Weekly Outlook: Out with a Sigh

The dollar fell against all the major currencies, but not by that much.

For the year as a whole however, the dollar was up. What’s really noticeable though is the narrow range of currencies during the year. They ranged from -5.2% for SEK to +4.3% for CAD. By comparison, last week’s best performer, NOK, was up 1.8% vs USD during the week – comparable in magnitude to its overall 2019 performance of -2.0%.

The main reasons for the sluggish volatility in 2019 were economic and monetary policy convergence. I expect less of both in 2020, for two reasons:

  1. The US-China trade war is dying down. That means economies should recover, but at different paces.
  2. Inflation seems to have bottomed. As it accelerates, countries are less likely to cut rates (which tends towards convergence, as rates can only be cut just so far) and maybe, possibly, conceivably some countries could start thinking about hiking rates, which would encourage monetary policy divergence.

I look for Germany, with its dismal economic performance recently, to be a major beneficiary of increased global trade. In addition, the European Central Bank (ECB) is seen as having a relatively high probability of hiking rates in 2020, although frankly I would be astonished if they did – I think maybe these figures are distorted by end-year factors and don’t reflect actual market views.

On the other hand, the dollar on average rises ahead of a US election, although the average may not have much meaning in this case when the dispersion is so great. Still, I think Trump has been such a disaster for the US and the world that any indication that he might be removed from office, either by impeachment or election, should help the US currency.

This week: a becalmed holiday market likely

The main feature this week of course is the New Year’s holiday. Most of the world will be off on Wednesday, New Year’s day, while Japan will be off Tuesday through Friday. New Zealand and Switzerland will be off on Thursday as well as Wednesday. In any case, I expect a lot of people will take the week off and markets will be thin.

Not only is there a major global holiday, but in addition there’s only one major US and one major EU indicator out during the week. No central bank meetings and only the minutes from the latest FOMC meeting out on Friday (plus a couple of Fed speakers that day). It looks to be pretty dull!

However, beware. On average, the last and first week of the year have slightly higher-than-average volatility, but not terribly so.

But occasionally they are the most volatile weeks of the year, probably because the market is so thin. As long as nothing untoward or unexpected happens, you’re probably safe spending your time a) partying and b) recovering from partying, but you might want to cover any open positions just in case.

This week’s indicators: final PMIs, FOMC minutes

The indicators, such as they are, are the final manufacturing purchasing managers’ indices (PMIs) for the major economies as well as the PMIs for those countries that haven’t announced yet. In addition, the Institute of Supply Management (ISM) announces its manufacturing index. For the US, we also get the Conference Board consumer confidence index on Tuesday, while in the EU, we get German CPI and employment data on Friday.

The final manufacturing PMIs are normally expected to be unchanged from the preliminary versions – that is, the preliminary version is as good a prediction of the final version as any. One exception this month is that the UK manufacturing PMI is expected to be revised up slightly to 47.6 from 47.4. I doubt if it will make any difference however.

The ISM manufacturing PMI, out on Friday, is expected to rise notably, but still be below the “boom or bust” line of 50. By comparison, the Markit version of the same index didn’t fall below 50 during 2019. It was more or less unchanged in December, which makes me wonder why the ISM version should rise sharply during the month. If it does anyway, that’s likely to be positive for the dollar.

The Conference Board consumer confidence index is expected to rise slightly. This is no surprise as consumer confidence is basically a function of the stock market and the unemployment rate, both of which are going in the right direction. Maybe it also reflects hope that Trump gets kicked out of office? USD positive

The minutes from the 11 December FOMC meeting will be released Friday afternoon. I doubt if the discussion of the economic outlook will turn up anything new, as most Fed officials who’ve spoken since the meeting have largely endorsed Chair Powell’s message that monetary policy is in the right place barring a “material reassessment.”

One point of interest will be what it would take for the Fed to hike rates. Powell raised the bar for hiking significantly when he said, “I would want to see a significant move up in inflation that is also persistent before raising rates to address inflation concerns.” However, he was careful to note that that was his own view. It will be interesting to see what the views on this important point are among the other committee members.

The market will also want to see the discussion about the Fed’s policy review. This review may well result in a change to the Fed’s inflation target away from a “hard” target of 2% to more of a “soft” target, such as “2% over time” or other way of allowing inflation to rise above 2% temporarily to make up for times that it was below 2%. Any move in that direction would probably be negative for the dollar as it would reduce the odds of a rate hike any time soon and indeed could increase the likelihood of a cut, since there would be less concern about overshooting the target.

There are a few Fed speakers on Friday: Richmond Fed President Barkin (non-voter/hawk), Dallas’ Kaplan (voter/neutral), Fed Governor Brainard (voter/neutral), San Francisco’s Daly (non-voter/dove), Chicago’s Evans (non-voter/dove) and However, only Barkin and Kaplan are likely to comment on the outlook for policy.

The other three will be appearing on a panel discussion at the American Economic Association meeting to discuss women in central banking, although they may say something of interest to the market during the Q&A session.

Other US indicators out during the week include advance trade balance and pending home sales on Monday.

As for the EU, the main point of interest will be the German inflation data on Friday. Inflation is expected to pick up notably during the month, which should be bullish for EUR.

The German employment data and Eurozone money supply, including bank lending, are also going to be released on the same day.

There are no major indicators out for Japan, Canada, Australia or New Zealand. Pretty dull!

This article was written by Marshall Gittler

The Most Influential People of 2019

If we had thought that 2018 was a year to remember, we were certainly not disappointed with 2019.

The U.S and European equity markets hit record highs going into this week’s holidays and the extended U.S – China trade war ended in a phase 1 trade agreement.

Perhaps more so than in any other year, geopolitics gripped the global financial markets more so than the stats. There was monetary policy also in focus, however, as the markets went on a rollercoaster ride of rising expectations of a recession to economic euphoria.

Without a doubt, the U.S President continued to be the global financial markets’ main protagonist.

Donald Trump

The U.S President was the center of attention in 2019 and continues to be with a week to go as we approach a new decade.

It all started back in early 2018 when Trump hit aluminum and steel imports with tariffs. Few would have anticipated the U.S President to hold is ground for an unprecedented 20 odd months to deliver a phase 1 agreement.

When you throw in the USMCA, which finally got the seal of approval after a year of wrangling, it’s hard to argue against Trump’s success at making America great again.

In spite of continued economic growth, he even managed to get the FED to reverse rate hikes, while also standing his ground on foreign affairs. A prime example was the HK Bill in support of the HK protestors. Few would have allowed such a bill to pass at such a delicate time in U.S – China trade negotiations.

To be frank, many had argued that he would only have his first 100 days to deliver on campaign pledges…

They couldn’t have been more wrong.

What he plans to deliver going into next year’s presidential election campaign remains to be seen but it’s likely to be bolder than the last one…

Boris Johnson

Boris Johnson’s sheer political resilience and persistence deserve a top 5 position. After disappearing into the political wasteland alongside the likes of David Cameron, there was a swift revival in late 2019.

Theresa May, Brexit, and ritain were on the ropes. With a minority government, Johnson failed in Parliament with a string of defeats before defying the odds.

Contrary to the EU and the Establishment’s threats, Johnson garnered a revised Brexit agreement and even got Parliament to vote in favor.

He then forced a first December General election since 1923 to deliver the Tory Party’s best outing since Thatcher’s heyday…

The Tories are now with a sizeable majority and finally reunited, with the British PM in prime position to draw the best out of the EU over the next 12-months.

And let us not forget, his pal sits in the Oval Office, just across the Pond…

Jerome Powell

In a year where many failed to stand up against the U.S President, Trump’s nemesis managed to avoid delivering zero interest rates. In a calm and collected manner, the FED Chair steered the U.S economy away from a recession. Powell managed this without the fanfare that we saw with his predecessor.

Trump may lay claim to the sustained growth and optimistic outlook, but the FED Chair does need some if not, most of the recognition. After all, the phase 1 trade agreement only came into being in the final month of the year…

Nigel Farage

If Boris gets a mention then Nigel also deserves a spot in the top 5. Firstly, he upset the apple cart in the EU elections, raising anti-EU sentiment in Brussels. He was then also a key figure in the Tory Party’s euphoric victory in early December.

His decision to fall on his sword to deliver a Tory Party victory was a rare event in politics. He did ultimately ensure Brexit. The people responded in kind, giving Johnson his majority to wrap up Brexit by the end of 2020…

HK Rioters

While there may have been a few that got things going, it was the sheer numbers. The unity seen across HK through late 2019 deserves a spot. While the violence could have been avoided, Hong Kong’s will to retain its identity was an impressive one. It was some time ago when the world saw images of Tiananmen Square and Tank Man. 30 years to be precise.

There was not be a single iconic picture to resonate with. The length of the stand against China and outcome, however, was impressive. Beijing and the world saw firsthand just how passionate the Cantonese are in retaining their identity.

And finally,

Nancy Pelosi

In terms of U.S politics, it was a trailblazer year for the Democrat. She became the first-ever woman speaker of the U.S House of Representatives. If that wasn’t enough, she also delivered just the 3rd impeachment in history.

