Forexlive Americas FX news wrap: Trade concerns and weak PMI pressure the USD
Forex news for NY trading on May 23, 2019.
- US stocks moves off lows at the close but still sharply lower on the day
- Pres. Trump: If trade deal happens with China, that would be great. If not, that's fine
- Kaplan: Fed can be patient on rates
- US crude oil futures settle at $57.91
- Bloomberg: Fed's Mester says an interest rate cut now would be bad policy
- 10 year yield trades at lowest level since October 2017
- Feds Kaplan, Daly, Bostic and Barkin talking technology and implications
- Fed's Daly: US tariffs on Chinese imports could help push inflation closer to 2%
- Goldman Sachs cuts 2Q GDP tracker to 1.5% from 1.6%
- European shares end with sharp losses on global growth concerns
- Pelosi: Trump said in a letter that infrastructure must wait for USMCA
- Kansas City Fed manufacturing activity for May 4 versus 6 estimate
- US new home sales for April 673K versus 675K estimate
- Markit PMI Manufacturing index (preliminary) 50.6 versus 52.7 estimate
- Canada wholesale trade sales for March 1.4% vs 0.9% estimate
- US initial jobless claims 211K vs 215K estimate
- The JPY is the strongest while the CAD is the weakest as NA traders enter for the day
- US' Pompeo: There is a real risk from China towards US national security
In other markets today, a near end of day snapshot is showing:
- Spot gold is trading up $10.46 or 0.82% at $1283.78. A lower USD and perhaps some safety flows helped to keep the precious metal supported.
- WTI crude oil futures are trading down $3.22 or -5.24% at $58.20. Concerns about global growth and a technical break below the 200 day moving average, contributed to the contracts decline.
The day's tone was once again influenced by concerns about US/China trade relations. The two major global powers have put meetings on hold after the recent rise in tariffs on $200B goods from China.
Also of influence today, was weaker PMI data. In the US, the Markit PMI data for manufacturing and services (and the composite of the two), came in much weaker than expectations (see details HERE). In Europe and also Japan, similar weaker than expected readings were also reported. That helped to pressure global equities.
In the Europe the major indices closed sharply lower with the German Dax down -1.78% and France's CAC down -1.81%. In the US, the Nasdaq index was down over 2% at one point in the day, but ended near the middle of the low to high trading range. Still, it fell -1.58% on the day. The Dow and S&P ended down by about -1.1%.
The USD today was mostly higher in early NY trading with gains vs the EUR, GBP, CAD , AUD and NZD (it was down vs the JPY and unchanged vs the CHF). However, when the much weaker than expected PMI data came out, buyers of the greenback turned to seller and although the dollar was still outpaced by the runaway CAD (on the back of the tumbling crude oil) and the GBP (political reasons), to dollar fell vs the JPY, CHF, NZD, EUR and AUD. Gains vs the EUR, NZD and AUD were reversed and the dollar got weaker vs the JPY and CHF. It was a big reversal in the greenback.
Technicals also helped play a role in the reversal.
EURUSD: For the EURUSD the pair moved below the 2019 low at 1.11094 in early NY trading only to have the price move only to 1.1106 low (3 pips below the old). Also at the area was a lower trend line on the hourly chart (see post here). The inabillity to push lower, helped turn seller to buyer, and when the PMI data came our weaker, the move to the upside was on. The pair did stall in the NY session near a resistance area at 1.11797 to 1.11871 (see post here). That area will be the barometer for traders in the new trading day.
AUDUSD: The AUDUSD pushed lower in the Asian and London morning session (into the NY session too) but could not break below the floor at 0.6864. That was the low from May 17, near the low from May 21 and was tested on three separate times today. Buyers eventually were able to push the price higher and get above the 100 hour MA and a topside trend line at 0.6889. The pair remains above that 100 hour MA, but still below the 200 hour MA at 0.6905 (and moving lower). A move above the 200 hour MA, would be more bulllish. Stay below and move back below the 100 hour MA at 0.6889, would be more bearish.
NZDUSD: The NZDUSD dug deeper to new year lows on Tuesday, Wednesday and again today (lowest levels in the pair since October 26, 2018). The low today reached 0.64811. However, after the PMI data, it too reversed, breaking above a trend line on the hourly at 0.6502 and then the 100 hour MA at 0.6511. THe price had not traded above the 100 hour MA since May 16th. That break sent the price even higher. The pair peaked at 0.65207. The price startst the new day above the 100 hour MA at 0.6511, but below the 200 hour MA at 0.6535. Those levels will be eyed by traders for bias clues. With the price above the 100 hour MA, it is time for the buyers to prove they can keep the price above the 100 hour MA. Can they keep control.
Wishing you all good fortune in your trading and for our Asian friends, I hope you have a great weekend.