Archives of “July 2019” month

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Crucial Update :Dollar Index ,Euro ,Yen ,GBP ,INR ,CAD ,AUD ,BRENT ,WTI ,GOLD ,SILVER -Anirudh Sethi

  
Analysis, Forex, Global Indices
The dollar gained against most of the world’s currencies last week. With a few sessions left in July,  the greenback has advanced against the major and all but a handful of emerging market currencies. It rose to new highs for the year at the end of last week against sterling.  The risk of a no-deal exit has increased with the new UK’s new Prime Minister making demands that the EC is not prepared to grant.
 
The dollar is testing key levels against other major currencies that could signal a technical breakout.  The euro made a marginal new low for the year last week, but the $1.1100 level held, perhaps helped by the defense of some options.  The dollar knocked on JPY109, an important barrier whose break could confirm a bottom is in place and signal scope for additional near-term gains.  The US dollar had recorded the lows for the year against the Canadian dollar on July 19 a little above CAD1.30 and before the weekend tested CAD1.32, the end of and band of resistance, which if broken could spur a move toward CAD1.3350-CAD1.3400.
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Surging household debt clouds Asia’s growth outlook

  
Analysis, Economy
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The rapid expansion of household debt in emerging Asian countries, particularly China, has become a risk to the global economy.In Thailand and Malaysia, debt has ballooned due to booms in the auto and housing markets, and the growing repayment burden has dampened consumer sentiment. In China, household debt as a percentage of nominal GDP is now over 50%. Countries such as Thailand have begun curbing their consumption in response to rising debt levels.The U.S. Federal Reserve is expected to cut interest rates at the end of this month. Emerging economies also have room for interest rate cuts, which would boost growth in the short run but could deepen the scars from indebtedness over the long term.
Somprawin Manprasert, chief economist at Bank of Ayudhya, pointed out that household debts have ballooned as a result of incentives for the purchase of cars and other items introduced by the Thai government in 2011. This is a structural factor that will weigh on future consumption, Somprawin said.Thailand’s household debt ratio is close to 70%. That is higher than in Japan and other advanced economies, which have ratios of about 58%, and well above that of the eurozone. The main reason is auto loans. To support the car industry, the Thai government introduced tax incentives to encourage purchases, which took off in 2012. As a result of the higher debt load, personal consumption has been sluggish and inflation has been weak.
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Trump counters Kudlow: “I didn’t say I’m not going to do something” on dollar

  
  Analysis
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Trump comments late on Friday

Trump comments late on Friday
Trump made news late in the day on Friday. Speaking to reporters, he walked back comments from economic adviser Larry Kudlow, who earlier in the day said the White House wouldn’t intervene in the dollar.
“I didn’t say I’m not going to do something,” he told reporters.
It was earlier reported that Peter Navarro gave him options on devaluing the dollar but Trump ruled them out. They also weighed proposals to publicly talk down the currency.
His public reaction is typical Trump, he rarely likes to show his hand, even in a matter that’s decided. Bloomberg sources said on Fr
He followed up that comment with several other notable quips and tweets:
  • BBG, citing two sources, said lower rates from the Fed might do the job and help avoid intervention
  • “I could do [currency intervention] in two seconds if I wanted to” he said
  • “The dollar is very strong, the country’s very strong, the dollar — it’s a beautiful thing in one way, but it makes it harder to compete.”
  • “The fed acted too soon, and I turned out to be right. They acted too soon and too violently.”
  • “I think that China will probably say, let’s wait, it’s 14, 15 months until the election”
  • “So, I don’t know if they’re going to make a deal. Maybe they will, maybe they won’t, I don’t care, because we’re taking in tens of billions of dollars worth of tariffs.”
  • “When I win, like almost immediately, they’re all going to sign deals”
  • He was asked if he will tariff French wine, after Macron levied a tax on Internet giants. “I might, I might,” he said.”I’ve always liked American wines better than French wines, even though I don’t drink wine. I just like the way they look, OK? But American wines are great.”
Lots to digest there.

