Forexlive America's FX news wrap: ISM data sends the dollar/stocks lower
Forex news for near trading on December 2, 2019
- US major indices start the week with sharp declines
- Brazil Foreign Minister: Country intalks with different US authorities about still tariffs
- CFTC commitment of traders: EUR longs remain in place. CAD longs trimmed
- US to consider higher EU tariffs after WTO ruling
- WTI crude oil futures settle at $55.96
- Brazil government in touch with the US trade reps on tariffs
- China Global Times: China will release an "unreliable entity list" soon
- Atlanta Fed GDPNow estimate cut to 1.3% from 1.7%
- European shares close sharply lower on trade worries
- Wilbur Ross to Fox: Pres. Trump will increase tariffs if there is no China deal
- Pres. Trump: Don't know of Hong Kong bill makes China deal harder
- US construction spending for October -0.8% versus 0.3% estimate
- US ISM manufacturing for November 48.1 versus 49.2 estimate
- Lagarde: Symmetry of inflation goal to be topic in ECB review
- US Markit manufacturing PMI for Nov (F) 52.6 versus 52.2 estimate
- Canada Markit manufacturing PMI Nov(F) 51.4 versus 51.2 last
- ICM poll: Conservatives 42% (+1% from week ago), Labour 35% (+1.0%)
- The NZD is the strongest and the CAD is the weakest as December begins
In other markets,
- spot gold is down $1.14 or -0.08% at 1406 $2.83
- WTI crude oil futures are up $0.81 or 1.47% at $55.98
In the US debt market, yields started the day higher with a steeper yield curve as well. As they progressed and data release was weaker than expectations, the shorter end did move lower with the 2 year down -1 basis point near the end of day. The 30 year still maintained a rise of 6.3 basis points. The 2-10 year spread moved up from 16.39 basis points on Friday to 21.69 basis points currently.
The day after the long Thanksgiving weekend started with positive news from strong Thanksgiving/Black Friday sales in the US and China manufacturing PMI data coming out better than expectations.. European PMI manufacturing data was also better than estimates but still remain below the 50 level.
That feel good news was hurt from an early tweet in the day from Pres. Trump saying that he would reinstate tariffs on Brazilian and Argentinian steel and aluminum. China news over the weekend was also not all that positive on the trade front after the the US sign the Hong Kong bill. As a result, premarket gains in US indices were eroded with the major indices opening mostly lower.
That bias was helped after fundamental data in the US showed weakness. The ISM manufacturing data for the month of November came in much weaker than expected at 48.1 versus 49.2 estimate. That was lower than the prior month 48.3 reading as well. The employment component fell to 46.6 from 47.7 last month, and new orders also dipped lower to 47.2 from 49.1 last month.
At the same time.construction spending for the month of October also was much weaker than expectations with a -0.8% month on month change. That compared unfavorably with the 0.3% expected rise. Pouring salt in the news was that the prior month was revised sharply lower to -0.3% from +0.5% previously reported.
The week data helped to accelerate the dollar to the downside against most of the major currencies. The only exception was the USDCAD which saw the greenback advanced by 0.14% versus the loonie. The dollar fell against all the other currencies with the NZDUSD the weakest at -1.26%. The USDCHF fell by -0.87% and the AUDUSD fell by -84%. Moreover technical levels were breached, helping the greenback's slide pick up steam.
Looking at the EURUSD, it his ending the day with an 87 pip trading range. That is more than double the normal 41 pip range seen over the last month of trading. In the process, the pair extended above the high price from last week at 1.10316, the 61.8% retracement at 1.10522 and then the 100 day moving average at 1.10708. The price rise did not stop until reaching 1.1088. That was just below the swing highs from November between 1.10894 at 1.10965. The last 6 hours of trading saw the price stay above its 100 day moving average at 1.10708 which keeps the bulls/buyers more in control. In the new day a break above the 1.1089 - 96 area would open the door for more upside momentum likely in the pair. If the 100 day moving average is instead broken on the downside at 1.10708, that is likely to see buyers turn to sellers on the disappointment from the break higher.
The USDJPY was another pair that saw a steady move in the direction of a weaker dollar. For it technically, the pair moved below its 100 hour moving average at 109.394, a trend line at 109.34 and the 200 hour moving average (currently at 109.059). In the new trading day, stay below that 200 hour moving average at 109.059 (and moving higher) will be the risk for the shorts. The pair does have a key target on the downside that did help stalled the fall. That target comes in at the 200 day moving average at 108.882 (the low for the day stalled just ahead of that level at 108.919).
The USDCHF (-0.87% on the day) saw its tumbled lower extend below both the 200 hour moving average at 0.9965 and the 200 day moving average/50% retracement (from the November 18 low) at 0.99452. The price fall did not stop until reaching the 0.9910 level. The range for the day was an oversized 97 pips (vs a month average of 44 pips). Technically, stay below the 200 day moving average in the new trading day at 0.99452, would keep the bears firmly in control. On the downside, more selling pressure will have traders looking toward its 100 day moving average at 0.9885.
In other pairs:
- The AUDUSD service above its 100 day moving average at 0.68175 on its way to a high price or 0.6826. The last 3 hours have seen the price stay above that moving average level. A move back below in the new trading day would take some of the bull out of the day, but I would expect support near the 0.6800 level.
- The GBPUSD based at the lows against its 100 and 200 hour moving averages at around the 1.2897 level. That was it's technical clue to move higher. The pair reached a high price of 1.2948 which was just short of the 1.2950 high price from last week's trading. It will take a move above the 1.2950 level to solicit more upside momentum