EUR/USD – Surging euro hits 1.18 despite soft manufacturing PMIs

EUR/USD has paused in the Friday session, after posting strong gains on Thursday. Currently, the pair is trading at 1.1772, down 0.05% on the day. On the release front, German and eurozone manufacturing PMIs disappointed, missing their estimates. There are no major U.S events on the schedule.

German and eurozone manufacturing PMIs were soft in September. The German indicator dropped sharply, from 56.1 to 53.7, missing the estimate of 55.7 points. This marked the weakest reading since August 2016. It was a similar story from eurozone manufacturing PMI, which fell from 54.6 to 53.3, the lowest level since October 2016. This marked the ninth straight month that the indicator has weakened – in December 2016, the indicator stood at 60.6 points. There was better news from services PMIs. German Flash Final Services PMI rose to 56.5, above the estimate of 55.1 points. The eurozone release improved to 54.7, above the estimate of 54.5 points.

The US-China trade war is heating up, with the two economic giants exchanging tariffs this week. On Monday, U.S President Trump announced 10% tariffs on some $200 billion worth of Chinese goods. China quickly responded, slapping 10% tariffs on $60 billion in US exports. These tit-for-tit tariffs have become a familiar script, only this time investors haven’t panicked and snapped up U.S dollars. Investors are somewhat relieved that the tariffs are just 10%, and China is taking measures to reduce the effect of the tariffs on its economy, including increasing stimulus and infrastructure spending. Global growth remains strong, despite the tariff spat. However, China has also threatened to cancel upcoming trade talks with the U.S, in protest of the recent U.S tariff.

Yen at two-month low versus dollar on Wall Street surge

 

EUR/USD Fundamentals

Friday (September 21)

  • 3:15 French Flash Manufacturing PMI. Estimate 53.3. Actual 52.5
  • 3:15 French Flash Services PMI. Estimate 55.2. Actual 54.3
  • 3:30 German Flash Manufacturing PMI. Estimate 55.7. Actual 53.7
  • 3:30 German Flash Services PMI. Estimate 55.1. Actual 56.5
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 54.4. Actual 53.3
  • 4:00 Eurozone Flash Services PMI. Estimate 54.5. Actual 54.7
  • 9:45 US Flash Manufacturing PMI. Estimate 55.1
  • 9:45 US Flash Services PMI. Estimate 54.9

*All release times are DST

*Key events are in bold

 

EUR/USD for Friday, September 21, 2018

EUR/USD for September 21 at 6:25 DST

Open: 1.1778 High: 1.1803 Low: 1.1770 Close: 1.1772

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1553 1.1637 1.1718 1.1840 1.1961 1.2055

EUR/USD was flat in the Asian session and continues to drift in European trade

  • 1.1718 is providing support
  • 1.1840 is the next resistance line

Further levels in both directions:

  • Below: 1.1718, 1.1637, 1.1553 and 1.1434
  • Above: 1.1840, 1.1961 and 1.2055
  • Current range: 1.1718 to 1.1840

ASEAN currencies edge higher

Sept 21 (Reuters) – Asian currencies strengthened for the
third consecutive day on Friday, supported by a weaker dollar
and shifting views over how much damage the Sino-U.S. trade war
will inflict on global demand and export-reliant regional
economies.

The dollar index has fallen more than 1 per cent this
week. Analysts said investment flows are being diverted away
from the greenback to its peers such as emerging market
currencies as trade tensions have ebbed.
“A significant factor in adding to the current run of dollar
weakness is the drop on safe-haven appeal after China suggested
they won’t weaponise yuan in a trade war,” said Stephen Innes,
head of trading for Asia-Pacific at OANDA in Singapore.
“Regional risk is very steady supported by thriving global
equity markets, a slightly weaker dollar and a positive glean
that North Korea’s leader Kim Jung-un has asked for a second
summit with President Trump.”

 

Reuters

Yen at two-month low versus dollar on Wall Street surge

USD/JPY at highest since July

USD/JPY rallied to its highest level since July 19 as the positive sentiment that lifted Wall Street to record highs continued in the currency markets during the Asian session. The response in Asian equities was not quite so dramatic with the Japan 225 index gaining 0.25% by lunchtime, the Hong Kong 33 CFD rising 0.25% and the China A50 index surging 1.32%%.

Japan shares shrugged off an uptick in longer-term yen yields after the Bank of Japan trimmed its daily purchases of Japanese Government Bonds with a tenor of 25 years and upwards. The 30-year yield hit its highest since October 2017 and the 40-year tenor saw rates at 1.02%, the highest since November 2017.

