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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.

Dollar, Stocks Climb, Yields Firm; Optimistic Trade Talk Extends

January 21, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, EUR-USD, S&P 500, US 10-year Treasury, USD/DXY, USD/JPY

Summary: Equities rallied while the US Dollar climbed to end with its first weekly gain since December 14. The scheduled Washington trip of Chinese Vice Premier Liu He on January 30 fuelled optimism on talks with the US to resolve the trade standoff. The Greenback’s rally was broad-based with the Dollar Index (USD/DXY) finishing at 96.364, up 0.3%. Sterling slumped back down to earth to 1.2874 from 1.2994. USD/JPY climbed to 109.89, its high since the flash crash on January 4.
Wall Street stocks finished higher ahead of a long weekend with the US celebrating Martin Luther King holiday today. The DOW rallied 1.36% while the S&P 500 was up 1.28%. The yield on the US 10-year Treasury climbed to 2.78% from 2.75%.
US economic data was mixed. Industrial Production beat forecasts while Consumer Sentiment slumped. UK Retail Sales slowed in December to 3% from 3.4% November.

Barchart.Com USD DXY (Dollar Index) Chart – 21 January 2019

USD/DXY – The Dollar Index climbed off the immediate support at 96.00 to end up 0.3% at 96.36. USD/DXY which measures the value of the US Dollar relative to a basket of 6 “major” currencies, rose to its highest since January 4. The Dollar Index hit its low on January 10 (95.15).
USD/JPY – the Dollar rallied steadily to an overnight high of 109.89 before settling to close at 109.75 in New York. Continued optimism China-US trade outlook, higher bond yields boosted the Greenback against the Japanese currency. The BOJ’s policy rate meeting is on Wednesday (January 23).
EUR/USD – The Single currency slipped to 1.1365 from 1.1395 on Friday. Overall US Dollar strength and recent softer Euro area economic data have sapped the Euro’s strength and halted its rally. The Euro closed at it’s lows since the January 4 flash-crash. The ECB has its policy rate meeting later this week

On the Lookout: The market’s focus today falls on China who release their annual Q4 GDP plus the trifecta of Industrial Production, Retail Sales, and Fixed Asset Investment. Economic growth in the world’s second largest economy is forecast to have slowed to 6.4% from 6.5% in Q4 2018. This would bring China’s Total 2018 GDP to 6.6%, the lowest since 1990. GDP Growth recorded in 2017 was 6.8%. A slowdown in the GDP to market expectations will put pressure on China to add further stimulus to promote growth. However, a mountain of stimulus would create more debt, something the country cannot afford.
The Bank of Japan and European Central Bank have their first rate-policy meets for the year. The Bank of Japan is not expected to deliver any surprises when they meet on Wednesday (23 Jan). The ECB is expected to carry a dovish tone following slower Euro area data when Mario Draghi gives his address. (Thursday, 24 Jan).
Following the Brexit drama, UK Employment numbers are out tomorrow as well as Germany’s ZEW Economic Sentiment (22 Jan). New Zealand’s CPI is released on Wednesday (23 Jan) and Australian December Jobs data are out on Thursday (24 Jan).

Trading Perspective: All eyes on China this morning. The market’s higher risk profile is based on a combination trade optimism and Chinese stimulus which has lifted equities and the US Dollar. Slower-than-forecast GDP would put pressure on the Dollar and risk. The world’s second largest economy cannot afford to our in more stimulus with the risk of further debt.
Markets have shrugged off the partial US government shutdown as it doesn’t have a precedent for weighing on the Greenback. We are now in the fourth week, with no clear end in sight.
The market’s positive risk profile may be in jeopardy as we look ahead to this week. Which may be a detriment to further US Dollar strength.

