The USD is mostly lower in up and back-down trading today. The US yields are mixed and so are the major US stock indices.
Pres Elect Trump said that a blanket 25% tariff on Canada and Mexico would be one of his first executive orders, and would charge China 10% on all goods that led to the initial spike in the USD in the day today before the trends reversed to the downside. .
IN Europe, ECB's Rehn, expressing a hawkish stance, highlights that salary and services inflation remain persistent, with the risk of inflation moderating more slowly than anticipated. He expects the Eurozone economy to grow slowly and recover gradually. Rehn suggests continuing to cut rates if upcoming data and forecasts align with the current inflation and growth outlook. Furthermore, his assessment indicates that Europe is likely transitioning toward neutral rates by early spring.
ECBs Villeroy said that Trump policies should be limited to inflation but interest rates could be impacted, while deGuindos said that focus is shifting to slower growth.
Here is a summary of today's economic and event calendar. :
- 8:05 AM (CAD): Gov Council Member Mendes speaks
- 9:00 AM (USD):
- S&P/CS Composite-20 HPI y/y: Forecast at 4.7% (previous 5.2%).
- HPI m/m: Forecast at 0.3% (previous 0.3%).
- 10:00 AM (USD):
- CB Consumer Confidence: Forecast at 111.8 (previous 108.7).
- New Home Sales: Forecast at 725K (previous 738K).
- Richmond Manufacturing Index: Forecast at -10 (previous -14).
- 1:00 PM (USD)
- US 5 Year note auction
- 2:00 PM (USD): FOMC Meeting Minutes (high impact).
Looking at the US debt market, yields are mixed in a early US trading with a steeper yield curve:
- 2-year yield 4.239%, -1.2 basis points
- 5 year yield 4.168%, -0.5 basis points
- 10 year yield 4.275%, +1.2 basis points
- 30 year yield 4.466%, +2.0 basis points
The US stock futures are implying a mixed opening in the major indices.The Dow closed at a record yesterday. The Russell 2000 close less than a point from a record closing level although yesterday a new all time intraday high was reached at 2466.48.
- Dow industrial average -46.57 points
- S&P index +15.38 points
- Nasdaq +65.61 points
in other markets:
- Crude oil is trading at $69.25
- gold is up $14.63 or 0.56% at $2639 after tumbling yesterday by 3.35%
- Bitcoin fell sharply yesterday and continued the decline today. It is currently down around $700 at $92,338.
Technically speaking:
- EURUSD: The EURUSD moved lower on the back of the tariff comments from Pres. elect Trump at the start of the new trading day. The price moved to a low of 1.0424 which filled most of the gap from the Friday close at 1.0414, but still short. The price rotated back higher and extended back above the 100 hour MA and topside trend line. IN the current hourly bar the price moved above the 200 hour MA (green line) at 1.05256. The current price is at 1.0537. Staying above the 200 hour MA would be the best case technical scenario for buyers looking for more upside. A more conservative risk would be the 100 hour MA. ON the topside, the 38.2% of the move down from the November high comes in at 1.05628 and represents the next upside target for buyers. Getting and staying above the 38.2% is the minimum retracement level that is needed to prove the buyers mean business. Absent that, and the rebound is just a plain-vanilla variety after a trend move lower.
- USDJPY: The USDJPYs push higher initially with the Trump comments were reverses but not with it's share of ups and downs intraday today (see hourly chart below). What sticks out technically, is that yesterday the high price of the day stalled near the 100 hour MA (blue line) keeping the sellers in control. The price action traded above and below the 100 bar MA on the 4-hour chart and a swing area going back in time at 153.88 (see green circles). The price over the last few hours have moved away from those levels and to new lows for the day and new week. In the process, the price is now also cracking below a swing area between 153.26 to 153.46 (see red circles). Sellers are making a technical play. For sellers looking for more downside, staying below the swing area (up to 153.46 is the best case scenario but more conservative sellers may look to 153. 88 as the barometer for buyers and sellers. Buyers, conversely, would be encouraged by a move back above 153.46 with the 153.88 as the "more confidence defining" level to get and stay above goinf forward. For now, sellers are in control.
- GBPUSD: The GBPUSD moved lower (higher USD) in the early hours in sympathy to the Trump tariff comments, but after stalling the fall ahead of 1.5300 (the low reached 1.5306 just above of that level). The snapback has now moved back above the 100-hour MA at 1.25899 and has moved to the high of a swing area between 1.2596 to 1.26137. The 200-hour MA at 1.26248 remains a key target to get to and through to increase the bullish bias. The last time the price moved above the 200 hour MA was back on November 8th. Move above that, and the traders would target 1.2660 near the swing high ceiling from last Thursday. Above that and the 38.2% would be eyed near the natural resistance at 1.2700 area. The buyers are trying to make a play above the 100 hour MA. Can they keep the momentum going with a break above the 200-hour MA.
- USDCHF For the USDCHF, the price traded above and below the 100 and 200 hour MAs but in the European session fell and has been able to extend lower - moving away from those MA barometers. The 100 hour MA comes in at 0.8871 and the 200 hour MA comes in at 0.8865 and are now resistance for sellers. Staying below keeps the seller in play. On the downside, there is a swing area between 0.8816 and 0.88262. Included within that area is the 38.2% retracement of the November trading range at 0.88262. Below that is the 200 day moving average at 0.88211. If that key area can be broken, the 100 bar moving average only four hour chart comes in at 0.880580.
