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Currencies Have A History Of Thanksgiving

Kathy Lien Follow

Daily FX Market Roundup 11.19.18

By Kathy Lien, Managing Director of FX Strategy for BK Asset Management.

It is a holiday week in the United States but Monday’s moves in forex shows how important it is to not mistake less
participation with consolidation. The U.S. dollar fell to fresh lows against the euro , Swiss franc and Japanese yen as stocks
resumed their slide. The forex market will trade continuously but equity and bond markets in the U.S. will be closed on Thursday with
half days for both on Friday. Currencies actually have a history of breaking out or reaching new milestones the week of Thanksgiving.
Just take a look at the charts below.

Last year, EUR/USD and GBP/USD hit a 1-month high Thanksgiving day while USD/JPY fell to a 2-month low the day before
Thanksgiving. In 2016, the EUR/USD dropped to an 11-month low the week of Thanksgiving while USD/JPY rose to a 7-month high.
There was no meaningful movement in sterling that year. In 2015, EUR/USD and GBP/USD fell to a 7-month low the week of
Thanksgiving as USD/JPY consolidated. In most cases, the trend that was in place immediately before the holidays continued. All of
this implies that if the trend of continuation persists this year, we should see EUR/USD test and possibly break 1.15 and USD/JPY hit
112 this week.

Fundamentally, there’s not much on the US calendar this week and it seems like any weakness in second-tier reports is being used as
an excuse to continue selling dollars. On Monday, the NAHB Housing Market Index failed to rebound like economists anticipated and
this was enough to send the dollar spiraling lower. With the momentum skewed to the downside, investors completely ignored Fed
President and FOMC voter Williams’ positive outlook – he described the economy as doing very well with solid job growth. Tuesday’s
housing starts and building permits reports are not expected to alter the dollar’s trend.

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Global Currency Pares

Meanwhile a weaker-than-expected Eurozone current account balance failed to stop the euro from rising. Not only did
EUR/USD end Friday above the 20-day SMA for the first time since September but its now also trading above the 200-SMA on the 4-
hour, something that it hasn’t done in 2 months. This opens the door for a move to 1.1510, which is where the more serious resistance
comes in. Of all the regions in the world, the Eurozone and Canada have the most important economic reports scheduled for release
this week and they are all due on Friday. Recent evidence suggests that the Eurozone economy is slowing and there’s a very good
chance the PMIs will confirm that. However, the single currency could easily hit 1.1500 before the data is released.

Sterling bulls are putting up a fight as the currency traded higher for the second day in a row. The focus is Brexit – Prime
Minister May is still working on getting a deal approved by Parliament while Tory MPs are focused on getting enough letters submitted
for a no-confidence vote. There will be intensive discussions this week according to May and it's unlikely that they will amount to
anything. Instead, the Tory Party has 25 of the 48 letters it needs to trigger a vote. According to the TIMES, Senior Brexiters have “firm
pledges,” from enough MPs to submit letters for a vote this week. If that happens, you can expect GBP/USD to reverse lower on its
way to 1.27.

Unlike the European currencies, all 3 of the commodity currencies traded lower against the greenback. AUD and NZD were hit
the hardest after a dispute between the US and China prevented the issuance of a final statement at this weekend’s APEC meeting. It
is the first time in its 25-year history that the leaders failed to agree on a formal joint statement because according to Canadian PM
Trudeau, trade was the central problem. Unfortunately this does not bode well for the upcoming G20 meetings where Xi is scheduled to
meet with Trump (he sat down with Pence this weekend). USD/CAD resumed its rise as oil prices continue to slide.

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Comments

Adib Hasan
17 minutes ago

many thanks

Reply 0 0

Peter Pamphil
1 hour ago

Thank you for the knowledge

Reply 0 0

Stuart Bcause
6 hours ago

Good analysis!

Reply 0 0

Max Ginez III

Thanks for educating us all the time

Reply 0 0

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Aslam Miah
7 hours ago

Another great article. Thanks Kathy

Reply 1 0

Richard Koh
7 hours ago

What is your opinion of the USD/SGD, short term and long term

Reply 0 1

Vicky Vick
7 hours ago

It was a great financial analysis u put up there Kathy, thanks for the infos, atleast that give trader's a good inside of the market.

Reply 2 0

Subaschandra Limbu
7 hours ago
Useful info...thanx

Reply 0 0

Cornett Edwards
7 hours ago

I have to agree! You have amazing insight! Thanks for all the info!

Reply 1 0

Musa Msimango
7 hours ago

So in case this means the dollar is going to lose momentum therefore one should consider selling the dollar Wednesday...
Analysis is best with Kathy.

Reply 1 0

Musa Msimango
7 hours ago

Thank you Kathy...

Reply 2 1

Ivan Perez
7 hours ago

thank you for putting all the main news all together..I love your view on the market.

Reply 2 1

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