;

Market Watch

May 24, 2019

Daily Insight

Americas

Today UK Prime Minister Theresa May announced her resignation, effective June 7th. The contest for new Conservative leadership is expected to be complete by the end of July, with Boris Johnson the odds-on favorite as May’s replacement. Johnson has been a leading ‘Brexiteer’, prompting JP Morgan to raise the likelihood of a no-deal (‘hard’) exit to 25% from the previous 15%.

The Pound Sterling initially strengthened following May’s announcement, with the GBPUSD trading as high as 1.2718, or +0.51% compared to yesterday’s close. The pound has since surrendered some of those gains but remains higher for the day.

The dollar is broadly weaker today, following though on yesterday’s losses initiated by fresh tensions over US/China trade. The dollar’s largest percentage declines are against the NOK (-0.60%), SEK (-0.57%), and NZD (-0.41%).

U.S. Durable Goods data released today showed orders declined in April by 2.1%, worse than the consensus estimate of -2.0%. And the prior reading of +2.6% was revised down to +1.7%, a significant negative adjustment.

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 - 28

8AM ET
USD - Consumer Confidence

Wednesday - 29

8AM ET
CAD - Bank of Canada Rate Decision

Market Indicators

HIGH

LOW

USD/JPY

109.75
109.46

EUR/USD

1.1205
1.1175

GBP/USD

1.2718
1.2648

USD/CHF

1.0043
1.0009

AUD/USD

0.6917
0.6881

USD/CAD

1.3482
1.3444

DOW

25654.49

NASDAQ

7688.613

OIL

58.77

GOLD

1287.4

Market Watch

May 21, 2019

Daily Insight

Americas

Overnight the Trump administration loosened trade restrictions placed on Huawei, China’s tech giant and leading manufacturer of smartphones. Last week the U.S. Commerce Department added Huawei to an export blacklist, preventing the company from purchasing almost any U.S. goods, spurring a global equity selloff. Today’s reprieve grants Huawei a 90-day license to continue to receive software updates for its cellphones and was the catalyst for today’s rally in equities.

The DXY (dollar index) is higher today, its 6th daily gain over the last seven trading sessions and is trading above 98.00. Key resistance is nearby at 98.30.

Today’s primary dollar gains are concentrated against the APAC currencies: AUD (+0.56%), NZD (+0.49%), JPY (+0.44), TWD (+0.25%), and SGD (+0.14%). The Australian dollar is trading just above key weekly support at 0.6875. A weekly close below 0.6875 and a monthly close below 0.7015 will trigger system generated sell signals, adding momentum to further AUD declines.

U.S. Existing Homes Sales data released today for April show a gain of 5.19m vs. the estimate 5.35m. The -0.4% decline compared to March was well below the anticipated gain of 2.7%.

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 - 22

12PM ET
USD - FOMC Meeting Minutes

Market Indicators

HIGH

LOW

USD/JPY

110.66
110.02

EUR/USD

1.1188
1.1142

GBP/USD

1.2813
1.2685

USD/CHF

1.012
1.0082

AUD/USD

0.6929
0.6866

USD/CAD

1.3434
1.3396

DOW

25810.42

NASDAQ

7787.06

OIL

63.38

GOLD

1274.3

Market Watch

May 17, 2019

Daily Insight

Americas

The dollar is broadly higher today, driving the U.S Dollar Index to its 5th consecutive daily gain. Ongoing uncertainty surrounding US/China trade tension continues to drive flows towards the traditional ‘safe haven’ currencies (USD, JPY, CHF).

Today the Japanese yen is higher by 0.10% vs. the dollar, bringing the yen’s monthly gain to +1.53% against the greenback. Similarly, the CHF has gained 0.71% vs. the dollar during May. The dollar has made gains of its own, most notably against the GBP at +0.35% today and +2.24% for May.

