USD/JPY Archives - The Industry Spread

Pound, Euro Gain on Brexit Deal, Lowe Remarks Lift Aussie

October 18, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, EUR-USD, Forex, FX trading, GBP-USD, Sino-U.S. trade talks, USD/JPY

Summary: Brexit continued to take centre-stage in FX. Sterling soared anew, hitting 1.2898 after reports that the UK and EU agreed a tentative Brexit deal. The Pound gained and The Euro rallied to 1.1140, near 2-month highs, easing to settle at 1.1125 at the New York close. Though the deal still needs to be ratified by British lawmakers, both currencies kept their gains. Weaker US data continued to erode support for the Dollar, which saw broad-based weakness against its Rivals. The Dollar Index (USD/DXY) a popular gauge of the Greenback’s value against a basket of 6 foreign currencies, fell 0.4% to 97.60 from 98.00 yesterday. The Australian Dollar soared 1% to 0.6825 (0.6762) lifted by a fall in the Jobless rate to 5.2% from 5.3%. The Aussie also got support from comments by RBA Governor Philip Lowe, speaking at the IMF Conference in Washington DC. Lowe said that negative rates are extraordinarily unlikely in Australia. The Dollar was marginally lower against the Yen at 108.64 from 108.75. Emerging and Asian Currencies all recorded gains versus the struggle US Dollar. Wall Street stocks extended gains to finish within record highs amid a cluster of mostly positive earnings reports. The Dow closed at 27,035. while the S&P 500 rallied 0.18% to 2,999.

US Industrial Production – forexfactory – 18 OCT 2019

US bond yields were up a touch with the 10-year yield closing one basis point higher at 1.75%.
The string of weak US data continued with misses in US Industrial Production, down 0.4% in September, after an upwardly revised 0.8% rise in August, the largest monthly fall since April. US Capacity Utilisation underwhelmed with a 77.5% print versus expectations of 77.7%. Philly Fed Manufacturing Index fell to 5.6 (versus forecast of 7.3), and the lowest since February.
Australia’s economy created 14,700 jobs in September while August’s employment gain was revised up to 37,900 from 34,700. The Unemployment Rate dipped to 5.2% from 5.3%.

EUR/USD – The Euro rallied to near two-month highs at 1.11398 before easing to close in New York at 1.1125. The shared currency continued to benefit from positive Brexit news and the broad-based US Dollar weakness.
GBP/USD – The Pound kept its gains, finishing at 1.2890 (1.2825 yesterday) in volatile trade. Sterling slumped to 1.2855 after a leader from Ireland’s Democratic Union Party said they would vote against the UK/EU Brexit agreement. British PM Boris Johnson still needs to get the deal approved by British lawmakers who meet on the issue Saturday.

AUD USD CHART – IG Daily FX – 18 October 2019

AUD/USD – The Aussie came back in true Battler form, jumping to 0.68330 before settling at 0.6825, (0.6762 yesterday) for a 1% gain. A fall in Australia’s Jobless rate and comments from RBA Governor Lowe supported the currency. The Kiwi, antipodean cousin to the Aussie, rose against the Greenback to 0.6350 (0.62900), a gain of 0.9%.

On the Lookout: The string of weaker US economic reports continued with Industrial Production and Capacity Utilisation following Wednesday’s poor retail sales.
We noticed that US TIC Long Term Purchases (which is the difference in values between domestic and foreign purchases of US Securities) fell to US$41.1 billion from the previous months rise of $83.8 billion. It is the first fall since June and the biggest since February. FX traders are starting to notice the weak US reports. In contrast, those of rival nations are stabilising. FX will focus on today’s Chinese data dump.

US TICS Long-Term Purchases – FXFactory – 18 Oct 2019

Today sees China’s trifecta of GDP, Industrial Production and Retail Sales. China also releases its Unemployment rate.
Asia’s other data release is Japan’s National Core CPI. Europe sees the Eurozone Current Account. Finally, the US releases its Conference Board’s Composite Leading Index.
The IMF Conference in Washington DC continues with Bank of England Governor Mark Carney due to speak.

Trading Perspective: The technical break in the Dollar Index (USD/DXY) below 98.00 to its close at 97.60, was the result of more than just Sterling and Euro strength. The Dollar’s fall overnight was broad-based. The string of weaker US economic reports is eroding support for the Greenback which is on the way to a deeper downside correction. Market positioning has been long of US Dollar bets which will keep the Greenback pressurised.

USD DXY Investing.Com – 18 OCT 2019

USD/DXY – The Dollar Index broke though immediate support at 97.80 after hovering around the 98.00 level yesterday. Overnight low traded was 97.50 which is today’s immediate support. The next support level lies at 97.20. Immediate resistance can now be found at 97.80 and 98.00. The Dollar Index broke through September lows and now appears headed to 97.38. Look for consolidation today with a likely trading range of 97.40-97.90. Prefer to sell rallies.
EUR/USD – The Euro extended its advance breaking through the 1.1110 level to top out at 1.11398, near two months highs. The shared currency closed at 1.1125. Positive Brexit news will continue to support the Euro. Further signs of a slowing US economy ahead will also buoy the Euro. Immediate support lies at 1.1100 followed by 1.1070. Look for some consolidation today with a likely range of 1.1085-1.1145. Just trade the range for today but the Euro remains a buy on dips in the medium term.
AUD/USD – The Battler extended its gains squeezing out the shorts following the fall in Australia’s Unemployment rate and comments from RBA Governor Lowe. We highlighted a few reports ago that the Australian Dollar TWI (Trade Weighted Index) was at near decade lows. The RBA will keep itself from easing while this is the case. The Aussie has more topside to it with immediate resistance today at 0.6840 followed by 0.6880. Immediate support can be found at 0.6800 followed by 0.6770. Look to buy dips with a likely range today of 0.6790-0.6840.

Happy Friday, top weekend and trading all.
Am off overseas for a break, back in mid-November. Stay nimble, keep your views firm.

Dollar Index Falls to One-Month Low on Weak Retail Sales

October 17, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, EUR-USD, FX trading, GBP-USD, monetary policy, Sino-U.S. trade talks, USD/JPY

Summary: The Dollar Index fell to one-month lows at 98.004 (98.286) as a weak Retail Sales report in September added to growing fears of a slowing US economy. Retail Sales dropped 0.3% in September, the first fall in seven months, missing forecasts of a 0.3% rise. The benchmark US 10-year bond yield closed 3 basis points lower to 1.74% in late New York. Across the Atlantic, Brexit neared its endgame, with EU and British officials on the verge of a last-minute deal. Sterling extended its gains, climbing to 1.28776 before easing to end at 1.2525 for a gain of 0.48%. British PM Boris Johnson still has work to do back in the UK to ensure Parliament approves the plan. The Euro advanced to 1.1075, up 0.36% on the combination of an overall weaker US Dollar and Brexit optimism. USD/JPY ended little-changed at 108.75. Ahead of today’s crucial Employment report, the Australian Dollar traded marginally higher to 0.6762 (0.6755).

USD RETAIL SALES – 17 OCT 2019

Wall Street stocks declined at the finish. The DOW was 0.22% lower to 26,972 (27,027). The S&P 500 lost 0.14% to 2,992 from 2,998 yesterday.
US September Core Retail Sales (excluding automobiles) fell 0.1% against forecast of a 0.2% gain.
UK September Annual Headline CPI missed forecasts at 1.7% (1.8%), while Core CPI matched expectations at 1.7%. UK September PPI Input (monthly) fell 0.8% lower than August’s fall of 0.1%.

