Forex news for NY trading on August 9, 2018

A snapshot of the various instruments in the market shows:

  • Spot gold is trading down $1.69 or -0.14% at $1212.26. The high price extended to $1217.83 while the low fell to $1210.77.
  • WTI crude oil is trading down $.24 or -0.36% at $66.70. The loss comes on the back of an over 2% decline yesterday. The high price extended to $67.41 while the low fell to $66.49
  • Bitcoin rebounded today after a sharp fall yesterday. The digital currency rose by $173 to $6492.50. The price remains below it's 100 hour moving average at $6730.78. Stay below is more bearish technically.

In the US stock market today, US major indices closed mixed. with the Dow and the S&P lower while the Nasdaq eked out a small gain. The Nasdaqs gain was the 8th consecutive higher close. The market has not duplicated that since October 2017.

European shares were also mixed with the German DAX rising 0.34%, and the Italian FTSE MIB falling -0.72%.

Below is a snapshot of the % changes of the major North American and European stock indices today.

In the Far East today the Nikkei 225 fell -0.20%, while the Shanghai composite index recovered some of the recent losses is a 1.83% rise.

In the US debt market today, the US sold $18B of 30 year bonds today completing the auctions for the week. The demand was a bit tepid with a small 0.03 bp tail and a bid to cover below the 6 month average at 2.27x. Nevertheless, yields were lower in the US on the back of weaker PPI data. Below is a snapshot of the yield changes for the US yield curve (and high low data for each maturity)

European 10 year yields were lower with the German Dax falling the most (-2.3 bps).

Fundamentally today, the US PPI came in weaker than expectations:

  • Final demand +0.0% vs 0.2% expected.
  • Ex food and energy +0.1% vs +0.2% expected
  • Ex food, energy, trade +0.3% vs +0.2% expected
  • No revisions to prior

Year-over-year numbers:

  • Final demand +3.3% vs +3.4% exp
  • Ex food and energy +2.7% vs +2.8% exp
  • Ex food, energy and trade +2.8% vs +2.7% prior

Tomorrow the more important CPI data will be released but if it follows the numbers today, there will be a continuation of the headscratching.

US weekly initial jobless claims came in stronger at 213K versus 220K. The job market remains strong in the US.

Perhaps the most impactful event comments from Feds Evans. He said that:

  • Modestly restrictive effect policy may be warranted
  • Economic fundamentals strong, labor market still improving, and the
  • Debate over whether to pause or continue higher into restrictive policy to intensify next year as Fed approaches neutral interest rate

The Fed currently views the current rates as being accommodative. If the Fed is to go toward restrictive, it implies perhaps higher rates than the market is expecting.

The comments helped to grind the US dollar in trading today. Overall, the greenback was the strongest of the major currency pairs. The NZD remained the weakest after the RBNZs more dovish comments after keeping rates unchanged.

Technically for some of the major currency pairs:

The EURUSD fell below its 100 hour moving average at the 1.1581 level in the NY morning session (risk for shorts). That break turned the bias back to the bearish side and the pair grinded lower. The pair fell below the August low at 1.15296 and is now targeting the double bottom (close enough) at 1.15068-1.15091 area. A move below that level would be the lowest level in 13 months.

The GBPUSD also moved lower and is closing down for the 6th consecutive day and at the lowest level since August 2017. Moreover, the pair is closing below a trend line on the daily chart at 1.2839 (trading at 1.2825 currently). Staying below that MA is bearish. The next major target is the August 2017 low at 1.2875. The bearish trend is alive and well for the pair.

The NZDUSD was the weakest currency for the day with the pair falling -1.94% on the day. Technically, the pair fell below a trend line connecting lows from December 2016, May 2017 in July 2018 at the 0.6678 level. The pair is closing and 0.6612 for the day. Stay below the broken trend line in the new day and the bears will next target 0.6571 - a swing low from March 2016.

The USDJPY waffled higher and lower trading today. The hair is closing at 111.07. The 100 hour moving average is about that 111.178. A move and close above that MA would be the first since August 3rd. Staying below will keep the bears more in control. Key level in the new trading day.

That does it for me for the day. Wishing those in the far east a great and safe weekend.