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USD news

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Breaking: U.S. Consumer Sentiment Sours More Than Forecast in November

#171
U.S. Consumer Sentiment Sours More Than Forecast in November

U.S. consumer sentiment declined more than forecast in November as Americans’ views about the economy deteriorated amid rising interest rates and slumping stocks.

The sentiment index dropped to 97.5, the lowest level since August, from the prior month’s 98.6, according to a University of Michigan report Wednesday. The median estimate of economists surveyed by Bloomberg was 98.3, which was also the preliminary reading released earlier this month. The gauge of current conditions decreased to 112.3, while the expectations index slipped to 88.1 -- also three-month lows.

Key Insights
  • A measure of buying conditions for long-lasting goods declined to a three-month low. Positive attitudes toward buying vehicles remained at a five-year low, and favorable home- buying conditions also were at “depressed levels,” according to the report. That doesn’t bode well for sales and orders of durable goods, which have softened in recent months.
  • “While there is no reason to anticipate a sudden change in expectations in the months ahead, consumers have begun to resist rising interest rates on purchases of housing and vehicles,” Richard Curtin, director of the University of Michigan consumer survey, said in a statement.
  • Even so, confidence remains elevated amid the strong job market, improving wages and cheaper gasoline. That may support consumers’ ability to spend heading into the shopping season kicked off by the Thanksgiving holiday weekend.
  • The report also showed inflation expectations for the year ahead edged down to 2.8 percent from 2.9 percent in prior month, while the inflation rate over the next five to 10 years was seen at 2.6 percent compared with 2.4 percent in the October survey.

Source: https://www.bloombergquint.com/onweb/u- ... gs.4fds5xE
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USD/JPY Technical Levels: slips below 113.00 on bearish RSI divergence

#172
USD/JPY Technical Levels: slips below 113.00 on bearish RSI divergence

  • The USD/JPY pair dipped below 113.00 soon before press time, adding credence to the bearish divergence of the relative strength index (RSI) seen in the hourly chart.
  • The bearish development on the hourly RSI also indicates the recovery rally from the recent low of 112.30 has likely ended.
    The bearish RSI divergence would be invalidated if the pair rises above 113.23.

Hourly Chart
USD_JPY D-636784509035954593.png

Trend: Bearish

Overview:
Last Price: 112.99
Daily change: -8.0 pips
Daily change: -0.0708%
Daily Open: 113.07

Trends:
Daily SMA20: 113.12
Daily SMA50: 112.9
Daily SMA100: 112.09
Daily SMA200: 110.2

Levels:
Daily High: 113.16
Daily Low: 112.64
Weekly High: 114.22
Weekly Low: 112.64
Monthly High: 114.56
Monthly Low: 111.38
Daily Fibonacci 38.2%: 112.96
Daily Fibonacci 61.8%: 112.84
Daily Pivot Point S1: 112.75
Daily Pivot Point S2: 112.43
Daily Pivot Point S3: 112.23
Daily Pivot Point R1: 113.28
Daily Pivot Point R2: 113.48
Daily Pivot Point R3: 113.8

Source: https://www.fxstreet.com/news/usd-jpy-t ... 1811220235
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USD/JPY extended intraday slide

#173
USD/JPY extended intraday slide, weakens below mid-113.00s

  • The latest trade-related optimism-led early spike turns out to be short-lived.
  • A heavily offered tone surrounding the USD failed to inspire bullish traders.
  • Risk-on mood/a goodish pickup in the US bond yields does little to lend support.

The USD/JPY pair extended its sharp intraday retracement slide and is currently placed at the lower end of its daily trading range, below mid-113.00s.

The latest optimism over the truce between the world's two largest economies led to a fresh wave of risk-on trade at the start of a new trading week and eventually weighed heavily on the Japanese Yen's safe-haven demand.

The pair opened with a bullish gap and climbed to a multi-day high level of 113.82 in reaction to the news that the US and China have agreed not to impose additional trade tariffs for at least 90 days, rather attempt to bridge the differences via new trade talks.

The pair, however, started losing steam at higher levels in wake of a heavily offered tone surrounding the US Dollar, which failed to find any support from a goodish pickup in the US Treasury bond yields amid firming prospects for a gradual monetary policy tightening cycle.

Moving ahead, today's scheduled speeches by influential FOMC members and the release of US ISM manufacturing PMI will now be looked upon for some fresh impetus later during the early North-American session.

