Articles

USD/CAD extends sideways grind above 1.3400 after Canada GDP data

60191   July 31, 2020 23:02   FXStreet   Market News  

• USD/CAD continues to fluctuate in a tight range above 1.3400.
• Canadian economy expanded by 4.5% on a monthly basis in May.
• US Dollar Index stays near 93.00 after mixed US data.

The USD/CAD pair struggled to make a decisive move in either direction after the macroeconomic data releases from Canada and the United States on Friday. As of writing, the pair was trading at 1.3420, where it was virtually unchanged on a daily basis.

Canadian economic activity recovers nicely in May

The monthly data published by Statistics Canada showed on Friday that the economic activity in Canada expanded by 4.5% on a monthly basis in May. Although this reading came in better than the market expectation of 3.5%, the commodity-sensitive loonie failed to gathered strength amid falling crude oil prices. At the moment, the barrel of West Texas Intermediate is losing more than 1% on the day to trade at $39.80.

On the other hand, the US Bureau of Economic Analysis reported that Personal Spending in June increased by 5.6%. However, further details of the publication showed that Personal Income declined by 1.1% in the same period. Other data from the US revealed that the ISM Chicago’s Purchasing Managers’ Index improved to 51.9 in July from 36.6 in June and the University of Michigan’s Consumer Sentiment Index dropped to 72.5 in July to fall short of analysts’ estimate of 73.

Following these data, the US Dollar Index (DXY) edged slightly higher but couldn’t stage a convincing rebound. As of writing, the DXY was posting small daily gains at 93.05.

Technical levels to watch for

No sign of progress on Congressional talks on stimulus

60190   July 31, 2020 22:56   Forexlive Latest News   Market News  

Benefits expire today

I get the sense there is still some cautious optimism about something on Monday. Cramer has White House ties and said that Mnuchin wants to get it done. These talks are so tough to handicap. At the moment we need to trade off vague comments.

I sense that Democrats believe they have the leverage to get what they want but Republicans might sense they’re behind in the polls and want to gamble on playing hard ball.

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Florida posts another record on coronavirus deaths at 257

60189   July 31, 2020 22:35   Forexlive Latest News   Market News  

Fourth day in a row of records

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Three seasonal trends to watch in markets in August

60188   July 31, 2020 22:29   Forexlive Latest News   Market News  

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.

ADVISORY WARNING: FOREXLIVE™ provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect’s individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FOREXLIVE™ specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FOREXLIVE™ expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.

NZD/USD Price Analysis: Flirts with session low, holds above 1-month old ascending trend-line

60187   July 31, 2020 22:17   FXStreet   Market News  

• NZD/USD witnessed an intraday turnaround from seven-month tops on Friday.
• Bears might now await a sustained break below the 0.6640 confluence support.

The NZD/USD pair extended its sharp intraday pullback from near seven-month tops and refreshed daily lows, around mid-0.6600s during the early North American session.

Bearish traders might now be aiming to challenge one-month-old ascending trend-line support, around the 0.6640 region. The mentioned level coincides with the 23.6% Fibonacci level of the 0.6385-0.6717 positive move, which should now act as a key pivotal point for short-term traders.

Meanwhile, technical indicators on hourly charts have just started drifting into the negative territory and support prospects for additional weakness. However, oscillators on the daily chart maintained their bullish bias and warrant some caution before placing any aggressive bearish bets.

This makes it prudent to wait for a sustained breakthrough the 0.6640 confluence support before confirming that the pair has topped out in the near-term. This, in turn, might accelerate the slide towards the 0.6620 horizontal level en-route the 0.6600-0.6590 region (38.2% Fibo. level).

On the flip side, the 0.6685 level now becomes immediate resistance and is closely followed by the 0.6700 round-figure mark. A sustained strength beyond now seems to assist the pair to aim back to retest YTD tops, around the 0.6940 region ahead of the 0.6955 level (Dec. 31 high).

NZD/USD 4-hourly chart

Technical levels to watch

Japan warned about forex intervention earlier today

60185   July 31, 2020 22:12   Forexlive Latest News   Market News  

Finance minister Aso hinted something was coming

Japan tried some verbal intervention earlier today and it didn’t do much at first but it’s likely responsible for the reversal today, if not outright intervention.

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US: UoM Consumer Sentiment Index drops to 72.5 (final) in July vs. 73 expected

60184   July 31, 2020 22:09   FXStreet   Market News  

• Consumer confidence in US continued to deteriorate in July. 
• US Dollar Index clings to modest recovery gains above 93.00. 

The University of Michigan’s Survey of Consumers revealed that the Index of Consumer Sentiment worsened to 72.5 (final) in July from 78.1 in June. This reading came in lower than the previous estimate of 73.2 and missed the market expectation of 73.

Further details of the publication revealed that the Current Economic Conditions Index dropped to 82.8 from 87.1 and the Index of Consumer Expectations edged lower to 65.9 from 72.3.

Commenting on the data, “consumer sentiment sank further in late July due to the continued resurgence of the coronavirus,” said Surveys of Consumers chief economist, Richard Curtin. “The federal relief programs have prevented more substantial declines in consumer finances, partially shielding consumers from the unprecedented surge in job losses, reduced work hours, and salary cuts.”

Market reaction

The US Dollar Index retreated slightly from session highs after this data and was last seen gaining 0.13% on the day at 93.09.

