28 Авг 2018

FOREX Newsletter

       

FOREX Newsletter

August 28, 2018

 

 

  Pulse of the Market

·      The United States and Mexico reached a bilateral deal on NAFTA yesterday

·      Easing fears over a global trade war helped the dollar pare some losses against the Yen

·      Gains in the British Pound were kept in checked by fears of a no-Brexit deal

·      Euro gained following better-than-expected business confidence in Germany

 

The U.S Dollar fell sharply against its rivals yesterday on fading fears over the prospect of a global trade war after the United States and Mexico reached a bilateral deal on NAFTA, paving the way for Canada to rejoin talks. The U.S Dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.47% to 94.63. President Donald Trump on Monday announced his administration had reached a deal with Mexico on issues that have upended the renegotiation of the North American Free Trade Agreement (NAFTA), the current trade agreement among the U.S., Canada and Mexico, for over a year. , Trump suggested the United States-Mexico Trade Agreement would replace NAFTA, paving the way for Canada to rejoin talks, bringing Trump a step closer to overhauling NAFTA and reducing investor fears over a full-blown trade war. Trump reportedly warned, however, that if a deal with Canada failed to materialized, then the U.S. would move ahead with tariffs on imported goods from Canada. This would dent the Loonie as it throws into doubt expectations about a September rate hike. By saying Canada could be left out, the US is threatening to take a tough line in those talks. The scenario poses uncertainty for Canadian economy, and could prompt Bank of Canada to hold off on a rate rise early next month. Fears over a full-blown trade war had kept demand for the greenback elevated on expectations that the strong U.S. economy would be less troubled from a trade war than that of its rivals. The dollar’s poor start the week comes as analysts warned that investor conviction for the greenback was starting to wane. Investors’ conviction in the strength of the dollar is starting to wane, including U.S. Federal Reserve Chairman Jerome Powell’s comments at Jackson Hole and recent developments in Washington. The plunge in the dollar was further compounded by strength in both euro and pound. EUR/USD rose 0.52% following better-than-expected business confidence in Germany, the Eurozone’s largest economy. GBP/USD gained 0.31%, although gains in the pair were kept in checked by fears of a no-Brexit deal, which would see the U.K crash out of the European Union without a trade deal with the member bloc and would likely hurt the U.K economy.

 

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
06:00 U.K Nationwide House Px n.s.a. (YoY) (AUG) Medium   2.7% 2.5%
08:00 Euro-Zone M3 Money Supply (YoY) (JUL) Low   4.3% 4.4%
11:00 ECB Board Member Peter Praet Speaks in Cologne, Germany Low      
12:30 U.S Advance Goods Trade Balance (JUL) High   -$69.0b -$68.3b
12:30 U.S Wholesale Inventories (MoM) (JUL) Medium   0.2% 0.1%
12:30 U.S Retail Inventories (MoM) (JUL) Low     0.0%
13:00 S&P/Case-Shiller Composite-20 (YoY) (JUN) Medium   6.43% 6.51%
13:00 S&P/Case-Shiller US Home Price Index (YoY) (JUN) Medium     6.38%
14:00 U.S Richmond Fed Manufact. Index (AUG) Low   17 20
14:00 U.S Consumer Confidence Index (AUG) High   126.5 127.4
14:00 U.S Conf. Board Present Situation (AUG) Medium     165.9

 

Euro

The single currency gained following the latest fundamental data from Germany, the largest economy within the Eurozone shows business morale improving finally this year. IFO had reported that August’s readings were improved across the board, with the current assessment coming in at 106.4, above the 105.4 expected. Overall, the EUR/USD traded with a low of 1.1593 and a high of 1.1692 before closing the day around 1.1676 in the New York session.

 

Yen

The Japanese Yen posted slight gains yesterday. It’s a quiet start to the week, with no Japanese or U.S events. Today, the U.S releases CB Consumer Confidence. Japanese inflation numbers in July were slightly softer than expected. National Core CPI remained pegged at 0.8%, shy of the estimate of 0.9%. The Services Producer Price Index edged lower to 1.1%.  Overall, the USD/JPY traded with a low of 110.91 and a high of 111.32 before closing the day around 111.05 in the U.S session.

