Forexlive Americas FX news wrap: Oil tumbles nearly 4%
Forex news for US trading on April 19, 2017
- US major indices end the day mixed
- Fed's Fischer says downside risks abroad 'noticeably smaller'
- Trump isn't making friends on either side of the Korean peninsula
- US crude oil settles at $50.44/BBL
- The wheels are really coming off of oil now, crude down $2
- Fed's Beige Book: Modest wage hikes broadened
- Fed's Rosengren: Fed could start shrinking balance sheet 'relatively soon'
- White House says Trump to direct interagency review of Iran nuclear deal
- A midday snap shot of the markets as London traders look to exit
- So what does a short covering rally really look like and why we can't really trade one?
- There could be some upside risks to the ECB's economic forecasts says ECB's Praet
- Weekly US EIA oil inventories -1.034m vs -1.400m exp
- UK Parliament votes in favour of General Election
- OPEC and non-OPEC members to meet on the same day as OPEC's May meeting
- Coeure: ECB doesn't want extraordinary measures to become too permanent
- The strongest and weakest currencies as NA traders enter for the day
A snapshot of the changes in some of the other markets shows:
- Crude oil down -3.76% to $50.53. The low reached $50.09 before rebounding toward the close.
- Spot gold fell by -$9.59 to $1280.02. Yesterday, the price peaked at $1292.55 before running out of steam.
- US stocks were mixed but off high levels. S&P index fell by -0.17%. Nasdaq was up +0.23%. Dow was down -0.58% largely as a result of a sharp decline in IBM which fell nearly 5% after disappointing earnings.
- US yields were higher on the day. 2 year yield 1.18%, +2 BP. 5 year yield 1.740%, +4 BP. 10 year 2.214%, +4.6 BP. 30 year yield 2.873% +3.8 BP
Today there was no economic data released in the US or Canada. Fed's Rosengren did speak at the Economics institute, and like other Fed officials, he backs shrinking the balance sheet "gradually". The Fed members seem to be lining up in favor of unwinding the 4.4T balance sheet. How specifically that will look like is still debatable, however.
In other news in the NY session, the General Election called by UK PM May became official. The euphoria from yesterday's move higher in the GBPU, lost some of it's "mojo" today. The pound fell vs the USD by 0.46% and also lost ground to the EUR (by 0.30%). Moreover they are going out at the extremes.
ECBs Coeure commented that he does not want "extraordinary measures to be "too permanent". Later ECBs Praet said there could be some upside risks to the ECB economic forecasts in the short term but warns the risks longer term are still tilted to the downside. The comments has limited impact.
The Fed Beige book was released from the Richmond Fed (the job rotates around the regional Federal reserve district banks). The headline focus seemed to be on labor. Businesses reported wage hikes broadening on higher turnover. The book also cited the shortage of unskilled workers. Ah....the unintended consequences from stricter immigration policy.
The big mover was the price of oil. At the lows, the price tumbled over 4% lower on the day (it is ending about 3.75% down). Inventory data showed a drop in inventories but not as grea as expected. Also there was concern about production once the current production quotas run off. Technically, the price tumbled below the 100 day MA at $51.66 AND the 50 day MA at $51.37. That led to increased selling pressure. The sharp fall helped to support the USDCAD. It is ending the day at the highs and trading at the highest level since mid_March. It is getting closer to topside trend line resistance near the 1.3495 level (the high peaked at 1.34895).
Other commodity currencies were also lower in trading today. The AUDUSD fell by 0.82% against the USD and the NZDUSD fell by 0.62%. The AUDUSD fell back below it's 100 day MA at 0.7525. Earlier in April, the price spent 4 days below the 100 day MA, before rebounding back higher. The low during that time extended to 0.7472 and is the next downward target on continued weakness. The 50% of the move up from the end of December low at 0.7454 is another target for the bears to get through IF the selling is to continue in the new trading day.
In NZ, the 1Q CPI will be released. The expectations are for a rebound to +0.8% from the +0.4% rise in the 4Q2016. The YoY is expected to rebound to 2.0% from 1.3%. Although the NZD fell in trading today, the price action will be influenced by the relative strength and weakness of that key quarterly economic release.
In other pairs:
The GBPUSD squeezed higher yesterday but corrected lower in trading today - closing near the lows of the day (the low reached 1.2768). For the NY session, the fall below the 1.2800 level seemed to attract more selling interest and will be a level to take back if the buyers come back in. ON the downside, the 1.2753 level is the 38.2% of the move up from yesterday's low. A move below that level should give sellers more confidence. For a good post on "the squeeze" yesterday (was it one?), click here.
The EURUSD was also in a corrective mood today with swings up and down. The high price did stall at the 50% retracement of the move down from the March 27th high. That midpoint comes in at 1.0737 level and the high price for the day peaked at 1.07366. The low stalled around the 1.0700 level and near the broken 38.2% from the same March 27th peak. That level comes in at 1.06977. The low reached 1.0699. So traders are leaning against fibo levels. A move below the 1.0700 level (and staying below) will be needed to solicit more selling in the new trading day.
The USDJPY did it's best to stay above the 100 hour MA (at 108.73 currently) and the 200 day MA (at 108.80 currently). There was a NY afternoon dip below the levels but the pair is closing back above the MA lines as the new trading day begins. Admittedly, the price has been above and below that key MA line over the 4 trading days. That says to me, the market does not know what it wants to do. At some point it will figure it out. With the price trading above the levels for most of the London and NY sessions today, you have to give the nod to the buyers (with risk on a break below the MAs). We will see how the day progresses and as is customary of late, it will be dependent on the US yields.
Below is a snapshot of the % changes of the major currencies vs each other. The USD was the strongest while the commodity currencies were the big losers led by the AUD and the CAD.