Forex Daily Recap – The Green Money Reached 97.77 Peak Amid Strong March Home Sales Data

US Dollar Index

The greenback had opened up on Tuesday morning near 97.30 levels and remained silent initially. The USD Index was 0.45 percent up at 14:39 GMT for the day. Investors are seeing the pair jumping reluctantly for the second time in this month. The former one had occurred on April 18 on the backdrop of the robust US Retail data. Today’s upward rally got triggered in the Asian trading session itself over widening of the US-German T-Bond yields. Laterwards, the green money received more uplifting power following higher-than-expected March New Home Sales data. The street analysts have set in a bearish stance on the sales number. This time, the consensus had, hence, estimated a 650K figure to the prior 662K number. However, the actual numbers stood way ahead of both, around 42K above the market expectation. The market remained surprised to post the sound US reports. The USD Index that computes the greenback against the six significant rivals upshot from 97.30 to 97.77 levels.

EUR/USD

The Euro pair started the day taking rounds near 1.1251 levels. The pair had undergone a seesaw type movement in the early morning session. The continuous broadening of the US and German Government Bond yields, added to the EUR/USD early plunge.

Today, the event calendar contained no significant euro event. However, positive US data reports made the EUR/USD tumble heavily draining previous session gains. The EUR/USD went breaching the active support line of 1.1210 levels. The pair had faced such a massive plunge as the US bearish-expected reports came out bullish. The US March Home Sales Change recorded a positive 4.5 percent over a negative 2.5 percent estimation. In this way, the currency which benefits the most from a greenback slump dropped upon the opposite case.

EURUSD 60 Min 23 April 2019
EURUSD 60 Min 23 April 2019

Moving further later the day, the European Commission (EC) published a negative EMU economic index. The EC had reported the April Consumer Confidence Index a negative 7.9, compared to the negative 7.0 estimate.

USD/CAD

The loonie pair had closed near 1.3344 levels on the last day from where it skyrocketed today. The early upsurge in the USD/CAD pair gets discounted to the healthy US Dollar Index and crude upliftment. Following a 0.2 percent higher CAD Feb Wholesale Sales data, the USD/CAD was kind-of apathetic. The pair directed upwards breaking the robust resistance line of 1.3373 levels. The barrel of West Texas Intermediate crude oil reached day’s high $66.60 amid the US broadcast earlier the day. The US Officials passed on a decision to reject the Iranian sanction waivers altogether. This US action to lift the crude prices was offset later with the Saudi’s plan to revamp its production. The Crude WTI futures were trading 0.68 percent for the day at 16:27 GMT.

USD/JPY

The safe-haven pair kicked off the day on a negative note, slipping steeply from 111.97 to 111.66 levels. The pair had lost around 30 pips within a matter of a few minutes following BoJ Executive Director Maeda’s monetary comments. The Officials mentioned that the bank might take up monetary easing activities if needed. Japanese Finance Minister Aso took this opportunity to call the bank’s yen-buying method to compete for deflation as improper.

USDJPY 60 Min 23 April 2019
USDJPY 60 Min 23 April 2019

The USD/JPY, later the day, gained demand as market risk elevated. As a response to US sanction waiver rejection, the Iranian Parliament proclaimed the US soldiers as “terrorists”. This risk-off condition moved the investors to the safe-haven pair elevating it in the European session. However, the pair gained traction and lost grounds on the backdrop of sound US Home Sales data. The USD/JPY was drifting near 111.77 levels at 16:30 GMT.

Forex Daily Recap – The Euro Bulls Took Advantage of Weak US Home Sales Data

EUR/USD

After the Thursday’s plunge that eroded most of the April’s gains, the EUR/USD attempted to recover the previous losses. The pair rang the opening bell on Monday morning near 1.1237 levels. The Euro pair was expected to remain stabilized as the economic calendar contained no significant euro events. Most of the major currency pair remained silent amid Easter Holiday. However, the pair uplifted 0.23 percent reaching the day’s high near 1.1263 levels. The pair made the upswing on the back of weak US Home Sales data. At 14:00 GMT, the US Existing Home Sales data reported even below the market-expected bearish numbers. The EUR/USD appeared to morph upwards breaking the primary resistance line of 1.1258 levels. Laterwards, the Euro pair rebounded after bouncing back from the resistance line of 1.1263 levels.

GBP/USD

The cable started trading near 1.2991 levels and continued downtrend on the Easter Monday.

GBPUSD 60 Min 22 April 2019
GBPUSD 60 Min 22 April 2019

Negative sentiments revolved around Brexit. During the weekend, the news reported that a Senior Conservative leader would ask May to step down from premiership. However, investors expect the things to get resolved tomorrow as the House resumes office after the Easter Recess.

US Dollar Index

The greenback had soared last on April 18 following robust US Retail Sales data. The Retails data had reported a high positive figure when the consensus had estimated a negative number. Today, the US Dollar Index started losing the top levels attained in the last week amid sparse Home Sales data. The Chicago Fed National Activity Index reported a slightly higher negative figure for the March month. This time, the index came out as unfavorable 0.15 points to the previous negative 0.31 points.

The greenback uplifted hardly three pips after the release of this economic activity index. Moving on, the US Dollar resumed the downward rally when the Home Sales data recorded a negative 4.9 percent for March. The market had expected a negative 2.3 percent for this housing report. More precisely, the US March MoM Existing Home Sales recorded 90K below the consensus estimate of 5.30 million. In the meanwhile, the 3-month Treasury bill auction mentioned a 0.02 percent growth in its average yield. Also, the average return for 6-month T-bill recorded a 2.40 percent. The USD Index was trading near 97.27 levels marking the then day’s low at 16:41 GMT.

USD/CAD

The loonie pair extended last day’s North American session fall into today’s session. The pair started the day tumbling from 1.3381 levels landing near 1.3359 levels. The first plunge gets discounted to the rise in crude prices.

USDCAD 60 Min 22 April 2019
USDCAD 60 Min 22 April 2019

Today, the Crude Oil West Texas Intermediate (WTI) Futures had marked a 2 percent jump in the Asian trading session. The crude went north when the US reports suggested of Iranian Sanction waivers getting rejected soon. The USD/CAD then remained consolidated for quite a while amid lack of economic data. The pair, however, slid further reaching day’s then low near 1.3340 levels on the back of weak US Home Sales data.

The street analysts had already taken a bearish stance on the US Home Sales figures, while the actual numbers reported even lesser than the expectation. Although the loonie pair had undergone a slump today, the overall picture for the USD/CAD looks quite decent. The pair continued to afloat and remain well above the lowest points of the month amid continued crude upsurge. The oil prices are expected to keep elevating until the geopolitical tensions, and OPEC-led supply diminishes.

GBP/USD Daily Price Forecast – The Major 200-days SMA Traded Well Above the Cable, Developing Long-term Uptrend

On the Easter day morning, the GBP/USD was hovering near the lowest vicinity near 1.1300 levels. When seeing the month’s chart, the cable seems to take rounds around the month-low of 1.2992 levels currently. The pair is expected to remain silent until the end of the day due to lack of supporting events.