Anyone who achieves such feats deserves a spot in the top 5. She may not get to oust the U.S President, but she has certainly achieved political greatness. That’s quite remarkable when considering the political landscape.

Powell and Trump were both in 2018’s top 5. We now have Boris and Donald on either side of the Pond. It will be interesting to see who makes it into next year’s list…

Gold, USD and the Euro: the Signs Ahead

Gold didn’t react decisively in the short run overall, but the European currencies: the euro, and the pound rallied. In the first part of today’s analysis, we’ll focus on what happened in the euro and how the forex situation fits the other gold price predictions.

Let’s start with the long-term chart featuring gold prices in terms of the euro.

Gold in the Eyes of the Europeans

The most important thing about gold’s performance is it’s 2019 attempt to break above the 2011 highs. It succeeded but only for a short while. The breakout was invalidated almost instantly as it was clear that gold is not able to withstand the selling pressure. Invalidations of breakouts tend to be very bearish developments and this time was no exception. And just like that – gold declined.

It’s been a few months since gold topped and gold – looking from the long-term perspective – is now only a little lower. Some may say that it’s proof that gold is just correcting after a big rally and that another big upswing is just around the corner. But that’s not what the chart facts support.

The fact is that gold failed to break above the previous high, which is bearish. Looking at the short-term performance, it might be both: correction or the early part of the decline, but so far nothing happened that would justify the bullish interpretation.

In particular, please note that back in 2012, when gold also tried to break above the previous high (and it actually succeeded in terms of the monthly highs), and failed, it also declined at a relatively slow pace initially. That didn’t prevent gold from declining very rapidly in the following months.

This means that if you’re using euro for your day-to-day transactions (for instance, because you live in Western Europe), then you shouldn’t count on the continuation in gold’s rally in the following months. In fact, something exactly the opposite could take place.

If you’re using U.S. dollars for your day-to-day purchases, the above is also very important to you. In this case, the above chart implies that the value of gold is likely to decline relative to what the EUR/USD currency pair will be doing.

And the EUR/USD pair.

The Euro and the Dollar

The Euro Index – proxy for the above – is at its medium-term resistance. Being at an important resistance without breaking above it means that the price is likely to move down. That’s how resistances work.

Moreover, please note that the entire September – today decline is one big prolonged shoulder of the bearish head-and-shoulders pattern (the early-2019 rally being the head). This means that once the Euro breaks significantly lower (perhaps triggered by one of the market news scheduled for this week) – below the previous 2019 lows, it’s likely to fall particularly hard. The size of the decline that follows the breakdown below the head-and-shoulders pattern is likely to be similar to the size of the head, which in this case means a move below the 2017 low. Of course, this would have major repercussions for many other markets, including gold.

If the euro declines that significantly, breaking below its 2017 low, and at the same time – based on the previous chart – gold declines more than the euro, gold would likely truly plunge in terms of the USD. Of course that’s not the only factor that points to this outcome, but it’s something that confirms other, even more important factors.

The full version of this analysis isn’t just about gold in euro terms though. There, we cover the immediate action in gold, silver and the miners in light of the USD Index twists and turns. Plus, we feature a little known sign that gold’s low volume just flashed, and show you its reliability. And of course, you’ll also find there the key factors at play and the targets of our promising short position. We encourage you to join our subscribers and reap the rewards. Subscribe today!

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Przemyslaw Radomski, CFA

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Forex Daily Recap – DXY Kept Hold Gains Post-Release of FOMC Minutes

USD Index

Greenback continued to linger in the upper vicinity of the Bollinger Bands, keeping intact accumulated gains.

US Dollar Index 1 Day 21 August 2019
US Dollar Index 1 Day 21 August 2019

Later the day, the July FOMC meeting minutes came out at around 18:00 GMT. The policymakers indicated that the last rate cut was a “mid-cycle adjustment”. The Fed officials also added that the rate cut shouldn’t be taken as a “pre-set course” for future cuts. Quite surprisingly,  the minutes also noted that few members wanted a 50 bps cut, based primarily on the weak inflation readings.

GBP/USD

Cable continued to stay consolidated near 1.1264 level on Wednesday. Red Ichimoku Clouds and adjoining base line of the indicator were hovering above the pair. Anyhow, the conversion line stood well below the GBP/USD pair, pouring cold water over the bearish sentiment. Also, the Relative Strength Index (RSI) was taking rounds near 37/41 range level, upkeeping a neutral market perspective.

GBPUSD 1 Day 21 August 2019
GBPUSD 1 Day 21 August 2019

At around 08:30 GMT, the UK July Public Sector Net Borrowing came out, disappointing the market participants. The Net Borrowing recorded near £-1.971 billion over £-2.650 billion estimates.

Meantime, today, German Spokesperson, Steffen Seibert proclaimed, “Germany prepares to accept a disorderly Brexit, considering the realities.” The Spokesperson also added that the country always would prefer an orderly Brexit. However, Steffen highlights the importance of accepting the reality in case of an unavoidable no deal EU-UK divorce.

AUD/USD

The daily volatility in the Aussie pair remained choppy as the day was approaching closing. Notably, the AUD/USD pair had opened up near 0.6778 level and was +0.15% up in the North American session. Earlier the day, the July MoM Westpac Leading Index reported upbeat data this time. The Leading Index recorded 0.14% over the prior -0.08%.

AUDUSD 1 Day 21 August 2019
AUDUSD 1 Day 21 August 2019

Anyhow, the bulls appeared quite out-of-mood to make some rigorous moves today. Nevertheless, the AUD/USD pair stood underway struggle to breach above the 23.6% Fibonacci retracement level or 0.6818 level. Ability to break above aforementioned resistance handle would immediately activate the upside barriers near 0.7037 and 0.7075 marks. Additionally, the Stochastic line (%K) was showing resilient movement, moving above the %D line of the indicator, pleasing the buyers.

USD/CAD

After testing the sturdy 1.3323 resistance, the Loonie pair was heading downside into the red Ichimoku Clouds. Here, the Clouds were acting as a strong support region, disallowing the bears’ entry. Also, the MACD line and the signal line of the MACD technical indicator appeared to look south side today.

USDCAD 1 Day 21 August 2019
USDCAD 1 Day 21 August 2019

Anyhow, the below-lying Parabolic SAR helped to keep the tempo higher, providing near-term hopes to the bulls. Upbeat July Canadian Consumer Price Index (CPI) remained as the primary driver that lifted the CAD currency. However, such a price action had an inverse impact on the Loonie pair allowing the bears to take over the pair. The July YoY BoC CPI Core rose 0.3% over the previous 0.0%. Also, the MoM CPI data surged 0.2% in comparison to the prior 0.1%.

On the other hand, the Crude prices also grew, further pushing down the USD/CAD pair. Today, EIA Crude Oil Stocks Change computed since August 16, published -2.732 million over -1.889 million forecasts. Hence, the inventories drop signaled for a rise in the demand for the commodity, allowing a price upsurge.

 

 

 

Daily Wrap – The Fed vs The Markets – Part II

We knew the rates market had a pre-set vision of an easing cycle, pricing in some 66bp of cuts through to December, and some 108bp through to December 2020. Obviously, front-end Treasury yields and global bonds more broadly had been the beneficiary of this implied policy path, with funds subsequently being pushed further and further out of the risk curve in search of yield, with the hunt for duration feeding into credit and equity. So, the risk was always that if we didn’t hear what we wanted to hear we would sell out of bonds, which would cause higher implied volatility, negative gyrations in equity markets and cause financial conditions to tighten.

A hawkish cut

Well, that scenario played out. Granted, the actual statement came out just as the market had anticipated, with a 25bp cut to the fed funds rate, a formal end to its balance sheet normalisation program (QT) and two dissenters (George and Rosengren were against easing). With narrative that the board will “act as appropriate to sustain the expansion”.

This, in itself, gave us a feel we were leaning to a hawkish cut, but things got spicy in markets when Powell spoke. The focal point of what we initially heard was this 25bp cut was a “mid-cycle adjustment to policy”, and that this was an insurance cut to keep in check the fallout from considerations such as trade. That we should not just consider that we had a 25bp cut, but it should be taken into context of the broader trend in policy, with the move to a patient stance, which is now accommodative, and that in itself is providing a more holistic support cushion to a resilient US economy.

It was a cut that many saw a really just taking out the December hike.

The Fed picking a fight with the market – the market will always win

“Mid-cycle” was all that mattered though. That was the red flag, and the market heard enough evidence that its implied easing path was thrown into question. The result, hardly surprisingly, was a move in US 2-year Treasury’s from 1.82% into 1.96%, with the 2s vs 10s yield curve falling 11bp to 10bp. The USD went on a run, with USDJPY tracking into 109, while EURUSD broke the triple bottom at 1.1106, taking the DXY higher for a ninth straight. AUDUSD fell from 0.6891 in to 0.6832, with EM FX finding a wave of offers as you’d imagine.

