Tag: Forex Analysis

FX Update – August 11 – Risk On Vibe?
Forex News

FX Update – August 11 – Risk On Vibe?

USDIndex, Daily The narrow trade-weighted USDIndex edged out a one-week high at 93.71, making this the third consecutive trading day a higher high has been seen. A softer tone in the Euro has in part given buoyancy to the index while pushing EURUSD to a one-week low, at 1.1723. EURJPY concurrently rose about 40 pips to a peak at 124.75. USDJPY remained firm, but remained just shy of the one-week high seen yesterday at 106.21. AUDUSD ebbed back under 0.7150, leaving highs at 0.7185/86, though still remained net higher on the day, while AUDJPY pegged a four-day high. USDCAD ebbed to a four-day low at 1.3320, reflecting a modest degree of outperformance in the Canadian Dollar, which has been concomitant with oil prices edging out new highs. Front-month USOil futures printed a one-week high a...
The Electoral College & The Swing States
Forex News

The Electoral College & The Swing States

It is less than 3 months to November 3rd and markets now have another key event to focus upon: the US 2020 Presidential Election. Early opinion polls have had the Democratic contender, Vice President Joe Biden, ahead of the incumbent, Republican President Donald Trump, for some months, both nationally and in the key swing states. However, all is still to play for with many weeks of campaigning still to be completed. Incumbent Presidents tend to get re-elected; only George W Bush Senior in 1992, who lost to Bill Clinton, and Jimmy Carter in 1980, who lost to Ronald Reagan, have failed to be re-elected in recent history. Under President Trump equity markets continued to rally, unemployment fell, and the USD remained broadly robust as business taxes were cut and regulations were rolled back...
Forex News

FX Update – Ahead of NFP, USD finds a bid

The narrow trade-weighted USDIndex (DXY) posted a two-day high at 93.16, extending the rebound from the 27-month low seen yesterday at 92.53. EURUSD concurrently retreated to a 1.1819 low, which is a pip shy of yesterday’s low and 2 pips shy of making it a big figure correction from yesterday’s 27-month peak. Cable posted a two-day low at 1.3098, drawing back from the 1.3187 five-month peak seen Thursday following the warily upbeat BoE outlook. USDJPY continued to ply a narrow range (less than 15 pips) around the 105.50 mark. Both the Aussie and Kiwi Dollars corrected moderately as the US currency firmed. AUDUSD, after first edging out a high at 0.7243, which matches Wednesday’s 18-month peak, ebbed to a low at 0.7196. USDCAD lifted to a three-day high at 1.3372. Front-month USOil futures...
More mixed news on US Jobs ahead of NFP
Forex News

More mixed news on US Jobs ahead of NFP

US initial jobless claims dropped -249,000 to 1,186,000 in the week ended August 1. That breaks a worrisome rise in claims the prior two weeks with a revised 13,000 uptick to 1,435,000 (was 1,434,000) over the last week of July, and a 114,000 pop to 1,422,000 in the July 18 week. It’s the lowest since March 14, just before the pandemic shut the economy, and the 20th consecutive week initial claims have been over 1,000,000. The 4-week moving average slid to 1,337,800 from 1,368.750 (was 1,368,500). Continuing claims declined -844,000 to 16,107,000 in the July 25 week versus the revised 800,000 bounce to 16,951,000 (was 17,018,000). The report is better than expected all the way around, though it still reflects hefty weakness in the labor market. We now have a -2,280,000 continuing claims ...
Forex News

Sterling Bid following BOE

GBPUSD, H1 The Pound has outperformed on the BoE’s guidance, which gave a cautiously optimistic take on the outlook, stating that the lockdown-induced downturn is less severe than initially foreseen. Cable posted a new five-month peak at 1.3184, while EURGBP fell nearly 0.5% to a two-day low at 0.9000. The Pound has also gained about 0.5% versus the Australian Dollar, and is up on the Yen and other currencies, too. The BoE left the repo rate at 0.10% and asset purchases totals unchanged, as had been widely anticipated. While the statement highlighted the likely sharp decline in Q2 activity levels, with GDP seen down around -20% y/y, it also noted the rebound in more timely higher-frequency indicators and a pick-up in housing market activity, and said that it expects a rebound, albeit gra...
After ADP, Payrolls rise expected barring any surprises with tomorrow’s claims
Forex News

