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Dean's Daily FX Update – 17 August 2017
In the Zone
- EURUSD
- AUDUSD
- USDJPY
- GOLD
- OIL
Noteworthy News
- Trump laying equal blame on both sides of the Charlottesville tragedy was ridiculous and I can only think that his ability to govern is going to come under further scrutiny.
Recap
The market continues to be dominated by geopolitical factors, if not in the form of rising tensions but also in the form of Trump comments. Yesterday we saw comments from Trump that laid equal blame of the tragedy in Charlottesville on both the alt-left and the neo-Nazi community. It must feel like a throwback to yesteryear and in my opinion it casts a shadow over Trumps voter base, it must be only a matter of time now before his own party starts to turn its back on him. The policy council that Trump had created 6 months ago also disbanded yesterday as business leaders refused to be associated with Trump, this council was supposed to guide the White House on policy, trade, tax and regulation.
This led the dollar weaker in the morning, but this was just a precursor to the FOMC meeting minutes later last night. Headlines over inflation were not very hawkish and the real headline that caused the dollar to weaken was, “Most Fed officials backed balance sheet moves at an upcoming meeting.” That looks hawkish on first glance, but there is no date here which means that there is no commitment and these leaves more questions – are the Fed reverting back to the indecisive and uninspiring bunch we saw last year? It was interesting to see that the greenback closed the day at its extreme lows against all the major pairs.
The EURUSD moved above the 200 week MA and the 100 hour MA which comes in at 1.1767 and it continued to flirt with that level leading into the close. It has broken this key defining level this week on both the lower and higher side and had not been able to run in either direction. It is interesting to notice that the pair seems to be hovering around these levels, possibly waiting for the dust to settle before making the next move – in my opinion the pair has run out of buyers at these levels.
The AUDUSD was the bigger mover yesterday as the perfect storm started to form, there was stronger AUD data, gold was up and the dollar was down. Price moved through the 200 hour MA at 0.7883 before moving through 0.7923. The employment report was upbeat this morning and this led the pair to trade closer to 0.7960, this will be a key level to watch on the London open and I will be looking to fade yesterday’s move and to look for this pair to trade lower.
Keep an eye out for the afternoon video that tries to tie everything together.
Important Economic Data out today
10:30 GBP Retail Sales
Consensus: 0.2%
Effect: Actual higher than expected is good for the GBP
13:30 EUR ECB Policy Meeting Minutes
Consensus: None
Effect: More hawkish than expected is good for the EUR
14:30 USD Unemployment Claims
Consensus: 240K
Effect: Actual lower than expected is good for the USD
14:30 USD Philly Fed Manufacturing Index
Consensus: 18.3
Effect: Actual higher than expected is good for the USD
16:00 USD Capacity Utilization Rate
Consensus: 76.7%
Effect: Actual higher than expected is good for the USD
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