The dollar is falling and oil is rising to highest level reaching $ 57.60
The Dollar retreated amidst Trump’s trade warning to Japan on his Asian trip and a Saudi corruption crackdown. Brent Crude Oil prices soared over 3% to their highest since mid-2015. The Dollar eased against the Yen. The Euro was little-changed. Sterling rallied as Brexit talks resume while a climb in commodities lifted the Australian Dollar.
German Factory Orders rose 1%, above expectations of -1.0%
Euro Zone Final Services PMI came in at 55 from 54.9 while the Sentix Investor Confidence Index read 34.0, up from the previous 29.7.
Canada’s Ivey PMI was up to 63.8 from 59.6.
Brent Crude Oil prices soared to finish up 3.25% at US$ 64.02 (US$ 62.12). An anti-corruption crackdown led by Saudi Arabia’s crown prince saw the arrest of royals, ministers and investors.
Wall Street stocks extended their rally with the S&P 500 up 0.25%.
Bond prices were higher. The yield on the US Ten year treasury slipped 1 basis point to 2.32%. Germany’s Ten Year Bund yield fell to 0.33% from 0.36% yesterday. The yield on Japan’s Ten year JGB finished down 3 basis points to 0.02%. Australia’s Ten Year bond yield was unchanged at 2.56%.
USD/DXY – retreated to 94.758 from 94.917 yesterday.
EUR/USD – finished little-changed at 1.1612 (1.1610 yesterday)
USD/JPY – lower to 113.75 (114.10 yesterday)
GBP/USD – bounced to 1.3170 from 1.3077 yesterday.
AUD/USD – climbs to 0.7689 (0.7652). Copper prices rose 1.3%.
Outlook: The Dollar should consolidate after last week’s hefty gains, as much the noise in the markets is ignored by traders. Donald Trump’s trip to Asia drew some attention as he remarked that trade with Japan “is not free, and it’s not reciprocal, and I know it will be”. Trump was not specific on how he intended to tackle the trade deficit. New York outgoing Fed President William Dudley said that that inflation would need to push above the 2% goal for awhile to anchor expectations. Central bank speakers this week will keep traders occupied.
Events and economic data releases today:
Australia – RBA interest rate decision and rate statement: (GMT 3.30 am, Nov 7/Local Time 2.30pm, Nov 7) forecast: The RBA is expected to keep its cash rate unchanged at 1.5 %
German September Industrial Production: (GMT 7 am, Nov7/Local Time 6 pm, Nov 7) forecast: -0.7% from 2.6%
UK Halifax House Price Index: (GMT 8.30 am, Nov 7/Local Time 7.30 pm, Nov 7) forecast: 0.2% from 0.8%
ECB President Mario Draghi due to deliver a speech at the opening remarks of the ECB forum on Banking Supervision in Frankfurt: (GMT 9 am, Nov7/Local Time 8 pm Nov 7)
Bank of Canada Governor Stephen Poloz due to deliver a speech at the Chartered Financial Analyst Society of Montreal, in Montreal: (GMT 5.30 pm, Nov 7/Local Time 4.30 am, Nov 8)
Trading View: Trading was more subdued yesterday amidst all the noise around the globe. The Dollar’s easier tone should extend as it consolidates. The US economy has bottomed out is on an upward trend. This will keep the Greenback supported on any corrective dips for a more sustained rally in the medium term.
EUR/USD – is forming a trading range between 1.1580 and 1.1630. Immediate resistance can be found at 1.1630 (overnight high was 1.1624). There is immediate support at 1.1600 and 1.1580. ECB President Mario Draghi speaks later on today. Traders will scrutinise his speech for any clues to inflation and the currency. Likely range today 1.1600-40. Look to sell rallies.
AUD/USD – had a good bounce off the lows as Iron Ore and copper prices rose. The RBA is expected to maintain its policy and keep the Official Cash Rate at 1.5%. The Aussie has immediate resistance at 0.7700 and 0.7720. Immediate support can be found at 0.7660 and 0.7640 (overnight low was 0.7638). Likely range today 0.7670-0.7710. Prefer to sell rallies.
USD/JPY – struggled to hold above 114.00 given broad-based Dollar weakness and Trump’s trade remarks. USD/JPY jumped to an overnight high of 114.74 before dropping to 113.77 at the NY close. Bank of Japan Governor Haruhiko Kuroda said that in his speech to business leaders that the BOJ would continue with its ultra-easy monetary stance for some time. This saw the Dollar soar against the Yen. Yesterday we highlighted that speculative JPY shorts (USD longs) climbed to -JPY 118,869 contracts, the 3rd highest total this year. This will keep the USD/JPY topside limited for now. Immediate support for USD/JPY lies at 113.50. There is immediate resistance at 114.10 and then 114.30. Likely range today 113.60-114.10.
GBP/USD – rallied to a high of 1.3175 as Brexit talks resume this week. Sterling bounced off it’s 3-week lows as trader’s keep away from building any large positions in the currency. The latest CFTC/Reuters report saw speculators turn long to +GBP 1,245 contracts from the previous week’s short of -GBP 1,485. The uncertainty of the Brexit negotiations will limit any big rallies in the Pound. GBP/USD has immediate resistance at 1.3190 and 1.3200. Immediate support lies at 1.3150. Likely range today 1.3080-1.3200.
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***Information contained in this newsletter are gathered from third parties and should not be regarded in any way as trade advice or recommendations by CM Trading. CM Trading does not recommend or advise traders or investors in their decision making but merely provides information from the market for its clients as additional information is made available as per the events occurring in the financial markets.
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