Forex news for NY trading on January 22, 2019

In other markets:

  • Spot gold, +$9.13 or 0.72% at $1285.01
  • WTI crude oil futures down $1.23 or 2.29% to $52.57
  • bitcoin on Coinbase rose $60 to $3579.55. The low reached $3425. The high extended to $3611.50

The US government shutdown enter date number 32 which once again limited the economic data. Nevertheless, coming intot the day, the markets were worried about China and global growth. China GDP came in at 6.4% on Monday. The IMF lowered global growth projections for 2019. Trade tensions go up and down. Brexit is not going anywhere. Oil prices are lower which can be good but is also an indication of sluggish growth. German Zew remains depressed.

As a result, yields were lower in Europe and the US and stocks were also lower.

The formula had the commodity currencies lower vs the USD at the start of the day and a flight into the relative safety of the JPY. Money was flowing out of risk pairs.

Things did not get any better for the stocks and bonds after the one economic release of the day. Existing home sales for December came in much worse than expected at 4.99M vs 5.24M expected. That news helped to send stocks and bond yields even lower.

Later in the afternoon there was a report that the US had canceled prepatory meetings with China (from the FT) as a result of lack of movement on key trade issues (see post here). Once again the stocks got hit with the Dow down 462 points at the lows. The Nasdaq index fell back below 7000 (the high reached 7110 earlier in the day) and traded down to 6979 at the lows. The EURUSD and the GBPUSD rose.

However, White House economic adviser Larry Kudlow saved disaster by coming in and saying the reports of cancelled China meetings were false. Stocks recovered into the close.

Nevertheless, stocks are ending the day with steep declines. European shares also fell but not as steeply as the US major indices.

US and European major indices close lower

In the US debt market, yields fell by 2.7 to 4.6 bps on concerns about growth.

US yields fell in the US today

In the currency markets, the GBP overtook the JPY as the strongest currency. The AUD and CAD remained as the weakest.

The % changes of the major currencies vs each other.

For the GBPUSD, the pair rose 0.52% (dollar lower) on the day. At the start of the NY day, the pair was near unchanged, but was also testing the 100 day MA after a corrective move lower into the NY session. The pair based against the 100 day MA at 1.2890 and started to march higher. The price reached a high price of 1.2974. Remember, the 1.1300 level was the high from last week and remains a key level on more upside momentum into the new trading day. The price did, however, come off into the close and trades near the 1.2960 level.

The EURUSD rebounded off a low at 1.1355. That low took the price below a lower trend line on the hourly chart at 1.1344. However, the existing home sales helped to weaken the dollar and sellers turned to buyers. Into the new day, on the topside, the 100 hour MA at 1.1376 (and moving lower) remains a key barometer for bulls and bears. The high price today reached 1.1372. The pair is closing at around the 1.1358 level. A move above would be the first break above since January 11. ON the downside, the lower trend line (at 1.1340 now) will be a level to move below if there is more selling on the horizon.

The USDJPY took a step lower on the back of data and then the US/China issues. The move took the price below its 100 hour MA (currently at 109.366). The low price extended down to 109.14 with the 38.2% of the move up from the January 10 low at 109.07. The correction higher picked up steam on the Kudlow headlines. The price moved back above the 100 hour MA in the process to an afternoon high of 109.45, but as the new day starts, the price is right back to the 100 hour MA. Which way do we go? Well, the story lines remain the same....

  • China/US
  • Brexit concerns
  • Stocks
  • Yields
  • US shutdown.

The price action and tools applied will help to push the market but understand, the story can change in an instant. So be aware.