Tag: Currency

Gold Unsteady as Investors Await FOMC Minutes

Gold continues to hug the $1290 line in Wednesday session, where it has hovered for much of the week. Earlier in the day, gold moved close to $1300 but has since retracted. In North American trade, the spot price for one ounce of gold is $1291.20, down 0.01% on the day. New Home Sales dropped to 662 thousand, well off the estimate of 680 thousand. Later in the day, the Federal Reserve releases the minutes from the May policy meeting. On Thursday, the US will publish unemployment claims and Existing Home Sales.

The Federal Reserve will be in the spotlight on Wednesday, as analysts pore over the minutes of the May policy meeting. The Fed did not raise rates at the meeting, but a strong US economy has raised expectations that the Fed will press the rate trigger in June – according to the CME Group, the odds of a June hike stand at 100%. The markets will be looking for some guidance from the May minutes, and if the message from Fed policymakers is hawkish, traders can expect the US dollar to post gains. On Monday, Atlanta Fed President Raphael Bostic sounded positive about the economy, saying the Fed’s employment and inflation goals were close to being met. The Fed expects growth to be around 2.5% in 2018, and inflation has been moving closer to the Fed target of 2.0%.

Earlier this week, there seemed to be some positive momentum regarding the US-China trade talks. However, President Trump voiced skepticism over progress in the negotiations, saying he was ‘not really’ satisfied with the results. Trump’s comments have confused the markets, as Treasury Secretary Steven Mnuchin declared on the weekend that the trade spat was ‘on hold’. The remarks spooked Asian and European stock markets on Wednesday. Investor risk appetite has also waned as there is uncertainty whether North Korean leader Kim Jong-un will meet with President Trump next month. On Tuesday, Trump acknowledged that there was a ‘substantial’ chance that the summit planned with Kim in Singapore on June 12 would not take place. Gold has been unable to take advantage of the nervousness in the markets, as it was unable to consolidate a move towards $1300 on Wednesday, and has fallen back to around $1290.

 

XAU/USD Fundamentals

Wednesday (May 23)

  • 9:45 US Flash Manufacturing PMI. Estimate 56.6. Actual 56.6
  • 9:45 US Flash Services PMI. Estimate 54.9. Actual 55.7
  • 10:00 US New Home Sales. Estimate 680K. Actual 662K
  • 10:30 US Crude Oil Inventories. Estimate -2.5M. Actual
  • 14:00 US FOMC Meeting Minutes

Thursday (May 24)

  • 8:30 US Unemployment Claims. Estimate 220K
  • 10:00 US Existing Home Sales. Estimate 5.56M

*All release times are DST

*Key events are in bold

 

XAU/USD for Wednesday, May 23, 2018

XAU/USD May 23 at 11:00 DST

Open: 1291.41 High: 1298.41 Low: 1288.02 Close: 1291.20

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1236 1260 1285 1307 1337 1375

XAU/USD showed little movement in the Asian session. The pair posted gains in European trade but has retracted in the North American session

  • 1285 is providing support
  • 1307 is the next resistance line
  • Current range: 1285 to 1307

Further levels in both directions:

  • Below: 1285, 1260 and 1236
  • Above: 1307, 1337, 1375 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged in the Wednesday session. Currently, long positions have a majority (69%), indicative of trader bias towards XAU/USD breaking out and moving to higher ground.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

GBP/USD – British Pound Drops to 2018 Low as Inflation Heads Lower

The British pound has posted considerable losses on the Wednesday session. In North American trade, GBP/USD is trading at 1.3356, down 0.57% on the day. Earlier in the day, the pair touched a low of 1.3305, its lowest level since December. On the release front, British CPI continued to fall, coming in at 2.4%. This was shy of the estimate of 2.5%. Over in the US, New Home Sales dropped to 662 thousand, well off the estimate of 680 thousand. Later in the day, the Federal Reserve releases the minutes from the May policy meeting. On Thursday, the UK releases Retail Sales and the US will publish unemployment claims and Existing Home Sales.

