Pound Archives - The Industry Spread

Pound Spikes Higher; UK Parliament Rejects No-Deal Brexit

March 14, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, Dollar, EUR-USD, EUR/GBP, EURO, GBP-USD, Pound, Sterling, USD/DXY, USD/JPY

Summary: Sterling once again took centre stage in the FX markets, soaring over 2% after the UK Parliament rejected a NO-Deal Brexit. The British Pound spiked in early Sydney to 1.3381 following its NY close of 1.3248 in choppy trade. The result paves the way for a vote to delay Brexit. Despite the political chaos and uncertainty in the UK, the British Pound remains strong.
US Headline and Core PPI in February missed forecasts, rising 0.1% (vs f/c 0.2%). This was the weakest annual increase in 18 months. The Dollar extended losses against it’s major rivals. EUR/USD hit one-week highs, climbing to 1.13386 before settling at 1.1325. The Australian Dollar lifted to 0.7097 despite a weak Westpac consumer confidence report.
Wall Street stocks rallied on optimism generated by the UK vote against a NO-Deal Brexit. The DOW finished 0.5% up at 25,700 (25,552. Yesterday). The benchmark US 10-year bond yield stabilised, up one-basis point to 2.61%.

Investing.Com GBP USD Hourly Chart – 14 March 2019

GBP/USD – The British currency jumped to fresh 8-month highs in early trade to 1.3381 before settling at 1.3325 currently. Sterling reversed losses yesterday at 1.3080 climbing to 1.3260 before the Parliament vote were a rejection was expected. The rejection of a NO-Deal Brexit now moves to a vote to delay.
EUR/USD – The Single currency benefited from Sterling’s rally although the EUR/GBP cross slumped to near two-year lows. The EUR/USD finished up 0.42% at 1.1333 in New York.
AUD/USD – the Australian Dollar grinded higher on the back of a generally softer US Dollar. The Aussie Battler rallied to 0.7097 before settling at 0.7093 (0.7085 yesterday). Westpac’s Consumer Sentiment Index fell to -4.8% to 98.8, the weakest reading since late 2017.

On the Lookout: So far, US economic data in February has been weaker than expected. Friday’s big US Jobs Creation miss was followed by modestly lower consumer and producer prices. Still the data has not been dramatic enough to change the Fed’s patient, “wait-and-see” approach to any rate increases this year.
Today the focus moves to China where the trifecta of Industrial Production, Retail Sales (both January) and Fixed Asset Investment (February) data are released later this morning. Germany and France release their February Final CPI report (m/m and y/y). The US rounds today’s data off with New Home Sales (Feb), Weekly Unemployment Claims and Import Prices.

Trading Perspective: The Dollar has edged lower this week on weaker-than-expected US economic data and falling yields. So far, the move has been corrective given the market’s long US Dollar positioning. The Dollar Index (USD/DXY) has dropped from 97.70 highs last week to 96.49 this morning. US bond yields stabilised yesterday. The 10-year yield rose to 2.61% (2.60%). Two-year US bond yields closed at 2.46% (2.45%). Expect some consolidation with more two-way trade today. The Dollar Index (USD/DXY) should find solid support at current levels (96.40/50). The UK still faces much uncertainty over Brexit which should see the Pound ease from current levels.

GBP/USD – the spike to 1.3381 this morning occurred in thin, low-volume early trade. It smacks of a large stop triggered above 1.3320. The big test comes later in the European day when Parliament votes again on what type of extension and the support it gets from the Euro bloc’s 27 members. GBP/USD currently trades at 1.3315. Immediate resistance can be found at 1.3340 and 1.3380. Immediate support lies at 1.3270 and 1.3240. Look for further choppy trade where the risk from current levels is lower.
EUR/USD – The Euro traded to a high of 1.1339 overnight. The resistance level at 1.1340 is strong. EUR/USD would need a sustained break of the 1.1340 resistance to push it higher. The next resistance level comes in at 1.1360-70. Immediate support can be found at 1.1300 followed by 1.1270. Look for consolidation with a likely trade today between 1.1270 and 1.1340. The Euro is not quite out of the woods yet, but the market remains short.
AUD/USD – The Aussie’s rally fell short of 0.7100 which is today’s immediate resistance level. The next resistance level lies at 0.7130/40. Immediate support for the Aussie Battler can be found at 0.7070 and 0.7040. Despite the much weaker than expected Westpac Consumer Confidence report the Aussie remains stable. An overall weaker US Dollar and a short Aussie market have lifted the antipodean currency. Look for consolidation as traders await today’s trifecta of Chinese data. Likely range 0.7050-0.7100. Just trade the range shag on this one.
USD/JPY – The Dollar has been remarkably stable against the Yen given its moves against its other Rivals. Traders expect the Bank of Japan to downgrade its economic outlook in tomorrows rates policy meeting. USD/JPY traded to 111.46 highs overnight before settling at 111.13 this morning. Immediate resistance can be found at 111.40/50 followed by 111.80. Immediate support lies at 111.00 (overnight lows) and 110.70. For today we can expect a trading range between 110.90-111.50. Prefer to sell rallies as the market positioning is still long USD/JPY.
USD/DXY – The Dollar Index closed just above strong support at 96.40. It has dropped from 97.70 to its current 96.486 in a week’s time. The next support level lies at 96.20. Immediate resistance can be found at 96.80 and 97.10. With US yields stabilising expect the support at 96.40 to hold within a range today of 96.45-96.85.

Trading View – 1 M Dollar Index Chart – 14 March 2019

Happy trading all.

UK Lawmakers Reject May’s Brexit Plan Again, Pound Slides

March 13, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: Brexit, CFTC, ECB, EUR-USD, EURO, GBP-USD, Pound, Sterling, USD/JPY

Summary: Sterling slid in volatile trade as the UK Lawmakers rejected PM May’s Brexit plan for the second time. While the margin of NO’s was less than the first vote, Parliament will now vote on whether they want a hard, no trade-deal Brexit later today. This will be followed by a potential extension of the exit deadline set on March 29. GBP/USD settled at 1.3060 in late New York after hitting a high of 1.32892 and low of 1.30050. UK GDP, Manufacturing and Industrial Production all beat forecasts, limiting Sterling’s losses. The Dollar was mostly lower against its peers following a disappointing CPI report. While Headline US CPI matched forecasts, Core Inflation rose less than expected, and remains low. US treasuries rallied, the benchmark 10-year bond yield dropped to 2.60% from 2.64%. Wall Street stocks were mixed. The DOW dropped 0.45% as Boeing shares slumped due to the grounding of its 737 Max 8 planes. The S&P 500 was up 0.2%.

