Session Wraps - Major Forex Headlines wrapped up by trading session

Forex news for North American trading on July 7, 2020:

Markets:

  • Gold touched $1797, highest since 2011, up $12
  • US 10-year yields down 4 bps to 0.638%
  • WTI crude oil down 35-cents to $40.38
  • S&P 500 down 34 points to 3145, finishing at the lows
  • GBP leads, CAD lags
Virus numbers weren't bad today but high frequency data, high positivity ratios and Fed commentary weighed, in particular comments from Bostic and Mester that the economy was 'leveling off'.

To be fair, risk trades had been on a strong run after a five-day winning streak in the S&P 500 so some weakness wasn't a shock. It also wasn't particularly aggressive in the FX market until late in the day when commodity currencies slid.

Cable was the early winner, rising to 1.2592 but gave back 50 pips after Europe went home. EUR/GBP selling was one of the reasons behind early GBP strength. The euro itself chopped between 1.1270 and 1.1300 before finishing at the lower end.

USD/JPY continues to give off mixed signals and was stuck near 107.50 after an early rally to 107.80 floundered.

The Canadian dollar was hit harder than other commodity currencies on pipeline troubles and its proximity to the US. The Mexican peso also suffered.

Gold was down in Europe but stormed back early in New York trade to take out last week's low and eventually take out (by $1) the 2013 high of $1796.
Forex news for North American trading on July 7, 2020:

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Author: Justin Low

Forex news from the European trading session - 7 July 2020

Headlines:

Markets:

  • GBP leads, AUD lags on the day
  • European equities lower; E-minis down 0.8%
  • US 10-year yields flat at 0.678%
  • Gold down 0.4% to $1,777.95
  • WTI down 0.7% to $40.33
  • Bitcoin flat at $9,271

EOD 07-07
The two main headlines on the session were basically the Australian state of Victoria announcing a renewed six-week lockdown in Melbourne and the European Commission seeing a deeper slump than initially anticipated in the economic recovery this year.

The RBA was a rather non-event with the market focus still largely resting on the risk mood, and today we are seeing a pullback from the gains yesterday.

The euphoria from the China rally yesterday has quickly faded, with Chinese stocks themselves sagging into the close and barely hanging on to gains today.

The barrage of negative virus headlines weighed on risk sentiment and that kept the dollar more bid in European morning trade for the most part.

EUR/USD fell from 1.1310 to 1.1259 before getting a slight bounce to 1.1290 as the dollar gives back some gains going into North American trading.

AUD/USD was a notable mover as the aussie fell on the Melbourne news, slipping from 0.6970 to 0.6922 before recovering some ground to 0.6940 levels now.

Cable also stayed more choppy, falling to a low of 1.2463 before rising to session highs now around 1.2520 levels with GBP/JPY also underpinned and taking a look above its 100-day moving average amid a weaker yen in trading today.

As such, USD/JPY is also keeping higher around 107.70 and moved close to test its own 100-day moving average earlier at 107.81.

So, today is essentially turning out to be the opposite of yesterday as investors are still duking it out between cheap money and virus fears. This is going to be the embodiment of Q3 trading so we're only just getting started in figuring out who has the edge right now.

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Forex news for Asia trading Tuesday 7 July 2020 

A big mover in FX was the Australian dollar, hit on news of a continued and accelerating surge in coronavirus cases at chatter of a four week lockdown reimposition in the country's second most populous state, Victoria (capital city Melbourne is where cases are rocketing higher).

AUD/USD highs just ahead of 0.7000 were rejected as news (rumours) crossed of a jump in cases by nearly 200 - no sooner had I posted it than AUD began to fall. Its since been as low as under 0.6960 as the rumours were shown to be accurate. But, AUD is not the only loser against the USD, NZD, EUR, GBP and CAD have all had similar sizxe falls while usynee and USD/CHF gained. This is a familiar response across forex to heightening fears on the virus. The news out of Australia came after US cases once again increased strongly, and Tokyo was above 100 for a fifth consecutive day. 

Stocks in China gained at the opening but the heat has come out of the rally since. Still up on the day but as I post the gains have been halved. 

The RBA meeting is yet to come, due at 0430GMT, previews above in the bullets. 

