Forex news for NY trading on August 16, 2017.

A snapshot of other markets near the end of the trading day shows:

  • Gold up $11.25 to $1282.69
  • WTI crude down -$0.75 to $46.80.
  • The US yields moved lower with the 2 year at 1.326% down -2.0 bp. 5 year 1.7806%, -4.4 bp. 10 year 2.223%, down -4.9 bp. 30 year 2.807%, down -4.0 bps
  • US stock indices ended the session with modest gains. The S&P ended up 0.14%. The Nasdaq ended up 0.19%. The Dow ended up 0.12%.

The USD was the weakest currency in trading today. The catalysts included:

The housing starts and building permits for July both came in weaker than expectations at 1155K vs 1120K est (starts) and 1223K vs 1250K est (permits). At the time the dollar was mixed. It started to weaken a bit.

Later there was a report that the Trump strategy and policy council was disbanding. The council was formed at the start of the Trump administration to help guide policy on trade, taxes and regulation. The forming was met with great fanfare. However, the comments from Trump yesterday where he shared blame on the tragic events in Charlottesville over the weekend with neo Nazi sympathizers and the alt-left, was a straw that broken the camels back. Unlike the manufacturing council that saw 6 or so leaders resign over the last few days, this group resigned all together. President Trump tweeted shortly thereafter that he disbanded both the councils. All gone. The dollar felt some more pressure.

That led to the FOMC meeting minutes. In an interesting wording choice, one headline read "Most Fed officials backed balance sheet move at an upcoming meeting" They just can't fully commit to September. Other headlines were mostly focused on aspects of inflation which were not all that hawkish:

  • Official saw inflation pick up over next couple of years.
  • Several said inflation risk could be to the downside
  • Many saw sub 2% inflation for longer than expected.
  • Some officials concerned by weak inflation, argue for patience
  • Fed split on assessment if inflation expectations well anchored

The Fed is likely to start the QE taper process slowly by simply letting the maturing paper, mature (and not reinvesting the proceeds. That should have a limited impact as the paper held varies in maturing. It will take years for all to matures. So it will happen. Nevertheless, the tightening of rates cycle did not get a boost from the comments today. The dollar move lower and closed near extreme levels.

Technicallly, the EURUSD moved back to the 200 week MA at the 1.1767 level and the 100 and 200 hour MA at the same level. The price for the pair traded above and below that key level over the last 3 hours of trading in the US session. Yesterday, the price broke below that level and reaced lower. Today we raced higher and stalled near the level. Nothing like a neutral home base to hang out while dust settles.

The USDJPY has also moved to a neutral level defined by its 200 hour MA and 38.2% retracement of the move up from the August 11 low. That comes in at 110.09. The low off the selling momentum stalled at 110.02. The 110.00 is a barometer for bullish above and bearish below in the new trading day.

The GBPUSD tried to break below its 100 day MA at 1.2860 yesterday and again today. The low yesterday got to 1.2846. The lows today (two separate ones) reached 1.2840. The afternoon selling took the price back higher but was not able to get to and through the 1.2900 level (and high from the London morning session at 1.2902).

The AUD was the strongest currency today. Gold was up, dollar selling helped contribute. Technically, the price moved above the 100 hour MA and then 200 hour MA at 0.7883 (that is risk). The price stalled around its 100 bar MA on the 4-hour chart at 0.7923. The Australian employment report will be released in the new trading day and the 200 hour MA at 0.7883 is a downside support target on a weaker number. On the topside, the 0.7936 is the 50% of the recent move lower off the July 27 high.

Below is a snapshot of the % changes of the major currencies vs each other.