Technical outlook
Valeria Bednarik, FXStreet's own American Chief Analyst explains: “The pair has spent the last 4 weeks inside a well-limited 200 pips' range, unable to extend gains beyond the 114.00 figure beyond a couple of short-lived spikes. The base of the range is 112.30, the low set on November 20. In the daily chart, the 100 DMA comes at 112.25, reinforcing the support area and indicating an increased downward potential on a break below the level.”

Source: https://www.fxstreet.com/news/usd-jpy-e ... 1812030939
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USDCHF: put value hits 6-month lows

#175
USD/CHF: put value hits 6-month lows, points to more pain

Risk reversals on USD/CHF, a gauge of call options (bullish bets) to put options (bearish bets), plunged to six-month lows yesterday, indicating investors are adding bets to position for further strength in the safe haven Swiss Franc (CHF).

One-month 25 delta risk reversals (CHF1MRR) dropped to -0.675 in favor of puts on Tuesday - its lowest level since June 14. Notably, the gauge stood at -0.35 on Nov. 15.

The negative number indicates that the implied volatility premium (or the demand) for the USD/CHF puts (CHF calls) is higher than that for the USD/CHF calls (CHF puts).

The USD/CHF is currently trading at 0.9925, having charted a bullish candle at the 100-day MA yesterday. The rising demand for the put options, however, indicates the long-term MA support of 0.9888 could be breached soon.

CHF1MRR
CHF options-636801824885270175.PNG
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Breaking: U.S. retail sales topped forecasts in November

#176
U.S. retail sales topped forecasts in November

U.S. retail sales topped forecasts in November as a key measure jumped by the most in a year and October figures were revised higher, indicating consumers are giving a bigger boost to the economy than expected this quarter.

The value of overall sales rose 0.2 percent after a 1.1 percent increase the prior month, Commerce Department figures showed Friday. The median forecast of economists surveyed by Bloomberg called for a 0.1 percent gain.

1302x-1.png

Sales in the so-called control group subset, which some analysts use to gauge underlying consumer demand, climbed 0.9 percent, more than double projections, following a 0.7 percent increase in the prior month. The measure excludes food services, car dealers, building-materials stores and gasoline stations.

The report may alleviate some concerns that growth is significantly weakening and should bolster views that consumer strength is extending into the fourth quarter following two periods of robust gains. Lower fuel prices may have given a lift to other retail categories, as Americans took advantage of Black Friday sales that kicked off the holiday-shopping season.

Online Shopping
Nine of 13 major retail categories showed increases in November, according to the Commerce Department data. The nonstore category, which includes online shopping, jumped 2.3 percent, the most in a year. Other solid gains were recorded at furniture and home furnishings stores, electronics and appliance vendors and health and personal care stores.

Filling-station receipts decreased 2.3 percent, the biggest decline since May 2017, the report showed. The Commerce Department figures aren’t adjusted for price changes, so lower retail sales in the category can reflect lower gasoline costs.

Sales at automobile and parts dealers rose 0.2 percent after increasing 1.5 percent in the prior month. Industry reports previously showed unit vehicle sales declined 0.6 percent from the prior month.

Excluding automobiles and gasoline, retail sales rose 0.5 percent, exceeding estimates, after a 0.7 percent increase the previous month.

Source: https://www.bloomberg.com/news/articles ... pId=google
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COT: USD longs reduced as rate hike premium erodes

#178
COT: Dollar longs reduced as rate hike premium erodes

Summary: The week to December 11 saw speculators sell dollars ahead of the strongest weekly close in 19 months, reducing bullish dollar bets against nine IMM currency futures by $3 billion to $29 bn.

Speculators sold dollars ahead of the strongest weekly close in 19 months. In the week to December 11, they reduced bullish dollar bets against nine IMM currency futures by $3 billion or 9% to $29 bn. The belief in a stronger dollar into 2019, however, remained elevated as per the chart below.

17cot1.png

The reduction was broad-based and was led by short-covering in EUR, JPY, AUD and NZD.

17cot2.jpeg

In fixed income leveraged funds were net-buyers across the yield curve with the exception being the five-year note where the net-short reach a fresh record high of 1.3 million lots, a total contract value of $147bn.

17cot3.jpeg

The week covered the soft jobs report on December 7 and subsequent rally which saw much of the 2019 rate hike premium being eroded. Record-breaking volumes in three-month Eurodollar futures on December 6 resulted in the net-short falling to just 800,000 lots, a 26-month low.