After ADP, Payrolls rise expected barring any surprises with tomorrow’s claims

The lean 167k July ADP payroll rise undershot our 1,900k private BLS payroll estimate with a 2,600k total BLS payroll gain. We also saw the expected big boost in the June ADP gain to 4,314k from 2,369k that narrowed the gap to the 4,767, BLS private payroll increase in that month. The ADP climb defied the improvement in the continuing and initial claims data for the period and other evidence that production continued to rise despite delays in re-openings for the retail sector. The ADP figures have done a poor job of signaling monthly BLS payroll changes, and we still expect a further July climb in payrolls barring any surprises with tomorrow’s claims data. There is a 12-month average “as reported” ADP drop through June of -1,608k, versus a 12-month average drop for BLS private payrolls of...
USOil – Reduced Production and Economic Recovery
Commodities, Forex News

USOil – Reduced Production and Economic Recovery

Crude Oil Looks Neutral USOIL trades have been in the range of $39.20 – $41.90 since the beginning of July. Various factors drive the oil market, all of which eventually affect the market’s supply and demand. On the supply front, OPEC+ agreed to reduce its output from 9.7 million barrels per day to 7.7 million barrels per day from August, which was decided at its last meeting in mid-July. There were indications that some countries were not living up to their previous commitment, however, which meant more supply. On the other hand, demand is in the spotlight too. How can we understand that demand is growing? Some of the signals for it can be examined, such as GDP, retail, industrial and factory production data, as well as index data of purchasing managers. The latest PMI data released earl...
Forex News

Sterling and BoE Preview

Sterling put in a rare week of outperformance last week, printing a new 5-month peak against the USD, 3-week highs versus the EUR and 8-month highs against the JPY. There are some positive factors with regard to the UK. One is the pick-up in the pace of economic recovery, as evidenced by; the much stronger than forecast preliminary July PMI data (outperforming Eurozone PMIs and showing the private sector to be back in expansion for the first time since lockdown) and the CBI’s July distributive sales report, which flagged a near full recovery in the retail sector (by rising to a +4 headline, up from -37 in June and the best reading since April last year, with sales in upcoming months seen at near seasonal norms). Helping the Pound last week were also signs that have led markets...
RBA: What we shall focus on from the RBA’s meeting
Forex News

RBA: What we shall focus on from the RBA’s meeting

The RBA’s meeting is in focus ahead of Asia Session. No change is anticipated  to the 0.25% rate setting. The Bank has expressed its commitment to ease credit conditions, seeking to support the economy as it recovers from the lockdown. In July’s minutes the bank said that negative rates are “extraordinarily unlikely” and that there is no case for intervention in the foreign exchange market, given its limited effectiveness when the exchange rate is broadly aligned with its fundamental determinants. At the same time RBA members “reaffirmed the importance of the longstanding principle of separating monetary policy from the financing of government”. Separately RBA’s Lowe also repeated in a speech that the AUD is broadly in line with fundamentals, which mirrored the sentiment of the minutes. L...
FX Update – July 31 – Dollar Down Again
Forex News

FX Update – July 31 – Dollar Down Again

USDIndex, Monthly The Dollar continued lower in what is now the biggest monthly decline the US currency has seen in a decade. The narrow trade-weighted USDIndex printed a fresh 26-month low at 92.49, the culmination of a 5% decline from the finishing level in June and marking just over a 10% drop from the highs seen in early March. US Treasury yields have printed fresh lows, with the 30-year bond in record low territory, extending declines seen since yesterday’s release of US Q2 GDP data, which came in at a dismal -32.9% y/y, although this met the consensus expectation. President Trump’s tweeted suggestion that the presidential election in November should be postponed has also been in the mix, adding a political element to arguments that the pandemic has precipitated a further erosion in ...