On the Brexit front, certain negative rumors keep the cable grappled for a pullback. The Sunday Time’s had reported that Sir Graham Brady, the top conservative leader will ask UK PM to step down. At this time, May’s resignation can emit crucial waves affecting the whole Brexit process.

As the EU elections are approaching dates, the Labour Party Deputy Leader Tom Watson fetches support for a second referendum. This pessimistic news, along with the previous May’s resignation-related rumor, strongly motivates the cable bears. In the meanwhile, the cable investors await for April 23, when the  House of Commons will resume office.

At the time of writing this article (10:41 GMT), the GBP/USD was trading near 1.2999 levels (almost 1.1300 levels).

GBP/USD Impactful Events

At 12:30 GMT, the Federal Bank of Chicago will release the March Chicago Fed National Activity Index (CFNAI). The index recorded a negative 0.29 points for February.

At 14:00 GMT, the National Association of Realtors will publish the March MoM Existing Homes Sales. Notably, the expansion of the housing market will strengthen the USD while a shrinkage of the market may weaken it. This time, the consensus estimate a 210K decrease in the Existing Home Sales reports.

Somehow, if the US reports miss estimates, then it could lead to the upliftment in the GBP/USD.

Technical Analysis

GBPUSD 60 Min 22 April 2019
GBPUSD 60 Min 22 April 2019

The primary Simple Moving Average (SMA) computed for 200-days, and 100-days stood well above the GBP/USD strengthening the bulls. On the longer term, investors can expect some strong upward movements breaching the sound 1.3122 resistance level. Over the last couple of days, the cable continued to drift in the lower region of the Bollinger bands. This position of the cable develops some insights for a short-term bear trend. The Relative Strength Index (RSI) stabilized near 50 levels after rebounding from the lower 27 levels.

EUR/USD Daily Price Forecast – The Euro Bears Remain Under Control Ahead of Pessimistic US Home Sales Data

Since Friday, the EUR/USD continues to oscillate in the narrow trade range of 1.1237/52 levels. The pair had last shown some noticeable movements on the Thursday trading session. On that day, the euro pair slipped onto its two-week lows on the backdrop of the rising greenback. The fall got bestowed with influential US Retail Sales figures pushing the US Dollar Index higher.

Meanwhile, the plunge in the EUR/USD had then worsened amid release of poor German & Eurozone PMI figures. The pair currently seems to stay still hold the hangover of the detrimental Thursday.

The greenback computed against the six rivals was trading near the month-high of 97.50 levels. The crude also was taking around its top levels in the morning session creating more woes.

On the Brexit side, things remain risk-averse amid some negative news revealed during the weekends. Rumors continue to revolve around resignation of the UK PM Theresa May. Anyhow, investors anticipate until the UK Parliament will restart and consider matters officially from April 23.

EUR/USD Significant Events

On the release front, there are no significant euro events lined up for the day on account of Easter Monday. However, some US events are showing up later today.

12:30 GMT

The Federal Reserve Bank of Chicago will publish the March economic activity index – the Chicago Fed National Activity Index (CFNAI). This index gives an overview of the activities performed during the period and the relative inflation-adjusted impact. CFNAI had recorded a negative 0.29 points in the previous month.

14:00 GMT

The National Association of Realtors will provide an estimate of the March MoM existing Home Sales. Housing data is crucial as it alludes a profound material impact on the overall market sentiment. The street analysts, however, stay quite bearish on the upcoming numbers. They expect the numbers to come around 210K lower than the prior 5.51 million.

If the Home Sales data falls beyond 210K, then chances of a small upliftment in the EUR/USD increases.

EUR/USD Technical Analysis

EURUSD 60 Min 22 April 2019
EURUSD 60 Min 22 April 2019

In the near term, the bears seemed to remain under control as the 21-day SMA move coinciding with the pair. On a longer scale, there stays a robust bearish stance for the pair. The significant 100-days and 200-days SMA stood above the EUR/USD making the bears firmer.

There is a robust resistance line of 1.1324 levels awaiting the pair. On the flip side, next support stays near 1.1212 levels.

Forex Daily Recap – Market Stood Uninterested To Poor US Housing Data Amid Good Friday Holiday

EUR/USD

On the previous day, the pair faced steep 0.48 percent fall following the release of robust US Retail data. Today, the EUR/USD continued to stay in the same lower vicinity near 1.1246 levels. The silent behavior of the pair gets discounted to the light event calendar amid Good Friday holiday. There remained hardly any significant movement generating event during the day. At 08:00 GMT, the Istituto Nazionale di Statistica published the Italy Business Confidence Index for April (low volatile event). The street analysts already had a bearish outlook on this business index. They expected the reports to come 0.099 percent lower than the previous 100.8 points. However, the actual reports recorded as 100.6 points, even below the expected 100.7 points.

EURUSD 60 Min 19 April 2019
EURUSD 60 Min 19 April 2019

Nonetheless, the euro pair showed no/less response to this disappointing number and remained in 1.1245/48 levels. Also, during the European trading session, the lower-than-expected US Housing data failed to impact the EUR/USD. It was quite surprising to monitor the apathetic euro pair amid weak US reports. Among the rivals, the EUR/USD had always remained the biggest gainer on greenback weakness. Somehow, things didn’t work as per expectation today.

USD Index

Yesterday the greenback had shown many gaps while on the upward rally amid fabulous US Retail figures. Those gaps resembled high interest among the buyers. However, today several gaps got noticed in the downward rally showing keen interest among the sellers. The USD Index that computes the greenback against the major rival currencies opened on Friday morning near 97.42 levels. The event calendar remained light for the day. However, the US Census Bureau broadcasted the March Housing Data.

And, following a sparse US housing data, the US Dollar dropped around ten pips reaching near 97.33 levels. The March MoM Housing Starts reported 1.139 million in comparison to the 1.230 million forecasts. At 12:30 GMT, another Housing data got released revealing the March MoM Building Permits figure. This time, the Building Permits number reported 31 million below the market expectation of 1.300 million. The greenback was trading near 97.37 levels at around 17:45 GMT, hardly 6-7 pips down for the day.

USD/JPY

The safe-haven pair remained consolidated just below the top 112 levels. During the day, the pair showcased low volatility on the backdrop of no significant economic event. In the early Asian trading session, the Bank of Japan (BoJ) addressed its ¥20-160 billion purchase reductions of bonds. BoJ especially highlighted the purchase cuts on bonds having maturities between 10 to 25 years.

USDJPY 60 Min 19 April 2019
USDJPY 60 Min 19 April 2019

Despite that, the USD/JPY gave less attention to the bank’s announcement and remained constant near 111.93 levels. And, while looking into the weekly performance, the USD/JPY remained within the range of 111.80 levels and 112.15 levels.

USD/RUB

The ruble pair rang the Friday morning bell near 63.90 levels, from where it soared reaching 64.03 levels. The rise in the pair gets discounted to the fall in the Russian Ruble amid series of fixed-coupon OFZ auctions occurred this year. However, the pair remained settled near 63.95 levels until the European session. Somehow, the USD/RUB made a slight upward movement marking the day’s high near 64.05 levels.

