Forex news for NY trading on July 10, 2019
- Nasdaq closes at record highs. S&P trades above 3000 for first time, but backs off.
- Fed's Bullard: Would support a 25 basis point cut. 50 basis points would be overdone
- Crude oil futures today settled that $60.43.
- More BOE Tenreyro: Still possible that we could have to hike rates in event of no-deal
- Fed's Bullard: Fed should have foregone the December rate hike
- FOMC June minutes: Many fed officials saw stronger rate cut case amid rising risks
- Gold moves back above 100 and 200 hour MA, tilting bias to upside again.
- Chair Powells testimony ends. What happened in the markets?
- BOE Tenreyro: A small amount of policy tightening will be needed on smooth Brexit
- US auctions off $24 billion of the 10 year notes at high yield of 2.064%
- Atlanta Fed GDPNow 1.4% vs last reading of 1.3%
- Powell continued: Wages rising at a healthy level, but expected more
- European major indices close with modest declines
- More Powells: Lower inflation could work its way into lower short-term interest rates
- BOC presser: Gov. Poloz and BOC's Vice Chair Wilkins highlighted comments
- Powell: Fed has no evidence for calling this a "hot" labor market
- More Powell: Fed does not want to get on a road to long periods of low inflation
- Highlights of Powell testimony is underway: Would not resign if asked by Pres. Trump
- DOE crude oil inventories for July 5 week -9499K vs -2900k estimate
- Monetary policy report from the BOC
- US wholesale inventories for May (F) +0.4% versus 0.4% estimate
- Bank of Canada keeps rates unchanged at 1.75%
- Full text of Chair Powells prepared remarks to Congress
- Fed Powell: Uncertainties since June FOMC continued to dim outlook. Risk weak inflation will be even more persistent
- The CHF is the strongest and the NZD is the weakest as NA traders enter for the day
The market traders were waiting for today. The big event?
Fed Chair Powell's first day of testimony on Capitol Hill. Would the Fed chair keep the hope firmly in place for rate cut in July? Will he keep hopes for more cuts later in the year?
The prepared text was released at 8:30 AM ET - well ahead of the testimony start time at 10 AM ET. The highlighted headlines read:
- Uncertainties since June FOMC continued to dim outlook, and
- Risk weak inflation will be even more persistent
Those were the two themes for the Fed Chair during his testimonry:
- Uncertainty (he said "Uncertain" some 26 separate times during his testimony), and
- Risk to persistent weak inflation. The Fed cannot risk Japaness style deflation.
Those themes, kept the rate cut hopes at 100% in July and also raised the prospects of a potential 50 bps cut to 26% (although that would probably require lower retail sales, GDP and lower inflation data before the July 31 rate decision day. Even Fed dove Bullard does not see 50 bps).
The Powell prepared text headlines sent:
- The dollar lower.
- It reversed pre-market stocks from being down (S&P was down about 8-9 points) to up.
- It sent yields on US treasuries lower with the short end leading the way (yield curve steepening). The 2 year was at 1.919% at the start of the NY session. It is down at 1.82% now.
- Gold moved from negative to positive (gold is up over $20 near the end of the trading day)
Below is a snapshot of a ranking of the strongest and weakest of the major currencies. The USD is the runaway weakest currency of the day, falling by -0.33% to -0.54% against the other major currencies. The NZD is the strongest of the majors. The action was in the dollar and it was on the sell side.
Although the testimony was the main event, there were other key events that influenced the markets today.
- The Bank of Canada rate decision came in as expected with unchanged policy.
Although the central bank raised Q2 growth to 2.3% from 1.3%, they lowered Q3 to 1.3% from 1.5% and characterized the growth as a "reversal of weather related declines in Q1". They harped on the risks from the trade tensions as having a "material effect" on global and Canadian economic outlook ("trade conflicts and uncertainty are projected to cut the level of Canadian GDP by as much as 2% by end of 2021"). Those sentiments sent the USDCAD sharply higher. However the pair did stall at a key swing area at 1.31395-445 (high reached 1.3143). The inability for the USD to
- Get above that resistance target,
- The pressure from a falling overall USD, and
- Higher oil prices (WTI crude oil is up $2.43 or +4.2% and back above the $60.26.
Higher oil prices was another market moving event today. The increase was attributed to a much larger that expected inventory draw of -9.499M (estimate was for around a -3.000M decline). With oil back above the the $60 level (it was near $51 at the June lows), it may start to be a a negative for business/consumer spending.
Later the Fed released the FOMC meeting minutes. Some dovish highlight headlines included:
- Many Fed officials saw stronger rate cut case amid rising risks
- Many officials saw more fed accommodation warranted near-term
- Many Fed officials in June saw risks weighted to the downside
When the use of the word many is used, it means most of the officials.
Some technical levels into the the new tradng day:
- EURUSD: The EURUSD traded above and below the 100 day MA at the session highs. The 100 day MA comes in at 1.13562. A move higher and away from that MA will also need to get above its 200 hour MA at 1.1267. A move above that level will look toward 1.1276 and then 1.1300. On the downside, the 100 hour MA comes in at 1.1230. That is the line in the sand for bulls/buyers in this pair. They will not want to see a break below that level
- USDJPY. The USDJPY fell below its 100 hour MA at 108.52 and stayed below for the NY afternoon session. Stay below is more bearish with the 200 hour MA at 108.263 the next hurdle to get to and through for more of a bearish bias.
- GBPUSD: The GBPUSD moved up to test the falling 100 hour MA (currently at 1.2510). There were some weak attempts to break above the 100 hour MA, with each rejected. The onus remains on the buyers to get above the 100 hour MA to get more buyers involved. 1.2539, 1.25516 and the 200 hour MA at 1.2565 are upside targets IF the 100 hour MA can be broken
