Forex trading news for May 11, 2017

  • US stocks end the day lower but well off the lows
  • CPI preview: Yellen and the Fed shopping for answers
  • Gold bounces off trendline after eight days of gains
  • US Crude oil futures settle at $47.83 /BBL
  • Senate confirms Robert Lighthizer as US Trade Representative
  • Not even a one-day retracement
  • Another sign the Fed is watching politics closer than ever
  • BAML looks at the trends in BoP data
  • Merkel says she will work with Macron for ideas about employment
  • An interesting point from SocGen on the Canadian dollar
  • US 30-year bond auction 3.050% vs 3.040% bid
  • Trump: It was my decision to fire Comey, it wasn't because of recommendation
  • A few pointed thoughts on the global economy from India's former central bank governor
  • ECB's Praet: Monetary policy alone can't ensure prosperity
  • Forex technical analysis: GBPJPY has a rare down day. Is it telling us something?
  • Either everyone is now armed to the teeth or something good has come from Trump becoming president
  • Spain feels the most pain at the European close
  • Where have all the EURUSD parity pumpers gone?
  • Rating cut, no problem: Can't keep the Canadian dollar down
  • IMF: Talks on Greek debt sustainability only just started
  • US stock futures point to modest loss as the market largely shrugs off politics. Snapchat to plunge.
  • Canada March new housing price index +0.2% vs +0.2% expected
  • US initial jobless claims 236K vs 245K estimate
  • April 2017 US PPI final demand 0.5% vs 0.2% exp m/m
  • Carney: Risks to global growth are slightly skewed to the downside

In other markets today:

  • Spot gold rebounded after eight days of declines. It is trading at $1225.30, up about $6.00
  • WTI Crude oil is trading up $0.44 or +0.95% to $47.78 in after hour trading. The price remains above support at $47.00 but is near the middle of a $45-$50 range.
  • US stocks opened lower, went lower but recovered a lot of the losses. S&P index is ending down -5.19 points or -0.22%. The Nasdaq is ending down -13.178 points or -0.22%, and the Dow is ending down -24 points or -0.11%
  • US yields are trading near low levels despite another luke warm auction. This time for 30 year bonds. The 2 year is trading at 1.334%, down 2 BP. The 5 year is trading at 1.918%, down 2 BP, the 10 year is trading at 2.3909%, down 2.3 bps. The 10 year yield could not sustain a move above the 200 day MA at 2.4141% (the high yield reached 2.4210% before moving back lower). Finally, the 30 year had a 1-point tail at the auction but is ending the day at 3.0287%. Dealers rewarded themselves with a profit on their positions after the bad auction...HMMMM.

The dollar was mixed at the end of the trading day, with most of the gains against the NZD (+1.2%). The RBNZ was more dovish in their statement and press conference at the start of the trading day. The greenback was also stronger against the GBP (+0.34%) and the CAD (+0.28%).

The GBP was influenced by BOE statement and inflation report. Although the comments were a mixed bag, the price action/technicals favored the downside. The pair did retrace and move back above a broken trend line at 1.2875 currently and the 100 bar MA on the 4-hour chart at 1.28819 (it is trading at 1.2891). A move above the 1.2897-1.2903 area would take some of the bearish technical sting out of the pair in the new trading day.

Against the CAD, the greenback was higher after rating cuts on Canadian banks, but reversed some of those gains on the back of higher oil prices (up about 1% on the day). That sent the price of the USDCAD below the 100 and 200 hour MA at 1.3694 and 1.3705 respectively. The North American afternoon session stayed below those MAs and will be a barometer for bullish above and bearish below in the new trading day.

The dollar was down against the JPY today, but the USDJPY is ending the day off the low at 113.45. Early in the NY session, the pair was under pressure as stocks tumbled. However, the pair did find support near the 100 hour MA and 38.2% retracement at 113.49 area. That led to a "hammer bar" and a retracement higher (see post). If you take out the quick move lower today, we have traded the the last 2 1/2 days in a 75 pip trading range.

A pair to watch might be the GBPJPY. Today the pair was lower on the day but 15 of the last 18 trading days have been higher. In the NY afternoon session, there was a correction higher that stalled against the 100 hour MA. Stay below that MA and more downside can be expected. PS the GBPJPY until had not traded below the 100 hour MA since April 17th. So moving below (at a much higher level) is news for this pair (and for traders looking for a top).

For the EURUSD, the pair got close to the 200 day MA today at 1.0830 (the low reached 1.0838) and is ending the day in the mid ranged. The NY session corrective highs stalled against the 100 bar MA on the 4-hour chart at 1.08759. In the new day, if there is a break above that MA, there could be another test of the 1.0900 level and the 100 hour MA (at 1.0905 and moving lower).

In fundamental news today, the PPI data was higher than expectations at 0.5% vs 0.2%. The US initial claims were also better at 236K vs 245K estimate. The data had limited impact at the time of release.

Tomorrow the US will release CPI and Retail sales. The market will be focused on the wage inflation in the CPI, and the Retail sales is for April (read Q2 data), so traders and the markets will be piecing together what is supposed to be a stronger Q2 after the 0.7% annualized gain in Q1.

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Below is a snapshot of the strongest and weakest currencies at the end of the trading day. Have a good day, evening and night, and for those in the Far East who will be exiting for the weekend, be sure to have a good and safe one with your friends and families.