Forex news for NY trading on October 23, 2018

In other markets

  • Spot gold is trading up because of $.42 or 0.69% at $1230.45. The low reached $1221.81. The high extended to $1240.07
  • WTI crude oil futures fell sharply and is trading at $66.02 down $-3.31 or -4.77%. The private crude oil stocks, showed a larger than expected build of 9880K near the close> The price closed below its 200 day MA for the first times since October 2017.

The US debt market saw yields fall by 2 to 4 basis points. Although lower, they recovered from much lower levels on the day when flight to safety flows sent investors into the treasuries. 2 year notes were issued today at 2.88%. Demand was ok. Below is a snapshot of the changes and ranges for the day.

In the European debt market today, the 10 year yields were lower into the close with the exception of the Italian BTPs. Investors fled the notes after the EU commission said Italy would have 3 weeks to rework their budget. The Italians said, "there is not plan B". That was not what investors wanted to hear. Yields moved up over 10 bps on the day.

Economically today, the Richmond Fed Manufacturing index came in 15 vs 24 expected. The index was up but fell short of the expectations.

The EU consumer confidence - which rarely goes positive apparently - came in close to the 0.0 line at -2.7 vs -3.2 expectations (PS it was positive earlier in the year - see chart in the post here).

There were a stable of Fed speakers. Fed's Kashkari did not comment on monetary polcy or the economy.

Fed's Bostic - more of a dove - sees a 4th hike now and that the possible headwinds are not throwing the economiy or the Fed off-track.

Fed's Kaplan said the Fed should gradually move toward neutral and that he sees the neutral rate in the "lower half of the Feds 2.5%-3.5% neutral range"

The Fed comments (slow/gradual rise in rates) helped to push the price of the major indices higher. Earlier in the day, the major indices were on their backs with Nasdaq down -2.8%, the S&P down about -2.2% and the Dow down -550 points. However, into the NY afternoon, the indices had recovered most of the declines.

The major indices still ended the day lower, but it felt like one of those days when ending lower, felt like an up day.

European shares also closed lower on the day. Below are the ranges and % changes for the major stock indices.

Finally in the forex market, a number of the major currency pairs just saw choppy moves higher and lower throughout the session.

The strongest currency was the JPY on the back of flight to safety risk flows, but the gains were lower than the levels earlier in the session. The NZD was the weakest at the start of the day and remained the weakest at the end of the day (despite being nearly unchanged vs the USD). Below is a snapshot of the % changes (and rankings) of the major currencies vs each other.

Some technical levels for some of the major pairs into the new trading day:

  • EURUSD: The EURUSD is ending the day with modest gains in what was an up and down trading session. The low for the day was reached in the Asian session at 1.1439. That was above the Friday and October 9 lows a 1.14315. The high in the NY afternoon session ticked just above the 100 hour MA at 1.1484, but quickly reversed into the close. The 100 hour MA will be a key barometer in the new trading day. Stay below, keeps the bears in control. Move above and the bias swings more to the upside.
  • USDJPY: The USDJPY was a slave to the stocks. When the stock market was tumbling lower, the USDJPY was stepping lower. The low today stalled at a swing area in the 111.93-985 level. Later in the NY session as the stocks stepped higher and higher and whittle away the declines, the pair retraced. The high ended up stalling just ahead of the 100 hour MA (at 112.488) and that level (give it up to 112.53) will be a barometer for bulls and bears in the new day. Stay below, and bears are more in control. Move above, and the upside momentum can continue
  • GBPUSD: The GBPUSD ran higher in the early session on a headline that the EU was reportedly willing to offer Theresa May a UK wide customs arrangement. That run faded when the price stalled at the 100 hour MA. The price moved off that level and more toward the middle of the 1.2935 to 1.30.43 trading range (at 1.2989). The stall at the 100 hour MA increases that levels importance in the new day (currently at 1.3036 and moving lower). Stay below is more bearish. Move above and the sellers turn around to buyers. A closer level to eye above is the 1.3000-09 area (swing levels on hourly chart going back to October 5th).
  • USDCAD: The new day will likely bring a rate hike in Canada. Trading in the USDCAD has been confined to the 1.3076 to 1.3120 area this week. The sideways price action over the last few days has the 100 hour MA catching up to the price. It stands at 1.3076 currently. Just below it is the 100 day MA at 1.3066. A move below each of those Mas would be more bearish and should lead to more selling. On the topside today, the high today stalled at a topside trend line connecting the last three day highs. That trend line currently comes in at 1.3118 going into the new trading day. That trend line - along with the high price from Friday's trade at 1.31316 will be levels to breach if the USDCAD is going higher.