Tag: US Unemployment Claims

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.

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.

Commodity currencies are beaming

 

Currency Markets 
The US dollar has given up some of its gains overnight as investors keenness for Greenbacks has temporarily abated. The shifting dynamics around trade and tariffs does give pause for thought as US dollar bulls are consolidating gains at a very tricky and treacherous junction for both the USD and US bond yields. After making some significant advances last week, USD profit taking was the name of the game in Monday NY session.

Commodity currencies are beaming on the back of surging Commodity Indexes as oil prices broke through last week high water mark. The de-escalation in the US -Sino tariff and trade has put to rest, temporarily albeit, some of the market biggest fears around a Global growth slowdown and commodity markets and prices are returning in vogue.

Also,  there’s the usual air of uncertainty with both May FOMC minutes and  April ECB minutes due this week. Trader’s will be more inclined not to get ahead of the curve before these releases.

EM currencies performed better overnight as stretched positions unwound and the bounce in oil prices provided some idiosyncratic benefits to petrol related currencies. However,  the common denominator in the EM space remains the stronger USD which could continue to run amok after the overnight profit taking inspired u-turn.

So far, the beginning of the week is  shaping up to be all about consolidating and gingerly contesting last week’s significant breakouts

Oil Markets

The markets positive take on “no trade war “and Venezuela political woes are driving Oil prices higher. The global condemnation surrounding the election of incumbent Venezuelan president Nicolas Maduro has as expected trigged the Trump administration to levee new sanctions on the debt-ridden country. Tightening the economic screws will severely cripple  Petróleos de Venezuela ability to export while making it virtually impossible for the country to acquire dollars.

Also, US secretary of state Mike Pompeo raised the Iran sanctions bar by promising to impose the “strongest sanctions in history” on Iran to bring it to the bargaining table for a new nuclear deal.

The effect of OPEC -Non-OPEC supply compliance and the US abandonment of the JCPOA has created ultra-tight supply conditions to the point where any hint of supply disruption will send oil prices soaring. Supply-side dynamics are apparently in the driver’s seat suggesting prices should push higher near term.

Equity Markets

Equity investors revelled as trade war fears have temporarily abated suggesting the parties are heading on a far more appealing approach than feared. But hope springs eternal that both superpowers can iron out a market-friendly bilateral trade agreement and at the minimum maintain, stay at the negotiation table until the more contentious trade issues can be ironed out. The fear is that the “no trade war “announcement is little more than kicking the can down the road., but only time will tell.

Gold Markets
Gold price movements continue to be as much as anything a USD trade. Gold prices moved off overnight lows on the back of USD profit taking. But from both a fundamental and technical picture the Gold bears continue to have the upper hand as bullish signals are non-existent. Given the resurgent dollar, a reprieve on the trade war front, equity markets stabilising and evaporated geopolitical risk premiums, the balance of risks suggests gold prices move lower over the near term.

Currencies

EUR: A bit of a mixed bag overnight with ECB’s Nowotny erring dovish but Italian Political risk premiums eased after Conte is said to be the next Prime Minister. However, given the Italian affair has little chance of a spill over into other peripheral debt and with the ECB already leaning very dovish with the first hike not priced until September 2019, the Italian risk should be of little influence on ECB policy.

JPY: After falling to move above 111.40 overnight, the dollar bulls turned more conservative without the support from higher US yields as 10 Year UST’s were little changed from last weeks levels

AUD: Strong Beta currencies are benefiting from the conciliatory actions on the US-China trade front as global equity markets soared and Wall Street has followed suit starting the week on a robust note. But the bullish case for commodities on the back of surging oil prices is building which is underpinning AUD sentiment.

MYR: We would typically expect USAsia to trade lower as the US dollar has taken a bit of a detour overnight. However, the Riggit remains vulnerable to the lack of insight into fiscal planning.  But markets levels look attractive from both a Bond yield and currency perspective not to mention surging oil prices, so we are left to surmise that once fiscal clarity is offered, we could finally see the Ringgit sentiment improve. I the meantime   EM Asia FX will remain susceptible to the stronger USD

USD/CAD – Canadian Dollar Steady Ahead of Canadian, U.S Job Reports

The Canadian dollar is steady in the Thursday session, after posting gains on Wednesday. Currently, USD/CAD is trading at 1.2778, down 0.10% on the day. In economic news, Canada releases Foreign Securities Purchases and ADP Nonfarm Employment Change. In the U.S, the Philly Fed Manufacturing Index is expected to drop to 21.2, while unemployment claims are forecast to rise to 216 thousand.