Just a few weeks ago, there was a strong likelihood that the Bank of England would raise interest rates at the May policy meeting. However, a spate of weak economic releases and falling inflation resulted in policymakers standing pat, leaving rates at 0.50%. Are we in for a repeat performance in August? Inflation levels continue to drop, with April CPI falling to 2.4%, down from 2.5% a month earlier. The markets are eyeing two key indicators later in the week – Retail Sales and Second Estimate GDP. If these releases miss expectations, an August rate hike will be in serious doubt. Earlier in the week, the markets priced in an August hike at 50%, but this dropped to just 33% after Wednesday’s weak inflation data. The pound is also under pressure, and the downward spiral is likely to continue if this week’s indicators do not perform well.

On Tuesday, Bank of England Governor Mark Carney testified before a parliamentary committee. Carney acknowledged that growth in the first quarter was weak, blaming “temporary and idiosyncratic factors”, such as massive snowstorms which hampered economic growth. The BoE has forecast growth in Q1 of just 0.4%. As for monetary policy, Carney was subtle, saying that “interest rates are more likely to go up than not, but at a gentle rate”. The markets clearly have their doubts about a rate hike in August, as Wednesday saw the pound fall and the likelihood of an August rate hike drop, following another drop in inflation.

  Fed Minutes to Drive Market as Trade Concerns Recede

  Another Turkish Lira flash crash

GBP/USD Fundamentals

Wednesday (May 23)

  • 4:30 British CPI. Estimate 2.5%. Actual 2.4%
  • 4:30 British PPI Input. Estimate 1.0%. Actual 0.4%
  • 4:30 British RPI. Estimate 3.4%. Actual 3.4%
  • 4:30 British Core CPI. Estimate 2.2%. Actual 2.1%
  • 4:30 British HPI. Estimate 4.4%. Actual 4.2%
  • 4:30 British PPI Output. Estimate 0.3%. Actual 0.3%
  • 6:00 British CBI Realized Sales. Estimate 4. Actual 11
  • 9:45 US Flash Manufacturing PMI. Estimate 56.6. Actual 56.6
  • 9:45 US Flash Services PMI. Estimate 54.9. Actual 55.7
  • 10:00 US New Home Sales. Estimate 680K. Actual 662K
  • 10:30 US Crude Oil Inventories. Estimate -2.5M. Actual
  • 14:00 US FOMC Meeting Minutes

Thursday (May 24)

  • 4:00 BOE Governor Mark Carney Speaks
  • 4:30 British Retail Sales. Estimate 0.8%
  • 8:30 US Unemployment Claims. Estimate 220K
  • 10:00 US Existing Home Sales. Estimate 5.56M

*All release times are DST

*Key events are in bold

GBP/USD for Wednesday, May 23, 2018

GBP/USD May 23 at 10:35 DST

Open: 1.3432 High: 1.3442 Low: 1.3305 Close: 1.3356

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3088 1.3186 1.3301 1.3402 1.3494 1.3613

GBP/USD ticked lower in the Asian session. The pair posted considerable losses in European trade and has inched higher in the North American session

  • 1.3301 is providing support
  • 1.3402 is the next resistance line
  • Current range: 1.3301 to 1.3402

Further levels in both directions:

  • Below: 1.3301 and 1.3186 and 1.3059
  • Above: 1.3402, 1.3494, 1.3613 and 1.3712

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged in the Wednesday session. Currently, long positions have a majority (60%), indicative of trader bias towards GBP/USD continuing to head lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

USD/CAD – Canadian Dollar Slips on Trump Comment Over China

The Canadian dollar has posted considerable losses in the Wednesday session. Currently, USD/CAD is trading at 1.2906, up 0.68% on the day. On the release front, there are no Canadian releases on the schedule. In the US, the key event is the Federal Reserve minutes from the May policy meeting. On Thursday, the US will release unemployment claims and Existing Home Sales.

On Tuesday, President Trump sounded skeptical over progress in trade talks between the US and China, saying he was ‘not really’ satisfied with the negotiations. Trump’s comments have confused the markets, as Treasury Secretary Steven Mnuchin declared on the weekend that the trade spat was ‘on hold’. The result? Asian and European stock markets are seeing red in the Wednesday session, as is the Canadian dollar. Investor risk appetite has also waned as there is uncertainty whether North Korean leader Kim Jong-un will meet with President Trump next month. On Tuesday, Trump acknowledged that there was a ‘substantial’ chance that the summit planned with Kim in Singapore on June 12 would not take place.

