15:00 U.S Pending Home Sales (YoY) (OCT) Medium   -2.8% -3.4%
19:00 U.S FOMC Meeting Minutes (NOV 08) High      

 

Euro

The single currency gained as Euro zone members aim to agree reforms to make their currency union more resilient when they meet next week. German Finance Minister Olaf Scholz said he wanted to promote a euro zone budget as part of the EU budget to help investment, economic convergence and stability in the euro zone. Overall, the EUR/USD traded with a low of 1.1265 and a high of 1.1386 before closing the day around 1.1364 in the New York session.

 

Yen

The Japanese Yen pair ticked lower in the Wednesday session. On the release front, U.S. Preliminary GDP for the third quarter gained 3.5%, just shy of the estimate of 3.6%. This follows an identical gain of 3.5% in the Advanced GDP release. Today promises to be a busy day, as the U.S releases three key indicators. Overall, the USD/JPY traded with a low of 113.42 and a high of 114.01 before closing the day around 113.66 in the U.S session.

 

British Pound

The British Pound ticked higher yesterday. On the release front, the BoE released its financial stability report. In the U.S, the key event was Preliminary GDP, which gained 3.5% in Q3. This follows an identical gain of 3.5% in the Advanced GDP release in October. Today, the U.K releases Net Lending to Individuals as well as GfK Consumer Confidence. Overall, the GBP/USD traded with a low of 1.2730 and a high of 1.2845 before closing the day at 1.2821 in the New York session.

 

Canadian Dollar

The Canadian Dollar weakened to a five-month low against its U.S counterpart yesterday as oil prices declined and ahead of the potential signing of a new North American trade pact this week. The price of oil was pressured yesterday by rising U.S inventories and doubts over whether an OPEC-led output cut will be agreed next week. Overall, USD/CAD traded with a low of 1.3239 and a high of 1.3357 before closing the day at 1.3274 in the New York session.

 

Australian Dollar

The Australian Dollar gained as the market waited for some clarity to emerge on Sino-US trade, while soft economic data at home had only a fleeting impact. US President Donald Trump is open to reaching a deal over dinner on Saturday with Chinese leader Xi Jinping but is ready to hike tariffs if there is no breakthrough, White House economic adviser Larry Kudlow said on Tuesday. Overall, AUD/USD traded with a low of 0.7219 and a high of 0.7326 before closing the day at 0.7308 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 52 and lies below the neutral zone. In general, the pair has gained 0.61%.

 

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 49 reading and lies below the neutral zone. On the whole, the pair has gained 0.50%.

 

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 61 reading and lies above the neutral region. In general, the pair has gained 1.02%.

 

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 54 and lies above the neutral region. On the whole, the pair has gained 0.03%.

 

Sterling-Swiss

This cross is trading below 14, 50 and 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 41 and lies below the neutral region. In general, the pair has gained 0.11%.

 

Appendix

  

FOREX Closing Prices for November 28, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.12903 1.1386 1.12657 1.13644 0.0078
USD/JPY 113.761 114.018 113.423 113.661 -0.1130
GBP/USD 1.27374 1.28453 1.27305 1.28212 0.0077
USD/CHF 0.99876 1.00042 0.99237 0.99357 -0.0049
USD/CAD 1.32935 1.33575 1.32398 1.32741 -0.0020
EUR/JPY 128.432 129.235 128.226 129.187 0.7800
GBP/JPY 144.938 145.811 144.836 145.745 0.7190
CHF/JPY 113.892 114.383 113.763 114.365 0.4480
AUD/JPY 82.171 83.155 82.14 83.015 0.8390
EUR/GBP 0.88635 0.88744 0.88086 0.88609 0.0002
EUR/CHF 1.12764 1.13145 1.12588 1.12945 0.0019
GBP/CHF 1.27186 1.27893 1.27145 1.274 0.0015

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1171 1.1218 1.1291 1.1339 1.1412 1.1459 1.1532
USD/JPY 112.79 113.11 113.38 113.70 113.98 114.30 114.57
GBP/USD 1.2638 1.2684 1.2753 1.2799 1.2868 1.2914 1.2982
USD/CHF 0.9824 0.9874 0.9905 0.9955 0.9985 1.0035 1.0066
USD/CAD 1.3106 1.3173 1.3223 1.3290 1.3341 1.3408 1.3459
EUR/JPY 127.52 127.87 128.53 128.88 129.54 129.89 130.55
GBP/JPY 144.14 144.49 145.12 145.46 146.09 146.44 147.07
CHF/JPY 113.34 113.55 113.96 114.17 114.58 114.79 115.20
AUD/JPY 81.37 81.76 82.39 82.77 83.40 83.79 84.42
EUR/GBP 0.8756 0.8782 0.8822 0.8848 0.8887 0.8914 0.8953
EUR/CHF 1.1208 1.1234 1.1264 1.1289 1.1320 1.1345 1.1375
GBP/CHF 1.2632 1.2673 1.2707 1.2748 1.2781 1.2823 1.2856

 

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.