DXY CHART – Trading View – 17 October 2019

USD/DXY – The Dollar Index retreated to fresh one-month lows, hovering at the 98.00 level at the close. Weak US retail sales, which saw a big miss against forecasts and recorded its first fall in 7 months weighed on the Greenback.
GBP/USD – Brexit related headlines once again dominated the FX landscape. Hopes continued to rise for a final deal as negotiations continued. The Pound traded in similar volatile fashion, jumping to a high at 1.28776 before dropping to 1.2825, up 0.48% from 1.2787 yesterday.
AUD/USD The Aussie Dollar managed a marginal gain of 0.11% to 0.6762 (0.6752) ahead of today’s Australian Employment report. Median market forecasts are for a gain of 15,000 jobs in September from August’s 34,700. The Aussie Battler was sold down to 0.67236 on the market’s dovish interpretation of the latest RBA meeting minutes.
EUR/USD – The Euro continued to advance buoyed by hopes of a Brexit deal and an overall weaker US Dollar. EUR/USD traded to 1.10855, fresh 4-week highs before easing to 1.1075 at the close, up 0.36%.

On the Lookout: Today’s data releases and events will set the tone for the next move in the Greenback. Before the release of today’s data RBA Deputy Governor Guy Debelle speaks at an Australian Investment Conference in Sydney. Bank of England Governor Mark Carney speaks at a Harvard University function in Boston. The European Council is expected to discuss Brexit at a meeting in Brussels today.
Australia’s September Employment Change, Unemployment Rate (forecast at 5.3%, unchanged from August), Participation Rate are released at 11.30 am Sydney time. Look for the breakdown as well between Full-time and Part-time Employment. European reports start with Swiss and Italian Trade Balances. The UK reports on its September Retail Sales. The US follows with a plethora of reports:
US Philadelphia Fed Manufacturing, Building Permits, Housing Starts, Industrial Production, Capacity Utilisation and Weekly Jobless Claims. Further slowing of the US economy could see more Dollar falls.
Markets will continue to monitor developments in trade and Brexit through various media releases.

Trading Perspective: The Dollar Index (USD/DXY) closed at a strong technical support at 98.00 after dipping briefly to 97.898. Expect some consolidation for the US Dollar against it’s Rivals although further confirmation of a slowing US economy will push the Greenback lower.

USD/DXY – The Dollar Index traded to an overnight low at 97.898, climbing to 98.004 at the close, clinging to the 98.00 support level. The next support level lies at 97.80 followed by 97.50. Immediate resistance can be found at 98.30 and 98.50. Expect the Dollar Index to consolidate today with a likely range of 97.90-98.40. Prefer to sell rallies.
EUR/USD – The Euro is still the main driver of the Dollar Index with 57.6% of the weight in the Index. Together with Sterling, the two currencies have a combined weight of 69.5% in the Index. The Euro traded to an overnight and 4-week high at 1.10855. Immediate resistance lies at 1.1085 followed by 1.1105. Immediate support can be found at 1.10520 and 1.1030. The EU Council meeting in Brussels on Brexit today is the big event for both the Euro and Pound. Look to trade a likely range today of 1.1040-1.1090. Just trade the range for this puppy today but the preference is to buy dips.
GBP/USD – Sterling jumped quickly to 1.28776 as Brexit entered its endgame with officials from the EU and the UK on the verge of a deal. However, it dropped just as fast as it rose to finish at 1.2825. The main positive for the Pound is that expectations for a no-Brexit have faded. Any new deal would have to go through the UK’s fractious Parliament. Look for more volatility on the currency. Immediate support for today lies at 1.2780 followed by 1.2730. Immediate resistance can be found at 1.2850 followed by 1.2880. Look to trade a likely range today of 1.2780-1.2880. Prefer to sell rallies from current levels. But be nimble.

IG-Daily FX AUD USD CHART – 17 OCT 2019

AUD/USD – The Aussie Dollar was marginally higher at the NY close to 0.6762. Just a few minutes ago, RBA Assistant Governor Guy Debelle, speaking at an Australian Investment Conference in Sydney said that rate cuts have taken account of the expected downturn in housing. The Aussie stayed put at around 0.6760 following his speech. It all depends on the Aussie Jobs report in a little over an hour. Immediate resistance lies at 0.6780 followed by 0.6810. Immediate support can be found at 0.6745 and 0.6725. Look to trade a likely range today of 0.6745-0.6795. Prefer to buy dips. The Aussie speculative market is short, and the Battler needs to play catch up with the overall weaker Greenback.

Happy Thursday and trading all.

Brexit Deal Nears Completion, Sterling Soars, Risk Rallies

October 16, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, ECB, EUR-USD, Federal Reserve Board, foreign exchange, Forex, FX trading, GBP-USD, Sino-U.S. trade talks, trading platform, USD/JPY

Summary: Sterling soared to its highest level since May, hitting 1.2800 (1.2562 yesterday) on the back of reports that Britain and the European Union were close to a Brexit deal. Speaking in Luxembourg before a crucial meeting with European leaders, chief EU negotiator Michel Barnier said a Brexit deal is still possible this week. On the trade front, Beijing indicated that it wants a pullback in tariffs before China purchases up to US$50 billion of US agricultural products. Risk-on extended for FX with the haven Yen, Swiss Franc, and the US Dollar dipping. The Dollar Index eased 0.17% to 98.286 and rallied against the Yen to 108.90 from 108.38. The Australian Dollar stayed soggy despite the market’s better mood, slipping 0.34% to 0.6752 (0.6777). Latest RBA meeting minutes revealed policymakers are prepared to ease monetary policy to support the economy if needed, despite knowing that doing so could create a housing bubble. The Euro was moderately higher at 1.1035 from 1.1025. USD/SGD edged higher to 1.3705 (1.3695) after MAS eased policy.
Treasury yields rose on the renewed optimism on Brexit. The US 10-year bond yield was up 4 basis points to 1.77%. UK ten-year Gilts yielded 0.69% from 0.63% yesterday. Germany’s 10-year Bund rate was up 4 basis points to -0.42%.

GLOBAL BOND YIELD CHART – Bloomberg – 16 OCT 2019

In the US, the earnings season got off to a good start, lifting Wall Street stocks higher. The US S&P 500 finished 1.03% higher at 2,998 (2,967).
Data releases yesterday took second place to politics. The UK Unemployment rate climbed to 3.9% in September from 3.8% the previous month. Britain’s Average Weekly Earnings (Wages) dipped to 3.8%, missing forecasts at 4%. Germany’s ZEW Economic Sentiment Index improved to -22.8 beating expectations at -26.7. Eurozone ZEW Economic Sentiment also bettered forecasts at -23.5 vs -26.7. Both ZEW Sentiment Indicators were worse than the previous month,

GBP/USD – soared to hit May 2019 highs at 1.2800 before easing to settle at 1.2787, up 1.33%. Fierce short covering in the British currency has seen it rally a total of 4.33% since the beginning of the week. Technically the 1.28 level will take more shorts covering to break up. EU ministers repeatedly said that it is too premature to assume a Brexit deal is imminent.
USD/JPY – The haven Yen weakened 0.42% against the Dollar to 108.88 after hitting a 6-week high at 108.90.
AUD/USD – The Australian Dollar dipped to a low at 0.67426, the weakest this week before settling a touch higher at 0.6752. The latest RBA meeting minutes revealed a more dovish tilt with policymakers willing to cut rates further if the economy weakens.
EUR/USD – the shared currency saw a modest rise to 1.1035 from 1.1025. The Euro would benefit should a Brexit deal materialise.

On the Lookout: Data releases pick up today with the first-tier US Headline and Core Retail Sale reports. Euro area, UK and Canadian Headline and Core CPI reports are also scheduled for release. Meantime New Zealand’s Q3 CPI beat forecasts at 0.7% against 0.6%. NZD/USD jumped from 0.6285 to 0.6320, easing to 0.6310 on the release. Inflation numbers matter to FX markets.

NZ Q3 CPI Chart – Forex Factory – 16 OCT 2019

Several central bank heads will be speaking today. Bank of England Governor Mark Carney is due to address a panel discussion at an IMF event in Washington DC. Chicago Fed President Evans speaks on economic conditions and monetary policy at a conference in Illinois. Bundesbank President Weidman speaks at a function in New York.

