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Dean's Daily FX Update – 26 July 2017
In the Zone
- EURUSD
- NZDUSD
- AUDUSD
- USDCAD
Noteworthy News
- Trump commented that Cohn and Yellen are the leading candidates to lead the Fed, you have definitely seen a slight change in Yellen since Trump took office and I wonder if this what Trump is noticing.
Recap
You find that the purists are quite happy that the market is being dominated by political events, it is probably a throwback from a time when we didn’t have any sophisticated charts, and I find it rather frustrating if I have to be honest. Yesterday was another perfect illustration, the dollar started the New York session slightly on the back foot as news about Trump verbally “abusing” the Attorney General sparked a little bit of concern.
Just as it looked as though we would get another leg lower in the dollar, word spread that there would be a vote to discuss a repeal and replace of Obamacare. The market quickly realized that this vote would not be called unless the Republicans were confident it would pass, the vote came in at a dead heat and Vice President Pence had the deadlock vote to pass. A small victory for the Republicans, but I just want to reiterate that this motion does not repeal Obamacare – it just opens up debate and essentially gives congress two years to find a solution.
More importantly, it will open up more opportunity to pass the tax and infrastructure laws. I hope that this is the first sign that the Republicans are starting to work as a team, because between the them and the Democrat attitude to just try and block everything means that it is the US public that are losing out as nothing gets done.
The EURUSD launched an attack at 1.1700 yesterday afternoon and fell just shy of the 2015 highs, then the afternoon session started and we saw that consumer confidence is high, manufacturing index came in double the expectation and we saw possibly some momentum building into the healthcare debacle. This sent the pair back to 1.1646 – unchanged on the day – I will be watching the FOMC statement tonight and wonder if it will be the catalyst for the EUR to move lower. The bulls are still in control, and the sellers will need to see a close below the 1.1615 support to open up for a move closer to 1.1480.
I highlighted over the weekend that I would be sitting out of the USDJPY, coupled with politics this pair also gets influenced by the global bond market and the US equity market. Earning season in the US continues to impress and so this has meant the USDJPY has found support and traded up to 112.00, it found immediate resistance up there but I will look for the pair to have another look after the FOMC.
Keep an eye out for the afternoon video that tries to tie everything together.
Important Economic Data out today
10:30 GBP Prelim GDP
Consensus: 0.3%
Effect: Actual higher than expected is good for the GBP
16:00 USD New Home Sales
Consensus: 615K
Effect: Actual higher than expected is good for the USD
16:30 USD Crude Oil Inventories
Consensus: -3.3M
Effect: No consistent effect on the USD
20:00 USD FOMC Statement
Consensus: None
Effect: More hawkish than expected is good for the USD
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