The Federal Reserve will be in the spotlight on Wednesday, as analysts pore over the minutes of the May policy meeting. The Fed did not raise rates at the meeting, but a strong US economy has raised expectations that the Fed will press the rate trigger in June – according to the CME Group, the odds of a June hike stand at 100%. The markets will be looking for some guidance from the May minutes, and if the message from Fed policymakers is hawkish, traders can expect the US dollar to post gains. On Monday, Atlanta Fed President Raphael Bostic sounded positive about the economy, saying the Fed’s employment and inflation goals were close to being met. The Fed expects growth to be around 2.5% in 2018, and inflation has been moving closer to the Fed target of 2.0%

  Fed Minutes to Drive Market as Trade Concerns Recede

  Another Turkish Lira flash crash

USD/CAD Fundamentals

Wednesday (May 23)

  • 9:45 US Flash Manufacturing PMI. Estimate 56.6
  • 9:45 US Flash Services PMI. Estimate 54.9
  • 10:00 US Crude Oil Inventories. Estimate -2.5M
  • 14:00 US FOMC Meeting Minutes

Thursday (May 24)

  • 8:30 US Unemployment Claims. Estimate 220K
  • 10:00 US Existing Home Sales. Estimate 5.56M

*All release times are DST

*Key events are in bold

 

USD/CAD for Wednesday, May 23, 2018

USD/CAD, May 23 at 7:45 DST

Open: 1.2819 High: 1.2895 Low: 1.2812 Close: 1.2906

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2687 1.2757 1.2850 1.2943 1.3015 1.3125

USD/CAD ticked higher in the Asian session and has posted stronger gains in European trade

  • 1.2850 has switched to a support role as USD/CAD has moved higher
  • 1.2943 is the next resistance line
  • Current range: 1.2850 to 1.2943

Further levels in both directions:

  • Below: 1.2850, 1.2757, 1.2687 and 1.2527
  • Above: 1.2943, 1.3015 and 1.3125

OANDA’s Open Positions Ratio

USD/CAD ratio has reversed directions and is showing movement towards short positions. Currently, short positions have a majority (55%), indicative of trader bias towards USD/CAD reversing directions and moving lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

DAX Slides on Weak German PMIs, Trump Skepticism Over China

The DAX index has dropped sharply in the Wednesday session. Currently, the DAX is at 12,971, down 1.50% on the day. On the release front, German and eurozone PMIs missed expectations in the manufacturing and services sectors. In the US, the key event is the release of the Federal Reserve minutes from the May policy meeting. On Thursday, Germany releases Final GDP and GfK Consumer Climate, and the ECB will publish the minutes of its April policy meeting.

Asian markets are seeing red on Wednesday after US President Trump sounded skeptical over progress in trade talks between the US and China. On Tuesday, Trump said that he was ‘not really’ satisfied with the negotiations. Trump’s comments have confused the markets, as Treasury Secretary Steven Mnuchin declared on the weekend that the trade spat was ‘on hold’. Investor risk appetite has also waned as there is uncertainty whether North Korean leader Kim Jong-un will meet with President Trump next month.

Weak PMI data in May has sent the euro lower in the Wednesday session, as the currency dipped below the 1.17 line for the first time since mid-November. Investors are particularly concerned that both German and eurozone manufacturing PMIs dropped for a fifth straight month. German Manufacturing PMI posted its weakest gain in 16 months, while the eurozone indicator posted its worst reading in 18 months. These numbers, while certainly disappointing, should not cause any alarm, as the PMIs continue to indicate expansion in the services and manufacturing sectors. Still, the fact that growth was softer than expected could give ECB policymakers reason to re-evaluate the planned wind-up of its stimulus program in September.

