25 Сен 2018

FOREX Newsletter

FOREX Newsletter

September 25, 2018

 

Pulse of the Market

·      Traders are expecting a rate hike for the third time this year as Fed meets today and tomorrow

·      The Euro rose to more than a three-month high against the dollar earlier yesterday

·      The pound gained ground as investors awaited an interest rate decision from the Federal Reserve

·      The Dollar rose against the safe-haven yen, with USD/JPY inching up 0.02% to 112.61

 

The U.S Dollar ended the day higher against some currencies and lower versus others but during the NY session investors spent most of their time buying U.S Dollars. The greenback hit low of 1.1815 versus the Euro shortly after equities opened but ended up settling the day near 1.1750. A similar reversal can be seen in sterling while USD/JPY and USD/CHF bounced off their lows to end the day at their highs. However, the prospect of a Federal Reserve rate hike this week could be helping the dollar. The Federal Reserve is widely expected to raise interest rates but it could be a dovish or hawkish hike. The outcome could have a lasting impact on all of the major currencies. At the same time, however, since U.S stocks hit record highs this quarter, portfolio rebalancing will be negative for the dollar. We may have already seen some of those transactions happen earlier this month but we cannot preclude the possibility of additional adjustments this week. The Reserve Bank also has a monetary policy announcement and as usual, the RBNZ’s outlook could have a significant impact on NZD. Canada-U.S trade talks will be in focus as the next major NAFTA deadline looms. The U.S wanted a deal closed by September 30th to abide by the fast track law that requires the agreement to be publicly available for 60 days before it is signed. September 30th is important because Mexico’s president steps down on December 1st and President Trump wants the deal signed with the outgoing and not incoming President. Draghi sent EUR/USD soaring above 1.18 when he said there’s a relatively vigorous pickup in underlying inflation. Although the pair receded from its highs on the back of U.S Dollar strength, the euro should outperform other major currencies on the back of the ECB’s brighter inflation outlook and stronger data. Despite ongoing trade tensions, German business confidence improved in the month of September, reinforcing the increase in investor sentiment reported earlier this month. German CPI is due for release later this week and given Draghi’s comments, the risk is to the upside for this report. Sterling, on the other hand, declined for legitimate reasons. Not only did the CBI’s industrial trends survey turn negative in September but Brexit negotiations are getting harder. There was talk that a deal could still be reached by November but there was no material progress. Instead, both UK Brexit Secretary Raab and Prime Minister May said they are going to hold their nerve today, which suggests that they are not going to bend easily to the EU’s demands.

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
05:30 BOJ Kuroda speaks in Osaka High      
06:00 German Wholesale Price Index (YoY) (AUG) Low     3.5%
13:00 U.S House Price Index (MoM) (JUL) Medium   0.3% 0.2%
13:00 S&P CoreLogic CS 20-City (MoM) SA (JUL) Medium   0.1% 0.11%
13:00 S&P/Case-Shiller Composite-20 (YoY) (JUL) Medium   6.2% 6.31%
13:00 S&P/Case-Shiller US Home Price Index (YoY) (JUL) Medium     6.2%
14:00 U.S Richmond Fed Manufact. Index (SEP) Low   21 24
14:00 U.S Consumer Confidence Index (SEP) High   132 133.4
14:00 U.S Conf. Board Present Situation (SEP) Medium     172.2

 

 

Euro

The single currency gained yesterday as Eurozone bond yields rose, with Germany’s 10-year Bund yield hitting its highest since mid-June, with analysts citing European Central Bank President Mario Draghi’s comments on wage growth and vigorous inflation. Germany’s 10-year yield rose to 0.51 percent, up more than 5 basis points. Overall, the EUR/USD traded with a low of 1.1722 and a high of 1.1813 before closing the day around 1.1746 in the New York session.

 

Yen

The Japanese Yen weakened against all major currencies yesterday except the Australian dollar and the Canadian dollar. Last week, the yen continued to weaken against the US dollar. Trading volumes in Japanese yen futures decelerated week-over-week, albeit to a fairly small degree. Looking at this week’s economic calendar, there is a range of upcoming figures. Overall, the USD/JPY traded with a low of 112.43 and a high of 112.82 before closing the day around 112.78 in the U.S session.

