Forexlive Americas FX news wrap: USD falls as stocks and bond yields head lower
Forex news for NY trading on July 17, 2019
- Iran's Zarif: US 'shot itself in the foot' by quitting deal
- Ray Dalio: A paradigm shift is coming (and here is what's to buy)
- WTI crude oil settles at $56.78
- Fed's Beige Book: Economic activity expanded at 'modest pace overall'
- Fed's George: Unemployment is not generating much price pressure at the moment
- Canada affirmed at AAA by Fitch
- G7 officials see trade tension weighing on global economy
- Democrats have made constructive proposals on USMCA trade deal
- European shares closing with losses
- Atlanta Fed GDPNow remains unchanged at 1.6%
- Gold climbs $15 on economic jitters
- Backdrop argues against US-China progress on trade - Morgan Stanley
- US weekly EIA oil inventories -3116K vs -3000K expected
- FOMC preview from HSBC: Don't expect clear signals beyond a 25 bps cut
- IMF estimates the US dollar is 6-12% overvalued
- Canada May manufacturing sales +1.6% vs +2.0% m/m expected
- US housing starts for June 1253K vs 1260K estimate
- Canada June CPI +2.0% vs +2.0% y/y expected
- The NZD is the strongest and the CHF is the weakest as NA traders enter for the day
- The pound may fall to parity against the dollar on a no-deal Brexit - Morgan Stanley
In other markets, a snapshot of the markets are showing:
- Spot gold is trading up $19.78 o 1.41% at $1426.10. In addition to Ray Dalio promoting gold as a safe haven, the precious metal is being supported by a lower USD.
- WTI crude oil is trading down $1.33 or -2.31% at $56.29. That is lower than the settle level at $56.78. The crude oil inventories today showed a draw near expectations at -3.116M vs -3.000M estimate. The private data showed a lower draw of -1.4M. However, gasoline and distillate inventories showed bigger than expected builds. The inventory data was influenced by Hurricane Barry in the Gulf of Mexico. The market price started to fall after the release.
- Bitcoin on Coinbase is trading up $185 and $9789. The low price reached $9071, while the high extent to $9998 just short of the $10,000 level
IN the US stock market, the major indices are ending near the lows for the day. Toward the close there was a report in the Wall Street Journal, that talks with China had stalled as the US tries to figure out what to do with Huawei.
Recall, that at the G20 meeting Pres. Trump said he would ease restrictions on Huawei. That feeling went away rather quickly, however, given the "national security" risks of the firm. Now it seems that it is enough to stall/stop negotiations.
After the close, Netflix reported that net new subscribers missed with 2.7M vs 5.0M estimate. That was bad enough to shave 11% off the price of the stock in after hour trading. IBM beat and so did eBay so it is not all that bad.
Below are the % changes with the high% and low% as well. The major indices in the US all traded in the black today but only by small margins. Most of the activity was in the red today. European shares slumped more than the US with the German Dax down -0.72%, Spain's Ibex down -0.99% and France's CAC down -0.76%.
In the debt market, yields in the US started near unchanged to down marginally, but are ending down 5 basis points in the 5 to 30 year part of the yield curve. The 2 year was down -3.3 bps. European yields were also lower with France's benchmark 10 year back below the 0.0% level (at -0.037%).
The lower stocks and the lower yields have helped to pressure the USD. Looking at the % changes of the major currencies, the USD is neck-and-neck with the AUD as the weakest currency on the day.
Technically, some trading highlights include:
- The USDJPY is trading to new session lows at the close and in the process is trading below the 108.00 level In the NY session the pair dipped below the 100 hour MA at 108.114 and then stayed below the level for the rest of the trading day. That MA is a risk/bias level in the new trading day. On the downside, the 107.798 was the low from lsast week's trading and the low from Monday (this week) as well.
- The EURUSD took out yesterday's low (and traded below 1.1200) at 1.12013 (low reached 1.11991, but could not go any further. The NY session traded to a low of 1.12089 early in the session, before rebounding higher. The high stalled ahead of a swing area at the 1.1234 to 1.1237 area (200 hour MA is at the 1.1237 too) and backtracked to 1.1223 into the close. The 200 hour MA (and high of the swing area) is topside resistance on more dollar weakness in the new day. Get above it needed to swing more of the sentiment around. Until then sellers hold more control.
- The GBPUSD also rebounded higher in the NY session but after breaking above the swing lows from last week at 1.24378-417, it stalled at the 38.2% retracement of the move down from the Friday high. That level came in at 1.24566. The pair is trading below the swing lows from last week at 1.2432. If the price can stay below the 1.2441 level, the sellers will have firm control. Move above, and then above the 38.2% at 1.24566, and the shorts may look to continue the correction higher with the 1.24798 and then the 100 and 200 hour MAs at 1.2492-97 as upside targets.
In news today, US housing starts and permits were weaker than expected. Canada inflation and manufacturing sales came in as expected.