The pound sterling traded to a fresh 3-month low today following reports of failed Brexit negotiations. Brexit seems to have dropped out of the headlines after the March 29 deadline was extended to October 31. In fact, online searches for ‘Brexit’ headlines have declined by 81% since the week of March 24-30 according to Google Analytics. Nevertheless, the Brexit process continues, along with the potential for volatile trading in the GBP.

The Mexican peso has declined as much as 1.33% vs. the dollar over two days of trading after the Bank of Mexico left the key borrowing rate unchanged at 8.25% at yesterday’s policy announcement. Daily volatility in the USDMXN pair has increased from 9.1074 on April 30th to 11.3746 today (a gain of 24.89%). Resistance at 19.2400 continues to limit the dollar’s advance.

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 - 21

10AM ET
USD - Existing Home Sales

Market Indicators

HIGH

LOW

USD/JPY

110.03
109.5

EUR/USD

1.1184
1.1159

GBP/USD

1.28
1.2733

USD/CHF

1.0117
1.0085

AUD/USD

0.6897
0.6871

USD/CAD

1.3513
1.3457

DOW

25826.88

NASDAQ

7865.79

OIL

63.21

GOLD

1278.5

Market Watch

May 15, 2019

Daily Insight

Americas

The dollar continues to rally from Monday’s selloff (where the DXY traded to a low of 97.028), and is currently trading at 97.675, a rebound of 0.67%. Monday’s weakness was spurred by China’s strategically timed announcement (just before the market open in the U.S.) of retaliatory tariffs on U.S. goods.

Today’s primary gains for the dollar are against the GBP (+0.50%), MXN (+0.35%), AUD (+0.30%), and NZD (+0.27%), with losses against the JPY (-0.24%), and CHF (-0.07%). Today’s activity mirrors the dollar’s performance for the month with MTD gains against the GBP (+1.60%), AUD (+1.31%), MXN (+1.12%), and NZD (+1.00%) and losses against the JPY (-1.85%) and CHF (-1.00%).

The GBPUSD has declined in seven of the last eight daily sessions and is trading at a 3-month low. Next support is seen at 1.2750.

Monthly Retails Sales data was reported for April this morning at -0.2% compared to the estimate of +0.2, a significant miss. Industrial Production and Capacity Utilization for April was also released today and showed a decline of -0.5% vs. the estimate of 0.0% (no change). The duo of disappointing economic results is weighing on equities this morning with the major U.S. indices down 0.50% on average.

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 - 16

8:30AM ET
USD - Housing Starts and Building Permits

Market Indicators

HIGH

LOW

USD/JPY

109.7
109.16

EUR/USD

1.1225
1.1178

GBP/USD

1.2923
1.2827

USD/CHF

1.0092
1.0056

AUD/USD

0.6948
0.6915

USD/CAD

1.3494
1.3457

DOW

25467.86

NASDAQ

2815.08

OIL

61.13

GOLD

1300.5

Market Watch

May 10, 2019

Daily Insight

Americas

The U.S. dollar is lower this morning against all the G10 currencies with notable declines against the NOK (-0.63%), CAD (-0.58%), SEK (-0.41%), and CHF (-0.37%). The dollar’s declines also extend to a broad list of majors/minors including the ZAR (-1.02%) and MXN (-0.38%).

Sentiment shifted against the dollar as updated Consumer Price Index (CPI) data was reported this morning at +0.3% for April compared to the +0.4% estimate. Inflation for April was tied primarily to rising gasoline prices which increased 12% during the month (and 60.4% over three months). Gas price increases are tied to refinery maintenance and unexpected short-term temporary factors so are discounted as truly inflationary. Yesterday’s Producer Price data combined with today’s CPI are the latest in a string of disappointing inflation readings and will require the Fed to continue its ‘patient’ stance on rate policy.

Equities are down this morning as new tariffs of 25% on Chinese goods went into effect early this morning. The S&P500 Index is currently -1.09% today and -3.51% for the week. The CNH (China Renminbi) is down 0.38% vs. the dollar today, extending its decline for the week to -1.91%.