Trading Perspective: FX move back to fundamentals with today’s data releases. A done deal on Brexit between Britain and the UK will see the Pound rally against the US Dollar and other weaker rivals. The Euro should also see further gains. Expect cross currency pairs like GBP/JPY, GBP/AUD, EUR/JPY, EUR/AUD to climb further.
The US Dollar is still on the defensive overall and tomorrow we look at the latest market positioning (delayed this week due to the US holiday on Monday).

Sterling Pound Chart – Daily FX – 16 OCT 2019

GBP/USD – Sterling rallied to an overnight and May high at 1.2800. The British Pound faces immediate resistance between 1.2800-30 level. A clean break above 1.2850 could see Sterling back to the 1.3000-1.3200 area. The 4.3% move higher has been the result of some fierce short covering. FX ignored the weaker UK employment report, trading on politics which affected sentiment. A Brexit setback could see Sterling fall just as quickly. Immediate support lies at 1.2750 followed by 1.2710. Look for a volatile trade today with a likely 1.2690-1.2790 range. Just trade the range shag and be nimble on this puppy today.
EUR/USD – The Euro continues to edge higher against the Greenback, finishing up 0.06% to 1.1035 (1.1025). Overnight high traded was 1.10461. Immediate resistance can be found at 1.1050 followed by 1.1080. Immediate support lies at 1.1010 and 1.0990 (overnight low 1.09913). Markets will focus on Euro area and Eurozone inflation numbers due today. Look to buy dips in a likely 1.0995-1.1065 range.

AUD/USD – The Aussie closed 0.34% lower to 0.6753 (0.6775) after the latest RBA meeting minutes revealed a dovish tilt from policymakers. The RBA Board said they were prepared to ease monetary policy support the economy if needed. Economic data will be crucial for the Aussie Battler moving forward. Tomorrow sees the September Australian Employment report. AUD/USD has immediate support at 0.6740 (overnight low 0.67426) followed by 0.6720. Immediate resistance can be found at 0.6780 and 0.6810. Look to trade a likely range today of 0.6740-0.6790.

Caution Weighs on Trade Talks, Brexit Hopes, Dollar Gains

October 15, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, CFTC, EUR-USD, FX, FX trading, GBP-USD, Retail Fx, Sino-U.S. trade talks, USD/JPY

Summary: Holiday-thinned markets turned cautious on a partial trade deal between China and the US while scepticism over a Brexit deal rose. FX reverted to familiar ranges in subdued trade with Japan, Canada and the US on holiday. The Dollar Index (USD/DXY) gained ground following two days of losses to finish at 98.516 (98.332 yesterday). Sterling fell 0.68% to 1.2562 (1.2615) after a deal to ease Britain’s departure from the European Union faced uncertainty. Euro area nations reportedly wanted more concessions from Boris Johnson. A total agreement was unlikely this week. The Euro dipped 0.07% to 1.1025 from 1.1036. Germany’s Wholesale Prices fell more than forecast.

CMC Markets – Singapore GDP – YoY – 15 Oct 2019

The Dollar ended flat against the safe-haven Yen at 108.35. Ahead of today’s release of the RBA meeting minutes, the Australian Dollar retreated in cautious trade to 0.6775 from 0.6793. The RBA trimmed rates at that last meeting. Elsewhere in Asia, the Monetary Authority of Singapore (MAS), effectively eased rates for the first time since 2016. The Singapore central bank did this by reducing the slope of the Singapore Dollar’s NEER (Nominal Effective Exchange Rate). Which is effectively the Singapore Dollar’s weighted average rate against a basket of foreign currencies. The effective easing was less than traders expected. The Dollar eased against the Singapore Dollar (USD/SGD) to 1.3695 from 1.3729. Singapore’s economy avoided a technical recession as Q3 growth rose 0.1%, missing forecasts at 0.2%. Wall Street stocks slipped in limited trade. Bond yields were unchanged.
China’s Trade Surplus increased in CNY terms to CNY 275 billion in September from CNY 240 billion in August. US Empire State Manufacturing Index rose to 4.0, beating forecasts of 1.1.

EUR/USD –The Euro fell back into range trading, dipping to 1.1025 after touching 1.10428 highs in Asia. The shared currency hit a low of 1.10126 before steadying in quiet trade.
GBP/USD – “What goes up must come down.” The British Pound fell back to 1.2562 from 1.2610 as optimism on a smooth Brexit waned with EU and UK leaders stressing that there was still a long way to go, before they could agree a Brexit deal. Much of Sterling’s spike over the weekend to 1.27068 was the result of fierce short covering in less liquid conditions.
USD/JPY – The Dollar eased to 108.35 after trading to a near 6-week high at 108.628 on Friday on the market’s risk on stance. USD/JPY peaked at 108.521 yesterday before dropping to a low at 108.033.
USD/SGD – The Greenback eased against the Singapore Dollar to 1.3695 from 1.3728 yesterday and 1.3757 Friday. Asian FX were disappointed that the MAS easing was less than they expected, “only just.” Still it was the first easing from the Singapore central bank since 2016. The Singapore Dollar has been exceptionally strong and recorded gains against the Greenback and other currencies. Expect a reversal of this with a vigilant MAS on the lookout.

On the Lookout: Global markets return to normal conditions today. The Asian day starts off with a data deluge from China and Japan. The RBA releases its latest monetary policy meeting minutes in Sydney (11.30 am). China reports on its September CPI and PPI. Japanese markets return today with the release of Japanese Revised Industrial Production and Tertiary Industry Activity. BOJ Governor Haruhiko Kuroda is due to speak at a Bank of Japan Branch Managers meeting in Tokyo (11.30 am Sydney). European reports today: Switzerland’s PPI, French Final CPI and Germany’s ZEW Economic Sentiment. The UK releases its Employment report for September with Average Weekly Earnings (Wages), Claimant Count Change (Unemployment Benefits), and Unemployment Rate. Bank of England Governor Mark Carney is due to testify at Financial Treasurer’s Select Committee in London.

Empire State Manufacturing Index – Forexfactory – 15 OCT 2019

Trading Perspective: Expect FX to trade in familiar ranges as the Dollar consolidates after two days of losses. The Commitment of Traders report will be released tomorrow due to the US holiday yesterday.
On the trade front, China reportedly wants to hold more talks with the US to hammer out details of President Trump’s touted “Phase One” deal. Which includes a delay of the Oct 15 tariffs, China’s agreement to buy more US agricultural products, more FX transparency. FX will continue to monitor developments on this front. Watch USD/JPY, this should be the main barometer.
Markets will look to Wall Street as US Q3 earnings season begins. Trades will look to the manufacturing and export industries to see the impact of the strong US Dollar.
While the Dollar’s corrective downtrend has hit a pause, it is by no means over with.

USD/JPY – The Dollar trade to a 6-week and overnight high at 108.628 on Friday afternoon in New York following optimism which was built on a China-US limited trade deal. Overnight the USD/JPY traded to 108.521. USD/JPY closed at 108.35 in New York. Immediate resistance lies at 108.60/70 which should contain any Dollar rallies. The next resistance level lies at 109.00. Immediate support can be found at 108.30 followed by 108.00. Look for a likely trade today of 108.00-108.60. Prefer to sell rallies.
EUR/USD – The Euro dipped to 1.1025from 1.1036 yesterday. Overall trading range for the shared currency was 1.10126-1.10428, familiar trading ranges in subdued markets. We could be back into a 1.0980-1.1080 range (September). Immediate resistance in the Euro lies at 1.1050 (overnight high 1.1043) followed by 1.1080. Immediate support can be found at 1.1000 followed by 1.0980. Look to trade a likely range of 1.1000-1.1070. With market positioning still short of Euro bets, the ideal trade is to buy dips.
AUD/USD – The Australian Dollar eased against the overall stronger Greenback to 0.6775 from 0.6792 yesterday. AUD/USD traded to a high at 0.68104 on Friday boosted by the prospects of a breakthrough in the US China trade talks. With FX turning cautious last night, the Aussie Battler retreated. Traders will monitor the RBA’s minutes of its most recent policy meeting. The Australian central bank cut its Official Cash Rate by 0.25% at that meeting. While the RBA said that interest rates would remain low for an extended period, they did not give any clues as to future policy. At the end of the day, the RBA are done for now and the Aussie market remains short. AUD/USD has immediate support at 0.6750 (overnight low 0.67512) and 0.6720. Immediate resistance can be found at 0.6800 followed by 0.6830. Look to trade a likely range today of 0.6760-0.6810. Prefer to buy dips.