Negotiations over a new NAFTA agreement have failed to reach a conclusion, and the parties haven’t even reached an ‘agreement in principle’. Although there is no official deadline to wrap up a deal, there are upcoming events which could mean that a deal won’t be made in 2018. Mexico holds general elections in June and the U.S holds congressional mid-term elections in November. Meanwhile, the Trump administration has given both Canada and Mexico another 30-day exemption on steel and aluminum tariffs, lasting until June 1. Earlier in the week, U.S 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.

The U.S economy continues to perform well, but the Federal Reserve target of 2 percent remains elusive. CPI rebounded with a gain of 0.2%, but this fell short of the estimate of 0.3%. Core CPI edged lower to 0.1%, shy of the forecast of 0.2%. Inflation levels will be an important factor for the Fed in its monetary policy projection, which remains at two more hikes in 2018. The odds of a rate hike at the June hike stands close to 100%, and the US dollar could continue to make broad gains as we get closer to the June policy meeting.

The trend is your friend.

Dollar Consolidates ahead of Today’s Event Risk

 

USD/CAD Fundamentals

Thursday (May 17)

  • 8:30 Canadian Foreign Securities Purchases. Estimate 3.00B
  • 8:30 Canadian ADP Nonfarm Employment Change
  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.1
  • 8:30 US Unemployment Claims. Estimate 219K

Friday (May 18)

  • 8:30 Canadian CPI. Estimate 0.3%
  • 8:30 Core Retail Sales. Estimate 0.5%
  • 8:30 Canadian Retail Sales. Estimate 0.3%

*All release times are DST

*Key events are in bold

 

USD/CAD for Thursday, May 17, 2018

USD/CAD, May 17 at 7:50 DST

Open: 1.2791 High: 1.2796 Low: 1.2750 Close: 1.2778

 

USD/CAD Technical

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

USD/CAD edged lower in the Asian session and has recovered in European trade

  • 1.2757 was tested earlier in support. It is 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 continues to show little movement this week. Currently, short positions have a majority (53%), indicative of trader bias towards USD/CAD continuing to move downwards.

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 Trading Sideways on Lack of Eurozone Data

EUR/USD is showing little movement in the Thursday session. Currently, the pair is trading at 1.1817, up 0.07% on the day. On the release front, there are no German or eurozone indicators. In the U.S, there are two key events, which could impact on the movement of EUR/USD. The Philly Fed Manufacturing Index is expected to drop to 21.2, while unemployment claims are forecast to rise to 216 thousand.  On Friday, Germany releases PPI and the eurozone publishes current account and trade balance.

The eurozone economy has performed well in 2018, but inflation has lagged behind and remains well below the ECB inflation target of around 2 percent. German Final CPI for April dropped to a flat 0.0%. Although this matched the forecast, this marked a 3-month low. Eurozone inflation indicators followed a similar trend, losing ground in April. Final CPI edged lower to 1.2%, down from 1.3% a month earlier. Final Core CPI followed a similar trend, dropping from 1.0% to 0.7%. Weak inflation levels could have a significant impact on ECB fiscal policy, as policymakers may have to consider extending its stimulus scheme, which is scheduled to run until September.

Bank of France Governor Francois Villeroy de Galhau raised some eyebrows this week after making hawkish comments about ECB interest rates hikes. Villeroy said that the ECB could soon provide additional guidance on the timing of a rate hike. In its last rate statement, the ECB said that any rate hikes would occur ‘well past’ the wrap-up of the stimulus program, which is slated to end in September. Villeroy stated that ‘well past’ could be a matter of quarters, rather than years. Investors snapped up euros on Monday after Villeroy’s comment, but the euro failed to hold onto these gains and ended the Monday session with small losses.