FT.COM US 10-Year Bond Yield Chart – 13 March 2019

EUR/USD – the Single currency extended gains, climbing to 1.13049 overnight before settling at 1.1288, up 0.34%. EUR/USD continues to grind higher after hitting 20-month lows following a dovish ECB meeting outcome. Speculative Euro short bets continued to pile higher in the latest COT CFTC report which finally caught up following the recent US government shutdown in December/January.
GBP/USD – Sterling had another roller-coaster session, moving 2% between highs and lows before settling at 1.3065, down 1.3% from yesterday’s 1.3145 opening. While the second rejection of UK lawmakers of PM May’s Brexit plan weighed on the British currency, it’s fall was limited. The ongoing drama extends with another vote later today which will keep the currency choppy.
USD/JPY – the Dollar ended flat at 111.27 (111.24 yesterday). The fall in the US 10-year bond yield had little effect on the USD/JPY but will keep its topside limited. Japanese data released today should see more movement in this currency pair. The COT/CFTC report saw an increase in net speculative JPY shorts.

On the Lookout: Today sees further economic data reads from Japan, the Euro-Zone, UK and US. Australia starts off with its Westpac Consumer Sentiment, not a big one, but nevertheless a gauge of consumer appetite which accounts for majority of overall economic activity. Japanese Core Machinery Orders (leading indicator of production), PPI and Tertiary Industry Activity for February follow next. China reports on its year-to-date Foreign Direct Investment. Europe sees the Euro-Zone Industrial Production for February while the UK Annual Budget is released. Lastly the US reports on its Headline and Core Durable Goods Orders (Feb), Headline and Core PPI and Construction Spending. Quite a bit to digest.

Trading Perspective: The Dollar Index (USD/DXY) continues to grind lower. US Core Inflation data disappointed and remains low. This follows the dismal Jobs Gains last week. While US retail sales grew in February, January’s negative sales report was revised lower. Market positioning remains long US Dollar bets in 6 out of 9 IMM currencies (exception: New Zealand Dollar, Russian Rouble and Mexican Peso). Saxo Bank-Bloomberg’s Commitment of Traders/CFTC report for the week ended May 5 shows the breakdown of these currencies.

Many analysts continue to call for a higher Dollar, given that the US near-term economic prospects look much less grim than the rest of the world. The US Dollar is also bid due to “safe-haven” demand. While both facts are true, market positioning is already biased that way. And the US 10-year bond yield continues to slide to one-year lows. Further correction in the Greenback looms.

Saxo-Bank Bloomberg COT-CFTC Report – 13 March 2019

EUR/USD – The Euro topped out at 1.13049 which remains a strong resistance level. The big topside level is at 1.1340. A sustained move above that will see further Euro gains as further short Euro stops could be triggered. Immediate support lies at 1.1260 followed by 1.1220. Would look to buy dips to 1.1260 today for an eventual test of 1.1340.
USD/JPY – The Dollar has been remarkably stable against the Japanese currency. USD/JPY closed virtually flat at 111.28 (111.23 yesterday). Immediate resistance lies at 111.40/50 which should hold on the day given the 4-basis point fall in the US 10-year yield to 2.60%. Japan’s 10-year JGB by contrast rose one basis point to -0.04% (-0.05%). Immediate support can be found at 111.10 followed by 110.80. Look to sell rallies to 111.50 today.
GBP/USD – the British Pound had another volatile session moving 2% between the high and low. Sterling held above 1.30, trading to 1.3005 lows before rallying to 1.3065 at the New York close, post the UK Parliamentary rejection vote. With another vote scheduled for later today (Lawmakers will vote on whether they want a hard or no-Brexit deal). This will probably result in another vote Thursday to extend the March 29 deadline. UK economic data released all beat forecasts. Expect further volatility on the Pound. GBP/USD has immediate support at 1.3020 followed by 1.2960. Immediate resistance lies at 1.3100 and 1.3160. Look to trade the extremes between 1.3020 and 1.3120 today. While net speculative Sterling shorts were trimmed, market positioning remains short Pounds.
AUD/USD – The Australian Dollar also continues to grind higher following its test of 0.7003 lows on Friday. The large drop in China’s exports weighed on the Aussie. Last night saw the third consecutive day of gains for the Battler. The Aussie will continue to benefit from a generally weaker US Dollar. Australian 10-year bond yields were unchanged at 2.03%. AUD/USD has immediate resistance at 0.7090/0.7100 (overnight high 0.70919). Immediate support can be found at 0.7060 and 0.7020. The latest COT/CFTC report (week ended March 5) saw speculative Aussie short bets increased to -AUD 40,741 contracts. Would look to buy dips to 0.7060 today.

Happy trading all.

Dollar Recovers “Somewhat” on Better US Q4 GDP, Yen Weakens

March 1, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Dollar, EUR-USD, Eurozone, GBP-USD, German 10 year yield Bund, Pound, Sterling, USD/JPY, Wall Street

Summary: The Dollar Index (USD/DXY), a measure of the value of the US Dollar relative to a basket of foreign currencies, recovered from a 3-week low following a better-than-forecast USQ4 Advance GDP reading. USD/DXY was up 0.04% to 96.18 after hitting a low of 95.824 and an opening of 96.15 yesterday. The delayed report (due to the government shutdown) beat median estimates by 0.4% to 2.6% from Q3’s downward revised read of 3.4%. Enough to alleviate investor fears about marked slowdown in the US economy due to trade ties. Global yields climbed. The benchmark US 10-year bond yield ended up 4 basis points at 2.73%. Germany’s 10-year Bund yield rose 3 basis points to 0.18% while Japanese 10-year JGB’s yielded -0.03% from -0.04% yesterday.

