Forex news for the North American session on August 13, 2021
Every once in a while you get a piece of economic data, that makes you do a double take and say “What was that again?”
That was the case with the Univ. of Michigan consumer sentiment data for August released today.
This survey data is actually released twice a month. The first or preliminary estimate was released today for the month of August. It will be revised in two weeks (August 27). The revision allows for those surveyed who did not get their responses in, to have a 2nd chance. Typically, the changes from month to month are somewhat stable. There are exceptions. For example, there was the plunge at the start of the Covid shut down in April 2020 of course from 95.9 to 71.0. Back during the 2007 to 2009 recession there was another big fall from 73.1 to 57.5.
Today saw the 3rd largest one month fall from 81.2 in July to 70.2 in August. It was the kind of move that makes you want to ask “Can you check that number please?”. After all, economic growth is still expected to grow its fastest pace in four decades. The JOLTS jobs data shows there are plenty of jobs.
On the negative side of course there is the Delta variant, and inflation is more persistent and sapping buying power from consumers (although wages are moving higher as well).
After a second look just to make sure, the index indeed did fall that much. In fact it fell to the lowest level since 2011 even surpassing the low from the Covid shut down in April 2020 (the index fell to 71.5 at that time). The declines were across all incomes, age, education subgroups and regions.
Looking at the two major pieces, the current economic conditions gauge fell to 77.9 from 84.5, while the expectations index tumbled to 65.2 from 79 in July. To make matters worse, consumers raised their expectations for medium-term inflation (five years out) to 3.0% from 2.8% (although the one year inflation did fall modestly to 4.6% from 4.7%).
The data miss sent yields in the US tumbling lower. The 10 year yield is trading down -8.4 basis points (to 1.283% from 1.367% yesterday), and 30 year fell -9.2 basis points (to 1.934% from 2.026% yesterday). The 2-10 year spread narrowed to 107.4 basis points from 114.00 basis points at the close yesterday.
In the forex, the USD fell sharply, and is ending as the weakest of the major currencies. The biggest mover was the USDCHF which saw the dollar fall -0.86%. The USDJPY fell by -0.72%, and the dollar tumbled -0.59% versus the EUR.
In other markets:
- Spot gold took its clue from the lower dollar and rose by close to $27 or +1.54% to $1779.26.
- Spot silver also moved higher by $0.60 or 2.59% to $23.75.
- Crude oil fell -$0.96 or -1.4% to $67.93 near the end of trading as concerns about growth and the negative prospects for travel.
- EURUSD: The EURUSD came into the day with a 63 pip trading range for the calendar week and is closing with a range that was still only 99 pips, but at least it was extended. The price moved above its 200 hour MA at 1.7782 and stalled just short of the 50% midpoint of the last cycle move lower from the July 30 high. That the point level comes in at 1.18067. The high for the day reached 1.18043. In the new trading week, the 200 hour MA at 1.1778 will be eyed as the bias tilt. Stay above keeps the buyers in play. ON the topside, getting above the 50% midpoint at 1.18067 would open the door for further gains. The price is ending the day near 1.1795
- GBPUSD: The GBPUSD extended above its 100 hour moving average at 1.3841 and a downward sloping trendline on the hourly chart at 1.3854. The high price extended to 1.3875 which was just above the pairs 200 hour MA at 1.3871. The price is closing just below the 200 hour moving average at 1.3868. In the new trading week, getting above the 200 hour moving average (at 1.3871) followed by the 50% midpoint of the move down from the July 30 high at 1.38865 (that was also the high price from Wednesday’s trade) would increase the bullish bias. Conversely, a move back below the broken trendline (currently at 1.3852) would have traders looking back toward a retest of its 100 hour moving average 1.3841.
- USDJPY: The USDJPY is closing near it’s lows for the day at 109.62. That level is also back below its 50% midpoint of the August trading range at 109.756 AND the 100 day moving average of 109.669. Those two levels will be close resistance in the new trading week. Stay below keeps the bears more control. On the downside, earmark the 109.183 to 109.232 as a downside bias level next week. If that area is broken, a retest of the August low at 108.715 would be eyed.
- USDCHF: The USDCHF was the biggest mover on the day. However, the low reached in the NY afternoon session did have cause for pause near the rising 200 hour MA at 0.91509. The pair is closing just above that level near 0.9156. That closeness to the 200 hour MA will have traders on their toes for the next shove. Will the sellers continue the selling when markets open on Sunday and push the price below the key MA level, or will buyers push the price off the MA level and correct some of the declines seen in the pair today? On a move lower, the 100 day MA comes in at 0.91337 and the 50% midpoint is at 0.91296 will be the next targets to get to and through.
- AUDUSD: The AUDUSD rose above its 100 hour moving average at 0.73478 and higher 200 hour MA at 0.73649 in the dollars move lower. The high price reached 0.7381 before modestly correcting into the close. The price still remains above the broken 200 hour moving average. That level (at 0.73649) will be the close barometer for the buyers and sellers in the new trading week. Stay above keeps the buyers more in control and the door opened for further upside probing. Move below the 200 hour moving average, and sellers could push the price back down toward a retest of its 100 hour moving average at 0.73478.