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Forex Market Update; EURGBP 8739 last
As posted earlier and still the case
I have been watching EURGBP which has created a tug-of-war between EURUSD (lagging) and GBPUSD (leading).
Market having more trouble absorbing the USD sell (GBPUSD buy) side
Note EURUSD has tested 1.1654-56 7 times on croas offsets (15 min) and held each time.while GBPUSD moves higher
Tentative sign EURGBP sell order may be filled or just pausing
Elsewhere:
- USDJPY playing some catchip and testing 155
- AUDUSD extending high towards 6600
Forex Market Snapshot
The dollar is trading weaker on Thursday although off its lows with interest rate expectations helping to drive the price moves. Good day for algos looking to run stops.
- AUDUSD outperforming after a strong jobs report dampened rate cut expectations.
- EURUSD extending its high to 1.1635 before backing off. shy of next key level at 1.1668.
- USDJPY pivoting 154.50 after running stops below it. This follows another failure (and lower high) just above 155
- CHF continues to benefit from prospects of a trade deal with the U.S.
Trading Tip: Watch Other Markets for Clues as They are All Connected
As traders we need to find as many clues and pieces to puzzle as possible.
With global markets connected, what happens in one can influence or give a clue to what is going on in another.
Take today as an example how markets are connected:
- US stocks moved lower setting a risk off mood
- Sharply lower bond yields suggested there might me more to it in a run for cover
- In FX, a stronger JPY /lower USDJPY (and a weaker AUDUSD) was another clue that is was a bigger risk off move.
Key is finding which market is leading and which is following.
Reminder about intra-day correlations: They work until thewy stop working
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Trading Tip: Watch Other Markets for Clues as They are All Connected
As traders we need to find as many clues and pieces to puzzle as possible.
With global markets connected, what happens in one can influence or give a clue to what is going on in another.
Take today as an example how markets are connected:
- US stocks moved lower setting a risk off mood
- Sharply lower bond yieldssuggested there might me more to it in a run for cover
- In FX, a stronger JPY /lower USDJPY (and a weaker AUDUSD) was another clue that is was a bigger risk off move.
Key is finding which market is leading and which is following.
Forex Market Snapshot
The dollar is trading firmer as part of some general profit taking/book squaring in other markets as well.
While still in its current ranges some recent dollar highs (e.g. USDCAD. EURUSD should it break 1.1610) are back on the chart radar.
EURUSD 1.1531
GBPUSD 1.3248
USDJPY 153.27
USDCAD 1.4080
USDCHF .8076
AUDUSD .6440
Poasted eaqrly this morning: Giess where the high was *(6628!)?
AUDUSD: Bullish Amazing Trader (AT) Pattern
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- Pattern: 3 red AT lines followed by acceleration to the upside
- Needs to hold above 6604 and then take out 6628 to give more legs to the move up
- Otherwise, back into its range with a bid while above 6655
AUDUSD 4 HOUR CHART
<AUDUSD: Bullish Amazing Trader (AT) Pattern
- Pattern: 3 red AT lines followed by acceleration to the upside
- Needs to hold above 6604 and then take out 6628 to give more legs to the move up
- Otherwise, back into its range with a bid while above 6559
AUDUSD 4 HOUR CHART
What’s Hot and What’s Not?
What’s hot?
USD is firmer across the board…
EURUSD below 1.15
USDCAD above 1.48
AUDUSD below ,6500
USDJPY tests 149+
Crude oil is up
What’ not?
All currencies extending lows vs the USD
Gold is down
US bonds (yields higher)
What’s hot/not?
US stocks treading water ahead of the FOMC decision and key earnings reports
Using my platform as a Heatmap shows..
… the dollar is almost back to square one after extending its highs overnight
EURUSD extended its low but downside paused above the pivotal 1.15 level (low 1.1525)
USD highs (deck cleared of USD BUY stops until these levels)
EURUSD 1.1526
USDJPY 148.75
GBPUSD 1.3315
USDCAD 1.3761
AUDUSD .6499Gold is up after trading lower yesterday
US stocks are up (focus on earnngs)
US bonds are steady
UE: US Consumer Confidence (Jul), JOLTS (Jun)
Since the middle of April, AUDUSD has been moving in a gradual ascending channel in the daily time frame. Price action has been oscillating within this channel and so far, the pair has been retaining its structure and holding the channel’s boundaries.
On the 4H timeframe, there was a test to go lower on the channel support, but the move didn’t have sufficient momentum to trigger a clean break.
Price attempted to push upward again but bullish strength has slowed down and we’re now seeing signs of its pull back as it tries to remain stability inside the channel again. I suspect a strong news, or a huge momentum is needed to break this structure. As of now it is still within its channel’s slow but steady bullish trend.
SocGen’s Overnight Economic News Summary
— US dollar regains bullish tactical footing in Asia, DXY up against 50dma at 98.76, next hurdles 99.50/100. 10-year United States Treasury +2bps at 4.48%, resistance 4.52%. President Trump on dismissing Federal Reserve Chair Powell: I don’t rule out anything, but it’s highly unlikely.
