Forex news for NY trading on January 28, 2019
The story of the day today is that traders mixed it up today ahead of some key events and released ahead.
- The most important earnings week really gets started tomorrow with the likes of Apple, Ebay, Pfizer reporting tomorrow. On Wednesday Facebook, PayPal, McDonald, Tesla and Microsoft will report. On Thursayd Amazon, Mastercard, GE and DowDupont will report. On Friday, Exson, Chevron and Merck will report. That is just some of the earnings. Today, Caterpillar missed and gave weak guidance as a result of China. Nvidia -which does not report until mid month in February – ratcheted down revenue projections markedly (by about 25%). They too blamed China. Last week Intel pared down 1Q expectations because of China. It’s China. China. China
- Speaking of China, talks between US and China will begin on Wednesday and extend into Thursday. Today, China filed a complaint with the WTO on tariffs. The US shot back by saying the Justice Department would announce criminal charges against Huawei Technologies. Both countries are suffering in the game of chicken, but hopes for an easy solution on 1. IP theft, 2. No forced joint ventures between US and China companies and 3. Enforcement of US complaints, and 4. Favoritism to Chinese companies within China dig at the root of economic growth in China
- Brexit amendments will be debated and then voted on on Tuesday. PM May is said to support the the Brady Amendment which would replace the Irish border backstop with ‘alternative arrangements’. If, and it is a big “IF”, it passes, it would pass the buck to the EU and effectively say, what do you suggest as a compromise to the current backstop plan. They have already said, there is none….UGH
- The Fed will meet on Tuesday and Wednesday and announce no change in policy at 2 PM ET on Wednesday. However, there are a lot of different directions Fed’s Powell can go. Does he keep the dovish tone after easing up after the December hike? Does he lean toward less balance sheet runoff. Remember in December he basically said it was on “auto-pilot” and the market did not like that at alll. Since December, the tone from the chair and the Fed officials has calmed down and become more dovish.
- US employment report on Friday. Originally, the US GDP was scheduled to be released this week too, but even thought the US is back open, the backlog makes reporting the 1st estimate for 1Q until a later date. However, the BLS is is on track to report on Friday with 165K non farm jobs after the oversized 312K last month.
- I know the government shut down is over but it does have a 3 week clock for a solution. Pres Trump continues to push that he will “build the wall” and the Dems are still dug in against it. At stake? The right to say “We built the wall” or “We did not build the walll” during the run up to the 2020 elections.
Anyway, the markets today saw stocks move lower in the US but close well off the lows. European shares did not have the benefit of the later day rally that eased some of the pain. So whereas the US indices closed near the session highs, the European major indices closed near their session lows.
US yields moved lower but like the the stocks, closed off the low levels. The US auctioned $81B of 2 and 5 year notes with decent demand.
European benchmark yields were mixed:
In the forex market, the near end of day snapshot of the strongest and weakest currencies showed the EUR was the strongest and the CAD inched out the GBP as the weakest.
However, the currencies vs the USD were mixed with the dollar rising vs the GBP, CAD, AUD and NZD, and falling vs the EUR, JPY and CHF.
In addition the pairs were off extreme levels with most pairs (with the exception of hte USDCHF) trading above and below the unchanged line (see chart below).
Some technical thoughts going into the new day:
- USDJPY. The USDJPY bottomed near the swing low from January 22 and the 38.2% of the move up from the January 10th low at 109.14 (low reached 109.156). That level is support into the new day. The 200 hour MA at 109.455 will be eyed above as key barometer to get and stay above.
- EURUSD: The EURUSD stretched toward the 100 day MA at 1.14476 (currently). The high reached 1.1443. The price rotated down to 1.1425 at the close. ON the downside, the 1.1394-958 was home to the 38.2% of the move down from the January high. The high from Jan 23 was also near that area. That is key support now.
- The GBPUSD are tracking a trend line on the hourly at 1.3152 currently. At 1.3172 is the 100 week MA. Last week, the price closed above that 100 week MA. Today – the first day of the week – we are back below. Of course that Brexit amendment votes are up tomorrow but stay below 1.3172 will be eyed in the new day
- NZDUSD fell from mid December upside target area at 0.6869-79 and closed near the day’s lows (and down on the day) at 0.6828. The 100 hour MA is moving up and approaching the 0.6800 area. On more weakness, that will be targeted.
Good fortune with your trading.