GBP/USD Daily Price Forecast – The Cable Bears Remaining Under Control after Yesterday’s Appalling Plunge

The Cable continued to remain subdued drifting near its comfortable 1.1300 levels after yesterday’s struggle. In the last day’s morning session, the GBP/USD had a sudden breakdown on the backdrop of lower-than-expected Eurozone and German PPI data. Nonetheless, the pair had attempted to push itself upwards, but the efforts missed aims after greenback started gaining strength. Last day, the USD Index had elevated on some astounding positive Retail Sales figures a negative market expectation.

However, the UK’s robust Retail data couldn’t win over the upbeat US Retail and Jobless Claims figures yesterday.

Moving forward, on the occasion of Good Friday, there remains a lack of events alluding impacts on the cable. Also on the Brexit front, there are fewer updates as the House got adjourned on Easter Recess.

Key Significant GBP/USD Events

19:30 GMT

The U.S. Commodity Futures Trading Commission will publish the Weekly Commitments of Traders. The report analyses the net positions of the US futures markets. The previous stats were at negative £ 6.5 Thousand. The outcome of this event is expected to stem less volatility in the pair’s movement for the day.

12:30 GMT

The U.S. Census Bureau will issue the March MoM Building Permits, and Housing Starts figures. An increasing number for both reports would signify the strengthening of USD. The analyst expects 41.9 percent hike in Building Permits while 21.0 percent decrease in the Housing Starts. If the event misses estimates, then that will act as a catalyst for the cable’s uptrend.

Technical Analysis

GBPUSD 60 Min 19 April 2019
GBPUSD 60 Min 19 April 2019

The most significant 100-days and 200-days Simple Moving Averages (SMA) got positioned above the GBP/USD showing a bearish trend. Notably, the 200-days SMA remained well above the 100-days SMA confirm active bear call in the long term. However, it seems to move slightly upwards in the near term touching 1.3022 levels sustaining downtrend. Hence, the pair appeared to cross the EMA to the upper vicinity of the Bollinger Bands (BB). The GBP/USD remained cushioned near the lowest 1.2976 support levels in the morning. On the upside, the pair may face the resistance lines near 1.3050 levels.

Forex Daily Recap – The Loonie Climbed A 85pips Within A Span Of Minutes Amid BoC’s Reports

USD/CAD

The loonie pair made an excellent 85 pips jump at around 14:15 GMT after the release of BoC Business Outlook Survey. In the Q1’19 reports, the BoC reported the business sentiment around a negative 0.6 points from the previous 2.2 points. In the meanwhile, the crude gets underway the last day extended pullback.

The Crude Oil West Texas Intermediate (WTI) futures touched the lowest vicinity near $63.05 per barrel. The continued plunge comes as a consequence of news revealing higher growth of US Oils. On an immediate effect, the OPEC allies are expected to raise productions to keep an uphold of the market shares. This news got discounted, and the oil continued to remain doused in losses.

NZDUSD 30 Min 15 April 2019
NZDUSD 30 Min 15 April 2019

From the US release front, the NY April Manufacturing Index reported above-the-consensus figures. In the meantime, optimism developed around US-Sino trade settlement elevated the market mood stabilizing the USD/CAD.

EUR/USD

After opening at around 1.1307 level, the euro pair merely had a sudden movement during the day. On the backdrop of a silent economic calendar, the EUR/USD remained capped under the stable 1.1320 resistance levels. The pair attempted quite a few times to breach the stubborn resistance level but failed to move beyond the levels. In the meanwhile, bullish traders remained less excited on the announcement of the German Central Bank.

The Bundesbank had released an upbeat national economy report for the first fiscal quarter of the year. On the flipside, the EUR/USD remained robust despite the broadcast of a higher-than-expected NY April Empire State Manufacturing Index. This time, the pair recorded 10.1 points, 68.33 percent above the consensus estimate of 6.0 points. However, at that moment, the market reaction remained utterly muted. Not surprisingly, near 13:00 GMT, the greenback took a boost from 96.80 levels, jumping to 96.92 levels.

NZD/USD

Today, the Kiwi pair gave up the early morning gains after touching the day’s high near 0.6783 levels. After that, the NZD/USD lost grounds and went slumping until landing near the day’s low of 0.6750 levels. Along with the weakening greenback, the fall in the pair was also as a result of the release of some sparse economic data in New Zealand.

NZDUSD 30 Min 15 April 2019
NZDUSD 30 Min 15 April 2019

GBP/USD

Since the start of this April, this is the fifth time that the cable attempted to breach the strong resistance of 1.3130 levels. However, the probability of such a breaking remains lower even at this time due to the lack of significant fundamental events. Now, it somewhat seems like the GBP/USD has found some comfort zone near the 1.3100 levels. The pair opened up the start of the week near 1.3086 levels. And at the time of writing this article, it was hovering near 1.3104 levels, 48 pips up for the day.

On the Brexit front, although the UK parliament is on Easter Recess, disagreements between May and Corbyn continue. The Opposition leader asks for a customs union while May’s party want to complete the Brexit to the earliest. Unless the internal uncertainty is resolved, leaving the EU may become a delayed story for the UK. More the delay, more the pressure developed on the GBP/USD.

Forex Daily Recap – USD/CNY Jumped Off Crag Underpinned Astounding Chinese Trade Figures

US Dollar Index

The USD Index that computes the greenback against the six major rival currencies slumped massively in the first half and attempted to recover in the latter half. The index had opened up near 97.16 levels, and a sudden selling pressure grappled the greenback bringing it down to the two weeks low of 96.15 levels.

The dollar slumped amid poor Michigan Consumer Sentiment Index, higher Chinese imports and other geopolitical tensions. This plunge had benefitted most of its strong rivals leading to their substantial escalation. Gold prices stabilized over the weakened Dollar Index heading to its first weekly gains in the last three weeks.

USD/CNY

The Chinese yuan pair opened up on Friday morning near 6.7196 level. After remaining reluctant to move in either direction, the pair was pushed off the cliff making it land near the strong support line of 6.7059. However, at 09:30 GMT, the USD/CNY had almost crossed and gone beyond this sound support region.

USDCNY 60 Min 12 April 2019
USDCNY 60 Min 12 April 2019

The massive plunge in the pair accounts to the weakening in the greenback and astounding Chinese reports published during the early session. Chinese March Trade Balance USD reported around $32.64 billion, enormously higher than the consensus estimate of just $7.05 billion. Chinese YoY, Import and Export figures, reported way much above the market expectation. The Chinese YoY Import number was 6.5 percent up while the export figure was 7.8 percent up. The US had also come up with some sound reports revealing above the consensus YoY Import and Export Price Index but lacked comparable power to uplift the yuan pair from continuing the downward rally. The greenback was trading near 96.75 level, 0.22 percent down for the day.

USD/RUB

On a broader timeline, the USD/RUB continues down trending amid soaring crude prices. The ruble pair slipped from 64.62 levels reaching the lower vicinity of 64.15 levels during the Asian trading session. The rationales behind the plunge were the uprising crude prices and the tumbling US Dollar Index.

USDRUB 60 Min 12 April 2019
USDRUB 60 Min 12 April 2019

The Russian Ruble is one of the commodity-linked currency that significantly benefits from a lift in the crude prices. Brent crude oil futures rose 1 percent touching $71.52 per barrel at 16:18 GMT. Earlier the day, fears had arisen over China’s economic data as most of the oil demand comes from the Asia side. However, the actual data came out precisely opposite to the expectation, easing investor tensions. Fragile US Dollar Index remained low amidst the release of high import numbers from China.