17cot4.jpeg

Source: https://www.home.saxo/insights/content- ... ium-erodes
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FOMC today: The Market Positions For A Dovish Rate Hike

#179
The Market Positions For A Dovish Rate Hike In Today’s FOMC

FOMC.png

In the last 24h, the intensity of the US Dollar sell-off gathered further steam. This dynamic clearly indicates that the market is not placing too high its hopes. The behavior in the US Dollar leading up to today’s event communicates the market is betting for an uber-dovish rate hike. In other words, the FOMC may still raise its interest rate one more time, although it will probably set the bar much higher to keep the tightening campaign going.

If they opt for the dovish hike, it won’t necessarily look like a Central Bank compromised by the recent tweets of Trump, but rather, acting in a way that helps to ease the further tightening of financial conditions, a dynamic that has only worsened via higher funding costs/lower liquidity in the system. The flattening of the US yield curve also communicates the Central Bank is getting ahead of itself. These developments disincentivize the Fed to keep its aggressive rate hike rhetoric, so they’d be less compelled and keep the powder dry, even if they will continue to highlight, especially via such a pragmatist as Fed’ Powell is, that the Central Bank will remain data-dependent.

One of the most pressing issues to address in today’s FOMC meeting includes the update of the dot plot rate forecasts, as well as potential upcoming revisions to the Fed’s balance sheet normalization process.

The only way to explain the changes in option premiums heading into the event is by accepting as true that the market’s view — as a hint — is that expectations for rate hikes heading into 2019 may be nullified as the eurodollar futures market or the US yield curve indicate. Similarly, we might see a Fed shifting the narrative towards an adjustment in its balance sheet normalization process too. Only under these dovish circumstances or similar in USD downside impact I can justify the change in options pricing.

Let’s now get into the details. What I’ve learned from today’s cross-asset analysis, judging by the variations in the pricing of options, is that the consensual view via US treasuries and equities substantiates the notion that the Fed may be working to engineer some type of circuit breaker in the soulless stock market. Even if the pricing to own puts in the E-mini S&P 500 is still much more expensive, the major reduction in premium cannot be ignored and tells us that the market is less bearish in equities heading into the event.

Just as it cannot be ignored the higher prices to own calls in US treasuries, jumping by over 100% from its previous 25-delta RRs. Throw into the mix the decrease of over 0.5bp in 25-delta risk reversals in the USD/JPY, and it looks like the US Dollar is poised to suffer further downside pressures. However, it may not be a broad-based move, as commodity currencies still remain largely unfavoured, not just in its spot technicals, but via the pricing of options.

That’s what options traders are telling us. They certainly have taken note, as bond traders did via the flattening of the US curve, that trade tensions, the fading of the fiscal ‘sugar rush’, the US twin deficits, weakness in the housing market, the slow down in investment growth, the late business cycle, Powell’s shift in narrative from a long way from neutral (October 3rd) to rates being “just below” estimates of neutral policy (November 28th), when compounded, place the risks of a more relaxed Fed into 2019, outweighing the pros.

In today’s report, I’ve also noted additional downside protection bought — via OTM puts — in the EUR/USD this week. A market that I find personally very interesting to endorse in buy-side action if the view by options traders materializes is gold. Vol is going to pick up substantially, but some pairs such as the EUR/USD, AUD/USD, judging by its implied vol, may still be contained in wider yet familiar ranges. However, gold appears to be an exception, together with the EUR/JPY, amid low gamma-scalping requirements.

All in all, brace yourself for a wild ride, in what’s set to be one of the major events of the entire year. It will set into motion the stage to approach 2019 with from a point of greater clarity to diversify one’s portfolio.

