19 12 月 2018

FOREX Newsletter

FOREX Newsletter

December 19, 2018

 

Pulse of the Market

·      The U.S Dollar slid lower against a currency basket ahead of today’s Federal Reserve meeting

·      The Japanese Yen remained supported amid concerns over the outlook for global growth

·      The pound was higher amid an ongoing political deadlock over Britain’s efforts to exit the EU

·      Bank of Canada Governor Stephen Poloz left the door open to a slower pace of interest rate hikes

 

 

The U.S Dollar was lower yesterday as investors waited for news from the Federal Reserve’s latest policy meeting. The U.S dollar index, which measures the greenback’s strength against a basket of six major currencies, fell 0.14% to 96.41, after an overnight high of 96.63. With the Fed expected to increase rates by 25 basis points for the fourth time this year today, investors will be watching for any new comments on possible policy changes in 2019. Fed officials, including Fed Chairman Jerome Powell, have said interest rates are nearing neutral and have become more cautious about FOMC tightening policy amid worry of slowing global growth. U.S. President Donald Trump’s critical comments on the Fed did not help the dollar’s cause either. In a tweet overnight, Trump took another swipe at the Fed, saying it was “incredible” for the central bank to even consider tightening policy given the global economic and political uncertainties. While the Fed remaining on hold would be a significant surprise and a significant U.S Dollar-negative, there is little doubt that equity market volatility is creating some headaches for policymakers. Osborne noted that Fed rate hike expectations have slipped, with markets now pricing in a 70 percent chance of a rate increase, down from a 78 percent chance on Monday. Investor confidence has deteriorated, leading to the gloomiest outlook for the world economy in a decade. The Dollar has replaced technology stocks as the most crowded trade for the first time since January. Risk-off sentiment yesterday lifted the Japanese yen and Swiss franc. Yen traders are also focusing on the Bank of Japan’s meeting on Dec. 19-20, at which it is widely expected to keep policy ultra-loose as inflation remains well below its target. The Pound Sterling continues to move off of the recently struck 20-month trough after it was confirmed that the Prime Minister will ask for the British Parliament to approve her latest Brexit proposal next month. The Canadian Dollar fell against the U.S Dollar yesterday.

 

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
07:00 German Producer Price Index (YoY) (NOV) Low   3.1% 3.3%
09:30 U.K Consumer Price Index (YoY) (NOV) High   2.3% 2.4%
09:30 U.K Retail Price Index (YoY) (NOV) Low   3.2% 3.3%
09:30 U.K House Price Index (YoY) (OCT) Medium   3.3% 3.5%
12:00 U.S MBA Mortgage Applications (DEC 14) Medium     1.6%
13:30 Canada Consumer Price Index (YoY) (NOV) High   1.8% 2.4%
15:00 U.S Existing Home Sales (MoM) (NOV) Medium   -0.4% 1.4%
15:30 DOE U.S. Crude Oil Inventories (DEC 14) Medium     -1208k
19:00 U.S FOMC Rate Decision (Upper Bound) (DEC 19) High   2.50% 2.25%
19:00 U.S FOMC Rate Decision (Lower Bound) (DEC 19) High   2.25% 2.00%
19:00 U.S Interest Rate on Excess Reserves (DEC 20) High   2.40% 2.20%
19:30 Fed’s Powell Holds Press Conference Following FOMC Decision Medium      
21:45 New Zealand Trade Balance (NOV) Medium   -880m -1295m
21:45 New Zealand Gross Domestic Product (YoY) (3Q) High   2.8% 2.8%

Euro

The single currency rose yesterday as the dollar weakened, with investors betting that growth concerns will prompt the Fed to slow its pace of interest rate hikes at this week’s meeting. A rout on Wall Street following a spate of weak data globally has strengthened the view that the Fed’s widely-expected rate hike today will usher in a slowdown. Overall, the EUR/USD traded with a low of 1.1335 and a high of 1.1401 before closing the day around 1.1359 in the New York session.

 

Yen

The Japanese Yen pair remained heavily offered through the European session yesterday and tumbled to over one-week lows in the last hour. A combination of negative forces kept exerting downward pressure for the third consecutive session. The concerns were evident from the recent fall in the US Treasury bond yields. Overall, the USD/JPY traded with a low of 112.23 and a high of 112.84 before closing the day around 112.50 in the U.S session.

