Forex news for North American trading on July 22, 2021
- WTI crude oil futures settle at $71.91
- Cable battles back from a potential breakdown
- S&P 500 touches the highest level of the day
- Oil is now higher on the week as it erases Monday's rout
- Still expecting modest USD upside amid market turbulence - BofA
- Oracle cloud issue causes widespread website issues
- Major European indices close mostly higher for the third consecutive day
- Weidmann and Wunsch said to oppose new ECB rate guidance
- US 10-year yields fall below 1.25% as CDC reports on rising US covid cases
- KC Fed manufacturing index 41 vs 30 prior
- US June existing home sales 5.86 vs 5.90m expected
- Eurozone July consumer confidence -4.4 vs -2.5 expected
- Falling new home orders underscore supply constraints in US economy
- The euro climbs to the highs of the day. No dovish magic from Lagarde
- Lagarde Q&A: We want to see at least 2% inflation well-ahead of our projection horizon
- ECB's Lagarde opening statement: Delta a growing source of uncertainty
- Chicago Fed June US national activity index +0.09 vs +0.29 prior
- US initial jobless claims 419K versus 350K expected
- The GBP is the strongest and the CHF is the weakest as NA traders enter for the day
The ECB kept rates unchanged and the Pres Lagarde commented that:
- We want durable 2% inflation. It can oscillate a bit
- Inflation cannot be below 2% for rates to rise
- No one wants to tighten prematurely
Although no one wants to tighten prematurely, Weidmann and Wunsch said they oppose the new ECB rate guidance. More specifically they objected to the length of the commitment and the lack of clarity.
The different views on the board of governors was congruent with the price action in the EURUSD post the rate decision. The price of the EURUSD chopped in an up and down range of about 42 pips immediately after the event. That range was was later widened to 72 pips (with extensions higher and lower) by the end of the day. That volatile movement took the price of the pair above and below the 100/200 hour MAS on a number of occasions, with the last effort heading to the downside. Although lower on the day by about 26 pips, the lowest low was able to stay above the low from Tuesday's trading at 1.1755 and the low from Thursday at 1.17512. The low price reached 1.17567. The price is trading at 1.1768 near the end of the day.
In other news today, the existing home sales came in a touch weaker than expectations at 5.86 million versus 5.9 million. Supply remains relatively low at 2.6 months versus 2.5 months in May. In other real estate news,D.R. Horton, the largest US homebuilder, reported strong earnings today but shares fell after it said sales orders tumbled by 16.5% in the quarter. They cited labor shortages and higher lumber prices. The price of lumber however has started to rotate back to the downside and trades near end of 2020 levels at $716.90 after surging to a high of $1733 reached on May 10.
In the forex market today, the GBP is ending as the strongest of the majors followed by the AUD. The EUR and CHF are fighting for the weakest.
GBPUSD; For the GBPUSD, it rose above the 50% retracement of the months trading range at 1.17403 and stay above that level in the New York session (it tested the level and found buyers). The price also moved above its 200 hour moving average for the first time since last Friday's trade. That moving average comes in at 1.37668. The price is closing near that level.
EURUSD: As mentioned above, the EURUSD traded down toward the lows from Tuesday and Wednesday at 1.1755 and 1.17512, but could not extend below those levels today (the low reach 1.17567). The 100 hour moving average is higher at 1.17877. A move back above that level will be needed to tilt the bias more to the upside. Conversely, a move below 1.175121 in Friday's trade, should lead to further downside momentum. The low price for all of 2021 came in at 1.17035 back on March 31. Getting to that level is a possibility in the new trading day.
USDJPY: The USDJPY traded in a narrow 35 pip trading range all day with support against the 200 hour MA at 110.04 and resistance against the 50% midpoint of the July trading range at 110.357. The prices closing the day near 110.193. A move below the 200 hour MA would increase the bearish bias with the 100 hour MA at 109.89 as the next target to get to and through. On the topside, a move above the 50% would have traders looking toward the high from last week at 110.693.
USDCAD: The USDCAD was a another currency pair that saw a below average trading range today. The low to high trading range came in at 65 pips. That was well below the 101 pip average over the last 22 trading days. From a technical perspective however, the price did remain below its 200 hour moving average at 1.25921. That moving average was tested on at least 11 hourly bars today. Sellers kept a lid on the pair against that moving average level. On the downside, the 1.2525 level was the low price yesterday (and the low for the week). The low price today was just above that level at 1.25283. Needless to say, getting above the 200 hour moving average at 1.2592, or moving below the week's lows at 1.2525 are the technical levels that should help define the next momentum move in the pair.
In other markets today, US stocks advanced for the third consecutive day with the NASDAQ index leading the way in relatively quiet markets:
- Dow industrial average rose 25.35 points or 0.07% yo 34823.35
- S&P index rose 8.79 points or 0.20% at 4367.48
- Nasdaq index rose 52.64 points or 0.36% at 14684.59.
In the European markets, the major indices moved higher with the exception of the UK FTSE 100 which fell -0.43%.
In the US debt market, the 10 yield is ending the day unchanged after trading as low as 1.233% and as high as 1.317%. The 30 year yield fell -1.1 basis points to 1.919% after trading as high as 1.981% earlier in the day.
