Forexlive Americas FX news wrap: The ups and down from trade news continues
Forex news for NA trading on November 7, 2019
- The S&P and Dow off highs but still close at record highs
- WH economic advisor Kudlow: There'll be tough concessions if there's Phase 1 deal
- WTI crude oil continues to consolidate
- FOXBusiness Edward Lawrence: China wants all tariffs rollback as Phases completed
- US consumer credit rises $9.513 billion versus $15 billion estimate
- Whoops. White House sources says plan to rollback tariffs faces fierce internal opposition
- Fox news: US, China want Phase 1 deal on paper by end of next week (and get back to where we were).
- EU Juncker: He does not think that Pres. Trump will implement auto tariffs
- US sells 30 year bonds at high yield of 2.430% vs WI at 2.424%
- European shares extend higher on global growth hopes
- US initial jobless claims 211K versus 215K estimate
- More BOE Carney: Global growth is well below trend
- The AUD is the strongest and the GBP is the weakest as NA traders enter for the day
- Carney press conference after BoE remains on hold
The North American session already started with flows into risk as word from China was US and China would phase in tariff rollbacks on a proportional basis as the different phases of the trade deal were agreed.
Wow....that was certainly better than the rumblings over the last few days where China was looking for all tariffs to be removed in order for Phase I to be complete.
So having some compromise in the middle sounded too good to be true perhaps, but then agani....why not?
Heck, the US GPD in the 3Q was 1.9%. The 4th quarter is off to a 1.0% pace according to the Atlanta and NY Fed's models. The China economy is not exactly firing on all cylinders either. As a result, f both sides got back to square one where China bought ag and tariffs were rolled back, the harder pieces of the trade puzzle could be worked out over time.
So stocks race higher higher. Yields were up over 10 bps. Gold was getting hit as the fear trade was unwound. The USDJPY and USDCHF were running to the upside as the flight into the safety of the JPY and CHF was reversed.
Then the headline comes out from a White House source that the plan to rollback tariffs faces "fierce internal opposition".
Now stocks - after moving lower and off the highs - ended up stabilizing and closing higher. In fact the S&P index and Dow industrial average each closed at record levels once again. Yields came off a little but the 10 year still was up 8.9 basis points on the day. Gold rallied off its lows, but was still down $-20 or so.
The problem is that the on-again off-again, evergreen, news headline driven trade negotiation for the easiest of the phases, can be frustrating and quite frankly, one never knows what may come of it.
Let's face it the USMCA deal is still not fully enacted or approved in the US. What's to make traders think that the trade negotiations is just another story that goes on and on and on and on, much like Brexit has gone on and on and on and on (and when there is a hung parliament will go on and on and on some more).
The best I can say is time will tell. In the meantime, dont' be surprised by anything.
Some technical levels into the new trading day (and final trading day of the week).
- EURUSD. The EURUSD high today stalled at the high from yesterday at the 1.1092 level. The pair moved below the 30.2% retracement at 1.10642 and ran to - and through - the 200 bar moving average on the 4 hour chart at 1.10452. The low reached 1.1035 which was between the 200 hour moving average and the 50% retracement of the move up from the October 1 low at 1.10288. The pair is trading back above the 200 bar moving average. It will take a move back below that level to give sellers a new reason to sell. If it cannot be done, a move back above the 38.2% retracement at 1.10642, would likely scare some of the short into buying back.
- GBPUSD. The GBPUSD fell below support at the 1.2802-056 area but could not get below the October 24 low at 1.27873 (the low reached 1.2792 today). When the rebound took the price back above the 1.2805 (and stayed above), the market traders took the price to a New York session high of 1.2832. From there, the price consolidated up and down between 1.2812 and that high. In the new day, a move below the 1.2802-05 and then the 1.27873 would be more bearish. Absent that, we could see a corrective move higher, with the next upside target at 1.2836-40 as an upside hurdle.
- The USDJPY race higher and traded to the highest level since the end of May. In the process the price moved above the October 30 high of 109.278 and the November 5 high of 109.237. The high price moved to 109.482. When the White House sources news came out, the price move back below those swing high levels to a low of 109.15. A late they wonder higher has taken the price back above those previous swing highs at 109.30. In the new day, traders will be eying the 109.237-278 area as a barometer for the bulls and bears. Stay above, tilts the bias to the upside. Move below, and the tilt moves back to the downside.