 

USD/JPY Weekly Chart

Source: Oanda fxTrade

 

USD/JPY is poised for its second weekly gain in a row and is heading toward the 200-week moving average at 113.26 while the July high sits at 113.18.

 

Japan CPI heads in the right direction

A welcome headline for the Bank of Japan saw Japanese consumer prices rise 1.3% year-on-year in August, the fastest pace since February. The headline topped expectations of a 1.1% increase and was a steep acceleration from the 0.9% seen in July. Core CPI was a more benign +0.4% y/y, in line with expectations and higher than July’s 0.3%.

In other Japanese news, Shinzo Abe was elected for his third term as leader of the LDP yesterday and is set to become the country’s longest-serving leader. He wasted no time in getting back down to business as Chief Cabinet Secretary Suga announced that PM Abe will hold a summit with US President Trump on September 26. There is no doubt that the tariff question will be the major topic under discussion.

US-China trade war, yesterday’s news?

S&P Raises Australia outlook to stable

Ratings agency S&P affirmed Australia’s sovereign rating at AAA and raised the outlook from negative to stable. The agency cited an improved fiscal outlook amid government expenditure restraint, with steady revenues supported by the strong labor market and relatively robust commodity prices. The top three ratings agencies now have Australia with a AAA rating and a stable outlook.

There was a muted response to the news from the Aussie as AUD/USD marked time ahead of the 55-day moving average resistance at 0.7315. The pair is currently almost flat on the day having risen for the past four sessions and is facing its strongest up-week in over a year. AUD/USD is now at 0.72935.

 

AUD/USD Daily Chart

Source: Oanda fxTrade

 

More PMI readings complete a slow data week

The slow data week concludes with September Markit PMI readings for both Germany and the Euro-zone, with both expected to show a lower reading than last month. The North American calendar is focused on Canada’s CPI readings for August followed by the Markit PMI data for the US. In contrast to the European readings, those are expected to rise and confirm the robust state of the US economy and could help fuel further gains on Wall Street.

 

You can view the full MarketPulse data calendar at: https://www.marketpulse.com/economic-events/

 

Have a great weekend.

Gold steady, shrugs off strong manufacturing, jobless claims data

Gold has taken a pause in the Thursday session, after posting gains on Wednesday. In North American trade, the spot price for one ounce of gold is $1203.83, up 0.05% on the day. On the release front, U.S indicators looked sharp, as Philly Fed Manufacturing Index and unemployment claims both beat expectations.

Which direction is the housing sector headed? This week’s data has pointed in both directions, making it difficult to discern a trend. Earlier on Thursday, Existing Home Sales remained steady at 5.34 million, but this fell short of the estimate of 5.38 million. Key construction reports on Wednesday were a mix. Building Permits disappointed, dropping from 1.31 million to 1.23 million. This was well short of the estimate of 1.31 million and marked the weakest gain since September. There was better news from Housing Starts, which jumped from 1.17 million to 1.28 million, above the estimate of 1.24 million. This was a three-month high.

After a brief respite, the US-China trade spat ratcheted upwards this week. Following weeks of speculation, U.S President Trump announced 10% tariffs on some $200 billion worth of Chinese goods. Only this time, investors didn’t panic. In previous rounds of tariffs, the dollar posted strong gains, but this has not happened this time around. Investors appeared to have been ready for a move by Trump, and may be sighing in relief that the tariff was set at 10% rather than at 25%. One senior economist summed up Trump’s most recent salvo as “bad but manageable”. However, if the Chinese do indeed retaliate and the U.S takes further measures, this would likely shake up the markets and boost the U.S dollar.

Kiwi jumps on strongest growth in two years

U.S safe-haven appeal diminishes

GBP/USD jumps on Brexit reports and retail sales

 

XAU/USD Fundamentals

Thursday (September 20)

  • 8:30 US Philly Fed Manufacturing Index. Estimate 17.5. Actual 22.9
  • 8:30 US Unemployment Claims. Estimate 210K. Actual 201K
  • 10:00 US CB Leading Index. Estimate 0.5%. Actual 0.4%
  • 10:00 US Existing Home Sales. Estimate 5.36M. Actual 5.34M
  • 10:30 US Natural Gas Storage. Estimate 81B. Actual 86B

*All release times are DST

*Key events are in bold

 

XAU/USD for Thursday, September 20, 2018

XAU/USD September 20 at 12:20 DST

Open: 1204.05 High: 1208.46 Low: 1201.34 Close: 1204.63

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1115 1146 1170 1204 1220 1236

XAU/USD ticked higher in the Asian session. In European trade, the pair moved higher but gave up most of these gains. XAU/USD has posted small losses in North American trade.

