Forex news for NY trading on July 1, 2020.
- NASDAQ closes at a record high
- VP Pence meets with Arizona Gov. Ducey
- More from Pres. Trump's interview on Fox: He supports use of masks
- Apple to reclose 30 additional stores across the US
- CDC reports 560 new deaths. Total now 127,299
- FOMC meeting minutes: Most Fed officials urged more explicit forward guidance
- Pres. Trump on Fox: Wants more money for individuals in a than Democrats
- California reports record 9740 new cases
- Houston area ICUs reach 102% of capacity
- Geopolitical: US readies global sanctions on China over Xinjiang abuses
- Maj. European indices end the session lower but well off intraday low levels
- Arizona cases come in at 4878 up 6.2% on the day. New record.
- Fed's Daly: Would be hesitant to call recent positive signs a recovery
- Florida coronavirus cases rise 4.3% vs 7-day average of 5.7%
- Crude oil inventories -7195K vs. -500K estimate
- US construction spending for May -2.1% vs. 1.0% estimate
- ISM manufacturing index for June 52.6 vs. 49.8 estimate
- Markit manufacturing PMI for June (F) 49.8 vs. 49.6 preliminary
- ECB Lane: Expects two steps forward, one step back recovery
- STAT news: Pfizer/BioNTech vaccine is showing positive results
- ADP employment change for June 2369K vs. 2900K estimate
- The JPY is the strongest and the AUD is the weakest as NA traders enter for the day
At the start of the NY session, risk off flows dominated with stocks down, sellers in the AUD, buyers in the JPY and USD.
Then a news report that Pfizer/BioNTech had clinical success on a vaccine for Coronavirus and the pre-market risk off flows were reversed.
ADP employment gains were less than expectations at 2.369M (vs 2.9M est), but it was still 2.3M. Moreover, the revision was a huge 5.8M which moved the May number more in line with the Labor Departments numbers (you have to wonder if the ADP simply "reseasonalized data" to make their data look like the Labor Departments data). In any case, it wasn't negative or some other big surprise,and the market is gearing up for another multi million gain in jobs at 8:30 AM ET tomorrow morning.
Later the ISM manufacturing index rose to 52.6 which was better than the 49.8 estimate. New orders in production rose smartly. Employment lagged. The data nevertheless did not hurt the risk on reversal trend.
On the coronavirus front, California, Texas, Arizona remain problem areas. Florida showed a 4.3% rise with new cases higher than yesterday. However the percentage gain was less than the 7 day average (for what that's worth). Arizona case count reached a new record. Houston Medical Center is reported ICU units at 102%. California reported a record new case number as well.
Other coronavirus news included Apple announcing that they would reclose 30 additional stores across the US bringing the total to 77. Pres. Trump said that he wants more money for individuals in the next stimulus package and also said that he supports the use of masks and will wear one in a group situation (although he has not in the past).
As flows moved into risk on, the US dollar started to move lower. It is ending the day behind the CAD as the 2nd weakest of the major currencies (what did Canada do to deserve the weakest currency status on its Canada Day holiday?). Leading the charge to the upside of the major currencies was the GBP. Technically it also moved above its 100 day moving average, in 50% retracement midpoint of the range since the December 2019 high.
Muddying the "risk on" story in the forex market at least was that the AUD was still mixed on the day and the JPY was still mostly positive (it tends to move lower on "risk on" flows). Him
In other markets:
- spot gold fell from the earlier new highs going back to 2012 at $1789.28. The low price for the day reached $1759.36 - $30 off that high level. The price is trading between those extremes at $1770 near the end of day.
- WTI crude oil futures rose $0.47 or 1.20% to $39.74. The weekly inventory data confirmed the drawdown from the private API data. Gasoline stocks however rose unexpectedly by 1.2M barrels. The private API showed a -2.5M drawdown. The price of crude oil did back off of the highs for the day at $40.58. The low for the day reached $39.05.
Some technical levels to high in the new trading day:
- GBPUSD: As mentioned the GBPUSD moved above its 100 day moving average at 1.24637. Also in the area was the 50% retracement of the move down from the December 2019 high at 1.2461, and the 38.2% retracement of the move down from the June 10 high at 1.2465. As a result, the 1.2461 – 65 area is a key barometer for the bulls and bears in the new trading day. Stay above is more bullish. Move below is more bearish.
- USDJPY: The USDJPY open the day moving away from its 100 day moving average at 107.878 to the upside. However when the price move back below that 100 day moving average, the buyers turned to sellers until the price reached its 100 hour moving average (currently at 107.443). Although the price trade above and below that moving average line on 4 or so hourly bars, the pair took a breather around the level and is closing right near that level. In the new trading day it will be the barometer for that pair.
- EURUSD: The EURUSD moved sharply lower earlier in the London morning session and in the process took out the lows from June 26 and June 30. However momentum could not be sustained and the pair rocketed higher off its 1.11837 low to an intraday high of 1.1274. In the process the price moved above its 100 hour moving average (at 1.12311) and 200 hour moving average (at 1.12425). The price ended up correcting back toward the 200 hour moving average in the New York afternoon session and found support buyers against that level. In the new trading day the 200 hour moving average will be the close risk level for the buyers/longs. Stay above is more bullish. Move below and the traders will be eyeing the 100 hour moving average at 1.1231144 additional bias clues.
