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COVID-19 Spikes In US, USD Resumes Downtrend – Forex News by FX Leaders – FX Leaders

Over the past 24-hours, the news cycle has been filled with key events. Among the most cited is the recent spike in U.S. COVID-19 deaths. Over the past two weeks, the U.S. has averaged more than 1,000 deaths per day, with Wednesday/Thursday bringing a tally of nearly 1500. At this point, cases are on the uptick as the Trump administration falls under intense media scrutiny.

On the political front, presumptive Democratic nominee Joe Biden has named Kamala Harris as his VP choice. Harris as the VP selection came as a surprise to many pundits as she is from the far left of the American political spectrum. In other words, many of Harris’s economic views lean socialist, similar to ex-Democratic candidate Bernie Sanders. Thus far, the markets haven’t put much stock in the potential impact of VP Harris on the economy should Joe Biden win the White House.

Once again it’s Thursday and that means U.S. employment is under the microscope. The headline of today’s reports was the decrease in unemployment claims. Initial Jobless Claims (August 7) fell to 963,000, well beneath projections of 1.12 million. At this point, it looks like we may have seen the worst of the unemployment numbers.

Unfortunately for the USD, a spike in COVID-19 is likely to bring about an extension of FED QE. So far today, the greenback is taking it on the chin versus the majors.

COVID-19 Spikes, USD/CAD Falls

In a Live Market Update from earlier this month, I outlined the importance of the 78% Fibonacci support level in the USD/CAD. This level is long gone ― next up may be 2020’s low at 1.2951.

COVID-19
USD/CAD, Weekly Chart

Overview: For the time being, it’s short-or-nothing for the USD/CAD. Rates are in a relative freefall as COVID-19-inspired dovish policy is driving values toward 1.3000. If we see WTI crude oil gain some late-summer swagger above $45.00, this pair is likely to make a legitimate run at 2020’s low.

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Forex News

Selling EUR/CHF at the Top of the Range – Forex News by FX Leaders – FX Leaders

EUR/CHF has been bearish for a few years, since it reversed down from 1.20, falling to 1.05 by May this year, as safe havens were attracting a lot of attention due to the coronavirus lock-downs. But, the situation improved and this pair bounced more than 4 cents higher.

The SNB (Swiss National Bank) intervened in the markets, while the Euro benefited from the European coronavirus recovery fund, worth EUR1.35 billion. But the climb ended above 1.09 and EUR/CHF retraced lower, falling to 1.06 in July.

The price climbed higher as the month of July progressed, but the climb stopped at 1.0840. Buyers tried that level twice, but failed and eventually gave up. This pair has formed a bottom at 1.0730s, while the top of the range comes below 1.08, despite the 2 tops at 1.0840. We decided to sell EUR/CHF at the top of the range, since the 50 SMA (yellow) is also providing resistance up there. Now we are waiting for the reversal lower to take place, since the 50 SMA is already rejecting the price.

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Spanish Inflation Turns Weaker Again in July – Forex News by FX Leaders – FX Leaders

Inflation has been weakening for a couple of years worldwide, while in Spain it started cooling off in February 2017. It topped at 3% back then, but started declining and it fell in negative territory in March this year, declining to -0.9% by April.

CPI (consumer price index) inflation fell to -0.9% in March, but started reversing higher in May and June. Although, today’s CPI report is showing another decline, with MoM CPI falling to -0.9% while the YoY CPI fell to -0.6%, from -0.3%. So, it seems like economic recovery in Spain is not gong that well.

Spain July Preliminary CPI Inflation Report

  • July final CPI YoY -0.6% vs -0.6% prelim
  • CPI  MoM -0.9% vs -0.9% prelim
  • HICP YoY -0.7% vs -0.7% prelim
  • HICP MoM -1.6% vs -1.6% prelim
  • Core YoY CPI +0.6%
  • June core CPI +1.0%

No change to initial estimates as Spanish headline inflation still sits in deflation territory amid the fallout from the virus outbreak. Core inflation is seen falling further as well, to its weakest level since June 2016 so that is hardly an encouraging sign about price pressures in the region in general.

