Forex news for North American trading on June 15, 2021
- NASDAQ index leads the way to the downside in trading today
- The bullish and bearish from the recent lumber futures price action
- WTI crude oil futures settle at $72.12
- Senate Majority Leader Schumer: Infrastructure discussions progressing
- US treasury auctions of $24 billion of 20 year notes at a high yield of 2.12%
- New York Gov. Cuomo lifts New York pandemic limits
- EU Von Der Leyen: We have raised €20 in 10 year bonds
- US and EU release joint statement after recent meetings
- European indices end the session with mixed results. Spain and Italy lower.
- Fitch sees world recovery boosting prices but runaway inflation unlikely
- Global dairy trade prices fall -1.3%. NZDUSD falls to a new session low.
- US business inventories for April -0.2% versus -0.1% estimate
- NAHB Housing market index for June 81 vs 83 estimate
- US May industrial production + 0.8% m/m vs +0.7% estimate
- Canada existing home sales for May -7.4% versus -12.5% in April
- Empire manufacturing index for June 17.4 versus 22.7 estimate
- US retail sales for May -1.3% vs -0.8% est
- US PPI final demand ) one for May 0.8% versus 0.5% estimate
- Canada housing starts for May 275.9K versus 277.5k estimate
- The USD is the strongest and the GBP is the weakest as NA traders enter for the day
T minus 22 hours until the FOMC decision at 2 PM ET.
The Fed is expected to keep rates on hold, but could look to start telegraph taper ideas. The data today saw retail sales give back some of the gains seen over the last 2-months. PPI continues to show pipeline cost pressures (up 6.6% YoY) . Industrial production and capacity utilization came in better than expectations, but the prior month was revised lower. US business inventories showed a decline and combined with sales, the inventory-to-sales ratio is near low levels which could be more inflationary down the road. The NAHB housing market index dipped from last month and was lower than expectations but still remains elevated.
In the commodities markets, the price of lumber - which skyrocketed this year until May 10 when it peaked at $1738 - continued its run to the downside since peaking, and moved to the lowest level since April (low reached $943 today). That move is down 41% from the high. That is certainly good news for the inflation trends for the Fed.
We will see what happens tomorrow, but what we know is the Fed has one eye on inflation, and another eye on the 7.5M of workers still out of work. Moreover, they are anticipating the reopening bottle necks will dissipate as time goes by.
Looking at the forex market today, the CHF is the strongest and the CAD is the weakest. The CAD weakness is despite a run up in the price of crude oil which took the price above the $72 level for the first time since October 2018. Crude oil futures in after hours trading is moving even higher after a larger than expected drawdown of inventories from the private oil inventory data (-8.54M barrels vs estimate of -3.5M). The price of crude is trading at $72.43. That is up $1.54 or 2.19% and just off the high at $72.48.
The USD today did start the day off as the strongest of the majors, but lost ground to the CHF, EUR and JPY. It is closing mostly higher with gains versus the commodity currencies and the GBP, and modest declines versus the CHF, EUR and JPY (the USDJPY barely moved today with only a 18 pip range).
In the US debt market today, yields are ending mixed with the two year up modestly, the 30 year up modestly and in between the five and 10 year yields down modestly. The treasury auction of $24 billion of 20 year bonds was met with very strong demand. If there is concern about inflation, the auction and yield dip seen of late, is not showing investors are all that worried.
In the US and European equity markets, the major US indices all fell. In Europe, Spain and Italy ended in the red but Germany, UK, France all closed higher. The US decline was led by the NASDAQ index X which felt -0.71% one day after closing at an all-time record high (not much momentum on that break)
In other markets:
- Spot gold is trading down $7.37 or -0.39% at $1858.81.
- Spot silver is down $0.19 or -0.69% at $27.66
- The price of bitcoin traded above and below the $40,000 level it currently trades up about $112 at $39,965
Some technical levels to eye in the new trading day:
- EURUSD: EURUSD stalled its fall near the 1.21000 level today. There is a swing area at 1.2099 to 1.2106. The current price is up at 1.2125. The up-and-down price action today as helped to push the 100 hour moving average lower. It currently is right at the 38.2% retracement of the most recent range from the June 9 high. That level comes in at 1.21398. Stay below that moving average and the sellers and buyers will continue to battle out between the 1.2000-1.2106 level below and the 100 hour MA/38.2% retracement above at 1.21398.
- GBPUSD: The GBPUSD broke below the most recent swing lows between 1.4085 from June 3, and Monday's low at 1.40692. The break triggered stops and push the price down to 1.40335, the lowest level since May 13 at the NY open. However, the price quickly started to rebound and moved back above those levels. The current price is trading at 1.4080. Although the price is still near the lowest levels since mid-May, it will take a move back below 1.40692 (low from yesterday) to give the sellers more control and confidence that the run lower today, wasn't just an aberration. On the topside, the 100 hour moving average currently comes in at 1.4116. The high price for today did stall right at that moving average level (it was higher at the time). Ultimately it would take a move above the 100 hour moving average to give buyers even more control.
- USDJPY: The one thing you can say about the USDJPY is the 18 pip trading range today will likely be more tomorrow. The current price is at 110.05. There is a swing area between 109.84 and 109.952. Get below that area and some of the bullish bias seen since last Friday starts to come out of the market.
- USDCAD: The USDCAD moved up to test the May 13 swing high price at 1.22027 (the high reached 1.2203) but could not sustain any momentum above the level. Teh price has moved back down toward the high price from last week near 1.2178. That level is also the 50% midpoint of the range since the May 4 high. Get below that level and there could be more downside probing as traders tilt more to the downside after testing the May 13 swing high.
