Forex news for New York trading on July 26, 2019
- Trump says he may tax French wines if digital tax is enacted
- S&P and NASDAQ indices close at record high levels
- CFTC Commitment of Traders: Positions are marginally changed
- The earnings calendar for the week starting July 29
- WTI crude oil futures settle at $56.20
- Trump: France's digital tax demonstrates a lack of commitment to OECD negotiations
- Baker Hughes oil rig count declines to the lowest level since February 2018
- European share end the week mostly higher
- NY Fed Nowcast model sees 3Q GDP at 2.21% vs 1.88% last
- Trump rejected Navarro's options for devaluing the dollar: Politico
- Trump puts the blame on the Fed (again)
- CNBC Kayla Tausche: Trump convened Cabinet meeting to discuss ideas to weaken USD
- WH Kudlow: Rules out any currency intervention
- ECB and SNB say formal gold selling pact no longer needed, won't be renewed
- US Q2 advance GDP +2.1% vs +1.8% expected
- The USD is the strongest. The AUD is the weakest as NA traders enter for the day
a snapshot of other markets near the session close is showing:
- Spot gold rose $2.91 or 0.21% $1417.44
- WTI crude oil futures rose $0.12 or 0.23% and $56.14
- Bitcoin on Coinbase down $34 at $9841. Last Friday the digital currency traded at $10,536
In the US stock market, the major indices closed with strong gains. The NASDAQ and S&P index both closed at record high levels. European shares closed mostly higher/but mixed.
The final numbers are showing:
- The S&P index closed up. The high reach 3027.98. The low extended to 3012.59
- The NASDAQ index closed up The reached 8339.64. The low extended to 8291.12.
- The Dow closed up 62. The high reached 27213.70. The low extended to 27123.125
Below are the %changes, %highs and %lows for the major indices in North American and Europe. In the US, the Nasdaq rose 1.11% but that was beat by the smaller cap Russell 2000 index which gained 1.25% today. In Europe, the UK FTSE rose 0.80%, but the Spain, Italian and Portugal stocks declined.
In the US debt market, yields are ending marginally lower with a flatter yield curve (30 year yields fell -1.7 basis points, while two year yields were down only -0.6 basis points).
In Europe the benchmark 10 year yields ended the session mixed, with the larger industrial countries seeing investor demand, while the more riskier southern Mediterranean countries seeing investors fleeing.
Today was GDP day in the US. The 2Q advanced report was released (it will have I think 3 other revisions) with annualized growth pegged at 2.1%. That was above economists estimates or 1.8% and above the estimates from the NY Fed's GDP model (1.3%) and the NY Fed's model (1.6%). The core PCE price index did come in weaker at 1.8% vs 2.0% estimate but it beat the 1Q rate of 1.1%. The GDP price index was higher at 2.4% vs 2.0%. Not so great in the report was that inventories, trade and busines investment slumped. The great in the report was that consumption surged 4.3% (vs 4.0% estimate and 1.1% in the 1Q).
The dollar, which was higher coming into the session, got even stronger in the NY session (but gave up some of those gains into the close). Neverthess, it was a good day for the dollar.
In addition to the GDP not hurting the greenback, there was chatter from White House's Larry Kudlow who said that the US rules out intervention on the dollar, and added that he disagrees with the notion that Trump wants a weaker dollar.
Those comments were followed by a report from CNBCs Kayla Tausche that Trump convened Cabinet meeting to discuss ideas to weaken USD. The meeting that took place was later explained to be a presentation by Peter Navarro who advocated for a lower dollar, but that the Pres. put the kaboosh on the idea (and even stopped the presentaton short of its conclusion) after strong opposition from Treasury Secretary Mnuchin and Kudlow. Later in the day, Trump seemed to have turned a new leaf on the his thoughts on the dollar saying:
- US has a very powerful dollar
- Dollar is currency of choice, euro is not doing so well, and my favorite
- It's a beautiful thing to have a strong dollar
Larry Kudlow must have finally gotten his full attention.
A look at some of the major currencies:
- GBPUSD. The GBPUSD was one of the weakest of the currencies today, trending lower to the lowest level in 27 months and closing near the session lows at 1.2375 (the high today was up at 1.2460). Last week, the pair closed at 1.2496 and peaked at 1.25198 on Wednesday. The prior low was earlier in the month at 1.23815. That level will be eyed in the new trading week as a barometer for the dip buyers, or the sellers looking for more of an unravel. When you go out the day at the year's low, the new week will make the next judgement for the pair.
- EURUSD. The EURUSD this week took out the May 2019 year low at 1.11064 yesterday when it printed 1.11007 after the ECB rate decision and start of the Draghi press conference. However, the new low could not be sustained and the price shot back higher to 1.1187 before settling mid range in trading yesterday. Today the pair moved lower but could not reach the 1.1100-06 lows (the low reached 1.1111 and we are closing at 1.1128). The 100 hour MA is falling and not far above at 1.1152. As that MA comes lower, the traders will have to make up their minds on whether the sellers had their shot and failed (in which case the 100 hour MA is broken to the upside), or make the judgement that the price has come this far, so it might as well extend the low trading range for the year (469 pips in total) and do more downside exploring.
- The USDJPY extended to the highest level since July 9th, reaching 108.82. The pair is going out at 108.68. There were two separate hourly bar highs at 108.81 and 108.82, with each rejected. For the week, the pair moved from a low of 107.69 on Monday. to the high today. Despite the fact, that the range for the week was only 113 pips, it did stay above it's 100 hour MA since breaking above on Tuesday. That MA comes in at 108.276 currently and moving higher.
