Forexlive Americas FX news wrap: Dollar moves lower as Fed speak this week sinks in. PS All time high closes in US stocks

Forex news for NY trading on July 12, 2019.

In other markets: 

  • Spot gold is trading up $ 11.36 or 0.80% at $ 1414.96.  The yelllow metal was helped by a lower USD. Technically, the price at the session lows,  stalled near the 100 hour MA support level, giving the buyers more confidence (and forcing the sellers to buy). See technical post here.
  • WTI crude oil future are trading at $ 60.26, up $ .06 or 0.10%. The high today reached $ 60.74. The low extended to $ 59.93. For the week, the price was up over 4.5% helped by a much larger than expected drawdown of inventories on Wednesday.  For a technical look at the pair CLICK HERE.
  • The price of Bitcoin is trading up $ 447 at $ 11600 despite negative comments on cryptocurrencies from Pres. Trump.
Forex news for NY trading on July 12, 2019.
The major stock indices moved to new record highs just ahead of what is the start of the earnings calendar on Monday.    Moreover the S&P index closed above the 3000 level, after toying with the level on Wednesday and Thursday.  European shares closed mixed with the German Dax and UK FTSE down marginally. 
The US indices closed at the highs for the day and at all time highs heading into the start of the earnings calendar next week. After two days of loads of Fedspeak that did not stop the market from expecting a Fed cut in July, today was a “digest the words” type of day.  That feeling, led to a slightly softer tone for the dollar despite higher than expected PPI. 

However, when Fed’s Evan’s (a new voice this week) started chirping in Chicago, the dollar started to take on an even weaker tone.   Comments included:

  • Business investment weaker than expected
  • Sees growth for 2019 around 2% which is close to what he regards as sustainable trend
  • Business investment has been weaker despite fiscal aid
  • Nervous about under running inflation objective
  • Policy is currently about neutral but could be more accommodated if the aim was to lift inflation
  • A couple of rate cuts could lift inflation by 2021
  • Framework is adequate as long as policymakers are going to actively push for inflation of 2% to assure target is met symmetrically
  • Hard for businesses to make long-term plans given uncertainty around trade landscape
  • Slowing foreign growth is going to dampen the US economy
  • Rsk management approach means being a little more accommodative in case downside risks materialize, but we don’t want to go too far
  • Now am more concerned policy isn’t on  accommodative side
  • Takes seriously the current rates may be more restrictive than should be
  • Could argue for rate cuts on inflation, global slowdown

He seemed to get more and more dovish as he went along.

Overall, the votes are there for a rate cut in July and if Charlie Evans, Vice Chair Williams, Chair Powell, Thomas Barkin, et. al. take the chatter from this week into the meeting at the end of the month, the bias may shift even more to the dovish side for other meetings this year.  

Below is a snapshot the rankings of the strongest and weakest currencies. The AUD is ending as the strongest on risk on sentiment, the USD is the weakest. 

The USD is the weakest of the major currencies.

In the US debt market, yields are ending the session lower, but  off the day’s lowest levels.

The US yields are ending lower
Some technical views/thoughts going into the weekend:
EURUSD: The EURUSD traded up. It traded down. It traded up again and is closing near the day highs. In between the high at 1.12744 and the low at 1.1237 sits the 100 day MA and 200 hour MA at 1.1253. In the NY session,dollar selling in the NY afternoon, took the price back above that bullish above/bearish below barometer. In next week’s trading, the levels will remain
key for the technical bias.   For the week, the low for the week was reached on Tuesday at 1.11927. The high was on Thursday at 1.1285.  The 38.2% of the move down from the June 18 high comes in at 1.1276. A move above that level would be more bullish in the new week.

USDJPY: The USDJPY fell below a neckline level at 107.93, and the 100 bar MA on 4-hour (at 107.956) and 50% retracement of the move up from June 18 on Friday (at 107.878). That area will be close resistance in the new trading week.  Next week on more selling, the 107.53-57 will be a key swing area from June 18 and July 3rd to get below.  If the 108.00 is breached above, the 200 hour MA and 200 bar MA on the 4-hour chart will be a key upside target.  

USDCHF: This is another currency pair that breached a neckline on the hourly chart (see post here), but has other support levels to get below in order to solicit more selling. Those levels include the 100 bar MA on 4-hour at 0.98377 a swing levels from July 2, and July 3rd at 0.9831-35.  Get below in the NY week and there should be more downside momentum.