 

British Pound

The British Pound edged higher against the U.S Dollar yesterday but remains in a precarious position following on from the beating it took at the end of last week’s session. The pound US Dollar exchange rate nosedived over two cents on Friday, suffering its largest single day losses so far this year following a breakdown in Brexit negotiations. Overall, the GBP/USD traded with a low of 1.3061 and a high of 1.3165 before closing the day at 1.3116 in the New York session.

 

Canadian Dollar

The Canadian Dollar was little changed as oil prices rose and the greenback fell broadly, while domestic data showed a stronger-than-expected increase in wholesale trade. Canadian wholesale trade rose 1.5 per cent in July from June, a bigger increase than the 0.5 per cent gain expected by analysts, data from Statistics Canada showed. Overall, USD/CAD traded with a low of 1.2906 and a high of 1.2953 before closing the day at 1.2952 in the New York session.

 

Australian Dollar

The Australian Dollar sold off against all major currencies. Last week, the currency moved up sharply against the US dollar. Notably, trading volumes in Australian dollar decelerated last week. This is a sign that traders did not buy last week’s rebound. There were no significant domestic developments yesterday instead the Australian dollar is tracking developments across financial markets.  Overall, AUD/USD traded with a low of 0.7250 and a high of 0.7279 before closing the day at 0.7257 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 issuing a bullish stance. The Relative Strength Index is above 67 and lies above the neutral zone. In general, the pair has gained 0.13%.

 

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 61 reading and lies above the neutral zone. On the whole, the pair has gained 0.45%.

  

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 58 reading and lies above the neutral region. In general, the pair has lost 0.28%.

  

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 54 and lies above the neutral region. On the whole, the pair has lost 0.31%.

 

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 46 and lies below the neutral region. In general, the pair has gained 0.96%.

 

Appendix

  

FOREX Closing Prices for September 24, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.17459 1.18137 1.17227 1.17463 -0.0005
USD/JPY 112.517 112.82 112.413 112.786 0.2220
GBP/USD 1.30811 1.3165 1.3061 1.31164 0.0035
USD/CHF 0.95804 0.96483 0.95778 0.96463 0.0069
USD/CAD 1.29182 1.29535 1.29066 1.29526 0.0038
EUR/JPY 132.178 133.05 131.879 132.468 0.1670
GBP/JPY 147.204 148.277 146.92 147.935 0.6640
CHF/JPY 117.411 117.533 116.823 116.902 -0.6090
AUD/JPY 81.789 81.978 81.557 81.769 -0.2260
EUR/GBP 0.89771 0.89849 0.89331 0.89531 -0.0028
EUR/CHF 1.12546 1.13341 1.12536 1.13287 0.0073
GBP/CHF 1.25339 1.26558 1.25251 1.26502 0.0121

 

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1617 1.1670 1.1708 1.1761 1.1799 1.1852 1.1890
USD/JPY 112.12 112.27 112.53 112.67 112.93 113.08 113.34
GBP/USD 1.2959 1.3010 1.3063 1.3114 1.3167 1.3218 1.3271
USD/CHF 0.9529 0.9554 0.9600 0.9624 0.9670 0.9695 0.9741
USD/CAD 1.2875 1.2891 1.2922 1.2938 1.2969 1.2984 1.3015
EUR/JPY 130.71 131.29 131.88 132.47 133.05 133.64 134.22
GBP/JPY 145.79 146.35 147.14 147.71 148.50 149.07 149.86
CHF/JPY 115.93 116.38 116.64 117.09 117.35 117.80 118.06
AUD/JPY 81.14 81.35 81.56 81.77 81.98 82.19 82.40
EUR/GBP 0.8877 0.8905 0.8929 0.8957 0.8981 0.9009 0.9033
EUR/CHF 1.1196 1.1225 1.1277 1.1305 1.1357 1.1386 1.1438
GBP/CHF 1.2434 1.2480 1.2565 1.2610 1.2696 1.2741 1.2826

 

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.

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