31 Авг 2018

FOREX Newsletter

     

FOREX Newsletter

August 31, 2018
 

 

Pulse of the Market

·      The Dollar traded higher as data showed inflation continue to meet the Federal Reserve’s target

·      Consumer spending, which accounts for more than two-thirds of U.S economic activity, rose 0.4%

·      The British Pound struggled to hold gains against the Dollar following its sharp rise

·      The Canadian Dollar retreated from 2-1/2 month peaks against the greenback yesterday

The U.S. dollar rebounded against all of the major currencies yesterday with the exception of the Japanese Yen and its underperformance tells us that the dollar was driven higher by a reduction in risk. We can identify at least 3 reasons for the dollar’s decline today. First and foremost, stocks have retreated from their highs after hitting record-breaking levels every day this week and the sell-off prompted a recovery in the dollar. All of the good news this week encouraged investors to take on risk but with stocks retreating, currencies like euro, sterling and the Canadian dollars also came off their highs. One of the main reasons for the pullback in equities and currencies is the end of the month profit taking but President Trump’s threat to withdraw from the WTO also did not help. Third, while this morning’s U.S. economic reports were mixed, economic data from other parts of the world were unambiguously disappointing leading to a weakness for those currencies. Today won’t be about data even though the Chicago PMI report and revisions to the University of Michigan’s Consumer Sentiment index is due for release. Month-end flows and updates on Brexit negotiations or Canada-US trade talks will drive currency movements. USD/JPY gave up all of yesterday’s gains but needs to close firmly below 111.00 to usher in a new wave of dollar weakness. Unlike some of the other major currencies, the slide in USD/JPY will be limited by the prospect of Fed tightening. The dollar could continue to rise against the euro. We’ve been talking about Italian bond yields all week and said yesterday’s pullback was unjustified. Today Italian yields shot up to fresh 4 year highs, driving the spread between Italian and German bond yields to their widest level in 5 years. Italy is the biggest problem for the euro right now and Fitch is scheduled to update their rating for Italy today. Sterling, on the other hand, should continue to outperform and will be an attractive long near 1.2950. UK mortgage approvals were lower than expected but the dollar’s recovery is the primary reason for the currency’s slide. The Canadian dollar sold off sharply on the back of a softer than expected GDP report. Growth stagnated in the month of June, causing the year over year rate to slip from 2.7% to 2.4%.
   

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
01:00 China Non-manufacturing PMI (AUG) Medium   53.7 54
01:00 China Manufacturing PMI (AUG) High   51 51.2
01:30 Australia Private Sector Credit (YoY) (JUL) Medium   4.4% 4.5%
05:00 Japan Housing Starts (YoY) (JUL) Medium   -4.3% -7.1%
06:00 German Retail Sales (YoY) (JUL) Medium   1.3% 3.0%
09:00 Euro-Zone Unemployment Rate (JUL) Medium   8.2% 8.3%
09:00 Euro-Zone Consumer Price Index Core (YoY) (AUG) High   1.1% 1.1%
10:00 Italian Gross Domestic Product w.d.a. (YoY) (2Q) Medium   1.1% 1.1%
13:45 U.S Chicago Purchasing Manager (AUG) Medium   64 65.5
14:00 U.S U. of Mich. Sentiment (AUG) Medium   95.5 95.3
17:00 Baker Hughes U.S. Rig Count (AUG 31) Medium     1044

 

Euro

The single currency fell as the Euro zone economic sentiment edged lower for an eight consecutive month in August, pulled down by less optimism in industry and services, a monthly survey by the European Commission showed. The Commission survey showed the economic sentiment indicator eased to 111.6 points in August. Overall, the EUR/USD traded with a low of 1.1640 and a high of 1.1716 before closing the day around 1.1669 in the New York session.

 

Yen

The Japanese Yen has edged higher erasing the losses seen on Wednesday. On the release front, Japanese retail sales dropped to 1.8%, but still, beat the estimate of 1.5%. Later in the day, Japan releases Tokyo Core CPI, with a forecast of 0.8%. In the U.S, Core PCE Price Index edged up to 0.2%, while Personal Spending remained pegged at 0.4%. Overall, the USD/JPY traded with a low of 110.93 and a high of 111.73 before closing the day around 110.97 in the U.S session.

