Bill Baruch, president and founder of Blue Line Futures, reviews and  previews the euro, Japanese yen, Chinese yuan Aussie and Canadian for Friday and the upcoming economic report calendar. Follow his reports Monday-Friday on and short Midday Markets video.

Euro (December)

Session close: Settled at 1.16125, down 32 ticks.

Fundamentals: The euro settled at its lowest level since August 20 and has lost nearly 2% since settling at 1.1837 after the Federal Reserve hiked rates by a quarter point last Wednesday. The Fed’s tightening is not the catalyst, it’s the reinvigoration of the Italian drama. Remember back in March and April how the two anti-establishment parties won favor. They ran on an intense anti-austerity platform and now they are making good on those promises. Their budget has a deficit target of 2.4% of gross output over the next three years. This is larger than the 1.3% “proposed” by their own Finance Minister. Ultimately, they have refused to back down and blame the euro. The situation will continue to develop, and traders must tread cautiously in the near-term as this leaves tremendous uncertainty as to where the floor is for the euro.

Fed Chair Powell gave a very upbeat synopsis of the U.S economy today but held to his narrative that “we are in extraordinary time” with historically low unemployment and modest inflation. He furthered his point by saying this is “not too good to be true.” While the euro did stabilize from the height of the Italian fears early this morning, the dollar also did not accelerate higher after his speech. His comments were in line with what we have been hearing; there are no signs inflation will run away, and this will keep the Federal Reserve at a gradual pace.

Wednesday, September Eurozone PMIs are due at 4:00 am EDT and Retail Sales follows at 5:00 am. We look forward to Chicago Fed President Evans who speaks at 6:30 am EDT and last month surprised many with a more hawkish tone than the one that dissented last December. Fed Governor Barkin speaks at 8:05 am EDT and the private ADP jobs survey is at 8:15 am. September PMI data is at 9:45 am EDT but more importantly ISM Non-Manufacturing is at 10:00 am. Later in the session we look forward to Fed Governor Brainard’s comments at 2:00 pm EDT as she was also more hawkish than expected last month. Cleveland Fed President Mester speaks at 2:15 pm and Fed Chair Powell is on the schedule again at 4:00 pm EDT.

Technicals: Price action has been under immense pressure but attempted to stabilize through U.S hours. We have widened major three-star support to ...


Yen (December)

Session close: Settled at .8844, up 22.5 ticks.

Fundamentals: The yen has nosedived since reversing early in Thursday’s session. Price action picked up pressure as the U.S equity markets traded higher following a strong GDP report, however, as those equity gains dissipated the yen did not react adversely. The currency remains, as we have called it, the most unenthusiastic trade on the board.

Technicals: We have maintained only a slight Bearish Bias in this unenthusiastic trade in order to exude that risk must be managed in oversold territory. The immediate-term downside has dissipated, and this aligns our momentum indicators with the low to bring first key support at .88145-.8833. A close above the previous low of .88675 will only be a step in the direction of neutralizing the trend and major three-star resistance at ... 


Aussie (December)

Session close: Settled at .7192, down 41 ticks.

Fundamentals: The RBA left interest rates unchanged overnight as expected. The U.S dollar has been firm since the Federal Reserve hiked rates last Wednesday and this has brought a steady wave of selling over the last week. Although commodity prices in general have gained significant ground over recent sessions, the Aussie has been subdued because of the blatant deterioration of U.S and China trade relations. Aussie building approvals are due at 8:30 pm EDT.

Technicals: Last week, the Aussie failed squarely at major three-star resistance at .7313-.7318 and this remains a significant headwind to rally attempts. To the downside, price action seems to be eyeing major three-star support at ... 


Canadian (December)

Session close: Settled at .78145, down 18 ticks.

Fundamentals: We have had an overall upbeat rhetoric on the Canadian saying it is best positioned to capitalize on U.S dollar weakness and in a prime position to rally once NAFTA gets resolved. The latter occurred Sunday night and the Canadian traded through major three-star resistance. While the sentiment is strong, and we believe the currency is heading higher, patience is required, and we are looking for an opportunity to position long after going Neutral in Bias late last week due to our uncertainty on the U.S dollar in the near-term. This busy week culminates with jobs data from both the U.S. and Canada. First, Ivey PMI is due Thursday.

Technicals: Price action reached a high of .7835 on Monday’s session but has begun to settle in. We are now looking for a short-term consolidation pattern to develop a bull-flag or pennant as it remains constructive at what was major three-star resistance at .... 

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Bill Baruch’s Midday Market Minute short video for Oct. 2 here.
Gold rips on short covering Tuesday.

View a short video: Bill Baruch: Trading Futures. Gold, USD, yuan.

Recorded: TradersExpo Chicago July 24, 2018.

Duration: 4:34.