AUDUSD: The AUD is the strongest of the major currencies today. In the process, the pair based against the 200 hour MA at 0.6984 , moved above a swing area at 0.7012-16 and breached the 100 day MA at 0.70209. The pair did stall near that 100 day MA, leaving the “higher?” or “lower?” decision for next week’s trading.   On more upside, the 0.7047 is the July high  and the highest level since May 1.

USDCAD: The USDCAD was pushed lower on more bearish USD flows, and higher oil in the second half of the week. The pair is closing at the lowest level of the year, and lowest level since October 2018 (trading at 1.3032). A move below the 1.3000 level opens the pair for a shot at the 100 week MA at 1.2980.  

My fingers are tired and I must have lost finger weight from all the typing exercise without Adam this week (and all the Fed speak and other events). I will return part of the favor on Monday and Tuesday (family in town), but look forward to my return on Wednesday.  Thank you for all your support this week and wishing you all a great and safe weekend. 

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Japan’s Aso: US-China situation seems a little different this time

Comments by Japanese finance minister, Taro Aso

  • Says US and China are talking about fundamental issues

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It’s either he knows something more (which I doubt) or he’s just assuming how the situation currently is. And you know what they say about people who ass-u-me.

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Shark bites 8-year-old boy in third North Carolina attack this month

A shark bit an 8-year-old boy in the third attack this season along the North Carolina coast, a local official said. Chris McCall, assistant village manager of Bald Head Island, told news outlets the boy was swimming in open water Sunday afternoon when a shark grabbed him by the leg, causing multiple bite wounds.

WECT-TV reports the child was transported on a ferry to the hospital and is expected to make a full recovery. The boy is the third person to be attacked by a shark in the state this month.

Last week, a 19-year-old was bitten by a shark in Ocean Isle, about 100 miles down the same coastline from where a 17-year-old girl lost most of her leg to a shark attack at Fort Macon State Park earlier this month. Charlie Winter was in the water near his daughter, Paige, when he heard other teenagers swimming with them at Atlantic Beach shout, “Paige! Shark! Get her!”

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But when he looked in the water, he saw only a five-foot trail of pink blood in the water. Winter dove in and grabbed his daughter, pulling a shark up out of the water along with her.

“It was a big shark … I immediately just started to hit it,” he said at a press conference Friday. “I don’t know how many times I punched it, but I hit it with everything I could and it let go.”

Then the former paramedic ran for shore, applying pressure on his daughter’s badly injured leg while the shark chased him “at arm’s length,” he said. In the struggle, Winters added that his daughter had been attempting to pry open the shark’s mouth with her hands.

Afterward, he said she was calm and just kept repeating the word, “dad,” as he carried her to safety. “She’s a tough little thing,” he said with emotion in his voice.

Doctors said the teenager’s left leg and two fingers on her left hand were amputated after what was likely a bull shark attack, based on tooth markings found on her bones. Winter said he saw two sharks in the water just after the attack, but doesn’t know what types of sharks they were.

Unprovoked shark attacks are rare. There were 66 of them worldwide last year, and four fatalities, according to the Florida Museum of Natural History.

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U.S. – CBSNews.com

CFTC commitments of traders: Smallish changes in the net speculative positions this week

Weekly Forex futures net noncommercial positioning data for the week ending June 11, 2019

  • EUR short 87K vs 88K short last week. Shorts trimmed by 1K
  • GBP short 45K vs 48K short last week. Shorts decreased by 3K
  • JPY short 45K vs 44K short last week. Short increase by 1K
  • CHF short 25k vs 36k short last week. Shorts decreased by 11K
  • AUD short 63k vs 63k short last week. Unchanged
  • NZD short 16K vs 20K short last week. Shorts decreased by 4K
  • CAD short 33K vs 42K short last week.  Shorts increased by 9K
  • Prior week

The positions remain long USD (short the currencies).  

The CHF shorts decreased by 11K
The CAD shorts were increased by 9K.

Those were the biggest movers in the week. 

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Analyze this: 5 tips for good market analysis

How to evaluate the market

How to evaluate the market

Trading is a process that can be broken in 2 stages: market analysis and the trade itself. To the latter we attribute things like opening an order, choosing position size and making sure that your actions conform to the rules of risk management.

This part of the process is very important. However, you shouldn’t underestimate the relevance of market analysis as well. In this article, we have gathered recommendations regarding the fundamental and technical analysis of the currency market.

Tip 1. Analysis first, trading second 

It often happens that those who only start their trading career form some random trade ideas in their minds and then start looking for the arguments that would justify their thoughts. This is a very wrong approach.

It’s the market analysis that should provide you with trade ideas and not the other way round. When you reverse this order, you lose the ability to think objectively. You will interpret everything you see on the charts as confirmations of your initial idea. There’s no point in such analysis because it doesn’t really prove that this idea was good.