  Fed Minutes to Drive Market as Trade Concerns Recede

  Another Turkish Lira flash crash

Economic Fundamentals

Wednesday (May 23)

  • 3:30 German Flash Manufacturing PMI. Estimate 57.9. Actual 56.8
  • 3:30 German Flash Services PMI. Estimate 53.1. Actual 52.1
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 56.1. Actual 55.5
  • 4:00 Eurozone Flash Services PMI. Estimate 54.7. Actual 53.9
  • 10:00 Eurozone Consumer Confidence. Estimate 0
  • 14:00 US FOMC Meeting Minutes

Thursday (May 24)

  • 2:00 German Final GDP. Estimate 0.3%
  • 2:00 German GfK Consumer Climate. Estimate 10.8
  • 4:00 ECB Financial Stability Review
  • 7:30 ECB Monetary Policy Meeting Accounts

*All release times are DST

*Key events are in bold

 

DAX, Wednesday, May 23 at 6:35 DST

Prev. Close: 13,169 Open: 13,134 Low: 12,956 High: 13,149 Close: 12,971

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

EUR/USD – Euro Slips to 6-Month Low on Weak German, Eurozone PMIs

After a quiet start to the week, EUR/USD has posted considerable losses in the Wednesday session. Currently, the pair is trading at 1.1726, down 0.45% on the day. On the release front, German and eurozone PMIs missed expectations in the manufacturing and services sectors. In the US, the key event is the release of the Federal Reserve minutes from the May policy meeting. On Thursday, Germany releases Final GDP and GfK Consumer Climate, and the ECB will publish the minutes of its April policy meeting. The US will release unemployment claims and Existing Home Sales.

Weak PMI data in May has sent the euro lower in the Wednesday session, as the currency dipped below the 1.17 line for the first time since mid-November. Investors are particularly concerned that both German and eurozone manufacturing PMIs dropped for a fifth straight month. German Manufacturing PMI posted its weakest gain in 16 months, while the eurozone indicator posted its worst reading in 18 months. These numbers, while certainly disappointing, should not cause any alarm, as the PMIs continue to indicate expansion in the services and manufacturing sectors. Still, the fact that growth was softer than expected could give ECB policymakers reason to re-evaluate the planned wind-up of its stimulus program in September.

The Federal Reserve will be in the spotlight on Wednesday, as analysts pore over the minutes of the May policy meeting. The Fed did not raise rates at the meeting, but a strong US economy has raised expectations that the Fed will press the rate trigger in June – according to the CME Group, the odds of a June hike stand at 100%. The markets will be looking for some guidance from the May minutes, and if the message from Fed policymakers is hawkish, traders can expect the dollar to post gains against the euro and other major rivals.

  Fed Minutes to Drive Market as Trade Concerns Recede

  Another Turkish Lira flash crash

EUR/USD Fundamentals

Wednesday (May 23)

  • 3:00 French Flash Manufacturing PMI. Estimate 53.6. Actual 55.1
  • 3:00 French Flash Services PMI. Estimate 57.1. Actual 54.3
  • 3:30 German Flash Manufacturing PMI. Estimate 57.9. Actual 56.8
  • 3:30 German Flash Services PMI. Estimate 53.1. Actual 52.1
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 56.1. Actual 55.5
  • 4:00 Eurozone Flash Services PMI. Estimate 54.7. Actual 53.9
  • 9:45 US Flash Manufacturing PMI. Estimate 56.6
  • 9:45 US Flash Services PMI. Estimate 54.9
  • 10:00 Eurozone Consumer Confidence. Estimate 0
  • 10:00 US Crude Oil Inventories. Estimate -2.5M
  • 14:00 US FOMC Meeting Minutes

Thursday (May 24)

  • 2:00 German Final GDP. Estimate 0.3%
  • 2:00 German GfK Consumer Climate. Estimate 10.8
  • 4:00 ECB Financial Stability Review
  • 7:30 ECB Monetary Policy Meeting Accounts
  • 8:30 US Unemployment Claims. Estimate 220K
  • 10:00 US Existing Home Sales. Estimate 5.56M

*All release times are DST

*Key events are in bold

 

EUR/USD for Wednesday, May 23, 2018

EUR/USD for May 23 at 4:30 DST

Open: 1.1778 High: 1.1790 Low: 1.1699 Close: 1.1726

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1448 1.1613 1.1718 1.1809 1.1915 1.2025

EUR/USD ticked lower in the Asian session and has posted stronger losses in European trade

  • 1.1718 is fluid. Currently, it is providing weak support
  • 1.1809 is the next resistance line

Further levels in both directions:

