Forexlive Americas FX news wrap: Dollar moves lower as Fed speak this week sinks in. PS All time high closes in US stocks Author: Greg Michalowski | Category: News
Forex news for NY trading on July 12, 2019.
- Major indices all close at record highs (and close at the highs for the day)
- CFTC Commitment of Traders: The GBP shorts increased and is the largest spec position of the majors
- Gold higher as USD falls.
- WTI futures settle the day (and for the week) up $0.01 at $60.21
- Fed's Barkin: Inflation is low. That's a victory, not a defeat
- Baker Hughes oil rig count 784 versus 786 estimate
- Stocks at all time highs. Earnings season starts next week
- Fed's Evans speaks to reporters: Low inflation, expectations show policy to restrictive
- European shares little changed to end the week
- NY Fed GDP Nowcast remains unchanged at 1.5% in current week
- Treasury Secretary Mnuchin: US may hit debt limit by early September
- Fed's Evans: Labor market seems quite vibrant, but…..
- Labor Secretary Acosta resigns amid pressure from Epstein sex trafficking case
- Bank of Italy sees Italian GDP 0.1% this year, 0.8% in 2020 and 1% in 2021
- The art of the deal. Pres. Trump tweeting
- US PPI final for June demand YoY 1.7% versus 1.6% estimate
- The CHF is the strongest and the EUR is the weakest as NA traders enter for the day
In other markets:
- Spot gold is trading up $11.36 or 0.80% at $1414.96. The yelllow metal was helped by a lower USD. Technically, the price at the session lows, stalled near the 100 hour MA support level, giving the buyers more confidence (and forcing the sellers to buy). See technical post here.
- WTI crude oil future are trading at $60.26, up $.06 or 0.10%. The high today reached $60.74. The low extended to $59.93. For the week, the price was up over 4.5% helped by a much larger than expected drawdown of inventories on Wednesday. For a technical look at the pair CLICK HERE.
- The price of Bitcoin is trading up $447 at $11600 despite negative comments on cryptocurrencies from Pres. Trump.
The major stock indices moved to new record highs just ahead of what is the start of the earnings calendar on Monday. Moreover the S&P index closed above the 3000 level, after toying with the level on Wednesday and Thursday. European shares closed mixed with the German Dax and UK FTSE down marginally.
After two days of loads of Fedspeak that did not stop the market from expecting a Fed cut in July, today was a "digest the words" type of day. That feeling, led to a slightly softer tone for the dollar despite higher than expected PPI.
However, when Fed's Evan's (a new voice this week) started chirping in Chicago, the dollar started to take on an even weaker tone. Comments included:
- Business investment weaker than expected
- Sees growth for 2019 around 2% which is close to what he regards as sustainable trend
- Business investment has been weaker despite fiscal aid
- Nervous about under running inflation objective
- Policy is currently about neutral but could be more accommodated if the aim was to lift inflation
- A couple of rate cuts could lift inflation by 2021
- Framework is adequate as long as policymakers are going to actively push for inflation of 2% to assure target is met symmetrically
- Hard for businesses to make long-term plans given uncertainty around trade landscape
- Slowing foreign growth is going to dampen the US economy
- Rsk management approach means being a little more accommodative in case downside risks materialize, but we don't want to go too far
- Now am more concerned policy isn't on accommodative side
- Takes seriously the current rates may be more restrictive than should be
- Could argue for rate cuts on inflation, global slowdown
He seemed to get more and more dovish as he went along.
Overall, the votes are there for a rate cut in July and if Charlie Evans, Vice Chair Williams, Chair Powell, Thomas Barkin, et. al. take the chatter from this week into the meeting at the end of the month, the bias may shift even more to the dovish side for other meetings this year.
Below is a snapshot the rankings of the strongest and weakest currencies. The AUD is ending as the strongest on risk on sentiment, the USD is the weakest.
Economic data today was limited to US PPI which although better than expectations, did not hurt the dollars decline.
In the US debt market, yields are ending the session lower, but off the day's lowest levels.
Some technical views/thoughts going into the weekend:
EURUSD: The EURUSD traded up. It traded down. It traded up again and is closing near the day highs. In between the high at 1.12744 and the low at 1.1237 sits the 100 day MA and 200 hour MA at 1.1253. In the NY session,dollar selling in the NY afternoon, took the price back above that bullish above/bearish below barometer. In next week's trading, the levels will remain
key for the technical bias. For the week, the low for the week was reached on Tuesday at 1.11927. The high was on Thursday at 1.1285. The 38.2% of the move down from the June 18 high comes in at 1.1276. A move above that level would be more bullish in the new week.
USDJPY: The USDJPY fell below a neckline level at 107.93, and the 100 bar MA on 4-hour (at 107.956) and 50% retracement of the move up from June 18 on Friday (at 107.878). That area will be close resistance in the new trading week. Next week on more selling, the 107.53-57 will be a key swing area from June 18 and July 3rd to get below. If the 108.00 is breached above, the 200 hour MA and 200 bar MA on the 4-hour chart will be a key upside target.
USDCHF: This is another currency pair that breached a neckline on the hourly chart (see post here), but has other support levels to get below in order to solicit more selling. Those levels include the 100 bar MA on 4-hour at 0.98377 a swing levels from July 2, and July 3rd at 0.9831-35. Get below in the NY week and there should be more downside momentum.
AUDUSD: The AUD is the strongest of the major currencies today. In the process, the pair based against the 200 hour MA at 0.6984 , moved above a swing area at 0.7012-16 and breached the 100 day MA at 0.70209. The pair did stall near that 100 day MA, leaving the "higher?" or "lower?" decision for next week's trading. On more upside, the 0.7047 is the July high and the highest level since May 1.
USDCAD: The USDCAD was pushed lower on more bearish USD flows, and higher oil in the second half of the week. The pair is closing at the lowest level of the year, and lowest level since October 2018 (trading at 1.3032). A move below the 1.3000 level opens the pair for a shot at the 100 week MA at 1.2980.
My fingers are tired and I must have lost finger weight from all the typing exercise without Adam this week (and all the Fed speak and other events). I will return part of the favor on Monday and Tuesday (family in town), but look forward to my return on Wednesday. Thank you for all your support this week and wishing you all a great and safe weekend.