Forex news for North American trading on August 20, 2020
- NASDAQ closes at a new record.
- CDC's Redfield: Tide beginning to turn on southern Covid outbreak
- Crude oil futures settle at $42.58
- US CDC coronavirus cases rise to 46,500 from 39,318 yesterday
- European shares end the session sharply lower
- Florida Covid statistics are released. Cases up. Deaths down
- US leading index for July 1.4% vs. 1.1% estimate
- Stephen Bannon charged with fraud by New York prosecutor
- White House advisor Larry Kudlow: Thinks US stock market is correctly portraying V shape
- US initial jobless claims 1106K vs 920K estimate
- Philadelphia Fed business outlook for August 17.2 vs. 20.8 estimate
- Teranet/National Bank HPI for July 0.3% vs. 0.7% last month
- The CHF is the strongest and the NZD is the weakest as NA traders enter for the day
US initial jobless claims moved back above the million level to 1.106M vs estimates of 0.920M. However, the good news is that continuing claims did fall below the 15 million level to 14.844 million. It is still shocking number but showing progress.
In other economic news the Philadelphia business outlook index did fall to 17.2 from 24.1 last month. That was less than the 20.8 estimate. The leading index was better-than-expected at 1.4% vs. 1.1% with the prior month revised to 3% from 2.0%.
Later in the day the CDC came out said that the tide was beginning to turn in the southern Covid outbreak. The number of cases has been trending more to the downside and although deaths have not seen a comparable move lower, the CDC expects that the number of deaths will start to decline next week.
Stocks – led by the NASDAQ – at already erased earlier declines and moved higher. The news helped to propel the broader indices above all time high closing levels. For the NASDAQ, it remained above the level easily (another new high closing level). For the S&P index however, it's push was not sustainable and the price closed below the record level by about 4 points. Apple shares closed above the 2 trillion level for the 1st time ever. Amazon lagged with only a 1.13% gain, but other FANG stocks (+Microsoft) each rose by over 2%. European shares had a miserable day and continue to like the US markets. Each of the major indices fell by over 1.14%
In the US debt market, yields are mixed with the 2 year up marginally while the 10 and 30 year issues losing the most.
The lower yields helped to push the price of precious metals higher. Gold prices rose by $20.90 or 1.08% at $1949.80. Spot silver added $0.64 or 2.42% to $27.35. WTI crude oil futures for October delivery fell $0.35 or -0.81% to $42.76. The contract remains above its 50% retracement of the years trading range of $42 but below its 200 day moving average at $43.47.
In the forex, the dollar opened marginally lower at the start of the session, moved higher in the morning session, then resume the move to the downside taking out earlier day levels. The greenback is ending lower vs. all the major currencies with the exception of the NZD.
The dollar lost the most vs. the GBP (-0.94%). The GBPUSD start to move higher just after the London fix and into the London close. The price moved above its 100 hour moving average at 1.31501 and raced higher. In afternoon trading it did stall near swing highs from January March at the 1.3199 to 1.32116 area, but is closing above those highs (the current price is trading at 1.3218). In the new trading day being able to stay above the 1.3199 level will be eyed as a key barometer for the bulls and bears. Stay above is more bullish, moved below and we could see a rotation back to the downside.
The USDCHF rallied strongly all day yesterday and sold off steadily all day today. In the New York session, the price moved back below its 200 hour moving average at 0.91023 and is extending just below its 100 hour moving average at 0.90765 at the close. The 100 hour moving average will be a barometer for the buyers and sellers. Stay above and the 200 hour moving average at 0.91023 will be the next upside target. Move below and the pair will continue to chip away at the price gains seen yesterday. PS the low price yesterday reached 0.90184.
The EURUSD did not have a trend like move like the GBPUSD and the USDCHF. In fact it did a good job of chopping up and down. The pair did try to move lower and in the process broke below its 200 hour moving average on 4 separate hourly bars (at 1.18313 currently). However none of those bars could see a close below the moving average. That's the bullish news. The bearish news is the price high could not get close to its 100 hour moving average at 1.18798. Into the new day, traders will be watching both the 100 hour moving average above (at 1.18798) and the 200 hour moving average below (at 1.18313) as targets. Traders will continue to also look for a break outside of those moving averages.
The AUDUSD spent most of its day below its 200 hour moving average at 0.71817. However the dollar selling in the New York afternoon has seen the pair move back above that level. Going into the new day it trades between the 100 hour moving average above at 0.7208, and the 200 hour moving average below at 0.71817.
The NZDUSD headed shot to move lower after breaking below the low for August at 0.6518. The low price extended to a lower channel trendline on the daily chart down at 0.64847 where buyers leaned. The dollar selling in the afternoon helped to push the price back above the old August lows at 0.65182. That level will be eyed as support. If broken look for another retest of the lower trend line. If not, the 100 and 200 hour moving averages come in at 0.6563 area. Get above and the buyers take back more control.