  • Below: 1.1718, 1.1613, 1.1448 and 1.1313
  • Above: 1.18o9, 1.1915 and 1.2025
  • Current range: 1.1718 to 1.1809

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Wednesday session. Currently, long positions have a majority (55%), indicative of trader bias towards EUR/USD reversing directions and moving higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Another Turkish Lira flash crash

Another Turkish Lira flash crash  

A busy start to the session dealing with yet another mini TRY flash crash as the bad Lira news continues to compound. Otherwise, global Forex and fixed income markets remain in neutral  overnight and predictably focused on the upcoming FOMC minutes

The Turkish Lira meltdown. As far as I can tell was little more than a liquidity crunch reminding the Efx space again just how weak liquidity is during less than ideal times. As usual, the predictably fall out from the TRYJPY carry trade  has kept my desk hoping this morning

President Trump was keen to remind us overnight that trade war is not about to leave the stage anytime soon declaring he is  “not pleased” with the results of China trade but sees them as “a start.” Which then triggered a subtle risk reversal on US equities leaving investors rudderless and prone  heading into today’s Asia session

Oil Markets 

Oil prices had taken a respite although their far-reaching implications across asset classes most likely contributed to denting equity sentiment when Washington suggested oil prices have gone too far. With US gas prices jumping to 3 dollars per barrel in the states ahead of peak driving season, the political backlash not to mention the likelihood surging oil prices will sap some momentum from the US economy has caught the US administrations attention. Which of course puts more focus on Vienna Group’s decisions on whether and when to increase production in response to the latest supply shocks from Iran and Venezuela

Gold Markets
The US dollar continues to drive the Gold bus as a short covering US dollar rally has tentatively lifted the gold bulls spirits. But the market remains mired in no man’s land as the break fo 1300 did create enough of a fire sale to shock gold market into submission. The markets will not shift to the FOMC minutes for inflation updates as any suggestion that the Feds do see a pick up beyond their 2% target could be interpreted bullishly for Gold which should find support as an inflation hedge

Currencies

EUR: challenging to avoid the excessive noise around the Italian political scene but the focus remains on the FOMC and ECB statement.

JPY: USDJPY is coming off rather aggressively this morning as more disclosures have been noted from PM Abe stemming from the Kake school scandal. Attention remains focused on the Nikkei which is cratering this morning and triggering some interday USDJPY stop losses below 110.75 in this mini-meltdown. Liquidity has been thin post TRYJPY meltdown, so this could be exacerbating moves, but we should expect some ” bargain hunting below 110.50 to keep the movement contained at least for the short term

MYR: Profit taking on the broader USD with US bond yields remain stable has improved local sentiment however the market is in desperate need of fiscal clarity, and this fact alone will hold foreign investors at bay despite some desirable levels on both bond and currency markets. Despite foreign investors shying the local markets, domestic funds have been significant equity buyers which continues to underpin domestic sentiment.

Fed Minutes to Drive Market as Trade Concerns Recede

The US dollar is mixed ahead of the release of the minutes from May’s Federal Open Market Committee (FOMC) meeting. The central bank held rates unchanged but there is almost 100 probability of a 25 basis points rate hike at end of the June 13 meeting. Commodity currencies were higher at the beginning the North American trade session only to fall as commodity prices gave way. Safe haven currencies rose after US President Trump said the June 12 Peace summit between North and South Korea could be delayed.

  • US Crude oil inventories expected to drop by 2.5 million barrels
  • UK inflation to remain steady at 2.5 percent
  • US 10 year bond yields were flat ahead of FOMC minutes

EUR Still on Backfoot due to Italian Politics

The EUR/USD lost 0.07 percent on Tuesday. The single currency is trading at 1.1783 ahead of the release of the notes from the Fed’s monetary policy meeting. The EUR is still struggling with the fallout of the Italian coalition. The latest from the union between the 5 Star Movement and the League is the nomination of Giuseppe Conte as prime minister. The lack of experience from the lawyer and academic did not inspire much confidence with the markets.



With rise of euro scepticism in the area the last thing needed was criticism from German economists who do not agree that the deeper integration proposed by French President Emmanuel Macron. 154 German economists criticized the call to protect the currency union and instead bring back the argument that economic reform is needed with member states who are struggling. Also opening the door to creating an orderly process for nations to exit the Union.