  • 1170 is providing support
  • 1204 is fluid. Currently, it is a weak resistance line
  • Current range: 1170 to 1204

Further levels in both directions:

  • Below: 1170, 1146 and 1115
  • Above: 1204, 1220, 1236 and 1261

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 rises to 10-week high on higher retail sales

GBP/USD has posted strong gains in the Thursday session. Currently, the pair is trading at 1.3260, up 0.85% on the day. On the release front, British retail sales posted a gain of 0.3%, beating the estimate of -0.2%. Over in the U.S indicators looked sharp, as Philly Fed Manufacturing Index and unemployment claims both beat expectations. On Friday, the UK releases public sector net borrowing.

A positive retail sales report on Thursday has boosted the British pound. Earlier in the day, GBP/USD climbed to 1.3299. its highest level since July 10. The currency moved higher after retail sales posted its fourth gain in five months. However, the gain of 0.3% in August was substantially lower than the July release of 0.7%. The respectable retail sales report follows a strong CPI release on Wednesday – the reading of 2.7% beat the estimate of 2.4%. This marked the strongest inflation reading since February.

After a brief respite, the US-China trade spat ratcheted upwards this week. Following weeks of speculation, U.S President Trump announced 10% tariffs on some $200 billion worth of Chinese goods. Only this time, investors didn’t panic and the Japanese yen and other currencies have held their own against the greenback. Investors appeared to have been ready for a move by Trump, and may be sighing in relief that the tariff was set at 10% rather than at 25%. One senior economist summed up Trump’s most recent salvo as “bad but manageable”. However, if the Chinese do indeed retaliate and the U.S takes further measures, this would likely shake up the currency markets and boost the U.S dollar.

Kiwi jumps on strongest growth in two years

U.S safe-haven appeal diminishes

GBP/USD jumps on Brexit reports and retail sales

GBP/USD Fundamentals

Thursday (September 20)

  • 4:30 British Retail Sales. Estimate -0.2%. Actual +0.3%
  • 5:35 British 10-year Bond Auction. Actual 1.60/1.9
  • 8:30 US Philly Fed Manufacturing Index. Estimate 17.5. Actual 22.9
  • 8:30 US Unemployment Claims. Estimate 210K. Actual 201K
  • 10:00 US CB Leading Index. Estimate 0.5%
  • 10:00 US Existing Home Sales. Estimate 5.36M
  • 10:30 US Natural Gas Storage. Estimate 81B

Friday (September 21)

  • 4:30 British Public Sector Net Borrowing. Estimate 2.9B

*All release times are DST

*Key events are in bold

GBP/USD for Thursday, September 20, 2018

GBP/USD September 20 at 11:20 DST

Open: 1.3144 High: 1.3299 Low: 1.3134 Close: 1.3254

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.2966 1.3088 1.3173 1.3301 1.3458 1.3550

In the Asian session, GBP/USD ticked upwards but retracted. The pair has posted sharp gains in European trade and has edged lower in the North American session

  • 1.3173 is providing support
  • 1.3301 is the next resistance line
  • Current range: 1.3173 to 1.3301

Further levels in both directions:

  • Below: 1.3173, 1.3088, 1.2966 and 1.2852
  • Above: 1.3301, 1.3458 and 1.3550

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 at 3-week high as greenback retreats

The Canadian dollar has posted small gains in the Thursday session. Currently, USD/CAD is trading at 1.2908, down 0.10% on the day. On the release front, Canada releases ADP nonfarm employment change. In the U.S, the Philly Fed Manufacturing Index is expected to jump to 17.5 points, while unemployment claims are forecast to climb to 210 thousand. On Friday, Canada releases CPI, which is expected to post a rare decline.

On Wednesday, there were key events on both sides of the border. Canada released Manufacturing Sales, posting a gain of 0.9%, which was within expectations. Still, the indicator has weakened for a third straight month, which could raise concern about the strength of the manufacturing sector. In the U.S, construction numbers were a mixed bag. Building Permits disappointed, dropping from 1.31 million to 1.23 million. This was well short of the estimate of 1.31 million and marked the weakest gain since September. There was better news from Housing Starts, which jumped from 1.17 million to 1.28 million, above the estimate of 1.24 million. This was a three-month high. On Thursday, we’ll get a look at Existing Home Sales, which has been on a nasty downtrend, losing ground for four straight months. The indicator is expected to improve slightly, to 5.36 million.

