Forex news for North American trading on November 30, 2016.

  • US stocks end the day at the lows
  • AUD: 2 ways to short. Morgan Stanley
  • US crude oil futures settle at $49.44
  • Dallas Fed trimmed mean PCE for October 2.1%
  • Feds Beige Book: Strong dollar reported as a headwind/slight upward pressure on prices
  • Gold taking it on the chin today
  • Fed's Powell: Until rates reach 1.5%, the Fed in risk management mode
  • Fed's Mester: Raising rates would be a prudent step
  • Russia's NovaK: Russia to join OPEC. Cut output by 300K B/D
  • Nigeria/Iran look in crystal ball and see $55-$60 area for crude
  • Oil up, but CAD weaker against the USD.
  • Al-Sada: All indications are we will get an agreement with non-OPEC #oott
  • USDJPY moves up to test the March highs (and backs off).
  • OPEC live: We have been able to reach an agreement #oott
  • Crude oil inventories in the current week comes in weaker at -884K vs 1500K estimate
  • Latest Atlanta Fed GDPNow down to 2.4% from 3.6% on November 23
  • October 2016 US pending home sales 0.1% vs 0.2% exp m/m
  • November 2016 US Chicago PMI 57.6 vs 52.0 exp
  • Indonesia booted from OPEC - Reuters #oott
  • Commerce secretary nominee Wilbur Ross: There will be tarriffs..
  • More from Fed's Kaplan: Would advocate further rate hikes in 2017
  • More OPEC: OPEC deal said to be effective in January
  • ECB sources: ECB more likely than not to extend QE in December
  • Canada Industrial Product prices for October rise +0.7% vs +0.6% est.
  • October 2016 US personal income 0.6% vs 0.4% exo m/m
  • Canada Q3 GDP annualized +3.5% vs +3.4% expected
  • OPEC agrees to cut by 1.2 mbpd to 32.5 mbpd - delegate
  • November 2016 US ADP employment 216k vs 165k exp
  • The strongest and weakest currencies as NA traders enter for the day

In other markets:

  • US stocks end the day at the lows. S&P index fell -0.27%. NASDAQ composite index fell -1.05%, the Dow industrial average rose 0.01%.
  • US 10 year note yield rose by 9.7 basis points to 2.3882%. To your note yields increased by three basis points to 1.119%
  • Spot gold tumbled $14.50 to $1173.71 – a decline of 1.22%
  • Crude oil futures soared by 8.29% to $48.97 currently. The high price extended to $49.90. Brent crude increased by 8.82% to settle at $50.47

OPEC was the alpha dog in trading news today. They agreed to cut production for the first time in 8 years and rid the world of record global inventories. The deal not only included OPEC but also non-OPEC countries including Russia.

The deal involved reducing output by 1.2M barrels a day by January or 32.5 million barrels. Iran was able to escape cuts as they recover from sanctions. They will be allowed to raise output to a 3.8 million barrels. Saudi Arabia was looking for a number close to 3.7 mbpd. Saudi Arabia will reduce output by 486,000 barrels a day to 10.058M a day. Iraq agreed to cut their production by 210K.

Other cuts include:

  • United Arab emirates: -139K
  • Kuwait: -131K
  • Non OPEC Russia will look to cut it's production by -300K

Other non-OPEC oil producers will meet in 10 days to discuss cuts from them.

The announced cuts led to a sharp rise in Crude oil (up over 8%). US oil companies stocks soared but should oil prices remain elevated, it could be a drag on the US economy as consumers feel the impact of higher prices. The positive - for the US - is higher prices may encourage producers to increase their production which could offset the cuts. Of course there is always the cheating that typically surfaces after a while. For the time being though the oil trades applauded the deal and raced Crude oil prices higher.

How did the currency market react?

The USD and CAD benefited while the JPY was the whipping dog. The dollar -which typically moves in the opposite direction of oil - instead rose with the price of oil today. The reason? Higher interest rates on expectations for higher inflation. In the US, the 10 year note yield moved to 2.38% near the close, up nearly 10 basis points on the day (it was also at the highest level in nearly 16 months). In Europe German, French and UK yields were up 5 basis points. With yields up in the US and Europe, traders exited the lower yielding yen trades in favor of the higher yielders. The carry trade was on. Some of the largest movers of the day were in the JPY complex with GBPJPY surging by 1.91%, CADJPY higher by 1.82%, EURJPY higher by 1.26% and the USDJPY up by 1.81%. Of course the CAD was a beneficiary on the back of being a large exporter of oil. The CADJPY was also a big gainer rising by 1.82%

Where do we stand with regard to some of the favorite currency pairs from a technical perspective?

The EURUSD fell below the lows from Monday and Tuesday at the 1.0564 area. The low for the day extended to 1.0552 but quickly rebounded back higher. The pairs push higher sent the pairs price up to test the 200 hour moving average at 1.0602 level in the 100 hour moving average at the 1.0607 level. The high corrective price stalled at 1.0602. In the new trading day, the market will need to resolve the support at 1.0564 and resistance at 1.0602 – 07 conflict. A break of either extreme should see momentum in the direction of the break.

As mentioned the USDJPY benefited from the carry trade (US yields sharply higher). However, even that trade ran into technical resistance against the highs from March 2016 at the 114.44 and 114.54 levels. The high for the day right at the upper extreme, and there was a rotation back down toward teh 114.00 area (low came in at 114.06. Close support in the trading day will be eyed at the 114.00 level. Find buyers there and the USDJPY could see more of a squeeze higher. Be aware.

The GBPUSD hourly chart is somewhat ugly (see chart below). There are lots of ups and downs and red and green bars. However on the top, the last three days have connected highs. On the downside the low from Tuesday stalled at a lower trend line. Today, the lows fell below the 200 hour MA (green line in the chart below) at 1.2439 but each look lower, failed. So there are sellers above against the trend line, and buyers below against the 200 and perhaps 100 hour MAs at 1.2439 and 1.2458 respectively. In between (the yellow are in the chart below) is "neutral area" where the price chopped higher and lower today with no discernible winner.

IN other pairs:

The USDCAD stalled against the converged 100 and 200 hour MAs at 1.3455 area. You might expect that the USDCAD would have fallen (CAD stronger) today on the back of stronger oil, but the pair was near unchanged. If the pair is going lower because of rising oil, it CANNOT move above the MA levels (and stay above) at 1.3455. It is currently trading at 1.3428.

The NZUDUSD found support buyers against the 100 hour MA (it is rising and at 0.70774). The 50% retracement of the move up from November 24th low was also a support level on the downside. That level comes in at 0.70696 (which was the low for the trading day).

The AUDUSD peaked at the start of the day against the high from Tuesday (at 0.74968). The pair tumbled lower through the 100 hour MA at 0.7452, the 200 hour MA at 0.74166. The 50% retracement of the move up form the Nov 21 low at 0.74038. That last level is close resistance. If that does not hold a rally, I would expect the 200 hour MA to cap rallies in the new trading day.

GBPJPY. The 200 day MA comes in at 143.81 today. The high reached 143.25 today. The pair has not traded above the 200 day MA since December 7th 2015 - nearly 1 year ago. KEY LEVEL.

The EURJPY has already breached the 200 day MA 5-days ago (at 118.52 now) and stayed above on the retest on Monday and Tuesday. The pair is looking to test the swing lows from March and April (at 121.70 and 121.47 respectively) AND the 38.2% of the move down from the June 2015 high at 121.56. That area is KEY RESISTANCE in the new trading day.

Below is a near end of day snapshot of the % changes of the major currencies vs each other