EURUSD
DXY

Gold fell $16 into $1410, with gold stocks hit hard, while the S&P 500 was sold 1.8%. The market was viewing this as a policy error, and flashbacks of Q4 18 were all too evident…the market hadn’t heard what it wanted to hear, and let the Fed know how they felt.

Powell is becoming well known for his pivots, and in this case, it’s almost as though he had someone in his ear telling him the market reaction, that towards the latter stage of the press conference, he walked back his earlier view. Once again, it’s clear. In an easing cycle, it’s the market that set policy, not the Fed, and if you want to challenge that dynamic, we will see volatility.

To clarify the “mid-cycle” comments, Powell detailed he meant it wasn’t the start of a long cutting cycle, and that he “didn’t say just one rate cut”. This narrative saw support kick back into bonds with a decent reversal in 2s, with the S&P 500 rallying to ultimately close 1.1% lower on the session. The rates market closed the day pricing a 64% chance of a September cut, so Powell has managed to install some belief the market is still on the money, but it feels like the communication with the markets is on more shaky ground.

The market needs time to regroup

The market now needs a couple of days to really digest this, and quite often in these meetings, the first move is not always the right move. We were hoping for clarity, and what we have been left with is more questions, so its back to listening to the Fed and ideally the man who many feel is the real governor on the board – Richard Clarida. That said, in the near-term, the most immediate scheduled speaker is James Bullard (7 August).

We will be keeping an eye on tonight’s (00:00aest) US ISM manufacturing, which after the overnight Chicago PMI, which came in at a woeful 44.4 (vs 51.0 eyed), surely holds downside risk to the consensus call of 52.0 on that index. After that, it’s on to Friday’s US payrolls, although when the Fed is looking more closely at inflation expectations and trade, the payrolls print should affect pricing too greatly, unless its an absolute disaster.

A weaker Asia open

The wash-up is we will see a weaker open in Asia, with the ASX 200 called to open just below 6800. The Hang Seng, Nikkei 225 and China should open around 1% weaker, and there is little in the way of data to really influence here. Gold stocks will find sellers easy to come by on the open, while on a more diversified level, BHP is indicted to open 1.6% lower. It’s not an ideal day for RIO to report numbers (after the bell), but even though we’ll see sellers on the open, there won’t be any panic. In fact, the open will offer a lot in the way of psychology, and I will be looking to see if traders buy the opening weakness or add onto the weaker open.

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Chris Weston, Head of Research at Pepperstone.

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Forex Daily Recap – Fiber Plummeted to a 2-year Low Post-Fed Rate Cut Decision

US Dollar Index

Finally, the Federal Reserve (Fed) has lowered the interest rates by 25 bps this time as per market estimates. The rate decision had taken over rising concerns of a fragile global economy and muted inflation rate. Meantime, the policymakers also mentioned about leaving the door open for further rate cuts, depending on the incoming data.

US Dollar Index 1 Day 31 July 2019
US Dollar Index 1 Day 31 July 2019

Following the rate cut release, the Greenback bulls gathered some extra energy and breached the sturdy 98.32 and 98.35 resistances. Earlier the day, the July ADP Employment Change reported 56K higher than the market hopes and 44K above the previous figures. Some, the July Chicago Purchasing Managers’ Index data release disappointed the market participants. The Index came around 13.96% lower than the consensus estimates of 50.6 points.

EUR/USD

Healthy 1.1158 resistance handle continued to restrict the pair’s upside even today. The EUR/USD pair had remained almost muted since July 23. However, the bulls attempted to test the 1.1158 resistance in the European trading session. Anyhow, the aforementioned resistance, in combination with a major counter trendline pushed the pair downwards.

EURUSD 240 Min 31 July 2019
EURUSD 240 Min 31 July 2019

Some crucial Eurozone-specific macroeconomic data came out on Wednesday morning. Few of them remained in-line with the market hopes, and few pleased the buyers while few made a disappointing data release. Notably, the Eurozone Q2 GDP reported slightly higher than the consensus estimate of around 1.0%. Needless to say, the Eurozone July YoY CPI Core reported 1.0% over 0.9% forecasts. Meanwhile, the Italian Q2 GDP recorded higher than the negative market expectations. Also, post-Fed rate cut release, the Fiber dropped to 1.1082 level, last touched in 2017.

AUD/USD

Today, significant Consumer Price Index (CPI) data releases remained in the center stage for the Australian economy. The highly significant Q2 QoQ RBA Trimmed Mean CPI recorded 0.1% higher than the previous 0.3%. Also, the Q2 QoQ CPI reported a whopping 0.6% rise as compared to the last 0.0%. On the backdrop of supporting economic data, the AUD/USD pair breached out of a 13-day old downtrend channel. Simultaneously, the Relative Strength Index (RSI) displayed an upshot, jumping from 28 levels to 40 levels.

AUDUSD 240 Min 31 July 2019
AUDUSD 240 Min 31 July 2019

If the pair had drifted more upwards, then it could have encountered the robust 0.6911 resistance handle. Anyhow, the 50-day SMA had crossed below both the 100-day and 200-day SMAs, forming a “Death Cross”. At 18:00 GMT, the Fed announced a 25bps rate cut as per expectations, allowing the Greenback to surge. On the contrary, such an upliftment in the USD Index discouraged the Aussie pair bulls. Post rate cut decision, the AUD/USD slipped and was testing the 0.6863 support handle.

USD/CNY

At around 19:00 GMT, the Chinese Yuan pair was forming a Doji Candlestick pattern on a daily chart, revealing net zero change since the last closing. Notably, the USD/CNY pair was making rigorous attempts to make a breakthrough out of the healthy 6.8936 resistance since June 20.

USDCNY 1 Day 31 July 2019
USDCNY 1 Day 31 July 2019

Even if the pair had made a triumphant march breaching above the aforementioned upside barrier, then the 6.9315 resistance would have got activated. Nevertheless, a 1-month old ascending support line was in place to limit pair’s daily losses.  During the early hours, the Chinese July NBS Manufacturing PMI recorded 49.7 points over 49.6 points forecasts. Somehow, the July Non-Manufacturing PMI reported 1.49% lower than the street estimates of 54.5 points.

 

Forex Daily Recap – Fiber Nudged Lower over Downbeat PMI Data

EUR/USD

After hitting the significant 200-day SMA at 1.1281 level on July 18, the Fiber took a rebound price action, heading to the south. Even today, the EUR/USD pair kept plunging and hardly saw any upside. The tumbling rally consisted of multiple Doji candlesticks, showing a continuation of the downtrend. However, a move to the upside would have enabled the pair to challenge the overhead significant SMA conflux.

EURUSD 240 Min 24 July 2019
EURUSD 240 Min 24 July 2019

On the economic docket, the downbeat outcome of the two significant high volatile events disappointed market participants. One among the duo was the German July Markit Manufacturing PMI which reported 4.88% drop over 45.2 points estimates. The other one was the Eurozone July Markit PMI Composite which came out 1.17% below the market hopes of around 52.1 points. Also, while moving downwards, the EUR/USD pair breached away the healthy 1.1193 and 1.1182 support handles.

GBP/USD

An overhead strong resistance conflux continued to put a lid over the Cable’s gains even today. This conflux consisted of a 1-month old descending slanting resistance and 100-day medium-term SMA.

GBPUSD 240 Min 24 July 2019
GBPUSD 240 Min 24 July 2019

After showcasing some adverse price actions last day, the GBP/USD pair ensured to take the flight to recovery today. Today, Boris Johnson took charge of the office as the new UK Prime Minister. Boris was put under pressure on his first day as the PM by both Donald Tusk and Michel Barnier to explain his Brexit plan “in detail“. Britishers continue to stay tensed, fearing a hard Brexit in the near term. The RSI was indicating 60.68 level, revealing an almost overbought condition.

USD Index

The Greenback ensured to keep the daily volatility within the vicinity formed by 2:1 and 3:1 Gann lines. Hence, the uptrend remained intact in the overall price actions of the USD Index. Though there occurred a slight downfall in the initial hours of the day, the Greenback bulls managed to recover those early morning losses laterwards. Both the July US Markit Manufacturing PMI and PMI Composite missed estimates. Also, the June MoM New Home Sales came around 0.646 million over the market hopes of 0.660 million. Despite that, the July Markit Services PMI recorded 0.97% higher than the consensus estimates of about 51.7 points. If at all, the USD Index made a move to the downside, then the market attention would have turned over to the below-lying significant SMAs. The histograms of the Moving Average Convergence Divergence (MACD) kept pointing to the north, bestowing positive drifts in the Greenback.

USD/JPY

The Japanese yen pair had bounced off 107.20 support on July 18, taking the upward path towards recovery. However, after reaching the 108.20 resistance mark, last day, the pair made a downturn. Today, the Ninja was underway the same slump rally, touching 107.96 level. Quite notably, the pair kept on moving in and out of the significant SMAs. The pair remained stuck between the 200-day SMA and the 50-day SMA in the late afternoon session.

