Forexlive America's FX news wrap: Gold gets hammered on month end selling/higher dollar

Author: Greg Michalowski | Category: News

Forex news for America session on September 30, 2019

In other markets:

  • Spot gold is down $-23.90 or -1.6% at $1473.15. More on gold below.
  • WTI crude oil futures are down $-1.54 or -2.77% at $54.36. All the gains from the Saudi drone strike have now been erased
  • Bitcoin on coring base is up $216.22 at $8222 on the Coinbase exchange. The high price reached $8393.23 the low extended to $7701. The bullish news for bitcoin is a double bottom was reached at the lows. The not so bullish news is that the price remains below its 200 day moving average at $8403. See post here.

In the US stock market today, the major indices are closing with decent gains, but off the highest levels.  Both the US and European markets closed with higher levels

  • The S&P index rose 14.95 points or 0.50% at 2976.74. The high price extended to 2983.85, while the low fell to 2967.07
  • The NASDAQ index rose 59.713 points or 0.75% at 7999.34. The high price extended to 8012.164 while the low fell to 7949.62
  • The Dow industrial average rose 96.5 a points or 0.36% at 26916.83. The high price extended to 26998.86, while the low extended to 26852.33.
The low is a snapshot of the percentage highs and lows for the major North American and European stock indices:

US stocks rose in trading todayToday is the quarter end, and the 3Q is ending with the Italian FTSE MIB the biggest gainer at 4.11%. The Portugal PSI 20 was the weakest -3.19% followed by the small-cap US Russell 2000 index with a -2.76% decline.  The Dow industrial average and S&P index both rose by 1.19%. The NASDAQ composite index ended the quarter -0.09% (nearly unchanged).

For the quarter US stocks were led by the Dow and S&P which rose by 1.19%
In the US debt market today, the yields are ending down after being up earlier in the session. The yield curve defined by the 2 - 10 year spread is little changed on the day.

US yields are ending the session lower after rising earlier in the session
The price of gold tumbled lower in trading today (it is down -$24 currently) helped by:
  • Less global fear. Recall that the Friday trade was influenced by news reports that US might put restrictions on holding Chinese company stock. The story did not fully disappear but let's say it was off the front page today
  • The US dollar moved higher.  The DXY index moved to the highest level since May 2017. A lower dollar tends to decrease the value of gold (all things being equal).
The price of gold also broke a head and shoulder line and fell below the 50 day MA for the first time since June.  

Now admittedly, there was little in the way of economic data in the New York session today to give much of a story to the dollars rise/or golds tumble for that matter.  In fact, the moves may be attributed to month end/quarter end rebalancing.  

On the economic front, the Dallas Fed manufacturing activity index for September did coming better-than-expected at 1.5 versus 1.0 estimate. However that was off the 2.7 level from last month.

In addition to that better release,according to twitter and other news outlets the Chicago PMI was weaker at 47.1 versus 50.0 estimate and 50.4 last month. So overall, there was a little good and a little bad from the economic data today. 

Looking at the strongest and weakest currencies for the day (see the charts and rankings below), the CAD is ending as the strongest of the majors thanks to a 0.77% rise in the CADCHF and a  0.59% gain in the CADNZD. The CAD was little changes vs the USD. The GBP also was stronger today  but also closed near unchanged vs the USD.

The winners and the losers in the Forex market today

The CHF  started the day as the weakest currency and  extended that bias in the North American session.  

The US dollar was higher on the day with the biggest gains versus the CHF, NZD and the EUR, but it was marginally lower marginally lower vs the GBP and the CAD (but only just barely).

Some technical thought for some of the major currencies:

  • EURUSD.  The EURUSD started the session on the back foot, falling below the 1.0900 level and extending to a new 2019 low at 1.0984 (lowest level since May 2017 as well).  What may have helped the downside was a heavy option settle of 2.3B at 1.0900 which may have solicited some hedging of risk.  However, the price fall did stall and settle but the price rise could only extend to 1.0913. That remained below a swing area at 1.0923-263. We are closing near the 1.0900 level which is just below the low from last week at 1.09038.  If the buyers are to take more control, they need to extend and stay above the 1.09263 level and then the falling 100 hour MA at 1.09468. Failure to do that, and the buyers are still in control.  
  • USDJPY.  The USDJPY fell in the Asian session, but after finding support near the 200 hour moving average and 100 day moving average, the pair moved steadily higher. The days high was reached in the early New York afternoon session at the 108.175 level. That was near the high price from Friday's trading and put the brakes on the rally. The pair rotated a little bit lower toward the 108.00 level, but has so far been able to stay above that key naturall support level.   In the new day a move above the 108.175 highs from Friday and today would be an invitation for the bulls to extended toward the September 17 high at 108.36 and the September 18 high at 108.471. Holding could see the buyers turned sellers and a rotation back down toward the 100 day moving average at 107.789.
  • AUDUSD:  The AUDUSD skimmed the bottom of the recent lows (lows since September 3rd) at the 0.67387 to 0.67429 area - the low reached 0.6740 - and bounced modestly into the close. The RBA is expected to cut rates by 0.25% at their meeting today.  According to the market, the expectations are at 80% for that 25 basis point cut. A move below the 0.67387 and staying below would be more bearish. On a topside the New York high stalled right at the 100 hour moving average. That moving average currently comes in at 0.67607. Moving above and staying above that moving average would have traders looking toward the falling 200 hour moving average at 0.67742.  Breaking above both would tilt the bias more to the upside, leaving the lows from last week and today as a strong floor (3 lows within 7 pips of each other).  

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