Trading View – US Ten-Year Bond Yield Chart – 01 March 2019

Elsewhere, inflation data out of the Euro area were in line with forecasts. The Euro ended flat at 1.1380. Sterling slipped off its highs, finishing down 0.4% at 1.3270 on position adjustment following its surge yesterday. USD/JPY rallied 0.4% to 10-week highs at 111.44 before settling at 111.35.
The much-touted Trump-Kim Hanoi nuclear summit ended abruptly without an agreement. Wall Street stocks slipped. The DOW finished down 0.4% at 25,931.

USD/JPY – The Dollar Yen which is the most sensitive to movements in the US 10-year yield (2.73% from 2.69%) was true-to-form rallying to an overnight and 10-week high of 111.44 before easing to 111.35. Emerging Market and Asian currencies also traded lower versus the Greenback.
GBP/USD – The British Pound edged lower to 1.3270 from 1.3319 as uncertainty as to when and how the UK would leave the European Union crept back into the markets. While markets have lowered their expectations of a NO-DEAL Brexit, a high degree of uncertainty remains with all the delays.
EUR/USD – finished virtually flat at 1.1378 (1.1370 yesterday). Euro area inflation data was mostly in line with expectations. Today sees Euro area Manufacturing PMI data. Overall range traded for the Euro was 1.13595 – 1.14195, a riveting 60 points!
AUD/USD – The Aussie fell as a result of weaker-than-expected Chinese Manufacturing PMI data (49.2 vs 49.5 forecast). AUD/USD closed 0.7% lower at 0.7095 from 0.7137 yesterday. Weaker EM and Asian currencies also weighed on the Aussie Battler.

On the Lookout: The week ends with more primary data releases from all the major economies. Japan starts off with Tokyo Core CPI, Unemployment, Capital Spending and Manufacturing PMI data. China follows with its Caixin Manufacturing February PMI. Euro area Final Manufacturing PMI’s from Spain, Italy, Germany, France and the EU follow. Eurozone Flash Headline and Core CPI are next. The UK reports on Net Lending to Individuals (which is a gauge of consumer spending) and Manufacturing PMI. Finally, US Core PCE Personal Income and Spending and Final and ISM Manufacturing data round off today’s plethora of data.
Fed Chair Jerome Powell addresses the Citizens Budget Commission Awards Dinner in New York later today (12.30 pm Sydney time) with a speech entitled: “Recent Economic Developments and Longer-Term Challenges”.
A potentially, and hopefully market-moving day to start March.

Trading Outlook: The Dollar Index (USD/DXY) had a good recovery off it’s overnight and 3-week lows at 95.824 last night. USD/DXY closed at 96.180 boosted by the climb in US bond yields. That said the Dollar’s recovery was not broad-based. While the Greenback saw gains versus the Yen, Sterling, Aussie and Kiwi, it fell against the Euro, Swiss Franc and Canadian Dollar. The difference may be that the EM and Asian currencies extended their weakness against the Dollar for the 3^rd day running. The Economic data releases today and market positioning will tell. On balance, the Dollar may grind higher first up. Powell’s speech will be closely monitored by traders. Caution followed the upbeat China-US trade negotiations after comments from some US officials. Markets will be on the lookout for any developments on this front. Enough to keep traders busy for Friday, the first day of March.

Barchart.Com USD JPY 1 M Chart – 01 March 2019

USD/JPY – The rally in the Dollar Yen was the result of the four-basis point move up in the US 10-year bond yield to 2.73% from 2.69%. Risk appetite was slightly lower but did not impact the haven Yen. USD/JPY has immediate resistance at 111.40/50 where it peaked. The next resistance level is at 111.80 followed by 112.20. Immediate support can be found at 111.10 and 110.80. Prefer to sell rallies with a likely range today of 110.85-111.45.
AUD/USD – The Aussie got whacked by a double-whammy of weaker Chinese PMI data, risk appetite and Emerging Market Asian Currencies. The Aussie Battler finished 0.73% lower at 0.7093 from 0.7137 yesterday. AUD/USD has immediate support at 0.7070/80 (lows last week). The next support level can be found at 0.7040. Immediate resistance lies at 0.7120 and 0.7140. Look to buy dips with a likely range today of 0.7085-0.7145.
GBP/USD – Sterling slid to 1.3270 after its strong rise to 1.3350 yesterday. Overnight high traded this time was 1.3320. There is still much uncertainty as to the timing and conditions regarding Brexit. Postponing the vote may lessen the chances of a NO-VOTE but it does not negate it. The Pound’s powerful move higher may have been the result of a combination of short-covering and establishing fresh long positions. It will be interesting to see what the actual market positioning is when the data is released early next week. The US government shutdown has delayed the CFTC’s Commitment of Traders reports. Immediate resistance for the Pound lies at 1.3300 followed by 1.3320. Immediate support can be found at 1.3250 and 1.3210. Look to sell rallies with a likely range of 1.3240-1.3290.

Happy Friday and trading all.

Slip-Sliding Away, Dollar Drops for Third Day Running, Yields Fall

February 20, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, China-US trade, EUR-USD, GBP-USD, German PPI, Pound, USD/DXY

Summary: The US Dollar headed for a third day of losses weighed by lower bond yields and a stronger performance from all it’s Rivals. The yield on the US 10-year bond slipped to 2.638% from 2.66% yesterday. Sterling outperformed, surging above 1.30 to 1.3070 on a combination of long-term short-covering and fresh buying. Despite the doom and gloom associated with Brexit, better-than-forecast UK data of late and a generally weaker Greenback spurred Pound purchases. The Dollar Index (USD/DXY) dropped another 0.25% to 96.538 (96.776 yesterday). Emerging Market currencies, the South African Rand, Russian Ruble, Mexican Peso, Thai Baht, and the Turkish Lira all finished higher against the withering Greenback. The Australian Dollar rallied 0.53% to a two-week high at 0.7170 while the Euro gained 0.26% to 1.1340 (1.1315 yesterday).

