10 Ago 2018

FOREX Newsletter

 

FOREX Newsletter

August 10, 2018
 

 

  Pulse of the Market

·      Excluding food and energy, U.S producer price index rose 0.1% data showed yesterday

·      Sterling has been the weakest currency this quarter and now there’s scope for a move to 1.2775

·      The New Zealand Dollar fell to its lowest level in 2.5 years against the greenback

·      USD/CAD is clearly waiting for a catalyst to break out which could be Canadian employment report

The U.S Dollar traded higher against all of the major currencies yesterday despite softer than expected inflation data. Economists were looking for price pressures to grow at a slower pace in July but instead PPI stagnated due to lower food and energy costs. Excluding food and energy, producer prices rose 0.1%. This is anemic but it is in no surprise because the U.S Dollar hit multi-month highs last month and its strength pushed inflation lower. Oil prices also fell in July, leading to a drop in energy costs. Jobless claims were better than expected but the improvement was overshadowed by PPI. Nonetheless, the sell-off in USD/JPY was nominal. The initial move was only 10 pips with the pair dropping another 10-20 pips during the NY session before stabilizing. The rally in the greenback against other major currencies like the euro and sterling also took a while to occur. The consumer price report is due for release today and it should have a much more significant impact on the greenback. Unfortunately, given the weakness of PPI, CPI growth could miss especially with gas prices declining in July. If inflation on the consumer level falls short of expectations, USD/JPY could break 110.70 and hit a fresh 1 month low. EUR/USD tested and rejected 1.16 today. The move was driven primarily by U.S Dollar strength but the ECB’s concerns about intensifying global risks did not help the currency. Aside from the U.S Dollar, sterling and the loonie will also be in play today. Starting with the pound it has now been 8 days since we’ve seen a rally in GBP/USD. Sterling has been the weakest currency this quarter. However given how much GBP has fallen, there could be a furious short squeeze on any hint of good news. So far the market is not buying the talk of more amenable Brexit terms from the EU but if today’s second quarter GDP numbers beat expectations, it could be the perfect catalyst for a relief rally.

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
  China New Yuan Loans CNY (JUL) High   1200.0b 1840.0b
01:30 RBA Quarterly Statement on Monetary Policy Medium      
08:30 U.K Visible Trade Balance (Pounds) (JUN) Medium   -£11900 -£12362
08:30 U.K Industrial Production (YoY) (JUN) Medium   0.7% 0.8%
08:30 U.K Manufacturing Production (YoY) (JUN) Medium   1.0% 1.1%
08:30 U.K Gross Domestic Product (YoY) (2Q) High   1.3% 1.2%
12:30 Canada Hourly Earnings Permanent Employees (YoY) (JUL) Medium   3.6% 3.5%
12:30 Canada Full Time Employment Change (JUL) Medium     9.1
12:30 Canada Net Change in Employment (JUL) High   17.0k 31.8k
12:30 Canada Unemployment Rate (JUL) High   5.9% 6.0%
12:30 U.S Consumer Price Index (YoY) (JUL) High   2.9% 2.9%
12:30 U.S Consumer Price Index Ex Food and Energy (YoY) (JUL) High   2.3% 2.3%
12:30 U.S Real Avg Hourly Earnings (YoY) (JUL) Medium     0.0%
17:00 Baker Hughes U.S Rig Count (AUG 10) Medium      
18:00 U.S Monthly Budget Statement (JUL) Medium     -$74.9b

 

Euro

The single currency traded lower against the U.S Dollar yesterday as investors increase their bets supporting the notion that the U.S will win the trade war versus China and that the strong economy will continue to make the dollar a more attractive investment. A trade through 1.1530 will signal a resumption of the downtrend. Overall, the EUR/USD traded with a low of 1.1524 and a high of 1.1618 before closing the day around 1.1528 in the New York session.

 

Yen

The Japanese Yen edged up to its strongest level against the dollar in nine days yesterday’s in Asian session ahead of trade talks between the United States and Japan and speculation over when the Japanese central bank will exit its ultra-easy monetary policy. The yen has fallen about 4 percent against the dollar over the past six months. Overall, the USD/JPY traded with a low of 110.68 and a high of 111.16 before closing the day around 111.09 in the U.S session.

