17 Dec 2018

FOREX Newsletter

FOREX Newsletter

December 17, 2018

 

Pulse of the Market

·      The Dollar was higher on Friday as investors turned their focus to the expected Fed rate increase

·      It seems unlikely that May’s party will support her agreement with Brussels on leaving the EU

·      The Euro weakened as the euro zone economy showed more signs of a slowdown

·      The Canadian Dollar lost ground against its broadly stronger U.S counterpart on Friday

 

 

The U.S Dollar shone on Friday, reaching a 19-month high against a basket of currencies, as investors preferred the safety of the world’s reserve currency in the wake of worrisome political and economic news outside the United States. The Chinese Yuan fell after data showed retail sales grew in November at their slowest pace since 2003 and industrial output rose the least in nearly three years. The offshore Yuan shed 0.38 percent at 6.9038 per dollar. The euro weakened as the euro zone economy showed more signs of a slowdown. Sterling tumbled as traders worried British Prime Minister Theresa May was struggling to secure assurances from the EU over her Brexit withdrawal deal. The dollar is not so much rallying as much as everyone else is falling. The greenback’s appeal increased in the aftermath of upbeat data on domestic retail sales and industrial output. The Dollar’s gains were limited by bets the Federal Reserve might reduce the number of interest rate increases after a widely expected hike next week. The futures market implied traders saw an 82 percent chance the U.S central bank would increase key short-term rates by a quarter point to 2.25-2.50 percent at its policy meeting next Tuesday and Wednesday, up from 79 percent on Thursday. The market is skeptical about the U.S. economy and whether the Fed would hike further after December. The greenback was also held back by the probability of a partial government shutdown as U.S. President Donald Trump and federal lawmakers disagree over funding for a border wall, analysts said. The euro was down 0.5 percent at $1.12965 after German data showed private-sector expansion slowed to a four-year low in December. French business activity unexpectedly contracted, further fanning fears about slowing growth in the euro area. Worries about the European economy were also stoked by uncertainty whether May could convince the British parliament to approve her Brexit deal. The Canadian Dollar lost ground against its broadly stronger U.S. counterpart on Friday as investors worried about signs of slower global growth and braced for a potential interest rate hike next week from the Federal Reserve. Weak data from China and Europe stoked fears of a global economic slowdown, pressuring stocks and the price of oil, one of Canada’s major exports. U.S. crude oil futures settled 2.6 percent lower$51.20 a barrel.

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
00:01 U.K Rightmove House Prices (YoY) (DEC) Medium      
04:00 Japan Tokyo Condominium Sales (YoY) (NOV) Low      
09:00 Switzerland Total Sight Deposits CHF (DEC 14) Low      
10:00 Euro-Zone Trade Balance (euros) (OCT) Low      
10:00 Euro-Zone Consumer Price Index (YoY) (NOV) Medium     2.2%
13:30 Canada International Securities Transactions (Canadian dollar) (OCT) Low      
13:30 U.S Empire Manufacturing (DEC) Low      
14:00 Canada Existing Home Sales (MoM) (NOV) Medium      
15:00 U.S NAHB Housing Market Index (DEC) Medium      
21:00 U.S Net Long-term TIC Flows (OCT) Medium      

 

Euro

The single currency weakened as the euro zone economy showed more signs of a slowdown. The euro was down 0.5 percent after German data showed private-sector expansion slowed to a four-year low in December. French business activity unexpectedly contracted, further fanning fears about slowing growth in the euro area. Overall, the EUR/USD traded with a low of 1.1268 and a high of 1.1363 before closing the day around 1.1300 in the New York session.

 

Yen

The Japanese Yen pair closed lower on Friday as extreme weakness in the global equity markets encouraged investors to seek shelter in the safe-haven Japanese Yen. Sellers hit the equity markets hard early in the session following the release of weaker-than-expected retail sales and industrial production from China. Overall, the USD/JPY traded with a low of 113.19 and a high of 113.65 before closing the day around 113.34 in the U.S session.

