DXY dips, EUR, NZD bounce highest; AUD, GBP edge up

Turkish Lira (TRY) Slides to All-Time Low, EMFX Lower

Summary: The Euro rebounded 0.47% against the Dollar to 1.1370 (1.1320) as overcrowded speculative shorts moved to cover their bets. This enabled the Dollar Index (DXY), which measures the value of the Greenback against 6 major currencies, to extend its pullback to 95.55 from 95.75 yesterday. Earlier this week, the DXY traded to a 16-month high to 96.25 on the back of a spike in US inflation and stronger retail sales. The British Pound (GBP/USD) was little changed, settling in late New York at 1.3497 (1.3492 yesterday). Against the Japanese Yen, the Greenback close with modest gains to 114.25 from 114.15. New Zealand’s Kiwi found its wings and soared against the Greenback to 0.7038 from 0.6998. An RBNZ survey showed inflation expectations rose to 2.96% from a previous 2.27% in Q4. The Australian Dollar edged up to 0.7277 (0.7265) while the USD/CAD pair dipped to 1.2600 from 1.2607 yesterday. Elsewhere, the US Dollar rocketed to an all-time high against the Turkish Lira (USD/TRY) to 11.29 from 10.33 on Wednesday. The CBRT (Central Bank of the Republic of Turkey) cut interest rates by 100 basis points to 15% despite a surging inflation nearing 20% in October. Which saw the US Dollar gain modestly against most Asian and Emerging Market currencies. The USD/SGD pair was last at 1.3565 from 1.3555 yesterday. The Greenback dipped against the Thai Baht (USD/THB) to 32.6 from 32.65. Against China’s Offshore Yuan, the Dollar (USD/CNH) gained modestly to 6.3815 (6.3725).

US bond yields finished their session flat. The 10-year US treasury note rate settled at 1.59% (1.59%). Global rival rates though were mostly lower. Germany’s 10-year bond yield eased 3 basis points to -0.28% (-0.25%). The UK 10-year Gilt settled with a yield at 0.92% against 0.96% yesterday.

Wall Street stocks finished mixed. The DOW dipped to 35,890 from 36,000. The S&P 500 rose 0.3% to 4,705 (4,695). Other data released yesterday saw Switzerland’s October Trade Surplus climb to +CHF 5.65 billion from 5.05 billion previously. US Weekly Unemployment Claims climbed to 268,000 from an upward revised 269,000 (from 267,000), and median forecasts of 260,000. The US Philadelphia Fed Manufacturing Index beat forecasts at 24.0, climbing to 39.0. Canada’s ADP Payrolls rose to 65,800 from a previous upwardly revised 41,000 (from 9,600 originally reported).

• EUR/USD – Amongst the majors, the shared currencybounced highest, up 0.47% against the Greenback to 1.1370 from 1.1320 yesterday. After trading heavy all week, speculative shorts headed for cover. The EUR/CHF cross also dipped briefly below 1.0500 for the first time since 2015. This further weighed on the shared currency.
• NZD/USD – The Kiwi also had an impressive comeback, after an RBNZ survey showed Q4 inflation expectations rose to a 10-year high at 2.96% (vs forecasts at 2.27%). NZD/USD settled at 0.7008 from 0.6998, up 0.51%. Overnight high traded was at 0.7053.
• AUD/USD – The Australian Dollar grinded higher to close at 0.7277 from 0.7265 yesterday. Overnight the Aussie traded to a peak at 0.7293 before easing at the New York close. The Battler traded 0.7250 lows. The Aussie failed to keep up with its smaller cousin the Kiwi.
• USD/JPY – With US bond yields finishing flat, the Greenback was little changed against theJapanese currency.The USD/JPY pair closed at 114.25 after trading to an overnight peak at 114.49. Overnight low traded was at 113.88.

On the Lookout: We can expect another light data read in today’s economic calendar. Japan kicks off with its Japan October National Core CPI report (y/y f/c at 0.1% from a previous 0.1% -ACY Finlogix). Japan also releases its Annual Headline CPI Rate for October (no f/c given, previous was 0.2%). New Zealand releases its October Credit Card Spending (y/y no forecasts, previous was -12.9).

