The yen has not benefited from the dollar’s week and a half decline, but it remains stable Monday. The dollar became the safe-haven of choice in its recent ascent due to trade uncertainties. With the premium coming out, it has dragged the yen along, says Bill Baruch.
Bill Baruch’s Midday Market Minute August 28 short video here.
Stocks retreat off of record highs while gold consolidates to $1204
Bill Baruch: Global stocks up Monday. Crude Stabilizes. Yuan strong. Bullish Gold. Commentary here.
Bill Baruch’s Midday Market Minute Monday short video here.
Euro (September)
Session close: Settled at 1.1696, up 52.5 ticks.
Fundamentals: Today was a tremendous follow through session for the euro. The U.S and Mexico reached a new trade agreement and we saw the safe-haven winds continue to come out of the U.S. dollar’s sails as it was down against every major currency. Boosting the euro early though was a stronger than expected read on German Ifo Business Climate; it is seemingly turning a corner from the worst level since November 2012 after President Trump’s meeting with EU Commission President Juncker.
We have been pounding the table on the capitulation of sentiment that took place nearly two weeks ago and sent the euro to the lowest level since last June’s breakout. Since, the euro has gained 3.3% and finds itself at an inflection point, reaching the highest level since August 1.
Pressuring the dollar was also a dovish rhetoric from Fed Chair Powell in his Jackson Hole speech on Friday; he reemphasized that there are no signs inflation will run away. (In fact, the FOMC Minutes last week showed a revision lower in the Fed’s inflation projections.) And he showed concern for hiking rates too quickly and slowing the economic recovery.
Technicals: The euro has been on a tear over the last week and a half but faces a tough task directly overhead. We have had major three-star resistance at ...
Economic calendar this week
Tuesday, regional European Confidence numbers from France and Italy are due early and then we look to U.S Trade Balance and Wholesale Inventories data at 8:30 am EDT. Case Shiller is due at 9:00 am EDT and August Consumer Confidence is at 10:00 am.
Wednesday, luckily, this week we get the second look at U.S Q2 GDP.
Thursday, more importantly though, July PCE, the Fed’s preferred inflation indicator, is due.
Friday, we get the first look at Eurozone August CPI.
Yen (September)
Session close: Settled at .90125, up 8 ticks.
Fundamentals: The Japanese yen has not benefited from the dollar’s week and a half decline, but it remains stable. This is because the dollar became the safe-haven of choice in its recent ascent due to international trade uncertainties and with the premium coming out, it has dragged the yen along with it.
Price action stabilized on Friday as China strengthened the yuan and shore up the region, but the yen finds itself at a key technical area now (discussed in the Technical section below).
Focusing on Japan, BoJ Core CPI is due out at 1 am EDT tonight. This is a big week for data from Japan and the more closely watched Tokyo CPI is due Thursday evening. The Bank of Japan is in a tug of war between policy dynamics and stronger than expected inflation will again spark the tightening rhetoric we heard in January of this year.
Technicals: Friday and today were quiet sessions for the yen as it consolidates at first key support at ...
Aussie (September)
Session close: Settled at .7348, up 21 ticks.
Fundamentals: China boosted the Aussie (AUD) on Friday when the People’s Bank of China announced they will resume counter-cyclical factors in yuan midpoint fixing. The yuan has gained 1.7% against the U.S dollar from its weakest on August 15. The last time we saw this move from China was in May 2017 in an attempt to strengthen the yuan. China is battling inflation due to the tariffs and massive storms that have hurt their food supply. The move boosted commodity prices and came at a dire time for the Aussie as it was nearing the recent low; a move below here would have been a big technical failure.
Technicals: Price action finds itself back at a fairly neutral level from near doom last week. Overhead resistance comes in at ...
Canadian (September)
Session close: Settled at .7716, up 37.5 ticks.
Fundamentals: The Canadian (CAD) became a beneficiary of the trade deal between the U.S and Mexico for two reasons; first it takes safe-haven premium out of the U.S dollar as it shows a light at the end of the international trade tunnel and second this assumingly paves the way for Canada to get invited back to the table.
The Canadian has also benefitted from commodity strength on the heels of China strengthening the yuan. The energy sector posted a tremendous week last week and this has provided a further tailwind for the Canadian to trade to the highest level since June.
Technicals: We held a Bullish Bias on the Canadian through last week though we waved slight caution after it faltered on Thursday. Still, price action remains constructive and as we have been noting the Canadian was best technically positioned for a global risk-on scenario. The tape is testing into major three-star resistance at ....