Gold gets the best of both US fiscal negotiations and potential stimulus agreement – HSBC

60183   July 31, 2020 22:05   FXStreet   Market News  

US fiscal negotiations should be positive for gold, while the yellow metal may consolidate recent gains in the near-term. All in all, gold is still well supported in the longer-term by low yields, according to HSBC precious metals analysts.

Key quotes

“It is clear that the FOMC continues to view the economic outlook as extraordinarily uncertain, and that the economy’s path will depend heavily on how the COVID-19 pandemic evolves.Ongoing monetary accommodation from the Fed and the extraordinarily uncertain economic outlook can buoy up gold.”

“The Fed said it would extend USD liquidity swap lines for nine central banks through 31 March 2021 to serve as backstop for markets and help facilitate planning by other central banks. The Fed also has standing US dollar liquidity swap lines with the BoC, the BoE, the BoJ, the ECB, and the SNB. To an extent, this helps assure the world of adequate USD supply, and reduce financial stress and uncertainty. This should be gold negative.”

“Gold is benefitting from the uncertainty arising from the wide disagreement between Republicans and Democrats on the make-up of the fiscal stimulus but also from the expectations that a fiscal stimulus agreement will be reached. That said, gold may be consolidating some recent gains in the near-term, especially if a fresh fiscal stimulus proves USD positive, from a cyclical perspective, instead of being USD negative amid fewer ‘safe-haven’ bids.”

“Low or negative real interest rates are key to propelling gold higher. When US real yields are low or even negative, investors have no opportunity cost in owning gold. Besides, negative real US yields are likely an indicator of financial or economic stress, probably boosting ‘safe haven’ demand for gold. Furthermore, when US real yields turn negative, it may be negative for the USD, supporting gold in USD terms. Gold is still well supported in the longer-term by low yields.”

U Much July final consumer sentiment 72.5 vs 72.9 expected

60182   July 31, 2020 22:02   Forexlive Latest News   Market News  

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.

ADVISORY WARNING: FOREXLIVE™ provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect’s individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FOREXLIVE™ specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FOREXLIVE™ expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.

US: ISM Chicago PMI jumps to 51.9 in July vs. 43.9 expected

60181   July 31, 2020 22:02   FXStreet   Market News  

• ISM Chicago PMI improved at a stronger pace than expected in July.
• US Dollar Index climbs to fresh daily highs above 93.00.

The ISM-Chicago’s Purchasing Managers’ Index jumped from 36.6 in June to 51.9 in July. This reading beat the market expectation of 43.9 by a wide margin. 

Market reaction

The greenback started to gather strength against its rivals in the American session with the upbeat data providing a boost to US Treasury bond yields. As of writing, the 10-year US Treasury bond yield was up 2.7% on a daily basis and the US Dollar Index was up 0.2% at 93.15.

United States Michigan Consumer Sentiment Index below forecasts (73) in July: Actual (72.5)

60180   July 31, 2020 22:02   FXStreet   Market News  

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EURUSD tumbles to daily lows near 1.1820

60179   July 31, 2020 22:02   FXStreet   Market News  

• EUR/USD loses further ground and recedes to the 1.1820 area.
• The dollar’s rebound looks to pick up extra pace on Friday.
• US final Consumer Sentiment for the month of July next on tap.

Following earlier +2-year peaks just beyond 1.19 the figure, EUR/USD seems to have embarked on a correction lower to the current 1.1820 region at the end of the week,

EUR/USD closing its sixth consecutive week with gains

EUR/USD briefly tested the area just above the 1.19 barrier during early trade on Friday, always on the back of the persistent offered bias hurting the greenback.

In the meantime, the dollar continues to reclaim ground lost and therefore keeping EUR/USD under some modest downside pressure. Higher US yields plus oversold conditions in most of the risk complex appear among the drivers of the buck’s bullish attempt.

In the docket, the flash headline CPI in the euro bloc is seen rising 0.4% YoY, while Core CPI is expected to gain 1.2% on a year to July. Additional data in Euroland saw a historic slump in the GDP, showing the economy is predicted to contract at an annualized 15% and 12.1% inter-quarter in Q2.

Across the Atlantic, the Core PCE gained 0.2% inter-month in June and 0.9% from a year earlier. The final print of the U-Mich index will close the weekly calendar later in the NA session.

What to look for around EUR

EUR/USD recorded fresh tops just above the 1.19 yardstick at the end of the week, confirming once again the solid momentum around both the single currency and the rest of its risky peers. The sharp move up, while largely triggered by dollar-selling, has found extra sustain in auspicious results from the domestic docket, in turn supporting further the view of a strong economic recovery following the coronavirus fallout. Also lending wings to the momentum around the euro, the recently clinched deal on the European Recovery Fund helped putting political fears within the region to rest (for now), while the solid position of the current account in the region adds to the rally.

EUR/USD levels to watch

At the moment, the pair is losing 0.25% at 1.1817 and faces immediate contention at 1.1709 (38.2% Fibo of the 2017-2018 rally) followed by 1.1495 (monthly high Mar.9) and finally 1.1448 (50% Fibo of the 2017-2018 rally). On the upside, a breakout of 1.1909 (2020 high Jul.31) would target 1.1996 (high May 14 2018) en route to 1.2032 (23.6% Fibo of the 2017-2018 rally).