USDJPY 240 Min 24 July 2019
USDJPY 240 Min 24 July 2019

Earlier the day, the Japanese May Leading Economic Index reported 94.9 points over 95.2 points forecasts. However, the May Coincidence Index came out 0.19% higher than the market expectation of around 103.2 points. If the pair had broken and moved above the 108.12 level, then that would have activated the resistance stalled near 108.35 level.

 

Forex Daily Recap – USD/CNY pair was Forming a Cup-and-Handle Pattern

USD/CNY

On Monday, the Chinese Yuan pair remained stuck majorly within the 6.8358/6.8487 range bracket. The USD/CNY pair had slipped drastically following positive updates from the US-China trade front. In the G20 meeting, President Trump offered some concessions to the Chinese counterpart. Trump promised no new tariffs and some relaxation over the restrictions imposed on Huawei Technologies Co.

USDCNY 60 Min 1 July 2019
USDCNY 60 Min 1 July 2019

Also, Beijing came into an agreement with Washington to purchase US agricultural products. Hence, the pair had made a downturn following the trade truce news, dropping 0.39% gains, reaching 6.8359 mark on Saturday. Today, the June Caixin Manufacturing PMI reported slightly lower than market expectation, recording 49.4 over 50.0 forecasts. This negative Chinese report allowed the pair to move away from 10-day low, touching 6.8459 level. Strong uptrend seems to lie ahead in the coming sessions as the pair was forming a Cup-and-handle chart pattern.

DXY

On the first day of July, the USD Index showcased some great movements, taking the Index from 96.26 level to 96.66 level. At around 15:48 GMT, the Greenback was testing the healthy 96.68 resistance mark. Speculations over a near-by Fed rate cut seemed to loom, considering the deepening uncertainty around the trade front.

US Dollar Index 60 Min 1 July 2019
US Dollar Index 60 Min 1 July 2019

“It does appear that, in particular, the negotiations between the U.S. and China are resuming, which is obviously a positive development but beyond that, ultimately, how those negotiations got resolved is certainly going to be an important factor in thinking about prospects for the global economy.”, said Fed Board of Governors Vice Chair Richard Clarida.

Meantime, the US economic docket displayed mixed reports affecting the Greenback’s daily price actions. The most crucial June ISM Manufacturing PMI reported 51.7 over 51.0 estimates. However, the June ISM Prices Paid reports recorded a 10.65% decline in comparison to 53.0 market hope.

EUR/USD

The Euro pair was heading south on Monday amid weaker economic data. The German June Unemployment and Manufacturing PMI data release disappointed the traders. The Unemployment Change came around -1K over -3K market estimations.  The downtrend that initiated on June 28 continued to take over the pair even today. The EUR/USD pair opened up the day near 1.1360 level and remained below the same mark throughout the day. The pair attempted a slight recovery after rebounding from 1.1316 level but got capped near 1.1360 mark. After touching that pivotal mark, the pair dropped 0.56% reaching near 1.1296 level at around 16:47 GMT. The pair had already reached the 10-day bottom in the evening session.

AUD/USD

The Aussie pair made the opening for the day near 0.7026 level and kept the downward motion intact. At around 17:15 GMT, the AUD/USD pair was trading near 0.6957 level, 0.99% down since the last closing. During the early hours, the RBA came up with the June YoY Commodity Index SDR. The Street analysts had estimated a 3.4% increase in the Index this time. Somehow, the actual statistics reported a higher figure of around 13.0% over the market expectation of 14.9%.

AUDUSD 60 Min 1 July 2019
AUDUSD 60 Min 1 July 2019

Nevertheless, the leading cause behind the Monday losses remained the RBA rate cut hopes. The market expects the Central Bank to cut the July interest rates from 1.25% to 1.00%, a 25 bps reduction. Speculations underpinned the Australian unemployment figures and the US-China trade deal chaos as the primary driver for a rate cut.

 

 

 

 

 

 

 

Forex Daily Recap – US Dollar Index Descended to a Three-Month Bottom

USD Index

At around 19:33 GMT, the Greenback was taking rounds near its three-month bottom. The USD Index was pushed off the cliff from about 97.64 levels on June 19. The Index kept a follow-through of the pullback sessions reaching 96.17 levels today. Wednesday’s Fed rate cut hints on “an accommodative” stance continued to weigh over the Index. Reports suggested a Fed rate cut would mostly happen in the near term by July. The US economic docket also failed to provide some significant support to the stumbling USD Index. The US June Markit Services PMI came out 0.3 points lower than the 51.0 forecasts.

US Dollar Index 60 Min 21 June 2019
US Dollar Index 60 Min 21 June 2019

Meanwhile, the May MoM Existing Home Sales data published higher-than-expected reports. The Existing Home Sales data had reported around 5.34 million over 5.25 million estimates. Somehow, the Greenback appeared to ignore these positive data and continued the downtrend.

USD/CAD

The Loonie pair appeared to shrug over the plummeting Greenback and rising Oil prices today. The USD/CAD pair was showing some slight recovery movements throughout the day. After marking the day’s opening near 1.3183 levels, the pair touched the day’s high near 1.1328 levels. At around 12:30 GMT, the Canadian April MoM Retail Sales data missed estimates. The market had expected the Retail Sales data to come around 0.2%. However, the actual statistics quoted 0.1% below the forecasts. Adding to this sour sentiment, the Retail Sales excluding Autos reported 0.3% over 0.1% estimates. Meantime, Baker Hughes US Oil Rig Count came near 789 over the last 788. This Crude report revealed a minor increase in the Stockpiles, showing a decline in the demand side. Amid escalating US-Iran tensions, the Crude prices skyrocketed knocking off the highest point near $57.97 bbl.

GBP/USD

After quoting the day’s opening near 1.2706 level, the Cable displayed a sharp pullback reaching 1.2643 level. These earlier losses got recovered in the rest half of the day marking daily high near 1.2747 level. The extra energy in the pair’s rigorous movements came out of the falling Greenback. The USD Index had touched the bottom near 96.50 levels in today’s session.

GBPUSD 60 Min 21 June 2019
GBPUSD 60 Min 21 June 2019

Last day, the BoE had left the monetary policy unchanged as per expectation. The Central Bank continued to remain in-line over its May Inflation report. However, the Bank mentioned that it would consider all possible downsides occurring due to various global cues. The Bank has also reduced its Q2 growth forecast from 0.2% QoQ to 0.0% QoQ. Hence, as compared to other Central Banks, BoE’s stance appeared to be lesser dovish. On the UK politics front, Boris Johnson continued to stay ahead of the Tory leadership race.

EUR/USD

The Euro pair that had opened up on Monday near 1.1217 levels was hovering near 1.1371 levels today. The EUR/USD pair continued to conquer new heights on Friday’s session majorly over Greenback slowdown. The USD Index was trading near its three month low amidst rate cut hopes. On the events front, France, German, and the Eurozone showcased some astounding reports. The market had anticipated the German June Markit Manufacturing PMI to report 44.5 over the previous 44.3. Quite surprisingly, the actual reports came more than the estimates, recording 45.4. Also, the Eurozone June Markit PMI Composite reported above the market expectation. There was hardly any downside observed in the pair’s movements today and kept the uptrend intact.

 

Forex Daily Recap – Bond Yields Drop Beyond 2% as Powell Hinted a Rate Cut in July

USD Index

The Greenback continued to extend losses on Thursday’s trading session. At around 12:30 GMT, the USD Index found some support near 96.61 levels and took recovery path. The plunge came in after the Fed hinted of a rate cut by December 2019. Fed Chair Powell would likely exercise an “insurance cut” by July. Following the Fed announcement, the US 10-year Treasury Bond Yields dropped and moved below 2%.

10-Year Bond Yield
10-Year Bond Yield

On the events front, the US Jobless Claims figures reported lower-than-expectations, which allowed the Index to reverse trend today. The Continuing Jobless Claims computed since June 7 reported 1.662 million over 1.688 million forecasts. Meantime, the Greenback appeared to shrug over weak June Philadelphia Fed Manufacturing Survey data. This data reported merely 0.3 over 11.0 estimates. A few moments ago, reports suggested that Iran attacked a US military surveillance drone flying over the Strait of Hormuz. Trump confirmed the attacks and tweeted, “Iran made a very big mistake!”. The global conditions seem to grow worse and probabilities of war sets in risk-off sentiment.

USD/JPY

At around 16:51 GMT, the Ninja was 1.39% down reaching near 107.24 levels last touched on January 3. The BoJ decided to maintain an ultra-easy monetary policy and kept the short-term rates unchanged at -0.1%. However, the policymakers hinted to maintain the long term interest rates close to 0.0%.

USDJPY 60 Min 20 June 2019
USDJPY 60 Min 20 June 2019

Additionally, BOJ Governor Kuroda mentioned that the Bank would remain flexible over future easing options depending on the incoming data. Also, the Japanese Inflation figures have already missed the target of 2.0%. Despite that, JPY April All Industry Activity Index came out at 04:30 GMT. The consensus had estimated the Index to report near 0.7% in place of previous -0.3%. However, the actual reports recorded 0.2% higher than the market expectation.