EUR/USD

The euro pair was heading north intending to knock off the strong resistance line at 1.1320 level during today’s session. The pair showed some good performance with the undermined greenback. The EUR/USD began trading on Friday morning near 1.1258 levels shooting straight 30 pips up reaching near 1.1285 levels.

After remaining consolidated for quite a while, the pair scored more after the release of above the consensus Eurozone February Industrial Production reports (Both YoY and MoM). The pair further elevated marking the day’s fresh high with the announcement of the US April Michigan Consumer Sentiment Index. The Consumer Index was 1.1 percent below the market expectation.

Forex Daily Recap – Dollar Index Rebounded Previous Losses On The Back Of Strong US Reports

US Dollar Index

The greenback remained sustained with a sideways pattern during the Asian trading session in the range of 96.90/95 levels. The US Dollar Index had shot straight up on the release of multiple higher than expected US reports. The US March Producer Price Index (PPI) reported 0.3 percent above the market expectation.

USD Index 30 Min 11 April 2019
USD Index 30 Min 11 April 2019

The MoM reports for the US March PPI figures excluding Food and Energy revealed 0.1 percent above the street estimates. Both Initial Jobless Claims computed since April 9, and Continuing Jobless Claims calculated since March 29 reported lower than the analyst anticipation provided an extra boost to the already rising US Dollar Index. The DXY had touched the strong resistance of 97.19 level making it the day’s high at 17:58 GMT.

USD/JPY

After plunging continuously for three days in a row, the safe-haven pair was 0.44 percent today. The USD/JPY pair opened up on Thursday morning near 111.01 level. The pair later on slowly kept climbing the chart knocking off the strong 111.53 resistance level. The main pushing force behind the yen pair was the uplifting US Dollar Index. The greenback computed against the six major rival currencies went above the 97.00 level rebounding last day’s losses. The USD Index had risen underpinned strong US Producer Price Index (PPI), and Jobless claims figures. Along with these positive reports, the 10-year T-bond went 0.75 percent up adding fuel to the pair’s upward rally.

EUR/USD

The Euro pair remained in the consolidation phase near 1.1276 level during the early Asian trading session. German March Consumer Price Index (Both YoY & MoM) reported in-line with the respective consensus estimates. However, the EUR/USD faced steep falls reaching day’s fresh low near 1.1254 levels. The greenback soared amid positive reports touching new highs pushing down the most prominent rival euro and thereby generating strong pullbacks for the EUR/USD. Earlier the day, ECB President Mario Draghi and ECB Governing Council member & Bank of France Head Villeroy had mentioned their dovish stance regarding eurozone economic slowdown.

GBP/USD

The GBP/USD rang the opening bell on Thursday morning near 1.3094 levels. It saw some slight upward initially but failed to keep up the hold dropping near the lower vicinity marking fresh low for the day at 1.3057 level. The previous day, the EU had granted the UK with an additional Brexit extension until October 31. This time, the extension is a bit “flexible” one which means the UK can leave at any point within the deadline after ratifying a proper deal with the EU.

GBPUSD 30 Min 11 April 2019
GBPUSD 30 Min 11 April 2019

But, the cable bulls remained silent despite such a flexible Brexit extension. The cable also falls prey to the rising greenback. The Pound pair slumped after the release of above the expected US PPI figures and lowest Jobless claims recorded since 1969.

AUD/USD

The Aussie pair started the morning session near 0.7169 level and was pushed off the cliff making it land somewhere near the lower vicinity of 0.7120 level. The continuous tumbling in the AUD/USD was backed obviously on the strengthening US Dollar Index. The US had released some splendid report numbers which brought forth the deepened plunge in the significant rival currencies weighed against the greenback.

USD/CAD Daily Price Forecast – The Loonie Bulls Roar Underpinned Crude Slump

The loonie pair started on Thursday morning from the lower vicinity of 1.3317 levels. From there, the USD/CAD upshot reaching 1.1340/50 region. The pair remained in consolidation mode for a quite while.

Crude Oil WTI Futures extended yesterday’s plunge into today’s trading session. The crude prices fell $64.44 per barrel reaching the day’s lower vicinity. The oil price slump got triggered after the International Energy Agency released the latest Oil Market report showing high inventories.

This fall in the crude helped uplift the commodity-linked currency pair USD/CAD making it touch the strong resistance of 1.3360 level. However, the loonie pair should boost with a surge in the US Dollar index which was under the consolidation phase in the morning session.

Key USD/CAD Influencing Events For The Day:

12:30 GMT (Low Volatile)

Statistics Canada will publish the February New Housing Price Index (NHPI) (YoY) & (MoM). The housing market affects the currency and NHPI provides the status of the market. The consensus has no estimates over YoY index while the previous was negative 0.1 percent. For MoM NHPI the analysts are expecting a rise in the numbers to 0.0 percent than the prior negative 0.1 percent.

17:00 GMT (Mid Volatile)

The Senior Deputy Governor of Bank of Canada, Carolyn A. Wilkins is expected to deliver a speech at the World Bank Group. The topic of the panel discussion is Capital Market Development and FinTech Revolution: Opportunities and Challenges.

12:30 GMT (Mid Volatile)

The US Department of Labor will release the following:

  • The market analysts are taking a bearish stance on the March Producer Price Index excluding Food & Energy (YoY) is set to announce. The consensus is expecting the numbers to come around 2.4 percent than the previous 2.5 percent.
  • The weekly Initial Jobless Claims (from April 5) and Counting Jobless Claims (from March 29) will appear soon. These indexes are important economic indicators in projecting the country’s economy. The analysts expect the Initial Claims to come near 211 thousand while the Counting Claims to appear around 1.738 million.

Technical Analysis

USDCAD 30 Min 11 April 2019
USDCAD 30 Min 11 April 2019

The USD/CAD was trading above the near-by 21-day Simple Moving Average (SMA), 55-day SMA, as well as above the significant 100-day SMA and 200-day SMA. This position of the pair develops a bullish stance on the future movements of the loonie pair. The pair found support twice at 78.6% Fibo retracement level and remained capped under the 38.2% Fibo retracement level. The bulls seem to continue rally knocking off the strong resistance of 1.3400 level.

Forex Daily Recap – The Greenback Gains Built Over Mixed CPI Figures Drained Fully Post FOMC Meeting

US Dollar Index

The USD Index continued to perform range bound movements sustaining between 96.86 and 97.09 levels for two days in a row until the European trading session. The greenback weighed against the six major rival currencies opened on Wednesday morning near 97.00 levels. The index plunged several pips earlier the day after the Euro and GBP rose on the back of some sound reports.

Things turned upside down at around 12:30 GMT when the US Department of Labor Statistics reported mixed Consumer Price Index (CPI) results for March. Both the CPI YoY and MoM which excluded Food & Energy had reported merely 0.1 percent lower than the consensus estimation. The March CPI Core and CPI (MoM & YoY), all these figures revealed some outstanding figures above the market expectation. Following this CPI event, US Dollar Index skyrocketed from 96.90 level reaching day’s fresh high of 97.21 level.