The U.S economy continues to perform well, but the Federal Reserve target of 2 percent remains elusive. CPI rebounded with a gain of 0.2%, but this fell short of the estimate of 0.3%. Core CPI edged lower to 0.1%, shy of the forecast of 0.2%. Inflation levels will be an important factor for the Fed in its monetary policy projection, which remains at two more hikes in 2018. The odds of a rate hike at the June hike stands close to 100%, and the US dollar could continue to make broad gains as we get closer to the June policy meeting.

The trend is your friend.

 

EUR/USD Fundamentals

Thursday (May 17)

  • 4:00 Italian Trade Balance. Estimate 3.74B. Actual 4.53B
  • Tentative – Spanish 10-year Bond Auction
  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.1
  • 8:30 US Unemployment Claims. Estimate 216K
  • 10:00 US CB Leading Index. Estimate 0.4%
  • 10:30 US Natural Gas Storage. Estimate 105B

Friday (May 18)

  • 2:00 German PPI. Estimate 0.3%
  • 2:00 German WPI. Estimate 0.2%
  • 3:00 US FOMC Member Loretta Mester Speaks
  • 4:00 Eurozone Current Account. Estimate 35.1B
  • 5:00 Eurozone Trade Balance. Estimate 20.7B

*All release times are DST

*Key events are in bold

 

EUR/USD for Thursday, May 17, 2018

EUR/USD for May 17 at 5:25 DST

Open: 1.1808 High: 1.1838 Low: 1.1792 Close: 1.1817

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1613 1.1718 1.1809 1.1915 1.2025 1.2092

EUR/USD ticked higher in the Asian session and has been marked by choppy trade in the European session

  • 1.1809 is fluid. Currently, it is a weak support line
  • 1.1915 is the next resistance line

Further levels in both directions:

  • Below: 1.1809, 1.1718, 1.1613 and 1.1448
  • Above: 1.1915, 1.2025 and 1.2092
  • Current range: 1.1809 to 1.1915

OANDA’s Open Positions Ratio

EUR/USD ratio is unchanged in the Thursday session. Currently, long positions have a small majority (52%), indicative of a slight trader bias towards EUR/USD continuing to move 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.

The trend is your friend.

The trend is your friend.

Currency Markets

There was an intense focus on Italy Wednesday thanks to speculation that its new coalition government would request that the ECB write-off the bank’s QE-acquired debt of EUR250bn. Panic ensued with the EURUSD plunging to 1.1760 before recovering after the report was denied.

But the Italian political noise proved to be little more than a distraction from the markets complete focus on US 10-year yields as investors continue to challenge their conviction on both the USD and the trajectory of US bond yields. But, what’s new with this picture as the market has been second-guessing the emerging bullish dollar narrative since Mid-April and missing out on 550 pips EURUSD  downside move

If the market continues to trade off US yields and diverging economic data between the US and EU, it’s hard to argue against the current direction in yields or the dollar. Forget the VIX the DXY is the new fear index if we consider the number of market cracks the dollar has exposed on its recent move.

On the US economic data front, the consumer remains the economy’s backbone, and if this robust trend in the retail space continues to build, factor in a bit of wage growth pressure and the US dollar will continue to move higher on the back of higher yields.

However, the Pound has firmed considerably on Brexit news breaking news from The Telegraph explains. “Britain will tell Brussels it is prepared to stay in the customs union beyond 2021 as ministers remain deadlocked over a future deal with the EU, the Telegraph has learned.” which has towed the EURUSD gingerly higher in early APAC trade

EUR:  With the EURUSD back above 1.1800, we’re at a make or break point for judging near term trader sentiment. Over the next 48 hours will be telling, as the bulls and bears jostled for position but provided the EURUSD can finish the week below 1.1850, that would suggest the bullish USD story remains intact. But a close below 1.1775 would be even more convincing

JPY: Similarly, a weekly market close above 110 indicates the near term USD rally continues. The correlation between rates feels right, and the USDJPY could be the best bet to express the USD dollar bullish bias near-term

AUD: It remains to confuse by not trading in line with US fixed income. And even more frustrating for the Aussie bears is the copper continues to sell poorly. After yesterday miss on the wage price index, a lot of buying emerged. Far much more than usual, suggesting some real cash interest on the dip possible from resting orders. ( Exporters??)
Oil Markets
Oil prices resumed their climb Wednesday after shrugging off Tuesday’s API data as investors turned focuses on the key Energy Information Administration report which highlighted an unexpected draw of 1.4 million barrels for the week to May 11. Of course, more attention will fall on EIA given that the API is a voluntary metric and, at times entirely off the wall, whereas EIA reporting is a mandatory industry regulation and the preferred metric for short-term investors. None the less, divergence in the reports will leave some investors scratching their heads as this week’s API data provided traders with more questions than answers.