USD/CHF

The pair continued to follow the tumble rally that initiated on June 19 at 1.0013 levels. The USD/CHF pair had made the opening today near 0.9925 levels. At 17:00 GMT, the pair was testing the 0.9792 support levels last touched on January 14. The Switzerland May Trade Balance reported 540 million higher than the market hopes of around 2,870 million. Meanwhile, the Greenback kept plunging following the Fed interest rate decision. As a result, the falling USD Index and the rising CHF kept the downtrend intact in the pair’s movements.

GBP/USD

After marking the day’s opening near 1.2654 levels, the Cable kept hold of the uptrend. The positive sentiment in the GBP/USD pair came mostly out of the Greenback slump. The UK Retail Sales reported mixed figures in the Asian session. The May MoM UK Retail Sales excluding Fuel came out -0.3% over -0.4% estimates. Anyhow, the YoY Retail data reported 0.4% lower than 2.7% forecasts. However, the gains remained limited near 1.2727 levels.

GBPUSD 60 Min 19 June 2019
GBPUSD 60 Min 19 June 2019

Meantime, Jeremy Hunt would compete with Boris Johnson after Michael Gove got eliminated in the latest ballot. In the middle of the day, BoE decided to keep the interest rates near 0.75%. Following the BoE rate announcement, the pair slipped from the day’s high reaching day’s low of 1.2674 levels.

Forex Daily Recap – USD Index Slipped -0.57% over Unchanged Fed Interest Rates

USD Index

The Greenback kept plunging since the Asian session after marking the day’s high near 97.68 levels. The slump rally came in ahead of the FOMC meeting scheduled at around 18:00 GMT. The market had expected the rates to remain unchanged near 2.5%. Trump had earlier mentioned his stance over his dissatisfaction over Fed’s monetary policies. The President had pressurized the Central Bank multiple times before, urging for an interest rate cut. The USD Index had badly fallen in the first half of the day reaching near 97.39 levels.

US Dollar Index 60 Min 19 June 2019
US Dollar Index 60 Min 19 June 2019

Despite that, positive sentiment over the US-Sino trade dispute helped the market to limit the losses. Representatives of both nations would discuss over resolving the trade problem in the upcoming G20 meeting. At around 18:00 GMT, the Fed Interest rate decision came out. The Central Bank has decided to keep the interest rates unchanged at 2.5%. Following the Fed announcement, the US Dollar Index slipped 0.27%, reaching 97.12 levels.

EUR/USD

The Euro pair opened up on Wednesday near 1.1197 levels and showcased a slight slip in the early hours. The initial plunge came after the release of weak German May MoM PPI figures. The German PPI reported -0.1% over 0.2% forecast, lowering investor interest. Somehow, the Fiber took support near 1.1187 levels and made a reversal in the overall trend. The EUR/USD pair then soared 0.30% reaching 1.1221 levels amid Greenback fall. The USD Index had dropped significantly ahead of the Fed Interest rate decision. The consensus had expected the rates to remain unchanged at 2.5% this time. Meanwhile, the Eurozone April Current Account reported €19.2 billion over €10.6 billion estimates.

GBP/USD

The Cable continued the previous day’s uptrend into today’s trading session. Last day’s poor performance in the USD Index had triggered the positive trend in the pair. On Wednesday, the GBP economic docket displayed some pleasing reports elevating the pair. The May MoM Retail Price Index reported 0.1% higher than 0.2% estimates. Also, May YoY PPI – Input came in higher than market expectation. The Street analysts had hoped the PPI figures to report near 0.8%. Somehow, the reports recorded 0.5% higher than the market forecast.

GBPUSD 60 Min 19 June 2019
GBPUSD 60 Min 19 June 2019

The most significant Inflation indicator – May YoY CPI reported at around 08:30 GMT. The reports remained in-line with the 2.0% estimates. Following such astounding reports, the GBP/USD pair skyrocketed 0.73% touching 1.2636 marks. The falling Greenback had provided the extra support for the elevation in the pair. Meantime, Boris Johnson stands ahead in the Tory leadership race. Boris has secured the backing of around 114 and 126 MPs in the first two ballots.

USD/CAD

Yesterday’s slump rally in the Loonie pair got paused near 1.3363 levels and slightly reversed in today’s session. The pair continued to consolidate in the range of 1.3368/83 levels in the Asian trading session. However, the pair displayed a definite Gap down in the early European session. Robust Canadian data allowed the pair to jump directly from 1.3373 levels to 1.3354 levels. The BoC May YoY CPI data came around 0.9% higher than expectations shocking the investor community. Also, the CPI Core was 0.1% higher than the previous 0.2%. In addition to the growing Loonie, the falling USD Index added substantial downward pressure on the pair’s movements. Along with all these factors, the EIA Crude report was higher than analyst estimates.

Forex Daily Recap – Fiber Slumped more than -0.47% Following Draghi’s Dovish Statements

AUD/USD

The slump rally that had begun on June 9 got slightly diverted in today’s trading session. The pivotal point for the reversal was 0.6835 levels. The pair had started the day near 0.6855 levels and continued the downtrend. The early slip in the AUD/USD pair came in after the critical release of RBA meeting minutes.

AUDUSD 60 Min 18 June 2019
AUDUSD 60 Min 18 June 2019

The policymakers mentioned that the Bank would opt for reducing the interest rates again. Following such a dovish stance, the AUD/USD pair dropped nearly to the five-month bottom. China and Australia are good trading partners. Meantime, Trump tweeted that “Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.” Hence, positive news on the US-China trade dispute front allowed the pair to recover the early morning losses. The Aussie pair soared 0.72% reaching day’s high near 0.6882 levels.

EUR/USD

The Euro pair kept the uptrend intact until President Draghi’s dovish stance over the economic growth. Mario mentioned that the Bank would leave the door open for further stimulus, including rate cuts. Hints for such a rate amid lack of improvement in the Eurozone economy hammered the Fiber. The EUR/USD pair suffered a massive plunge dropping more than 0.47% following the ECB President comments. The market reaction took the pair from 1.1242 levels to 1.1189 levels.

Laterwards, the pair continued to maintain a range-bound performance sustaining between 1.1181 and 1.1211 levels. German ZEW Survey June  Economic Sentiment data release shocked the market. Street analysts had expected -5.9 points this time. Anyhow, the reports came as -21.1 points. Also, the Eurozone CPI data was lower than the market expectation. The May MoM CPI data reported 0.1% lower than the consensus estimates of 0.2%. The Eurozone ZEW Survey – Economic Sentiment for June also disappointed the market participants. The Sentiment Index came in as -20.2 over -3.6 forecasts.

USD Index

After a small tumble rally in the early hours, the trend in the USD Index reverted near 97.38 levels. From this pivotal reversal point, the Greenback went straight up, touching 97.76 levels. The rise in the US Dollar came in as its major rival – EUR/USD suffered a sharp pullback in the Asian session. The Euro pair had fallen over the dovish economic stance provided by the ECB President Mario Draghi. The stances included probabilities of a rate cut in the near term considering the sluggishness improvement in the Eurozone economy.

US Dollar Index 60 Min 18 June 2019
US Dollar Index 60 Min 18 June 2019

Anyhow, this has lifted the Greenback to 13 days high. In response to Draghi’s commentary, Trump tweeted “Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others.” Meanwhile, on the economic docket, there was an overall mixed performance. The May MoM Building Permits data reported 2K lower than the consensus estimates of 1.296 million. Despite that, the May MoM Housing Starts published 30K higher than the market hopes of 1.239 million.

USD/CAD

The Loonie pair had made the opening on Tuesday near 1.3409 levels and remained slightly lower initially. Canada is among the largest exporter of Crude Oil. Any fluctuations in the Crude prices have an inverse impact over the pair’s movements. The pair had reached 1.3432 levels at around 10:00 GMT marking day’s high. However, the prices soared 5.8%, reaching the $54.50 per barrel mark in the Asian session. The primary driver was the positive sentiment developed around the US-Sino trade dispute after Trump’s tweets. The US President mentioned about productive talks to happen in the G20 meet, next week.

Forex Daily Recap – GBP Bulls Stood Aside Paving the Way for the Bears

USD Index

The Greenback showcased a high swing performance in the early hours after making the opening near 97.50 levels. The morning gains came in after the Fiber slipped over weak economic data. And, any fall in the rival EUR/USD adds to a definite push in the USD Index. Last week, at the end of a strong uptrend, the Index had managed to mark weekly highs near 97.58 levels. Today, while taking the upward path, the US Dollar Index was testing the same highest point. Fortunately, the act of testing proved worth the effort. At around 07:00 GMT, the Greenback quoted a fresh daily high near 97.60 levels. However, the performance started losing shine after the release of the NY June Empire State Manufacturing Index.