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UK’s Housing Market Showing Signs of Recovery? – Forex News by FX Leaders – FX Leaders

UK’s housing market continues to work its way towards rebounding, showing signs of a possible boom, even as property prices rose in July – the first increase since the coronavirus pandemic struck UK and the rest of the world. RICS monthly house price balance soared to +12 during July from -13 in June, indicating optimism in the market.

75% of estate agents surveyed witnessed an increase in the number of buyers during July, while 57% observed higher sales for the period. Respondents also noted that there were more number of homes being put up for sale in July.

New buyer enquiries registered a sharp increase in July, rising for the second consecutive month. Meanwhile, respondents to the survey expected house sales to rise in the coming three months, but could fall in a year’s time, indicating that the rebound could be temporary.

Chief economist at RICS, Simon Rubinsohn, observes, “It is interesting that there remains rather more caution about the medium term outlook with the macro environment, job losses and the ending or tapering of government support measures for the sector expected to take their toll. Some contributors are now even referencing the possibility of a boom followed by a bust.”

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The 20 Daily SMA Is Keeping AUD/USD Bullish – Forex News by FX Leaders – FX Leaders

This has been quite a roller-coaster year for most assets and especially AUD/USD . This forex pair dived the most during the crash of the Q1, as panic sent commodity currencies crashing lower, while it seems to be the first to be heading the recovery since the crash stopped by the middle of March.

During the decline, the 20 SMA (grey) was providing resistance for this pair, pushing the price lower. It did so in early March and it provided resistance on April again, when the price was reversing higher. But, the trend eventually turned quite bullish and the price moved above the 20 SMA.

The 50 SMA turned into support at first at the beginning of April, then the 20 SMA took things in its hands and has been providing support since then. The price has pierced the 20 SMA a few times, but hasn’t broken it, since it has returned above it pretty quickly.

Yesterday we saw the price slip below this moving average again, but it returned above it and now the bullish trend seems intact again. So, bullish is the way to go in this pair, until the price clearly moves blow the 20 daily SMA. When that happens, the 20 SMA will likely turn into resistance, but until then, the buyers remain in charge.

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Exchange rate falls at the NAFEX window on a depressed forex market | – Nairametrics

Nigeria’s exchange rate at the NAFEX window remained stable to close at N385.50 during intraday trading on Tuesday, August 11, 2020. In a similar development, the exchange rate at the parallel market remained stable for a second consecutive trading day on Tuesday as it closed at N475/$1 after exchanging for as high as N485/$1.

READ ALSO: Exchange rate falls across the forex markets as CBN devalues the naira

Market Watch

Parallel Market: At the black market where forex is traded unofficially, the Naira remained stable again against the dollar to close at N475/$1 on Tuesday, according to information from Abokifx, a prominent FX tracking website. This was the same rate that it exchanged on Monday, August 10.

READ ALSO: Naira falls to N475/$1, another new low as exchange rate disparity widens

NAFEX: The Naira remained stable against the dollar at the Investors and Exporters (I&E) window on Tuesday, closing at N385.50/$1.

  • This was the same rate that was reported on the last trading day, Monday, August 10.
  • The opening indicative rate was N386.20 to a dollar on Tuesday. This represents a 3 kobo drop when compared to the N386.17 to a dollar that was recorded on Monday.
  • The Naira fell to as high as N387 during intraday trading before strengthening to the closed rate of N385.50. It also sold for as low as N380/$1 during intraday trading.

Forex is sold at several prices and at different times during the day.

READ ALSO: Naira gains at the NAFEX window as market liquidity improves

Forex Turnover: Meanwhile, forex turnover at the Investor and Exporters (I&E) window improved significantly on Tuesday, August 11, 2020, as it rose by  705% day on day.

  • According to the data tracked by Nairametrics from FMDQ, forex turnover rose from $3.97 million on Monday, August 10, 2020, to $31.96 million on Tuesday, August 11, 2020.
  • The forex turnover for the day although improved significantly from the previous trading day, still remained low. This just as dollar supply has remained very weak.
  • The average forex sale for last week was about $50.6 million which is an improvement on the $32 million that was recorded the previous week. FX turnover which hit a record low of $3.97 million, recorded a significant improvement but is still a far cry from the over $200 million turnover that was recorded in January.
  • Total forex trading at the NAFEX window in the month of July was $937 million compared to $875 million in June.
  • The exchange rate disparity between the official NAFEX rate and the black-market rate is still as wide as N89.5. Nigeria maintains multiple exchange rates comprising the CBN official rate, the BDC rates, SMIS, and the NAFEX (I&E window). The wide disparity between the 2 rates has created huge arbitrage opportunities for some highly connected individuals.

