05 Dec 2018

FOREX Newsletter

FOREX Newsletter

December 05, 2018

 

Pulse of the Market

·      Safe-haven buying emerged after President Trump’s tweet raised fears that trade war was not over

·      Falling Treasuries were blamed for the leg lower in the greenback earlier in the session

·      The Pound Fell as Prime Minister Theresa May’s government was found in contempt of parliament

·      Goldman Sachs said it continued to recommend investors position for a “tactical bounce in USD/CAD

The U.S Dollar rose from lows against its rivals yesterday after the plunge in U.S Treasury yields stalled. Safe-haven buying emerged after President Donald Trump’s tweets raised fears that the trade war was not over. The U.S dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.11% to 96.86, but was above a session low of 96.31. Trump said in a tweet he was “Tariff Man,” reminding investors that he was not afraid to re-escalate trade tensions with China, scaling back optimism from a day earlier, prompting support for Treasuries and helping the greenback move off lows. Falling Treasuries were blamed for the leg lower in the greenback earlier in the session, as fears of an economic recession grew after short-dated Treasury rates rose above longer-dated rates, referred to as an inversion of the Treasury yield curve, a signal of a potential economic recession. Yields on two maturities at the front of the Treasury curve rose above longer-dated 5-year notes overnight Tuesday for the first time in more than a decade. The pound, meanwhile, reversed its gains from earlier after Prime Minister Theresa May’s government was found in contempt of parliament for refusing to release its full legal advice on Brexit. GBP/USD fell from a session high of $1.2839, which had followed hopes that Brexit could be canceled after a top European Officer said that UK should be able to unilaterally cancel its withdrawal from the EU. USD/CAD rose 0.45% to $1.3256 a day ahead of Bank of Canada’s interest rate decision, widely expected to remain unchanged at 1.75%. Ahead of the rate decision, Goldman Sachs said it continued to recommend investors position for a “tactical bounce in CAD vs. USD going into year-end,” citing expectations the Bank of Canada will continue to keep a January rate hike on the table. The markets were delighted with the results of a weekend meeting between President Trump and Chinese President Xi Jinping at the G-20 summit.

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
00:30 Nikkei Japan PMI Services (NOV) Medium     52.4
00:30 Australia Gross Domestic Product (YoY) (3Q) High   3.3% 3.4%
01:45 Caixin China PMI Services (NOV) Medium   50.8 50.8
08:55 Markit Germany Services PMI (NOV) Low   53.3 53.3
09:00 Markit Eurozone Services PMI (NOV) Low   53.1 53.1
09:30 Markit/CIPS UK Services PMI (NOV) Medium   52.5 52.2
10:00 Euro-Zone Retail Sales (YoY) (OCT) Medium   2.0% 0.8%
12:00 U.S MBA Mortgage Applications (NOV 30) Medium     5.5%
13:15 U.S ADP Employment Change (NOV) Medium   195k 227k
14:45 Markit US Services PMI (NOV) Low   54.4 54.4
15:00 Bank of Canada Rate Decision (DEC 5) High   1.75% 1.75%
15:00 U.S ISM Non-Manufacturing/Services Composite (NOV) High   59 60.3
15:30 DOE U.S Crude Oil Inventories (NOV 30) Medium     3577k
19:00 U.S Federal Reserve Releases Beige Book Medium      

 

Euro

The single currency traded sharply higher earlier in yesterday’s session but ended the day slightly lower. EU finance ministers agreed yesterday to give the euro zone ESM bailout fund new responsibilities, but delayed decisions on a euro zone budget and a deposit guarantee scheme after failing to reach an agreement. Overall, the EUR/USD traded with a low of 1.1317 and a high of 1.1417 before closing the day around 1.1341 in the New York session.

 

Yen

The Japanese Yen traded higher yesterday. The markets were delighted with the results of meeting between President Trump and Chinese President Xi Jinping at the G-20 summit. Trump had threatened to raise tariffs on all Chinese products from 10 percent to 25 percent on December 1, but the Chinese convinced Trump to hold off on the tariffs until March 1. Overall, the USD/JPY traded with a low of 112.55 and a high of 113.64 before closing the day around 112.76 in the U.S session.