IG DAILY FX USD SGD Chart – 15 OCT 2019

USD/SGD – The MAS effective easing disappointed Singapore Dollar bears who had anticipated more. USD/SGD eased to 1.36757 before settling at 1.3695, and 1.3728 yesterday. This was the first easing by the MAS since 2016 and the Singapore Central Bank is aware of the currency’s strength on a trade weighted basis. Immediate support can be found at 1.3680 followed by 1.3650. Immediate resistance lies at 1.3720 followed by 1.3760. Look to buy any USD/SGD dips or sell SGD against the Yen or Aussie.

Happy trading all.

Sterling Slips Pre-Open, Brexit Deal Hopes Pared

October 14, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, EUR-USD, Fintech, FOMC, FX trading, GBP-USD, Retail Fx, USD/JPY

Summary: After rocketing a total of 3.7% in 2 sessions on fierce short-covering, Sterling slipped 40 points from its NY close at 1.2645 to 1.2605 in pre-Sydney open. Britain and the EU on Sunday said that a lot more work would be needed to secure a Brexit agreement. Elsewhere the Dollar eased after China and the US made progress on their trade talks. China agreed to buy more US agricultural products while President Trump suspended a threatened tariff hike. The Dollar Index (USD/DXY) retreated 0.37% to 98.332 (98.715 Friday). The Greenback eased against Major currencies with the notable exceptions the Japanese Yen and Swiss Franc. The Euro was up 0.19% to 1.1035 (1.1005). Optimism on the partial trade China-US deal lifted the Australian Dollar to a 0.6795 finish, up 0.35%. The Dollar climbed 0.47% against the Japanese Yen. Stronger-than-expected Jobs growth propelled the Canadian Dollar 0.3% against its US counterpart (USD/CAD 1.3295 from 1.3335).
Wall Street stocks finished with gains while global bond yields extended their rally. The Dow was up 0.8% to 26,815. (26,505). The S&P 500 gained 0.7% to 2,972 (2,940).
Canada’s Payrolls created 53,700 jobs in September, beating median forecasts for a gain of 11,200.
Canada’s Unemployment Rate dipped to 5.5% from 5.7 % in August.

EUR/USD – The Euro closed at 1.1035, above the 1.1010 for the first time since September 29. Broad-based US Dollar weakness and higher Euro area bond yields have buoyed the shared currency.

Pound Dollar Chart – Daily FX – 14 October 2019

GBP/USD – Sterling rocketed a total of 3.7% in two sessions, from 1.2212 to 1.2645 (Friday close) on fierce short covering on growing prospects for a less disruptive Brexit. The Pound dipped to 1.2605 from 1.2645 in pre-Sydney trading after weekend headlines suggested a lot more work needs to be done in Brexit talks. GBP/USD currently sits at 1.2630.
USD/JPY – The Japanese Yen was one of two major currencies that weakened against the Dollar as risk appetite remained healthy. The partial trade deal between China and the US lifted USD/JPY to a 108.45 finish (107.95 Friday).
USD/DXY – The Dollar Index, a popular gauge of the Greenback’s value against a basket of 5 major currencies, retreated to 98.332 from 98.715 Friday.
AUD/USD – The Aussie extended its rally versus the Greenback to 0.6795, up 0.34% (0.6760). Overnight high traded for the Aussie was 0.6810. The Aussie Battler’s recovery remains tepid despite progress on China-US trade talks due to a weak domestic economy caused by the drought and housing slowdown.

On the Lookout: China returns after its week-long National Day celebrations with its Trade Balance report in Yuan and US Dollar terms. Meantime Japanese markets will be closed in observance of its national Health/Sports Day. US and Canadian markets are closed today in observance of Columbus Day and Thanksgiving Day respectively.
Data releases for today are few with Chinese trade numbers the highlight. Euro area reports see Germany’s Wholesale Price Index and Eurozone Industrial Production.
The week ahead sees the US Earnings Season begin. While this will affect stock trading more than FX, traders will keep an eye out for earnings from US companies affected by the strong US Dollar and trade war.
On the trade front, FX will keep an eye out for any official Chinese reaction to the trade deal initiated by President Trump. All eyes will also be on Trump’s trade tweets on Twitter.

Trading Perspective: FX will consolidate at current levels in Asia today. The Dollar is struggling with key levels against the currencies approaching. The week ahead will determine if this corrective downtrend can be sustained.

Global Bond Yield Rate Chart – Bloomberg – 14 OCT 2019

On Friday, US bond yields extended their gains. The US 10-year yield climbed 7 basis points to 1.73%. Rival treasury yields more than matched the gains in US rates, apart from Germany. Ten-year German Bund yields were up 2 basis points to -0.45%. The UK 10-year Gilt yield was up 12 basis points to 0.70%. Australia’s 10-Year bond rate closed at 1.01% from 0.89% on Friday. This will keep the Greenback on the defensive.

DXY CHART – Daily FX – 14 October 2019

USD/DXY – The Dollar Index traded to an overnight and September 20 low of 98.20 before settling at 98.332 in New York for a 0.37% loss. Overnight high traded was 98.742. Technically the Dollar Index is on a corrective downtrend. Immediate support can be found at 98.20 followed by 98.00. Immediate resistance lies at 98.70 and 99.00. Look for a likely trading ranged today of 98.10-98.50. Prefer to sell rallies.
EUR/USD – The Euro rallied 0.19% to a 1.1035 finish in New York. The overnight high traded was 1.10627 before the shared currency dipped. The Euro’s topside was constrained by the yield gap between US and German 10-year rates. Trade war optimism and an overall weaker Greenback will keep the Euro supported. Immediate resistance can be found at 1.1060 followed by 1.1090. Immediate support lies at 1.1010 followed by 1.0980. Look to trade a likely range today of 1.1010-1.1060. Prefer to buy dips.
GBP/USD – The British currency stole the limelight as best performing currency for 2 sessions following its 3.7% spike. Fierce short covering boosted the Pound to a 1.27068 overnight and late June high. GBP/USD settled to close at 1.2645, sliding to 1.2605 in pre-Sydney markets and settling currently at 1.2639. Sterling has immediate resistance at 1.2680 followed by 1.2710. Immediate support can be found at 1.2610 followed by 1.2560. Look to trade a likely range today of 1.2585-1.2715. Just trade the range shag on this one today.
AUD/USD – The Aussie lifted to an overnight and three-week high at 0.68104 before easing to 0.6795 at the New York close. Immediate resistance lies at 0.6810 followed by 0.6850. Immediate support can be found at 0.6750 (overnight low 0.67533) followed by 0.6730. Look to trade a likely range of 0.6770-0.6820. Prefer to buy dips/
USD/JPY – The Dollar rallied against the Yen to an overnight and near 2.1/2 month high at 108.628 before easing to 108.42 at the New York close. Japanese 10-year JGB yields were up 3 basis points to -0.19%, while the US 10-year rallied 7 basis points. The wider yield gap and risk-on stance lifted the USD/JPY pair. Immediate resistance lies at 108.70 followed by 109.00. Immediate support can be found at 108.30 followed by 108.10 and 107.80 (overnight low 107.849). Look for a likely trading range today of 108.10-60. Prefer to sell rallies.

Have a good week ahead. Happy trading all.

