Forex news for NY trading on May 18, 2018

In other markets:

  • Spot gold is up $1.56 or 0.12% at $1292.30
  • WTI crude oil settled down -$0.21 at $71.28
  • Bitcoin on Bitcoin is trading at up $17 at $8220. The high reached $8280. The low extended to $7927.

US major indices closed unchanged to lower, and were lower on the week:

  • S&P was down -0.26% and down -0.54% on the week
  • Nasdaq was down -0.38% and down -0.66% on the week
  • Dow was unchanged and down -0.47% on the week

Yields were lower today.

  • 2 year 2.544%, down 2 bps
  • 5 year 2.886%, down -4.9 bps
  • 10 year 3.0578%, down -5.3 bps
  • 30 year 3.1999%, down -4.5 bps

The strongest and weakest for the day is showing the NZD is the strongest. That currency started to move higher early and grinded higher during the day. The CAD was the weakest. That currency was the big story in the North American session today.

For the CAD, the story was centered on the data. The US did not have any data so the focus was on that pair. The CPI came in mostly as expected, but the YoY did dip to 2.2% vs 2.3% expectations. Then there was the retail sales. That headline came in at 0.6% vs 0.3%, but all the gains were in the volatile auto and parts. Looking at the ex auto and parts, the number was -0.2% vs. 0.5% expectations.

So the nuances of the data was enough to push the CAD lower as traders started to take out the prospects for a tightening at the next meeting. In fact, the chances for a hike at the May 30th meeting fell from 43% to 28.3% currently (as per the OIS market).

For the USDCAD, the pair moved from a low from 1.2788 to a high at 1.2910. The pair is settling at 1.2881.

Other highlights of the price action today showed:

  • The USDJPY moved to the highest level since January 23rd and in the process extended above the 61.8% of the move down from the November high. That level came in at 110.859. However, when stocks and yields started to move lower, so did the USDJPY. The price fell below the 61.8% and moved to a low 110.60. The price remains above a lower trend line on the hourly at 110.54 and the 100 hour MA at 110.369 (both are moving higher). The pair failed on the break higher, but to go lower from here, there needs to be a bigger push at the beginning of next week.
  • The EURUSD move its lowest level since December 18th and moved to a low of 1.17488. There was a lot of concern out of Italy this week as a result of the forming of the coalition between the League and 5-Star. 10 year BTPs yields moved sharply higher as the formula of lower taxes and increases in public spending, is a recipe for potentially a deteriorating budget. Time will tell, but the concerns rolled over into the EURUSD. The pair targets a key support target at 1.17133 which is the 38.2%, and near swing lows from November and December. Be aware.
  • For the GBPUSD, it has been 12 days of ups and downs in fairly narrow range. Today, the lows for the month of May at 1.3450 was tested but not broken (the low reached 1.3454). The pair is closing around 1.3469. Next week that floor will continue to be eyed. On the topside the 200 day MA (today at 1.3555) will continue to be a barometer for buyers. If the price can move back above (it closed below from Tuesday to Friday), the sellers should give up. Until then, the sellers remain in control.
  • The NZDUSD moved higher (the NZD was the strongest currency of the majors on Friday) and got close to its 200 hour MA today. The MA comes in at 0.6925 and the high reached 0.6922. What is the significance of that MA? The price of the NZDUSD has not traded above the 200 hour MA since April 18th at a price 0.7340. That is a long time ago and a lot of pips ago. Into the new week, that MA will be a key barometer for the bulls and the bears. Stay below, is more bearish. Move above and the technical story gets more bullish.

Have a great weekend and thank you for your support of FXL.