WorldWideMarkets Community

Forex Trading, Market News & Technical Analysis

US FX Market Open – Thursday July 27, 2017: USD weak, EUR/CHF new post floor high

Posted by Marge Maresca on Jul 27, 2017 9:31:00 AM


Overnight Events

• EUR/USD -0.15%, USD/JPY +0.17%, GBP/USD +0.24%, EUR/GBP -0.39%
• DXY -0.11%, DAX -0.55%, FTSE -0.01%, Brent +0.29%, Gold +0.17%
• DE Aug Gfk consumer sentiment, 10.8% vs f'cast 10.6%, prev 10.6%
• GB Jul CBI distributive trends, +22 vs f'cast 10, prev 12
• Britain to scrap Libor rate benchmark from end-2021
• EZ Jun Loans to Non-fin, 2.1%, prev 2.4%
• EZ Jun Loans to households, 2.6%, prev 2.6%
• EZ Jun Money-M3 annual growth, 5.0% vs f'cast 5.0%, prev 5.0%
• China factory sector seen maintaining solid growth in July
• China industrial profits jump most in 3 months, weather higher financing costs
• China economic outlook bright, prudent monetary policy to continue - senior official
• Japan’s life insurers curb enthusiasm for foreign bonds - Nikkei
• MoF flow data week-ended July 22 – Japanese again good buyers of foreign bonds
• Net Y1.1786 trln bought, adds to large buys previous week, stocks bought too
• Foreign investors buy net Y292.4 bln Japanese stocks, adds to buys previous wk
• Oil prices hover near 8-week highs on lower U.S inventories
• Gold rises to six-week high as dollar drops after Fed statement

Currency Summaries

• Dovish turn in Fed expectations and DC political uncertainty weighing on USD
• ECB Nowotny comments Wed's helped EUR, post FED rally peaks 1.1777 Asia
• Setback based at Tues prior hi 1.1712, now support. Fri/Mon lows 1.1684-83
• 2.5bln 1.1700 expiries today/Friday underpin. Barriers reside 1.18, 1.19, 1.20
• Barriers mostly RKO attached to long EUR calls - many shorter date expiries
• Key bull focus 200WMA 1.1797 - close above Friday reinforces 1.20 target

• USD/JPY near 111.25-32 NY cut expiries worth 1.5B & cloud top 111.26
• There are said to be large Japanese bids ahead of 110.00
• Talk non Japanese spec accounts sold USD/JPY to 111.00 in Asia
• Model stops below 111.00 were triggered, more stops clustered sub 110.70
• Recall USD/JPY dropped from 111.27 to hit 110.79, ahead of recovery to 111.43
• Risk for squeeze higher, but 200-DMA @112.12 like to cap

• EUR/CHF breaks 1.1200 barriers during the European am
• 1.12 = high water-mark for cross since SNB scrapped 1.20 floor Jan 2015
• "Risk on" weighing on safe-haven CHF: VIX tested 1993 low Wednesday
• Swiss franc attractive as funding currency for carry trades
• German consumer morale up to 16-year high, EUR-positive
• 1.1365, 1.15 & 1.18 among EUR/CHF bull targets

• 1.3124 = low water-mark for cable since 10mth high of 1.3157 in Asia
• 1.3124 approximates to last week's high (1.3120 = Wednesday's high)
• Ascent to 1.3157 fuelled by USD selling after dovish Fed statement
• Offers expected near 1.3200 (option barrier level)
• 1.3100 (option expiry level), 1.3084 (Monday's high) & 1.3067 supports
• BoE MPA next week: 6-2 or 5-3 vote to keep Bank Rate at 0.25% expected

• 1.2458 = high water-mark for USD/CAD since 1.2415 revisited in Asia
• 1.2415 was Wednesday's 25mth low after USD sold on dovish Fed
• Recovery rally from Wednesday's low topped out at 1.2463
• 1.2458/63 levels reside either side of May 2016 low (1.2461)
• Dovish shift in Fed expectations contrasts with hawkish BoC expectations
• 48% probability of another BoC 25bp rate hike Sept 6-BOCWATCH/Eikon