FOMC minutes revealed that the committee members believe the interest rates to remain unchanged until this year end. The members also added comments showing a weak outlook for the economy amid Brexit chaos and rising trade tensions. The greenback dropped again to 96.86 levels.

EUR/USD

After remaining in the consolidation phase the last day, the euro pair saw some good upward movements in the morning session. This upliftment in the pair developed hopes of marking new highs for the week. In the meanwhile, the February Industrial output data for France and Italy came out as “positive” when the street analysts expected “negative” numbers. These above consensus figures had helped the euro pair climb the upward rally reaching 1.1287 level.

EURUSD 15 Min 10 April 2019
EURUSD 15 Min 10 April 2019

The pair immediately reversed direction after the release of mixed US CPI reports and Draghi’s dovish stance on the economy. The EUR/USD which benefits the most among its peers on greenback plunge suffered today on the drastic escalation of USD Index. ECB President Mario Draghi reiterated stating a dovish outlook for the economy, and he added a down-tilt existence in the economic growth. The pair fell steeply from the day’s high of 1.1286 level landing near the lower vicinity of 1.1230 level, 56 pips down or 0.50 percent drop.

GBP/USD

After undergoing severe pullback the previous day, the Cable had a good trading session today. The pair started trading at around 1.3052 level and soared straight up touching day’s high of 1.3120 level. On the events front, the UK displayed some astounding above the consensus Industrial and Manufacturing Production numbers for February. The UK February Gross Domestic Product (GDP) MoM figures reported 0.2 percent as compared to the market expectation of 0.0 percent. Such impressive results helped the GBP/USD to reach the top levels faster.

The cable had dropped in the afternoon session on the rise of the greenback underpinned mixed US CPI reports. The pair regained upliftment after the NIESR March GDP Estimate for three months came around 0.4 percent higher than the consensus estimate of 0.0 percent. EU Summit on Brexit commenced at 16:00 GMT and discussions on approving May’s request for an Article 50 extension was currently in progress at the time of writing this article (18:00 GMT).

USD/CAD

The loonie pair opened up on Wednesday morning near 1.332 level. The USD/CAD pair made day’s high at 1.3360 level and fresh low near 1.3307 level. Oil prices had reached the five-month high price recently from where it dropped on the back of President Putin’s comments on resuming Oil productions.

USDCAD 15 Min 10 April 2019
USDCAD 15 Min 10 April 2019

However, the crude rose in the afternoon trading session amid rising geopolitical tensions. The EIA crude stock inventory change reports showed lower numbers than the consensus. This news along with the OPEC-led supply cut deepened the pain, making the Crude Oil WTI Futures to rebound near the previous high of $64.77 per barrel. The crude slump pushed down the USD/CAD pair making it land near 1.3305 levels.

USD/CAD Daily Price Forecast – Ichimoku Clouds Hover Over The Loonie

After the last day attempt for an upliftment to breach the 1.3395 resistance level, the loonie pair today remained near 1.3320/40 levels. The USD/CAD had already touched the strong resistance level of 1.3338 levels in the morning session.

During the Asian trading session, the majority of the candlesticks had longer upper shadows than the lower ones showing strong buyer dominance.

Following the Russian President Vladimir Putin’s comments on resuming oil production from June 2019, the crude prices had fallen reaching $63.80 per barrel. However, Crude Oil WTI Futures upsurged amid OPEC-led supply cuts, geopolitical pressures rise on Libyian violence, and tightening of US sanctions on Iran and Venezuela. Hence, Crude prices initiated rebound to its five-month tops after previous small dips.

Global tensions deepened over concerns for a probable EU-US trade war. US Index may face severe consequences from the EU front if Trump confirms an official tariff imposition on the European goods.

Key USD/CAD Impacting Events For Today:

12:30 GMT (Mid Volatile)

US Bureau of Labor Statistics will release the US March CPI (YoY and MoM) and CPI Core figures. The Street analysts expect the Core CPI to record ten pips above the previous 260.99. On the CPI front, both YoY and MoM, consensus take on a bullish stance on the numbers.

14:30 GMT (Low Volatile)

The Energy Information Administration (EIA) will release the US weekly crude oil stock change since April 5. The consensus estimates the number to come around 2.513 million than the previous 7.238 million.

18:00 GMT (Highly Volatile)

The Board of Governors of the Federal Reserve will publish the Federal Open Market Committee (FOMC) Minutes report. The report is crucial in providing upcoming Interest rates and analyzing the risk to the various US long-term economic goals.

18:00 GMT (Mid Volatile)

The US Financial Management Service will broadcast the Monthly Budget Statement. The budget provides the status of the government debts and receipts for March, and this information is crucial in analyzing the movement of USD. The analyst consensus expects the numbers to come around negative $180 billion than the previous negative $234 billion.

Technical Analysis

USDCAD 15 Min 10 April 2019
USDCAD 15 Min 10 April 2019

The Ichimoku clouds hovered above the loonie pair. The baseline and the conversion line stood almost aligned along with the USD/CAD. However, there appears a bearish sentiment in the pair based on the Ichimoku cloud strategy. The 21-day Simple Moving Average (SMA), 55-day SMA, 100-day SMA, and 200-day SMA lied above the USD/CAD developing bearish stance on the pair’s future movements. The Relative Strength Index (RSI) showed lower momentum at 06:00 GMT drifting near 50 levels.

USD/CAD Daily Price Forecast – The Loonie Pair Heads Low Amid EU-US Trade War Fears And Crude Upsurge

The loonie pair continued to stay in the consolidation mode during the Tuesday trading session. The pair remained sustained in the range of 1.3290 and 1.3324 levels despite skyrocketing crude prices.

The Crude Oil West Texas Intermediate (WTI) Futures remained capped within

$64.80 per barrel. WTI futures traded near $64.55 per barrel at 06:15 GMT.  The increasing geopolitical issues boiling in the Libyan region (OPEC member) had put heavy pressure on the country’s oil export. This decline in the crude supply uplifted the commodity price to a five-month high on the previous day.

The New US-Euro Trade War

By April end, the US and China are expected to solve their disagreements and frame a proper trade deal. The global economy had suffered a lot due to the Superpower dispute. As the US-Sino trade war is about to wind up, US Prez Trump sets ready for a new tariff war.

This time it is with yet another Superpower – “Eurozone”. Reports suggested that the US administration is preparing to impose fresh tariffs on $11 Billion of EU Goods. This negative news has left the investors unnerved as fears of economic slowdown is further elevated.

The US Dollar Index that computes the greenback against the six major rival currencies seemed to remain stabilized near 96.90 levels. If the global tensions worsen over time, the loonie pair can have a significant impact on its future movements.

Crude prices, however, upsurged in the middle of rising global trade issues, frequent OPEC supply cuts, and US sanctions on Iran and Venezuela.

Key USD/CAD Impacting Event Lined Up:

20:30 GMT

The Weekly Statistical Bulletin (WSB) records data on refinery and four significant petroleum products. The American Petroleum Institute (API) will issue WSB filed until April 5. The Market analysts are away from any estimates while the previous statistics were at 2.963 million.