Pound Soars on Brexit Hopes, Dollar Falls as Trade Talks Resume

October 11, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, EUR-USD, FX, FX trading, GBP-USD, Sino-U.S. trade talks, trading platform, USD/JPY

Summary: The British Pound soared 2% (1.2450) on positive comments from the leaders of the UK and Republic of Ireland on Brexit. Meantime, the Dollar Index fell 0.4% to 98.715, its biggest one-day drop since September 4 as high-level trade negotiations between Beijing and Washington were underway. President Trump said trade talks were going well as the first day’s discussions were wrapping up. Prospects for a partial deal between the US and China fuelled risk appetite. The Australian Dollar bounced back to 0.6762, up 0.65% leading trade-oriented currencies higher. Short covering lifted the Euro to a high at 1.10335 before easing to settle at 1.100, again of 0.22%. The risk-on stance boosted USD/JPY to close at 107.95 from 107.50 yesterday. Against the offshore Chinese Yuan and EM currencies, the Dollar was broadly lower. USD/CNH eased 0.3% to 7.1150 (7.1420). Global bond yields jumped as geopolitical fears eased on developments of both sides of the Atlantic. The 10-year US bond yield was up 7 basis points to 1.66%. Germany’s 10-year Bund rate rose to -0.47% from -0.55%. UK ten-year gilt yields lifted 12 basis points to 0.58% (0.46%).

Global Bond Yields – Bloomberg – 11 Oct 2019

Data releases yesterday saw US inflation ease. US September Headline CPI retreated to 0.0% from 0.1% in August. Core CPI dipped to 0.1% from 0.3%. US Weekly Jobless Claims unexpectedly fell to 210,000 against median forecasts of 215,000. UK and Euro area data were mixed.
Equities rallied as investors focussed on trade talks. The DOW lifted to 26,505, up 0.56% (26,340) while the S&P 500 gained 0.69% to 2,940 (2,920).

GBP/USD – Sterling traded to an overnight and 16 day high at 1.24695 before easing to 1.2450 in New York. Irish leaders said that there is a pathway to a possible Brexit deal following a meeting between UK PM Boris Johnson and his Republic of Ireland counterpart Leo Varadkar. The meeting lasted for over three hours and discussions were described as “detailed and constructive.” Short covering in the Pound did the rest.
EUR/USD – The shared currency rallied on improved geopolitical sentiment and broad-based US Dollar weakness. Germany’s 10-year bond yields spiked 8 basis points which boosted the Euro to an overnight and near 3-week high at 1.10335, easing to settle at 1.1007 at the close.
USD/JPY – Risk-on, Dollar-Yen up. USD/JPY traded to 107.973 before settling currently at 107.87. Optimism on the US-China trade talks and higher US bond yields lifted the Dollar higher against the Yen. Japan’s 10-year JGB yield was unchanged at -0.22%.
AUD/USD – the trade oriented Australian Dollar resumed it’s climb on the optimistic trade outlook and easing geopolitical tensions. AUD/USD rallied to 0.67744 before settling at 0.6762 in New York.

On the Lookout: Asian markets will determine whether the optimism surrounding trade talks and Brexit can be sustained. Traders will keep their eyes on the latest media releases as clues to the next FX moves. US data released last night saw a soft inflation report which supported expectations that the Fed will trim rates this month for the third time this year. While the weekly Unemployment Claims unexpectedly fell, Job growth remains slow.
Today’s data calendar is light. New Zealand’s Business NZ Manufacturing Index, just released, matched forecasts at 48.4 Japan reports on its M2 Annual Money Stock. Germany releases its Final CPI report. The Eurozone ECOFIN Meetings in Brussels are underway today (a meeting on Euro area economic policies attended by Eurozone Finance ministers). Canadian Employment Change and Unemployment Rate (September) follow. US University of Michigan Consumer Sentiment and Inflation Expectations round up the day’s reports.

USD CORE CPI – Forex Factory – 11 Oct 2019

Trading Perspective: US Dollar is on the defensive. The jump in US bond yields were matched, if not bested by its Rivals. Eurozone bond yields jumped to 3-week highs on the improved risk sentiment due to optimism on Brexit and US-China trade talks. Markets also sense that the ECB may have run its course on monetary policy easing for now. Ten-year Italian bond yields climbed 10 basis points to 1.07%. The Greenback’s yield differential is narrowing and will continue to do so.
Market positioning remains long of US Dollar bets and short of currencies. The latest Commitment of Traders/CFTC report saw speculators short of Euro, Sterling, Aussie, and Kiwi bets. Against the Yen, speculators trimmed their JPY long bets. Much of yesterday’s move higher in the currencies was the result of short covering. We can expect more of the same ahead if trade talks go well.

EUR/USD – The Euro closed above 1.1000 for the first time since September 25, but only just (1.1007). The rise in Eurozone bond yields and narrowing differentials with US rates will keep the Euro supported. Much depends on how Brexit and China-US trade talks progress from here. EUR/USD traded to an overnight high at 1.10335. Immediate resistance can be found at 1.1040 followed by 1.1080. Immediate support lies at 1.0990 and 1.0960. Speculators (latest COT report for the week ended 01 Oct) increased their short Euro bets to -EUR 65,978 contracts from -EUR 60,722. Look for a likely trading range today of 1.0985-1.1065. Look to buy those dips.

Pound USD Chart – IG Daily FX – 11 October 2019

GBP/USD – The British Pound soared to finish at 1.2450, up 2% and was best performing currency. Speculative GBP short bets ran for the exit on the positive comments following the meeting between the leaders of the UK and Republic of Ireland. The Irish backstop (border) is at the centre of Brexit talks. The positive meeting between both leaders improved the chances of a Brexit deal between the UK and EU. GBP/USD has immediate resistance at 1.2470 followed by 1.2500. Immediate support can be found at 1.2410 and 1.2370. Expect more choppy moves in the Pound with a likely range today of 1.2350-1.2480. Just trade the range shag on this one.
AUD/USD – The Australian Dollar resumed its climb on the improved risk sentiment due to improved chances of a partial trade deal between the US and China. AUD/USD closed at 0.6762 after trading to 0.67744 overnight high. Immediate resistance lies at 0.6780 followed by 0.6810. Immediate support can be found at 0.6735 and 0.6710. The reason the Aussie Battler is not higher is that Australian 10-year bond yields, up one basis point to 0.89% did not match those of the US and other rivals. Market positioning saw speculative Aussie short bets increase to -AUD 53,302 contracts from -AUD 47,155 the previous week. Today’s Australian Business Insider carried a report that new ABS (Australian Bureau of Statistics) data saw Home Lending data return to its 2017 highs, buoyed by the RBA rate cuts. AUD/USD should trade a likely range today of 0.6750-0.6800. The Battler remains a buy on dips against the Greenback.

Happy Friday and trading all.

Risk-On, Risk-Off, USD/JPY UP, USD/JPY Down. Here We Go Again.

October 10, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, CFTC, EUR-USD, financial services, Fintech, FX trading, GBP-USD, Retail Fx, Sino-U.S. trade talks, USD/JPY

Summary: FX traded in familiar ranges, the Dollar Index (USD/DXY) closed flat (99.102) although the Greenback was mixed against major Rivals. It was a case of risk-off, risk-on again as hopes for a China-US trade deal rose. Yesterday was risk-off after the US State Department imposed visa restrictions on some Chinese officials it believed were responsible for abusing Muslims in Xiajiang Province. The Financial Times reported that Chinese officials are offering to increase their purchases of US agricultural products. Another headline from Bloomberg reported that Chinese officials are open to agreeing a partial trade deal with the US. The next round of trade talks are due today and Friday. The Dollar rallied 0.51% against the Yen to 107.50 before slumping to 107.10 yet again in early Sydney. The South China Morning Post reported that China and the US are no closer to a trade deal. An anonymous source said that China and the US “have made no progress.”

