Forex Signals US Session Brief, June 27 – Risk Off, Risk On Again
Skerdian Meta • 4 min read
Yesterday, the markets were calm as the sentiment improved somewhat. Donald Trump did tweet more threats to Europe and whoever he could think of, but the market ignored him. The negative sentiment or panic could probably pick up where it left off when Trump’s new tariffs on European cars become official. Safe-havens declined as a result but the decline in Gold is another matter which I explained on a previous forex update.
Today, the markets are slow again but the sentiment seems to lean on the negative side. The decline in the Chinese equities raised some eyebrows. Although, in the last hour or so we heard a few positive comments. Bagnai who is an Italian official and who is a Euro-skeptic said that the Italian government won’t attack the Euro. That’s a bit of a relief. Another administration official, this time from the US, has just commented that Trump won’t go for the harshest stances against China. These were some comforting comments which caught the markets by surprise. USD/JPY just popped 50 pips higher on the comments and it is climbing as are the risk currencies.
The European Session
Swiss Investor Sentiment – The investor sentiment plunged this month in Switzerland. The investor sentiment was at 28 points in May, but this month it declined to 8 points. The sentiment has been at around 20 points for most of the year, so this month’s tumble is not good news, especially considering the trade war that’s been going on.
Eurozone M3 Money Supply – The total amount of Euros that’s in circulation as cash and as bank deposits increased by 4.0% this month. That is a positive sign after two declining months. I suppose the ECB will increase the money supply as the trade war gets uglier.
Tax Increase from Japan’s PM Abe – Japan’s Prime Minister Shinzo Abe said earlier today that they will go on with the sales tax increase next year unless there is another crisis like the Lehman Brothers collapse. Well, Trump’s trade war could be worse and the last time the Japanese hiked this tax 4 years ago, it didn’t go too well.
UK Stability Report – The UK stability report from the Bank of England leaned on the dovish side. Governor Mark Carney said that global risks are real and are increasing. Trade tensions have increased which is a big problem considering that Brexit is coming. The GBP entered another bearish phase after the report.
Germany’s CSU Will Wait – Merkel’s coalition partner party the CSU commented that they will wait until the end of the EU summit. They want to act now on immigration, meaning starting deportations, but they will see what Merkel agrees on with the other EU leaders.
The US Session
US MBA Mortgage Applications – The mortgage applications declined by 4.9%. Last week they increased by 5.1% so this dip is not a good sign and it is pretty big. Although, it is a volatile report so we have to see how the next few weeks come up.
Trump Won’t Go Too Hard on China – US officials said that Trump won’t trigger the national emergency law on China and it won’t take the harshest measures on this trade war. They also said that the US will engage with partners to fight against technology and intellectual property theft. Hello, which partners? Trump doesn’t have any partners left – he turned them all into enemies of the state.
US Treasury Secretary Mnuchin Expects Great Q2 GDP Figures – Mnuchin followed up on previous comments saying that the US won’t single out China on investment restrictions and that he expects great GDP figures for Q2. Let’s se how great those figures will be when the GDP report is released next month.
US Durable Goods Orders Decline – Durable goods orders declined by 0.6% and the core orders declined by 0.3%. This is the second month that durable goods orders declined after tumbling 1.7% last month. Not a good trend, but the core orders for last month were revised higher to 1.9% and the USD is taking that as a positive sign.
US Wholesales Inventories – Inventories increased by 0.5% this month against 0.2% expected. This means that the US consumer is not that confident, else the inventories would have decreased. It also means that companies will order less in the coming weeks since they already have stock. Slightly negative for the USD.
Trades in Sight
- The main trend is down
- The sentiment is still negative
- The NZD is the weakest currency today
- The RBNZ rate decision today looms on NZD traders
The 20 SMA is still pushing the price lower
The NZD has been on a bearish trend in the last two days and it has been the weakest of the majors so far. The statement from the Reserve Bank of New Zealand is scaring NZD buyers away. Although, NZD/USD popped higher on comments from the US officials. We saw that as a good opportunity to sell this pair which we did and we are already in profit.
The US Dollar is advancing today, so it is possible that this is the Buck resuming its uptrend after several days of retracing lower. The latest comments from US officials are also helping the Buck but at this point, but I don’t think we can trust Trump’s administration. Beware of another reversal.