NY June Empire State Manufacturing Index
NY June Empire State Manufacturing Index

The market had expected 10.0 points this time over previous 17.8 points. But, the actual figures came out as -8.6 points, the lowest since October 2017. Such disappointing economic data adds in more pressure for a Fed rate cut in the next few months. Anyhow, the US labor market appeared to remain stronger discounting rate cut probabilities. The market now eyes for the Fed meeting scheduled on Wednesday.

GBP/USD

The Cable made the opening on Monday near 1.2595 bottom levels amid Brexit tensions. The pair had remained consolidated in the early hours lacking direction. However, the GBP/USD pair lost ground at around 05:45 GMT showcasing a downtrend. The decline in the pair got support near 1.2572 levels and reversed the trend. The overall sentiment remained fragile throughout the day as Britishers continued to fear over a hard Brexit.

GBPUSD 60 Min 17 June 2019
GBPUSD 60 Min 17 June 2019

Boris Johnson, former Mayor, and Foreign Secretary stay in front of the Tory Leadership race. Boris has already mentioned that he will take the opportunity to execute Brexit irrespective of a deal. Few other candidates who got through the second ballet came up with soft-Brexit stances. In the meantime, Dominic Raab mentioned of a Brexit idea with a Parliament bypass. Amid such deteriorating sentiment, the pair slipped from 1.2605 levels straight down to 1.2536 levels.

USD/CAD

The pair kept hold onto the 1.3410 top levels as the economic docket weighed lower with lack of significant events. The Crude prices suffered a sharp pullback slumping 2.32% reaching $51.71 per barrel in the early hours. The plunge in the prices amid rising Middle East tensions. The US Secretary of State Mike Pompeo said that Washington does not want to go to war with Iran. But, the US will take every action necessary, including diplomacy, to guarantee safe navigation in the Middle East. However, the OPEC-led supply cuts helped the commodity to choose pickup, rebounding from $51.77 bbl reaching $52.48 bbl. Anyhow, the disappointing US data kept the downward pressure intact over the pair’s movements. Despite that, Canadian April Foreign Portfolio Investment reported $-12.80 billion over the previous $-1.56 billion. Today, the USD/CAD pair mainly remained consolidated near 1.3410 levels except a small dip rebounding from 1.3392 levels.

EUR/USD

Following Friday’s closing on a lower note near 1.1205 levels, the pair showed some functional recovery today.

EURUSD 60 Min 17 June 2019
EURUSD 60 Min 17 June 2019

The EUR/USD pair marked the day’s highest point near 1.1248 marks in the early European session. Disappointing US data generated a pullback in the Greenback which provided support for Fiber upsurge. Earlier the day, Eurozone Labor Cost for the first quarter came out. The Street analyst had hoped for a 0.3% rise in the data, expecting 2.6% this time. Somehow, the reports remained lower than the estimates but were higher than the previous statistics.

Forex Daily Recap – USD at 9-Day High with Strong Retail Data

USD Index

The Greenback that remained capped under 97.08 levels in the morning showcased a breakthrough in the early European session. The USD Index knocked off 97.44 levels marking 9-days high after the release of robust US data. May Retail Sales Control Group came out at around 12:30 GMT. The market had expected the figures to report an in-line number with the previous 0.4%. Anyhow, the actual reports recorded 0.5%, 0.1% higher than expectations. Also, the MoM May Industrial Production came out as 0.4% in place of 0.2% consensus estimates.

US Dollar Index 60 Min 14 June 2019
US Dollar Index 60 Min 14 June 2019

However, the speed of Greenback upliftment slowed down as the June Michigan Consumer Sentiment Index missed forecasts. The Street analysts had expected the Sentiment Index to report as 98.0 over previous 100.0. But, the reports were slightly lower than estimates reporting near 97.9. Today’s positive US data seemed to mitigate the speculations over a probable Fed rate cut.

EUR/USD

After sliding for three days in a row, the Euro pair touched the 7-days bottom mark. The plunge in the EUR/USD pair came after the immediate USD Index upsurge. The pair had made the opening on Friday near 1.1279 levels. Laterwards, the Fiber showcased a fake upside move touching 1.1290 levels in the early hours. However, a slump rally was no far, and the pair started slipping over poor Euro-specific data release. German May Wholesale Price Index reported below estimates. Also, Italian Industrial data and CPI figures recorded weaker reports. During the early European session, higher-than-estimated US data added more downward pressure on the pair. The Fiber dropped 0.66%, reaching near 1.1214 levels at around 16:03 GMT.

USD/JPY

The Ninja initiated trading today near 108.32 levels and remained quite silent in the early hours. The USD/JPY pair slightly went south laterwards after the release of Japanese April Capacity Utilization data. This data reported 1.4% higher than the consensus estimates of around 0.2%.  In addition to that, the April YoY Industrial Production data was in-line with the market expectation of about -1.1%.

USDJPY 60 Min 14 June 2019
USDJPY 60 Min 14 June 2019

Later the day, the US Retail Sales figures and Industrial Production data reported above the market hopes. Following sound US economic data, the USD/JPY pair displayed a significant jump from 108.20 levels to 108.50 levels. Also, the US 10-year bond yields appeared to recover from the earlier incurred losses remaining flat for the day.

USD/CNY

The Chinese Yuan pair continued to maintain the uptrend started on June 12. The pair had begun day’s trading session near 6.9217 levels. And, in the late afternoon session, the pair was taking rounds near 6.9255 levels marking day’s high. The pair was testing this intense resistance levels but failed to do so. Mixed Chinese data released at around 07:00 GMT kept the pair’s positive trend intact. Chinese May YoY Retail Sales reported 8.6% over 8.1% estimates. In the same time, Industrial Production data came out 0.5% lower than the street expectation of 5.5%. Below estimates YTD Fixed Asset Investment added more oil into the upward moving USD/CNY pair. Further upliftments came up with the release of good US May Retail figures.

Forex Daily Recap – Aussie Pair Slipped over Disappointing Job Data

AUD/USD

The Aussie pair made a low swing movement in the early hours following disappointing Australian jobs data. The May Unemployment Rate recorded 5.2% over 5.1% estimates. There was an addition of 42.3K jobs in May. However, significant addition came from Part-time Employment counting to 39.8K. On the other hand, the Full-time jobs added remained merely 2.4K. Following such weak Employment data, the AUD/USD pair slipped from 0.6936 levels reaching 0.6905 levels.

AUDUSD 60 Min 13 June 2019
AUDUSD 60 Min 13 June 2019

At around 12:30 GMT, the US Initial Jobless Claims reported 6K higher than the 216K estimates. Also, the US May YoY Import Price Index recorded -1.5% in comparison to 0.4% estimates. The pair remained sustained within 0.6902/18 range levels in the later part of the day.

USD/CAD

The pair had reached the weekly high near 1.3345 levels yesterday, gaining more than 70 pips in one go. Unfortunately today, in the morning session, the Loonie pair lost almost 50% gains attained amid crude price upshot. Oil prices rose around 3.8% in the early hours as two Saudi Oilers got attacked in the Gulf of Oman. The tankers got sabotaged while passing from near-by the Iranian coast. Hence, speculators drew similarities between the earlier attacks and today’s attacks, focusing spotlight over Iran. Also, Japanese PM Abe visited Iran today when the attacks took place. And, Trump calls him as a friend. However, as of now, the case remains unsolved. Later the day, weak US Unemployment data took control over the USD/CAD pair and continued the plunge rally. Somehow, the pair was recovering in the afternoon taking a bounce from 1.3300 levels.

GBP/USD

After marking the day’s opening near 1.2694, the Cable was trading near 1.2679 at 16:00 GMT. The pair remained slightly subdued as there were no GBP-specific events in the docket today. The race for the UK Prime Ministership continued. Recent reports suggested that Boris Johnson has won the first ballot. Boris had already mentioned that he would at any cost (with/without a deal) make happen Brexit on October 31. Britishers fear his hardliner Brexit.

GBPUSD 60 Min 13 June 2019
GBPUSD 60 Min 13 June 2019

The GBP/USD pair slipped as Greenback gathered momentum over rate cut hopes as the US Jobless Claims missed estimates. Investors eye Fed’s meeting scheduled for next week expecting a rate cut. The pair was heading south at around 16:14 GMT as Boris led the Tory leadership race.

USD Index

The Greenback had initiated the trading session on Thursday near 96.96 levels. There was a slight downfall in the early hours as German May CPI figures came in-line with the consensus estimates. Hence, the US Dollar Index declined further marking day’s low near 96.88 levels. Quite surprisingly, the Index gained momentum following lower-than-expected Jobless Claim figures and trade data. Continuous Jobless Claims computed since May 31 reported 1.695 million over 1.680 million forecasts. However, investors remained optimistic over probable Fed rate cuts in the near term with today’s poor US data. Recently, May CPI figures also showcased mixed reports. In the same time frame of 12:30 GMT, the US May trade indexes came out with numbers below estimates. With gathered optimism, the USD Index touched the daily high near 97.08 levels at around 15:00 GMT.

