- FX Market
- 4 months ago
Forex last night was a roller coaster with a late bounce on Wall Street that wiped the floor with the yen, sent the Aussie on a round trip and left the dollar out to dry off.
This all came about despite deep-seated concerns over China's markets, European indexes down to below 2018 lows, poor revenue and guidance reports from big game US stocks and an untold amount of geopolitical angst - We also got a WSJ headline that US Manufacturers See Signs of New Risks ahead of the PMIs today. (We have the midterm elections coming up on the 6th Nov, not that anyone is insinuating there of course). However, it has made for a "golden" opportunity for those who like to trade triangles: Gold: Symmetrical triangle give-away: Buy the bullish breakout to 123.6% Fibo expansion level
All in all, commodities are mostly lower still with that break in oil after Saudi promised to supply the Iranian shortfall. WTI fell below 200 DMA for the first time in more than a year as a result.
EUR/USD was on the backfoot in the early part of the NY session, despite the tighter IT-DE & DE-US spreads. The risk-off sentiment is improving the playing field for the yen, and that means that EUR/JPY bears can have their cake and eat it too, which caps EUR/USD on rallies. However, the impressive turnaround Wall Street likewise capped the yen and EUR.USD was able to recover from 1.1456 all the way to 1.1494. The pair ended NY at 1.1472. While Rome's budget proposal was rejected by Brussels, the impact is likely to be a more drawn out risk for the euro than a one day blunder. Cable was performing well considering the political angst that surrounds Brexit. However, the trade there is fickle, and headline sentiment continue to change from one day to the next, making for a volatile cross. GBP/USD closed the North American day in the green by 0.22% within a range of 1.3044/1.2970 at 1.2995. There is a positive turn in sentiment for Brexit negotiations whereby a UK-wide customs union solution is starting to gain traction. However, the key risks to the pound stem from UK Parliament as it is there that these types of proposals are finding a tougher time appeasing key decision makers. EUR.GBP caught a late bid as a result of traders doubt in the UK Parliament's ability to find a middle ground on these outstanding negotiations and ended at 0.8834, -0.0&% for NY trade and within the range of 0.8847-0.8800. USD/JPY was good two-way traffic, initially offered on a risk-off environment. The pair made a low of 111.95, ( 55-DMA prop), and recovered from there to make a high of 112.47 as the stock market flipped over to sunny side up. There was some Fed chat, and Bostic reaffirms Fed hikes. The Wall Street Journal was saying “US Manufacturers See Signs of New Risks”, underlining the stronger USD, rising costs due to the tariffs, and slower growth in China which the same sentiment has taken US Treasury yields down a notch or few from 3.19% to as low as 3.11% in the 10-yr benchmark on Tuesday. AUD/USD was beaten down by the general risk tone that is deteriorating at a rapid pace. Copper hangs in the balance of China's performance and demands to falter while USD/CNH is on the verge of a spike to the upside. However, while the fundamental picture for the antipodes is one of stark negativity, the ebbs and flows of the markets, and the stubbornness of US bulls, is helping to buoy the Aussie with AUD/JPY rallying on a last-minute surge in US stocks on Tuesday late int he day. AUD/USD travelled in a 0.7090 - 0.7056 round trip range and ended NY at 0.7086.
Source : WJS; ANZ