Make sure that when you approach the market you have as clear and free mind as possible. This will allow you to grasp the real profit opportunities.

Tip 2. Confirmations

Once you have the idea, make sure that it’s valid. Of course, there’s no way to be 100% sure that a trade will bring profit. Yet, it’s possible to increase the probability of success. Most trading systems are based on the simple principle: there’s a certain sufficient amount of clues you need to gather in order to adopt a trade idea.

Each trader has his/her own view on what “sufficient” is. In our opinion, at least 3 clues are necessary and these clues have to be of different nature, for example, a clue from price action, a clue from a technical indicator and a clue from fundamentals.

Tip 3. Fundamental or technical approach?

There are still a lot of people who like debating which type of analysis is better. At the same time, ask yourself a question: should we really set limitations here? After all, these types of analysis are very different.

The fundamental analysis represents the study of the forces that are driving the market. These drivers become very important when you trade trends. On the other hand, fundamental analysis won’t allow you to make precise market entry, while often enough every pip counts. That’s where the technical analysis chimes in.

It also offers visual insights in the psychology of market players. For example, a “Head and Shoulders” pattern clearly shows that bulls lose their ability to push the price higher. Many traders recognize this distinctive shape of the price action and act accordingly thus making the pattern a self-fulfilling prophecy.

So, seeing merits in both fundamental and technical analysis, we propose an evident solution: combine the two! You may say that that’s too general a recommendation and you will be right.

How about the following scheme: for short-term trades, make your decision based on technical analysis but consult fundamentals in the economic calendar as they can make a big impact on your trade; for longer-term trades, use fundamental analysis to identify a trend to follow and then apply technical analysis to find good entry and exit levels.

Tip 4. Multiple timeframes save the day

Some traders go as far as to perceive timeframes as different trading instruments. Don’t make this mistake! Timeframes represent merely a set of lens for different perspectives and allow a trader to get a better look at the market.

Alexander Elder has established a classic approach by introducing a triple screen system that uses 3 timeframes. A trader should start with a bigger timeframe (locate the overall trend), then switch to a smaller one (find the point where a counter-trend move ends) and finally open the smallest timeframe (make a precise entry).

In any case, going from a larger timeframe to a smaller one is the correct approach because otherwise you will risk falling victim of the situation we described in tip #1. So, no matter whether you are a scalper or a position trader, make sure you reap the benefits of analyzing several timeframes.

Tip 5. Remember about correlations     

Forex market doesn’t exist in the void. Remember that currencies represent just one of the ways for investors to store their funds, for speculators to get profit and for hedgers to protect themselves from big changes in the exchange rates.

As a result, currencies compete with other assets, such as stocks and commodities for public attention. The prices of other instruments are denominated in currencies and this forms yet another tie (that’s why gold/oil are so sensitive to the dynamics of the USD).

Finally, currencies are naturally connected to the performance of respective economies. The latter interact as well, so no wonder that problems in China will pressure the AUD: China is Australia’s key trading partner. 

As a result, it’s necessary to have a broad view of the market, follow the general newsflow related to currencies and global economy and be aware of especially strong direct and inverse correlations. Examples of direct correlation: AUD/USD and NZD/USD, XAU/USD and XAG/USD. Example of inverse correlations: EUR/USD and USD/CHF.       

All in all, market analysis should be an area of constant improvement for a trader. It’s a key skill both to make your own trades or to evaluate the ideas of others. Check Forex news and market commentary at FBS website: we surf through tons of info to serve you the brief and sharp summary of the most important things. Good luck in your market analysis and trading!

This article was submitted by FBS.

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Japan PM Abe and US President Trump to meet Friday this week – here’s what is not on the agenda

Meeting on 26 April 2019

Japan’s Finance Minister Aso says the two will not discussing currency matters (speicficaly the USD/JPY rate).

However,  Aso is scheduled to meet with US Treasury Secretary Mnuchin on Thursday … where FX rates may well (likely will) be a topic. Aso will be keen to avoid any tweets from you-know-who attacking the yen and seeking to strengthen it.

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Argentina’s Debt Hasn’t Looked This Bad Since 2014

© Bloomberg. A statue stands over the Plaza de Mayo, marking the scene of the May 25, 1810 revolution, in Buenos Aires, Argentina. Photographer: Victor J. Blue/Bloomberg © Bloomberg. A statue stands over the Plaza de Mayo, marking the scene of the May 25, 1810 revolution, in Buenos Aires, Argentina. Photographer: Victor J. Blue/Bloomberg

(Bloomberg) — Argentina’s dollar debt is getting hammered by global investors.

