October 16, 2018
Pulse of the Market
· The U.S Dollar dipped yesterday after retail sales data for September missed expectations
· U.S retail sales barely rose in September as a rebound in motor vehicle purchases
· Safe haven Japanese yen and the Swiss franc gained yesterday as European stocks tumbled
· The Canadian Dollar strengthened to its highest in five days against its U.S counterpart
|The U.S Dollar fell in yesterday’s trading session after retail sales data for September missed economists’ expectations, and as benchmark U.S Treasury yields consolidated after last week hitting their highest level in seven years. U.S. retail sales barely rose in September as a rebound in motor vehicle purchases was offset by the biggest drop in spending at restaurants and bars in nearly two years. Retail sales edged up only 0.1 percent in the month. Economists polled by Reuters had forecast an increase of 0.6 percent. We had softer than expected retail sales that was another leg of dollar selling. It comes after data last week showed that U.S. consumer prices rose less than expected in September, held back by a slower increase in the cost of rent and falling energy prices, as underlying inflation pressures appeared to cool. Higher 10-year Treasury yields, which on Tuesday shot to 3.26 percent, helped to boost the greenback last week. With yields now having retraced to 3.15 percent, investors are looking for fresh impetus for dollar buying. Safe haven currencies the Japanese yen and the Swiss franc gained on Monday as European stocks tumbled to 22-month lows, with rising tensions between Western powers and Saudi Arabia adding to a cocktail of concerns that battered global stocks last week. Saudi Arabia has been under pressure since a prominent Saudi journalist Jamal Khashoggi, a critic of Riyadh and a U.S. resident, disappeared on Oct. 2 after visiting the Saudi consulate in Istanbul. Chancellor Angela Merkel’s Bavarian sister party also said on Monday it would back political stability in Berlin after suffering big losses in a regional election which their far-right foes hailed as “an earthquake” that would rock the coalition government. The Japanese Yen hit a one-month high and the Swiss franc rallied yesterday as rising geopolitical tension and further falls in equity markets left investors skittish at the start of the week. Canadian Dollar gained yesterday as Canadian business sentiment remains at elevated levels, with companies expecting to ramp up investment to build new capacity and accommodate demand. The central bank has hiked interest rates four times since July 2017 to leave its policy rate at 1.50 per cent.|
|00:30||RBA Meeting Minutes (OCT 2)||Medium|
|01:30||China Producer Price Index (YoY) (SEP)||Medium||3.6%||4.1%|
|01:30||China Consumer Price Index (YoY) (SEP)||High||2.5%||2.3%|
|08:30||U.K Claimant Count Rate (SEP)||Medium||2.6%|
|08:30||U.K Jobless Claims Change (SEP)||Medium||8.7k|
|09:00||German ZEW Survey Current Situation (OCT)||Medium||74.4||76|
|09:00||German ZEW Survey Expectations (OCT)||High||-12||-10.6|
|09:00||Euro-Zone ZEW Survey (Economic Sentiment) (OCT)||High||-7.2|
|13:15||U.S Industrial Production (MoM) (SEP)||Medium||0.2%||0.4%|
|13:15||U.S Manufacturing (SIC) Production (SEP)||Medium||0.2%||0.2%|
|14:00||U.S NAHB Housing Market Index (OCT)||Medium||67||67|
|20:00||U.S Net Long-term TIC Flows (AUG)||Medium||$74.8b|
The single currency was higher in yesterday’s trading session. On the release front, there were no Eurozone events. In the U.S, the focus was on retail sales reports. The week ended on a high note, with solid inflation numbers in Germany. Inflation climbed 2.3% in September on a year-to-year basis, its strongest gain since November 2011. Overall, the EUR/USD traded with a low of 1.1541 and a high of 1.1604 before closing the day around 1.1577 in the New York session.
The Japanese Yen hit a one-month high as rising geopolitical tension and investor anxiety about the global economy left investors skittish at the start of the week. Equity markets fell on worries the ongoing U.S trade dispute is hitting China’s economy. Analysts expect the yen to strengthen as a downturn in equities catalyzes safe-haven demand for the yen. Overall, the USD/JPY traded with a low of 111.60 and a high of 112.21 before closing the day around 111.75 in the U.S session.
The British Pound capped losses following a weekend of fruitless Brexit talks on conviction that the U.K. and the European Union would eventually reach a deal to avoid a chaotic divorce. The risks to any bullish sterling views include leaders not agreeing on the Brexit divorce terms. Both the U.K. and the EU have stepped up contingency planning in case negotiations fail. Overall, the GBP/USD traded with a low of 1.3094 and a high of 1.3179 before closing the day at 1.3150 in the New York session.
The Canadian Dollar strengthened to its highest in five days against its U.S counterpart yesterday, after a quarterly business survey by the Bank of Canada supported bets for another interest rate hike from the central bank as soon as next week. Canadian business optimism remained at near-record levels in the third quarter. Overall, USD/CAD traded with a low of 1.2952 and a high of 1.3049 before closing the day at 1.2987 in the New York session.
The Australian Dollar strengthened against all major currencies except the Japanese yen. Last week, the Australian dollar ended the week higher against the US dollar after rebounding from the bottom-end of its trading range. Notably, week-over-week trading volumes in Australian dollar futures accelerated for the third week in a row. Overall, AUD/USD traded with a low of 0.7097 and a high of 0.7147 before closing the day at 0.7138 in the New York session.
EUR/JPY is trading below 14 and above 50, 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 43 and lies below the neutral zone. In general, the pair has lost 0.20%.
Currently, GBP/JPY is trading below 14 and above 50, 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 49 reading and lies below the neutral zone. On the whole, the pair has lost 0.38%.
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 41 reading and lies below the neutral region. In general, the pair has lost 0.13%.
This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is issuing a bearish signal. The Relative Strength Index is above 42 and lies below the neutral region. On the whole, the pair has gained 0.18%.
This cross is trading above 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 61 and lies above the neutral region. In general, the pair has lost 0.50%.
|FOREX Closing Prices for October 15, 2018|
|Daily Pivot Points|
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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