Forex news for New York traders on June 7, 2018

In other markets today:

  • Spot gold is up $1 at $1297.36. The high reached $1303.45. The low extended to $1294.85
  • WTI crude oil rose $1.17 or 1.81% to $65.90

US stocks closed mixed with the:

  • Dow up 0.38%
  • S&P down -0.07%
  • Nasdaq down -0.70%

US yields were lower across the board. The flow into US treasuries may have been partially encouraged by a flight to safety bid as a result of emerging market concerns. The Brazilian real (BRL) continued its fall as did their stock market. If there is a greater exodus out of the EM countries stocks and debt, the US debt market would be a safe haven.

  • 2 year 2.483%, down 3.2 bps
  • 5 year 2.763%, down 4.6 bps
  • 10 year 2.922%, down -4.9 bps
  • 30 year 3.068%, down -5.3 bps

IN the forex market for the major currency pairs, the CHF and the JPY were the strongest (flight into the safety?), while the commodity/risk currencies like the AUD, CAD and NZD all fell. The USD was largely mixed in trading at the end of the day.

There was some action in the GBP today as the Brexit drama continues (and will continue for some time) The backstop proposal initial sent the GBPUSD lower only to bounce off technical support against the 100 hour MA. Later, just as the price was once again testing key technical support against the 100 hour MA, BOEs Ramsden came in with hawkish comments and the pair rebounded (from 1.3380 to 1.3450 area). Let's face it, there remains a lot of balls in the air with regard to the UK/Brexit and that could make the swings like today, more the norm vs. the exception.

As far as US economic data, the only major release this morning was the initial claims data. That continued to show strong employment as it came in at 222K vs 220K expected and near all time low levels. The market is used to that story line. So the data had little impact.

The USDJPY remained in a narrow 35 pip trading range for most of the day. However, as stocks softened, and US yields did the same (problem in emerging markets perhaps?), the flow in the markets started to go into the "relative safety of the JPY" (the CHF also attracted flows as the USDCHF fell -0.62% from the close from yesterday). Technically, the USDJPY fell below the 100 hour MA and the 100 bar MA on the 4-hour chart, and the selling was on. The fall below the 100 bar MA at 109.83, did not slow until the low from Tuesday was tested at around 109.45. The rest of the day was spent waffling up and down but below MA resistance above and the swing lows below.

Other flows today, saw the AUDUSD head lower. IN trading on Wednesday, the pair stalled right against a topside trend line on the daily chart at 0.7676. That was a technical catalyst for more downside selling. The fall lower today stalled in the NY session at 0.7612. That took the price back below the 100 hour MA at 0.7635 (risk for shorts into Friday).

Other geopolitical news today saw Japan's PM Abe visit Trump once again (I think it is his third visit). Of course it is on his way to the G7 meeting in Ottawa but with the N. Korean meeting next week, Abe certainly wanted to remind Trump of the goals from Japan's side.

Not only does Abe also want denuclearization, but he also wants shorter missile launches stopped and the release of abducted Japanese citizens in N. Korea. This was a request by Abe back in February, and although the US successfully brokered the release of their captured citizens since then, they did not secure the release of the Japanese prisoners. With trade another key issue, it seems to me, if Trump were able to secure their release, it may go a long way toward more trade concessions from Japan. Just saying....

Have a great weekend for those in the Far East.