With the dual supply shortcomings from Iran and Venezuela providing substantial support and given we’re not even in peak July driving season, at least for the short term, it’s hard to imagine Oil prices giving up too much ground especially on bearish inference from one of highly unpredictable US Oil inventory reports. Dips continue to look attractive in this environment.

Gold Markets
Gold remains under pressure from the US dollar and utterly vulnerable to higher US bond yields which are showing signs of a significant topside breakout after the 10-year Treasury note yield hit 3.1 % overnight. The inflationary overtones from oil prices coupled with a substantial US retail sales print have increased Fed rate hike expectations. As the trickle-down effects from US fiscal stimulus continue to show in the data, bond yields will move higher, but ultimately the positive data prints will leave a larger than life footprint on Fed members interest rate views and challenge the current dot plot scenario.
Malaysia Markets

Not unexpected the political noise, stronger USD and higher US Treasury yields continue to dent sentiment in local markets.  But given the higher US Bond Yields, I expect the USDMYR to grind higher over the short term in line with the broader USDASia basket.

 

Stephen Innes OANDA Head of Trading APAC

USD/CAD – Canadian Dollar Gains Ground on Strong Manufacturing Report

The Canadian dollar has rebounded on Wednesday, after three straight winning sessions. In the North American session, USD/CAD is trading at 1.2819, down 0.45% on the day. On the release front, Canadian Manufacturing Production dropped to 1.4%, but still beat the estimate of 1.1%. In the US, construction numbers were mixed. Building Permits remained steady at 1.35 million, matching the forecast. Housing Starts dropped to 1.29 million, short of the estimate of 1.32 million.

In the U.S, retail sales reports were shy of the estimates in April, but investors preferred to focus on the positive, noting that both retail sales and core retail sales posted gains, as consumer spending is improving after a sluggish first quarter. A new concern is higher gas prices, which could put a dent in consumers’ wallets and hurt spending. Oil prices have hit their highest levels in over 3 years, and with the US leaving the Iran nuclear deal and escalating tensions in the Middle East, gasoline prices could remain at high levels.

The Trump administration is offering Canada a carrot (or is it more of a stick?) in the NAFTA negotiations. At the end of April, Trump gave both Canada and Mexico another 30-day exemption on steel and aluminum tariffs, lasting until June 1. Earlier in the week, U.S 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.

I’m a believer

Italian Politics Pounds Euro

USD/CAD Fundamentals

Wednesday (May 16)

  • 8:30 Canadian Manufacturing Sales. Estimate 1.1%. Actual 1.4%
  • 8:30 US Building Permits. Estimate 1.35M. Actual 1.35M
  • 8:30 US FOMC Member Raphael Bostic Speaks
  • 8:30 US Housing Starts. Estimate 1.32M. Actual 1.29M
  • 9:15 US Capacity Utilization Rate. Estimate 78.4%. Actual 78.0%
  • 9:15 US Industrial Production. Estimate 0.6%. Actual 0.7%
  • 10:00 US Mortgage Delinquencies
  • 10:30 US Crude Oil Inventories. Estimate -1.1M

Thursday (May 17)

  • 8:30 Canadian Foreign Securities Purchases
  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.1
  • 8:30 US Unemployment Claims. Estimate 219K

*All release times are DST

*Key events are in bold

 

USD/CAD for Wednesday, May 16, 2018

USD/CAD, May 16 at 9:40 DST

Open: 1.2878 High: 1.2877 Low: 1.2813 Close: 1.2818

 

USD/CAD Technical

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

USD/CAD showed limited movement in the Asian and European sessions. The pair has edged lower in North American trade

  • 1.2757 is providing support
  • 1.2850 has switched to a resistance role after losses by USD/CAD
  • 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 almost unchanged in the Wednesday session Currently, short positions have a majority (54%), indicative of trader bias towards USD/CAD continuing to move downwards.