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 - 15

9:15AM ET
USD - Industrial Production

Thursday - 16

8:30AM ET
USD - New Residential Construction

Market Indicators

HIGH

LOW

USD/JPY

110.05
109.5

EUR/USD

1.1254
1.1214

GBP/USD

1.3048
1.2991

USD/CHF

1.0159
1.0101

AUD/USD

0.6614
0.6583

USD/CAD

1.3484
1.338

DOW

25484.29

NASDAQ

7770.059

OIL

61.72

GOLD

1288.2

Market Watch

May 09, 2019

Daily Insight

Americas

U.S./China trade tensions continue to dominate the headlines ahead of today’s talks in Washington. Recent comments by U.S. and Chinese officials reflect a hardening stance on both sides, dimming the hope of any reconciliation soon. The Trump administration is set to implement a new round of tariffs on Chinese goods starting at 12:00am Friday, May 9th, where tariffs on $200bio of Chinese exports will increase to 25% (from the current 10%). Trump has also suggested additional tariffs of 25% on another $325bio of Chinese goods may be forthcoming if trade negotiations fail to make progress. Unsurprisingly China has threatened retaliatory tariffs.

Lack of progress on U.S./China trade negotiations has led to a spike in market volatility, primarily in the equities markets where the VIX (volatility) Index has jumped to 22.77 from last Friday’s close at 12.87. The major stock indexes have seen significant declines since last Friday’s close with the S&P500 -3.41%, the Dow Industrials -3.20%, and the Nasdaq100 -4.36%.

The currency markets have been largely insulated from the tariff-induced volatility. The US Dollar Index is currently down 0.27% from Friday’s close with dollar major declines against the JPY (-1.31%), EUR (-0.28%), and CHF (-0.24%) and gains vs. GBP (+1.20%), NZD (+0.92%), AUD (+0.57%) and CAD (+0.45%). The dollar has advanced 1.35% vs. the Chinese Renminbi over the same 6-day period.

Producer Price Index data released this morning showed an April increase of 0.2%, below the forecast of 0.3%. With wholesale inflation unchanged over the last year at 2.2%, inflation continues to be a no-show.

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 - 10

8:30AM ET
USD - Consumer Price Index

Market Indicators

HIGH

LOW

USD/JPY

110.11
109.51

EUR/USD

1.1251
1.1174

GBP/USD

1.3026
1.2968

USD/CHF

1.021
1.0124

AUD/USD

0.6995
0.6965

USD/CAD

1.3505
1.3471

DOW

25571.33

NASDAQ

7816.59

OIL

61.58

GOLD

1285.5

Market Watch

May 02, 2019

Daily Insight

Americas

A Tale of Two Feds. Yesterday the FOMC released its prepared policy statement, which was largely in line with expectations… solid jobs gains, low unemployment, low and declining inflation, and no rate change. The key text of the statement relating to inflation was: “On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.” The absence of inflation is one thing, but the mention of declining inflation was unexpected and supported the current premise that the next policy action would be a rate cut.

However, in the post-announcement press conference Fed Chair Powell offered a different take on inflation stating that “We suspect that some transitory factors may be at work. Thus, our baseline view remains that, with a strong job market and continued growth, inflation will return to 2 percent over time and then be roughly symmetric around our longer-term objective.”

In a matter of minutes, the focus shifted from declining inflation to an expected increase in inflation over time. The whipsaw impact on the dollar was evident as the US Dollar Index went from the day’s low of 97.150 to a high of 97.728 (a gain of 0.59%) during the brief shift between the policy announcement and the press conference. The dollar closed the day broadly higher with the most significant gains vs. the NZD (+0.78%), AUD (+0.47%), CAD (+0.43%), and MXN (+0.26%). Dollar strength has carried over to today’s session on increasing dollar momentum.

USDCAD: Near-term support is seen at 1.3390 and resistance at 1.3505. Medium-term resistance at 1.3560 and 1.3650. Long-term trendline resistance at 1.3800. Daily, weekly, and monthly signals point to a stronger USD.

