30 Nov 2018

FOREX Newsletter

FOREX Newsletter

November 30, 2018

 

Pulse of the Market

·      U.S personal income and spending grew more than expected but jobless claims increased

·      Currency movements were restrained by concerns about the upcoming G20 meeting

·      Concerns about the impact of the tariffs forced investors to ignore better labor data from Germany

·      The Australian dollar ended the day higher while the New Zealand dollar sold off

The U.S dollar dropped sharply on the back of Fed Chair Powell’s comments on interest rates. USD/JPY extended slightly lower but GBP/USD retreated and EUR/USD was unchanged. Powell’s view that rates are just under neutral levels is a sign that they intend to slow their pace of tightening next year. However, in yesterday’s note, we pointed out that Fed futures did not change by much because Powell simply said what the market was waiting to hear. Investors had already downplayed expectations for tightening next year with the futures market only pricing in 1 full rate hike in 2019. Yesterday’s U.S. economic reports did nothing to confirm or deny the central bank’s caution – personal income and spending grew more than expected but jobless claims increased and pending home sales fell sharply. Meanwhile, the FOMC minutes did not help the dollar. Currency movements were also restrained by concerns about the upcoming G20 meeting. President Trump sits down with President Xi today and we have no idea how the talks will go. The biggest turnaround yesterday was in the euro. At the start of the NY session, euro was one of the weakest currencies because there were reports that the US would levy tariffs on EU autos before Christmas. Concerns about the impact of the tariffs forced investors to ignore better labor data from Germany and stronger Eurozone confidence. Shortly after the NY open, however, the European Commission denied those reports and the EUR/USD u-turned for a rally to 1.14. The other big story was oil. Before the NY session began, the price of crude fell below the critical $50 mark. In response USD/CAD traded above 1.33. However Russia’s talk of output cuts reversed the slide and sent prices sharply higher (crude ended the day up 2%) and as a result, USD/CAD gave up its gains to end the day unchanged. Canada will be in focus today with quarterly and monthly GDP numbers due for release.

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
00:01 U.K GfK Consumer Confidence (NOV) Medium   -11 -10
01:00 China Non-manufacturing PMI (NOV) Medium   53.8 53.9
01:00 China Manufacturing PMI (NOV) High   50.2 50.2
05:00 Japan Consumer Confidence Index (NOV) Medium   43.2 43
05:00 Japan Housing Starts (YoY) (OCT) Medium   -0.1% -1.5%
07:00 German Retail Sales (YoY) (OCT) Medium   1.4% -2.6%
07:00 U.K Nationwide House Px n.s.a. (YoY) (NOV) Medium   1.7% 1.6%
08:00 Switzerland KOF Leading Indicator (NOV) Medium   99.5 100.1
10:00 Euro-Zone Unemployment Rate (OCT) Medium   8.0% 8.1%
10:00 Euro-Zone Consumer Price Index Core (YoY) (NOV) High   1.1% 1.1%
11:00 Italian Gross Domestic Product w.d.a. (YoY) (3Q) Medium   0.8% 0.8%
13:30 Canada Quarterly Gross Domestic Product Annualized (3Q) High   2.0% 2.9%
13:30 Canada Gross Domestic Product (YoY) (SEP) High   2.3% 2.5%
14:45 U.S Chicago Purchasing Manager (NOV) Medium   58.5 58.4
18:00 Baker Hughes U.S. Rig Count (NOV 30) Medium     1079

 

Euro

The single currency traded higher yesterday. Euro zone economic sentiment continued to deteriorate in November but less than predicted, thanks to an unexpected rise in optimism in the industry, data showed yesterday. Economic sentiment in the 19 countries sharing the euro eased to 109.5 in November from 109.7 in October. Overall, the EUR/USD traded with a low of 1.1347 and a high of 1.1400 before closing the day around 1.1392 in the New York session.

 

Yen

The Japanese Yen posted gains yesterday. On the release front, Japanese retail sales jumped 3.5%, its highest level since December 2017. In the U.S., the Core PCE Price Index dropped to 0.1%, shy of the estimate of 0.2%. Personal Spending improved to 0.6%, above the estimate of 0.4%. On the labor front, unemployment claims jumped to 234 thousand. Overall, the USD/JPY traded with a low of 113.17 and a high of 113.64 before closing the day around 113.46 in the U.S session.