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 Softer, German and Eurozone CPI Match Expectations

EUR/USD has posted losses in the Wednesday session, continuing the downward trend we saw on Tuesday. Currently, the pair is trading at 1.1803, down 0.31% on the day. On the release front, German and eurozone CPI releases matched their estimates. ECB President Mario Draghi will speak at an ECB event in Frankfurt. In the U.S, Housing Starts and Building Permits are expected to remain unchanged, at 1.32 million and 1.35 million, respectively. On Thursday, the U.S releases Philly Fed Manufacturing Index and unemployment claims.

German Final CPI continues to lose ground. The indicator dropped to 0.0%, marking a 3-month low. Eurozone Final CPI edged lower to 1.2%, down from 1.3% a month earlier. Eurozone Final Core CPI followed a similar trend, dropping from 1.0% to 0.7%. If inflation levels continue to soften, the ECB will have to consider extending its stimulus scheme, which is scheduled to run until September. Germany will release additional inflation numbers on Friday.

First-quarter eurozone and German GDP data were within expectations, but investors should not become too sanguine, as the numbers pointed to a slowdown in the eurozone economy. Both Germany and the eurozone posted gains of 0.6% in the fourth quarter of 2017. Will economic conditions improve in Q2? Institutional analysts don’t seem optimistic, according to the well-respected ZEW Economic Sentiment surveys. The German indicator posted a sharp drop of -8.2 for a second straight month – the first declines since July 2016. The eurozone release improved to 2.4, but low reading certainly doesn’t show much optimism. The markets are bracing for more soft numbers on Wednesday, as Germany and eurozone release CPI reports. If these indicators miss their estimates, the euro could lose ground.

I’m a believer

Italian Politics Pounds Euro

EUR/USD Fundamentals

Wednesday (May 16)

  • 2:00 German Final CPI. Estimate 0.0%. Actual 0.0%
  • 5:00 Eurozone Final CPI. Estimate 1.2%. Actual 1.2%
  • 5:00 Eurozone Final Core CPI. Estimate 0.7%. Actual 0.7%
  • 5:35 German 10-year Bond Auction. Actual 0.62%
  • 8:00 ECB President Mario Draghi Speaks
  • 8:30 US Building Permits. Estimate 1.35M
  • 8:30 US FOMC Member Raphael Bostic Speaks
  • 8:30 US Housing Starts. Estimate 1.32M
  • 9:15 US Capacity Utilization Rate. Estimate 78.4%
  • 9:15 US Industrial Production. Estimate 0.6%
  • 10:00 US Mortgage Delinquencies
  • 10:30 US Crude Oil Inventories. Estimate -1.1M

Thursday (May 17)

  • 8:30 US Philly Fed Manufacturing Index. Estimate 21.1
  • 8:30 US Unemployment Claims. Estimate 219K

*All release times are DST

*Key events are in bold

 

EUR/USD for Wednesday, May 16, 2018

EUR/USD for May 16 at 6:30 DST

Open: 1.1837 High: 1.1854 Low: 1.1802 Close: 1.1803

 

EUR/USD Technical

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

EUR/USD continues to break below support levels this week. The pair inched lower in the Asian session but then recovered. EUR/USD has edged lower in European trade

  • 1.1718 is a providing support
  • 1.1809 has switched to a resistance role after losses by EUR/USD on Wednesday. It is a weak line

Further levels in both directions:

  • Below: 1.1718, 1.1613 and 1.1448
  • Above: 1.1809, 1.1915, 1.2025 and 1.2092
  • 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 small majority (52%), indicative of a slight trader bias towards EUR/USD 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.

I’m a believer

I’m a believer

The promising US Retail sales data left a resound footprint on global markets as US consumers are loosening their purse strings, but perhaps more important from an investor perspective, the data speaks directly and plainly while providing a linear gauge of the trickle-down effects from fiscal stimulus. Indeed, green shoots start to emerge.