Forex Daily Recap – Higher Probability of Rate Cut with Missed CPI Estimates

USD Index

The Greenback had slipped from 97.16 levels on last Friday amid poor May Non-Farm Payrolls and Average Earnings data. Until today, the US Dollar Index remained stuck below 97 levels. The US Consumer Price Index (CPI) data release was the key highlight for Wednesday, which came out at around 12:30 GMT. Market participants were eagerly waiting for these significant reports as the outcome would strengthen the Fed’s rate cut possibilities. Street analysts had expected the May YoY CPI that excluded Food & Energy to remain in-line with the previous 2.1%. Anyhow, the data came out 0.1% lower than the market expectation, reporting 2.0% this time. The May MoM CPI excluding Food & Energy also missed estimates. In the middle of such weak reports, MoM CPI came in-line with the consensus estimation of around 0.1%. Meantime, the May CPI Core recorded 0.11% higher than the previous 261.735 figures.

Consumer Price Index 12 Jun 2019
Consumer Price Index 12 Jun 2019

On an overall basis, the May CPI data showcased mixed reports. Fed Chairman Powell had earlier mentioned that the Bank would take up appropriate steps in case of an economic slowdown. Hence, the mixed CPI data would pressurize the Central Bank to make a rate cut happen sooner. On the other side, the US-China trade dispute continued to damage world businesses. Trump and Xi would meet up in the G20 Meeting about to happen by month end to discuss trade settlements. Coming back to USD Index’s performance, the Greenback marked the weekly low near 96.59 levels following CPI data release. Despite that, the Index took an immediate pickup and knocked off 96.80 levels. The Market seems to remain fingers crossed awaiting a near-by Fed rate cut.

EUR/USD

After starting trading on Wednesday near 1.1329 levels, the pair seemed to remain negative as the day approached closing. The Fiber had displayed a slowly phased uptrend in the Asian session marking day’s high near 1.1343 levels. The slight early upliftment had occurred on the backdrop of mixed Euro-specific data release. The France Q1 QoQ Non-Farm Payrolls came out 0.2% higher than the market hopes of around 0.3%. Also, Spanish May HICP and CPI data reported in-line with the consensus estimates.

EURUSD 60 Min 12 June 2019
EURUSD 60 Min 12 June 2019

ECB President Mario Draghi commented today that Central and Eastern Europe remains vulnerable to the trade war headwinds. Draghi’s warnings left the Fiber traders unnerved and kept the pair plunging. Later the day, ECB’s Coeure mentioned that the Bank’s  Asset Purchase Programme (APP) was a good source of financial easing. At around 16:50 GMT, the EUR/USD pair was testing the healthy 1.1291 resistance levels, marking daily low.

USD/CAD

The Loonie pair was trading 0.21% up in the late European session amid mixed CPI data and lowered Crude prices. The US CPI figures reported lower-than-expected while the CPI Core data revealed some bullish numbers. Meanwhile, the commodity prices reduced from $52.31 bbl, reaching $51.60 bbl after the release of disappointing EIA reports. The Market had expected a -0.481 million this time. Somehow, the actual reports showed up as 2.206 million showing lack of demand for the commodity. Hence, the USD/CAD pair maintained good growth today, quoting the day’s high near 1.1316 levels.

USD/CNY

The Yuan pair marked the day’s opening near 6.9098 levels buckling up for some descent upliftments. The Chinese May CPI and PPI data came out in-line with the market expectations elevating USD/CNY pair. The YoY CPI reported near 2.7% higher than the previous 2.5%. Meanwhile, the MoM CPI recorded 0.0% over the last 0.1%. The USD/CNY pair touched 6.9222 levels marking day’s high following early morning Chinese data. Laterwards, in the rest of the Asian session, the pair appeared giving up the accumulated gains reaching 6.9132 levels.

USDCNY 60 Min 12 June 2019
USDCNY 60 Min 12 June 2019

However, the pair took a U-turn after the release of lower-than-expected May YoY M2 Money Supply data. In addition to that, the Chinese May New Loans recorded 1,180 billion over 1,225 billion forecasts. Anyhow, this time, the pair could lift itself only till 6.9214 levels. When the mixed US CPI figures came out, the pair seemed to drop 0.02% reaching 6.9168 levels.

Forex Daily Recap – Cable Expedited as UK Wages Data Beat Estimates

USD Index

The Greenback started trading on Tuesday near 96.73 levels and remained quite flat throughout the day. The Index marked the day’s high near 96.87 levels while day’s low near 96.68 levels. The US Index stood slightly subdued amid Trump’s intervention in the nation’s monetary policy. Trump tweeted today, aiming the Euros and other devalued currencies that the “US Dollar is at a big disadvantage”. This statement came up after the Fed Chief Powell had hinted last week, the probable likelihood of a rate cut. Powell had mentioned that the Bank would take appropriate steps in case of an economic slowdown. The President also added that the Fed interest rates are way too high. Earlier US Presidents had stayed distanced themselves from the Central Bank. However, Trump has broken the precedent set by the former leaders, breaking Fed’s political independence. In the European session, the US Producer Price Index (PPI) came out. The May MoM PPI excluding Food and Energy recorded 2.3% in-line with the market hopes. Anyhow, the PPI figures remain 0.1% lower than the previous 2.4%.

GBP/USD

After making the opening near 1.2691 levels, the Cable showcased a small correction that reverted from 1.2670 levels. The pair managed to perform a break-through the healthy resistance level near 1.2725 marks. The upliftment in the GBP/USD pair came after the release of positive Earnings data. UK 3Mo/Yr April Average Earnings excluding Bonus reported 0.3% over the consensus estimates of 3.1%. Also, the crucial UK April ILO Unemployment Rate came in-line with the market estimates of 3.8%.

GBPUSD 60 Min 11 June 2019
GBPUSD 60 Min 11 June 2019

Traders also witnessed some weak UK data at around 08:30 GMT. The UK May Claimant Count Change recorded 23.2K over 22.9K estimates. However, the Cable shrugged to the Claimant data and kept up the uptrend. Such optimistic results in the middle of uncertain Brexit tensions appeared as a boon to the Cable. Laterwards, weak US PPI data compressed the Greenback gains thereby helping its rival Cable upsurge. At 17:00 GMT, the pair was testing 1.2730 resistance levels but failed to breach it.

NZD/USD

The Kiwi pair extended the previous day’s downward rally into today’s trading session. The NZD/USD pair had triggered the downtrend on June 7 near 0.6681 levels. The pair made the opening near 0.6611 levels and continued slipping throughout the day. At around 12:30 GMT, the pair took a break from the downtrend. The pair shifted slightly upwards, breaking the negative trend. The Kiwi pair had found some strong support near 0.6569 levels, marking daily or 5-days low. Overnight New Zealand Q1 Manufacturing Sales data impacted the pair’s movements in the initial hours. The data reported 2% in-line with the consensus estimates as well as the prior figures. The pair was trading near 0.6585 levels at around 17:12 GMT, on track of recovery.

EUR/USD

The Euro pair remained higher as investors appeared to shift from the risky US Dollar Index. The fear came after the Trump mentioned Euro in his tweets today.

EURUSD 60 Min 11 June 2019
EURUSD 60 Min 11 June 2019

Trump called Euro as “devalued” and added that the US Dollar is at a big disadvantage here. Meanwhile, Bank of Finland governor and ECB governing council member Olli Rehn reiterated on rate cuts. The Officials also addressed to restart the Quantitative easing soon. The EUR/USD pair managed to mark daily high near 1.1337 levels breaking 1.1333 resistance levels. Technicals showed the uptrend in the pair to continue in the coming sessions.

Forex Daily Recap – Yuan Pair Oscillating Near Three-Month Top

USD/CNY

The Yuan pair remained oscillating near the three month top mark on the back of mixed economic Chinese data. The jump observed in the pair’s movements on Friday had lifted the USD/CNY pair to 6.9232 levels. Before that, the pair was trading, maintaining a range bound approach between 6.9171and 6.8950 levels. Today, the pair managed hold grip over the top levels and also tested 6.9357 sound resistance levels. However, the pair failed to make a breakthrough and remained capped within the 6.9357 marks. At around 02:00 GMT, Chinese trade data came out. May CNY YoY Imports report recorded 7.8% lower than 15.5% forecasts. Also, the exports data for the same period came out as -2.5% over 15.9% estimates. Anyhow, the May Trade Balance USD was slightly higher-than-estimates reporting near $41.65 billion over $20.50 billion expectation.

USD Index

The Greenback showed some recovery price actions on Monday trading session. The Index had dropped last week over weaker Employment data and Average Hourly Earnings reports. The USD Index made the opening today near 96.71 levels and kept trending upwards throughout the day. The Index marked the day’s high near 96.93 levels. Investors seemed to lose interest over rivals like the Cable, Euro, and Yen.

Trade war tensions between the US and Mexico lowered as Trump took back his threat to impose Mexican tariffs. An ease in the trade conditions drastically improved the overall market sentiment. On the economic event front, the April JOLTS Job Openings reported higher than market estimates. The Job Openings data came out as 7.449 million over 7.240 million expectations. Such positive employment data provided a boost to the Greenback. Nevertheless, the US Dollar Index was trading near 96.79 levels at around 16:43 GMT.