Trading View – 6 M USD 10-Year Bond Yield Chart – 20 February 2019

GBP/USD – The British Pound defied expectations, surging to over two-week highs of 1.30728 before settling to close in New York at 1.3065. More optimistic Brexit sentiment and a broad-based US Dollar decline roused fresh Pound buyers. Despite the stronger finish, expect the British currency to remain volatile with uncertainty over Brexit still a huge risk.
EUR/USD – the Single currency ground it’s way higher to an overnight high of 1.13575 before settling to close at 1.1340. The decline in the Greenback and the rally in Sterling has frustrated fresh sellers and enabled the Euro to finish at Feb 12 highs. The ZEW Economic Sentiment saw better-than-forecast readings for Germany and the Euro-Zone last night.
AUD/USD – The Aussie Battler is another currency that continues to grind its way higher, frustrating shorts. The RBA meeting minutes revealed nothing new and the Aussie remains captive to the ongoing China-US trade talks. AUD/USD closed at 0.7165 after trading to a high of 0.71738.
USD/DXY – The Dollar Index fell to 96.538, down 0.25% on broad-based Dollar selling. USD/DXY traded to an overnight low of 96.426 and managed to close right above immediate support at 96.50, an interesting juncture.

On the Lookout: Following the long US holiday weekend, the markets get going today with more first-tier economic data on the way today and tomorrow. The latest FOMC meeting minutes (January) are released later today (early tomorrow in Asia). Earlier today New Zealand Q4 PPI output rose 0.8%, beating forecasts of 0.6%. Today sees the release of Japanese Trade data for January, Australian Wage Price Index data, German PPI, and UK CBI Industrial Orders Expectations.

Trading Perspective: The performance of the Emerging Market currencies against the US Dollar may suggest further weakness ahead. However, after 3 days of decline in less liquid conditions, we should see more two-way trading from here. Bond prices rose and stocks were mostly up on solid US corporate earnings. The yield on the benchmark US 10-year slipped one basis point to 2.638%. Slip-sliding away, the Dollar needs fresh yield support to lift it higher.
Saxo Bank’s chart on the Commitment of Traders CFTC report (for the week ended in January 22) saw a large trimming of US Dollar longs. This should be Dollar supportive as the Greenback continues to slip. Remember though that this report is almost a month old.

EUR/USD – Despite bearish sentiment, the Euro continues to frustrate sellers. The Single currency has benefited from Sterling’s rally and the overall weaker US Dollar. On the day, the immediate resistance for EUR/USD lies near the overnight highs of 1.13575. The next resistance level can be found at 1.1370/80 and then 1.1400. Immediate support lies at 1.1310 followed by 1.1275. Expect the overall weaker US Dollar sentiment to drive the Euro higher in the short term but 1.1360/70 will cap. Likely range today 1.13 20/70.
GBP/USD – Sterling’s climb in less than a week (from 1.2805 Friday) to 1.30728 last night is impressive indeed. Despite the doom and gloom associated with Brexit, the Pound defied sentiment. Which is in true Cable fashion. The assumption that short-covering and fresh buying from longer term funds is most probably accurate from the price movement. However, the risks remain in place. Any rallies today will be limited to 1.3080. The next resistance level can be found at 1.3110. Immediate support can be found at 1.3040 followed by 1.3010. Look for a likely range today of 1.2980-1.3080.
AUD/USD – The Australian Dollar has also frustrated the sellers with its robust performance of late. While the Antipodean currency is closely related to the Chinese economy and its ongoing trade situation with the US, the Aussie is still quoted against the US Dollar. AUD/USD has immediate resistance at 0.7175 followed by 0.7200. Immediate support can be found at 0.7140 and 0.7105 on the day. Expect more consolidation in a likely range of 0.7125-75.

Trading View USD DXY 3M Chart

USD/DXY – The Dollar Index closed just above supports of 96.50 (96.538). Immediate support can be found at 96.40. A break of 96.40 could see us at the early February lows around 96.00. Immediate resistance can be found at 96.80 followed by 97.10. Look for a likely range today of 96.40-96.80.

Happy trading all.

Pound, Euro Post Modest Gains in Quiet, Holiday Trade

February 19, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Dollar, EUR-USD, EURO, GBP-USD, Pound, USD/JPY

Summary: Sterling and the Euro finished with modest gains in quiet holiday affected trade. With US markets absent for the President’s Day holiday, trading volumes were low. Sterling extended its rally from last week’s lows, ending up 0.3% at 1.2927. Markets awaited the outcome of Brexit talks between the EU and Britain. Optimism on renewed trade negotiations between China and the US in Washington this week lifted stocks in Asia. The Dollar Index (USD/DXY) drifted lower to 96.776 from 96.924 yesterday. The Australian Dollar ended little-changed into the RBA’s release of its latest policy meeting minutes later today. Meantime, Saxo Bank reported on the delayed release of the Commitment of Traders CFTC report due to the 35-day US government shutdown. The latest COT report for the week ended January 22 saw net speculative US Dollar long bets against 8 IMM currencies drop to a 6-momth low to US$ 22 billion. This was a week before the FOMC meeting on January 30.

Saxo Bank – Commitment of Traders Report for CFTC – Currencies for week ended Jan 22,2019 – 19 Feb 2019

EUR/USD – The Single Currency posted a modest gain to 1.1315 (1.1300 yesterday) after hitting 3-month lows last week. The Euro’s rally has been mostly technical, having held the strong support at the 1.1240 level. The overnight high of 1.1334 should cap with 1.1340 containing any further gains.
GBP/USD – Sterling extended its rally, climbing 0.3% to 1.2927. Despite the growing risk of a no-deal Brexit, the Pound has shown amazing resilience. Reuters reports hedge fund buying, most probably short-covering which is logical. Overnight high was 1.29386. The UK releases its Employment data for January later today. Further gains should be limited.
AUD/USD – The Aussie tested 0.71607 overnight, it’s highest level in two weeks. Metals rose on the back of optimism on the resumption of China-US trade talks in Washington this week. AUD/USD drifted lower to end little-changed at 0.7132 from yesterday. The RBA releases its latest monetary policy meeting minutes today (11.30 am Sydney time). The 0.7170 resistance level is formidable as is the support at 0.7080.

On the Lookout: We can expect a slow start in Asia after last night’s quiet, thin volume trade due to the US holiday. The 24-hour trading ranges should remain intact.
Data released today start off with the RBA release of the minutes of its latest meeting. This is followed by UK Employment data and the ZEW report for German Economic Sentiment. This first-tier data will have an impact on the Pound and the Euro.