JOLTS – Job Openings Chart – Reuters Graphics – 10 OCT 2019

FOMC meeting minutes revealed Fed officials supported the need for a September rate cut but remain divided on the way ahead for monetary policy. The divide between the hawks and doves saw a neutral response from FX. The Euro advanced 0.12% to 1.0975 (1.0955). Sterling was modestly lower at 1.2912 91.2922) after erasing earlier gains. The Northern Irish party, which supports the British government said it would oppose an EU concession on the Irish backstop. The Australian Dollar ended flat at 0.6729. Emerging Market currencies were mostly up versus the Greenback. Wall Street stocks and global bond yields rose. The US S&P 500 was up 0.77% to 2,920.
The US 10-year Treasury yield climbed 5 basis points to 1.58%.
US JOLTS Job Openings, a measure of labour demand, dropped in August to 7.05 million from July’s 7.22 million, and missing forecasts of 7.35 million. While the number of openings is still plenty, it was the third monthly drop. The decrease in hiring fits in with the slowing trend in job growth.

USD/JPY – The Dollar finished higher against the Yen to 107.51, up 0.51% from 107.10 yesterday. Risk-on sentiment and a higher US 10-year yield boosted the Greenback against its Japanese counterpart. USD/JPY then slumped in early Sydney back to 107.10 on the South China Morning Post report.
EUR/USD – The Euro advanced against the Dollar to 1.0975 (1.0955) after trading in a familiar 1.0952-1.0990 range. German 10-year Bund yields climbed 5 basis points to -0.55% matching its US counterpart.
GBP/USD – Sterling erased its gains, slipping to 1.2212 (1.2222 yesterday) after climbing to 1.2291 on a series of Brexit headlines from various media channels.
AUD/USD – The Australian Dollar ended flat at 0.6728 (0.6730). The market’s risk-on stance failed to benefit the Aussie which continues to hover above recent 10-year lows reached last week.

On the Lookout: Markets will look to tonight’s release of US Headline and Core CPI reports. Ahead of that data is plentiful. The day starts off with the UK RICS House Price balance report. Japanese Core Machinery Orders, PPI, and Bank Lending data follow. Australian Home Loans round up Asia’s reports. Germany reports on it’s Trade Balance followed by French and Italian Industrial Production. The UK follow next with September GDP, Manufacturing Production, Industrial Production and Goods Trade Balance. The ECB releases its Monetary Policy Meeting minutes. Finally, the US Inflation numbers follows was well as US Weekly Unemployment Claims.
FX will continue to monitor trade related headlines from various media outlets.

Trading Perspective: The rally in US bond yields was matched by its rivals which saw the Dollar Index close flat. FOMC meeting minutes saw Fed officials divided evenly between hawks and doves on the way ahead for monetary policy. US JOLTS Job Openings, although its not a primary economic report, missed forecasts. The Dollar is living on borrowed time and tonight’s CPI report could be crucial. The Greenback’s topside is limited. The next move is south.

Global Bond Yield Rates – Bloomberg – 10 OCT 2019

USD/JPY – While the Dollar rallied against the Yen on improved risk appetite and higher US bond yields, it’s topside is limited to 108.00. USD/JPY closed at 107.50 after trading to an overnight high at 107.629. Immediate resistance today lies at 107.70 followed by 108.00 Immediate support can be found at 107.20 and 106.80 (overnight low traded was 106.934). Look to trade a likely range today of 106.80-107.80. Just trade the range shag on this one. Media releases will see this roller coaster ride continue.

DOLLAR YEN CHART – DAILY FX – 10 OCT 2019

EUR/USD – The Euro advanced to finish at 1.0975 after trading to an overnight low at 1.09518. The ECB releases its latest monetary policy account meeting minutes later today. There are also Euro area data reports to digest. The Euro has been trading in a familiar range between 1.0900-1.1000 for just over a week now. Market positioning remains short of Euro bets and the topside is the more vulnerable side. Look for a likely range today of 1.0950-1.1110. Prefer to buy dips.
AUD/USD – The Australian Dollar finished flat despite improved sentiment on renewed hopes of a trade. This morning’s opening saw the Aussie dip to 0.6715 on the South China Morning Post media release on trade. AUD/USD has immediate support at 0.6700 followed by 0.6680. Immediate resistance can be found at 0.6750 (overnight high 0.6750) followed by 0.6770. Look for a likely range today of 0.6700-50. Prefer to buy dips.

Tin helmets out, we are in for a volatile Asian session. Happy trading all.

Trade Outlook Sours, Dollar Lifts, US Producer Prices Unexpectedly Drop

October 9, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, EUR-USD, financial services, FX trading, GBP-USD, trading platform, USD/JPY

Summary: The Dollar Index, a gauge of the Greenback’s value against a basket of 5 major currencies, was up 0.17% to 99.132 (98.988). Trade tension rose just days before high-level talks between the world’s two largest economies. The Trump administration put visa restrictions on Chinese officials linked to the mass detention of Muslims in Xianjiang Province and announced it would blacklist 28 Chinese companies. Sterling, which has an 11.9% weight in the Dollar Index, slumped 0.57% to 1.2225 from 1.2295, finishing as worst-performing currency. Talks between Boris Johnson and Angela Merkel failed to find common ground on a possible solution to Brexit. The Dollar dipped against the haven-sought Yen to 107.10 (107.30). The Euro fell for the 3^rd day in a row to 1.0955 from 1.0975, failing to clear 1.1000 yet again. AUD/USD was little changed at 0.6732. Fed Chair Jerome Powell reiterated that the US economy is facing some risks and acknowledged that Job growth is slowing. Powell said the Fed was contemplating the possibility of purchasing Treasury bills yet saying that this was not QE(?).

US PPI Chart – FX Factory – 09 Oct 2019

US bond yields ended lower after a report showed that Headline US Producer Prices unexpectedly fell in September to -0.3%, missing expectations of 0.2%, its lowest in almost 3 years. The weakness in producer inflation reflects the downturn in the US factory sector. Two-year US bond yields slumped 4 basis points to 1.42%. The benchmark 10-year US rate ended at 1.53% from 1.56%.
Wall Street stocks closed at their lows following the rise in trade tensions and weak PPI report. The DOW finished at 26,173 from 26,490. The S&P 500 was 1.5% lower to 2,893 from 2,943 yesterday.
China’s Caixin Services PMI dipped to 51.3, missing forecasts of 52.1. German Industrial Production outperformed, rising to 0.3% in September from August’s -0.6%. US September Core PPI (excluding food and energy) dropped to -0.3% from August’s 0.1%.

EUR/USD – The Euro retreated 0.15% to 1.0955 at the New York close after trading to an overnight high at 1.0996. Despite better-than-forecast German Industrial Production data, rising global trade tensions boosted the US Dollar’s haven status and weighed on the shared currency.
USD/JPY – The Dollar eased against the Yen to 107.10 from 107.30 weighed by lower US bond yields. The Yen’s haven status also buoyed the Japanese currency. Overnight low for the Dollar was at 109.806.

POUND – DOLLAR CHART – DAILY FX – 09 Oct 2019

GBP/USD – Sterling slumped to 1.2225 from 1.2295, down 0.58% after yet another attempt at a Brexit solution failed. This time it was a phone conversation between Boris Johnson and Angela Merkel. The two leaders were unable to find common ground about a possible solution to Brexit.
AUD/USD – the Australian Dollar was little changed against the Greenback at 0.6732 despite the weaker than expected Chinese Services PMI report.

