Forex news for NY trading on July 20, 2018.
- US stock indices give up gains. End in the red in up and down session.
- S&P raises Greek outlook to positive from stable
- G20 draft: Global growth outlook still positive but risks increasing
- CFTC Commitments of Traders: JPY shorts increase right before a Friday surge
- 10 year yield up, but needs one more push to get moving higher.
- WTI crude oil settles at $70.46, up $1.00
- SNB's Jordan: Global economy on a relatively strong path
- Bitcoin hit by a nasty whipsaw
- Baker Hughes US oil rig count 858 vs 863 prior
- Fitch affirms Canada at AAA with a stable outlook
- You want earnings? Next week is "The Week".
- European equity close: Mostly lower
- The NY Fed Nowcast for Q2 comes in at 2.7%, down from 2.8% last week.
- I guess we know how far Trump is willing to go on tariffs
- German minister downplays this weekend's G20
- BOJ may debate modifying yield curve target to allow for natural rise in long-term rates
- Trump 'ready' to put tariffs on all Chinese goods
- Trump warns that others are manipulating FX and says 'tightening now hurts'
- Canada June CPI +2.5% vs +2.3% y/y expected
- Canada retail sales for May 2.0% vs. 1.0% expected
- Fed's Bullard: Imminent yield curve inversion is a real possibility
- The NZD is the strongest and the USD is the weakest as the NA session starts
In other markets:
- Spot gold is trading higher today on the back of the lower dollar. The price is up $8 or 0.66% at $1231. The 200 week MA was broken this week at $1234 and it will close below that MA. However, the recovery today still threatens that break. What we learned this week (lately) is that gold is more reactionary to the swings in the USD (sometimes the correlation is not so great).
- WTI crude oil futures settled up $1 or 1.44% at $70.46. On Monday, the September contract will be the front contract. It settled lower at $68.26. So don't be surprised when the price seems much lower on Monday.
- Bitcoin moved above the 100 day MA at $7618, the price moved up to a high of $7687 on the break but quickly failed and came back down (trades at $7366). For the week, the price moved up from around $6181. At $7366 currently, that still is a 19% gain.
US stocks ended marginally lower for the day and the week.
- The S&P fell -0.09% on the day and was up 0.02% on the week
- The Nasdaq fell -0.07% on the day and was down by the same amount on the week
- The Dow fell -0.03% on the day and eked out a 0.15% gain for the week.
In the US debt market today, yields were higher and the yield curve steepened:
The 2-10 year spread widened to 30 bps (was around 24 bps earlier in the week). The 10 year yield is trading up around the 100 day MA (CLICK HERE for the post).
The USD was the weakest currency today. Looking at the charts, belpw, the greenback was lower against all the major currencies today, led by the fall in the USDCAD. Canada had some good retail sales and inflation data today that helped propel the loonie higher (it was the strongest of the majors today).
The catalyst for the greenbacks run lower?
The doubling down on the Fed and the USD by Pres. Trump today.
Recall, that yesterday, an interview with Pres. Trump started the dollars run lower by saying he was not happy that the Fed was raising rates and nullifying the work done by tax cuts and regulation. He also harped on the strength of the USD.
Today, after the White House had backtracked saying the President was in support of independent Fed, doubled down by saying:
That was the catalyst for today's moves. Not only did the dollar go down, but it helped steepen the yield curve as well on the expectation that if the Fed does slow down, the inversion of the yield curve could be avoided.
Fed's Bullard spoke to that idea earlier when he said the Fed should slow the hikes so that the yield curve does not invert.
A look at some of the pairs shows:
- The EURUSD surged from about 1.1661 to a high of 1.1738 on its run higher (lower dollar). In the process, the pair moved back above the 100 and 200 hour MAs and a topside trend line on the hourly chart at 1.1716. The pair is closing near that level and it will be a barometer for a bullish or bearish bias in the new week.
- The USDJPY fell below its 200 hour MA way up at 112.313 and moved down to 111.38 at the lows. That level is the 61.8% of the July trading range. The pair is closing near that level. Will be a close level to eye next week for bias clues.
- The GBPUSD retraced 50% of the move down for the week at 1.31246 and is closing right around the level. That is a result given weaker CPI, retail sales and Brexit concerns. Today the pair started the NY session around 1.3040 and moved to high of 1.3140 before settling at 1.3130.
- The USDCAD fell sharply today helped by the weaker USD and better data (retail sales and CPI). The price fell to a lower trend line on the daily chart at 1.3105 and stalled. If the price is going lower next week, getting below that trend line will be eyed.
That does it for me, especially since Adam and I repeated the effort ; )
Wishing you all a great and safe weekend. Do something nice for someone.
Greg.