Investing.COM USD JPY Daily Chart – 21 January 2019

USD/JPY – The Dollar’s rebound has taken us to virtually where we began on the morning of the flash-crash. Higher US bond yields have lifted USD/JPY with the 10-year US bond yield closing at 2.78%. Japan’s 10-year JGB was up 1 basis point to 0.00%. The BOJ is not expected to deliver any surprises when they meet on Wednesday. The market’s risk-on profile lifted the USD/JPY to current levels. Any change in that will see a reversal. Immediate resistance lies at 109.90-110.00. The next resistance level can be found at 110.10 and then 110.40. Immediate support lies at 109.40 followed by 109.10. The strong bounce in the Dollar Yen may be overextended and any move lower in risk appetite will see USD/JPY slip. Likely range today 109.00-109.90. Prefer to sell rallies from here.
USD/DXY – the Dollar Index has rebounded well off the base at 95.15 seen in early January. As the market raced off to sell Greenback’s the optimism built from trade talks and the rally in bond yields lifted the US currency. The next resistance level on USD/DXY lies at 96.40 (overnight high 96.394), followed by 96.70 and 97.00. Immediate support can be found at 96.10 and 95.80. Look to sell rallies with the positive risk appetite overdone. US bond yields may have also hit their peak for now. Its’ difficult to see them much higher given the ongoing US government shutdown.
EUR/USD – the Single currency found itself slip-sliding away given the overall USD strength. Euro area economic figures have continually disappointed, highlighting the slowdown in the continent. Traders who raced off buying Euro’s for the break higher were disappointed and turned when the 1.1570 level failed. EUR/USD traded to 1.13532, January 4 lows. Immediate support for the Euro can be found at 1.1350 followed by 1.1320. Immediate resistance lies at 1.1400 followed by 1.1440. EUR/USD has basically stayed in a 1.1300-1.1500 range with breaks unable to sustain themselves. Traders are expecting a slightly downbeat ECB this week. That said expect the base at 1.1300/s to hold with the range within 1.1300 and 1.1500.
AUD/USD – The Aussie flipped 0.40% to 0.7165 after another failed attempt above 0.72 cents. An overall stronger US Dollar, buoyed by positive risk profile, has weighed on the Battler. Chinese GDP data is forecast to have slowed to 6.4% in Q4 2018. If the data comes out as expected, look for the Aussie to drift lower with good support at 0.7140/50. Anything stronger than 6.4% will see AUD/USD jump to 0.7200/10. Australian Employment growth due on Thursday is expected to slowdown in December to 18,100 jobs from 37,000 in November. Look to buy dips in the Aussie with a likely range of 0.7140-0.7220 range.

Have a good week ahead all, happy trading.

Dovish Fed Minutes, Trade Optimism, Shutdown Push Dollar Lower

January 10, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, EUR-USD, EURO, FED, FOMC, S&P 500, USD/JPY

Summary: December FOMC Meeting minutes revealed dissension amongst members on the rate hike and reinforced the Fed’s cautious approach to further tightening. Trade optimism remained as China and the US extended talks for the third day in Beijing. The end-result was broad-based Dollar weakness. The Dollar Index (USD/DXY) slid to October lows, closing at 95.15 (95.914 yesterday). EUR/USD climbed 0.8% to 1.1550, the Kiwi was up 0.8% to 0.6798. The Dollar slipped against the Yen to 108.02 (108.67 yesterday). Germany’s trade surplus beat forecasts offsetting yesterday’s weak factory output. The Bank of Canada kept policy unchanged, leaving its overnight rate at 1.75%.
The US government shutdown entered Day 19 without resolution, further weighing on the Greenback as Sydney markets opened.
Wall Street stocks pared gains made earlier on the day, weighed by the partial government shutdown. The S&P 500 was up 0.6% at 2585 (2570).
Brent Crude Oil prices soared 4.5% boosted by OPEC cuts and optimistic trade talks.

EUR/USD – The Euro broke above 1.1500 on the dovish Fed meeting minutes and upbeat German trade data. EUR/USD climbed to 1.1557, hitting its strongest level since mid-October. The Single currency pared gains to close at 1.1551.
USD/JPY – slip-sliding away, this currency pair fell to 107.97 overnight lows, and closing at 108.02, down 0.7%. Japanese economic data releases come through today and tomorrow together with more Fedspeak.
AUD/USD – rallied to just under 72 cents on broad-based US Dollar weakness. The Aussie finished at 0.7177, up 0.2%. The Battler’s gains were limited by downbeat Australian Building Approvals which fell well below forecasts.