Trading Perspective: The latest Commitment of Traders report for the week into January 22 saw a large drop in net speculative Dollar longs into the January 30 FOMC meeting. Saxo Bank reported that CFTC should be rolling figures twice a week and should catch up by the week into March 5.
Market positioning is an essential tool and can be used as a guide in trading the 8 IMM listed currencies. The report suggests is that the market continued to trim their US Dollar net long positions ahead of the FOMC meeting. Net speculative JPY shorts were cut by a whopping 60% which saw the USD/JPY slip to 108.50. It has since rallied to just under 111.00.
The US Dollar rose against the Emerging Market currencies. USD/ZAR was up 0.62% (14.1274), USD/TRY up 0.57% (5.3030), USD/INR up 0.1% (71.40). This should provide the Greenback with some overall support and in the short term limit any Dollar drops.

EUR/USD – The Euro traded to a high of 1.13339. Immediate resistance at 1.1340/50 is strong and should cap any attempts to move higher. Immediate support can be found at 1.1300 and then 1.1270/80. Look to trade a range of 1.1290-1.1330 today. Am neutral at current levels so just trade the range shag.
GBP/USD – Sterling’s uptrend extended to 1.29386 overnight, near highs for a week. Immediate resistance can be found at 1.2950 followed by 1.2980 and 1.3000. Immediate support lies at 1.2900 and 1.2880. The UK Jobs report will be closely watched following the strong rise in Retail Sales on Friday. While the risks continue to grow on a NO-Brexit deal, the topside should be limited, for now. Likely range 1.2870-1.2950. Just trade the range shag on this little puppy too.
USD/JPY – yesterday’s narrow trading range will see a similar start in Asia today. Immediate resistance lies at 110.60 (110.613 overnight high). The next resistance level can be found at 110.80 and then 111.10. Immediate support lies at 110.40 (overnight low 110.437) and then 110.25. Look to trade a range today between 110.30-110.80. Just trade the range shag.
AUD/USD – The Aussie was lifted by the risk-on sentiment brought about by renewed optimism in the China-US trade talks. Gains in Metals and resources also buoyed the Australian Dollar. The RBA’s latest meeting minutes should continue to show a neutral stance from the Aussie central bank. Immediate resistance at 0.7160/70 is strong with the next level at 0.7200. Immediate support can be found at 0.7120 and then 0.7090. Look to trade between 0.7110/60. Short term topside should be limited today.

Trading View – 1M AUD USD Chart – 19 Feb 2019

Happy trading all.

Many Headlines, Little Movement – Dollar Grinds Lower and Marks Time

February 18, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, Dollar, DOW, EUR-USD, GBP-USD, Pound, RBA, S&P 500, US bond yields, US TICS, US-Mexico border, USD/DXY, USD/JPY

Summary: The Dollar slipped against its Rivals on Friday after initially climbing ahead of a long US weekend to celebrate President’s Day today. The Euro took a hit to the chin, falling to 1.1234 November 2018 lows before recovering to close at 1.1300 on softer US capacity utilisation and import price data. Headlines across trading screens from ECB executive Board member Benoit Coeure’s speech read that the “economic slowdown is stronger than expected and inflation was shallow” weighed on the Single Currency. Strong British retail sales in January boosted the Pound despite concerns of a Brexit vote defeat in Parliament for PM Theresa May. Sterling ended up 0.68% at 1.2889 (1.2805 Friday). The Dollar Index (USD/DXY) slipped to 96.924 from 97.00.
Equity market sentiment was lifted after Chinese press headlines touted that a week of trade discussions with the US in Beijing had produced “step-by-step” progress. The DOW rallied 1.88% while the S&P 500 ended 1.29% higher (2777). US bond yields were unchanged.

Trading View – 3M EUR USD Chart – 18 February 2019

EUR/USD – slumped initially to 1.12341 overnight and over 3-month lows on Couere’s speech before an impressive bounce back to 1.1300 at the New York close. Which is basically where it started on Friday morning. The Euro’s strong bounce suggests further upside.
GBP/USD – After falling from 1.32 to around 1.2750 on Brexit’s ongoing dramas, the Pound has come back on a combination of an overall weaker US Dollar. Robust retail sales data boosted Sterling and further gains are possible.
AUD/USD – The Battler bounced back to finish up 0.43% at 0.7140 from 0.7105. Overnight low traded was 0.70794. The Aussie held the 0.7070 level well and looks poised to grind higher. The January monetary policy meeting minute from the RBA are released tomorrow.

On the Lookout: With the US markets closed to mark the President’s Day holiday, we should see less headlines on the screens today. US data on Friday was mixed. Lower than forecast reads for US Capacity Utilisation and Import Prices were offset by stronger than expected University of Michigan Consumer Sentiment and Empire State Manufacturing data. US TICS Long Term Purchases for January sank to a whopping -US$ 48.3 billion from a previously revised lower figure of +US$ 32.0 billion. The balance of demands for US currency and securities fell unexpectedly, which does not auger well for the Greenback. US data disappointments could become more common.
Over the weekend, US President Trump issued an emergency along the US-Mexico border after Congress blocked his border wall funding request.

Forex Factory US TICS Long Term Purchases

Trading Perspective: With the US on holiday today, expect a slow start to the week. Economic data is light as well. Recent ranges should remain intact although the lower broad-based US Dollar close suggests further downside correction before any rallies. Traders will keep their eyes on any news headlines across their screens from China on their trade talks with the US. Tomorrow sees the RBA latest monetary policy meeting minutes as well as UK Employment data.