 

British Pound

The British Pound steadied near 11-month lows yesterday after a decline this week that was fueled by investor fears Britain will leave the European Union without an agreement on its future relationship with the bloc. The recent slide began after the UK trade minister, Liam Fox, warned over the weekend that he saw a 60 percent chance of a no-deal Brexit. Overall, the GBP/USD traded with a low of 1.2817 and a high of 1.2909 before closing the day at 1.2826 in the New York session.

 

Canadian Dollar

The Canadian Dollar fell yesterday awaiting employment data to be released today. The diplomatic row between Canada and Saudi Arabia continues as both nations are standing their ground. Oil prices have halted their skid as concerns on Iranian supplies following the reactivation of the US sanctions and a curb in demand if China and the US trade dispute is not resolved. Overall, USD/CAD traded with a low of 1.2998 and a high of 1.3061 before closing the day at 1.3052 in the New York session.

 

Australian Dollar

The Australian Dollar has traded steadily against the US Dollar (USD) today, with neither currency dominating. Demand for both currencies has fallen today following the news that China is seeking to impose fresh tariffs against the US in the ongoing trading conflict. The Australian Dollar has a chance to rally before the weekend Overall, AUD/USD traded with a low of 0.7379 and a high of 0.7451 before closing the day at 0.7382 in the New York session.

 

Euro-Yen

EUR/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 37 and lies below the neutral zone. In general, the pair has lost 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 also indicating a bearish stance. The Relative Strength Index is above 27 reading and lies below the neutral zone. On the whole, the pair has lost 0.35%.

  

Aussie-Yen

Currently, the cross is trading below 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 44 reading and lies below the neutral region. In general, the pair has lost 0.69%.

  

Euro-Sterling

This cross is currently trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 64 and lies above the neutral region. On the whole, the pair has lost 0.26%.

  

Sterling-Swiss

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is indicating a bullish tone. The Relative Strength Index is above 24 and lies below the neutral region. In general, the pair has lost 0.42%.

 

Appendix

  

FOREX Closing Prices for August 09, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.16092 1.16181 1.15245 1.15286 -0.0083
USD/JPY 110.947 111.165 110.689 111.095 0.1020
GBP/USD 1.288 1.29099 1.28173 1.28261 -0.0057
USD/CHF 0.99319 0.99492 0.98928 0.99371 0.0003
USD/CAD 1.30156 1.30619 1.2998 1.3052 0.0028
EUR/JPY 128.807 128.986 128.019 128.066 -0.7870
GBP/JPY 142.899 143.467 142.325 142.483 -0.5020
CHF/JPY 111.671 112.067 111.433 111.822 0.0780
AUD/JPY 82.3 82.614 81.867 81.917 -0.5700
EUR/GBP 0.90106 0.90287 0.89789 0.89895 -0.0024
EUR/CHF 1.15306 1.15346 1.14483 1.14558 -0.0077
GBP/CHF 1.27933 1.28153 1.27301 1.27438 -0.0054

 

  

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1402 1.1463 1.1496 1.1557 1.1590 1.1651 1.1683
USD/JPY 110.33 110.51 110.80 110.98 111.28 111.46 111.75
GBP/USD 1.2700 1.2759 1.2792 1.2851 1.2885 1.2944 1.2978
USD/CHF 0.9847 0.9870 0.9904 0.9926 0.9960 0.9983 1.0016
USD/CAD 1.2949 1.2973 1.3013 1.3037 1.3077 1.3101 1.3141
EUR/JPY 126.76 127.39 127.73 128.36 128.70 129.32 129.66
GBP/JPY 140.91 141.62 142.05 142.76 143.19 143.90 144.33
CHF/JPY 110.85 111.14 111.48 111.77 112.12 112.41 112.75
AUD/JPY 80.90 81.39 81.65 82.13 82.40 82.88 83.15
EUR/GBP 0.8920 0.8949 0.8969 0.8999 0.9019 0.9049 0.9069
EUR/CHF 1.1338 1.1393 1.1425 1.1480 1.1511 1.1566 1.1597
GBP/CHF 1.2626 1.2678 1.2711 1.2763 1.2796 1.2848 1.2881

 

 

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

 

 

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