;

Market Watch

July 10, 2019

Daily Insight

Americas

Fed Chairman Powell begins two days of testimony before Congress as he delivers the Federal Reserve’s semi-annual Monetary Policy Report. His testimony will be closely scrutinized for clues into the possibility of a near-term rate cut and how last Friday’s positive jobs report has impacted the Fed’s economic outlook.

The Bank of Canada releases its latest rate policy decision today. The expectation is for no change, leaving the overnight lending rate at 1.75%. Canada’s recent strong economic performance has bolstered the BoC’s hawkish stance and has fueled the Canadian dollar’s strength this year.

Yesterday’s abrupt resignation of Mexico’s finance minister continues to reverberate in the currency markets today, driving peso weakness to multi-week lows. The peso closed yesterday with a 1.27% decline vs. the dollar and is currently down another 0.49% today. Near-term resistance is seen at 19.3000.

trends*

USD   JPY
USD
 / 
JPY
EUR   USD
EUR
 / 
USD
EUR   GBP
EUR
 / 
GBP
GBP   USD
GBP
 / 
USD
USD   CHF
USD
 / 
CHF
AUD   USD
AUD
 / 
USD
USD   CAD
USD
 / 
CAD
USD   MXN
USD
 / 
MXN
USD   CNH
USD
 / 
CNH

economic calendar

Wednesday - 10

8:30AM ET
USD - Fed Chairman Testimony to Congress
10AM ET
CAD - Bank of Canada Rate Decision

Market Indicators

HIGH

LOW

USD/JPY

108.99
108.53

EUR/USD

1.1255
1.1202

GBP/USD

1.2521
1.2444

USD/CHF

0.9942
0.9888

AUD/USD

0.696
0.6911

USD/CAD

1.3137
1.3072

DOW

26783.26

NASDAQ

8141.72

OIL

59.15

GOLD

1411.5

Market Watch

July 08, 2019

Daily Insight

Americas

The USD has had a strong start to the month with the Dollar Index gaining 1.20% MTD. July’s gain recoups a significant portion of June’s DXY decline of 1.66%. The dollar’s gains among the G10 currencies are concentrated against the European pairs… +0.89% vs. the GBP & SEK, +0.57% vs. the NOK, and +0.54% vs. the EUR, and smaller gains vs. the DKK and CHF.

The US dollar’s Achilles heel has recently been the Canadian dollar which has gained 0.57% against the greenback during July, adding to June’s out sized gain of 2.62%. The CAD’s advance is attributed to a string of isolated events, namely (1) the Fed’s shift in rate policy outlook on June 19th; (2) the bombing attack on two oil tankers near the Persian Gulf; (3) the shooting down of a US military drone on June 20th; and (4) the explosion on June 19th and subsequent permanent closure of the Philadelphia Energy Solutions oil refinery in Pennsylvania, the largest refinery operation on the Eastern Seaboard. Each of these events is a reason to buy the CAD, and the nearly daily unfolding created a synergy favoring CAD strength.

Friday’s Nonfarm Payrolls report showed a gain of 224K jobs vs. a 160K estimate. This is a significant outperform and stark improvement over the previous month’s jobs report of 75K.

trends*

USD   JPY
USD
 / 
JPY
EUR   USD
EUR
 / 
USD
EUR   GBP
EUR
 / 
GBP
GBP   USD
GBP
 / 
USD
USD   CHF
USD
 / 
CHF
AUD   USD
AUD
 / 
USD
USD   CAD
USD
 / 
CAD
USD   MXN
USD
 / 
MXN
USD   CNH
USD
 / 
CNH

economic calendar

Wednesday - 10

7AM ET
USD - MBA Mortgage Applications
2PM ET
USD - FOMC Meeting Minutes

Thursday - 11

8:30AM ET
USD - CPI

Market Indicators

HIGH

LOW

USD/JPY

108.68
108.28

EUR/USD

1.1234
1.1213

GBP/USD

1.254
1.25

USD/CHF

0.9944
0.9899

AUD/USD

0.6994
0.6974

USD/CAD

1.3083
1.3049

DOW

26769.25

NASDAQ

8085.16

OIL

57.65

GOLD

1403.7

Market Watch

June 26, 2019

Daily Insight

Americas

U.S. Housing Price data released yesterday for April showed housing prices unchanged compared to last month, vs. an estimated 0.10% increase. And on a year-over-year basis April home price increases for 2019, at +2.54%, were slightly behind last year’s pace of +2.68%.

