29 8 月 2018

FOREX Newsletter

 

FOREX Newsletter

August 29, 2018

 

  Pulse of the Market

·      According to the Conference Board, in August consumer sentiment, hit its strongest level in 17 years

·      The Euro appreciated more than 4 cents in a move that took the pair from its 1-year low

·      The latest Brexit headlines suggest that negotiations aren’t going as well as the UK hopes

·      Canadian Foreign Minister is in Washington right now for high-stakes trade talks with the U.S

The U.S Dollar ended the session lower against some currencies and higher versus others, there’s no question that the sell-off is beginning to lose momentum. Consumer confidence beat expectations but higher interest rates caused house prices to rise less than anticipated and the stronger dollar contributed to the wider trade deficit. Revisions to second quarter GDP report is due for release today along with pending home sales but the dollar should take its cue from stocks, risk appetite and ultimately Canadian-US trade headlines. USD/JPY has been hovering above 111 since the beginning of the week. The only currency that has consistently performed worse than the dollar was the Japanese Yen and the only reason for that is the recovery in risk. If USD/JPY drops below 110.80, the next stop should be 110. In the past 2 weeks, we’ve seen a dramatic recovery in the euro. The single currency appreciated more than 4 cents in a move that took the pair from its 1-year low of 1.13 to a 3 week high of 1.1733. The recovery was driven by the decline in the U.S. dollar, improvement in risk appetite, softer U.S. economic reports, stronger German data and short covering. However, now that EUR/USD breached 1.17 and came within 17 pips of our 1.1750 target it may be time to start looking at selling euros. On a fundamental basis, the record-breaking moves in U.S stocks will boost business and consumer confidence. In fact according to the Conference Board, in August consumer sentiment hit its strongest level in 17 years. This positive attitude should translate into more spending especially after the confidence report showed more respondents preparing to make big-ticket purchases over the next 6 months. With more spending come more growth and healthier U.S. data. German data has also been decent as shown by German IFO report but the real problem for the euro is Italy. Italian 10-year bond yields hit 4-year highs yesterday reflecting renewed concerns about the country’s budget. Right now investors are looking at it as a localized problem as they’ve sold Italian bonds but not the euro. Sterling turned lower yesterday on the back of the recovery in the Dollar. The latest Brexit headlines also suggest that negotiations aren’t going as well as the UK hopes. Prime Minister May said a no deal Brexit is not the end the world.

 

 

Time(GMT)   Economic Release IMP Actual Forecast Prior
05:00 Japan Consumer Confidence Index (AUG) Medium   43.3 43.5
06:00 German GfK Consumer Confidence (SEP) Medium   10.6 10.6
06:45 French Gross Domestic Product (YoY) (2Q) Medium   1.7% 1.7%
11:00 U.S MBA Mortgage Applications (AUG 24) Medium      
12:30 U.S Gross Domestic Product Annualized (QoQ) (2Q) High   4.0% 4.1%
12:30 U.S Gross Domestic Product Price Index (2Q) High   3.0% 3.0%
12:30 U.S Personal Consumption (2Q S) Medium   3.9% 4.0%
12:30 U.S Core Personal Consumption Expenditure (QoQ) (2Q) Medium   2.0% 2.0%
14:00 U.S Pending Home Sales (YoY) (JUL) Medium     -4.0%
14:30 DOE U.S. Crude Oil Inventories (AUG 24) Medium      
23:50 Japan Retail Trade (YoY) (JUL) Medium   1.2% 1.8%

 

Euro

The single currency traded higher yesterday. Lending growth to euro zone companies and households held steady at a post-crisis high last month while an indicator of money circulating in the euro area, which often foreshadows future activity, slowed unexpectedly, the ECB said. Lending growth to non-financial corporations expanded by 4.1 percent in July. Overall, the EUR/USD traded with a low of 1.1661 and a high of 1.1732 before closing the day around 1.1693 in the New York session.

 

Yen

The Japanese Yen traded little changed yesterday. On the release front, BoJ Core CPI edged up to 0.5%, above the estimate of 0.3%. In the U.S, manufacturing and consumer confidence data was stronger than expected. CB Consumer Confidence jumped to 133.4, crushing the estimate of 126.6 points. Today, Japan releases consumer confidence. Overall, the USD/JPY traded with a low of 110.93 and a high of 111.33 before closing the day around 111.17 in the U.S session.