Technical Analysis

USDCAD 15 Min 9 April 2019
USDCAD 15 Min 9 April 2019

The loonie pair had an overall bearish aspect during the day. After plunging last day, the USD/CAD remained in the consolidation phase in the lower vicinity near 1.3300 level. The major Simple Moving Averages (SMA) computed for 21-day, 55-day, 100-day, and 200-day lied above the USD/CAD displaying bearish sentiment to the pair. The Keltner Channels (KC) showed the pair to remain between the bottom channel bound and the Exponentially Moving Average (EMA) adding to the bearish call for the future movements of the pair.

EUR/USD Daily Price Forecast – The Euro Pair Maintained Multiple Consolidation Phases

The Euro pair seems to remain in the consolidation region between 1.1255 and 1.1275 levels as it headed up to knock off the upper vicinity on Tuesday morning trading session.

EUR/USD rose underpinned US Dollar Index slump. The index had fallen over rising global tensions and elevation in its rival currencies weighed against it. The Australian dollars, Canadian dollars, and other major currencies upliftment on the back of crude upsurge. The crude oil was hovering at its five-month tops.

Today at 01:30 GMT, Australian February Home loans recorded a positive 2.0 percent in comparison to the consensus estimate of a negative 2.0 percent. This AUD event added more fuel to the USD Index plunge thereby elevating rivals including EUR/USD.

The US Dollar Index was trading near 97.01 levels during the Asian session.

A few moments ago, Swiss March MoM Unemployment numbers came around in-line with the market expectation of 2.4 percent. The EUR/USD dropped from 1.1263 level and went beyond 1.1260 level following the event.

On the Brexit front, EU Summit will take place tomorrow. EU Officials will then address on May’s request for an additional Brexit extension.

Today’s Key EUR/USD Influencing Events:

08:00 GMT

The National Institute of Statistics will publish the Retail Sales (YoY) and (MoM) for February. The report assists in tapping consumer expenditure for Italy. The consensus estimates YoY Sales to come 1.2 percent lesser than the prior 1.3 percent. The Market analysts expect 0.4 percent less for MoM Sales than the previous 0.5 percent.

20:30 GMT

The American Petroleum Institute will issue the Weekly Statistical Bulletin (WSB) since date April 5. The stats will provide data on refinery and four significant petroleum products. The consensus has no estimates while the previous stats were at 2.963M.

Technical Analysis

EURUSD 15 Min 9 April 2019
EURUSD 15 Min 9 April 2019

The euro pair was trading above the significant 100-day SMA (Simple Moving Average) and 200-day SMA, developing some bullish stance for the pair. The pair had uplifted for the last two days and was remaining under consolidation phase at the time of writing this article (06:54 GMT). The EUR/USD created new month high in the morning session. On the flipside, there are strong support lines at 1.1210 level and 1.1184 level, to protect downfalls if any. RSI (Relative Strength Index) remained in the range of 40 and 60 levels. The pair expected to sustain consolidated at the upper vicinity.

USD/CAD Daily Price Forecast – The Loonie Pair Broke Previous Strong Support Line of 1.3370

The Loonie pair extended the Friday’s consolidation phase into the Monday trading session. USD/CAD remained sustained in the upper vicinity of 1.3370 and 1.3380 levels.

Most of the candlesticks during the Asian trading session had longer upper shadows and shorter lower shadows which denotes buyer domination. The loonie pair created a fresh daily high of 1.3393 level as well as a new daily low of 1.3370 level during the early session.

USD Index continued its two-day downward rally reaching 97.21 level at 10:30 GMT. The index is heading to the strong support level of 97.19 level. The US Dollar Index had fallen over rising concerns on geopolitical issues in the Libyan grounds vis-a-vis the US.

The EUR/USD pair had jumped in the morning session after the release of positive German Trade balance report. This upliftment in the rival currency also weighed down the greenback.

Burgeoning Crude Prices

The OPEC’s continued supply cuts have moved the crude prices up reaching a 5-month high. The continued Military conflicts in Libya is making the country’s crude to go offline. The supplying capacity of the country is over 1 million barrels a day which got undermined. Supply of oil is falling short of the demand which is the crucial factor behind influencing the barrel cost.

This upsurge has elevated the commodity-linked currency Canadian Dollar, thereby pushing down the USD/CAD.

The pair’s future movements will rely on the US and CAD events to happen later the day.

Key USD/CAD Influencing Events Lined Up For Today:

12:15 GMT

The Canadian Mortgage and Housing Corporation will publish the Housing Starts s.a (YoY) for March. The report taps data about the number of new houses constructed. The consensus estimates a high reading of 193.0K than the previous 173.1K.

12:30 GMT

Statistics Canada will issue the February Building Permit for new construction projects.

The report is crucial because if there is any increase or decrease in the number of projects, it will impact the CAD. The Market analysts are expecting a bullish stance over the Permit with 0.2 percent than the previous -5.5 percent.

14:00 GMT

The US Census Bureau will publish the Factory Orders (MoM) for February month. The report calculates the total orders of durable & non-durable goods. It is an important economic indicator as it provides status about the manufacturing sector. The consensus estimates a decrease in the numbers to come around -0.6 percent to the previous 0.1 percent.

Technical Analysis

USDCAD 5 Min 8 April 2019
USDCAD 5 Min 8 April 2019

The 21-day Simple Moving Average (SMA), 55-day SMA, 100-day SMA, and 200-day SMA lied above the loonie pair. This position of USD/CAD shows some strong bearish movements for the pair. The Relative Strength Index (RSI) was hovering below 40 levels. The USD/CAD had broken the strong support line of 1.3369. The overall sentiment as per technical analysis is bearish, but the loonie seems to act resilient and sustain range-bound movements.

USD/CAD Daily Price Forecast – The Loonie Pair Stabilizes Ahead Of US Non-Farm Payrolls & Canadian Unemployment Reports

The Loonie pair started on the Friday’s trading session at around 1.3360 level. The pair later slipped reaching 1.3355 level where it remained in the consolidation mode during the Asian session. USD/CAD tumbled thereon in the middle of rising crude prices. West Texas Intermediate(WTI) remained above $70 per barrel level which is the highest since YTD. This upsurge in the crude prices led to the uplift in the commodity-linked Canadian dollars thereby pushing down the loonie pair.

US Treasury Bond Yields rose to new levels albeit didn’t reflect on the USD Index’s performance during the day. However, the USD Index shifted gears and got elevated on positive US-Sino news. Reports revealed that the trade talks are at the last stage and the deal is expected to get signed soon.

Key Influencing USD/CAD Events Lined Up For The Day:

12:30 GMT (Highly Volatile Event)

The US Department of Labor will publish the March Non-Farm Payrolls, and it will identify the change in Payroll. The difference in these numbers will tend to impact the Forex Board. The consensus estimates a higher number to 180K than prior 10K.

12:30 GMT (Highly Volatile Event)

Statistics Canada will release the March Net Change in Employment, and this data will signify the number of employed people in Canada. The consensus estimates the Change to 1.0K than the previous 55.9K.

12:30 GMT (Highly Volatile Event)

Statistics Canada will publish the Unemployment Rate, and it will provide the number of unemployed people in the country. The higher rates exhibit weakening of the Economy. The Consensus is in-line with the Rate estimates to 5.8 percent.

