August 02, 2018
Pulse of the Market
· ISM manufacturing index showed a reading of 58.1 for July, missing expectations of 59.4
· Private payrolls grew by 219,000 for July, rising from the 181,000 seen in June
· The Bank of England’s Monetary Policy Committee is widely expected to raise the bank rate today
· The Canadian Dollar strengthened to a nearly seven-week high against its U.S counterpart
|The Dollar rose modestly against its rivals amid mixed U.S economic data on the labor market and manufacturing ahead of Federal Reserve’s policy decision. The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.15% to 94.47. ISM manufacturing index showed a reading of 58.1 for July, missing expectations of 59.4. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12% of the U.S. economy. The ISM Employment sub-index showed a reading of 56.5 for July, topping expectations of 56.0, supporting the narrative of a strong U.S. labor market as the private sector also saw strong job growth. Private payrolls grew by 219,000 for July, rising from the 181,000 seen in June, according to a report released Wednesday by ADP and Moody’s Analytics. That beat economists’ forecast of 186,000. The slew of economic data arrived just hours ahead of the Federal Reserve’s interest rate decision and accompanying monetary policy statement due 2 p.m. ET. The Federal Open Market Committee is expected to vote to leave interest rates unchanged, but market participants are expected to closely parse the accompanying statement for any tweaks in language on monetary policy. According to Fed Rate Monitor Tool, 97.9% of traders expected the Federal Reserve to stand pat on interest rates. That is slightly higher than the 96.9% seen a day earlier. The dollar lost ground against the yen as the latter drew strength from a sharp uptick in Japan 10-year bond yields in the wake of the Bank of Japan’s decision Tuesday to permit long-term rates to fluctuate between zero and 0.2%, depending on economic and price developments. USD/JPY fell 0.16% Y111.68 after trading as high as Y112.15 GBP/USD fell 0.05% to $1.3117 as traders looked ahead to the Bank of England’s rate decision on Thursday. The Bank of England’s Monetary Policy Committee is widely expected to raise the 0.50% bank rate today’s meeting to 0.75%.
|01:30||Australia Trade Balance (JUN)||Medium||A$900m||A$827m|
|05:45||Switzerland SECO Consumer Confidence (JUL)||Medium||2||2|
|07:15||Switzerland Retail Sales Real (YoY) (JUN)||Medium||0.0%||-0.1%|
|07:30||Switzerland PMI Manufacturing (JUL)||Medium||60.9||61.6|
|08:30||Markit/CIPS UK Construction PMI (JUL)||Medium||52.8||53.1|
|09:00||Euro-Zone Producer Price Index (YoY) (JUN)||Low||3.5%||3.0%|
|11:00||Bank of England Bank Rate (2 AUG)||High||0.75%||0.50%|
|11:00||BOE Asset Purchase Target (AUG)||High||435b||435b|
|11:00||Bank of England Inflation Report||High|
|12:30||U.S Initial Jobless Claims (28 JUL)||Medium||220k||217k|
|12:30||U.S Continuing Claims (21 JUL)||Medium||1745k|
|14:00||U.S Factory Orders (JUN)||Medium||0.7%||0.4%|
|14:00||U.S Durable Goods Orders (JUN)||Medium||1.0%|
|23:50||BOJ Minutes of Policy Meeting (JUN)||Medium|
The single currency struggled as fears of an escalation in the trade dispute between the United States and China boosted the dollar and a survey showing subdued euro zone manufacturing growth in July kept investors cautious. The U.S. administration plans to propose a 25 percent tariff on $200 billion in Chinese imports, up from an original 10 percent. Overall, the EUR/USD traded with a low of 1.1655 and a high of 1.1698 before closing the day around 1.1658 in the New York session.
The Japanese Yen fell as the Bank of Japan offers minimal tweaks to its loose monetary policy. After the Bank of Japan (BOJ) released the statement on Tuesday that it would make its policy framework more flexible for the long term, Yen took a dip. However, for now, the bank only made a few tweaks to its ultra-loose monetary policy. Overall, the USD/JPY traded with a low of 111.37 and a high of 112.13 before closing the day around 111.70 in the U.S session.
The British Pound trod water as traders shunned the currency ahead of Bank of England interest rate decision, although strategists at Nordea Markets say Sterling will almost certainly be found wanting after the event and that they favor selling the currency. The Bank of England is widely expected by the market to raise UK interest rates to 0.75% on Thursday. Overall, the GBP/USD traded with a low of 1.3093 and a high of 1.3142 before closing the day at 1.3124 in the New York session.
The Canadian Dollar strengthened to a nearly seven-week high against its U.S counterpart as the U.S Federal Reserve left interest rates on hold and officials signaled progress in talks to update the NAFTA trade pact. The United States and Mexico are getting close to a deal on the key issue of autos content rules at negotiations to renew the NAFTA. Overall, USD/CAD traded with a low of 1.2972 and a high of 1.3030 before closing the day at 1.3001 in the New York session.
The Australian Dollar has rallied a bit during the trading session yesterday, but this is a very busy week and therefore I think it’s very unlikely that we can make a longer-term move in the next couple of days. By the end of the week, we may have some clarity, as we get the jobs number out of America. At this point though, I do believe that pullbacks are buying opportunities. Overall, AUD/USD traded with a low of 0.7388 and a high of 0.7427 before closing the day at 0.7402 in the New York session.
EUR/JPY is trading above 14, 50 and 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 52 and lies above the neutral zone. In general, the pair has lost 0.40%.
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 52 reading and lies above the neutral zone. On the whole, the pair has lost 0.11%.
Currently, the cross is trading above 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 51 reading and lies above the neutral region. In general, the pair has lost 0.39%.
This cross is currently trading above 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 53 and lies above the neutral region. On the whole, the pair has lost 0.27%.
This cross is trading above 14, 50 and below 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is indicating a bullish tone. The Relative Strength Index is above 42 and lies below the neutral region. In general, the pair has gained 0.18%.
|FOREX Closing Prices for August 01, 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.