Forexlive Americas FX news wrap: Durable goods orders soar

Author: Greg Michalowski | Category: News

Forex news for North American trading on August 26, 2020

US June Durable goods orders surprise to the upside with and 11.2% gain vs. 4.7% expected. The data may have been influenced by higher defense aircraft parts (up 77%). But the other break down including ex transportation, capital goods orders nondefense ex air, and capital goods shipments nondefense ex air also be estimates. Moreover revisions were higher. So overall report was solid.

US stocks open mixed with the Dow industrial average down, the S&P near unchanged, and the NASDAQ index higher. By the end of the day all 3 indices closed near their highs for the day, with the NASDAQ index leading the charge with a 1.73% gain. That index is up 30.0% on the year. The S&P index also gained over 1% (up 1.02%). Both the NASDAQ and the S&P closed at record levels and made new all-time intraday highs once again.

The Dow industrial average lagged but still rose by 0.3%. In the process, the index got within 1% of the 2019 closing level. 

European shares also closed higher with the German DAX leading the way with a near 1% gain on the day below is a summary of the ranges and changes for the major stock indices in Europe and North America.

Forex news for North American trading on August 26, 2020_

In the forex, risk on flows helped to propel the NZD and AUD higher, with the NZD by far the strongest of the majors. On the downside, the CHF, EUR and USD fought each other for the weakest of the majors with the CHF winning that race. Below is a ranking of the major currencies along with the percentage changes of each currencies vs. each other. 

The ranges and changes for the major currency pairs

From a technical perspective:

  • EURUSD. The EURUSD fell into the early New York session with the price dipping below swing level support between 1.17795 and 1.17837. The low reached 1.17714 snapping back higher. The upside stalled near the 38.2% retracement of the move down from the August 18 high to the August 21 low. That level comes in at 1.18342. The price is currently trading at 1.18309. In the new trading day breaking and staying above the 38.2% retracement level would target the 200 hour moving average 1.1848. Getting above that level would open up the door for further upside momentum. On the downside watch the 1.1801 to 1.18117 for support. Should the 1.1800 below be broken, a move back down toward the 1.17795 level would be in the cards
  • GBPUSD: The GBPUSD is closing in a resistance area defined by the January and March swing highs between 1.3199 and 1.32116. The price is currently trading at 1.3211 as the end of day approaches.   Getting above that swing area was not a problem last week as 4 of the 5 trading days traded above and below the level. The problem is staying above the level for the buyers.  Traders in the new day will use that level as a barometer for the bias.  Move above and stay above is more bullish.  Stay below would be more bearish
  • USDJPY: The USDJPY is trading at 105.97 into the close. That is right above the 200 hour moving average at 105.95, but below its 100 hour moving average at 106.00. The narrow 5 pip spread between the 2 moving averages has both buyers and sellers sitting on edge as to which way the new day will push the price.  Today, the sellers were more in control with the USDJPY down -0.38% on the day.  
  • NZDUSD: The NZDUSD March to the upside today and is also closing near its high levels for the day at 0.66222. At that level, the market price is testing a topside channel trendline on the daily chart. Like the GBPUSD and the USDJPY, traders will be watching that level for bias defining clues.  Move above would be more bullish. Stay below would be more bearish
  • USDCAD: The USDCAD it is closing lower. However, the sellers more force to cover in the last few hours of trading after the low for the day took out the August 19 low at 1.31324 and the August 24 low at 1.3134 by only a couple pips. The inability to keep the momentum running to the downside, led to some short covering into the close. The price is currently trading at 1.3148. In the new trading day watch the 1.3158 to 1.3170 as potential resistance. Stay below and we should see a break of the floor between 1.3131 and 1.3134. On the topside get above 1.3168 and a retest of the 100 hour moving average 1.3186 and 200 hour moving average at 1.3193 would be eyed.
As a summary, in other markets today:
  • Spot gold rose $26.17 or 1.36% to $1954.38. That is near the high price for the day
  • Spot silver is higher by $0.89 or 3.39% to $27.42. It too is near the high price for the day
  • WTI crude oil futures are up $0.07 or 0.16% of $43.42. The price remains above its 200 day moving average at $43.25 keeping the buyers more in control.
In the US debt market, the US treasury successfully auctioned off 5 year notes with a -0.9 basis point tail and a strong bid to cover ratio. That helped to bring down rates off there intraday high levels today.

The US yields were mostly higher
Tomorrow at 8:30 AM, the US initial jobless claims are expected to show a 1 million gain for the week. That comes off a 1.106 million gain last week. The US advance goods trade balance and personal income/personal spending. At 9:10 AM ET Fed chair Powell will be speaking at the virtual Jackson Hole symposium. Focus will be on whether the chair foreshadows a change in inflation guidelines to a average inflation target. At 10 AM, the University of Michigan final sentiment reading for August is expected to come in at 72.8. That is up slightly from the 72.5 in July.

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