• AUD/USD retreat to threaten 0.8014 influenced by profit-taking on longs
• 0.8014 = Wednesday's high. 0.8066 was 26mth high in Asia
• Bids expectedd around 0.8000 (former key resistance) if retreat extends

• 0.7524 = low water-mark for NZD/USD since 26mth peak of 0.7557 in Asia
• Ascent to 0.7557 fuelled by greenback selling on dovish Fed statement
• Fonterra raises forecast for farmgate milk prices to NZD 6.75/kg from 6.50

Chart - (Source:ThompsonReuters)

EUR/USD bulls eye 1.2167 Fibo
EUR/USD bulls are setting their sights on 1.2167--50% Fibonacci of the 1.3995-1.30540 drop (2014-2017) after taking out 1.1736, the 38.2% retrace of the same fall to hit a new 2017 high at 1.1777. The task for bulls now is to register a close above the 1.1736 at the end of July to pave the way to that 1.2167 level. EUR/USD is persistently trading well above the 30-month upper Bolli band currently at 1.1595 level, an unusual pattern which is indicative of a market heading to a new equilibrium. Fourteen-month momentum is likely to register a positive reading for the first month since January, highlighting the bullish outlook. If the market fails to register a monthly close above 1.1736, this will suggest that medium-term bulls are running out of steam. Chart 

Today’s events

Option Expirations (Source:ThompsonReuters)

An expiring FX option heading into the New York Cut, if close enough to the strike price, can act as a magnet for selling/buying.  If the option is large, it can generate enough trading to move the market.  

• EUR/USD vols/calls firm as dealers position for further EUR/USD gains
• EUR/CHF vols/calls boosted by this weeks spot gains and 1.12 barrier break
• USD/JPY vols only marginally higher as broader ranges hold. Barriers below
• AUD vol demand falters as follow through above 0.80 barrier lacks impetus
• Cable 1wk vol higher on MPC capture/spot upleg, 1mth stagnates at 7.0

Economic Data (GMT) - (Source:ThompsonReuters)

• N/A Atlanta Fed GDP Now (Q2) (prev +2.5% q/q AR)
• 12:30 Initial Jobless Claims (w/e Jul 22) (mkt 241k, prev 233k)
• 12:30 Continued Claims (w/e Jul 15) (mkt 1.950 mln, prev 1.977 mln)
• 12:30 Durable Goods Orders (Jun) (mkt +3.0% m/m, prev -0.8% m/m)
• 12:30 Durable Goods Orders ex-Trans (Jun) (mkt +0.4% m/m, prev +0.3% m/m)
• 12:30 Durable Goods Orders ex-Defense (Jun) (prev -0.3% m/m)
• 12:30 Core Capital Goods Orders (Jun) (mkt +0.3%, prev +0.2% m/m)
• 12:30 Advance Goods Trade Balance (Jun) (prev advance -$65.9 bln)
• 12:30 Advance Wholesale Inventories (Jun) (prev advance +0.3% m/m)
• 12:30 Advance Retail Inventories (Jun) (prev advance +0.6% m/m)
• 12:30 Chicago Fed National Activity Index (Jun) (prev -0.26)
• 12:30 Revised Building Permits (Jun) (as reported 1.254 mn SAAR, +7.4% m/m)
• 15:00 KC Fed Manufacturing Index (Jul) (prev 11)

Events, Other Releases (GMT) - (Source:ThompsonReuters)

• 13:45 FedTrade operation 30-year Fannie Mae / Freddie Mac (max $1.575 bn)
• 18:30 FedTrade operation 30-year Ginnie Mae (max $1.1 bn)
• 19:00 New York Fed publishes tentative agency MBS operation schedule for period     beginning July 28

Topics: US FX Market Open


Tools & Educational Resources

Forex 101LEARN MORE >>
Learn the basics of Forex and how to practice trading the markets.

GlossaryLEARN MORE >>
Confused by the language? Click here and search for key trading terms.

Browse our frequently asked questions and find your answers right away.

Access to the educational lessons, webinars and platform walkthroughs.


Get started with a FREE $10,000 Demo Account and experience the Forex Market RISK FREE!