On the Lookout: The Dollar continues to garner safe-haven support on the tense outlook of the trade talks between China and the US. Markets will continue to be driven by these trade tensions.
Meantime US economic data continues to underperform. US bond yields have retreated to levels where we started off the week. Jerome Powell said that the Fed will soon start growing its balance sheet again. Although he said that this was not QE, its hard to think otherwise. This is negative, not positive for the US Dollar.
Today’s data calendar is light. Australia begins our day with its Westpac Consumer Sentiment Index. Japanese Preliminary Machine Tool Orders follow. The Eurogroup meetings in Brussels which are attended by the ECB President and Finance Ministers from the Euro area countries discuss a range of financial issues and could be market moving. US JOLT Job Openings finish off the day’s data releases. Fed Chair Jerome Powell is due to participate in a panel discussion at a Fed function in Kansas City. The release of the FOMC’s latest meeting minutes is the day’s big event (4 am Sydney time tomorrow).

Trading Perspective: The Dollar Index (USD/DXY) managed a modest gain of 0.17% to 99.132. The result is due to a fall in Sterling and the Euro (which together carry a 69.5% weight in the USD/DXY). Otherwise the Dollar was mixed against other rivals. USD/JPY was a touch lower, while the Aussie and Kiwi were little changed. Against Emerging Market currencies, the Dollar saw mild gains.
US data releases have disappointed. The unexpected fall in US Producer Prices puts further pressure on the Fed to trim rates a 3^rd time this year when they meet later this month. Jerome Powell said that the Fed will start expanding its balance sheet soon. While he said that this is not QE, its hard to think otherwise. US bond yields are headed down. Market positioning remains long of Dollar bets. None of these factors are Dollar supportive. The Greenback’s safe-haven status is treading on thin ice.

BARCHART DOLLAR INDEX CHART – 09 OCT 2019

USD/DXY – The Dollar Index gained 0.17% to close in New York at 99.132 (98.988 yesterday). Overnight high traded was at 99.249. USD/DXY has continued to grind higher after trading to 99.67 on October 2. Overnight low for the Dollar Index was 98.848. Immediate resistance for today lies at 99.25 followed by 99.50. Immediate support can be found at 98.90 and 98.60. The FOMC’s latest meeting minutes will be followed by the US September CPI report. Last night’s drop in US producer prices may be a preview of a soft CPI. Look for a likely trading range of 98.775-99.25. Prefer to sell rallies.
EUR/USD – The Euro lost ground against the US Dollar despite better-than-forecast German Industrial Production data. Brexit woes have begun to weigh on the Euro as well as the Pound. Meantime, net short Euro bets increased to -EUR 65,978 contracts from the previous week’s -EUR 60,722. EUR/USD has immediate support at 1.0940 (overnight low 1.09411) followed by 1.0910. Immediate resistance can be found at 1.0980 followed by 1.1000. Look to trade a likely range today of 1.0940-1.0990. Prefer to buy dips.
GBP/USD – Sterling slumped 0.57% to 1.2225, finishing as worst performing currency as Brexit talks collapsed. A blame game between the EU and UK has ensued. This will keep the Pound pressurized. Most analysts are expecting an extension followed by another UK election. Which is hard to predict. GBP/USD has immediate support at 1.2190 (overnight low 1.2195). The next support level lies at 1.2165. Immediate resistance can be found at 1.2250 and 1.2280. Prepare for a volatile ride on the Pound and trade a range between 1.2180 and 1.2280. In the long run, an overall weaker US Dollar will support Sterling.

Happy trading all.

Dollar Gains, FX Cautious as China-US Trade Talks Resume

October 8, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, EUR-USD, Eurozone, FX trading, GBP-USD, Sino-U.S. trade talks, trading platform, USD/JPY

Summary: FX markets shunned recent economic data, eyeing trade negotiations amid looming signs of a global recession. Uncertainty prevailed on China signalled its willingness to deal on parts of the negotiations but were reluctant to agree to President Trump’s broader trade package. With top level talks scheduled to resume Thursday and Friday, the Dollar Index (USD/DXY) rose modestly to 98.985 (98.84), up 0.17%. Traders chose to return to the Greenback, which has remained steady despite chances of a more aggressive Fed loosening monetary policy. FX will look to the Fed’s September FOMC meeting minutes (early Thursday) for further clues as to whether the Fed will trim rates this later this month. USD/JPY rallied 0.38% to 107.30 (106.92) on the resumption of trade talks and higher US bond yields. The Euro hit 1.10006 yet again but retreated in New York, closing at 1.0974, little changed from 1.0977 yesterday. Germany Factory Orders dipped to -0.6% missing forecasts at -0.4%. Sterling edged lower against the Greenback to 1.2295 (1.2335) with signs of any Brexit deal between the UK and EU no closer. The Australian Dollar retreated 0.48% to 0.6733 from 0.6767 on the uncertainty surrounding the trade negotiations. Emerging Market currencies slumped against the Dollar, reversing gains made yesterday. USD/ZAR (Dollar- South African Rand) soared 1.28% to 15.1838 (0590). USD/TRY (Dollar-Turkish Lira) jumped 2.62% to 5.84 from 5.70 yesterday.

FX Factory – Eurozone Sentix Investor Confidence – 08 OCT 2019

US treasury yields rebounded. Two-year bond yields climbed 6 basis points to 1.46%. The US 10-year rate was up 3 basis points to 1.56%. Wall Street stocks fell. The DOW closed 0.35% lower at 26,487. (26,555) while the S&P 500 fell 0.47% to 2,936. (2,952 yesterday).
Japan’s Leading Economic Indicators for September printed at 91.7 against forecasts of 91.8.
The Eurozone Sentix Investor Confidence Index slipped to -16.8, missing median expectations of -12.9. US Consumer Credit was up slightly at 17.9 billion versus forecasts of 14.9 bio.

EUR/USD – The Euro failed to break above 1.1000 again after climbing for 5 straight day against the Greenback. Weaker-than-forecast German factory orders and Eurozone Sentix Investor Confidence weighed on the shared currency. EUR/USD closed at 1.0978.
USD/JPY – the Dollar lifted against the Yen despite a dip in the market’s risk appetite. Higher US bond yields and a climb in speculative JPY long bets in the latest Commitment of Traders/CFTC report also restrained the Japanese currency. The US Dollar hit a high at 107.464 before retreating to 107.30 at the NY close.
AUD/USD – The Australian Dollar retreated as uncertainty prevailed over the upcoming trade negotiations between China and the US. The weaker Emerging Market currencies also weighed on the Aussie and other trade sensitive FX. AUD/USD fell to 0.67298 before settling a tad higher at 0.6732 in New York.

On the Lookout: With the focus on trade, markets in Asia will watch for any news releases out of China today. Chinese markets return from their week-long National Day celebrations. Today also sees a data dump with more reports released.
Japan starts of the day with its Average Cash Earnings, Household Spending, and Current Account reports. Japan will also release its Economic Watcher’s Sentiment Diffusion Index (Sydney afternoon)

Australia’s National Australia Bank Business Confidence Index and ANZ Job Ads follow. China returns with its Caixin Services Index for September.
Bank of England Governor Mark Carney speaks at a Climate Related Financial Summit Task Force in Tokyo. Bank of England MPC members Tenreyro speaks at an ECB Conference in Frankfurt. MPC member Haldane speaks at a Financial Stability Conference in Lisbon.
Euro area reports start off with Switzerland’s Unemployment Rate, German Industrial Production, French Trade Balance, and Italian Retail Sales.
Canadian data sees the release of Housing Starts and Building Permits. US Headline and Core Producer Price Index round up the day’s reports.
Fed Chairman Jerome Powell speaks at a Business Association meeting in Denver. The FOMC’s Evans speaks at a function in Chicago.

Trading Perspective: The Dollar kept its bid tone overall despite last week’s weak US economic reports. The Greenback’s safe-haven status in the midst of uncertain trade negotiations is still alive. Meantime China returns to the markets after its long National Day holiday celebrations. US bond yields rebounded off their lows which is also providing the Greenback support.

Saxo – Bloomberg COT Report – 08 OCT 2019

Meantime the latest Commitment of Traders/CFTC report (week ended Oct 1) saw an increase in net speculative Dollar long bets to 9-week highs. The breakdown in the 9 IMM currencies show an increase in net short Euro, Aussie and Swiss Franc bets. Net speculative NZD shorts increased to hit another record.

