Forex news for North American trading on December 7, 2016

  • Ding. Ding. Ding. S&P and Dow indices close at record highs
  • US consumer credit rises by 16.018 billion
  • Forex technical analysis: AUDUS has an impressive rebound after dismal GDP
  • Brexit news: UK lawmakers back government timetable to trigger EUs article 50
  • USDJPY moves back toward the resistance area
  • Classic consolidation pattern in EUR/USD points to more gains
  • 5 reasons to bet against the Canadian dollar after the BOC - Nomura
  • Jamie Dimon named head of The Business Roundtable
  • Forex technical analysis: NZDUSD respects recent highs
  • Another super day in the life of European stocks
  • US EIA weekly oil inventories -2389k vs -1500k exp
  • JOLT job openings for October 5.534M vs 5.500M estimate
  • BOC leaves rates on hold and give themselves a pat on the back
  • Tepid start for US stocks at the open while closing year forecasts get hiked
  • Russian spokesman: All companies supported proposals on production cuts
  • Forex technical analysis: GBPUSD bounces off 50%
  • Brexit's Davies expects parliament will have a vote on final EU deal
  • The strongest and weakest currencies as NA traders enter for the day
  • Trump's happy to govern by Twitter

In other markets:

  • S&P index +29.29 points or 1.32%
  • NASDAQ composite index +60.761 points or 1.14%
  • Dow industrial average up 297.84 points or 1.55%
  • 10 year bond yield 2.3419%, -4.6 basis points
  • Spot gold plus $3.54 to $1173 - +0.3%
  • WTI crude oil futures $49.84 $-1.09 or -2.14%
  • The strongest currency is the NZD. The weakest currency is the GBP. The USD was down against all major currencies with the exception of the GBP.

Stocks once again marched higher in trading today as the Trump rally continued. Today, the President elect was named TIME Magazine's Person of the Year, and in the article he said "I am going to bring down drug prices". That was enough to send the biotech, and pharma stocks down but not enough to stop another round of buying in industrial s, banks, even techs today. The Dow rose by near 300 points or 1.55%. The S&P added 1.32%. Remember, yesterday the deal maker announced an agreement with Softbank to invest 50B in the US (with 50K new jobs). He also bashed Boeing for the $4B price tag for the new fleet of Air Force One planes. Today Boeing was up 1.9% on the day. So far all Trump touches turns to gold and that is somewhat scary. Feeding a egomaniac with successes, will only make the roller coaster ride go faster, with more tweets, potentially more bullying and that can lead to problems (he may not win them all). Hold on folks, but so far, so good.

The early parts of the Trump rally (that is to the end of November) had the dollar moving higher and interest rates also moving higher. The last 5 trading days has seen the US 10 year yield move down from 2.492% to a low of 2.338% today. The dollar index - since peaking at 102.05 on November 24th - traded down to 100.14 today (it reached a low of 99.85 on Monday). Is the story changing? For stocks, corporate tax rates lower. Windfall gain. Decreased regulation? Windfall gain. Fiscal spending. Windfall gain. Higher rates. Windfall for banks especially if Fed is slow to ease (or says they will be). A higher dollar is not a windfall internationally, but if the deal maker can make better trade deals without getting in a tariff trade war, that is ok. There are a lot of risks but so far so good.

In the currency markets today, the dollar was lower mainly with the exception of the GBPUSD. The GBPUSD fell on the back of Brexit concerns. Technically, the pair fell below the 100 hour MA (currently at 1.26697) but found a stall point against the 200 hour MA (currently at 1.25758 - the low reached 1.2570). The pair rallied off that low and closed around the 1.2626 level - right between the 100 hour MA above and the 200 hour MA below. REMEMBER, this currency pair led the way lower on the back of Brexit and then the October Flash crash. The move down from the Flash Crash started at 1.2620 - about right where we are right now. The 100 day MA comes in at 1.2781. You can argue either way for this pair going forward. So let the technicals create the story. On the topside 1.2700 and then 1.2781 are key levels. Below a break of the 200 hour MA at 1.25758 (and rising) is more bearish.

The USDJPY is another pair that is bopping between its 100 hour MA above, and its 200 hour MA below. The 200 hour MA on the downside comes in at 113.44. The low stalled right near that level today. The 100 hour mA comes in at 113.90. Toward the end of the NY session, the price moved up to 113.99 (just above the 100 hour MA level0, but backed off. We trade at 113.72 at the close - between the two MA levels. There has not been a close below the 200 hour MA on the hourly chart since November 9th. That is a key technical level in this current battle between the two MAs Breaking and staying below is more bearish. NOTE the words "and staying below". Be careful for failed breaks (but we won't know until we know).

The EURUSD is waiting for the ECB tomorrow. The expectations are for an increase in the time for QE. The decision will be at 7:45 AM ET. Draghi will speak at 8:30 AM ET/1330 GMT. He normally speaks for an hour or so. The thing about his press conferences a headline can send the market higher, and another can send it back lower. That can be frustrating. The key technical level on the topside is 1.0815-21. The lows from March 2016 and the 38.2% of the move down from November come in that area. On the downside, the 1.0697-1.0708 will be a level to eye below. The 1.0697 is the low for the week and the 1.0708 level is the "old" 2016 low from the 1st few trading days of the year. Those will be the levels in play for bulls/bears.

The NZDUSD is ending the day at the highs. Governor Wheeler in a speech toward the end of the session was somewhat bullish on the prospects for growth/inflation. The 100 day MA and the 50% of the move down from the November high will be key levels on the topside in the new tradnig day. They come in at 0.7195 and 0.7186 respectively. The price has not been above the 100 day MA since November 11th.

The AUDUSD was able to shrug off the decline from the horrible GDP yesterday and closed higher on the day. The 38.2% of the move down from the November high comes in at 0.74889. The last two weeks have seen peeks about that level on 4 separate occasions (the last one on Friday), but each stalled ahead of the 0.7500 level. There is something about the 0.7500 level (which means a break should solicit stops). THe 200 day MA at 0.7530 would be the next target followed by the 50% at 0.75439 (move down from November high) and the 100 day MA at 0.7575. No move above 0.7500 today and expect a rotation back lower.

Stocks look good but the dollar is not really following them the way they did when the Trump rally began. We may be working off a little overbought (dollar) situation. The technical levels will help tell the story eventually. In the meantime, the ECB decision (and subsequent volatility) will be the story over the next 24-hours. Buckle up for a ride in that currency pair.

Below is the near end of day snapshot of the % change of the major currencies vs each other.