EUR/USD – The Euro recovered after making fresh 3-month lows (1.12341) following Couere’s remarks. EUR/USD closed just under 1.1300 which remains a pivot point. Expect further range trading for the Single currency with the bias likely higher following it’s strong close. Initial resistance lies at 1.1350 with the strong level at 1.1400. Expect immediate support at 1.1270 to contain any fresh selling. The next support lies at 1.1240 which is strong.
USD/JPY – the Dollar edged lower versus the Yen, finishing at 110.45 from 110.57 on Friday. With US bond yields basically flat, trading in this currency pair was slow. USD/JPY traded to 111.13, December 27 highs before slipping lower. On the day, immediate support lies at 110.25 (overnight low), followed by 110.00. Immediate resistance can be found at 110.65, which was the overnight high. Look for a likely trading range of 110.15-65 today with the preference to sell rallies.
GBP/USD – Robust British retail sales lifted the Pound. It was the best performer against the US Dollar among the major currencies. GBP/USD finished at 1.2889, not far from its overnight high of 1.2898. Immediate resistance can be found at 1.2910, followed by 1.2940. 1.3000 remains both psychological and strong resistance. We should see initial support emerge at 1.2870 followed by 1.2840. Tomorrow sees UK employment data. Any further strength in British economic data will further boost the Pound. Look for a likely trading range today of 1.2860-1.2920. Prefer to buy dips.
USD/DXY – the Dollar Index finished a tad lower at 96.924 from 96.99 Friday. USD/DXY should continue to grind lower after its technical failure to break above 97.40. The initial support at 96.70/80 should contain any selling with the strong support at 96.40. Immediate resistance can be found at 97.10 and 97.40. Look to sell rallies and expect a drift lower on the Dollar Index.

Have a good week ahead, happy trading all.

Pound Soars, Bites Shorts as Risks of a Muddled Brexit Fall

January 24, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, EUR-USD, GBP-USD, NZD/USD, Pound, Sterling, USD/JPY

Summary: Sterling soared, breaking above 1.30 for the first time since November as big short positions ran for cover. Reports that the British Labour Party would back a proposal which would force the government to seek a delay to Brexit lifted the Pound. According to Reuters, who have been monitoring FX market positioning through the CFTC report, spec GBP/USD shorts reached 4.8 billion USD on Dec 21, 2018. This was the last from the CFTC before the US partial government showdown. GBP/USD closed at 1.3067, up 0.86%. The Dollar eased against most of the Majors, bar the Yen. The Yen weakened as risk appetite returned and the BOJ kept its monetary policy steady without any changes to its yield curve control. The BOJ also saw more downside to the economy like other central bank peers. The Kiwi outperformed on a surprise rise in inflation.
Stocks rallied after-hours on robust US earnings. The DOW rallied 0.63%, the S&P 500 gained 0.27%.

GBP/USD – Sterling soared to 1.3067 as big shorts ran for the exits as less chances of a disorderly Brexit increase. The Reuters report on the last available CFTC data highlights the size of speculative short Sterling bets. Most of the big trading banks that participate actively in the FX markets have their own records of positioning via internal flows. While short GBP/USD positions have gradually unwound since their peak in September 2018, (6.5 billion USD), the overall bias remains short. With the government shutdown into its 33^rd day, its difficult to gauge just where the markets positioning currently sits… on all currencies.
USD/JPY – The Dollar bounced off its lows as the BOJ announced it was maintaining policy, keeping its yield curve control. The rise in risk appetite also buoyed the USD/JPY. US 10-year bond yields climbed 2 basis points to 2.75%.

Trading View – 6 Month NZD USD Chart – 24 January 2019

NZD/USD – the Kiwi outperformed, rising 0.6% against the Greenback to 0.6790 (0.6725 yesterday). New Zealand’s Q4 CPI rose 0.1% beating forecasts of 0.0% for an annual clip of 1.9% (vs f/c 1.8%). While much of the rise was due to seasonality, the underlying inflation trend remains underpinned. A softer US Dollar could see the Kiwi rally further. The Aussie rallied on the back of the Kiwi, ending with modest gains to 0.7137.

On the Lookout: Markets shrugged off the trade talk drama on reports that US delegates had cancelled a low-level meeting ahead of next week’s high-level talks with the visit of Chinese Vice Premier Liu He. The Jan 30-31 meeting is still on, and stocks in Asia saw mild gains. Meantime, the US government shutdown enters it’s 33^rd day with no end in sight.
Events and economic data releases for today begin with Australia’s Employment Report for December. Prior to that, Australian Flash Manufacturing and Services PMI’s are released. Japan’s Flash Manufacturing and Services PMI follow shortly after. Europe sees Euro-area Manufacturing and Services PMI’s from France, Germany and the Euro-Zone. The big event is the ECB rates policy meeting. The ECB is expected to maintain its Main Refinancing Rate at 0.00%. Mario Draghi will follow with ECB Press Conference after. US Weekly Jobless Claims and Flash PMI’s round up today’s data. So, a busy day for PMI’s.

Trading Perspective: The Dollar Index (USD/DXY) has been consolidating around the 96.00 level. It closed at 96.115, down 0.19%. While the Dollar’s overall losses were mild, the Greenback fell more markedly against the Emerging Market currencies. The South African Rand rallied 0.94% while the Turkish Lira was up 1.07%. This may signal further Dollar weakness against the Major currencies.
As the government shutdown extends into unchartered territory, support for the Greenback will wane. While it may have no direct bearing on the US economy, where on this earth will any government shutdown be positive for its currency.
The last CFTC data on market positioning highlighted the GBP shorts against the US Dollar. Market positioning prior to that report saw extended USD shorts against most of the currencies that the CFTC records. Beware of further long US Dollar unwinds.

Bloomberg 6 M GBP USD Chart – 24 January 2019

GBP/USD – The Pound rallied above the 1.30 level without looking back, managing to trade to 1.30807 highs. Immediate resistance can be found at 1.3080 followed by 1.3110. Immediate support lies at 1.3020 and then 1.2990. While reports have highlighted that market positioning on the GBP/USD remains short, one should not get carried away up here. Brexit is still not yet resolved and while some of the negatives around it have been removed, its still a big deal. Look for more volatility ahead and be flexible with a likely range of 1.2980-1.3100 today.
EUR/USD – the Euro had a muted day, rallying a modest 0.17% against the Greenback as the market prepares for a dovish-leaning ECB. Given the recent downturn in Euro area data and the IMF downgrade of global GDP (citing weakness in Germany’s auto market), the Euro is struggling to break much higher. One of the highlights of the Reuters report on Sterling market positioning was the fact that many speculators hedged their short GBP positions by selling EUR/GBP, according to one of the trading banks. This makes sense to me from my experience as an FX dealer from an active trading bank. Which suggests to me that there has been a build up on Euro shorts. Immediate resistance can be found at 1.1400 followed buy 1.1430. Immediate support lies at 1.1350 and 1.1320. Prefer to buy on dips to the mid to low 1.13’s.
AUD/USD – the rally on the Kiwi lifted the Aussie to an overnight high of 0.7144 before easing to close at 0.7137 in New York. The Australian Dollar fell behind its antipodean cousin, the Kiwi. The AUD/NZD cross slipped to 1.0517 from 1.0595 yesterday. Australian Employment for December is forecast to have risen by 17,300 jobs from the previous +32,000 jobs in November. The unemployment rate is expected to remain at 5.1%. Unless we see an extremely bad set of numbers (i.e Employment growth less than 5,000 jobs or negative) expect the Aussie to remain in a 0.7110-0.7180 range today. An overall weaker US Dollar will keep the Aussie supported.