New Home Sales data for May (also released yesterday) was a disappointing -7.8%, compared to the market estimate of +1.6%. May’s decline outpaced April’s -6.9% drop.

Consumer Confidence for June was reported at 121.50, well below both the market estimate of 131.0 and the prior reading of 134.10.

Yesterday Federal Reserve Chairman Powell underscored the Fed’s recent view that the U.S. economy is in the early stages of a downturn and reaffirmed the Fed’s commitment to adjust fiscal policy as needed.

Federal Reserve President Bullard also made headlines yesterday in an interview on Bloomberg TV but struck a more hawkish tone when he said that any rate cuts would be ‘in the realm of insurance’ and that a 50bps cut would be overdone. Bullard has been an outspoken ‘dove’ and was the only Fed President to cast a dissenting vote in the FOMC’s recent policy decision to keep rates unchanged.

The dollar’s recent selloff has paused as support for the U.S Dollar Index at 96.00 developed over the last three days. The DXY had declined 1.7% following the release of last week’s FOMC policy statement where the Fed signaled two rate cuts by the end of 2019.

 

trends*

USD   JPY
USD
 / 
JPY
EUR   USD
EUR
 / 
USD
EUR   GBP
EUR
 / 
GBP
GBP   USD
GBP
 / 
USD
USD   CHF
USD
 / 
CHF
AUD   USD
AUD
 / 
USD
USD   CAD
USD
 / 
CAD
USD   MXN
USD
 / 
MXN
USD   CNH
USD
 / 
CNH

economic calendar

Friday - 28

10AM ET
USD- U. of Michigan Consumer Survey

Market Indicators

HIGH

LOW

USD/JPY

107.76
107.1

EUR/USD

1.1374
1.1348

GBP/USD

1.2707
1.2663

USD/CHF

0.9785
0.9744

AUD/USD

0.6995
0.6952

USD/CAD

1.3196
1.3142

DOW

26584.26

NASDAQ

7652.61

OIL

59.28

GOLD

1409.8

Market Watch

June 20, 2019

Daily Insight

Americas

In yesterday’s FOMC policy statement the Fed left rates unchanged (as expected) and removed the phrasing that included the word ‘patient’ and replaced it with more accommodative language, i.e. ‘closely monitor’ (also as expected). The markets anticipated a more ‘dovish’ tone from the Fed, but given the dollar’s selloff following the policy announcement, it’s clear the Fed went beyond what was expected. So what else did they say? A few key changes from the Fed’s May policy statement:

·         Economic activity went from ‘solid’ to ‘moderate’

·         Inflation compensation went from ‘low’ to ‘declined’

·         ‘Uncertainties have increased’

·         ‘patient’ to ‘closely monitor’

In the wake of the Fed’s announcement the US Dollar Index declined 0.54% yesterday and is currently down 0.47% today at 96.662. Next medium-term support is seen at 95.400, or 1.3% below current levels.

The dollar has declined against each of its G10 peers but not all losses are equal. The primary declines today are against the NOK (-1.71%), CHF (-1.11%), SEK (-0.86%), NZD (-0.75%), CAD (-0.74%), and AUD (-0.67%).

Dollar declines have been exacerbated against currencies with exposure to oil (particularly the NOK, CAD, and AUD) due to the overnight downing of a U.S. military drone by Iran. Increasing tensions in the Middle East have led to an increase of 7.90% in oil prices over the last three days.