The UST 10Y closed above the critical and pivotal 3.05 % area which encouraged the dollar Bulls to hammer the EURUSD down to critical structural support levels. While the clearest dollar bull signal is from US 10y yields, but with trader humming the iconically cool ” I’m a Believer” this morning, there’s permanence building as waves of fresh dollar longs hit the books.

Oil Markets
Despite OPEC oil demand forecasts amidst China’s unquenching thirst for crude oil rising, bullish Asia sentiment seems to have gone off the boil after China reported weaker-than-expected investment and retail sales in April, muddying its economic outlook suggesting the domestic surge in refinery runs could be short-lived.

The stronger dollar typically causes a bit of indecision as investors usually back off from commodity risk when the US dollar strengthens.

The API reported a surprise inventory build for the week ending May 11 which caused some intraday long positions to cut risk.

But at the end of the day, Oil markets remain supported by the usual suspects, Iran and Venezuela and OPEC compliance suggesting Oil remains a buy on the dip.

Gold Markets

Gold finally succumbed to the $1300 level as the stronger USD dollar ran roughshod through COMEX gold overnight. But with Gold positioning on CFTC significantly reduced against much of the year, mirroring the money flows into the USD over the past month, there wasn’t a lot of market stress on the move from a flow perspective.

Shifting interest rate dynamics on the back of oil-driven inflation expectations with the stronger USD in tow suggests we could see an extension lower. But ultimately the longer term inflationary pressures, especially with real interest rates expected to stay historically low, gold should continue to find support. However.,logic suggests letting et the dust settle, as bullish signals have remained far and few between of late.
G-10 Currencies

EUR: The US retail sales number triggered a massive currency reaction on the back of UST 10 Y yields rocketing higher. While the market is tentatively finding support at the critical 1.1820-25 level, it’s hard to argue the current direction given the surging US yields which suggest we could print in the 1.17 handle sooner than later.

JPY: USDJPY soared as the US Treasury yield rally spotlight on the interest rate policy divergence between the Bank of Japan and the Fed. USDJPY rose from 109.91 at the NY open to 110.44. However, Yonhap reported North Korea is cancelling its meeting with South Korea for Wednesday and threatening to withdraw from its summit with Trump – all because of US-South Korea drills. Which has seemingly capped, at least for the time being, USDJPY upward momentum

Malaysia

The local markets are going through a period of inflexion. After navigating a potentially high-risk election, as investors are taking a well-deserved breather after coming out relatively unscathed.

But with the US dollar trading stronger across the EM Asia Basket and in G-10 space the Ringgit will struggle to make any inroads today Especially with the US 10 years UST surging to 3.08 overnight.

Investors are unlikely to flock back into the Ringgit end masse over the next week especially with the USD surging and US yields punching higher and oil prices off their latest high-water mark.

We should expect a bit of a bumpy ride over the next few weeks as soon as the government lays all their policy cards on the table. Yesterday Malaysia’s new Council of Eminent Persons briefed the public on its activities, but the main take away is that fiscal reforms will shade more towards cost cuts to offset GST removal at this stage and should be good enough to keep the prey Credit agencies eyes at bay for the time being.

Stephen Innes OANDA Head of Trading AOAC

China Data Flash

10:00*(CN) CHINA APR INDUSTRIAL PRODUCTION Y/Y: 7.0% V 6.4%E; YTD Y/Y: % V 6.7%E– Source TradeTheNews.com

10:00(CN) China Apr Fixed Assets Urban YTD y/y: 7.0% v 7.4%e– Source TradeTheNews.com

10:00*(CN) CHINA APR RETAIL SALES Y/Y: 9.4% V 10.0%E; YTD Y/Y: % V 9.9%E– Source TradeTheNews.com

A bit of a saw off on the critical CNY data dump with both Retail Sales and Fixed Asset spending missing the mark but Industrial Production surprising to the upside. Since Chin’s new wealth consumer will continue to spend, the IP increase suggests the economy remains steady. But the market was looking for more convincing data; and we’re seeing a bit of wobble on WTI/BCO and commodity markets in general.But given the Lunar New Year holiday effect, we shouldn’t get too much of a negative reaction