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Exchange rate unification remains on the cards and yet to be implemented weeks after the central bank governor confirmed it will be executed.

The foreign exchange market appears to be getting used to the recent adjustment of the official exchange rate by the Central Bank of Nigeria.

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Forex News

FOREX-Dollar grinds lower as traders question timing of U.S. stimulus – Reuters

* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E

* Talks on U.S. stimulus not progressing

* U.S. dollar loses some ground

* Aussie gains on positive jobs data

By Stanley White

TOKYO, Aug 13 (Reuters) – The dollar fell against most of its peers on Thursday amid fading hopes for a compromise between Republicans and Democrats over additional stimulus for the U.S. economy.

The Australian dollar rose after better-than-expected jobs data eased concerns about a persistent coronavirus outbreak in the country’s second-largest city.

The greenback was hampered by a decline in Treasury yields, but analysts say this is likely only a temporary setback because U.S. lawmakers will eventually agree to more stimulus to help the economy recover from the coronavirus.

“The dollar needs positive news on stimulus to rise further, but I’m sure we’ll get there, because these politicians can’t go back to their constituencies empty handed,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

“Once this happens, gains in dollar/yen could be a catalyst for dollar gains against other currencies.”

Against the euro, the dollar fell to $1.1813, adding to a 0.4% decline on Wednesday.

The British pound rose 0.25% to $1.3067.

The dollar fell 0.2% against the safe harbour Swiss franc to 0.9105.

The dollar pulled back from a three-week high to trade at 106.65 yen.

The onshore yuan briefly rose to a five-month high before steadying at 6.9380 per dollar.

President Donald Trump accused congressional Democrats on Wednesday of not wanting to negotiate over a U.S. coronavirus aid package as top Republican and Democratic negotiators traded blame for a five-day lapse in talks over relief legislation.

The pandemic has taken a particularly heavy toll on the United States, where it has killed more people than any other country. Millions of U.S. workers have lost jobs, and supplemental federal unemployment benefits expired last month.

Market sentiment has swung between optimism and pessimism, but analysts argue that more stimulus is the most likely outcome because without it the U.S. economic recovery could stall.

The U.S. dollar index against a basket of major currencies fell 0.2% on Thursday in Asia but was still well above the two-year low it reached last week.

Elsewhere in currencies, the Australian dollar rose 0.2% to $0.7176, holding onto gains after data showed the economy created three times as many jobs as expected and the jobless rate fell from a 22-year high in July.

The positive jobs data suggests the economy remains resilient in the face of an ongoing outbreak of coronavirus cases in Melbourne.

Across the Tasman Sea, the New Zealand dollar bought $0.6581, stabilising after the country’s central bank on Wednesday expanded quantitative easing and flagged the prospect of negative interest rates. (Reporting by Stanley White; Editing by Sam Holmes and Lincoln Feast.)

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Forex News

Forex Today: Optimism weighed on the dollar – FXStreet

Here is what you need to know on Thursday, August 13:

The dollar edged lower on the back of prevalent optimism, as investors preferred safe-haven assets. Global indexes closed in the green, while US Treasury yields ticked marginally higher to a fresh one-month high.

The greenback appreciated only against the JPY, with the pair reaching 107.00

The US Congress has made no progress on a next aid package, but the market seems not worried about the issues. No news in the US-China war of words further supported the positive sentiment.

Coronavirus in the US: The number of new cases has been put on doubt as the country recovered an average fo 52,800 new daily cases over the last week, down 19% from the previous weekly average. Testing, in the same period, declined 12%.

UK data weighed on the Pound. Q2 GDP came in at -21.7%, slightly better than anticipated yet signaling the extension of coronavirus’ harm to the economy. Total Business Investment in the same period contracted 31.4%, much worse than the -0.1% expected. Also, the June Goods Trade Balance posted a deficit of £ 5.12 B.  On a positive note, Industrial Production was up 9.3% in June, and down 12.5% when compared to a year earlier, both numbers better than anticipated.