Happy trading all.

Sterling Reverses Gains as Brexit Vote Fears Surface Anew

January 9, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, China-US trade, EUR-USD, FED, GBP-USD, Jerome H. Powell, Pound, Sterling, US S&P 500, Wall Street

Summary: Sterling reversed recent gains made at the expense of a weaker Dollar and no negative Brexit headlines. With the British Parliament set to vote on Theresa May’s Brexit plan next week (15 Jan), traders adjusted their positions. May must win the vote for any chance of an approval of the deal with the European Union by the March deadline. A modestly stronger US Dollar also weighed on the Pound, down 0.53% to 1.2715 (1.2765). The Euro slipped off its highs of 1.1485 to 1.1445 after German Industrial Production fell unexpectedly last month. It was the third decline in factory growth as soggy data continued to emerge from Europe.
Stocks extended their gains as optimism on Sino-US trade talks continued into the second day. The DOW posted a gain of 0.86% while the S&P 500 was up 0.75%.
Global yields continued to rise with the US 10-year bond up 3 basis points to 2.72%. Japan’s 10-year JGB yield rose to 0.00% from -0.03%.

EUR/USD – The Single currency once again failed to break above 1.1500, with 1.14846 the overnight high traded. The weaker-than-forecast German factory output data weighed on the Euro, which finished 0.33% lower. Weakness in the Euro and British Pound enabled the US Dollar to gain modestly versus it’s Rivals. However, the prospect of no further Fed rate hikes limited the Greenback’s gains.

Trading View GBP USD 1 M Chart – 09 January 2019

GBP/USD – The British Pound was one of the stronger gainers at the expense of the Dollar’s fall after Fed Chair Jerome Powell’s more dovish speech. Sterling reached 1.27969, near two- week highs before slipping to end 0.53% lower (1.2715). The Pound has been relatively stable although fears of a hard Brexit will weigh and see more volatility.
US S&P 500 – Wall Street stocks extended gains made yesterday as optimism on the ongoing China-US trade talks outweighed negative sentiment in the financial sector. The S&P 500 gained 0.75% to 2572 from 2550 yesterday and 2530 Monday. Overnight high traded was 2580 where immediate resistance lies. The ongoing partial US government shutdown will limit any gains. President Trump is scheduled to speak on it later today and focus on the budget standoff due to his border wall funding.

On the Lookout: As markets consolidate in Asia first-up the busy week’s events will start to pick up today, coming in fast and furious. US President Trump speech on the border security and the government shutdown later today (1pm Sydney time). Before that Australia releases it’s Building Approvals for November, which are expected to improve from the previous month’s drop of 1.5%.
Germany’s Trade Balance will be closely scrutinised with Exports expected to fall 0.3% from a gain of 0.7% in October. BOE Governor Mark Carney is speaking about the future of money in a Bank of England conference.
The Bank of Canada has its policy meeting later today. The meeting is interesting as some are expecting them to hike the overnight rate to 2% from 1.75%. The Rate statement and Press Conference will be closely followed should a surprise emerge.
Fed speak starts with speeches from FOMC members Bostic (Atlanta President), Evans (Chicago President) and Rosengren (Boston President).
Last, but not least, is the release of the FOMC December meeting minutes (6 am Thursday Sydney time).

Trading Perspective: With the week’s heavy events and data yet to emerge, markets will be content to consolidate at current levels. The Dollar generated support from the weaker Euro and Pound as well as higher bond yields. Meantime, the prospect of no further Fed rate hikes will keep the Dollar’s topside limited. Traders will look into the minutes of the last Fed policy rate meeting in December to get any clues to the FOMC’s thinking then on interest rates and the US economy. Fed speak from FOMC members Bostic, Evans, and Rosengren will also be monitored. The Dollar’s rebound was to be expected after it’s steep decline following Jerome Powell’s speech which many considered dovish. Expect some good two-way trade in a potentially choppy session.

EUR/USD – The Euro failed on the topside to break above 1.1500 once again. The pressure is now to the downside with 1.1420 immediate support. The next level of support comes in at 1.1380. The topside of 1.1485-1.1500 will be difficult to break but the prospect of a more dovish Fed should see the medium-term bulls emerge in the Euro in the high 1.13’s/low 1.14’s.
GBP/USD – The British currency will remain captive to Brexit which may not necessarily mean automatic downside. But Sterling will stay volatile with many chances to trade either side of the currency. Choose your levels carefully and look out for market positioning. GBP/USD has immediate support at 1.2700 followed by 1.2660. The resistance at 1.2760 should cap any Sterling gains today. A generally weaker US Dollar may give the Pound the needed boost to squeeze out more shorts.
AUD/USD – The Aussie was little-changed finishing at 0.7140 (0.7144 yesterday). The Australian Dollar has had a decent bounce of it’s lows after last week’s flash crash. AUD/USD traded to a high of 0.71493 where immediate resistance lies. We should see some consolidation with a likely range of 0.7085-0.7155 today. The outlook for a generally weaker US Dollar should see the Aussie continue to maintain it’s gains and grind higher in true Battler fashion.
US S&P 500 – This Wall Street Share Index finished up 0.75% at 2575, just below the 2580 immediate resistance level. Expect the resistance at 2580 and 2600 (strong) to hold any gains with a pull-back most likely. The immediate support at 2535 should hold, with upcoming events (trade talks, Trump’s speech on US government shutdown, FOMC meeting minutes) holding the key to future moves.

