Forex news for NY trading on September 20, 2018
- Record closes for the Dow and S&P. Nasdaq up about 1% (but no record).
- NAFTA: Talks are increasingly held up on threat of national security tariffs
- Goldman Sachs: The Fed can and will hike rates above 3.00%
- US crude oil settles at $70.80/BBL
- UN meetings are next week. Here's who Trump will meet
- Six reasons the US dollar should end 2018 weaker - TD
- US sanctions officials from Russia and China
- ECB's Praet: Eurozone economy continues to expand at above-potential rate
- China planning a broad import tax cut, but will it exclude the US?
- NAFTA: Canada wants guarantees it won't be hit with auto tariffs
- US Q2 household net worth rises $2.19 trillion
- It's a good day for the European stock market
- ECB's Weidmann: Germany must not adopt protectionist stance versus China
- Eurozone Sept advance consumer confidence -2.9 vs -2.0 expected
- US August existing home sales 5.34m vs 5.36m expected
- Di Maio says 5-Star will quit coalition if spending demands not met
- May: There can be no withdrawal without Irish border backstop
- Tusk: I am a little bit more optimistic on positive outcome
- Fed's Powell has been doing the rounds at Congress trying to protect independence
- Tusk: Chequers framework for economic cooperation will not work
- Canada ADP August employment report +13.6K vs +11.6K prior
- Weidmann: ECB must not ignore the risks of loose monetary policy
- US initial jobless claims come in at 201K vs 210K exp
- Philly Fed September business outlook +22.9 vs +18.0 expected
- The GBP is the strongest. The USD is the weakest as NA traders enter
In other markets:
- Spot gold moved marginally higher on the back of the weaker dollar. The spot price moved up $3.52 or 0.30% at $1207.60
- WTI crude oil fell $0.32% to $70.80. The October contract settled today (last day of trading). Tomorrow the November contract will be the front contract. It settled today at $70.32
- The price of Bitcoin on Coinbase is trading near unchanged level at $6423 on the Coinbase exchange. The high reached $6445.55. The low extended to $6365. Technically, the price low yesterday stalled at the September low, bottomed and squeezed to a topside trend line (see green circle 3) . Since then, the price has waffled in a narrow range, but above the 100 and 200 hour MAs at $6365 and $6413 respectively. In the new trading day, those MAs will continue to be a barometer for bulls and bears. Stay above is move bullish. Move below is more bearish.
One of the big financial stories of the day is the S&P and Dow trading and closing at new record highs. For the Dow, the prior high was back January 26th. The S&P just reached it's last high on August 29th. Today each gapped higher on the open and stayed bid. The Nasdaq record is up at 8133.19. The price is still 105 points from the record level.
The final numbers saw the:
- S&P close at 2930.87 up 22.92 points or 0.79%
- Nasdaq closed at 8028.23 up 78.197 points or 0.98%
- Dow closed at 26657, up 251 points or 0.95%
In the European market, they too had strong gains. Below is a summary of the % changes of the major European and NA indices today. There was not a lot of activity below the 0% line in major indices:
In the US debt market, the yields are ending the session mixed with a flatter yield curve. Below are ranges and changes. The 2-10 year spread fell 0.7 bps to 26.52.
Yields in the US 10 year are getting more comfortable above the 3% level. In the process, the yield is also moving closer to the next target at the May 2018 high of 3.1261%. Today, the yield traded to a high of 3.0943. The low reached 3.0552%.
For what it is worth, Goldman's Jan Hatzius sees the Fed being more comfortable taking the rate above the neutral rate of 2.75%-3.00%. The treasury yields push higher seems to suggest the debt market might be buying into that thinking.
While the stocks soared, the dollar and JPY got hit today (they were the weakest). The market seems to be thinking that maybe global growth won't be all that bad,
- That China and US trade tensions will work toward a deal;,
- That Brexit gets done without a "no-deal" uncertainty.
- That NAFTA even works out.
ECB's Praet spoke to better days ahead by saying "Eurozone economy continues to expand at above-potential rate.".
The currency flows, bond market and stocks were in agreement today. The NZD was also the strongest currency which speaks to a "risk on" idea.
Technically for some of the pairs into the new day:
- The EURUSD ran away from the 100 day MA at 1.16609 level and closed at the high for the day at 1.1780. The 38.2% of the 2018 trading range comes in at 1.17795. A move above would be more bullish and would target the June high at 1.1850 over time on more momentum.
- The GBPUSD also rallied away from its 100 day MA at 1.3155 today and like the EURUSD, got close to the 38.2% of its 2018 trading range at 1.33163. The price stalled today at 1.3298 and backed off toward support at 1.32205 (low reached 1.3226). The pair closed up at 1.3268 between the support at 1.3220 and the resistance at 1.3316. Those levels will help define the range and the bias (on breaks).
- The USDJPY is trading in the range that defined the extreme for the pair back in July. That extreme is from 112.146 (which was the August 1 high) and the 2018 high at 113.17. The pair closed at 112.45. The buyer are more in control above the 112.146. I look for the 113.00-113.17 to be a magnate for the price action now.
- The NZDUSD pushed topside resistance on the daily and hourly chart toward the close and moved back down. You can read the analysis HERE. If "the global story" is getting less worrisome, the correction off the high should not be too dramatic.