On the Lookout: The FOMC meeting minutes reiterated the Fed’s “patience” about further rate increases. While most members voted to raise interest rates in December there were a few dissensions. Fedspeak mostly echoed lowered expectations of rate increases in 2019.
Several more Federal Reserve officials speak later today. FOMC members James Bullard and Charles Evans speak at different events. The highlight will be Fed Chair Jerome Powell who addresses the Economic Club of Washington DC where audience questions are expected. Upbeat Sino-US trade talks in Beijing are expected to end today with a statement expected. Data releases today begin with China’s annual PPI and CPI for December, followed by Japanese Leading Economic Indicators and 30-Year JGB Bond Auction for Asia. Europe sees ECB Monetary Policy Meeting accounts followed by the US Fed speakers.

Trading Perspective: While the Dollar is clearly on the back-foot, the events and data releases could make for a rebound. Fed Chair Powell’s speech will be closely followed. While trade talks between China and the US remain optimistic, any disappointment will give the Greenback support, while weigh on stocks. Tomorrow sees the release of US Headline and Core CPI which will be crucial. Fed officials said that they could afford to be more “patient” about tightening rates due to “muted inflation pressures”.
US bond yields steadied further with the 10-year finishing 2 basis points higher at 2.74%. Germany’s 10-year Bond yield settled at 0.27% from 0.22%.

EUR/USD – The Single Currency hit a high of 1.1557 not seen since October 17 last year. The Euro backed off those highs and settles currently at 1.1543, suggesting that the immediate resistance at 1.1555/60 should hold. The ECB has it’s turn tonight when it releases its monetary policy meeting accounts. A bit of caution on the topside before getting too carried away. We see a likely trading range of 1.1485-1.1555 today.
USD/JPY – The Dollar slid to 107.97 earlier this morning before settling at 108.15 currently, suggesting immediate support just under 108.00. If we look back to May 2018, USD/JPY has been in a wider 108-113 range. And unless we see a lower US 10-year bond yield, its difficult to see that break. That said, the USD/JPY always tends to overshoot (as it did during the recent flash-crash). Japanese data releases today and tomorrow and further Fedspeak will determine the next big move for this currency pair. Immediate support lies at 107.90 and then 107.60. Immediate resistance can be found at 108.35. For today we see a likely range of 107.95-108.55.
AUD/USD – The Aussie traded to 0.71939, short of the immediate resistance at 0.72 cents. The Aussie lagged its Rivals against the generally weaker US Dollar. Base metal prices stabilised after their strong rally earlier this week. Trade talks between China and the US remain the big factor for the Battler. Chinese CPI and PPI data releases today will also impact the currency. The resistance on the AUD/USD pair lies between 0.7200/20 and that should cap any rallies for today with a likely range of 0.7150-0.7200.
S&P 500 – This Wall Street financial stock index rallied to a high of 2595 before paring gains to close with modest gains at 2589. Immediate resistance can be found at 2600 followed by 2630. Immediate support lies at 2560 and then 2520. The ongoing government shutdown will limit any further gains. The risk is down should optimism on trade fail to sustain.

Happy trading all.

Stocks Jump Following Steep Losses in Wild Session, Dollar Slips

December 28, 2018 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, EUR-USD, S&P 500, US 10-year bond yield, USD/DXY, USD/JPY, VIX Index

Summary: “Oh, what’s going on, what’s going on?” Marvin Gaye’s 1970 lyrics entered my head as I logged into my trading platform. The S&P 500 had slumped over 2% following yesterday’s furious rally only to bounce back and finish up 1.2%. Literally in the blink of an eye, Fast and furious 2. Trading volumes stayed low. The S&P 500 volumes were a reported 11% below the 30-day average. Computers and Algos have taken over in stock trading which defy human explanation. Wall Street’s initial fall came after a Reuters reported that President Trump was considering an executive order to ban US firms from using equipment built by Chinese firms Huawei and ZTE.
The Dollar Index (USD/DXY) closed 0.5% lower, mainly on the Euro which rallied 0.7%. USD/JPY was little-changed at 111.04, rebounding off lows seen when stocks slumped earlier.
The VIX Index remained elevated, rising back to 34 before dropping to finish around the 30.00 mark.
The yield on the benchmark US 10-year bond slipped 2 basis points to 2.78%.

