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Daily Market Analysis

U.S Dollar continue to strengthen, Gold hits two-month low



Beginning with yesterday market developments, the U.S Dollar resumed its rally against the G10 currencies as FED rate hike is on the table again. The Dollar index traded higher on Tuesday and has reached two-week high at 96.14 boosted by a strong increase in the consumer confidence index during the month of August.

The Japanese Yen plunged by 1.13% against the Greenback to reach 103.10, highest level since July 29. In the meantime, both the Euro and the British pound extended last Friday decline to stabilize at 1.1140 and 1.3070 levels respectively.

In the equity market, the Dow fell by 49points, while the S&P500 was off 0.2%.Gold retreated to two-month low at $1310 per ounce, meanwhile, Oil prices settled down 1.34% at $46.35 on the back of a strong Dollar.

Now let us have a look at the technical picture of the Euro, the British pound, Gold and the U.S Dollar index.



EUR/USD

The Euro resumed its decline after bears managed to push prices below 1.1240 hourly support. As of now, the trend remain bearish in the near-term, and a continuation to the downside is likely in the coming hours. However, when looking at momentum indicators, the pair is clearly oversold and a bounce can happen soon. Technically, the drop should find strong demand around 1.1110-1.1080, from where we expect to see the beginning of at least three corrective waves higher.

In the daily chart, the single currency remain under pressure below 1.1365 peak, meanwhile, prices are likely to test the 61.8% Fibonacci retracement of the entire recovery that began from 1.0910 low which stands at 1.1085. Consequently, the recent sell-off may slow down once prices get there.

Support: 1.1120-1.1085-1.1055

Resistance: 1.1160-1.1190-1.1205







GBP/USD

The British pound keep fighting for a clear direction in the near-term and volatility is likely to increase in the coming hours, ahead of the U.S Non-farm payrolls due later this week.

From a technical standpoint, the Sterling remain positive in the hourly chart as far as 1.3025 support is in place. However, the current market environment is in favor of the U.S Dollar, which can keep the upside potential limited in this pair.

In the near-term, the focus should be 1.3070 support as a break below it will bring the bearish pressure and can send the pair to as low as 1.3025 in the next days.

In the flipside, a daily close above 1.3157 level can be the trigger for a move back up towards 1.3170/95 resistance zone will offer fresh selling opportunities for bears and another wave lower to be seen.

Support: 1.3072-1.3025-1.2975

Resistance: 1.3157-1.3170-1.3195






GOLD

After several attempts to break above 1357 hourly resistance that failed, prices succeeded to break below the support zone of $1333/1328 in the daily chart, which cleared the path for a re-test of the daily support of $1305.

Technically, gold turned bearish in the near-term as prices has shown four consecutive lower highs (1375-1367-1357-1342) from the yearly peak of $1375, which reinforces the probability of further weakness in the coming days. As of now, $1325 represents the short-term resistance level and as far as prices keep trading below it, further weakness is here to stay in the coming hours.

To conclude, gold remain under pressure and the upside potential is likely to be limited, while another towards 1300 psychological support is imminent.

Support: 1305-1300-1287

Resistance: 1316-1322-1325






Dollar index

Looking at the U.S Dollar price action ahead of the U.S Jobs report scheduled for Friday. The Greenback continue to strengthen as FED rate hike bets increased significantly, the sentiment shifted towards buying the U.S Dollar in the recent days.

Technically, prices overtook 96.00 handle, which keeps the near-term outlook bullish for the U.S Dollar, in addition, the break above this resistance should expose 96.50 area in the coming days, and from where strong sellers may appear. From a larger perspective, the Dollar keep trading sideways in the weekly chart, as investors remain skeptical about the date of the next interest rates hike. Consequently, volatility can persist in the near-term unless we see a clear break above 97.65 peak or below 93.00 weekly support.

Meanwhile, we can see that bulls managed to preserve the higher lows structure that began from 92.95 low, which may lead to further gains in the Greenback especially if a daily close above 96.50 level happens.



Support: 95.85-95.60-95.40

Resistance: 96.25-96.50-96.80





Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Dollar remains king ahead of NFP




A resurgent Dollar rattled the financial markets on Wednesday with most currencies kneeling to the greenback following the firm ADP Non-Farm employment figure of 177k which heightened hopes over the Federal Reserve raising rates in 2016. With US labour repeatedly displaying signs of resilience in a period of global uncertainty, part of the prerequisites for the Fed to take action this year may have been achieved. This has been a solid week for the Dollar and the string of positive economic data release could entice bulls to send the Dollar higher as optimism rises over the Fed breaking its tradition of central bank caution.