Daily FX – Euro Chart – 08 OCT 2019

EUR/USD – the Euro retreated after trading to 1.1000 resistance level once again. The overnight high was 1.10006. The shared currency retreated against the overall stronger Greenback to 1.0975. Euro area data was also weaker with German Factory Orders and the Eurozone Sentix Investor Confidence Index both missing forecasts. Meantime, the latest COT/CFTC report saw net speculative Euro short bets increase to -EUR 65,978 contracts (week ended Oct 1) from the previous week’s -EUR 60,722. Immediate resistance remains at the 1.1000 level followed by 1.1030. Immediate support can be found at 1.0960 (overnight low 1.0962) followed by 1.0930. Look to buy dips in a likely 1.0955-1.1005 range today.
USD/JPY – The Dollar rallied against the Yen to an overnight high at 107.464 before settling lower to close at 107.30 in New York. Higher US bond yields boosted the Greenback versus the Yen. USD/JPY traded to an overnight low at 106.65 before fresh buying boosted this currency pair. The latest COT/CFTC report saw net speculative JPY longs increase slightly to +JPY 13,917 contracts from +JPY 12,783 the previous week. Immediate support can be found at 107.00 followed by 106.70. Immediate resistance lies at 107.50 and 107.80. From these levels, it looks like a trading range will emerge between 106.70 and 107.70 for now.
AUD/USD – The Aussie retreated following 4 straight days of gain at the expense of the Greenback. AUD/USD traded to an overnight high at 0.6765. The next resistance level is 6780 followed by 0.6810. Immediate support can be found at 0.6730 (overnight low 0.67298) followed by 0.6710. The latest Commitment of Traders report (week ended Oct 1) saw an increase in net speculative Aussie short bets to -AUD 52,302 from the previous week’s -AUD 47,155. Which is currently at 71% of the year’s maximum. Look to buy dips with a likely range today of 0.6725-0.6775.

Happy trading all.

US Payrolls Slows, Jobless Rate Falls to 50-Year Low, Wages Decline

October 7, 2019 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, Brexit, EUR-USD, FX trading, GBP-USD, Sino-U.S. trade talks, USD/JPY

Summary: The Dollar finished mixed against it’s rivals after an initial rally following a US Payrolls report which was considered “solid”. A total of 136,000 Jobs were created in September, missing median forecasts of 145,000. The Unemployment rate dropped to a 50-year low of 3.5% (forecast 3.7%). Wages declined on a monthly basis to 0.0% from 0.4%, which corresponded to an annual rate of 2.9% from August’s 3.2%. The Euro was up slightly at 1.0977 from 1.0967. Sterling dipped to 1.2320 from 1.2335 with Brexit preventing any gains. The Guardian reported on Sunday that EU Brexit negotiator Michel Barnier said that Boris Johnson’s government would have to bear the blame for a no-deal Brexit. The Australian Dollar was best performing currency, extending its gains to 0.6767 from 0.6743. Shorts continued to cover after the antipodean currency hit 10-year lows last week at 0.6670. Wall Street stocks rallied on the Jobs report. Odds for a Fed rate cut in their October meeting rose to 85%. The benchmark US ten-year bond yield was flat at 1.53%.
Other data released Friday: Australian Retail Sales dipped to 0.4% against forecasts of 0.5% in September. Canada’s IVEY PMI slumped to 48.7 in September from August’s 60.6 and forecasts of 62.6.

FX FCTRY – US UNEMPLOYMENT RATE CHART – 07 OCT 2019

EUR/USD – The Euro dipped initially to 1.09571 following the US Payrolls report which highlighted the fall in the Unemployment rate to 3.5%, a 50-year low. The shared currency then rallied to finish at 1.0978 (1.0967) after the US Dollar’s rally ran out of steam.
USD/JPY – The Greenback rallied to 107.134 initially as the US Jobs report came as a relief to Dollar bulls worried following last week’s slump in US factory and services plunge. US political tensions increased over the weekend with fresh allegations from a second whistle blower on President Trump’s dealings with the Ukraine. USD/JPY dipped to 106.75 in early Sydney after closing at 106.91 in New York Friday.
AUD/USD – The Australian Battler saw more shorts run for cover after last week’s plunge to fresh 10-year lows at 0.6670. AUD/USD closed at 0.6767 from 0.6742 Friday morning. The weekend news of a second whistle blower in the case of President Trump’s dealings with the Ukraine has triggered some risk-off at the Sydney open. Trading conditions are thin with most Australian States closed in observance of Labour Day today.

On the Lookout: The US Unemployment rate dropped to a 50-year low while Job growth moderated. This was a relief to Dollar bulls after two weak reports last week heightened US recession fears. However, as Kathy Lien, Managing Director of Bank Asset Management observed, while the Jobless rate fell to 50-year lows, the US labour market is weakening, not improving. Wage growth stalled which poses a problem.
A Reuters report highlighted that manufacturing payrolls declined for the first time in 6 months. The retail and utility sectors also continued to shed jobs. While the jobs market is still the strongest in a decade, there is no question that the US is in the midst of a slowdown. Lien’s observations are right.
The Dollar is headed lower, not higher.

Nordea Bank – US Wage Momentum Decreases – 07 OCT 2019

Today most States in Australia are closed in observance of Labour Day. Chinese markets are still closed as they observe their National Day holiday. Japan reports its Leading Economic Indicators. Euro area data start the Germany’s Factory Orders, and the Eurozone Sentix Investor Confidence Index. UK reports on its Halifax House Price Index. US Consumer Credit (September) rounds up today’s reports.

Trading Perspective: Interest rate differentials between the US and its rivals have been narrowing. Last week US 2-year bond yields plunged to 1.39%, near two-year lows. On Friday it managed to close at 1.4%. While this has not had a marked effect on the US Dollar, and is not always the main driver of FX, it will catch up and weigh on the Greenback.

EUR/USD – The Euro traded to an overnight high at 1.1000 before easing to settle at 1.0978 at the NY close. The shared currency has immediate resistance at 1.1000. Immediate support can be found at 1.0955 (overnight low traded 1.0957). The next support level lies at 1.0930. On Friday the Euro struggled to break above the 1.1000 resistance level for the second time this week. A break above 1.1000 could see the Euro test the 1.11 level, last seen in the middle of September. Look to trade a likely range today of 1.0955-1.1005. Prefer to buy dips.
USD/JPY – With US bond yields steadying at their lows, the Dollar will stay under pressure against the Yen. The latest political drama in Washington on the news of a second whistle blower on Trump’s dealing with the Ukraine saw a mild risk-off in Asia. USD/JPY dipped to 106.65 low in Sydney this morning from its 106.91 NY close. USD/JPY has immediate support at 106.50 followed by 106.20. Immediate resistance can be found at 107.10 (overnight high traded 107.13). The next resistance level lies at 107.30. Look to trade a likely range today of 106.55-107.15. Just trade the range shag on this one.

RBA Australian Dollar TWI – 7 Oct 2019

AUD/USD – The Australian Battler continued to force short bets to cover, trading to an overnight high at 0.6774, settling in NY to close at 0.6767. This morning, with Australian markets closed for Labour Day, volumes were light and conditions thin, the Aussie dipped to 0.6755. The Aussie has managed a decent bounce off it’s 10-year lows at 0.6670 which held a couple of attempts to break it. Last week we saw that net speculative Aussie short bets increased to total -AUD 47,155. We also highlighted that the RBA’s Australian Dollar TWI (Trade Weighted Index) was at lows not seen since 2007/2008. This is still the case and the RBA will be less inclined to trim interest rates. AUD/USD has immediate resistance at 0.6780 followed by 0.6810. Immediate support can be found at 0.6750 followed by 0.6720. Look to buy dips with a likely trading range today at 0.6750-0.6800.

Have a good week ahead all, happy trading.

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