— Japan: trade deficit narrowed to 235.5 billion yen in June from 291.6 billion yen in May. Exports -0.5% year over year, imports +0.2%. Japanese investors bought 759.3 billion yen international bonds last week. International investors bought 170.4 billion yen Japanese bonds and 446.0 billion yen Japanese stocks.
— United Kingdom average earnings excluding bonuses slow to 5.0% three-month/y over year in May, consensus was 4.9%. Private sector moderates to 4.9%. Employment +134,000 threee-month over three-month. Unemployment rate +0.1pp to 4.7%. Payrolled employees -41,000 in June, May revised up to -25,000 from -109,000.
— Australia’s employment up 2,000 in June, full-time -38,200, unemployment rate climbs to 4.3%, participation rate up a tick at 67.1%. AUDUSD -0.8% at 0.6475. Three-year AGBP yield declines 8bps to 3.43%.
— Day ahead: U.S. retail sales, weekly jobless claims, Philly Fed business outlook. Federal Reserve speakers Kugler, Daly and Cook. European Central Bank’s Villeroy. Bond auctions from Spain, France and the U.K.
— Nikkei +0.4%, EUR 10-year IRS unchanged at 2.67%, Brent crude +0.3% at $68.7/barrel, Gold -0.5% at $3,333/oz.
AUDUSD Chart
Australia’s Dollar Gains After Central Bank Unexpectedly Leaves Rates Unchanged, Says Mitsubishi UFG
The top performing G10 currency overnight Monday was the Australian dollar (AUD), highlighting that the latest United States trade policy developments haven’t “significantly” undermined global investor risk sentiment, said Mitsubishi UFG.
Market participants remain optimistic that trade deals will eventually be reached to help dampen the impact of higher tariffs, wrote the bank in a note to clients.
Domestic developments have also been favorable for the Australian dollar overnight Monday after the Reserve Bank of Australia unexpectedly decided to leave rates on hold at 3.85%, stated MUFG. The Australian rate market had been almost fully pricing in another 25bp rate cut as of Monday so it was a big surprise to leave rates on hold.
The yield on the two-year Australian government bond initially jumped by almost 10bps after the policy decision, which helped to lift AUDUSD up to a high of 0.6558 from around 0.6510 before the announcement, pointed out the bank. The decision to leave rates on hold wasn’t unanimous. There were three dissenters who voted for the rate cut today while six members voted to leave rates on hold.
In the accompanying press conference, Governor Michele Bullock emphasized that Tuesday’s decision was more about “timing” rather then direction, indicating that the RBA will continue to lower rates in a “sensible, cautious way,” added MUFG. The RBA wants to be more confident that it has “nailed” inflation and is waiting to confirm that inflation is sustainably on track to its 2.5% target.
As a result, the RBA judged that it could wait for more information to confirm inflation, added the bank. The next RBA policy meeting is on Aug. 12 and by that time, the Australian consumer price index report for Q2 will have been released, which, without any major upside surprises, should allow the RBA to resume rate cuts next month.
SocGen’s Overnight Economic News Summary
— US dollar soft with lower United States Treasury yields in Asia, yen (JPY) and won (KRW) fractionally firmer after President Trump announces intent to impose 25% tariffs on goods from Japan and South Korea on Aug. 1, raise levies on South Africa, Indonesia, Thailand and Cambodia. Deadline not firm, open to extensions.
— Reserve Bank of Australia leaves cash rate target at 3.85% by 6-3 MPC vote versus consensus forecast of 25bps cut to 3.60%. Board needs more time to judge whether inflation is on track to reach 2.5% on a sustainable basis. AUDUSD +0.7% at 0.6540, three-year ACGB yield +12bps at 3.43%.
— Day ahead: U.S. NFIB small business optimism, three-year UST auction. European Central Bank speaker Nagel. Romania’s central bank (NBR) forecast to stay on hold. Chile’s consumer price index.
— CFTC foreign exchange positions: euro net longs reduced to 13.8%, yen longs trimmed to 40.5%, sterling longs decreased to 16.6%, Australian dollar shorts reduced to 46.3%, Canadian dollar (CAD or loonir) shorts raised to 31.2%, short Swiss franc upped to 32.8%, Mexico’s peso longs increased to 35.6%.
— Nikkei +0.1%, EUR 10-year IRS 2.5bps at 2.62%, Brent crude -0.3% at $69.4/barel, Gold -0.1% at $3,333/oz.
AUDUSD Chart
Using my platform as a HEATMAP shows..
…the dollar trading mixed to weaker
EURUSD firmed but struggling to stay above 1.1750 after failing yesterday to test 1.1680 and then popping higher after the 10% tariff report, It was a classic example of it’s the news that matters as the report came from an EU source and not the White House
AUDUSD firmed after A surprise RBA hold on rates
USDJPY has been an exception by trading firmer but has backed off its high after pausing below 146.50
Gold is lower as it consolidates after a quiet start to the day
US bonds yields up as touch more after rising yesterday.
US stocks trading a touch higher
Quiet data day
July 9 trade deal deadline pushed out to August 1
14 letters with tariff rates included Japan, South Korea, Thailand