 

British Pound

The British Pound held near a four-week high as investors hesitated to take fresh positions on the currency amid a spate of crisscrossing Brexit headlines. Sterling surged more than one percent on Wednesday as traders covered short positions after the European Union’s Michel Barnier said that the UK could be offered an unprecedented partnership. Overall, the GBP/USD traded with a low of 1.2983 and a high of 1.3041 before closing the day at 1.3008 in the New York session.

 

Canadian Dollar

The Canadian Dollar fell as data showed the economy grew at a slower pace in the second quarter, supporting traders’ view the Bank of Canada will leave key interest rates on hold next week. Prices on domestic government debt rose in the wake of the latest gross domestic product figures, flattening the yield curve on the notion of slowing economic growth. Overall, USD/CAD traded with a low of 1.2901 and a high of 1.2998 before closing the day at 1.2979 in the New York session.

 

Australian Dollar

The Australian Dollar fell sharply yesterday after figures for capital expenditure and building approvals missed expectations, and the New Zealand dollar took a knock on business sentiment. The Australian Dollar weakened yesterday following the release of second-quarter capital expenditure which fell 2.5 per cent compared to the previous quarter. Overall, AUD/USD traded with a low of 0.7247 and a high of 0.7313 before closing the day at 0.7254 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 55 and lies above the neutral zone. In general, the pair has lost 0.93%.

 

Sterling-Yen

Currently, GBP/JPY is trading above 14, 50 and below 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 55 reading and lies above the neutral zone. On the whole, the pair has lost 0.74%.

  

Aussie-Yen

Currently, the cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is giving a bearish tone and MACD is indicating a bullish stance. The Relative Strength Index is above 40 reading and lies below the neutral region. In general, the pair has lost 1.24%.

 

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 also issuing a bearish signal. The Relative Strength Index is above 50 and lies above the neutral region. On the whole, the pair has lost 0.18%.

 

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 33 and lies below the neutral region. In general, the pair has lost 0.26%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix

 

 

FOREX Closing Prices for August 30, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.17055 1.17168 1.16402 1.16696 -0.0036
USD/JPY 111.671 111.736 110.934 110.973 -0.6860
GBP/USD 1.30236 1.30411 1.29834 1.30083 -0.0015
USD/CHF 0.97028 0.97139 0.96842 0.96905 -0.0013
USD/CAD 1.29103 1.2998 1.29011 1.29796 0.0075
EUR/JPY 130.733 130.843 129.394 129.501 -1.2200
GBP/JPY 145.454 145.662 144.356 144.369 -1.0700
CHF/JPY 115.06 115.268 114.412 114.487 -0.5560
AUD/JPY 81.614 81.675 80.466 80.597 -1.0080
EUR/GBP 0.89863 0.89909 0.89518 0.89682 -0.0016
EUR/CHF 1.13589 1.13668 1.13013 1.1309 -0.0051
GBP/CHF 1.26384 1.26608 1.25952 1.26065 -0.0033

 

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1558 1.1599 1.1634 1.1676 1.1711 1.1752 1.1787
USD/JPY 109.89 110.41 110.69 111.21 111.49 112.02 112.30
GBP/USD 1.2923 1.2953 1.2981 1.3011 1.3038 1.3069 1.3096
USD/CHF 0.9649 0.9667 0.9679 0.9696 0.9708 0.9726 0.9738
USD/CAD 1.2824 1.2863 1.2921 1.2960 1.3018 1.3056 1.3115
EUR/JPY 127.53 128.46 128.98 129.91 130.43 131.36 131.88
GBP/JPY 142.62 143.49 143.93 144.80 145.24 146.10 146.54
CHF/JPY 113.32 113.87 114.18 114.72 115.03 115.58 115.89
AUD/JPY 78.94 79.70 80.15 80.91 81.36 82.12 82.57
EUR/GBP 0.8911 0.8931 0.8950 0.8970 0.8989 0.9009 0.9028
EUR/CHF 1.1219 1.1260 1.1285 1.1326 1.1350 1.1391 1.1416
GBP/CHF 1.2515 1.2555 1.2581 1.2621 1.2646 1.2686 1.2712

 

 

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.