Session Wraps - Major Forex Headlines wrapped up by trading session

Author: Greg Michalowski
3

Forex news for NY trading on July 20, 2018.

In other markets:

  • Spot gold is trading higher today on the back of the lower dollar. The price is up $8 or 0.66% at $1231. The 200 week MA was broken this week at $1234 and it will close below that MA.  However, the recovery today still threatens that break.  What we learned this week (lately) is that gold is more reactionary to the swings in the USD (sometimes the correlation is not so great).  
  • WTI crude oil futures settled up $1 or 1.44% at $70.46. On Monday, the September contract will be the front contract. It settled lower at $68.26. So don't be surprised when the price seems much lower on Monday.
  • Bitcoin moved above the 100 day MA at $7618, the price moved up to a high of $7687 on the break but quickly failed and came back down (trades at $7366).  For the week, the price moved up from around $6181.  At $7366 currently, that still is a 19% gain. 
US stocks ended marginally lower for the day and the week.

  • The S&P fell -0.09% on the day and was up 0.02% on the week
  • The Nasdaq fell -0.07% on the day and was down by the same amount on the week
  • The Dow fell -0.03% on the day and eked out a 0.15% gain for the week.
In the US debt market today, yields were higher and the yield curve steepened:

The 2-10 year spread widened to 30 bps (was around 24 bps earlier in the week).  The 10 year yield is trading up around the 100 day MA (CLICK HERE for the post). 

The USD was the weakest currency today.  Looking at the charts, belpw, the greenback was lower against all the major currencies today, led by the fall in the USDCAD.  Canada had some good retail sales and inflation data today that helped propel the loonie higher (it was the strongest of the majors today). 


The catalyst for the greenbacks run lower? 

The doubling down on the Fed and the USD by Pres. Trump today. 

Recall, that yesterday, an interview with Pres. Trump started the dollars run lower by saying he was not happy that the Fed was raising rates and nullifying the work done by tax cuts and regulation. He also harped on the strength of the USD.  

Today, after the White House had backtracked saying the President was in support of independent Fed, doubled down by saying: 


That was the catalyst for today's moves.  Not only did the dollar go down, but it helped steepen the yield curve as well on the expectation that if the Fed does slow down, the inversion of the yield curve could be avoided.  

Fed's Bullard spoke to that idea earlier when he said the Fed should slow the hikes so that the yield curve does not invert. 

A look at some of the pairs shows:

  • The EURUSD surged from about 1.1661 to a high of 1.1738 on its run higher (lower dollar).  In the process, the pair moved back above the 100 and 200 hour MAs and a topside trend line on the hourly chart at 1.1716. The pair is closing near that level and it will be a barometer for a bullish or bearish bias in the new week. 
  • The USDJPY fell below its 200 hour MA way up at 112.313 and moved down to 111.38 at the lows. That level is the 61.8% of the July trading range. The pair is closing near that level.  Will be a close level to eye next week for bias clues.
  • The GBPUSD retraced 50% of the move down for the week at 1.31246 and is closing right around the level. That is a result given weaker CPI, retail sales and Brexit concerns. Today the pair started the NY session around 1.3040 and moved to high of 1.3140 before settling at 1.3130.
  • The USDCAD fell sharply today helped by the weaker USD and better data (retail sales and CPI).  The price fell to a lower trend line on the daily chart at 1.3105 and stalled. If the price is going lower next week, getting below that trend line will be eyed. 

That does it for me, especially since Adam and I repeated the effort ; ) 

Wishing you all a great and safe weekend.  Do something nice for someone.  

Greg.

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Author: Adam Button

Author: Adam Button
2

Forex news for North American trading on July 20, 2018:

Markets:

  • Gold up $8 to $1231
  • WTI crude up $1.00 to $70.46
  • S&P 500 down 3 points to 2801
  • US 10-year yields up 6 bps to 2.89%
  • CAD leads, USD lags

Canadian economic data was on the agenda and it delivered a positive surprise that sent USD/CAD quickly down to 1.3125 from 1.3235. The drop compounded weakness in the US dollar that was triggered by Trump pining for lower Fed rates and talking about a bigger trade war with China.

The dollar selling hardly took a break throughout the day. USD/JPY started new York trade near 112.50 and sagged a cent lower in steady selling that continued right into the close.

Cable bulls showed their mettle with a big bounce to 1.3132 after falling below 1.30 and to an 8-month low yesterday. It's a potential reversal but it's still tough to fall in love with the pound after that CPI print and with the Fed still hiking rates.

