Forexlive Americas FX news wrap: Day 1 after election and stocks soar
Forex news for NY trading on November 7, 2018.
- Just buy stocks on US Election days
- RBNZ Gov Orr says not ruling out a rate cut
- RBNZ keeps rates unchanged at 1.75%
- Jeff Sessions has resigned as Attorney General
- House Leader Pelosi: Health care won in Tuesday's ballot
- US treasury auctions off 30 year bonds at 3.418%
- Pres. Trump: Largest midterm Senate gain in decades
- Trump LIVE at the White House
- DOE crude oil inventories 5783K vs 2000K est
- Ivey PMI for October 61.8 vs 50.4 last month
- New Zealand posted a stunning jobs report earlier and the kiwi is primed
- Why risk trades are higher after the US election
- A light economic calendar means a chance for markets to digest the vote
- Merkel ally Seehofer to offer to step down as CSU leader - report
- Looks like Trump wants a new spirit of cooperation (just kidding he's already combative)
- The AUD is the strongest and the USD is the weakest as NA trader enter for day
- US MBA mortgage applications w.e. 2 November -4.0% vs -2.5% prior
In other markets:
- Spot gold is down -$0.81 or -0.07% at $1226.33
- WTI crude oil is down -$0.57 or-0.92% at $61.63
It is a day after the US Election Day and like 2016, the stocks just loved it. Recall in Novemebr 2016, everyone thought if Trump was elected stocks would get hammered. They did for an hour or two, and than started to move higher.
Today even Pres. Trump forecasted that if you vote for the Dems, you are voting for a lower stock market.
Well, Mr. President, you are wrong. The major indices headed up over 2.12% for each with the Nasdaq up 2.64%. Nice rally. European shares were also higher.
If you owned stocks today, your investment portfolio did quite well. Below are the ranges and percentage changes for the major US and European indices.
In the debt market today, the US treasury had a clunker of a 30 year bond auction. The high yield came in at 3.418%.That was above the WI level just before the auction at 3.395%. Moreover the bid to cover was down at 2.06x vs 2.42x in the prior auction. Yuck! Yields traded at a low of 3.384% earlier in the day for the 30 year. By the close the yield had moved up to 3.4407%. It was still down -0.3 bps on the day, but sell off the low yield level.
How did the forex market react to the change in political landscape?
The thought before the election was that the USD would move lower, and apart from the JPY, the green back did move in that direction (see the ranking of the strongest to the weakest in the chart below).
However, looking changes and ranges, the price action saw prices above and below the 0 line for all of the major currency pairs (vs the USD). The EURUSD, USDJPY, USDCHF, and USDCAD are trading within 16 pips of the unchanged line. So there was some ups and downs in trading today (see upper chart below).
Some technical levels of importance for the major pairs are showing:
- EURUSD. THE EURUSD moved up to test the 61.8% of the move down from the October 16 high at 1.14978. There is also some 6.4B of options expiring at 1.1500 on Friday by the way. At the highs, the dollar was much lower, but by the close, the price had moved back down toward the 100 hour MA at 1.1417 (low reached 1.1424 in the last hour of trading). It is still up on the day but a move back below that MA in the new trading day, may give the longs some trading anxiety. The 200 hour MA is at 1.13907 and a move below that level will not be good technically
- The USDJPY rebounded off a lower trend line hold in the NY session. The pair was helped by the runaway stocks (risk on) which can weaken the demand for the JPY (and boost the USD at least against that pair). The 1.1370 is a topside trend line to target. The price moved above that trend line in the Asia-Pacific session but reversed.
- The NZDUSD moved higher this time yesterday after much better employment data. That rally continued to a high of 0.6814 - near the 38.2% of the 2018 trading range at 0.6810. The price backed off. In the new day, get and stay above that level would target the 100 day MA at 0.6900 level.
Wishing you all good fortune in your trading.