October 11, 2018
Pulse of the Market
· A recent increase in bond yields has been driven this week by positive data
· the euro was higher due to the fall in the greenback, recovering from a selloff
· The pound was higher, amid reports that 80% of the treaty between the UK and the EU is done
· The Canadian Dollar weakened to a 10-day low against its U.S. counterpart
|The U.S Dollar was lower yesterday, amid fears that the Federal Reserve will increase interest rates higher than expected. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, slumped 0.21% to 95.16. A recent increase in bond yields has been driven this week by positive data that showed the Fed will increase rates in December and beyond. The yield on the benchmark United States 10-year note rose to 3.214% after reaching a seven-year high of 3.261% the day before, while the United States 30-Year Treasury bond was at 3.384%, not far from a four-year peak of 3.44%. Meanwhile, the euro was higher due to the fall in the greenback, recovering from a selloff as Italy’s populist government and the European Commission went head-to-head over the country’s budget. Brussels and Rome have been at odds over the country’s budget deficit plans for the next three years, which breach EC rules on running excessive deficits and high debt. The pound was higher, amid reports that 80% of the treaty between the UK and the European Union is done. GBP/USD rose 0.41% to 1.3197. The dollar slid lower against the yen, with USD/JPY down 0.26% to 112.66. In times of uncertainty, investors tend to invest in the Japanese yen, which is considered a safe asset during periods of risk aversion. The Canadian dollar weakened on Wednesday to a 10-day low against its U.S. counterpart, underperforming other G10 currencies, as the price of oil, one of Canada’s major exports, slumped. The loonie touched its weakest since Sept. 28 at 1.3046. U.S. crude oil futures settled 2.4 per cent lower as U.S. equity markets broadly fell, even though energy traders worried about shrinking supply from Iran due to U.S. sanctions and also kept an eye on Hurricane Michael, which closed nearly 40 per cent of U.S. Gulf of Mexico oil output. The modest rebound in the Australian dollar came to a shuddering halt yesterday, falling heavily as global investor risk sentiment took a turn for the worst. After drifting to as high as .7130 in Asian trade on the back a modest improvement in investor sentiment, the AUD/USD began to fall in European trade with losses accelerating as North American markets opened. More firm US economic data, and hawkish commentary from US Fed officials kept US bond yields at or near multi-year highs, adding to concern that the current pace of Fed tightening was likely to continue in the period ahead.|
|00:00||Australia Consumer Inflation Expectation (OCT)||Medium||4.0%|
|08:30||Bank of England Credit Conditions & Bank Liabilities Surveys||High|
|12:30||Canada New Housing Price Index (YoY) (AUG)||Medium||0.5%||0.5%|
|12:30||U.S Consumer Price Index (YoY) (SEP)||High||2.4%||2.7%|
|12:30||U.S Consumer Price Index Ex Food and Energy (YoY) (SEP)||High||2.3%||2.2%|
|12:30||U.S Real Avg. Weekly Earnings (YoY) (SEP)||Medium||0.5%|
|12:30||U.S Real Avg. Hourly Earning (YoY) (SEP)||Medium||0.2%|
|12:30||U.S Initial Jobless Claims (OCT 6)||Medium||210k||207k|
|12:30||U.S Continuing Claims (SEP 29)||Medium||1650k|
|15:00||DOE U.S Crude Oil Inventories (OCT 5)||Medium||7975k|
The single currency gained yesterday, moving away from seven-week lows after a fall in U.S Treasury yields took some steam out of the U.S Dollar’s recent run. The rally in the U.S Dollar was paused yesterday in European trading session, although analysts said it was likely to prove a temporary reprieve for the euro. Overall, the EUR/USD traded with a low of 1.1478 and a high of 1.1544 before closing the day around 1.1518 in the New York session.
The Japanese Yen pair was back under pressure, with the exchange rate slipping to a fresh monthly-low of 112.76. USD/JPY struggles to hold its ground despite the limited reaction to the U.S Producer Price Index (PPI), which showed the headline reading slipping to 2.6% from 2.8% per annum in August but the broader outlook for dollar-yen remains supportive. Overall, the USD/JPY traded with a low of 112.23 and a high of 113.26 before closing the day around 112.25 in the U.S session.
The British Pound continued its decent rally started on Tuesday despite data published by the Office for National Statistics (ONS), the UK economy displayed no signs of growth in August, missing expectations of a modest 0.1 per cent expansion. The report revealed Britain’s builders were hit particularly hard. Overall, the GBP/USD traded with a low of 1.3134 and a high of 1.3213 before closing the day at 1.3188 in the New York session.
The Canadian Dollar edged lower against its U.S counterpart as oil prices fell and U.S Treasury yields climbed toward multi-year peaks. Investors were worried that higher bond yields and trade conflicts could hurt global economic growth. On Tuesday, the IMF cut its world gross domestic product forecasts for the first time in two years. Overall, USD/CAD traded with a low of 1.2924 and a high of 1.3066 before closing the day at 1.3065 in the New York session.
The Australian Dollar struggles to benefit from improved consumer confidence. A modest rebound in October’s Westpac consumer confidence index offered limited support to the Australian Dollar (AUD), with the improvement failing to reverse the previous month’s slump. Confidence in the underlying health of the Australian economy remains limited. Overall, AUD/USD traded with a low of 0.7052 and a high of 0.7101 before closing the day at 0.7100 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 0.37%.
Currently, GBP/JPY is trading above 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 59 reading and lies above the neutral zone. On the whole, the pair has lost 0.26%.
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 37 reading and lies below the neutral region. In general, the pair has lost 1.30%.
This cross is currently trading below 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 26 and lies below the neutral region. On the whole, the pair has lost 0.12%.
This cross is trading above 14, 50 and below 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 72 and lies above the neutral region. In general, the pair has gained 0.18%.
|FOREX Closing Prices for October 09, 2018|
|Daily Pivot Points|
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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.