Although there have been ongoing talks of there being a live meeting to raise US rates in September, such could be slightly abrupt with the possibility that the Fed will digest further positive data to support hiking rates in December. With an increasing focus on US data as an attribute to fulfil the conditions of a rate increase, much attention may be directed towards Friday’s NFP report. If the Non-Farm payroll for August exceeds expectations, then the central bank may be offered another compelling reason to pull the trigger in December.

The rising optimism over the Fed taking action this year has propelled the Dollar Index above 96.00. This Index is turning bullish on the daily timeframe as prices are trading above the 20 SMA. Previous resistance around 96.00 could transform into a dynamic support which encourages buyers to send prices towards 96.50.





UK Manufacturing PMI in focus

Sterling bulls made a valiant effort to reclaim control on Wednesday with the GBPUSD lurching towards 1.3150. While bulls may be commended on their efforts to elevate the GBPUSD higher, it has nothing to do with an improved sentiment towards the Sterling but Dollar instability from the fluctuating expectations over the Fed taking action this year. Sterling remains chained by the Brexit uncertainty which has haunted investor attraction towards the currency, while speculations of further easing by the BoE continue to entice bears to install repeated rounds of selling. Investors may direct their attention towards the UK Manufacturing PMI for August which may offer some clarity on how the manufacturing industry is faring post-Brexit. A further contraction in manufacturing may rekindle fears over a slowdown in economic momentum consequently bolstering hopes of the BoE easing further in 2016. On the other hand, the Sterling could be offered a lifeline if an upbeat manufacturing PMI release quells easing speculations.

The GBPUSD has been flung onto a chaotic roller coaster ride with prices sharply swinging between losses and gains amid Fed hike hopes. Sterling remains heavily pressured and the divergence in monetary policy between the BoE and Fed could entice sellers to attack the GBPUSD. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. A breakdown below 1.3100 may open a path towards 1.2900.






Commodity spotlight – Gold

Gold remains under immense pressure with the metal breaking below the firm $1315 support as the growing expectations over the Fed raising US rates this year continues to encourage bears to install heavy rounds of selling. It should be kept in mind that although Gold is very attractive in times of uncertainty, the metal is zero yielding and also priced in Dollars which make it very vulnerable to rate hike speculations.

Friday’s NFP could be a critical attribute which will decide where Gold trades towards in the coming weeks with a strong employment report potentially leaving prices vulnerable to heavy losses. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. Previous support at $1315 could transform into a dynamic resistance that encourages a further decline towards $1285. While the technicals are currently firmly bearish, an extremely weak NFP would destroy the hopes of the Fed raising rates in the short term and could offer Gold a lifeline.





Source : http://www.forextime.com/market-analysis

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Daily Market Analysis

Sterling bulls lean on PMI lifeline





Sterling displayed an incredible rebound during trading on Thursday with the GBPUSD surging towards 1.3265 following August’s blockbuster manufacturing PMI of 53.3 which instantly dispelled the ongoing Brexit fueled concerns. UK Manufacturing has hit a 10-month high clawing out of contractionary territories aided by a vulnerable Sterling that helped bolster export orders and input costs. While the rebound in manufacturing is unquestionably encouraging, investors should still keep in mind that it may be too early to gauge the ramifications of Brexit to the UK with more time needed for a clear picture. Although Sterling may enjoy further gains in the short term as expectations erode over the BoE easing further, the lingering Brexit uncertainty should cap upside gains in the longer term.

From a technical standpoint, Sterling bulls were offered a lifeline and the GBPUSD has already lurched over 130 pips to the upside. Prices are trading above the daily 20 SMA while the MACD is in the process of crossing to the upside. While bulls may seem to be in control on the daily timeframe, a solid NFP on Friday could swiftly quell the uptrend with prices trading back towards 1.3100.






Commodity spotlight – WTI Oil

WTI Oil descended towards three-week lows at $44.60 on Thursday as the persistent concerns over the excessive oversupply of oil in the global markets haunted investor attraction towards the commodity. It is becoming increasingly clear that investors have digested the oversupply reality with the fading optimism over OPEC securing a freeze deal in September’s informal meeting enticing sellers to attack further. U.S crude stockpiles have risen consecutively while OPEC heavyweights such as Saudi Arabia and Iraq continue to pump incessantly into a market that is already heavily saturated. WTI Crude remains fundamentally bearish with further declines expected as the combination of supply fears and soft demand encourages bears to install rounds of selling. The sharp breakdown below $46 may open a clean path towards $44.00.