CFTC Commitment of Traders: Positions are marginally changed

  
Analysis, Forex
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Forex futures positioning data among noncommercial traders for the week ending July 23, 2019

  • EUR short 39K vs 31K short last week. Shorts increased by 8K
  • GBP short 79K vs 76K short last week. Shorts increased by 3K
  • JPY short 9K vs 11K short last week. Short trimmed by 2K
  • CHF short 13k vs 12k short last week. Shorts increased by 1K
  • AUD short 48 k vs 53k short last week. Shorts trimmed by 5K
  • NZD short 12K vs 17K short last week. Shorts trimmed by 5K
  • CAD long 31K vs 21K long last week.  Longs increased by 10K
  • Prior week
Highlights:
  • GBP shorts remain as the largest position. The GBPUSD moved to new 27 month lows today rewarding those traders.
  • AUD shorts are the 2nd largest position and the AUD moved to new month lows today retracing the run higher from the June 10 low
  • The EUR shorts increased by 8K. The EURUSD moved modestly lower this week. The EUR short has been cut from over -100K short to 31K (the fall in short positions seems to have slowed over the last month.
  • Speculators remain long the CAD. It is the only major foreign-currency long position versus the US dollar
Forex futures positioning data among noncommercial traders for the week ending July 23, 2019

S&P and NASDAQ indices close at record high levels

  
Analysis, US Market

The Dow industrial average lagged behind but still closes higher

The S&P index the NASDAQ index both closed at record high levels. The Dow industrial average lagged behind but still closed higher on the day.  The Dow remains below its record high as Boeing and Caterpillar declines this week on earnings hurt that index. Nevertheles for the week, it still eked out a gain for the week.
The final numbers are showing:
  • The S&P index rose 22.19 points or 0.74% at 3025.86
  • The NASDAQ index rose 91.67 points or 1.11% at 8330.21
  • The Dow industrial average rose 51.47 points or 0.19% 27192.45.
For the week, the NASDAQ index led the way to the upside:
  • S&P index rose 1.65%
  • NASDAQ index rose 2.26%
  • Dow industrial average rose 0.14%

GBPUSD falls to new 2019 lows. Trades at lowest level in 27 months.

  
Analysis, Forex
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Trades below the July low a 1.23815..

The GBPUSD has falled to a new 2019 low on the break of the July 17th low at 1.23815.   The price has traded to 1.23755 so far.
Trades below the July low a 1.23815..
In trading to new 2019 lows, the pair is trading at the lowest level in 27 months (April 2017). The next target from the weekly chart above is at the April 2017 low at 1.2364. The March 2017 low was at 1.23599.  Moves below those levels open up the downside even more.
The price action this week has seen the price move below the 1.2441-748 area (see yellow area on the chart above). That area is defined by 2018 lows and weekly lows from June and early July. Last week, the price fell below that level only to rebound back above. This week, the pair will close below that swing area….(see red circled numbers).
Drilling to the 5 minute chart, the pair has accelerated and trended lower in the NY session. The session in the London and NY session has been able to stay below the 200/100 hour MA (there was a brief move above the 100 bar MA in the London session but stayed below the 200 bar MA).  It cracked below a lower trend line in the last couple hours that accelerated the fall.
The 38.2-50% of the last trend leg lower comes in at 1.2396-1.2400 now. The trend line cuts across in that area.  For the trend traders looking for more, that area is a risk/trend defining area. Stay below, keeps the trend intact.
GBPUSD on the 5 minute chart is trending lower

European share end the week mostly higher

  
Analysis, Global Indices

Spain Ibex and Italys FTSE MIB is lower

The major European stock indices are ending the Friday session mostly higher:
  • German Dax, +0.5%
  • France’s CAC, +0.7%
  • UKs FTSE, +0.9%
  • Spain’s Ibex -0.7%
  • Italy’s FTSE MIB, also fell by -0.3%
For the week, the major indices are higher:
  • German Dax, _1.3%
  • France’s CAC, +1.1%
  • UK FTSE, +0.55%
  • Spain’s Ibex, +0.5%
  • Italy’s FTSE MIB, +0.8%
In the benchmark 10 year notes today, yields are also ending mixed with investors shunning the “riskier” southern countries (Spain, Italy and Portugal) and buying the more northern countries (German, France and UK)
Spain Ibex and Italys FTSE MIB is lower
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