USDCAD: Currently trading below long-term trendline support at 1.3250. Next support at 1.3090 and 1.2900.

USDMXN: Support seen at 18.7400 and 18.5000. Resistance at 19.4900 and higher at 19.7500.

trends*

USD   JPY
USD
 / 
JPY
EUR   USD
EUR
 / 
USD
EUR   GBP
EUR
 / 
GBP
GBP   USD
GBP
 / 
USD
USD   CHF
USD
 / 
CHF
AUD   USD
AUD
 / 
USD
USD   CAD
USD
 / 
CAD
USD   MXN
USD
 / 
MXN
USD   CNH
USD
 / 
CNH

economic calendar

Friday - 21

10AM ET
USD - Existing Home Sales
8:30AM ET
CAD - Retail Sales MoM
9AM ET
MXN - Aggregate Supply and Demand

Market Indicators

HIGH

LOW

USD/JPY

108.14
107.47

EUR/USD

1.3317
1.1226

GBP/USD

1.2727
1.2633

USD/CHF

0.9946
0.9829

AUD/USD

0.6936
0.6879

USD/CAD

1.3286
1.3151

DOW

26747.26

NASDAQ

8078.55

OIL

55.4

GOLD

1386.7

Market Watch

June 19, 2019

Daily Insight

Americas

Overnight FX trading ranges were narrow ahead of today’s FOMC rate policy decision. The US Dollar Index is lower by 0.09% with only a 0.15% difference between the day’s high and low.

Today’s Fed rate statement is set for release at 2pm EDT (the policy statement is usually three paragraphs and averages 280 words). While the expectation is for no rate change, the policy statement will likely reflect a shift towards a more accommodative stance due to persistently low inflation readings and worrying signs from the global economy.

The specific focus of the policy statement will be on whether the word ‘patient’ is dropped and replaced with language more suggestive of future rate cuts (to be read as ‘we have lost patience in waiting for inflation to surface and will adjust rate policy as needed to achieve target levels’).

The risk for today’s announcement is that the market is already ahead of the Fed in the shift towards lower rates. Since it is unlikely that the Fed will be as dovish as expected, dollar strength will be the likely path following the Fed’s statement.

USDCAD – Inflation data released for Canada today was reported above expectations. CPI (YoY) was reported at 2.4% vs. the 2.1% estimate. And month-over-month CPI was reported at 0.4%, above the expected 0.1% increase. USDCAD gapped lower in response to the positive data, the US dollar losing as much as 0.33%.

trends*

USD   JPY
USD
 / 
JPY
EUR   USD
EUR
 / 
USD
EUR   GBP
EUR
 / 
GBP
GBP   USD
GBP
 / 
USD
USD   CHF
USD
 / 
CHF
AUD   USD
AUD
 / 
USD
USD   CAD
USD
 / 
CAD
USD   MXN
USD
 / 
MXN
USD   CNH
USD
 / 
CNH

economic calendar

Wednesday - 19

2PM ET
USD - FOMC Rate Decision

Friday - 21

830AM ET
CAD - Retail Sales

Market Indicators

HIGH

LOW

USD/JPY

108.62
108.24

EUR/USD

1.1208
1.1187

GBP/USD

1.2608
1.2543

USD/CHF

1.0015
0.9966

AUD/USD

0.6886
0.6855

USD/CAD

1.3383
1.3337

DOW

26315.27

NASDAQ

7950.53

OIL

53.95

GOLD

1347.1

Market Watch

June 18, 2019

Daily Insight

Americas

The FOMC started its two-day policy meeting today. Given the recent global economic turmoil stemming from US/China trade and ongoing Brexit uncertainty, combined with the malignant absence of inflation and new signs of a contracting U.S. economy, this week’s meetings will be anything but business-as-usual. The probability of a Fed rate cut has risen steadily, increasing from 0% last November to 22.9% for tomorrow’s announcement. For next month’s policy meeting (07/31) the probability of a rate cut has increased from 0% to 89.20% over the same period. While some analysts are predicting a rate cut at tomorrow’s statement the most we are likely to see from the Fed is a shift towards a more dovish (accommodative) tone.