 

British Pound

The British Pound continues to move off of the recently struck 20-month trough after it was confirmed that the Prime Minister will ask for the British Parliament to approve her latest Brexit proposal next month. Analysts caution that Theresa May will be fighting the fight of her life in order to get her deal through to find the backing of members from her own party. Overall, the GBP/USD traded with a low of 1.2608 and a high of 1.2703 before closing the day at 1.2638 in the New York session.

 

Canadian Dollar

The Canadian Dollar steadied against its U.S counterpart yesterday, underperforming other G10 currencies as oil prices fell and Bank of Canada Governor Stephen Poloz left the door open to a slower pace of interest rate hikes. The price of oil, one of Canada’s major exports, fell to its lowest since September of last year after reports of swelling inventories. Overall, USD/CAD traded with a low of 1.3387 and a high of 1.3494 before closing the day at 1.3462 in the New York session.

 

Australian Dollar

The Australian Dollar gained earlier in yesterday’s trading session but reversed almost all the gains to end the day slightly lower. Australian Dollar has been put on the defensive by worries about slowing growth in China. The currency had been sideswiped by disappointing Chinese economic data, which in turn rippled through markets globally sending stocks sharply lower. Overall, AUD/USD traded with a low of 0.7164 and a high of 0.7201 before closing the day at 0.7166 in the New York session.

 

 

Euro-Yen

EUR/JPY is trading below 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 43 and lies below the neutral zone. In general, the pair has lost 0.16%.

 

Sterling-Yen

Currently, GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish tone and MACD is indicating a bearish stance. The Relative Strength Index is above 38 reading and lies below the neutral zone. On the whole, the pair has lost 0.10%.

 

Aussie-Yen

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 40 reading and lies below the neutral region. In general, the pair has lost 0.25%.

 

Euro-Sterling

This cross is currently trading above 14, 50 and below 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 62 and lies above the neutral region. On the whole, the pair has lost 0.05%.

 

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 38 and lies below the neutral region. In general, the pair has gained 0.13%.

 

Appendix

  

FOREX Closing Prices for December 18, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.13463 1.14011 1.1335 1.13595 0.0013
USD/JPY 112.819 112.842 112.231 112.508 -0.3050
GBP/USD 1.26188 1.27039 1.2608 1.2638 0.0017
USD/CHF 0.99284 0.99357 0.98978 0.99252 -0.0002
USD/CAD 1.3405 1.34944 1.3387 1.34628 0.0059
EUR/JPY 128.025 128.09 127.619 127.808 -0.2060
GBP/JPY 142.348 142.63 141.907 142.197 -0.1420
CHF/JPY 113.596 113.648 113.231 113.318 -0.2720
AUD/JPY 80.963 81.176 80.633 80.751 -0.2040
EUR/GBP 0.89888 0.9009 0.89612 0.89869 -0.0005
EUR/CHF 1.12668 1.12947 1.2582 1.1277 0.0012
GBP/CHF 1.25292 1.25851 1.25159 1.25448 0.0016

  

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1263 1.1299 1.1329 1.1365 1.1395 1.1431 1.1462
USD/JPY 111.60 111.92 112.21 112.53 112.82 113.14 113.43
GBP/USD 1.2500 1.2554 1.2596 1.2650 1.2692 1.2746 1.2788
USD/CHF 0.9866 0.9882 0.9903 0.9920 0.9941 0.9957 0.9979
USD/CAD 1.3294 1.3341 1.3402 1.3448 1.3509 1.3555 1.3617
EUR/JPY 127.12 127.37 127.59 127.84 128.06 128.31 128.53
GBP/JPY 141.14 141.52 141.86 142.24 142.58 142.97 143.31
CHF/JPY 112.73 112.98 113.15 113.40 113.57 113.82 113.98
AUD/JPY 79.99 80.31 80.53 80.85 81.07 81.40 81.62
EUR/GBP 0.8915 0.8938 0.8962 0.8986 0.9010 0.9034 0.9058
EUR/CHF 1.3428 1.3005 1.2141 1.1718 1.0854 1.0431 0.9567
GBP/CHF 1.2443 1.2479 1.2512 1.2549 1.2581 1.2618 1.2651

 

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

 

Disclaimer

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