Prices hovering below 75 cents on the dollar and an average yield of 11.08 percent for its international bonds shows investors are uneasy despite an unprecedented $ 56 billion credit agreement with the International Monetary Fund and $ 76.7 billion of reserves at the central bank. During a year in which emerging-market notes posted their best quarter since 2012, Argentina’s return of 2.1 percent year-to-date is one-third the average for peers.

Moreover, credit-default swaps are pricing in a 49 percent probability of non-payment over the next five years compared with just 22 percent a year ago. The extra yield investors demand to hold the dollar debt over U.S. Treasuries — 8.58 percentage points — is the highest since 2014, when the country was in default and before Mauricio Macri boosted optimism with a presidential campaign that promised a return to economic normalcy.

Debt due in 2021 is trading below 90 cents and yielding 13.5 percent. If investors in that security are worried about getting paid, pity the creditors of the 100-year-bond issued at the peak of foreign-investor exuberance for Macri in June 2017. They’re currently priced at 71 cents.

Ecuador, which has historically traded close to Argentina among high-yield credits, is deemed more than 300 basis points safer in the bond market than its South American peer despite a history of defaults and a IMF program a fraction of the size. Here’s how that relationship has evolved over the past year:

Macri is now up for re-election in October after a first term that most investors consider to have produced mixed results, and Cristina Fernandez de Kirchner, who oversaw the country from 2007 to 2015, is mulling a comeback. The prospects of a run-off in November between Cristina (as she’s most often called) and Macri appears to be the most likely scenario, according to pollsters who currently see it as a coin toss on who would emerge victorious.

Given that Cristina nationalized the private pension system, installed currency controls and blasted the IMF and foreign debt investors, it’s understandable that bondholders are unsettled. Macri’s approval rating has slipped below 30 percent for the first time since taking office and the bitter recession and stubbornly high inflation (54.7 percent year-on-year) are making it hard for even some supporters to justify another four years in office.

Aware of the poll numbers, Macri rolled out measures last week to freeze prices on some consumer goods, increase lending and lessen the blow of some planned utility rate hikes. Whether those moves, along with the central bank’s uber-restrictive monetary policy, will bolster the outlook enough to let him squeak by for re-election remains to be seen.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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The Hong Kong Dollar Just Saw Its Biggest Jump This Year

© Bloomberg. Hong Kong one-hundred dollar banknotes are arranged for a photograph in Hong Kong, China. Photographer: Justin Chin © Bloomberg. Hong Kong one-hundred dollar banknotes are arranged for a photograph in Hong Kong, China. Photographer: Justin Chin

(Bloomberg) — The jumped the most since December on Wednesday, as short-sellers were burned by spiking borrowing costs.

The exchange rate strengthened as much as 0.14 percent, moving away from the weak end of its trading band, where it had been stuck for weeks. It pared the advance to 0.05 percent as of 5:24 p.m. local time. The Hong Kong Monetary Authority has spent $ 2.8 billion since the start of March to defend the peg.

The currency’s forward points have surged, with the one-month tenor touching the highest level since September, reflecting tighter liquidity and thus higher costs for traders to build bearish wagers. The Hong Kong dollar’s interbank interest rates, known as Hibor, also climbed, with the one-month cost rising the most this year Wednesday.

“Some short carry trade unwinding is reasonable,” said Stephen Chiu, foreign-exchange and rates strategist at China Construction Bank Asia Corp. “This movement could be temporary — the interbank liquidity situation wasn’t that bad, so the Hong Kong dollar rates should soften again in the future. And we do expect the U.S. rates to rebound.”

A gap between borrowing costs in the city and the U.S. fueled weakness in the Hong Kong dollar in March, as traders sold the local currency and put the proceeds in the higher-yielding greenback. That spread has narrowed, partly thanks to intervention, from almost 1.6 percentage points in February to 43 basis points — making shorting the Hong Kong currency a less lucrative trade.

Gains in local equities this year could also be contributing to the advance, as investors purchase the city’s currency to chase the rally, according to Ryan Lam, head of research at Shanghai Commercial Bank Ltd. The closed at the highest since June on Tuesday, before slipping 0.1 percent Wednesday.

The currency may move back to HK$ 7.85 per greenback later this month, according to Chiu and Lam.

The Hong Kong dollar’s one-month Hibor jumped 27 basis points to 2.05429 percent, its highest level this year.