0_Q9fgeqHeNvwrq4Wh.png

Market Drivers
US President Trump had another go at the Fed via Twitter, calling for the Central Bank to pause further interest rate hikes. He is interfering in the decision of an independent institution in a way that is unprecedented for a US President, in hopes of a circuit breaker for stocks. The tweet read: “I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!”
Another day characterized by analogous dynamics in risk behavior, with follow-through selling in US equities and US bond yields, while the US Dollar keeps weakening ahead of the FOMC. The tendency to sell a macro expensive USD is, in a way, capping the potential downside the currency may suffer immediately after the Fed decision. Look for some potential upside spikes to find liquidity and if the Fed is indeed overly dovish, then would be time to engage in USD selling. On the contrary, if the Fed refrains from a dovish tilt, all hell may break loose for USD bears, especially on such aggressive pricing of a dovish outcome this week.
Relatively good news out of the Eurozone as the European Economic Commission, via its representative Mr. Moscovici, confirmed that France is not going to be sanctioned over its budget deficit on the basis that the country’s breach is ‘temporary, limited and exceptional’. Similarly, an Italian government source has announced that the EU commision has, at last, accepted the 2019 budget deficit of 2.04%. These 2 developments are clear positive inputs for the Euro, even if no effect in the price today.
Oil got absolutely whacked by falling over 7% as concerns about oversupply and global demand slowdown continue to mount. The sharp decline asserts the view that heading into 2019, the risk of inflationary pressures should remain largely capped by energy prices.
Chinese President Xi, in a speech on the 40th anniversary of Deng’s market opening and reform, refrained from sounding retaliatory, even if he indirectly hinted that the US is in no position to dictate the future of China. The 90-day trade truce goes on, despite the market seems to have moved on, with the worries having morphed into a concerted global slowdown. The massive decline in Oil is definitely an indication of such concerns.
The UK is accelerating preparations in case of a no-deal with the EU. The Cabinet has agreed to set into motion the remaining elements of the no deal preparation. Time is running out for the UK, and these type of headline won’t help the Sterling. At this juncture, both technical and fundamentals are alienated for further downside pressure in GBP/USD.

Fundamentals
The ANZ business confidence in NZ rose 13 points in December, printing the highest in 8 months, while firms’ views of their own activity lifted 6 points. The official reports via ANZ could read that “expected profitability and employment, investment and export intentions rose, and perceived availability of credit jumped sharply. On the downside, marring the picture a little, most indicators for the agriculture sector deteriorated.”
The RBA minutes erred on the side of caution, with a narrative that could be considered a tad more dovish, on the basis of less optimism around the Aussie economy. There was more attention than usual given to credit, housing, consumer and external risks.
The German Dec IFO business climate index, which is perceived as one of the top leading indicators for the overall health of the German economy, came at 101.00 vs 101.7. It was the lowest reading since Sept 2016 and the data is yet another element that will undermine the ability of the ECB to turn more hawkish into 2019. The risks keep mounting for the ECB to stay on the sidelines, refraining from any tightening campaign next year.
Building permits and housing starts in the US saw a recovery in Nov. However, as part of the reports, Single-family housing starts fell more than 13 percent last month from a year earlier.
In what should be regarded as a volatile series, the Canadian manufacturing sales undershot its expectations in October, following four increases in the previous five months.
The New Zealand GDT price auction printed a solid 1.7% with an average selling price of $2,844.00. It’s the second consecutive fortnight rise after a tough 6m losing streak.

Source: https://medium.com/
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US dollar index in bearish consolidation

#180
US dollar index in bearish consolidation sub-97.00 ahead of dovish Fed hike

The US dollar index, the greenback when measured against a basket of six major currencies, resumed its bearish momentum in Wednesday’s European trading, following a temporary reversal seen in the US last session.

The USD bears fought back control and dragged the rates back below the 97 handle before consolidating the latest leg down near the 96.85 region. Markets await the FOMC verdict and the Statement of Economic Projections (SEP), due later today at 1900 GMT, for the next push lower.

The greenback got thrashed so far this week on the back of the increased expectations of a dovish Fed rate hike. It’s widely expected that the Fed will lift borrowing costs by 25bps to a range of between 2.25-2.50%, which would make it the fourth rate hike of this year.

However, mounting global economic slowdown worries combined with trade war risks and lower inflationary pressures, the Fed is likely to signal fewer rate hikes next year and could hint an earlier end to its monetary tightening. This is the main reason why the USD sellers continue to lurk, despite the recent rout in the global equity markets.

US dollar index Technical Levels

Overview:
Today Last Price: 96.81
Today Daily change: -25 pips
Today Daily change %: -0.258%
Today Daily Open: 97.06

Trends:
Previous Daily SMA20: 97.01
Previous Daily SMA50: 96.58
Previous Daily SMA100: 95.9
Previous Daily SMA200: 94.32

Levels:
Previous Daily High: 97.17
Previous Daily Low: 96.7
Previous Weekly High: 97.71
Previous Weekly Low: 96.36
Previous Monthly High: 97.7
Previous Monthly Low: 95.68
Previous Daily Fibonacci 38.2%: 96.88
Previous Daily Fibonacci 61.8%: 96.99
Previous Daily Pivot Point S1: 96.78
Previous Daily Pivot Point S2: 96.51
Previous Daily Pivot Point S3: 96.31
Previous Daily Pivot Point R1: 97.25
Previous Daily Pivot Point R2: 97.45
Previous Daily Pivot Point R3: 97.72

Source: https://www.fxstreet.com/news/us-dollar ... 1812191050
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