12:30 GMT (Mid Volatile Event)

The CAD Statistics will release the March Participation Rate, and it will indicate the total Labor Force above 15 years. The Market analysts expect a decrease in the Rates to 65.7 percent across the previous 65.8 percent.

12:30 GMT (Mid Volatile Event)

Statistics will broadcast the March Average Hourly Wages (YoY), and this report will examine the increase in income of the Canadians. The previous Average was 2.25 percent.

Technical Analysis

USDCAD 5 Min 5 April 2019
USDCAD 5 Min 5 April 2019

The USD/CAD broke the strong resistance level of 1.3367 reaching 1.3369 level at 10:40 GMT. The loonie pair was trading above the 21-day SMA (Simple Moving Average), 55-day SMA, 100-day SMA and 200-day SMA showing bullish stance on its future movements. The pair remained in the vicinity between the upper bound of the Keltner Channel and the EMA (Exponentially Moving Average) showing signals of an uptrend. RSI (Relative Strength Index) displayed majorly sustained within the standard range of 30-70 levels.

USD/CAD Daily Price Forecast – The Loonie Pair Flies On Crude Upswing

The USD/CAD extended the last day’s uptrend rally into the Thursday’s trading session. The loonie started off the day near 1.3344 level. Thereon, the pair went uplifting without getting undermined until 1.3369 level. Most of the candles seemed to have longer shadows showcasing buyer and seller dominations.

The primary rationale behind the loonie pair upsurge was the decline in crude prices. Oil prices had slipped on the Thursday morning after a report revealed unanticipated oil inventory numbers. West Texas Intermediate (WTI) Futures dropped 0.14 percent reaching $62.37 per barrel. Brent Oil Futures settled 0.1 percent lower in the morning reaching $69.27 per barrel.

However, when the bigger picture of a year is taken, WTI is 35 percent up, and Brent is 28 percent higher. These price hikes are mainly due to the US sanctions on countries like Iran and Venezuela and the regular supply cuts from the Organization of Petroleum Exporting Countries (OPEC).

“Positive rhetoric regarding a U.S.-China trade deal could continue supporting crude, and even lift it higher from here,” said Tariq Zahir, managing member at the oil-focused Tyche Capital Advisors fund in New York.

At the time of writing this article (12:06 GMT), the loonie pair was trading at 1.3350 level.

Key USD/CAD Events To Have A Close Scrutiny:

12:30 GMT

The US Department of Labor will publish the Continuing Jobless Claims (CJC) and the Initial Jobless Claims (IJC) which provides the status of the US Labor Market. The CJC considers the number of unemployed and people receiving unemployment benefits. Market analysts estimate the figure to come around 0.006M lower than the previous 1.756M. The IJC is issued weekly and provides data about the people who are first timers in availing unemployment benefits. The Market analysts take on a bearish stance on the IJC with the consensus estimate of 216K to the prior 211K.

14:00 GMT

Canada’s Ivey School of Business will release the March PMI which provide data relevant to economic conditions. The previous PMI market data was 48.9 percent while on the PMI s.a.the consensus estimate of 51.1 points against the last 50.6 points.

14:30 GMT

The Energy Information Administration (EIA) will publish the US Natural Gas Storage Change report. The report is an estimated data based on a monthly survey since March 29. The Market Analysts expect an increase in the Gas volumes with 10B against the previous volume -36B.

Technical Analysis

USDCAD 5 Min 4 April 2019
USDCAD 5 Min 4 April 2019

The USD/CAD pair remained in the boundaries of the Keltner channel (KC). The USD/CAD pair shown no distortion in the KC. The pair stayed majorly on the upper vicinity between the upper bound of the KC and EMA revealing great signs of a sustained uptrend. However, while drafting this article (12:06 GMT), the pair was drifting near the lower side of the KC. The 200-day SMA, 100-day SMA, 55-day SMA, and 21-day SMA lie above the USD/CAD allowing the bears to rule the pair’s upcoming movements. The Relative Strength Index (RSI) showed the graph to stay within the standard range of 30-70 levels.

USD/CAD Daily Price Forecast – The Loonie Sandwiched Betwixt Weaker DXY And Higher Crude Prices

The Loonie pair set fresh lows for the week after making a recovery trial last day. USD/CAD started the day at 1.3344 level and later slipped consistently reaching 1.3295 level. There was hardly any upward movement for the USD/CAD during the Asian trading session. If it continues to downtrend, the pair will undoubtedly encounter the March strong support levels present in the vicinity of 1.3274 and 1.3255.

USD Index (DXY) had fallen drastically from 97.29 level reaching 96.96 level since the morning session. Reasons seem unidentified like how the greenback grew stronger last day over weaker Durable Goods Orders reports.  But this time DXY is experiencing severe pullbacks increasing the selling pressure on the currency index. However, US Treasury Bond Yields saw upliftment and US-Sino Trade talks gave a favorable status quo which must have elevated the DXY.

Upsurging crude prices led to additional stress to the USD/CAD. Crude Oil had knocked off new multi-month highs reaching $63 per barrel amid global tensions.

Investors will remain unnerved until the loonie pair takes a u-turn upwards.

Key USD/CAD Influencing Events Scheduled For The Day:

12:15 GMT (Mid Volatile Event)

The Automatic Data Processing, Inc of the US will broadcast the March Employment Change. The report will evaluate the change in the number of employed people in the US. A higher number may indicate an increase in consumer spending thereby encouraging economic growth. A Bearish expectation by the Consensus estimate with 170 K against the previous 183K.

13:45 GMT (Mid Volatile Event)

The Markit Economics will publish the PMI Services and PMI Composite on Manufacturing and Service sector for March month. The PMI is crucial to suggest overall economic conditions in the US. The Service sector is vital because it occupies a large share of US GDP. The Market analysts estimate stand in-line to PMI composite with 54.3 percent and PMI Service with 54.8 percent.

14:00 GMT (High Volatile Event)

The Institute for Supply Management (ISM) will release the March Non-Manufacturing PMI for the US. The Index will tend to reflect the status of business in Non-manufacturing sector. The market analyst is expecting a Bearish stand with 58.0 percent over the previous figure of 59.7 percent.

Technical Analysis

USDCAD 5 Min 3 April 2019
USDCAD 5 Min 3 April 2019

The pair saw a downtrend during the day reaching 1.3297 level. The Simple Moving Averages (SMA) for the major days lie above the loonie pair showing a bullish stance in the upcoming movements. The Moving Average Convergence Divergence (MACD) remained positioned in the lower vicinity of the indicator showing low buy signals. The Relative Strength Index (RSI) showed fewer signs of overbuying or overselling during the day.

Gold Opens The Week Positive, But Gains Limited Ahead Of Central Banks

Precious Metals opened the week with gains as investors are on a wait-and-see mode ahead of central banks announcements this week.

Gold, Silver, Copper, and Palladium are up on the day, while the Dollar index is testing critical support.

The dollar index is 0.10% negative on the day as the unit is now trading at 2-week lows around the 96.40 crucial support.

Global risk sentiment as a catalyst

Risk sentiment remains on the table as investors now think that a dovish Fed will fuel stocks market. However, a weak dollar is underpinning gold and other commodities.

