Forexlive America's news wrap: BOC keeps rates steady but not so dovish
Forex news for NY trading on December 4, 2019.
- US stocks end higher but can't hold onto new highs made in the last hour of trading
- UK ComRes election poll puts Conservatives at 42%, Labour at 32%
- What to look forward in the New York session tomorrow?
- WTI crude oil futures settle at $58.43
- TD pushes Bank of Canada rate cut out to April after upbeat tone
- Mexico's Seade: USMCA making progress toward a deal but questions still pending
- European shares close higher on the day
- WSJ: Saudi Arabia threatens to increase production due to production cheaters
- Weekly US crude oil inventories -4856K versus minus 1500K estimate
- PM Trudeau: Downplays caught on camera Trump comments
- US ISM nonmanufacturing index for November 53.9 versus 54.5 estimate
- Bank of Canada keeps rates unchanged at 1.75%
- US Markit services PMI for November (F) 51.6 versus 51.6 estimate
- Canada labor productivity QoQ for 3Q 0.2% versus 0.2% estimate
- Pres. Trump: China talks going very well
- ADP employment change comes at 67K versus 135K estimate
- The GBP is the strongest and the CHF is the weakest as NA traders enter for the day
In other markets:
- Spot gold fell $-2.90 or -0.20% to $1474.71.
- WTI crude oil futures search $2.24 or 3.99% to $58.34. The weekly inventory data showed a larger than expected drawdown. OPEC+ meeting starts tomorrow and the Aramco IPO will also be priced on Thursday. Big day for oil
The US stock market open higher on the back of more positive comments about US China phase I deal details (that ole chestnut), and was able to edge to new session highs into the last hour of trading. However, the market ran out of steam and the major indices drifted back lower.
Nevertheless, it was a positive day with the S&P index up 0.63% the Dow industrial average up 0.57% and the NASDAQ index up 0.54%. European shares did even better with all but the UK FTSE rising by over 1.1% (the UK FTSE rose by 0.42%)
In the US debt market today, yields rebounded back to the upside after a few days of moving lower. The 2 year yield was up 3.8 basis points, while the 30 year yield rose by 5.9 basis points. The yield curve steepened by about 2 basis points (reflected in the 2– 10 year spread)
Looking at the Forex market, the GBP and the CAD were the strongest of the majors. The JPY was the weakest.
The GBPs rise was helped by technical breaks in many of the GBP pairs.
- The GBPUSD moved above the 1.300 – 11 resistance area and ran higher. The high price extended all the way up to 1.31197 before dipping modestly to 1.3086 in the New York afternoon session. The pair is trading around the 1.3100.
- The EURGBP fell to it's lowest level since May 2017, falling below the 0.8471 low from 2019 in the process. That pair is trading near the lows for the day at 0.8452 into the close and keeps the bears fully in control. There is a trend line on the 4 hour chart at 0.8444 that is being approached however. A move below will be needed to solicit more selling momentum. Be aware
- The GBPJPY extended to the highest level in nearly 7 months after breaking above a trendline on the daily chart at 141.90. The price has extended up to a high of 142.77 where it ran into topside trend line resistance. The pair is currently trading at 142.655
The loonie's strength today was helped by a more hawkish/less dovish statement after the Bank of Canada kept rates unchanged (no change was expected). That lowered expectations for a rate cut in 2020. The USDCAD tumbled lower and in the process extended outside of the 11 day narrow 74 pip trading range (below 1.3253) and the 100 day moving average at 1.32237. THe pair extended toward the lows from November 19 at 1.31882 and found some willing buyers against the level (the low reached 1.3190).
In the US, the greenback was mixed but lower thanks to the sharp declines vs the GBP and CAD. The dollar was higher versus the JPY and the CHF, mainly due to higher yields and higher stock prices.
However, the data in the US was less than stellar. The ADP employment change showed a lower than expected gain of 67K versus 135K estimate. The ISM nonmanufacturing index although above 50 was also less than expectations at 53.9 versus 54.5 estimate.
The ADP numbers can diverge from the US employment numbers. However if a similar number for nonfarm payroll prints on Friday (expectations are for 185K versus 128K last month), there might be more stock, yield, dollar weakness.
Wishing all good fortune in your trading in the new trading day.