Forex news for NY trading on October 21, 2019.
- US stocks close near session highs for the day.
- UK parliament will hold first vote on Brexit bill at 1800 GMT on Tuesday
- Boeing is the "Dog of the Dow" today and its earnings will be released on Wednesday
- WTI crude oil futures settle at $53.31
- UK Minister Gove: No formal response has been received from the EU to PMs letter
- Rees-Mogg: Withdrawal agreement will be published shortly
- Pres.Trump: China is purchasing agricultural products now
- EU's Moscovici: Expect either a Brexit deal or a delay on Oct 31
- Trump says trade deal with China is coming along great
- European shares end the session higher on the day
- Johnson says he will go ahead with introduction of withdrawal bill
- A December Fed pause is coming - MUFG
- Goldman warns on softening corporate buybacks
- October Belgian consumer confidence improves to -8 from -11
- Kudlow: If Phase 1 China talks go well, December tariffs could be taken off
- The NZD is the strongest and the JPY is the weakest as NA traders enter for the day
- Wilbur Ross: China deal doesn't have to be in November, it has to be right
Although the UK Speaker of the House Berkow blocked a vote on the UK Prime Minister's Brexit deal today. However at approximately 1700 GMT, the legislators will vote on Withdrawal Agreement Bill, which will enact Johnson's deal. The vote will be a test on whether the Brexit plan will pass the House of Commons, but it does not mean that it won't be amended through the House this week. If done, that could lead government to withdraw the legislation instead of implementing it.
Over the weekend, the PM sorta, kinda sent the letter to the EU asked for an extension past the October 31 end date (to January 31). The EU is sitting tight until the political votes on the legislation is voted on.
What we know is the first test will take place at 1700 GMT (2 PM ET tomorrow). That is when the rubber will meet the road, but it is not the end of the road (or the process). So stay tuned.
Other than that, the markets had little news other than some comments from Kudlow and Trump on how the trade deal was progressing. Pres Trump said that China was already buying some agricultural goods and that in some ways, the Phase II had lower hurdles than Phase I. I find that hard to believe, but having fits of optimism, is nothing new from the President. Kudlow said that if Phase I talks go well, the December tariffs could be taken off. Again, hopeful comments that are not much of a surprise, especially from Larry Kudlow.
In other markets today, the US stocks took the good news on Monday and rallied stocks although the Dow lagged on the back of downgrades for Boeing. The embattled airplane manufacturer will report earnings on Wednesday. The Nasdaq and S&P had solid gains today. THe European shares also closed higher on the day. Below is a graphical summary of the % high, low and close changes for the major North American and European stock indices. The Nasdaq rose 0.91% on the day. The smaller cap stocks in the Russell 2000 rose by 0.95%.
In the US debt market, the yields rose by 4 to 5 basis points in more or less a parallel shift of the yield curve higher.
In the forex market, the NZD, CAD are ending as the strongest of the major currencies. It is election day in Canada. The markets were modestly supportive of the loonie ahead of the results. The weakest currency was the EUR and the JPY with most of the declines in each coming vs the risk on currencies like the CAD, AUD and NZD. The USD was mixed in trading today with gains versus the EUR, GBP, JPY and CHF and declines vs the CAD, AUD and NZD.
Some key technical levels in play for the new trading day:
- EURUSD: The EURUSD moved above its 100 day moving average on Friday at 1.11334 (today). The price was able to stay above that moving average in trading today reaching a low of 1.11379 before modestly bouncing into the close. Stay above the 100 day moving average will keep the buyers more in control in the new trading day
- USDJPY: The USDJPY try to move above its 100 hour moving average in the London session, but was quickly turned away. The pair is trading just below that moving average level at 108.627 into the close. Staying below is more bearish. Moving above (and staying above) would be more bullish.
- The GBPUSD was able to get above the 1.3000 level for the first time since May 13 (the high p reached 1.30116). However, that momentum could not be sustained and the price backed off in the NY session. The price is going out at around 1.2962. A lower channel trendline comes in at 1.2914 and rising on the hourly chart. A move below that trendline would weaken the technical picture a bit. On the topsdie the name of the game will be to get above the 1.3000 level and the high at 1.30116. That should open the door for more upside momentum.
- USDCAD. The CAD was onte of the strongest on the day and the USDCAD on the hourly chart saw the price fall below a lower trendline and stay below. That trend line comes in at 1.3106 (and moving lower - see chart below). The price is trading at 1.3086 at the close. A move back above that broken trend line would spoil the bearish break. Until then, however, the bias nod remains with the shorts in the pair (higher CAD).
