Trump Jr. shocks the market after publishing e-mails with a Russian lawyer before the last US election
Global markets recovered after a shock sell-off following Donald Trump Jr’s contact with a Russian lawyer through his emails. The US Senate announced a two week delay to their August recess to give more time to work on key legislative matters. The Dollar Index (USD/DXY) slipped 0.3% mainly on the back of the Euro’s 0.6% rally. Other currencies were mixed in more volatile trading.
US JOLTS Job Openings inMay
totalled 5.67 million, missing expectations of 5.98 million. The Job Openings and Labour Turnover Survey are still near historical highs.
The Yield on Ten Year US Treasuries was down one basis point to 2.36%. The German Ten Year Bund Yield ended at 0.55% from 0.54%.
Wall Street stocks bounced off their lows following the email news. The US DOW closed flat.
EUR/USD – rose to close up 0.6% at 1.1466 (1.1400 yesterday)
GBP/USD – finished lower at 1.2848 from 1.2880. Moody’s reported that the UK’s creditworthiness is under pressure due to Brexit uncertainty.
USD/JPY – ended at 113.93 from 114.03, little-changed.
AUD/USD – climbed, closing at 0.7636 (0.7608 yesterday). Industrial metals were up. Copper closed 1.08 % higher.
NZD/USD –drops to close down 0.4% at 0.7224 from 0.7275 yesterday.
Outlook: The Trump Jr email will further highlight the controversies between the US and Russia. This could hinder the legislation on Trump’s tax reform and spending which would accelerate economic growth. The Senate announcement of a delay to the August recess for more time to work on key legislative matters enabled US stocks to rebound.
Although the Dollar Index (USD/DXY) finished weaker, much of that was due to the Euro rally (which is 0.57% weight on the Dollar Index).
Federal Reserve Governor Lael Brainard said that the Fed shouldstart
it's balance sheet soon. Brainard also remarked that she would want to move more cautiously on increases in the Fed Funds rate.
Markets will focus on Janet Yellen’s semi-annual monetary policy testimony to the US House Financial Services Committee (GMT 2 pm, July 12/Local Time 12 am, July 13). Markets will be looking at Yellen’s timing for the US central bank to begin its balance sheet unwinding.
The Bank of Canada has it’s rate policy meeting later (GMT 2 pm, July 12/Local Time 12 am, July 13) – Market participants expect the Bank Of Canada to hike the Overnight rate to 0.75% from the current 0.5%.
Trading View: The Dollar should trade with a weaker tone in the first part of trading today. However, the Dollar’s fall was not broad-based and will need more fundamental news to push it to lower ground.
EUR/USD – traded to an overnight high of 1.14797 before settling at 1.1465 this morning. There is immediate support at 1.1420 and then 1.1380. Resistance lies at 1.1480 and then 1.1500. The Euro was the strongest currency in last night’s move. There is little news out of Europe this week and the Euro has been driven by events in the US. Yellen’s testimony will determine if this Euro up move has more legs in it or we are close to a short term top. Remember that the speculators increased their net long Euro exposure to over 4 year highs. Likely range today 1.1380-1.1480
GBP/USD – Sterling fell against the Dollar and Euro on a resurgence of Brexit uncertainty. Bank of England Governor Ben Broadbent warned about the risks of Brexit to UK trade. Broadbent did not touch on monetary policy. GBP/USD has support at 1.2830 (which was the overnight low). There is immediate resistance at 1.2880 and 1.2900. Likely range today 1.2830-1.2900.
USD/JPY – USD/JPY has immediate resistance at 114.50 with good support at 113.70/80. The Dollar edged lower after the Trump Jr email news but managed to close near 114.00. Any resurgence of risk aversion on political uncertainty could see USD/JPY lower. Likely range today is 113.20-114.20.
NZD/USD – The Kiwi also fell against the US Dollar and other currencies. There was no fundamental news to push the NZD lower. Reports of an earthquake between 6.4-6.8 magnitude offshore of the South Island supposedly triggered the selling. No casualties were reported. In spite of the Euro’s rally, the Kiwi has not bounced much. The latest CFTC/Reuters report saw speculators increase their net NZD longs to +NZD 29,133 contracts (from +NZD 25,233 contracts). These are the highest number of net Kiwi longs since April 2013. The move lower suggests a liquidation of these longs in a currency that can be very illiquid at the best of times. There is immediate resistance at 0.7240 and then 0.7280. Good support lies at 0.7200 (overnight low was 0.72017). Should the US Dollar rally, we could see this Bird much lower.
Now is your chance to make a profit!
Open an account here!
***Information contained in this news letter 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 being made available as per the events occurring in the financial markets.
HIGH RISK WARNING:
Trading Foreign Exchange (Forex) and Contracts for Differences (CFD’s) is highly speculative, carries a high level of risk and may not be suitable for all investors. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin.
© Copyright 2015 – CM Trading – All rights reserved