After covering their stop-loss positions, investors will likely rebuild their bearish bets, pushing the Hong Kong dollar back to the weak end of the trading band, said Ken Cheung, a senior Asian foreign-exchange strategist at Mizuho Bank Ltd.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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3 Things Under the Radar This Week

© Reuters.  © Reuters.

Investing.com – Here’s a look at three things that were under the radar this past week.

1. ‘No Free Lunch’ Has Different Meaning For Some U.S. Gas Drillers

There’s no such thing as a free lunch. That’s the maxim the world pretty much operates by.

Yet, the experiences of natural gas drillers at Texas’ Waha hub may make that sound like a cruel joke.

Next-day natural gas prices at Waha plunged to record negative levels this week. And some drillers were not only getting no money for the commodity, but also paying those with spare pipeline capacity to take the unwanted gas.

That’s akin to giving away your bread and paying people to eat it. It’s not something OPEC is ever expected to do with its oil, even if that unlikely reaches zero value at some point.

Pipeline constraints in the Permian basin in West Texas were to blame for the phenomenon. The Permian is the nation’s largest oil field, but it also produces large volumes of gas and the region lacks pipelines to move it. That has squeezed gas prices there for some time.

Weak demand and recent equipment problems on a key pipeline in New Mexico have exacerbated the problem, Reuters reported.

Spot prices at the Waha hub fell to minus $ 3.38 per million British thermal units for Wednesday from minus 2 cents for Tuesday. That beat the prior all-time next-day low of minus $ 1.99 for March 29.

On the broader front, futures of gas on the New York Mercantile Exchange, which set month-ahead prices, have also been weak lately as the advent of spring weather tempers heating demand.

The United States experienced one of its heaviest gas consumption periods ever in the winter as heating demand spiked from record low temperatures caused by a polar vortex. reached more than 4-1/2-year highs of nearly $ 5 at the height of the cold weather in November. They are now well below $ 3.

2. As Oil Prices Flirt With Highs, Energy Stocks Slide

When oil prices rack up gains, energy stocks tend to join in on the fun. But energy stocks lagged the swashbuckling moves higher in oil prices this week, leaving many scrambling for answers.

Oil prices rose nearly 5%, outpacing gains in the S&P 500 energy sector, which served up an increase of about 2.25%.

Some in the investment community outlined three factors for the disconnect between energy stocks and oil prices: valuation, valuation, valuation.

Energy stocks have gone up too fast too soon. This prompted investors to remain on the sidelines or head for the exits. The energy sector trades at 18x 2019 earnings, above 16.3x for the S&P 500.

There appears little hope, however, that energy companies will be able to jack up earnings and justify their valuations as the bulk of companies in the sector have seen double-digit declines in first-quarter earnings expectations.

Among the 11 sectors, the energy sector has recorded the largest decrease in expected earnings growth since the start of first quarter to -18.4%, FactSet said last week. Despite the decline in expected earnings, the energy sector “has witnessed the third-largest increase in price of all eleven sectors since December 31 at 15.6%,” the report said.

The lower expectations on earnings growth has been driven by lower average oil prices in the first quarter of the year compared with a the same period a year ago.

“Despite an increase in price during the quarter, the average price of oil in Q1 2019 ($ 54.81) to date is 13% lower than the average price of oil in Q1 2018 ($ 62.89),” FactSet said.

3. Travel Spending Expectations Fall

The index is down slightly year to date, slightly below the . But those long transports may have pause, given Morgan Stanley’s note this week.

The investment bank said in note on airline stocks that companies are lowering their budgets for corporate travel this year after surveying managers again “to obtain an update given U.S. Government shutdown effects, uncertainty regarding Brexit and slowing global macro trends.”

On a budget-weighted basis, corporate travel expenditure is expected to grow 2% in 2019, down from 3.7% growth expectations from a survey in November.

Of airline respondents surveyed, 59% expect an increase in budget spending, which is down from 66% in November.

“In this update we focus primarily on volume-based changes in travel spend, with airline managers now expecting net booking volume increase of (about) 1.5% in 2019,” Morgan Stanley said. “Compared to our November survey where 75% of respondents expected an increase in airline bookings for 2019, now only 45% of respondents expect an increase.”

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Mueller report concluded. Congress may learn contents this weekend

Report submitted to the Attorney General

US Attorney General William Barr informed Congressional leaders that he’s received the conclusions of Mueller’s Russia investigation today. It’s not clear if it’s the full report or a “confidential report explaining the prosecution and declination decisions” he has reached.

In any case, Barr told congress he may be able to reveal to them the report’s conclusions as soon as this weekend.

Here is the letter from Barr:

Report submitted to the Attorney General

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