U.S President Trump fired another tariff salvo earlier this week, and the Chinese have vowed to retaliate. This has become an all-too familiar script, which was repeated on Monday, as the U.S announced 10% tariffs on some $200 billion worth of Chinese goods. Only this time, investors didn’t panic and the Canadian dollar and other currencies have held their own against the greenback. Why have the currency markets reacted so calmly? Investors appeared to have been ready for a move by Trump, and may be sighing in relief that the tariff was set at 10% rather than at 25%. One senior economist summed up Trump’s most recent salvo as “bad but manageable”. However, if the Chinese do indeed retaliate and the U.S takes further measures, this would likely shake up the currency markets and boost the U.S dollar.

Kiwi jumps on strongest growth in two years

U.S safe-haven appeal diminishes

 

USD/CAD Fundamentals

Thursday (September 20)

  • 8:30 Canadian ADP Nonfarm Employment Change
  • 8:30 US Philly Fed Manufacturing Index. Estimate 17.5
  • 8:30 US Unemployment Claims. Estimate 210K
  • 10:00 Eurozone Consumer Confidence. Estimate -2
  • 10:00 US CB Leading Index. Estimate 0.5%
  • 10:00 US Existing Home Sales. Estimate 5.36M
  • 10:30 US Natural Gas Storage. Estimate 81B

Friday (September 21)

  • 8:30 Canadian CPI. Estimate -0.1%
  • 8:30 Canadian Retail Sales. Estimate 0.6%

*All release times are DST

*Key events are in bold

 

USD/CAD for Thursday, September 20, 2018

USD/CAD, September 20 at 7:30 DST

Open: 1.2920 High: 1.2935 Low: 1.2894 Close: 1.2909

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2515 1.2666 1.2830 1.2970 1.3067 1.3160

USD/CAD was flat in the Asian session and has ticked lower in European trade

  • 1.2830 is providing support
  • 1.2970 is the next resistance line
  • Current range: 1.2830 to 1.2970

Further levels in both directions:

  • Below: 1.2830, 1.2666 and 1.2515
  • Above: 1.2970, 1.3067, 1.3160 and 1.3292

DAX rally continues despite US tariffs on China

The DAX index has posted gains in the Thursday session, continuing the upward trend seen on Wednesday. Currently, the index is at 12,284, up 0.54% on the day. On the release front, there are no major German or eurozone events. Eurozone consumer confidence is expected to post a decline of -2 for a second straight month. On Friday, Germany and the eurozone release manufacturing PMIs.

The US-China trade war ratcheted upwards this week, as the U.S. imposed 10% tariffs on some $200 billion worth of Chinese goods. Previous rounds of tit-for-tat tariffs have rocked the equity markets, but that hasn’t happened this time around. The DAX has shrugged off the news, gaining 1.8% this week. It is notable that German automakers, which could be hit hard by further tariffs, have posted strong gains on Thursday. BMW is up 1.24%, Daimler has risen 0.94% and Volkswagen has climbed 1.69%. Bank shares have also posted gains – Deutsche Bank is up 1.13% and Commerzbank has jumped 2.79%.

Why the calm reaction from German equity markets? Investors appear to have been ready for a move by Trump, and may be sighing in relief that the tariff was set at 10% rather than at 25%. One senior economist summed up Trump’s most recent salvo as “bad but manageable”. However, if the Chinese do indeed retaliate and the U.S takes further measures, this would likely shake up the currency markets and boost the U.S dollar.

Kiwi jumps on strongest growth in two years

Economic Calendar

Thursday (September 20)

  • 10:00 Eurozone Consumer Confidence. Estimate -2
  • 11:15 German Buba President Weidmann Speaks

Friday (September 21)

  • 3:30 German Flash Manufacturing PMI. Estimate 55.7
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 54.4

*All release times are DST

*Key events are in bold

 

DAX, Thursday, September 20 at 6:50 DST

Previous Close: 12,219 Open: 12,208 Low: 12,202 High: 12,295 Close: 12,284

EUR/USD – Euro gains ground, Eurozone consumer confidence ahead

EUR/USD has posted slight gains in the Thursday session. Currently, the pair is trading at 1.1694, up 0.28% on the day. On the release front, the eurozone releases consumer confidence, which is expected to post a decline of -2 for a second straight month. In the U.S, the Philly Fed Manufacturing Index is expected to jump to 17.5 points, while unemployment claims are forecast to climb to 210 thousand.