ECB President Draghi rattled the rate cut saber in comments overnight. Lagging inflation and deteriorating economic fundamentals in the EU have prompted the ECB’s recent shift to threats of added stimulus. The EURUSD declined as much as 0.55% shortly following the remarks and remains down 0.24% during today’s session.

Canadian Manufacturing Sales data for April was released today and came in at -0.6% vs. the estimate of 0.4%. Any time the actual has a different sign than the estimate is a significant miss. 

trends*

USD   JPY
USD
 / 
JPY
EUR   USD
EUR
 / 
USD
EUR   GBP
EUR
 / 
GBP
GBP   USD
GBP
 / 
USD
USD   CHF
USD
 / 
CHF
AUD   USD
AUD
 / 
USD
USD   CAD
USD
 / 
CAD
USD   MXN
USD
 / 
MXN
USD   CNH
USD
 / 
CNH

economic calendar

Tuesday - 18

2PM ET
USD - FOMC Rate Announcement

Market Indicators

HIGH

LOW

USD/JPY

108.68
108.06

EUR/USD

1.1243
1.1181

GBP/USD

1.2553
1.2506

USD/CHF

1.0013
0.9966

AUD/USD

0.6874
0.6832

USD/CAD

1.3432
1.3385

DOW

26483.25

NASDAQ

7994.14

OIL

52.36

GOLD

1349.6

Market Watch

June 13, 2019

Daily Insight

Americas

The U.S. dollar is trading at the day's highs following the release of the IMF's negative outlook on the EU region earlier today. The IMF pointed to global trade tensions and the potential for a no-deal Brexit as shocks to an economy that is already in a prolonged stretch of slow growth/low inflation. The IMF's forecast for the euro-area (characterized as 'precarious') is putting pressure on the EURUSD which is trading at the day's low below 1.1270 as stops at 1.1285 were triggered.

Initial Jobless Claims for the U.S. were released today at 222K, above the forecast 215K. And last week's jobless claims were revised upwards. The combined ADP Employment Survey, last Friday's US Nonfarm Payrolls report, and today's Initial Jobless Claims, taken together, show early signs of a struggling jobs market.

trends*

USD   JPY
USD
 / 
JPY
EUR   USD
EUR
 / 
USD
EUR   GBP
EUR
 / 
GBP
GBP   USD
GBP
 / 
USD
USD   CHF
USD
 / 
CHF
AUD   USD
AUD
 / 
USD
USD   CAD
USD
 / 
CAD
USD   MXN
USD
 / 
MXN
USD   CNH
USD
 / 
CNH

economic calendar

Friday - 14

6:30AM ET
USD - Retail Sales
7:15AM ET
USD - Industrial Production
7AM ET
CAD - Existing Home Sales

Market Indicators

HIGH

LOW

USD/JPY

108.54
108.17

EUR/USD

1.1304
1.1272

GBP/USD

1.2708
1.2662

USD/CHF

0.9961
0.9918

AUD/USD

0.6937
0.6902

USD/CAD

1.3344
1.33

DOW

26065.05

NASDAQ

7831.66

OIL

52.86

GOLD

1339.8

Market Watch

June 12, 2019

Daily Insight

Americas

The U.S. Dollar Index has found its footing near support at 96.60 after falling from May's 98.144 high close. The one-two punch of dovish Fed statements and last week's disappointing jobs data precipitated the dollar's recent 1.57% decline.

The Canadian dollar currently holds the biggest month-to-date gain (of the G10 pairs) vs. the greenback at +1.72%. Employment data for Canada released last week surprised to the upside with jobs gains of 27K (vs. a +5K estimate) and the unemployment rate dropping to 5.4% from 5.7%. Weekly resistance is at 1.3300 and medium-term trendline support at 1.3205.

