Forex news for NY session on October 24, 2018
- Microsoft beats on top and bottom
- Saved by the bell (now earnings). S&P and Dow now down on the year
- WTI crude oil futures settle at $66.82
- Fed's Bostic: US economy is 'chugging along quite well'
- Beige Book: Economic activity expanded with growth modest to moderate
- More Mester: Might be a good time to raise counter cyclical capital buffer
- Fed's Mester (hawk): Underlying US economy strong
- US auctions US$39B five-year notes at 2.977%
- Italy Econ. Min. Tria: Cannot keep Italy, Germany spread at 320 basis points
- Wilkins and Poloz: Its possible the pace could be faster or slower on rates
- European provisional equity closes are mostly lower
- Question and answer highlights from BOC Poloz/Wilkins: Part 1
- Highlights from Bank of Canada Press prepared text from Carolyn Wilkins
- EIA inventory data show crude oil build of 6346K vs 3700K est.
- Bank of Canada October 2018 rate statement
- New home sales for September 553K vs 625K expected
- Bank of Canada raises rates by 0.25% to 1.75% from 1.5%
- Markit US manufacturing PMI for Oct (P) 55.9 vs 55.3 exp.
- FHFA house price index for August 0.3% versus the 0.3% expected
- The AUD is the strongest. The EUR is the weakest as NA traders enter
- ForexLive European FX news wrap: Euro slumps as poor data clouds economic outlook
A snapshot of other markets into the close:
- Spot gold of $2.31 or 0.19% at $1232.58
- WTI crude oil futuresI trading down $.12 or -0.18% at $66.32. The high for the day reached $67.72 which was back above the 200 day MA at $67.40. However, a late day selloff has sent the price below that key MA for the 2nd consecutive day (see technical report HERE). Weekly inventory data showed another bigger than expected build.
- Bitcoin on Coinbase is trading up by $30 at $6424. The high price reach the $6471. The low extended to $6390. The price still remains below the 100 day moving average at $6760.62.
There were a couple of key stories in trading today:
- The BOC raised rates and took out the word "gradual". The implications was it opens up the central bank to raise rates toward more neutral levels quicker (vs raising every other meeting).
- The stock markets declines. Both the S&P and Dow closed in the red for the year. What? Stocks can be down in a year? Apparently. That has investors worried and could to flow into other markets.
For Canada, and the loonie today, the hike sent the USDCAD tumbling below the 100 day MA at 1.3068 and the 200 hour MA at 1.30403. By the time the presser with Wilkins and Poloz was over, the price made it below the 1.3000 level and to a low of 1.2968. However, the momentum could not be sustained. By the close, the CAD overall was still the strongest currency of the day - edging out the JPY in the process (which was a result given the sharp fall in stocks), but most of the declines were against the EUR and the GBP which had their own problems. The rise took the price of the USDCAD back above its 200 hour MA (at 1.30403) at the close, but still below the 100 day MA at 1.3068. In the new day look for sellers against the 100 day MA. If the price starts to trade back above, there should be more covering. PS a move below the 200 hour MA at 1.30403 should give sellers more confidence.
While the CAD was the strongest, the GBP and the EUR were the weakest.
The GBP weakness continues to be Brexit related. PM May had cabinet meetings today and the fear is not only for no-deal, but a revolt within her party and cabinet. That helped to trend the GBPUSD lower on the day, and in the process fell below a lower trend line on the hourly chart (see post here). That trend is around the 1.2885 level which is just above the closing level, but until that level can be broken (and stay above too), the sellers remain in control.
Following the GBPUSD lower was the EURUSD which stalled against the 100 hour MA in the London morning session, before tumbling lower. The fall in the pair was helped by PMI data out of Germany which disappointed. The NY session was largely consolidative near the lows (low reached 1.13776 in the NY morning session) as the pair found support buyers near a lower trend line on the 4-hour chart. That trend line comes in at 1.1378 in the new trading day. Stay above in the new day, could lead to more buying/ profit taking. Move below and there should be more downside for the pair.
Below are the % changes for the major currencies vs each other today.
For the stock market, the numbers were not pretty. The S&P fell over 3%. The Nasdaq fell over 4% The Dow was down -2.41%. The European markets were mostly lower as well, but closed before more weakness in the NA afternoon trading.
One saving grace for tomorrow, is that two high profile stocks announced stronger earnings after the close.
Microsoft and Tesla both beat on the top and bottom line and Whirlpool also had some decent numbers. Both stocks are up nicely from the closing levels. That should help get the day off to a decent start tomorrow. Having said that, there are another boat load of earnings tomorrow to get through including Amazon, Alphabet, Celgene, Bristol-Myers Squibb,Merck, Chipotle, Twitter, VeriSign, and Intel.
The USDJPY was a victim of the stock market selling today. It fell below its 100 hour MA at 112.489 and then the 200 hour MA at 112.329 on the back of the afternoon selloff. In the new day, stay below that MA level keeps the bears more in control.
Yield ended lower today in the US on the flight into safety bid.
In Europe, the 10 year yields were also lower with the exception of the Italian yields which were lower, but ended higher as EU commission and Italy "parry" on the budget, with both so far sticking to their guns (or epee, keeping the fencing theme).
Have a good afternoon, night, day and thank you for your support.