USDMXN: Near-term resistance currently at 19.1900 and higher at 19.2900. Medium-term resistance is seen at 19.4600. Support at 18.8000 and key support at 18.7500.

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 - 03

8:30AM ET
USD - Employment Situation Report

Market Indicators

HIGH

LOW

USD/JPY

111.67
111.35

EUR/USD

1.1219
1.1172

GBP/USD

1.308
1.3018

USD/CHF

1.0204
1.0168

AUD/USD

0.7029
0.6995

USD/CAD

1.3477
1.3431

DOW

26209.68

NASDAQ

7985.605

OIL

61.09

GOLD

1272.4

Market Watch

May 01, 2019

Daily Insight

Americas

The dollar closed April with a gain against eight of the G10 currency pairings, its only loss vs. the EUR with a minimal decline of 0.02% and no change vs. the DKK. The dollar's primary gains were against the SEK (+2.18%), CHF (+2.02%), NZD (+1.92%), AUD (+0.90%) and CAD (+0.61%). 

The dollar's strength carried over to a wider basket of major and minor currencies, the only exception coming against the Mexican peso with a decline of 1.04%. The dollar’s decline vs. the peso is consistent with the market's recent trend to increase exposure to 'risk' assets.

Today the dollar is mixed in quiet trading ahead of the FOMC’s rate policy announcement scheduled for this afternoon. The dollar is lower vs. the MXN, CHF, GBP, EUR, & JPY but higher against the NZD, CAD, SEK, NOK, and AUD.

The FOMC rate decision will be released today at 2PM ET and the expectation is for no change. The probability of a rate cut today is currently a miniscule 2.2% and a 0% for a rate hike. However, over the next five FOMC meetings scheduled for this year the chance of a rate cut increases significantly, starting at 23.4% at the June meeting and ending the December meeting with a 68% probable cut.

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 - 01

2PM ET
USD - FOMC Interest Rate Decision

Friday - 03

8:30AM ET
USD - Employment Situation Report

Market Indicators

HIGH

LOW

USD/JPY

111.55
111.13

EUR/USD

1.125
1.1211

GBP/USD

1.3092
1.303

USD/CHF

1.0198
1.0137

AUD/USD

0.7061
0.7035

USD/CAD

1.3422
1.3377

DOW

26672.59

NASDAQ

8140.148

OIL

63.63

GOLD

1283.8

Market Watch

April 12, 2019

Daily Insight

Americas

The dollar is trading lower today against most major currencies, continuing the theme of a global move into more risky assets. The dollar’s biggest decline in the majors is vs. the AUD at -0.79%, followed closely at -0.58% vs. the NZD. Gains in Asian assets is being fueled by China’s ongoing stimulus efforts to spur economic growth. The AUDUSD is now trading at its highest level in 7 weeks in a directional move that may attract additional momentum buying. Next resistance is at 0.7250 and higher at 0.7300.

Other declines for the dollar are -0.57% vs. EUR, -0.42% vs. CAD, -0.41% vs. GBP, and -0.34% vs. MXN. The US Dollar Index failed to breach 97.200 in three consecutive attempts and is now -0.40% at 96.800, its lowest level in the previous 13 trading sessions. Next support comes into play at 96.500 and major support now seen at 96.300.

Today the USDMXN is trading below 18.8000 (long term trendline support) and has tested as low as 18.7430. A close below 18.8100 will mark the lowest close since 18 Oct of last year. Next support is at 18.7000 and major support at 18.5000.

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 - 16

9:15AM ET
USD - Industrial Production

Market Indicators

HIGH

LOW

USD/JPY

112.02
111.59

EUR/USD

1.1324
1.1253

GBP/USD

1.3133
1.3051

USD/CHF

1.0034
0.9997

AUD/USD

0.7192
0.7116

USD/CAD

1.3388
1.3313

DOW

26328.54

NASDAQ

7609.882

OIL

64.33

GOLD

1295.3

*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.