USDMXN has encountered atypical volatility during the last two weeks, triggered by the Trump Administration's announcement of new tariffs on Mexican goods on May 31st. In response to the new tariffs the USDMXN jumped from 19.1710 on May 31st to an intra-day high of 19.8787 on June 3rd, or a gain of 3.69% for the dollar. * Now that the tariffs have been shelved, the dollar has surrendered its gains to trade as low as 19.0820 intraday. Short-term support is developing at 19.1300 and resistance is seen at 19.3000. * In the medium-term the USDMXN is trading back within its pre-tariff sideways range of 18.9000/19.2500. A key takeaway from the Mexican tariff crisis is the significant resistance encountered at 19.8000.

trends*

USD   JPY
USD
 / 
JPY
EUR   USD
EUR
 / 
USD
EUR   GBP
EUR
 / 
GBP
GBP   USD
GBP
 / 
USD
USD   CHF
USD
 / 
CHF
AUD   USD
AUD
 / 
USD
USD   CAD
USD
 / 
CAD
USD   MXN
USD
 / 
MXN
USD   CNH
USD
 / 
CNH

economic calendar

Thursday - 13

6:30AM ET
USD - Initial Jobless Claims
6:30AM ET
CAD - New Housing Price Index

Friday - 14

6:30AM ET
USD - Retail Sales
7:15AM ET
USD - Industrial Production
8:00AM ET
USD - Consumer Sentiment

Market Indicators

HIGH

LOW

USD/JPY

108.57
108.22

EUR/USD

1.1343
1.1307

GBP/USD

1.2759
1.2715

USD/CHF

0.9955
0.9903

AUD/USD

0.6964
0.6942

USD/CAD

1.3305
1.3278

DOW

26019.72

NASDAQ

7790.445

OIL

52.05

GOLD

1337.8

Market Watch

June 07, 2019

Daily Insight

Americas

The Nonfarm Payrolls report for May was released today, showing a change of +75K, well below the market estimate of +175K. Today's report validates Wednesday's ADP Employment report which also came in significantly below expectations. Early signs of weakness in the labor market are being interpreted as giving the Fed clearance to begin a series of rate cuts. Following today's employment report the probability of a cut at the FOMC's June meeting jumped from 19.7% to 29.2%, and from 66.3% to 78.5% at their July meeting.

The dollar is sharply weaker following the report as the US Dollar Index is -0.55% during today's session, and is at a 3-month low at 96.510.

For the second day in a row the dollar is lower against all of the G10 currencies, with the biggest declines against the NOK (-0.95%), and NZD (-0.88%). Other declines are vs. the CAD (-0.66%), AUD (-0.62%), EUR (-0.60%) and GBP (-0.51%).

trends*

USD   JPY
USD
 / 
JPY
EUR   USD
EUR
 / 
USD
EUR   GBP
EUR
 / 
GBP
GBP   USD
GBP
 / 
USD
USD   CHF
USD
 / 
CHF
AUD   USD
AUD
 / 
USD
USD   CAD
USD
 / 
CAD
USD   MXN
USD
 / 
MXN
USD   CNH
USD
 / 
CNH

economic calendar

Tuesday - 11

6:30AM ET
USD - Producer Price Index

Wednesday - 12

6:30AM ET
USD - CPI

Market Indicators

HIGH

LOW

USD/JPY

108.62
107.88

EUR/USD

1.1348
1.1251

GBP/USD

1.2761
1.2689

USD/CHF

0.995
0.9862

AUD/USD

0.7022
0.6964

USD/CAD

1.3368
1.3264

DOW

26056.57

NASDAQ

7759.63

OIL

52.86

GOLD

1350.5

*The arrows indicate how the base currency performed against the counter currency overnight. This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.