Forexlive Americas FX news wrap: A wild day in the markets
Forex news for NY trading on August 7, 2019
- US broad indices end a wild day with major comeback
- Attn NZD traders - RBNZ Governor Orr speaking real soon, at 2010 GMT
- Saudi's considering all options to halt oil drop
- US consumer credit for June $14.596 billion versus $16.1 billion estimate
- US WTI crude oil futures settle at $51.09
- Fox's Edward Lawrence: China expects tariffs will go to 25%
- Gold wanders lower after double top....$1500 and intraday moving average support eyed.
- Secretary of State Pompeo: Hopeful talks with North Korea will resume
- US treasury auctions $27 billion of 10 year notes at 1.670%
- Japan eases some export restrictions to South Korea
- China's Global Times: China and US are caught in a stalemate worse than round one
- Fed's Evan: Economic headwinds mean cutting rates further could be reasonable
- European shares decouple from the US market. End mostly higher
- CNBC reports: Trump to ban government agencies from purchasing from Huawei
- China keeps door open for September talks - report
- Saudi Crown Prince sticking to $2 trillion valuation for renewed Aramco IPO -report
- US EIA weekly oil inventories +2385K vs -2700K expected
- Canada July Ivey PMI 54.2 vs 52.4 prior
- Gold trades at $1500 for the first time in over 6 years
- Goldman Sachs highlights "increasingly attractive" risk-reward in cable
- Trump says the problem isn't China, it's the Fed
- This is the sound of a central bank cutting 50 basis points
- The JPY is the strongest and the NZD is the weakest as NA traders enter for the day
A snapshot of other markets:
- Spot gold, up $26.80 or 1.82% at $1501.08
- WTI crude oil is down -$1.28 or -2.38% at $52.36
- Spot silver is up $0.6620 or 4.03% at $17.112
The markets went on a wild ride today the NY session through midday saw yields tumbling, stocks tumbling, gold rallying, and oil crumbling, but then a later day rally that reversed markets.
At the end of the day,
- The broader US indices ended with modest gains. That was no small feat given the Nasdaq was down -1.67% at the lows (ended up 0.38%) and the S&P was down as much as -1.95% (ended up 0.08%).
- The US 10 year note is ending up 1.2 bps at 1.7139% after being as low as 1.5931% at the session lows.
- Gold (as mentioned, reached as high at $1510 before coming back down a bit to $1501.08.
- Crude oil traded as low as $50.52 but rallied to $52.36 by the close.
What caused all the volatility?
The markets continue to be reacting to global worries about US/China.
That fear led to the RBNZ cutting rates by a greater than expected 50 bps at the start of the day (25 was expected). Later India and Thailand also cut rates as countries (in general) seem to want to get ahead of the Fed in stimulating, and are happy to "ask questions" later.
That in turn had Pres. Trump tweeting once again his displeasure with the Fed (of course throwing 10% tariffs and threats of 25% around does change the dynamics for the Fed and the economy but that goes unsaid). All of which did not help the yields and stocks. Both picked up steam to the downside.
Meanwhile in the forex market, it had it's own related stories to trade off of.
For the EURUSD, the reaction lately is if stocks falter, the EURUSD rallies (whats bad for the US is good for the EU. I guess there is hopes that China deals more with the EU). That helped to send the EURUSD pair above its 100 day MA at 1.12249 to a high of 1.1241.
The USDCAD moved higher on the back of the falling oil prices. The price of USDCAD moved above it's 100 day MA at 1.3300 to a high of 1.3343.
The NZDUSD tumbled on the back of the rate decision early in the Asian sesson, but saw a rebound to the 50% of the days range as the USD started to take on some heat (midpoint is at 0.6467 and that is where the price rally stalled).
The USDJPY traded below the low from yesterday (which was another new low going back to the flash crash on January 3rd) at 105.51, to a new low of 105.484. The market could not go any further.
The USDCHF tested the June low at 0.9693 level with the low reaching 0.96915, but could not go any further.
After London had left for the day, there were comments from Fed's Evans with some dovish overtones.
Secretary of State Pompeo spoke with UK's Raab about signing a trade agreement as soon as Brexit is figured out.
Ironically a bad auction for 10 year notes, helped to send yields higher and the market cheered the reversal of yields
In the oil market, the Saudi's came out with a few headlines saying that the price of oil falling is because of fear and that they would be working with producers to get the price back higher. That sent crude oil higher which appeased stocks as well.
As a result, in the forex:
- The EURUSD fell back below the 100 day MA at 1.1224 and headed back toward the 1.1200 level
- The USDCAD - on the rally back in oil - moved lower and tested the 100 and 200 day MAs at the 1.3300 level (down from 1.3343).
- The USDJPY and USDCHF each squeezed higher - helped by the fundamental stories and the fact that the breaks to new lows, could not gather additional downside momentum. The USDJPY moved from 105.49 to a NY afternoon high of 106.26 and the USDCHF moved from 0.9691 to 0.9753.
Now of course, what goes up can easily go down again (and visa versa), but for now the market seems to have dodged a meltdown in stocks, bond yields and crude oil. Tomorrow is a new day....