 

British Pound

The British Pound continues to slide during trading on Friday, as the relief rally after Teresa May avoided a no-confidence vote has been completely wiped out. She went to Brussels, and they offered her nothing in return. The odds of a hard Brexit are increasing by the day. Ultimately, I think that the market continues to offer short-term selling opportunities. Overall, the GBP/USD traded with a low of 1.2527 and a high of 1.2662 before closing the day at 1.2578 in the New York session.

 

Canadian Dollar

The Canadian Dollar lost ground against its broadly stronger U.S counterpart on Friday as investors worried about signs of slower global growth and braced for a potential interest rate hike next week from the Federal Reserve. It has been a risk-off day for sure and that ties into the weaker-than-expected Chinese data. Overall, USD/CAD traded with a low of 1.3344 and a high of 1.3399 before closing the day at 1.3389 in the New York session.

 

Australian Dollar

The Australian Dollar plunged on Friday on concerns about a weakening economy in China and Europe. The selling was fueled by safe-haven flows into the U.S Dollar as risk appetite weakened following softer-than-expected economic data from China and the Euro Zone. China released reports showing economic activity in the world’s second largest economy mostly slowed in November. Overall, AUD/USD traded with a low of 0.7149 and a high of 0.7226 before closing the day at 0.7174 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 45 and lies below the neutral zone. In general, the pair has lost 0.73%.

 

Sterling-Yen

Currently, GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish tone and MACD is indicating a bearish stance. The Relative Strength Index is above 40 reading and lies below the neutral zone. On the whole, the pair has lost 0.84%.

 

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 also indicating a bearish stance. The Relative Strength Index is above 45 reading and lies above the neutral region. In general, the pair has lost 0.90%.

 

Euro-Sterling

This cross is currently trading above 14, 50 and below 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 59 and lies above the neutral region. On the whole, the pair has gained 0.10%.

 

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 38 and lies below the neutral region. In general, the pair has lost 0.15%.

 

Appendix

  

FOREX Closing Prices for December 14, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.13607 1.13635 1.12684 1.13008 -0.0055
USD/JPY 113.58 113.656 113.195 113.348 -0.2490
GBP/USD 1.26541 1.26623 1.25277 1.25782 -0.0080
USD/CHF 0.99387 0.99876 0.99321 0.99871 0.0049
USD/CAD 1.33473 1.33992 1.33448 1.3389 0.0038
EUR/JPY 129.055 129.111 127.961 128.106 -0.9420
GBP/JPY 143.763 143.837 142.352 142.592 -1.2110
CHF/JPY 114.257 114.335 113.454 113.462 -0.7940
AUD/JPY 82.069 82.112 81.22 81.325 -0.7410
EUR/GBP 0.89738 0.9003 0.89593 0.8982 0.0009
EUR/CHF 1.12914 1.12925 1.12395 1.12873 -0.0005
GBP/CHF 1.2579 1.25853 1.2497 1.25634 -0.0019

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1163 1.1216 1.1258 1.1311 1.1353 1.1406 1.1449
USD/JPY 112.68 112.94 113.14 113.40 113.60 113.86 114.07
GBP/USD 1.2382 1.2455 1.2517 1.2589 1.2651 1.2724 1.2786
USD/CHF 0.9895 0.9913 0.9950 0.9969 1.0006 1.0024 1.0061
USD/CAD 1.3302 1.3323 1.3356 1.3378 1.3411 1.3432 1.3465
EUR/JPY 126.52 127.24 127.67 128.39 128.82 129.54 129.97
GBP/JPY 140.53 141.44 142.02 142.93 143.50 144.41 144.99
CHF/JPY 112.28 112.87 113.17 113.75 114.05 114.63 114.93
AUD/JPY 80.10 80.66 80.99 81.55 81.88 82.44 82.78
EUR/GBP 0.8916 0.8938 0.8960 0.8981 0.9004 0.9025 0.9047
EUR/CHF 1.1201 1.1220 1.1254 1.1273 1.1307 1.1326 1.1360
GBP/CHF 1.2424 1.2460 1.2512 1.2549 1.2600 1.2637 1.2688

 

Sources:  News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)

 

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