Royal MT4 US S&P 500 H4 Chart – 09 January 2019

Happy trading all.

Pound Plummets to 20-Month Lows, PM May Delays Brexit Vote

December 11, 2018 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, Crude Oil, Dollar, GBP-USD, gold, Pound, Ruppee, sterling exchange rate, USD/INR, USD/JPY

Summary: “The Pound Is Sinking” sung Paul McCartney in his 1982 tune of the same title in his album “Tug Of War”. This pretty much sums up yesterday’s chaotic currency markets. Changing the lyrics for the original currencies to today’s, sung to the same tune..“The Loonie’s falling, the Rupee’s reeling and feeling quite appalling. The Dollar is holding, the Yen is fading, the Aussie’s very weak, but everyone’s still trading. UK PM May’s decision to delay today’s scheduled parliamentary vote on Brexit saw Sterling sink to 20-month lows. May’s decision was due to a warning from colleagues of a resounding defeat in parliament of her Brexit deal which now risks no deal. UK Gilt prices rallied, yields tumbled.
Elsewhere in the markets, Brent Crude Oil prices slid 2.6%. Canada’s Loonie fell 0.71% to 1.3405 (1.3323). Reserve Bank of India governor Urjit Patel’s unexpected resignation saw the Indian Rupee slump 1.65%. Emerging market currencies were all lower against the Dollar.

GBP/USD – slumped to April 2017 low of 1.2507 from 1.2735 at yesterday’s open. Sterling settled back at 1.2560 after breaking the support at 1.2600. The yield on the UK ten-year gilt slumped 7 basis points to 1.19% as bonds rallied. Sterling looks suspect and a break of 1.25 could see a test of 1.2350. While any rally should stop at 1.2660, expect more volatility ahead.
USD/JPY – rallied to a high of 113.274 after dropping to an overnight low of 112.24. The Dollar’s strong rebound suggests good support in the 112.20 area. Strong resistance can be found at 113.40. Looking like more consolidation ahead.
AUD/USD – found a good base around 0.7180 yesterday (low 0.71779), settling at 0.7188, down 0.16%. After it’s strong rally last week, the Aussie appears weak. The trade conflict between the US and China will weigh on the Antipodean currency. Commodity and resource prices slid yesterday led by Brent Crude Oil. Copper slid 1.3% while gold and silver were lower. The CRB Index (Commodity Research Bureau) were all lower. AUD/USD closed at 0.7188 (0.7200 yesterday).
USD/INR – soared to close at 72.51 from 71.37 yesterday. This currency pair has fallen from 73 to 70 following the Emerging Market turmoil in October and November. The resignation of the RBI Governor and upcoming local elections are weighing on the Indian Rupee. Incumbent PM Modhi and his ruling party face a tight contest. Emerging market currencies from South Africa’s Rand to Russia’s Rouble all tumbled against the Greenback. Another EM currency crisis is possible.

On the Lookout: Expect the US Dollar to consolidate it’s gains after yesterday’s big sell-off. Asian markets will be cautious following the volatility in Europe and North America yesterday.
Economic data due today include Australian House Price Index for Q3, National Australia Bank’s Business Confidence Index and Conditions for November as well as Japan’s Machine Tool Orders. Across the Atlantic, markets will look at UK Employment and Wage data for November. German and Euro-Zone ZEW Economic Sentiment Index are due. Finally, the US reports Headline and Core PPI data (November).
Market positioning from the latest CFTC report (week ended December 4) revealed that speculators added to their short Euro, Yen and Sterling positions. Net speculative Aussie shorts were pared.

Trading Perspective:

GBP/USD – this currency pair looks heavy even at current levels. While GBP/USD managed to rebound off the overnight low at 1.2507 to its current 1.2562, a test of 1.2500 cannot be ruled out. Expect Asia to consolidate between 1.2510 and 1.2580 before European traders have another go at the downside. The latest CFTC report (week ended December 4) saw an increase in speculative short Sterling bets to -GBP 39,800 contracts from the previous -39,100. While that is a small change, overall speculative shorts are at their biggest since May 2017. Volatility will continue to rule the Pound.
USD/JPY – look for further consolidation between 112.00-113.50 with a test lower more likely. Stocks stabilised yesterday but risk appetite remains shaky. The yield on the US Ten-Year bond was flat at 2.85% while Japan’s 10-year JGB yield slipped 2 basis points to 0.03%. Currently the US Dollar is the go-to currency as a safe-haven. This will change as we head into the new year. Expect the Yen to come back.
AUD/USD – slip-sliding away, the Aussie is losing support with market’s risk-off profile and lower resource prices. This currency pair has had a weak tone since the close on Friday. There is a good chance that the strong support at 0.7160 will be tested with the next support coming in at 0.7120. Immediate resistance can be found at 0.72 and 0.7220. The latest CFTC report saw a slight decrease in net speculative Aussie short bets to -AUD 50,800 contracts from -53,900. This is still the biggest number of spec shorts since November 2015. Look to buy the dips today to 0.7160.
USD/INR – a break above 73.50/74.00 could spell danger for the Emerging Market currencies, looking fragile once again. The USD/ZAR jumped 2.04% to 14.40 from 14.00 yesterday while Russia’s Rouble lost 1.11% against the Greenback. The RBI has intervened to keep the Rupee from weakening further most of November. USD/INR pulled back to 69.00 from 73.50 at the end of November. Emerging Market currencies are closer monitored these days, often they could lead the Majors.

Pound Spikes Higher; UK Parliament Rejects No-Deal Brexit

UK Lawmakers Reject May’s Brexit Plan Again, Pound Slides

Dollar Recovers “Somewhat” on Better US Q4 GDP, Yen Weakens

Slip-Sliding Away, Dollar Drops for Third Day Running, Yields Fall

Pound, Euro Post Modest Gains in Quiet, Holiday Trade

Many Headlines, Little Movement – Dollar Grinds Lower and Marks Time

Pound Soars, Bites Shorts as Risks of a Muddled Brexit Fall

Sterling Reverses Gains as Brexit Vote Fears Surface Anew

Pound Plummets to 20-Month Lows, PM May Delays Brexit Vote

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