U.S President Trump has fired another tariff salvo, and the Chinese have vowed to retaliate. An all-too familiar script, which was repeated on Monday, as the U.S announced 10% tariffs on some $200 billion worth of Chinese goods. Only this time, investors didn’t panic and the euro and other currencies have held their own against the greenback. Why have the currency markets not reacted so calmly? Investors appeared to have been ready for a move by Trump, and may be sighing in relief that the tariff was set at 10% rather than at 25%. One senior economist summed up Trump’s most recent salvo as “bad but manageable”. However, if the Chinese do indeed retaliate and the U.S takes further measures, this would likely shake up the currency markets and boost the U.S dollar.

U.S construction numbers were a mixed bag on Wednesday. Building Permits disappointed, dropping from 1.31 million to 1.23 million. This was well short of the estimate of 1.31 million and marked the weakest gain since September. There was better news from Housing Starts, which jumped from 1.17 million to 1.28 million, above the estimate of 1.24 million. This was a three-month high. On Thursday, we’ll get a look at Existing Home Sales, which has been on a nasty downtrend, losing ground for four straight months. The indicator is expected to improve slightly, to 5.36 million.

Kiwi jumps on strongest growth in two years

EUR/USD Fundamentals

Thursday (September 20)

  • Tentative – Spanish 10-year Bond Auction
  • 8:30 US Philly Fed Manufacturing Index. Estimate 17.5
  • 8:30 US Unemployment Claims. Estimate 210K
  • 10:00 Eurozone Consumer Confidence. Estimate -2
  • 10:00 US CB Leading Index. Estimate 0.5%
  • 10:00 US Existing Home Sales. Estimate 5.36M
  • 10:30 US Natural Gas Storage. Estimate 81B
  • 11:15 German Buba President Weidmann Speaks

Friday (September 21)

  • 3:30 German Flash Manufacturing PMI. Estimate 55.7
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 54.4

*All release times are DST

*Key events are in bold

 

EUR/USD for Thursday, September 20, 2018

EUR/USD for September 20 at 4:45 DST

Open: 1.1673 High: 1.1709 Low: 1.1669 Close: 1.1694

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1434 1.1553 1.1637 1.1718 1.1840 1.1961

EUR/USD ticked higher in the Asian session but then retracted. The pair has posted small gains in European trade

  • 1.1637 is providing support
  • 1.1718 is the next resistance line

Further levels in both directions:

  • Below: 1.1637, 1.1553, 1.1434 and 1.1312
  • Above: 1.1718, 1.1840 and 1.1961
  • Current range: 1.1637 to 1.1718

Kiwi jumps on strongest growth in two years

Kiwi higher as Q2 growth beats forecasts

New Zealand recorded its best quarter-on-quarter growth in Q2 as the economy expanded 1.0%, a faster pace than the 0.8% growth economists had expected. On an annual basis, growth was also higher than expected, rising 2.8% y/y, topping estimates of a 2.5% increase. New Zealand’s Statistics Agency reported that growth was broad-based with mining the only industry to decline. The largest contribution to growth was agriculture, which rose 4.2%.

The kiwi popped higher in a knee-jerk reaction to the data, with NZD/USD rising to its highest level this month. The 55-day moving average is at 0.6687 and NZD/USD has traded below this average since April 19.

 

NZD/USD Daily Chart

Source: Oanda fxTrade

 

NAFTA talks slow

It is looking increasingly less likely that any agreement on renewing the NAFTA this week with talks reportedly stalled and going nowhere. Canadian PM Trudeau said yesterday there would need to be a bit more flexibility from the US if the two sides are to reach a deal by the end of the month.

The Canadian dollar has been rising for the past two days, though more likely due to weakness in the US dollar rather than strength in the Canadian one. USD/CAD is currently trading at 1.2918, above the 200-day moving average at 1.2866. USD/CAD has traded above this moving average since April 19.

 There are $1.1 billion worth of USD/CAD options expiring today at strike 1.30

 

USD/CAD Daily Chart

Source: Oanda fxTrade

 

 

EU leaders summit to produce more Brexit headlines?

EU leaders begin a summit in Austria today with an increasing risk that more Brexit-linked headlines will be released. The latest news was that UK’s May had rejected the EU’s improved proposal on the Irish border and the pound suffered as a result.

Other data points include UK retail sales for August which are expected to show negative month-on-month growth again after a positive July.  The US releases weekly jobless claims and the September reading for the Philadelphia Fed manufacturing index together with August’s existing home sales.

 

You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/