The economic calendar this week will not any major releases with mostly lagging indicators in the agenda. European producer managers index (PMIs) and the minutes fro the European Central Bank (ECB) meeting could offer some insight but investors are looking forward to more guidance from the central bank which so far has remained very quiet on what are its plans after the massive quantitive easing program runs its course in September.

Loonie Gets Commodities and Trade Boost

The USD/CAD appreciated 0.26 percent in the last 24 hours. The currency pair is trading at 1.2819 as the loonie bounced back during the Asian trading session from disappointing retail sales data on Friday and a long weekend after the Victoria Day holiday. Commodity prices rose as the USD rally ended after trade tensions eased with China. Strong commodities in particular oil prices boosted the CAD as well a strong signal the US is more open to trade negotiations as the fate of NAFTA remains to be decided. Energy prices could not maintain the upward momentum and West Texas Intermediate fell below $72 but geopolitics is keeping energy prices at 3 year highs.


usdcad Canadian dollar graph, May 22, 2018

The economic calendar this week will be dominated by the release of the Fed minutes. The market is pricing in a June rate hike and investors will scan the notes from the Federal Open Market Committee (FOMC) looking for further clues on the path of monetary policy. Fed members have supported two or more rate hikes this year. The Bank of Canada (BoC) is expected to hold its rate untouched in May at 1.25 percent after a string of soft data is not putting as much pressure as earlier in the year.

Core retail sales dropped by 0.2 percent instead of the 0.5 percent expected growth. Tuesday’s release of wholesales sales beat the forecast with a 1.1 percent gain and an upward revision to the previous 0.8 percent loss that now stands at –0.4 percent.

Oil Reaches 3 Year High on Supply Concerns

West Texas Intermediate is trading at $71.98 and trading near 3 year highs due to geopolitical events. The fundamentals of the energy markets call for a lower valuation as demand has not grown to levels that justify current prices. The Organization of the Petroleum Exporting Countries (OPEC) agreement with other major producers, most notably Russia, accomplish the goal of stability but it is now the uncertainty in the Middle East that drives price action.


West Texas Intermediate graph

Investors are aware of a risk that a rapid decline could come, but it could be achieved only if there is political stability in the region, a long shot at this point. Or if there are significant changes in how big oil producers not part of the deal react to higher prices. The US has slowly ramped up their production but with fundamentals only in the periphery at this time it could be some time before the market prices in higher oil production.

The situation in Venezuela and Iran could end up keeping prices at 3 year highs as supply disruptions have been the most effective factor dictating crude prices. Timing wise the start of the driving season in North America will be supportive as season demand rises.
Market events to watch this week:

Wednesday, May 23
4:00am AUD RBA Gov Lowe Speaks
4:30am GBP CPI y/y
10:30am USD Crude Oil Inventories
2:00pm USD FOMC Meeting Minutes
Thursday, May 24
4:30am GBP Retail Sales m/m
7:30am EUR ECB Monetary Policy Meeting Accounts
Friday, May 25
4:30am GBP Second Estimate GDP q/q
8:30am USD Core Durable Goods Orders m/m

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

Gold Listless as Investors Look for Cues

Gold is almost unchanged in the Tuesday session. In North American trade, the spot price for one ounce of gold is $1292.77, up 0.01% on the day. It’s another quiet day on the release front, with no key indicators. The sole event was the Richmond Manufacturing Index, which jumped to 16, well above the estimate of 9 points. On Wednesday, the Federal Reserve will release the minutes of its May policy meeting.

The trade battle between the US and China has taken a pause, and that could spell trouble for safe-haven gold. After weeks of sharp rhetoric and stiff tariffs, there was a breakthrough of sorts on Sunday. US Treasury Secretary Steven Mnuchin announced that the two sides had made significant progress and the trade war was being ‘put on hold’. Just last week, the White House sounded pessimistic about a deal being reached with China. The two economic giants have imposed tariffs on one another in recent weeks, worth billions in trade. These moves had raised fears of a bilateral trade war between the two largest economies in the world. The respite means that the sides are talking to each other, and that meant that the US can air its grievance over its massive trade deficit with China, which President Trump has long complained is a result of a non-level playing field. In addition to the trade deficit, the US wants to discuss technology transfers and cyber theft.

