SPX reaches a record high over 2,600, FX major currency pairs generate no price action trading opportunities

Nov 22 • Morning Roll Call • 64 Views • No Comments

After falling back last week, whilst displaying a classic Heiken Ashi doji on a weekly chart, indicating investor indecision, many analysts were left wondering where the next momentum would come from, in order to push the main USA equity markets to fresh record highs. After setting so many highs throughout 2017, finally the SPX broke through the critical psyche handle of 2,600 during Tuesday’s New York trading session, closing out at 2,999, taking the annual return to circa 21%. The rally in the SPX wasn’t as a consequence of economic calendar news, as other than home sales rising by 2% MoM for October, there was very little hard or soft data to promote any exuberance or confidence. The progress on NAFTA (North American Free Trade Agreement) talks helped the peso and Canadian dollar to rise, which may have (in turn) assisted North America equities to advance.

Global equities began the rally with Japanese equities rising and the MSCI Emerging Market Index increasing by 1.4%, to reach the highest level seen in over than six years. The U.S. dollar fell versus the Canadian dollar, ended flat versus the Swiss franc and yen, and ended up circa 0.2% versus the euro. WTI oil rose by circa 1% in conjunction with a general commodities rally. Overall FX markets experienced the doldrums during Tuesday’s sessions, with little in the way of price action created by the major currency pairs; USD/CHF, GBP/USD, USD/JPY, or EUR/USD.

The Australian dollar initially fell to a five month low, after suggestions from the RBA central bank, that interest rates will stay lower for a longer period. However, as Europe’s markets opened the Aussie dollar made a significant and sustained recovery, with AUD/USD breaching R2 at one stage during the sessions, closing out up circa 0.4% on the day.

Sterling fell versus most of its peers, with the exception of a modest 0.1% rise versus the euro, as Brexit issues (once again) came into sharp focus, with prime minister May intimating that she’d be prepared to offer £40b in terms of an obligation settlement to withdraw from the E.U, which will still fall short of the amount set out in various official documentation published by the E.U.

The U.K. statistics agency, the ONS, delivered disappointing news in the form of the October deficit rising; the public sector net borrowing requirement rose by £3b MoM to £8b, and with the U.K. chancellor Philip Hammond due to broadcast his latest budget to UK’s Parliament on Wednesday, this deterioration (which he no doubt had advance knowledge of) may suggest that Hammond has less room for fiscal spending and initiatives than previously thought.

European economic calendar news centred on Swiss data, with exports, imports, and the positive balance shrinking. The effect on the Swiss franc was modest, whilst its safe haven appeal was not relevant or in evidence on the day, as the global risk on trading environment carried over from Monday. European equities enjoyed the contagious rally, whilst the euro failed to advance versus any of its main peers, falling versus euro, sterling, Australasian dollars and ending the day close to flat versus the Swissie. The furore created on Monday, by the German coalition talks collapsing, appears to have already disappeared from investors’ decision making and rationale. Whilst various ECB officials went on record as stating that any adjustments to the APP (asset purchase programme) in 2018 would be gradual and lacking drama.

U.S.DOLLAR

The dollar index fell by approximately 0.2% on the day. USD/JPY experienced very little in the form of price action movement during Tuesday’s trading sessions; closing the day out at circa 112.46, close to the daily pivot point line. USD/CHF closed out at circa 0.991, close to flat on the day and resting near the daily pivot point. USD/CAD whipsawed through a tight bullish and bearish range, rising near to R1, then falling through S1, shortly after New York opened, to then recover marginally, ending the day down circa 0.2%.

STERLING

GBP/USD was close to flat on the day, closing out at circa 1.323 on the daily PP. Sterling fell versus both Australasian dollars, and versus CHF the U.K. pound ended the day close to flat. GBP/JPY finished the day up circa 0.1% at 148.9.

EURO

EUR/USD failed to generate any significant price action during Tuesday’s trading sessions, falling by approx. 0.2% on the day to 1.173, the currency pair has fallen through the critical 100 DMA sited at 1.175. EUR/GBP closed down 0.2% on the day at 0.886. Versus NZD and AUD the euro fell by circa 0.3% on the day, EUR/AUD falling through S1. The euro fell versus the Canadian dollar, EUR/CAD closing the day out at circa 1.500, down circa 0.3% and at one stage falling through S1.

GOLD

Gold (XAU/USD) recovered some of the sell off experienced on Monday, to close the day out up circa 0.3% at £1279 per ounce, having at one point during the trading sessions risen to 1284. The precious metal traded in a very tight bullish range, pushing through S1 at one stage during the New York trading session. The 100 DMA, often a critical moving average for gold traders, is currently sited at 1280.

EQUITIES SNAPSHOT FOR NOVEMBER 21st.

• DJIA closed up 0.69%.
• SPX closed up 0.65%.
• FTSE 100 closed up 0.30%.
• DAX closed up 0.83%.
• CAC closed up 0.48%.

KEY ECONOMIC CALENDAR EVENTS FOR NOVEMBER 22nd.

• GBP U.K. Chancellor Presents Budget to Parliament.

• USD Initial Jobless Claims (NOV 18).

• USD Durable Goods Orders (OCT P).

• EUR Euro-Zone Consumer Confidence (NOV A).

• USD U. of Mich. Sentiment (NOV F).

• USD FOMC Meeting Minutes (NOV 01).

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