Gold bottomed at $ 1,862 a troy ounce, recovering some ground afterwards to close the day unchanged around $1,913 a troy ounce.

Australia will publish its July employment data at the beginning of the Asian session.

Cryptocurrency Market News: Venezuela is looking into using crypto to collect taxes

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Forex News

S&P 500 Within Striking Distance Of All-Time Highs – Forex News by FX Leaders – FX Leaders

It’s been a big day for U.S. stocks, led by a run at all-time highs in the S&P 500 SPX. Values are driving north of 3300.00 and approaching the pre-COVID-19 levels of last February. For now, the market drivers are a bit obscure. A second round of COVID-19 stimulus payments appears to be in doubt, U.S./China relations are becoming even more frayed, and COVID-19 infection rates are on the rise. While today’s action is strong, it’s a challenge to figure out what exactly is driving the positive sentiment. 

On the commodity front, WTI crude oil is showing strength above $42.50. At least some of the good cheer may be attributed to another drop in U.S. oil supplies. Earlier, the EIA reported a drop of -4.512 million barrels, the third major decrease in a row. This is not uncommon for the summer driving season as the demand for refined fuels is robust. Ultimately, we’ll see how long the strength lasts ― Labor Day weekend is under a month away, marking the unofficial end of the summer vacation season.

Bidders are in firm control of the S&P 500, sending the market some 1.20% higher for the session. Let’s dig into the weekly technicals for the September E-mini S&P 500 and see where this market stands.

S&P 500 On The Doorstep Of February’s Highs

Below is a weekly chart of the September E-mini S&P 500 as of Tuesday’s close. As you can see, the all-time high of 3396.50 was in line for a test. The weekly bullish trend remains valid and a late-summer rally appears to be a foregone conclusion for U.S. stocks.

September E-mini S&P 500 (ES), Weekly Chart
September E-mini S&P 500 (ES), Weekly Chart

Overview: As we head toward mid-August trade, COVID-19 news is taking a backseat to inflationary pricing. This week has brought us exploding COVID-19 infection rates as well as a spike in inflation. Thus far, investors have chosen to get out in front of inflation instead of limiting exposure due to COVID-19. While a viable vaccine appears to be a ways off, it looks like the markets are already pricing an end to the pandemic’s economic reach.

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Forex News

Markets Rally Following Robust CPI Report – Forex News by FX Leaders – FX Leaders

U.S. stocks are running to the bull following this morning’s stronger-than-expected CPI report. At the halfway point of the U.S. session, the DJIA DOW (+265), S&P 500 SPX (+48), and NASDAQ (+250) are all deep into the green. For the time being, bidders are dominating the stock market, with gainers outpacing decliners.

Yesterday’s PPI release suggested that inflation was firmly on the uptick. Today’s CPI figures backed up this assertion:

Event                                      Actual            Projected        Previous

CPI (MoM, July)                       0.6%                 0.3%                  0.6%

Core CPI (MoM, July)              0.6%                 0.2%                  0.2%

At this point, it appears the trillions of dollars in FED QE are finally stimulating inflation. Core CPI tripled projections, suggesting that prices are moving higher exclusive of food and energy costs. Don’t look now, but a more hawkish tone may come to pass at September’s FED meeting.

CPI Up, USD Rallies Vs The Yen

Typically, a robust CPI reading translates into a strengthened USD. Conventional wisdom tells us that as inflation rises, rate hikes from the FED are imminent. However, 2020 is certainly special in that COVID-19 will largely dictate FED policy for the foreseeable future.

CPI
USD/JPY, Daily Chart

The past four sessions have been good for USD/JPY bulls. Rates are closing in on 107.00 amid decisively bullish participation. As we roll toward late-week trade, there is one resistance level on my radar:

  • Resistance(1): Swing High, 107.53

Bottom Line: Until elected, I’ll have sell orders in the queue from 107.44. With an initial stop loss at 107.77, this trade produces 33 pips on a standard 1:1 risk vs reward ratio.