US Bad data limits Dollar’s strength
Weaker than expected US housing and consumer sentiment data dragged the yields and the Dollar lower. The Dollar Index (USD/DXY) slipped to close down 0.33% at 97.14. The benchmark US Ten year bond yield fell back to 2.15% from 2.16%. Two-year yields finished at 1.32% from 1.35% Friday.
Stocks were little-changed. The Dow rose 0.11% while the S&P500 slipped 0.03%.
The number of new US Residential Building Permits issued for May fell to an annualized 1.17 million from April’s 1.23 million.
US May Housing Starts fell to 1.09 million units against an expected 1.23 million units.
The University of Michigan Consumer Sentiment Index dropped to 94.5 (vs f/c 97.2).
EUR/USD – closed at 1.1194 (1.1148 Friday). The Euro opens up at 1.1203 this morning.
USD/JPY – opens lower at 110.80 this morning following its NY close of 110.86 (110.92 Friday)
GBP/USD – ended at 1.2776 (1.2760 Friday).
AUD/USD – finishes at 0.7617 (0.7583 Friday), opens up this morning at 0.7622
USD/CAD – ends down at 1.3214 (1.3265 Friday). No change at this morning’s opening.
The market lacks the conviction to take the Dollar too far either way. Trading the recently established ranges is the best strategy.
The latest CFTC/Reuters data (week ended 13 June) saw speculators trim the total net long US positions to the lowest since August 2016.
It’s the individual currency breakdowns that provide the most interesting insight into the market positioning for this week.
EUR/USD – opens above 1.12 this morning buoyed by the Macron French election win and broad-based weaker US Dollar. Resistance lies at 1.1230 and then 1.1280. There immediate support at 1.1180 and 1.1150. The overall range for over two weeks has basically been 1.1140 to 1.1280. The latest CFTC/Reuters data saw speculators increase their long EUR/USD bets by 5,044 contracts to +EUR 79,053. This is the highest net total of Euro longs since May 2011. Likely range today 1.1185-1.1225 with the preference to sell rallies.
GBP/USD – closed at 1.2775 from 1.2757 Friday. Sterling opens up little-changed in Asia today at 1.2772. There is immediate resistance at 1.2790 and 1.2800. Support lies at 1.2750. The CFTC/Reuters report saw little change in Sterling’s net short position to -GBP 39,441 contracts (-GBP 36,716 contracts). The official start of Article 50 Brexit negotiations should see increased volatility in the Pound after a recent quiet patch.
AUD/USD – rallied to close higher at 0.7617 (0.7584 Friday). The Aussie has managed to claw it’s way back above 76 cents after spending most of June between 75 and 76 cents. There is immediate resistance at 0.7640 with support around 0.7580. Last week we saw the speculators turn small short on the Aussie for the first time since the week of Jan 10, 2017. In the latest report (week ended June 13) the specs increased their total net Aussie short contracts to -AUD 1,511 contracts from -AUD 114 contracts. This should enable the recent support around 0.7560-0.7580 hold in the current environment. Likely range today 0.7580-0.7640.
USD/JPY – Immediate resistance lies at 111.40. There is support at 110.65 (overnight lows). Speculators cut their net short Yen positions to -JPY 50,553 contracts (from -JPY 55,027 contracts) in the latest CFTC/Reuters report. Last Friday the BOJ kept it’s discount rate at -0.10%. Likely range today 110.60-111.30.
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***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.
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