 

British Pound

The British Pound fell against the U.S Dollar as Theresa May was grilled by a Commons committee over her Brexit deal. The Prime Minister defended her withdrawal agreement in front of the House of Commons liaison committee just a day after the Bank of England’s bleak no-deal forecast, in which GDP, house prices and the pound itself would fall sharply. Overall, the GBP/USD traded with a low of 1.2753 and a high of 1.2847 before closing the day at 1.2785 in the New York session.

 

Canadian Dollar

The Canadian Dollar edged higher, building on gains from the day before as oil prices rallied and data showed that Canada ran a smaller-than-expected current account deficit in the third quarter. The country’s current account deficit narrowed to $10.34 billion in the third quarter from a revised $16.68 billion deficit in the second quarter. Overall, USD/CAD traded with a low of 1.3251 and a high of 1.3310 before closing the day at 1.3281 in the New York session.

 

Australian Dollar

The Australian Dollar closed slightly higher yesterday. New figures released by The Australian Bureau of Statistics have barely moved the Australian dollar against the greenback, despite better than expected CAPEX data. ABS figures show an uptick in September private capital expenditure (CAPEX) with the CAPEX slipping 0.5%. Overall, AUD/USD traded with a low of 0.7293 and a high of 0.7342 before closing the day at 0.7310 in the New York session.

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also issuing a bullish stance. The Relative Strength Index is above 51 and lies above 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 45 reading and lies below the neutral zone. On the whole, the pair has lost 0.47%.

 

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 60 reading and lies above the neutral region. In general, the pair has gained 0.01%.

 

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 bullish signal. The Relative Strength Index is above 59 and lies above the neutral region. On the whole, the pair has gained 0.53%.

  

Sterling-Swiss

This cross is trading below 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 41 and lies below the neutral region. In general, the pair has lost 0.07%.

 

Appendix

  

FOREX Closing Prices for November 29, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.13694 1.14003 1.13473 1.1392 0.0028
USD/JPY 113.641 113.648 113.172 113.463 -0.1980
GBP/USD 1.28234 1.28479 1.27536 1.27856 -0.0036
USD/CHF 0.99373 0.99751 0.99158 0.99553 0.0020
USD/CAD 1.32727 1.33103 1.3251 1.32818 0.0008
EUR/JPY 129.207 129.283 128.651 129.269 0.0820
GBP/JPY 145.743 145.787 144.492 145.066 -0.6790
CHF/JPY 114.326 114.384 113.602 113.93 -0.4350
AUD/JPY 83.012 83.184 82.712 83.026 0.0110
EUR/GBP 0.88634 0.89184 0.88576 0.89077 0.0047
EUR/CHF 1.12988 1.13465 1.12873 1.13437 0.0049
GBP/CHF 1.27419 1.27502 1.26756 1.27306 -0.0009

  

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1306 1.1327 1.1359 1.1380 1.1412 1.1433 1.1465
USD/JPY 112.73 112.95 113.21 113.43 113.68 113.90 114.16
GBP/USD 1.2649 1.2701 1.2744 1.2796 1.2838 1.2890 1.2932
USD/CHF 0.9863 0.9889 0.9922 0.9949 0.9982 1.0008 1.0041
USD/CAD 1.3192 1.3222 1.3252 1.3281 1.3311 1.3340 1.3370
EUR/JPY 128.22 128.44 128.85 129.07 129.48 129.70 130.12
GBP/JPY 143.15 143.82 144.44 145.12 145.74 146.41 147.03
CHF/JPY 112.78 113.19 113.56 113.97 114.34 114.75 115.12
AUD/JPY 82.29 82.50 82.76 82.97 83.24 83.45 83.71
EUR/GBP 0.8810 0.8834 0.8871 0.8895 0.8932 0.8955 0.8992
EUR/CHF 1.1246 1.1267 1.1305 1.1326 1.1364 1.1385 1.1424
GBP/CHF 1.2613 1.2644 1.2687 1.2719 1.2762 1.2793 1.2837

 

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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