Reported Debt Ceiling Deal Reached
Ahead of President Obama announcing that a deal had been reached, the USD shot up against the Yen and mildly against the Swissy as S&P futures and the Nikkei jumped over 1.5%. Sterling and to a lesser extent the Euro appreciated against the USD as some risk off trades unwound, with US treasuries also inching lower.
The Forex Week Ahead from FXDD
EURUSD consolidating into the close
The EURUSD is testing the top trendline of the bull flag as we head into the close. The level comes in at the 1.4394 level currently. A move above could see a test of the high before days end.
BOC Flaherty sees Canada growth improving in 2H
- Says Canada should have moderate growth this Year and US should have “some growth”
EURUSD falls but finds support against the 200 hour MA and bounces
The EURUSD corrected lower after testing the 100 hour MA at the 1.4394 level and found support against the 200 hour MA. From there he price has moved back higher and looks to test the 100 hour MA again. Alhough, the dip buyers might keep a lid from profit taking, a move above this MA should solicit additional buying with 1.4417 the next target.
By the way, the low at 1.4336 was 5 pips from the important 100 day MA at the 1.4331 level. Traders had a low risk trade opportunity against the key 200 hour MA and the 100 day MA level.
Feds Bullard & Lockhart On CNBC in Jackson Hole, WY
Say:
- not thinking deeply about default
- reticent to speculate on markets
- i do think a deal will get done- Bullard
- Dont look to fed to offset damage
- I wouldnt take any options off the table- Lockhart
- A lot of speculation isnt responsible
- Bullard says 2Q GDP number in line with market expectations
- I do think theyll get a deal done- Bullard
- Ultra-easy monetary policy- Bullard
- Inflation rise a bit of a surprise- Lockhart
- Fed to watch inflation very carefully- Bullard
- Transitory elements in inflation rise- Lockhart
- Very high bar to QE3 -Lockhar
USDJPY falls to 77.00 level on weaker US data
The USDJPY moved sharply lower on the weaker US data today in addition to Washington budget issues. The price has found support against the 77.00 level with trendline just below this key level at 76.96. The low in March came in at the 76.41 area in fast market conditions. At the time, the market was reeling from the “idea” that Japan exporters would need to repatriate funds back to Japan (selling dollars, buying yen in the process). In March to stop the fall, global central banks came into the market and sold Yen (bought USDJPY). The hardship on the country from the devastation of the Tsunami and nuclear disaster warranted the concerted effort. I do not think that concerted effort will be found now. Today, the dynamics are different with the dollar weakness dominating.
The price bottom at 77.00 is a logical level to pause. Traders will be eyeing the correction – marking the 38.2% of the move down at 77.255 as a level to get above that would take some of the sting of the decline away from the sellers today. Failure to move above this level keeps the pressure on the pair. Keep an eye on the level.
AUDUSD pushes against the 100 hour MA
The AUDUSD has moved higher in reaction to the weaker dollar but relatively, the move higher has been more contained. The price has pushed to the 100 hour MA at the 1.0969 level. A move above the level will likely lead to further buying on stops. The correction off the high, has so far found support against the 38.2% of the move up from the low at 1.0944. The 100 bar MA on the 5 minute chart comes in at the 1.0938 level. Holding these levels will likely lead to another test of the NY highs.
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