Forex News for US trading on January 7, 2016Intro Paragraph Text Here.
- US stocks tumble on China worries
- December 2015 US Challenger layoffs 23,622 vs 30,953 prior
- Initial jobless claims 277K vs 275K expected
- Canada Dec SA Ivey PMI 49.9 vs 55.0 expected
- Preview: December non-farm payrolls tends to be an outlier
- Oh yeah, we do have the US employment tomorrow...
- More from Feds Evans
- And the dollar heads lower
- Feds Evans: Very gradual tightening to ensure inflation goal
- Turns out China eliminating circuit breakers wasn't the tonic
- China needs to quit pussyfooting around
- Preview: December non-farm payrolls tends to be an outlier
- Save this one for the technical analysis textbooks
- Fed's Lacker: Would like to see reinvestments ended in not-too-distant future
- Canada Dec SA Ivey PMI 49.9 vs 55.0 expected
- China suspends stock circuit break rule - CSRC
- There's a risk of recession this year says Fed's Lacker
- Tough year to be a Chinese equity fund manager
- Bank of Canada Poloz's Q&A: Expects creation of export firms
- Fed's Lacker: Case for higher interest rates ought to be clear
- BOC's Poloz welcomes Fed rate hike
It was another rough day for those that work in the building at the corner of Wall and Broad (even if no one works there anymore...replaced by electronic traders on the floor of the NYSE and the folks from CNBC). The US stocks tumbled once again (S&P down -2.37%, Nasdaq downe -3.01% and Down down -2.32%) and is having the worst start EVER. Yes EVER. China, China, China is the words most used to describe the reason. The PBOC set the exchange rate higher (Yuan lower) once again. Moreover the offshore variety (the one that is not fixed artificially, traded at the widest spread to the on shore variety (i.e. the market expects further weakness). Reported intervention to stem the weakness in the off-shore Yuan, had traders confused and led to to meltdown in the Shanghai composite. Recent circuit breakers were triggered (more on that in a second) and after a day of work, the traders in Shanghai left feeling...well fresh. After all, the market only traded for 14 or so minutes.
In the new trading day today, all eyes will be once again on the Shanghai composite as the circuit breakers were removed. Oh, there were rumblings in the NY session that China would devalue again. In August they did and it led to sharp falls the global stock markets. The EURUSD rose sharply, The USDJPY fell sharply. That memory helped to weaken the dollar as the NY session wore on.
What else is up before the week ends. Oh yeah, in addition to China tonight, the market also will be focused on the US employment report tomorrow. The expectations are for 200K, 5% and 0.2%. Those are the estimates for NFP, the unemployment rate and wages MoM respectively. If stock markets were not a concern, the market would be looking forward to the 1st major economic release event. However, with multiple balls in the air now, the "red alert" risk factor may keep players cautious and on the sidelines - looking instead to patiently fade the initial move.
The default expectation for a normal market now that liftoff has occurred is if NFP >200K, January might not be a reality but it could be "in play" or "live" (as the Fed likes to say). The dollar would get stronger in anticipation of the 4 projected Fed hikes in 2016. Now, however, with "global concerns" heating up, a 200K might lead to a dollar rally and then dollar fall. Be aware. A weaker number might just send the dollar lower and lower - especially if there is continued stock weakness. We will see.
What are the major currency pair highlights today?
EURUSD rallied and closed near the highs. Technically, lots of the heavy lifting higher was done before NY got in, and traders leaned against the 200 hour MA at the 1.0878 for most of the day. However, on a break above that MA in the NY afternoon, buyers lifted the pair an additional 50-60 pips.
The USDJPY fell and made lows in the Asia Pacific session. IN the NY session, a corrective rally was the first move but seller came in against the lows from yesterday at 119.23 area.
The GBPUSD had a governor on it's upside in the form of a bid in EURGBP. Nevertheless, the pair was able to base at the 1.4530 level (Ryan picked that level clean), and move above the 1.4600 level (to around 1.4620).
Oil price fell to as low as $32.08 a barrel (it closed at $36 two days ago - that is a >10% decline). USDCAD fell but retraced more than 1/2 the losses by the close. The high in the USDCAD took out the July 2003 swing high by 4 pips at 1.41687. Will it cap the high? Trends are fast, directional and go further than traders expect. Also CAD employment tomorrow too.
Good luck with your trading.