 

British Pound

The British Pound traded higher at the start of the session following an unexpected piece of legal advice. The advocate general of the European Court of Justice said earlier today that the British government has the unilateral right to withdraw its notice of intent to leave the European Union. However, GBP ended the day lower against the U.S Dollar. Overall, the GBP/USD traded with a low of 1.2656 and a high of 1.2837 before closing the day at 1.2714 in the New York session.

 

Canadian Dollar

The Canadian Dollar edged higher in yesterday’s Asian trading hours, after sharp gains at the start of the week. On the release front today, the Bank of Canada is expected to maintain the benchmark rate at 1.75%. The Canadian dollar started the week with sharp gains after the U.S and China agreed to a truce in the tariff war. Overall, USD/CAD traded with a low of 1.3161 and a high of 1.3264 before closing the day at 1.3259 in the New York session.

 

Australian Dollar

The Australian Dollar has touched a multi-month peak in a knee jerk reaction to a pause in the Sino-US trade dispute, though there was plenty of caution about the prospects of a lasting peace. The White House said President Donald Trump told Chinese President Xi Jinping that he would not boost tariffs on US$200 billion of Chinese goods on January 1 if Beijing agreed to buy an unspecified amount of US goods. Overall, AUD/USD traded with a low of 0.7324 and a high of 0.7391 before closing the day at 0.7334 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 43 and lies below the neutral zone. In general, the pair has lost 0.86%.

 

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 also indicating a bearish stance. The Relative Strength Index is above 38 reading and lies below the neutral zone. On the whole, the pair has lost 0.83%.

  

Aussie-Yen

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is indicating a bullish stance. The Relative Strength Index is above 56 reading and lies above the neutral region. In general, the pair has lost 1.03%.

 

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 lost 0.05%.

 

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 37 and lies below the neutral region. In general, the pair has lost 0.09%.

 

Appendix

  

FOREX Closing Prices for December 04, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.13523 1.14173 1.13171 1.13417 -0.0010
USD/JPY 113.626 113.642 112.557 112.76 -0.8790
GBP/USD 1.2723 1.28378 1.26566 1.27147 -0.0007
USD/CHF 0.99773 0.9989 0.99285 0.99726 -0.0005
USD/CAD 1.31966 1.32644 1.31616 1.32598 0.0064
EUR/JPY 128.992 129.018 127.596 127.908 -1.1080
GBP/JPY 144.58 144.734 142.817 143.381 -1.1960
CHF/JPY 113.833 113.859 112.838 113.036 -0.8210
AUD/JPY 83.606 83.635 82.536 82.724 -0.8620
EUR/GBP 0.89201 0.8943 0.88878 0.89165 -0.0004
EUR/CHF 1.13278 1.13462 1.13037 1.1312 -0.0015
GBP/CHF 1.26958 1.27546 1.2644 1.26816 -0.0012

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1200 1.1259 1.1300 1.1359 1.1400 1.1459 1.1501
USD/JPY 111.25 111.90 112.33 112.99 113.42 114.07 114.50
GBP/USD 1.2454 1.2555 1.2635 1.2736 1.2816 1.2918 1.2997
USD/CHF 0.9877 0.9903 0.9938 0.9963 0.9998 1.0024 1.0059
USD/CAD 1.3090 1.3126 1.3193 1.3229 1.3296 1.3331 1.3398
EUR/JPY 125.91 126.75 127.33 128.17 128.75 129.60 130.17
GBP/JPY 140.64 141.73 142.55 143.64 144.47 145.56 146.39
CHF/JPY 111.61 112.22 112.63 113.24 113.65 114.27 114.67
AUD/JPY 81.20 81.87 82.30 82.97 83.39 84.06 84.49
EUR/GBP 0.8833 0.8861 0.8889 0.8916 0.8944 0.8971 0.8999
EUR/CHF 1.1253 1.1278 1.1295 1.1321 1.1338 1.1363 1.1380
GBP/CHF 1.2522 1.2583 1.2632 1.2693 1.2743 1.2804 1.2853

 

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.