Forexlive Americas FX news wrap: Dollar fall as CPI misses expectations
Forex news for New York trading on August 11, 2017
- July US consumer price index 1.7% vs +1.8% y/y expected
- US stocks end the session with gains for the day. Not so fortunate for the week
- Trump to Kim Jong Un: If you do anything with respect to Guam, you will regret it
- CFTC Commitments of Traders. Speculators increase US dollar bets to largest since Jan 2013
- Crude oil futures settle at $48.82 /BBL
- Bakes Hughes total oil rig count 768 v 765 last week
- Federal Reserve voter: Digital currencies aren't a realistic competitor to the US dollar
- Fed's Kashkari: Today's CPI report was another reason to wait rather than hiking
- European stocks struggle again in rough week
- Fed's Kaplan: I want to see more evidence on inflation before hiking again
- Philly Fed survey shows economists giving up on inflation
- Fed's Kaplan: Inflation is still running below 2%
- PBOC says will continue with prudent, neutral monetary policy
- Saxo Bank doubles margins in dollar, euro and yen trades
- Draghi may use Jackson Hole event to lean against euro strength - Morgan Stanley
A snapshot of other markets shows:
- Dollar lower, spot gold higher. Plus weekend concerns about N. Korea has helped the precious metal. Spot gold is up $4 to $1290.50.
- WTI crude oil at $48.76, up $0.17 or 0.35%.
- US yields are ending the day mixed. 2 year 1.292%, down 3.2 bp. 5 year 1.7429%, down 2.8 bp. 10 year 2.1906%, down -0.7 bp. 30 yeare 2.781%, up 1.4 bp
- US stocks ended the day higher, but the week lower.
The US CPI came in weaker than expectations at +0.1% vs 0.2% estimate. The ex food and energy was also weaker at 0.1% as well. The YoY values at 1.7% were also on the light side. That helped to send the dollar lower on the first run. The EURUSD surged back above the 200 week MA at 1.1776 and the 100 and 200 hour MAs it's way to a high of 1.1834 (from 1.1754). The USDJPY fell to a new day low at 108.71.
However, a combination of lack of liquidity and some comments from Russia that China and Russia have a Plan B for No. Korea, helped to send stocks off the pre-open lows and the dollar back higher. That is what happens on a Friday, with economic event and geopolitical risks, and liquidity risk.
The EURUSD fell from the high of 1.1834 back down and that low stalled at 1.1876 - the 200 week MA. That was the bottom for the rest of the NY session. The price moved higher from there and extended to a day high at 1.1849 before settling back lower into the close. For a more detailed technical look of the EURUSD click here.
As for the USDJPY, it moved lower off the data reaching 108.716. The move back higher stalled at the underside of a broken trend line. The lid was established, at 109.38. The price rotated lower before settling back lower. The low stalled at earlier at Asian and London morning lows at 108.91 before rebounding into the close (closed at 109.12 area). Read more about USDJPY here...
In other news today
- Fed's Kaplan and Kashkari suggested the inflation data is reason to hold off on tightening.
- The Baker Hughes weekly oil rigs showed oil rigs up but the total rigs coming back down. Rig counts don't turn on or off with the spot price of oil. I suspect the declines are in response to the oil price heading below the $45 area (the low reached near $42). The price this week tested the $50 level before back tracking to the $49 area. If the price is able to hang above and below the $50 level, perhaps we see more rigs being added.
- The weekly commitment of traders report certainly has its limitations, but the net short in the dollar reached the largest level since January 2013. The dollar has been moving lower. So traders are doing ok I guess. Now greed is always a potential problem. If there is a surprise that says "higher US dollar" those record shorts could scramble to get out. The solid gains in employment did not do anything. The market was more reactionary to the inflation data AND the level of interest rates (heading lower).
In other currencies:
- The USDCAD had an up and down week but dragged to a new session high. However, today, the pair was not so bullish. The USDCAD price rotated back lower (higher CAD) on the back of lower dollar. IN addition, the oil price did fall in early trading (to $47.98) but closed near the highs at $48.82 area. That too is a benefit to the CAD (lower USDCAD). Technically, the decline sent the pair to a low of 1.2652. That area is a key support. To read more about that level, CLICK HERE.
- The GBPUSD is ending the week just above the 100 hour MA at 1.2998 (that is close enough to 1.300)). In a simple trading world going into the new week why not think above 1.3000 is bullish. Below 1.3000 is bearish. I know we moved above and below the 1.3000 level on Tuesday, Wednesday, Thursday and Friday, so why should it change? The simple reason is traders are saying they don't know if the GBPUSD should go higher or lower from here. Guess what? It will make up its mind and the longer it goes above and below the 1.3000, the better chance for a big move. So be on the lookout for a big move.
- The USDCHF this week peaked on Tuesday close to the 100 day MA at 0.9788. The high price moved to 0.9783. The rest of the week saw the price fall as the CHF became a safe haven again (No. Korea and lower stocks). The low reached 0.9582. There is support at 0.9547/50. Move above 0.9640 (the high reached 0.9638 today) and the buyers should feel more comfortable
I gotta get outta here....Below are the % winners and losers in trading today.