Forex news for North American trading on September 17, 2020

The US dollar for the most part had an up and down day with earlier gains being erased - and then some - by the day's close.

The initial moved for the greenback was to the upside in the Asian session. By the time London/European traders came in, the greenback had started to erode. Nevertheless, at the start of the North American session, most of the major currencies were near/close to unchanged on the day.

The exceptions were the against the GBP. The pound was lower/dollar higher on the back of hints that the BOE might look to go negative on rates at some point.

The greenback was lower vs the JPY. The catalyst for that pair, was a combination of stock market declines (flight into the "relative safety of the JPY"), and the Bank of Japan revising up its economic assessment and assessment for exports and output.

However, as things progressed in the NY session, so did the USD selling.

For the GBP, it got a boost on comments from Ursula Von Der Leyen (the president of the European commission), who said that she was "convinced" that the EU-UK trade deal is still possible. That "convincing" comment, spiked the GBPUSD to new session highs, and back above its 200 hour MA at 1.2933 (which it stayed for the rest of the day). The pair is trading well above that MA level at 1.2985. Getting above the natural resistance level at 1.3000, and the high from yesterday at 1.3006 will be eyed by traders in the new day (and final session for the week - TGIF to our Asian friends!). A move back below its 200 day moving average would not be a good way to end the week.

Below are the rankings of the major currencies heading into the close. The NZD is ending the day as the strongest of the majors. The USD (as mentioned is the weakest. However, note that relatively speaking, the currencies are clustered close together at the close. The price action was also full of ups and downs as traders chopped each other up.

Forex news for North American trading on September 17, 2020

On the economic front today, US data was somewhat neutral:

  • US initial jobless claims came in a touch higher than expectations at 860K vs. 850K estimate. However continuing claims were stronger at 12628K vs 13489K.
  • Housing starts and building permits were the miss to the downside. However, housing data has been stronger is people move out of the cities into the suburbs as a result of the coronavirus. Low interest rates (and promises for them to remain low) are a powerful combination. On the negative side, builders are reluctant to go all and given the Covid situation and relatively high unemployment. High lumber prices are also a negative for homebuilders. They don't want to get caught holding the lumber so to speak.
  • Philadelphia Fed business activity index came in as expected at 15.0 which was below the 17.0 last month. The expectations six-month forward were stronger than expected.
  • On the Covid front, case count moved higher in the US as did deaths. France had the highest level of new cases which is a worry for the European continent.
  • The OPEC+ meeting did not announce any production cuts. However, members promised to get production back to normal. There also some warning shots to short speculators including one from Saudi's oil minister who said "Those who want to gamble on the oil market (to the downside), will be ouching like hell". That certainly is a different way of saying "Don't fight OPEC".

In the US equity market today, the Dow industrial snapped its 4 day winning streak. The NASDAQ index an S&P index also closed lower. The final numbers are showing:

  • Dow industrial average, -0.47%
  • S&P index -0.84%
  • NASDAQ index, -1.27%

In the US debt market, yields are ending lower but off the lowest levels of the day

  • 2 year 0.135%, -0.2 basis points
  • 5 year 0.277%, -0.4 basis points
  • 10 year 0.688%, -0.8 basis points
  • 30 year 1.438%, -2.0 basis points

Technically speaking for some of the major currency pairs:

  • EURUSD: The EURUSD is closing the session above its 200 hour moving average at 1.18277, its 100 hour moving average at 1.18423, giving the buyers the bias tilt (the pair is currently trading just above the its 100 hour moving average at 1.1846). Stay above those moving averages keeps the buyers in control in the new trading day.
  • GBPUSD: The GBPUSD at share of ups and downs in trading today, but moved above its 200 hour moving average on the Von Der Leyen comments and stayed above. That moving average currently comes in at 1.2933. Stay above is more bullish. On the topside the high for the week was at 1.3006. Getting above that level opens up the door for a run toward the 38.2% retracement of the September trading range at 1.30365.
  • USDJPY: The USDJPY it is closing lower for the 4th consecutive day this week. Recall last week the weeklong trading range was 59 pips. The trend move to the downside this week has seen the range expand to 164 pips so far. The pair remains between a downward channel on the hourly chart. The upper trendline cuts across at 104.84 (and moving lower). It would take a move above that trend line to take some of the bearish technical bias out of the pair.
  • USDCAD: The USDCAD was higher for most of the day and staying above its 100 and 200 hour moving averages at 1.3179 at 1.3173 respectively. However the last 2 hours saw the price crack below those levels, and close in the red. The pair is currently trading at 1.3167. The low price extended to 1.3149. In the new trading day, it would take a move back above the moving averages at 1.3173 and 1.31793, to shift the bias back higher. A move below the low from Tuesday at 1.3134 and the Thursday low at 1.31263 (which was also the 50% midpoint of the September trading range) would tilt the bias more to the downside.

TGIF.