EUR/USD – The Single Currency outperformed, rallying 0.7% against the Greenback. Overnight high traded was 1.14542. ECB policymakers have maintained their confidence that the Euro-Zone will weather the slowdown. The recovery of the lows and current market positioning leave the Euro poised for a more sustainable recovery.
USD/JPY – Safe haven Yen saw the Dollar drop to a low of 110.456 before rallying back above 111.00 as stocks recovered. Japanese 10-year JGB yields were unchanged. A slew of Japanese economic data is due today
AUD/USD – The Aussie’s attempt to climb on the overall USD weakness failed and the antipodean ended down 0.6% at 0.7028 (0.7060 yesterday). AUD/USD traded to a low of 0.70166, lows not seen since January 2016.

Barchart.Com CBOE Volatility Index – 6 month Chart -12/28/2018

VIX Index (CBOE Volatility Index). The VIX climbed back to 33.80 following the drop to 30.23 before closing at 29.96, down 1.48%. It remains elevated near the 30 mark. Expect more volatile days ahead. “My my, hey, hey, volatility is here to stay”.

On the Lookout: Amidst the uncertainty, economic data released yesterday saw the US Conference Board’s Consumer Confidence Index declined in December, printing at 128.1 against forecasts of 133.0 and a previous 135.7. Today’s data sees Japanese Preliminary Industrial Production, Retail Sales, Unemployment Rate and Tokyo Core CPI. Germany reports its Preliminary CPI. US Goods Trade Balance and Chicago PMI round up the data.

Trading Perspective: The drop in US yields will keep a lid on the US Dollar. Two-Year US Treasury yields fell 4 basis points to 2.57%. Market positioning also favours a weaker Greenback. The last full Commitment of Traders CFTC report saw speculative US Dollar long bets were maintained against the Major currencies. With trading volumes low, and trading rooms thin into next week, any sizeable orders could see some exaggerated moves.

EUR/USD – The Euro topped out at 1.1454 which is today’s immediate resistance. Short term support can be found at 1.1420 and then 1.1400. The overnight low was 1.1351 and that level should hold if the Single currency is to see further gains.
USD/JPY – The Yen continues to be the choice of safe-haven currency and any further dramatic falls in stocks will see the Dollar lower. The fall in US yields will also keep a cap on USD/JPY. The overnight high traded was 111.34. Immediate resistance lies at the 111.30/40 level followed by 111.80 and 112.00. Immediate support can be found at 110.50 and then 110.20. A break of 110.20 would see the 110.00 level tested, leaving the Dollar exposed to 109.60. With market positioning currently short JPY bets, look to sell USD/JPY rallies.
AUD /USD – The Aussie continues to trade heavy in the current environment. A test of 0.7000 is possible. However, given that the speculators are short of Aussie, we should see some good support at those levels and a bounce is likely. For today, AUD/USD has immediate support at 0.7015 and the 0.7000. A break of 0.7000 would see 0.6960. On the topside, resistance lies at 0.7050 and then 0.7080. With US yields coming lower, the widening differential between US and Aussie rates has come to a halt. Which is supportive of the currency.

FXCM AUD USD Daily Chart – 12/28/ 2018

Happy trading all.

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

Dollar, Stocks Climb, Yields Firm; Optimistic Trade Talk Extends

Dovish Fed Minutes, Trade Optimism, Shutdown Push Dollar Lower

Stocks Jump Following Steep Losses in Wild Session, Dollar Slips

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