US Dollar Index 60 Min 10 June 2019
US Dollar Index 60 Min 10 June 2019

USD/MXN

During the weekend session, the Mexican Peso pair showcased a Gap-Down opening. The pair had started on Sunday near 19.3027 levels over the previous closing of 19.6193 levels. The slump in the USD/MXN pair developed as Peso currency uplifted more than 2% over the optimistic US-Mexico trade deal. President Trump took the Mexican tariffs intended to increase every month off the table on Sunday gradually. Over to the movements, the pair attempted to breach the robust resistance line near 19.3059 levels two times today. Anyhow, the pair lacked the desired energy to knock off the healthy resistance levels. On the downside, the USD/MXN pair found critical support near 19.1372 levels multiple times on Monday. Trump proclaims his win over the counterpart Mexico with the help of tariffs. President also added that threat to impose tariffs allowed the deal to happen within two days. In the agreement, Mexico ensures decreasing the overall illegal immigration issue in the US.

EUR/USD

Investors seem to lose confidence over the Euro pair and slowly shift towards currently safe-haven USD Index. The negative sentiment had developed around the pair following ECB’s last week announcement. The policymakers mentioned that the Bank would cut rate if an economic slowdown takes place.

EURUSD 60 Min 10 June 2019
EURUSD 60 Min 10 June 2019

The pair started trading today near 1.1321 levels and went drowning in the Asian session. The early tumble in the EUR/USD pair found significant support near 1.1290 levels and kept rebounding from the same point. There remained hardly any EUR-specific event today to deviate the pair’s movements on account of Whit Monday holiday. Meantime, the GBP/USD stumbled over adverse UK Manufacturing and Industrial data.

Forex Daily Recap – US Employment Data Confirming Fed Rate Cut Possibility

USD Index

Traders had developed a slight optimism around the Buck in the Asian session on EUR/USD fall. The US Dollar had dived down away from 97 levels in the last two sessions. But, the Index managed to rebound after striking 96.80 levels. Anyhow, the pair couldn’t find support near 96.80 levels today. The tumble rally took the Greenback towards week’s lowest vicinity marking daily/weekly low near 96.47 levels.

The USD-specific influencing events came out at 12:30 GMT. The US May Non-Farm Payrolls broadcasted 75K figures over the 185K market expectations. Hence, a fewer number of jobs created last month shows strong signs of weakness in the economy. The market now expects the Fed to come up with a rate cut earlier this year mostly by July. The Average YoY Hourly Earnings came out 0.1% lower than the market hope of 3.2%. May Labor Force Participation Rate also mentioned poor figures further weakening the Greenback.

US Dollar Index 60 Min 07 June 2019
US Dollar Index 60 Min 07 June 2019

EUR/USD

The Euro pair had started trading on Friday session near 1.1276 levels and continued the upward rally crossing 1.1300 levels. The pair displayed a slight downshift in the early hours amid adverse Switzerland and German data. At around 05:45 GMT, the Swiss May MoM Unemployment Rate came out in-line with the market expectation of 2.4%. Laterwards, German April YoY Industrial Production data reported -1.9% over -0.4% estimates. The slow degradation in the EUR/USD pair continued as German April Trade Balance reported €1.6 Billion lower than the €18.6 Billion estimates. After touching the pivotal 1.1251 levels, the pair shifted gears and took the upward journey. The positivity in the Fiber appeared after the release of sparse USD data. The US reported lower-than-expected May Non-Farm Payrolls and Average Hourly Earnings. As the Euro currency makes up the 50% portion in the USD Index, the Fiber shot up on Greenback failure. The EUR/USD pair got elevated and marked the daily high near 1.1347 levels. From the weekly point of view, the pair remains almost 1.58% higher over last week closing mark.

USD/MXN

The Mexican Peso pair managed to uptrend after making the Friday opening near 19.6683 levels in the Asian trading session. The positive trend in the pair attempted twice to breach the 19.7890 resistance levels twice today. However, the pair couldn’t make a breakthrough instead cooled down to 19.5606 low levels. US President continued to remain stubborn over imposing 5% Mexican tariffs from Monday. Trump warned that the taxes would increment each month, reaching 25% by October.

USDMXN 60 Min 07 June 2019
USDMXN 60 Min 07 June 2019

Anyhow, Mexican President Lopez Obrador stays optimistic about retaliating soon and points over Trump’s mistake to link trade with migrants. Mexico would likely use China’s tactic of a tit-for-tat trade war with the US counterpart. Seeing the countries battling with trade tariffs Russian President Vladimir Putin accused the US today of “unbridled economic egoism”

 

USD/CAD

After making the opening on Friday trading session near 1.3353 levels, the USD/CAD pair remained sustained within 1.3343/68 range. However, the pair lost hold of the range-bound phase later as adverse US events came out. The Loonie pair slipped straight from 1.3365 levels landing near 1.3264 levels. The fall in the pair developed after the release of lower-than-estimated US May Non-Farm Payrolls and Average Hourly Earnings. The Greenback touched the three-month low mark of 96.46 levels today.

Meanwhile, the Crude Oil prices upsurged 2% on Friday’s session, marking day’s high near $54.31 bbl. The upliftment in the commodity came up over multiple reasons. First, the OPEC member Saudi addressed that they would continue with supply cuts through the rest of the year. Second, the Market expectation over Fed rate cuts got stronger after the release of weak US Employment data. A Fed rate would weaken the Greenback and would strengthen the Crude demand among buyers possessing other currencies.

Forex daily Recap – USD/INR Declined on Interest Rate Cut Announcement

USD/INR

The Rupee pair started trading on Thursday near 69.64 levels and was hovering near 69.19 levels at around 15:31 GMT. The pair showcased a smooth decline throughout the day in the middle of Central Bank rate cut. The RBI announced a reduction in the interest rates by 25 bps, making the repo rate to 5.75%. The Bank also changed its stance from “neutral” to “accommodative”, leaving space for more upcoming rate cuts.

USDINR 60 Min 06 June 2019
USDINR 60 Min 06 June 2019

RBI Policymakers have reduced the repo rate for third straight time. Meanwhile, the Officials also slashed the GDP growth forecast. The Bank decreased the forecast figures from the previous 7.2% to 7.0% as inflation stays below 4% target. The Central Bank has taken this stance of the rate cut to increase the overall liquidity in the market, considering the macroeconomic factors.

USD Index

The Greenback was taking rounds near its one-month lows as US Unemployment data and Trade Balance reported poor figures. The US Dollar Index made the opening today near 97.31 levels and initiated the downward rally. Bears started taking control over the Buck after the release of lower-than-expected USD-specific data. The April Trade Balance recorded $-50.8 Billion over $-50.7 Billion forecasts. Both the Continuing Jobless Claims computed since May 24, and Initial Jobless Claims calculated since May 31 reported higher-than-estimated. Also, the Q1 Non-Farm Productivity came out 0.1% lower than the market expectation of 3.5%. Adding to the sour sentiment, Q1 Unit Labor Costs reported -1.6% in place of consensus estimates of -0.8%. The USD Index marked the day’s lowest point near 96.79 levels following such adverse US reports. The Index attempted to recover strength but failed to do so as Fed’s Kaplan mentioned his dovish stance for the economic outlook.

USD/MXN

Mexican Peso pair stayed near its monthly high amid rising US tariff concerns over Mexican exports. Last day, the US Officials had set a meeting with the Mexican counterpart over the 5% tariffs imposed on all the exports of Mexico. US President tweeted that the meeting showed “not nearly enough” progress. Trump reiterated that the taxes would continue to increase by 5% every month, culminating to 25% in October this year. The President puts his demand to curb illegal immigration into the US territory as a solution to the eradicate tariffs.

USDMXN 60 Min 06 June 2019
USDMXN 60 Min 06 June 2019

Meantime, Mexican economists smell a near-by recession out of a probable debt crisis. Credit rating agency Fitch downgraded Mexico’s sovereign debt previous day. Moody’s also reduced their overall economic outlook to negative, adding further pressure to the Mexican Peso. Nevertheless, Mexican President Andres Manuel Lopez Obrador stood quite positive of getting into a deal with the US. The President prepares a list of US products and plans for retaliation against the United States.

EUR/USD

The Euro pair started the day near the 1.1236 bottom levels. The pair remained close to the same opening levels throughout the Asian trading session. Following the release of German April MoM Factory Orders, the EUR/USD pair gradually took pickup. The German data came out near 0.3% over the market expectation of 0.1%. The pair shrugged to the in-line reported Eurozone Q1 QoQ Employment Change figures. However, the Euro pair reacted positively to the Eurozone Interest rate decision reporting 0.0% in-line with the estimates. The pair jumped from 1.1219 levels to 1.1272 levels at around 11:45 GMT. The EUR/USD pair made further upliftments amid weaker US Unemployment and trade data. The pair marked the day’s high near 1.1310 levels.