Gold prices continue to show little movement, but that could change on Wednesday, when the Federal Reserve releases the minutes of its policy meeting earlier in May. The Fed did not raise rates at the meeting, but a strong US economy has raised expectations that the Fed will press the rate trigger in June – according to the CME Group, the odds of a June increase stand at 95%. The markets will be looking for some guidance from the May minutes, and if the minutes are hawkish, traders can expect the dollar to post gains against its rivals.

XAU/USD Fundamentals

Tuesday (May 22)

  • 9:59 US Richmond Manufacturing Index. Estimate 9. Actual 16

Wednesday (May 23)

  • 10:00 US New Home Sales. Estimate 680K
  • 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

XAU/USD for Tuesday, May 22, 2018

XAU/USD May 22 at 12:10 DST

Open: 1292.33 High: 1293.15 Low: 1291.13 Close: 1292.77

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1236 1260 1285 1307 1337 1375

XAU/USD edged lower in the Asian session but recovered in European trade. The pair has posted small losses in the North American session

  • 1285 is providing support
  • 1307 is the next resistance line
  • Current range: 1285 to 1307

Further levels in both directions:

  • Below: 1285, 1260 and 1236
  • Above: 1307, 1337, 1375 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is almost unchanged in the Tuesday session. Currently, long positions have a majority (70%), indicative of trader bias towards XAU/USD breaking out and moving to higher ground.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

GBP/USD – British Pound Unchanged after Carney Testimony

The British pound is showing little movement in the Tuesday session. In North American trade, GBP/USD is trading at 1.3427, unchanged on the day. On the release front, Britain posted a deficit of GBP 6.2 billion, below the estimate of 7.2 billion. This marked the first deficit after a string of three straight surpluses. British CBI Industrial Order Expectations disappointed with a reading of -3, missing the estimate of 2 points. This was the first decline since October. In the US, the Richmond Manufacturing Index jumped to 16, well above the estimate of 9 points. On Wednesday, the UK releases a host of inflation indicators, led by CPI. The Federal Reserve will release the minutes of its May policy meeting.

Bank of England Governor Mark Carney testified earlier on Tuesday before a parliamentary committee, but his remarks have had little impact on the British pound. Carney acknowledged that growth in the first quarter was weak, blaming “temporary and idiosyncratic factors”, such as massive snowstorms which hampered economic growth. The BoE has forecast growth in Q1 of just 0.4%. As for monetary policy, Carney was subtle, saying that “interest rates are more likely to go up than not, but at a gentle rate”. The bank balked at a rate hike earlier in May, due to weakening inflation and a spate of soft economic data. BoE policymakers are unlikely to raise rates before August at the earliest.

After weeks of an escalating trade war between the US and China, there was a breakthrough of sorts on Sunday. The US dollar has posted gains after Treasury Secretary Steven Mnuchin announced that the two sides had made significant progress and the trade war was being ‘put on hold’. Just last week, the White House sounded pessimistic about a deal being reached with China. The two economic giants have imposed stiff tariffs on one another in recent weeks, worth billions in trade. These moves had raised fears of a bilateral trade war between the two largest economies in the world. The respite in tariffs means that the US can sit down with the Chinese and discuss the US trade deficit with China, which President Trump has long complained is a result of a non-level playing field with China. In addition to the trade deficit, the US wants to discuss technology transfers and cyber theft.

  Commodity currencies are beaming

  China to cut Tariffs on some Auto Parts and Vehicles

GBP/USD Fundamentals

Tuesday (May 22)

  • 4:15 British MPC Member Gertjan Vlieghe Speaks
  • 4:30 British Public Sector Net Borrowing. Estimate 7.2B. Actual 6.2B
  • 5:00 British Inflation Report Hearings
  • 6:00 British CBI Industrial Order Expectations. Estimate 2. Actual -3
  • 9:59 US Richmond Manufacturing Index. Estimate 9. Actual 16

Wednesday (May 23)