Europe starts off the UK releasing its GFK November Consumer Confidence Index (f/c -18 from a previous -17 – ACY Finlogix). Germany follows with its October PPI (m/m f/c 1.7% from 2.3%; y/y f/c 16.1% from 14.2% - ACY Finlogix). France follows with its Unemployment Rate (f/c 7.9% from 8% - ACY Finlogix). The UK releases its October Public Sector Net Borrowing (f/c -GBP 14.2 billion from previous -GBP 21.8 billion – ACY Finlogix). UK October Retail Sales follows (m/m f/c 0.4% from -0.2%; y/y f/c -1.9% from -1.3% - ACY Finlogix). Canada kicks off North America with its September Retail Sales (m/m f/c -1.7% from previous 2.1%; y/y no f/c, previous was 2.8% - ACY Finlogix), Canadian October New Housing Price Index follows (m/m no f/c, previous was 0.4%; y/y no f/c, previous was 11.3%). There are no scheduled economic releases from the US. The US Treasury though releases its Treasury Report, which is a detailed review of global exchange rate policies, economic conditions and government and central bank actions across the globe. The aim is to look for currency manipulators.

Trading Perspective: Thank God it’s Friday. Markets will take a breather today ahead of a light calendar release and the end of busy week. The Dollar Index (DXY) eased 0.27% to 95.55 after hitting a 16-month high earlier this week (96.25). We can expect further easing in the DXY as traders pare positions ahead of the weekend. While there are no major US economic data releases today, traders will be focussed on central bank speak. ECB President Christine Lagarde is due to speak at several functions in Germany today. Across the Atlantic, FOMC member Clarida will speak in San Francisco at an Asian Economic Policy Conference.

Overnight, EUR/CHF cross traded to a low at 1.0498, it’s lowest level since 2015. EUR/CHF bounced back to close at 1.0525. The previous low for the EUR/CHF pair was at 1.0535. The Swiss National Bank has defended the 1.05 level vigorously since 2015.

In January 2015, a “flash crash” occurred when the SNB suddenly and unexpectedly removed the EUR/CHF price peg of 1.20 they set at the time. The EUR/CHF cross plunged 20% within a minute (from 1.2 to less than 1.0). Many traders and investors lost large sums of money because of the move. Traders will be monitoring the 1.0500 EUR/CHF level closely today.

• EUR/USD – The shared currency performed its best in a week, rebounding 0.47% against the Greenback to 1.1370. Overnight the Euro hit a high at 1.1374. On the day, immediate resistance lies at 1.1400 followed by 1.1430. On the downside, EUR/USD should find initial support at 1.1340 followed by 1.1310 (overnight low traded was at 1.1314). Expect the EUR/USD pair to grind higher in a likely trade between 1.1330-1.1430. Keep an eye on the EUR/CHF cross pair as well.

(Source: Finlogix.com)

• NZD/USD – The Kiwi rebounded against the Dollar supported by a surprise rise in the RBNZ’s Inflation Expectations survey. Overnight the NZD/USD pair traded to a high at 0.7053 before easing to settle at 0.7038 at the close. Immediate resistance lies at 0.7055 followed by 0.7085. Immediate support can be found at 0.7000 (overnight low 0.6995). The next support level lies at 0.6970. Look for the Kiwi to consolidate in a likely trade between 0.6985-0.7085. Trade the range shag on this one today, the preference is to sell rallies in the Bird.
• AUD/USD – The Aussie edged higher to close at 0.7277 from 0.7265. Overnight high traded was at 0.7293. On the day immediate resistance is found at 0.7300 followed by 0.7330. Immediate support can be found at 0.7250, which was the overnight low. The next support level can be found at 0.7220. Look for the Aussie to trade in a likely trading range today of 0.7230-0.7330. Trade the range shag on this puppy today.
• USD/JPY – The Greenback managed to settle at 114.25 from 114.15 yesterday. Trading was active with the overnight high recorded at 114.49. This puts today’s immediate resistance at 114.50 followed by 114.80. On the downside, the USD/JPY pair hit a low at 113.88. For today immediate resistance is found at 114.00 followed by 113.80 and 113.50. Look for consolidation in a likely trading range today of 113.10-114.10. Prefer to buy dips.

Its Friday and after a long week, as the Easybeats sand in 1966, “I’ve Got Friday on my mind.” Have a happy Friday all, and a top weekend ahead.