Euro peaks before a fall, as it encourages safe-haven flight to the U.S. dollar. Bill Baruch, president and founder of Blue Line Futures, reviews and previews the euro, Japanese yen, Aussie and Canadian and the economic calendar.
Bill Baruch’s FX Rundown short video for Jan. 3-4 here.
Despite flash crash/surge moves in the Aussie & yen last night, fireworks have yet to come. Bill Baruch breaks down what Friday's data deluge means for USD, euro, yen, Aussie & CAD.
Euro (March)
Session close: Settled at 1.1414, down 108.5 ticks.
Fundamentals: The euro peaked at 1 am EDT before beginning a precipitous fall of a penny and a half. A contraction in Caixin Chinese Manufacturing was not as new of news as headlines are telling you given that the state-run data also showed a contraction Sunday night.
However, the overall sentiment behind such had a hand in euro weakness through Wednesday as it encouraged a safe-haven flight to the U.S. dollar. This continued with soft Manufacturing data from Europe regionally and on the eurozone headline. These were in line to mixed versus expectations but the fallout in Spain was bad and again the overall sentiment added tailwinds to the dollar’s safe-haven move and not singularly the euro-dollar pair.
In the U.S., Manufacturing PMI missed but still expanded better than that from Europe. Thursday will be pivotal as U.S ISM Manufacturing at 10:00 am EDT will either help confirm or deny this momentum ahead of a critical schedule Friday that includes eurozone CPI early, Nonfarm Payroll upon U.S. hours and Fed Chair Powell for lunch among other major indicators.
Technicals: The euro failed once again to hold higher prices. Today’s high was critical because it was the ...
Yen (March)
Session close: Settled at .92105, up 39.5 ticks.
Fundamentals: A strong December 20 rally has proven to have legs and the better news is there’s room to run. The yen gained half a point today in the face of U.S. dollar strength and this can typically be good for the safe-haven currency. With Treasury yield spreads tightening (flattening yield curve), volatility in risk-assets skyrocketing and many questioning the diminishing returns of the Bank of Japan’s ultra-loose monetary policy, the least enthusiastic trade on the board has quickly become the exact opposite. Fundamentally and technically, pullbacks are buying opportunities for the foreseeable future.
Technicals: On Monday, the yen took out its high from the December 26 reversal. Its continued strength has now taken out resistance that aligns ...
Aussie (March)
Session close: Settled at .7008 down 44 ticks.
Fundamentals: The Aussie is trading at the lowest level since February 2016 and the contraction in Chinese Manufacturing is a key catalyst in today’s move. However, this new low has been weeks in the making. Today was a double whammy for the Aussie with the U.S. dollar also finding safe-haven winds to start the year. For now, the trend remains lower until we find positive news on the U.S.-China trade front or without any data out of Australia through the rest of the week a weaker U.S. dollar due to Nonfarm Payroll and Fed Chair Powell on Friday.
Technicals: This new low has opened a potential floodgate, however, a failure to quickly follow through and instead close back above ....
Canadian (March)
Session close: Settled at .73725, up 21.5 ticks.
Fundamentals: Despite broad weakness around the globe, the Canadian managed to hold ground after RBC Manufacturing PMI Wednesday morning was solid given its competition. Adding support was a strong move higher in Crude Oil after it was reported OPEC production dropped 530,000 bpd in December. All things considered, the Canadian has been trending sharply lower since October 1 and it simply needed a breather today and it traded positively despite U.S. dollar strength. Data and Fed speak from the U.S. will be crucial to round out the week.
Technicals: Price action arguably stayed below a long-term support level at ...