  • 4:30 British CPI. Estimate 2.5%
  • 4:30 British PPI Input. Estimate 1.0%
  • 4:30 British RPI. Estimate 3.4%
  • 6:00 British CBI Realized Sales. Estimate 4
  • 10:00 US New Home Sales. Estimate 680K
  • 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

GBP/USD for Tuesday, May 22, 2018

GBP/USD May 22 at 11:25 DST

Open: 1.3427 High: 1.3491 Low: 1.3412 Close: 1.3427

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3186 1.3301 1.3402 1.3494 1.3613 1.3712

GBP/USD ticked lower in the Asian session. In European trade, the pair posted gains but then retracted. GBP/USD is showing little movement in the North American session

  • 1.3402 is a weak support level
  • 1.3494 is the next resistance line
  • Current range: 1.3402 to 1.3494

Further levels in both directions:

  • Below: 1.3402, 1.3301 and 1.3186
  • Above: 1.3494, 1.3613, 1.3712 and 1.3796

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged in the Tuesday session. Currently, long positions have a majority (61%), indicative of trader bias towards GBP/USD breaking out and moving lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

USD/CAD – Canadian Dollar Steady, Wholesale Sales Next

The Canadian dollar has edged higher in the Tuesday session, after posting strong gains on Monday. Currently, USD/CAD is trading at 1.2769, down 0.16% on the day. On the release front, there are no key indicators on the schedule. Canada releases Wholesales Sales and the US publishes the Richmond Manufacturing Index. On Wednesday, the Federal Reserve will release the minutes of its May policy meeting.

The Canadian dollar posted strong gains on Monday, erasing the losses seen on Friday. The currency ended the week on a soft note as core retail sales declined 0.2%, well off the estimate of 0.5%. This marked a 4-month low. Inflation remained steady, as CPI came in at 0.3% in April, matching the estimate. On an annualized basis, inflation was up 2.2% in April, the third straight month it exceeded the Bank of Canada inflation target of 2.0%.

There was a dramatic development in the China-US tariff battle on Sunday, as US Treasury Secretary Steven Mnuchin said that the trade war was being ‘put on hold’. Just last week, the White House sounded pessimistic about a deal being reached with China. The two economic giants have traded stiff tit-for-tat tariffs in recent weeks, worth billions in trade. These moves had raised fears of a bilateral trade war between the two largest economies in the world. The respite in tariffs means that the US can sit down with the Chinese and discuss the massive US trade deficit with China, which President Trump has long complained is a result of a non-level playing field with China.

Are the NAFTA negotiations in trouble? It appears that the parties remain far apart on a deal, and even an ‘agreement in principle’ between Canada, the US and Mexico seems unlikely at present. Meanwhile, the Trump administration has given both Canada and Mexico another 30-day exemption on steel and aluminum tariffs, lasting until June 1. Last week, US Commerce Secretary Wilbur Ross said that further extensions could be granted, depending on the progress made in the NAFTA talks. Ottawa has demanded “full and permanent” exemptions from the tariffs, but may have to cough up more concessions in the NAFTA talks in order to convince Washington to exempt Canadian steel and aluminum imports from tariffs.

  A test of the breakouts

USD/CAD Fundamentals

Tuesday (May 22)

  • 8:30 Canadian Wholesale Sales. Estimate 0.9%
  • 10:00 US Richmond Manufacturing Index. Estimate 9

Wednesday (May 23)

  • 14:00 US FOMC Meeting Minutes

*All release times are DST

*Key events are in bold

 

USD/CAD for Tuesday, May 22, 2018

USD/CAD, May 22 at 7:50 DST

Open: 1.2789 High: 1.2789 Low: 1.2749 Close: 1.2769

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2527 1.2687 1.2757 1.2850 1.2943 1.3015

USD/CAD was flat in the Asian session and has shown limited movement in European trade

  • 1.2757 was tested earlier in support and remains a weak line
  • 1.2850 is the next line of resistance
  • Current range: 1.2757 to 1.2850

Further levels in both directions:

  • Below: 1.2757, 1.2687 and 1.2527
  • Above: 1.2850, 1.2943, 1.3015 and 1.3125

OANDA’s Open Positions Ratio

USD/CAD ratio is showing movement towards long positions. Currently, short and long positions are evenly split, indicative of a lack of trader bias towards USD/CAD.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.