In any case, experts are in wait-and-see mode ahead of the series of central banks’ monetary policy announcements this week.

From the Federal Reserve taking the lights on Wednesday, until the Swiss National Bank and the Bank of England having the baton on Thursday.

All banks are expected to take dovish stances with the Federal Reserve keeping the focus as it will release its new economic projections.

“The Fed’s interest rate and monetary policy decisions on Wednesday, as well as the Federal Open Market Committee’s new economic projections, will probably exert the most influence on gold prices this week,” FX Empire analyst James Hyerczyk highlighted in a recent article.

Policymakers could turn more dovish in the next days. It would be supportive for gold and other precious metals.

In this framework, commodities started the day with declines, but gold and silver recovered losses, and now they are posting gains.

Gold extends gains

XAUUSD Daily Chart Gold March 18

Gold is trading positive on Monday amid a weak dollar. Currently, XAU/USD is posting 0.26% gains so far today as it is pricing at 1,305.

The pair is now ready for a new test of the 20-day moving average at 1,308. Remember that this line rejected gold twice last week.

With a break above the mentioned moving average, gold will have open doors to the 1,320 area, where it would be able to build up another bullish leg. Then, check 1,330 and 1,345 as the new frontiers.

To the downside, a failure at 1,300 will send XAU/USD down to 1,290, where the next important buying area is. Below there, 1,280 is the critical level to watch.

Silver opens the week with gains

XAGUSD daily chart Silver march 18

Silver recovered initial losses on Monday to regain the 15.30 area and to trade as high as 15.40. A weak dollar and a positive correlation with Gold are the main factors contributing to these movements.

XAG/USD is currently trading 0.44% positive on the day at 15.35. On the middle term, silver is well supported by the 200-day moving average level at 15.12and by the 15.00 support area.

To the upside, 15.50 is the next resistance with 20 and 50 days moving averages between 15.50 and 15.60 levels.

Copper reclaims the 2.9000 area

Copper is trading positive on Monday as it is extending its Friday’s pullback from 2.85.

XUC/USD is now trading 0.63% positive on the day at 1.9170. The pair is trading sideways between 2.8550 and 2.9270.

Palladium approaches to its all-time highs

XPD/USD is trading positive for the sixth day in a row as palladium is approaching its all-time price against the dollar at 1,570.

The pair is now pricing at 1,561, 0.46% positive on the day.

Forex Annual Market Recap – 2018

Volatility returned to the currency markets in 2018. The prior year did not provide investors with fear and uncertainty the way 2018 did. The dollar was the main catalyst for changes in market sentiment. Exchange rates were relatively stable until the spring of 2018 and then it became clear that US yields would rise, sending the greenback higher. There were also some severe movements in emerging currencies. The Chinese Yuan weakened substantially along with the Turkish Lira. Moving forward, there are several factors investors should focus on. The ECB will play a key role in 2018, along with political events in both the UK and US.

The Strength in the Greenback

The dollar returned as the king of the currencies in the spring of 2018.  A new Federal Reserve chair began his tenure and quickly installed the belief that the Fed would continue to raise rates multiple times in 2018 and 2019. This led to a rise in US yields pushing the yield differential between major counterparts in favor of the greenback.

Fed Chair Powell’s continued to be hawkish throughout the year, and by October of 2018 the average Fed forecast confirmed the central banks’ intention to increase interest rates three more times in 2019, with another rate hike scheduled for December.  Fed chair Powell in the fall of 2018 said that monetary policy was still accommodative, and there was further to go before the Fed funds rate hit neutrality.  The hawkish tone of the Fed was repeated during the week before Christmas. The fed increased the Fed fund rates by 25-basis points and signaled some softening by forecasting an increase in interest rates by 50-basis points in 2019 instead of the 75-basis point forecast increase they had made during the fall. This was at odds with the market which forecast rates to fall in 2019.

The Dollar versus the Euro which is the most liquid global currency pair has a peak to trough move of nearly 10%. The increase in the value of the greenback might be curtailed by a less hawkish fed. The markets are signaling that rates have reached restrictive levels which might reduce dollar volatility moving forward.

EUR/USD 1y
EUR/USD 1y

 

One of the issues is the concept of neutrality. Coming out of the Great Financial Crisis, the Fed wanted to increase interest rates to the point where they had enough bullets to reduce rates should a recession occur. If the Fed left rates as very accommodative levels, then there would be no stimulus to help the economy if it began to falter.

The Fed also needed to unwind its asset purchases. The period of quantitative easing had ended, and the Fed began to wind down its portfolio. This strategy was put in place before President Trump was elected, and there has been continuity between recent Fed Chairs, during the last 10-years. The President has been ultra-critical of the Fed decision to increase rates during 2018. If this occurred in nearly any other country investors would have hammered the currency. Yields would soar as investors extract a steep price for criticism of the central bank.

Brexit Hampers Sterling

GBP/USD 1y
GBP/USD 1y

The pound was a big loser in 2018, as the issue related to Brexit started to heat up. The decline in the pound coincided with strength in the greenback which began in the spring of 2018. The GBP/USD had peaked to trough range of 13%.

During the fall of 2018 reports that the EU and the UK were having difficulty reaching an agreement started to generate headwinds for the GBP. Despite mixed data, some of which showed strength, the Bank of England was hamstrung by the Brexit issues. Ahead of the Christmas break, Prime Minister Terresa May reached an agreement with the EC but was told this would be the last agreement and there was no flexibility.  Unfortunately, PM May was unable to get the Brexit bill passed by the parliament. In fact, her own party the Tories held a no-confidence vote which May was able to survive. This will be revisited in early 2019, as the Brexit saga continues.

The Chinese Yuan Tumbles

The Chinese Yuan was one of the biggest movers during 2018. The peak to trough range was nearly 11.5%.  The currency began to weaken during the spring of 2018 as trade issue between the US and China began to heat up. There were multiple fits and starts and as of the year-end, the rhetoric between President Trump and President Xi continues. Initially, investors thought the weakening of the Chinese currency was a function of the People’s Bank of China’s efforts to offset softening exports with a weaker currency. This would make Chinese exports more attractive. During the latter half of 2018, Chinese economic data began to soften which was foreshadowed by the weakening currency. As of year, end Chinese PMI data moved into contraction territory which points to further contraction in the Chinese economy.

USD/CNY 1y
USD/CNY 1y

2019 Forecast

While 2018 was the year of the dollar, there are many issues that can change the narrative in 2019.  The Fed will likely change its tune and reduce the number of rate hikes to 1, instead of 2. US yields already reflect this scenario and should help reduce the value of the dollar. The global economy could continue to weaken which will weigh on the yuan and could further hurt the Chinese currency.

The markets have also failed to discount the volatility associated with political unrest in the United States. President Trump could be impeached which is likely, but nobody believes, the Senate will convict him. If this becomes the case, the markets could become very volatile and could generate significantly headwinds for the dollar. US yields, in this case, would decline instead of rising, making the dollar less attractive. At the same time, investors would be looking for a safe-haven currency which would likely be the yen and the Swiss Franc. Even if political unrest does not occur, a potential recession in the US would weigh on the greenback.