AUD/JPY lower as coronavirus fear heightens again Forex news for Asia trading Tuesday 7 July 2020 

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Forex news for North American trading on July 6, 2020

Other markets:

  • spot gold is trading up $10.15 or 0.57% to $1786.11
  • WTI crude oil futures are trading near unchanged levels at $40.64
The ISM nonmanufacturing index for June jumped to 57.1 from 45.4 in May. It was also well above the 50.2 estimate. The nature of the index has the potential to show the movements especially when shocks like the coronavirus shut down quickly reverse.  One month businesses are closed. The next month, they are open.  As a result, the rebound is not all surprising. 

Looking at the components however, the one red flag comes from the employment component which remains in the contraction side despite the sharp increase from 31.8 to 43.1.  If employment remains depressed/contractionary (i.e. more more states close down restaurants, bar, theaters, etc.), it could have a negative impact on the other components.  Below are the impressive changes seen in June. 

  • New orders 61.6 vs 41.9 last month
  • Employment 43.1 vs 31.8 last month
  • Inventory sentiment 55.9 vs 55.1 last month
  • Prices paid 62.4 vs 55.6 last month
  • Backlog of orders 51.9 vs 46.4 last month
  • Supplier deliveries 57.5 vs 67.0 last month
  • New export orders 58.9 vs 41.5 last month
  • Imports 52.9 vs 43.7 last month
The CDC reported reported 44,361 new cases which was slightly higher than the number yesterday (around 43,000). The bright spot is the death numbers remain low at 235. The focus over the next few weeks will be on that death toll. If it increases dramatically as a result of the rise of new cases, that would be trouble. 

The USD was vying with the JPY as the weakest of the major currencies at the start of the North American session.  At the end of the day, it was the weakest although it did gain marginally in the session as some shorts took profits.  

The EUR was the strongest of the majors. It was the strongest at the start of the NY session but weakened in the NY session (also saw modest profit taking).  

Forex news for North American trading on July 6, 2020_
Although the US dollar was weaker across the board, the declines were mixed with the GBPUSD, USDJPY and USDCAD little changed.  The USD declined the most vs. the EUR at -0.55%. The AUD and NZD gained nicely vs the greenback as "risk on" flows helped those currencies.  

Helping the "risk on" flows was sharply higher stocks. The NASDAQ index led the way with a 2.21% gain. The NASDAQ also closed at record levels and has it been up for 5 consecutive days (as has the S&P index). The Dow industrial average rose by 1.78% and close at its session highs. The S&P moved up 1.59% and is within 1.58% of the unchanged level for the year.

European shares also advanced with the UK FTSE leading the way at +2.09% followed by Spain's Ibex at 2.06%.

US stocks closed sharply higher In the US debt market, yields closed marginally higher and near the low yield for the day. The 2 – 10 year spread was nearly unchanged on the day.

US yields are marginally higher at the end of the day

A technical look at some of the major currency pairs shows:
  • EURUSD: The EURUSD race higher with the pair getting within a few pips of the June 23 high of 1.1348 (high reached 1.1345) before reversing lower. The correction did fine support against last week's high at 1.1302.  That level will be the barometer for the bulls/bears into the new day. Stay above keeps the buyers more in control. Move below and there could be more rotation and probing back to the downside.
  • USDJPY: The USDJPY fell below its 100 hour moving average in the London morning session and stay below that level through the New York session (with one test). The 100 hour moving average comes in at 107.552 (and moving lower).  In the NY afternoon, the price extended below its 200 hour moving average (currently at 107.417).  Staying below those 2 moving averages would tilt the trading bias to the bearish side in the new trading day.  Move above the 100 hour MA at 107.552 would tilt the bias back to the topside.  On the downside the 50% retracement of the move up from the June 23 swing low comes in at 107.112. Move below should open up the downside. 
  • GBPUSD: The GBPUSD moved higher and peaked in the NY session at 1.25193. That was still 10 pips short of last week's high at 1.25291 and some 22 pips short of the June 24 high at 1.25413. The price decline off the highs is trying to find support against a lower trendline. A move below that line would have traders looking toward the rising 100 hour moving average at 1.24608 and below that the 100 day moving average at 1.2442.

GBPUSD

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