Forexlive Americas FX news wrap: U of Michigan consumer sentiment sends the USD higher

Forexlive Americas FX news wrap: U of Michigan consumer sentiment sends the USD higher Author: Greg Michalowski | Category: News

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Forex news for NY trading on May 17, 2019.

  • US stocks end lower on China concerns
  • Fed's Harker: US labor market is tight
  • CFTC Commitments of Traders: JPY shorts trimmed by 30K
  • Key economic releases for next weeks trading
  • CNBC: Next round of US China trade talks are in flux
  • WTI crude oil futures settles the week at $62.76
  • Canada's Trudeau: Steel and aluminum tariffs were the greatest barrier to USMCA
  • US farmers to get $15 to $20B of aid as a result of tariff wars. Pres. Trump speaks LIVE
  • Joint statement highlights from US/Canada
  • Zijin of Global Times: China will certainly retaliate from barbaric suppression of Huawei
  • Mexico and Canada to lift retaliatory tariffs on US products
  • Baker Hughes oil rig count 802 versus 805 last week
  • White House considering Derek Kan for Fed Board opening
  • European stock indices and lower but well off low extremes
  • New York Fed GDP Now forecast falls to 1.8% from 2.2% last week
  • Tory Eurosceptics tell PM May to resign now
  • CBC reports: US and Canada close to agreement on metals tarriffs
  • US leading index for April 0.2% versus 0.2% estimate
  • University of Michigan consumer sentiment for May(P) 102.4 versus 97.2 estimate
  • White House to announce up to 6 month delay on EU cars
  • The JPY is the strongest and the GBP is the weakest as risk off flows back in play

In other markets:

  • Spot gold $-9 or -0.70% at $1277.75. For the second day in a row, the USD rise, hurt investors in gold
  • WTI crude oil futures fell $-.18 or -0.29% at $62.69
  • Bitcoin on Coibase fell $592 to $7075. The digital currency fell to a low price of $6600 earlier in the day session. In one fell swoop, that retraced over 50% of the move up from the April 26th low. The price ended up rebounding to back above the $7000, but it put a sour taste in the mouths of the bulls who – prior to today – were looking at a low for the Monday to Friday week at $6864 (on Monday) and a high at $8377.77. All of that gain had disappeard on the run to the low today.

The data today in the US came in better than expectation and higher vs last month, and that helped to propel the USD to the strongest of the major currencies today. The AUD was the weakest on the day.

The USD was the strongest of the majors for the 2nd day in a row today (see ranking of the major currencies below). There were three main catalysts fundamentally that helped the greenback.

The USD was the strongest of the major currencies for the 2nd day in a row

One was the surge in the Univ. of Michigan consumer sentiment (expectations and current conditions also rose nicely. For the headline number it soared from 97.2 last month to 102.4. That took the index to the highest level in 15 years. The expectations componen also soared 96.0 from 87.4 last month. It too was a 15 year high.

The 2nd main catalyst, was reports throughout the day that the US/Canada/Mexico would abolish the steel and aluminum tariffs along with other retaliatory tariffs including Kentucky bourbon and dairy products. They also pledged to finally work to ratify the USMCA trade agreement which has been in limbo for a number of months, largely due to the tariffs which remained (now that wasn't hard, was it).

The third catalyst was that the White House will postpone tariffs on EU and Japan auto cars and parts for 180 days.

Now it was not all rainbows and unicorns. The day started on a weak note with concerns about the US/China and ended the day with same concerns.

In the Asian session, Xinhua and People's Daily carried pieces saying China may have no interest in continuing trade negotiations for now. Later in the day, Hu Xijin of the Global Times tweeted that

China will certainly retaliate for barbaric suppression Huawei received. It's a unanimous attitude of officials and ordinary people. I believe Beijing is selecting retaliation targets and approaches, minimizing damage to itself and not weakening confidence in China's opening up.

And CNBC had, their own tweet saying:

Scheduling for the next round of talks is "in flux" because it is unclear what the two sides would negotiate, two sources said. China has not signaled it is willing to revisit past promises on which it reneged earlier this month.

The last tweet, sent US stocks lower. The major indices ended the session lower on the day and nearer the session lows. Below are the low to high trading ranges and the close levels.

The US stocks are ending near the session lows for the day.

That fall, took some of the bull out of the USDJPY, USDCHF. The US and Canada trade news, also benefitted the CAD more than the USD and helped to weaken the USD a bit in the NY afternoon session.

Some fundamental/technical/price action highlights:

  • The GBPUSD is closing at the day and week lows and trading at the lowest level since January 15th. PM May is on life support and the UK government is not making any progress on a Brexit deal The GBPUSD was down each day this week and 9 of the last 10 days.
  • The EURUSD is also closing near the low for the day/low for the week. It's high was on Monday at 1.12628 and low was today at 1.1155 (we are closing just above that level). The low from May 3 is at 1.11345 and is the next target for the pair.
  • The USDJPY was able to extend above a swing area at 110.02-04 when stocks were moving higher today, but came off on the late day sell off and is trading right around that swing area at the end of the week. Next week, it will be a barometer for bulls and bears.
  • The USDCAD continued its up and down runs this week. Today, the pair moved above 1.3500 level (a key ceiling area) and continued to a high of 1.35128. However, the US/Canada/Mexico deal helped to push the CAD higher (USDCAD lower) and the pair tumbled back lower. The pair is up on the week (1.3411 to 1.3460) but it was not without ups and downs from start to finish.

The NZDUSD and AUDUSD are also ending at the lows for the week. Each were hurt by the breakdown of US/China talks. For the AUDUSD this week, the jobs report showed unemployment rising to 5.2% from 5.0%. That sent analysts to calll for a cut at the next RBA meeting on June 4. Time will tell.
Wishing you all a great weekend. Thank you for your support.


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