 

British Pound

The British Pound was unchanged yesterday. U.S manufacturing and consumer confidence data was stronger than expected. CB Consumer Confidence jumped to 133.4. Today, the U.S publishes Preliminary GDP and Pending Home Sales. With the negotiations over Brexit stalled, there is an increasing likelihood of a ‘no deal’ Brexit. Overall, the GBP/USD traded with a low of 1.2859 and a high of 1.2930 before closing the day at 1.2870 in the New York session.

 

Canadian Dollar

The Canadian Dollar strengthened to a nearly three-month high on the prospect of Canada reaching a deal this week to overhaul the North American Free Trade Agreement. U.S. Treasury Secretary Steve Mnuchin said he believed the United States can reach a trade deal with Canada this week after coming to an agreement with Mexico. Overall, USD/CAD traded with a low of 1.2885 and a high of 1.2980 before closing the day at 1.2930 in the New York session.

 

Australian Dollar

The Australian Dollar traded slightly lower. With the new Australian Prime Minister Scott Morrison having filled most of the cabinet roles, attention should turn back to economics, commodities and global investor sentiment as the main driver of AUD this week. Research from Australian lender ANZ meanwhile suggests there is some evidence that businesses are reacting negatively to political uncertainty. Overall, AUD/USD traded with a low of 0.7319 and a high of 0.7360 before closing the day at 0.7332 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 62 and lies above the neutral zone. In general, the pair has gained 0.24%.

 

Sterling-Yen

Currently, GBP/JPY is trading above 14 and below 50, 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 48 reading and lies below the neutral zone. On the whole, the pair has lost 0.07%.

 

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 51 reading and lies above the neutral region. In general, the pair has lost 0.07%.

 

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 73 and lies above the neutral region. On the whole, the pair has gained 0.29%.

  

Sterling-Swiss

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 22 and lies below the neutral region. In general, the pair has lost 0.51%.

 

Appendix

 

 

FOREX Closing Prices for August 28, 2018
Currency Open High Low Close Net Chg
EUR/USD 1.16772 1.17321 1.16611 1.1693 0.0017
USD/JPY 111.059 111.337 110.935 111.172 0.1130
GBP/USD 1.28922 1.293 1.28597 1.2870 -0.0021
USD/CHF 0.97938 0.98074 0.97434 0.97598 -0.0037
USD/CAD 1.2966 1.29802 1.2885 1.2930 -0.0036
EUR/JPY 129.706 130.251 129.625 130.003 0.3100
GBP/JPY 143.191 143.641 143.021 143.098 -0.0940
CHF/JPY 113.372 113.941 113.261 113.873 0.5440
AUD/JPY 81.595 81.744 81.369 81.557 -0.0570
EUR/GBP 0.90545 0.90967 0.90516 0.90824 0.0027
EUR/CHF 1.14372 1.14518 1.14144 1.14148 -0.0025
GBP/CHF 1.2627 1.26363 1.25554 1.25658 -0.0064

 

 

 

Daily Pivot Points
  Trading Range  
Contract S3 S2 S1 Pivot R1 R2 R3
EUR/USD 1.1588 1.1624 1.1659 1.1695 1.1730 1.1766 1.1801
USD/JPY 110.56 110.75 110.96 111.15 111.36 111.55 111.76
GBP/USD 1.2773 1.2816 1.2843 1.2887 1.2913 1.2957 1.2984
USD/CHF 0.9669 0.9706 0.9733 0.9770 0.9797 0.9834 0.9861
USD/CAD 1.2788 1.2837 1.2883 1.2932 1.2978 1.3027 1.3074
EUR/JPY 129.04 129.33 129.67 129.96 130.29 130.59 130.92
GBP/JPY 142.25 142.63 142.87 143.25 143.49 143.87 144.11
CHF/JPY 112.76 113.01 113.44 113.69 114.12 114.37 114.80
AUD/JPY 80.99 81.18 81.37 81.56 81.74 81.93 82.12
EUR/GBP 0.9012 0.9032 0.9057 0.9077 0.9102 0.9122 0.9147
EUR/CHF 1.1365 1.1390 1.1402 1.1427 1.1440 1.1464 1.1477
GBP/CHF 1.2454 1.2505 1.2535 1.2586 1.2616 1.2667 1.2697

 

 

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

 

 

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