 

British Pound

The British Pound traded higher at the start of the new week yesterday. Despite the exchange rate recovering from earlier lows, there is a strong risk Sterling tests fresh lows over coming days as markets continue to factor a ‘no-deal’ Brexit. The Pound sold off close to year-long lows in the previous week. Overall, the GBP/USD traded with a low of 1.2827 and a high of 1.2899 before closing the day at 1.2891 in the New York session.

 

Canadian Dollar

The Canadian Dollar reacted in a positive fashion to news of a breakthrough in NAFTA negotiations between the US and Mexico yesterday, August 27. According to reports, the United States and Mexico have reached an agreement to revise key portions of the 24-year-old North American Free Trade Agreement. Overall, USD/CAD traded with a low of 1.2951 and a high of 1.3065 before closing the day at 1.2965 in the New York session.

 

Australian Dollar

The Australian Dollar rallied on optimism that new PM Morrison would not seek to radically change economic policies. He is the 6th Prime Minister in 10 years. The markets actually reacted positively to the news, with the AUD gaining strength following Morrison’s victory. Morrison had served as the country’s treasurer for three years. Overall, AUD/USD traded with a low of 0.7305 and a high of 0.7354 before closing the day at 0.7344 in the New York session.

 

 

Euro-Yen

EUR/JPY is trading above 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 60 and lies above the neutral zone. In general, the pair has gained 0.31%.

 

Sterling-Yen

Currently, GBP/JPY is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 47 reading and lies below the neutral zone. On the whole, the pair has gained 0.18%.

  

Aussie-Yen

Currently, the cross is trading above 14 and below 50, 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 50 reading and lies above the neutral region. In general, the pair has gained 0.13%.

  

Euro-Sterling

This cross is currently trading above 14, 50 and 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 70 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 bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 28 and lies below the neutral region. In general, the pair has lost 0.02%.

 

Appendix

  

FOREX Closing Prices for August 27, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.16245 1.16923 1.15931 1.16762 0.0053
USD/JPY 111.254 111.328 110.917 111.059 -0.1930
GBP/USD 1.28484 1.28993 1.28271 1.28911 0.0042
USD/CHF 0.98278 0.98442 0.97857 0.9797 -0.0035
USD/CAD 1.30147 1.3065 1.29511 1.29655 -0.0070
EUR/JPY 129.343 129.12 128.772 129.693 0.3950
GBP/JPY 142.959 143.261 142.503 143.192 0.2510
CHF/JPY 113.169 113.428 112.765 113.329 0.1530
AUD/JPY 81.548 81.712 81.15 81.614 0.1060
EUR/GBP 0.90452 0.90641 0.90324 0.90557 0.0009
EUR/CHF 1.14255 1.14477 1.14085 1.14394 0.0012
GBP/CHF 1.26285 1.26527 1.26171 1.26301 -0.0002

  

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1516 1.1555 1.1615 1.1654 1.1715 1.1753 1.1814
USD/JPY 110.46 110.69 110.87 111.10 111.29 111.51 111.70
GBP/USD 1.2774 1.2800 1.2846 1.2873 1.2918 1.2945 1.2990
USD/CHF 0.9715 0.9750 0.9774 0.9809 0.9832 0.9867 0.9891
USD/CAD 1.2809 1.2880 1.2923 1.2994 1.3037 1.3108 1.3151
EUR/JPY 128.92 128.85 129.27 129.20 129.62 129.54 129.97
GBP/JPY 141.95 142.23 142.71 142.99 143.47 143.74 144.23
CHF/JPY 112.26 112.51 112.92 113.17 113.58 113.84 114.25
AUD/JPY 80.71 80.93 81.27 81.49 81.83 82.05 82.40
EUR/GBP 0.9006 0.9019 0.9037 0.9051 0.9069 0.9082 0.9101
EUR/CHF 1.1377 1.1393 1.1416 1.1432 1.1455 1.1471 1.1494
GBP/CHF 1.2578 1.2598 1.2614 1.2633 1.2650 1.2669 1.2685

 

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

 

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