Forexlive Americas FX news wrap: Dollar rebounds after yesterday's tumble.
Forex news for trading on May 17th 2017.
- US stocks have rebound day after tumble yesterday
- US crude oil futures settle the day at $49.35.
- Brazil's President says he will prove his innocence, will not quit
- US officials note surprise record in New Zealand milk production
- And you thought fake news was just for politics
- Mexico central bank raises benchmark rate to 6.75% from 6.50%
- Comey story getting credit for the US dollar jump isn't all it seems
- Forex technical analysis: GBPUSD moves back into the "Red Box", and look what happened
- US airstrike hits pro-Assad forces in Syria. Officials say no change in policy
- Chart of the day: Something is different in the air
- Fed's Mester: Repeats that Fed must stay vigilant against 'falling behind'
- Moody's UK macroeconomic conditions remain firm
- VP Pence: DT will sign into law the most consequential tax cut in American history.
- European stocks down (sans Italy) but off the lows
- NAFTA renegotiation process begins as letter sent to Congress
- US March factory orders revised to +0.5% from +0.2%
- US Leading index for April 0.3% vs 0.4% estimate
- Brazil shows the US what a real political crisis looks like
- US Philadelphia Fed business outlook for May 38.8 vs. 18.5 estimate
- US initial jobless claims 232K vs. 240K estimate
- The strongest and weakest currencies as NA traders enter for the day
In other markets today:
- S&P index rose by 8.69 points or 0.37%. Nasdaq rose by 43.89 points or 0.73%. Dow rose by 56.09 points or +0.27%
- US yields are ending mixed. 2 year 1.2662%, +2 basis points. 5 year 1.7706%, +1.6 basis points. 10 year 2.226%, unchanged. 30-year 2.8989%, -1.7 basis points
- Spot gold fell $13.10 to $1248.11
- WTI crude futures is ttrading down $.23 to $49.30.
The USD rebounded in trading today after the sharp fall yesterday. The greenback was supported by better data: US initial for jobless claims fell to 232K vs estimate of 240K. The Philadelphia Fed business outlook index for May came much higher at 38.8 versus 18.5 estimate. The Leading index for April rose by 0.3% but was a touch lower than expectations of 0.4%.
The data was better but it was the political news that helped send the dollar higher and with it, stocks rebounded, gold fell, and yields move a touch higher. That news came in the NY afternoon session via a video whereby former FBI Director Comey said he was not pressured by the Justice or Attorney General to end any investigations. The market interpreted his answer as suggesting the WH never asked either. Of course, that was one of the reasons for the huge sell off yesterday. So what if the question was not specific to the WH. The market did not care.
The charge higher in the dollar on the news, was led by a 100 pip fall in the GBPUSD in a matter of seconds in the NY afternoon session. The news dovetailed a technical break of the 1.2988-90 which was a ceiling yesterday, became a floor after the break higher today, before breaking below shortly after the story/video broke. So the ceiling at 1.2988-90 became a floor, but then became a ceiling again on the break lower. Got it? On the downside, the GBPUSD fell below the 100 and 200 hour MAs at 1.2925-30, but is closing just above those levels. In the new trading day, if the price heads back below those MAs in the new day, AND gets below the 1.2900 level, the selling should intensify. Conversely, if the MAs can not be broken, there may be retest of that old ceiling once again.
The USDJPY was another pair that was helped by the news. For it, the price was able to retake the broken 200 bar MA on the 4-hour chart AND the the 50% midpoint of the move up from the April 2017 low To the May high. That area came in at 111.20-24. The price is closing above that area. Stay above and a move toward 112.00-04 becomes the next target. Above that, the 112.50-56 will be the next technical targets (100 hour MA and 100 bar MA on the 4-hour chart). On a break back below 111.20 and 110.50 and 110.10 become the next downside targets.
The EURUSD moved above the 61.8% of the move down from the May 2016 high at 1.1128 yesterday. Today, the price moved to the highest level since US Election day at 1.1171. The price for most of the NY session traded above and below the 1.1128 level , and did fall to new session lows of 1.1075 in the afternoon dollar buying, BUT is closing around 1.1100. The 1.1128 remains a level to eye on the topside. Get back above and the bulls are more in control. On the downside, the 100 hour MA at 1.10547 will be eyed. The price moved above the 100 hour MA at 1.0887 on Friday of last week, and has not looked back since that time. Yes we are much higher, but if there is a test, I do think buyers would step in against that MA level. So be prepared should there be a dip and buying opportunity.
Less than 24 hours ago, the AUDUSD moved higher on better than expected employment data. By the end of the day today, the price had given back all those gains and ended the day lower and below the 100 hour MA at 0.7420 an the 100 bar MA on the 4-hour chart at 0.7428. Stay below those MA levels, keeps the bears in control with the 200 hour MA at 0.7394 as the next downside target (that MA line held twice yesterday so it is a key MA line). If the two 100 bar MAs are broken to he upside, we should see more buying.
Overall, I know the dollar is going out with gains today, but it could still be a correction from the sharp declines yesterday. Much may rely on how stocks do in the next 24 hours, and how Trump rebounds from what has been a bad week full of distractions that has taken focus off policy changes like health care, tax overhaul, regulations, infrastructure spending. One thing that may cool things down, is Trump goes overseas to Saudi Arabia, Israel and Italy (to visit the Pope) which is about as unique a combination for a 1st state overseas trip as President. He will also participate in a G7 meeting in Italy on May 26th and 27th. Who knows what he might say, but generally speaking he is overly friendly to those he visits (or who visits him). His problem is he can run his mouth a little too much at times - especially when he should not (and just keep quiet).
Have a great night and for those in the Far east who are done for the week tonight, have a great weekend.
Below is an end of day snapshot of the strongest and weakest currencies in trading today. The USD was the strongest, while the NZD was the weakest.