I mean, is Trump tweeting about rates going to change the Fed path? That's the question to think about on the weekend.

EUR/USD clocked a strong finish to the week in a raise to 1.1723 from 1.1630 before Trump tweeted. There was a bit of extra dollar selling into the weekend, perhaps on worried about more tweets to come.

The Australian dollar was stronger and is testing Thursday's high near 0.7440 in what will be an early level to watch.

Have a great weekend.

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Author: Justin Low

Author: Justin Low
5

Forex news from the European trading session - 20 July 2018

Headlines:

Markets:

  • NZD leads, USD lags on the day
  • European equities lower following Trump's trade comments
  • Gold up 0.12% to $1,224.35
  • WTI crude up 0.24% to $69.63
  • US 10-year yields up 1.1 bps to 2.849%
  • Bitcoin up 0.59% to $7,463


The session offered little in terms of key movements as traders continue to suffer a bit of a "dollar hangover" following Trump's comments overnight. The dollar started the day a little on the back foot as traders weigh Trump's comments along with the fact that there were reports on intervention in the Chinese yuan.

The dollar index fell close to the 95.00 level before bouncing back again and moved to a high of about 95.20 before retreating again late in the session, and that was the only notable piece of action during the day in the currencies space.

The dollar's push higher saw cable move towards the 1.3000 handle again, but eventually moved higher as the dollar weakened towards the end of the session.

In other news, Italy's political worries resurfaced a little with comments by Borghi on the euro and tensions within the coalition government causing Italian assets to slide a little early on. But the jitters slowly faded as the session went by.

Apart from that, there is notable change in oil where it moved to highs mid-way through the session sending USD/CAD to session lows of 1.3233 as Brent and WTI posted gains of over 1%. That has all but faded now as it seems that the inability by buyers to break above the technical levels highlighted here on Brent capped the upside move.

And late in the session we got a bit of drama as CNBC published the second part of its interview with Trump and he said that he is "ready to go to 500" on tariffs imposed on Chinese products. That sent equities lower, but the currency and bond markets held steady in spite of that and we're seeing some retracement in stocks now.

Looking at individual currency pairs, EUR/USD held steady for majority of the session trading at the highs of 1.1674 early on before retreating to trade around 1.1630-50 levels currently.

USD/JPY also held steady trading to a low of 112.21 as the dollar weakened but thereafter held steady around 112.30-40 levels.

AUD/USD and NZD/USD were steady gainers early on as the Chinese yuan steadied against the dollar after reports of intervention but the aussie gave up some of its gains following the dip in equities late on.

That's about it for the session. I'll be away for the next two weeks so I'd like to wish everyone well over the next fortnight and all the very best with your trading. ;)

 

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Author: Eamonn Sheridan
7

Forex and Bitcoin news for Asia trading Friday 20 July 2018

Its true, I used yesterday's headline over again! And why not ... the  People's Bank of China slashed the value of the onshore yuan yet again today, firing another shot in the trade war (devaluing the yuan is like a tariff on everything imported!):

  • The reference rate was set at at it lowest (for the CNY against the big dollar) since mid-July last year
  • The devaluation was the biggest one day cut to the CNY since June of 2016

Just like yesterday, traders took a big stick to the offshore yuan, CNH slumping; USD/CNH traded above 6.83 at one stage before settling a little:


Markets responded by quickly cutting risk, overnight US stock index futures (and equity indexes generally) got a hit as did 'risk' currencies; everyone's favourite AUD/JPY copped it too.



There was a recovery for the yuan, though, above 6.83 did not last long. Chinese state owned banks reported sellers of USD, an intervention to support the yuan. While the PBOC wants a lower currency, they don't want it too fast.

Elsewhere .... yes, there were other things going on …

Japanese inflation data the other item of interest in Asia today. The headline and core (excluding fresh food but not energy) both came in not too badly for the BOJ. Both well short of target, but, yeah not too bad.

However .... and its a big however ... taking energy out and the inflation result is woeful if you are at the Bank of Japan. ICYMI the target for core (excluding food and energy) is sustainably around 2% y/y. If you take 2% and divide it by 10 you'll get 0.2%, and that was the result announced today. Kuroda will not be happy. 

Currency movement ... 'risk' fell in response to the CNY 'fix' and that's about it in a nutshell. As I update AUD, NZD, EUR, GBP, CAD, CHF have all come back to barely net changed on the session against the big USD. Even USD/JPY is off just a few tics.

Yuan is where the action was, and remains.

Have a great weekend!

Still to come:


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