Source : http://www.forextime.com/market-analysis

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Daily Market Analysis

Markets on standby ahead of NFP






A sense of anticipation has firmly gripped the financial markets on Friday as investors await the Non-Farm payrolls report for August which could provide clarity on when the Federal Reserve plans to raise US rates in 2016. Global stocks remain mixed with most major markets on standby as anxious investors observe from a distance ahead the market shaking employment report. Asian equities have already drifted lower on Friday and this caution could trickle into Europe consequently leaving European stocks vulnerable to losses. Wall Street was punished on Thursday by the downbeat U.S manufacturing data that rekindled concerns over the US economy with further losses expected as investor jitters intensify ahead the NFP.

The over-extended stock market rally may be displaying signs of exhaustion with September being a potential month where bears emerge from hibernation. Although the heightened expectations of the Fed raising US interest rates has somewhat elevated global sentiment, the persistent concerns over the health of the global economy are still lingering in the background. Prolonged periods of depressed oil prices have eroded investor risk appetite while uncertainty is still a recurrent theme which has left market participants on edge. With volatility making a comeback it could take an unexpected catalyst to trigger a steep stock market selloff. Conventional wisdom holds that a strong Dollar is problematic for stocks which should keep investors alert as hopes heighten over the Fed taking action this year.

UK Construction PMI in focus

Sterling bulls were gifted a lifeline on Thursday with the GBPUSD lurching towards four-week highs above 1.3300 following August’s solid manufacturing PMI of 53.3 which alleviated the Brexit fuelled fears. Sterling weakness from the persistent Brexit uncertainty helped uplift export orders and input costs consequently propelling the UK manufacturing to fresh 10 month highs. While this data was quite impressive, it still remains too early to come to a conclusion with more time needed to weigh the impacts of Brexit to the UK economy.

Investors may direct their attention towards the UK construction PMI which if also exceeds expectations could provide the Sterling another welcome boost. Sterling could accumulate further gains in the short term as the positive data diminishes expectations over the BoE easing further. In the longer term, upside gains could be capped as the Brexit uncertainty persistently haunts investor attraction towards the currency.

From a technical standpoint, Sterling bulls were unchained on Thursday with the GBPUSD rising over 170 pips in a single trading day. Prices are trading above the daily 20 SMA while the MACD has crossed to the upside. Although bulls may be currently in control, a positive NFP figure which bolsters hopes over the Fed raising US rates could cause the GBPUSD to tumble back down towards 1.3100.

Soft US Manufacturing pressures Dollar

The Dollar was left pressured on Thursday following the unexpected contraction in U.S manufacturing which rekindled concerns over the health of the US economy. Manufacturing slipped into contractionary territory at 49.4 for the first time since February consequently dimming hopes over the Fed raising US interest rates in September. Although the manufacturing report was somewhat disappointing, overall data from the US has displayed signs of economic stability which has kept hopes alive for the Fed to act this year. Investors may direct their attention towards Fridays heavily anticipated NFP report which if exceeds expectations could renew optimism towards the Federal Reserve breaking the trend of central bank caution.

It may take an extreme anomaly in Friday’s NFP report to abruptly cool the heated expectations over the Fed raising rates at least once this year. A healthy figure above 180k which displays some stability in the US labour force may be enough to keep hopes buoyed over the central bank pulling the trigger in 2016. A figure below 150K could renew concerns over the health of the US economy and potentially erode optimism towards September being a “live” meeting to act. In extreme cases, a repeat of May’s dismal employment report figure of 38k could temporarily sabotage all efforts taken by the Fed to act.

Dollar bulls are still in control and the Dollar Index is still bullish on the daily timeframe. Prices are trading above the daily 20 SMA while the MACD has also crossed to the upside. A decisive breakout above 96.00 could open a path towards 96.50.

WTI Oil breaks below $44

WTI Oil was left vulnerable to extreme losses during trading on Thursday with prices breaking below $44 as investors discounted the possibility of OPEC securing a freeze in September’s informal meeting. Although OPEC may be commended on their ability to exploit the oil price sensitivity by creating speculative boosts in oil prices, it has come at a very heavy cost. Fears over the excessive oversupply in the markets continue to haunt investor attraction towards the commodity while concerns over slowing demand have capped upside gains. Crude oil stocks piles continue to rise while OPEC members incessantly pump to reclaim market share. The ingredients of a bear trend are present and September’s informal meeting could be the catalyst needed to send WTI lower towards $40.

Commodity spotlight – Gold

Gold was elevated slightly on Thursday following the soft US manufacturing data which eroded some expectations over the Fed raising US interest rates this year. Despite the lifeline provided, the metal has been under pressure today with prices trading towards $1310 as anticipation mounted ahead of the NFP. Gold has been very attractive in times of uncertainty and unease but the metal is zero yielding and also priced in Dollars which make it quite vulnerable to rate hike speculations.

Friday’s NFP could be a critical catalyst which will decide where Gold trades towards in September with a firm employment report leaving the metal open to steep losses.From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. Previous support at $1315 could transform into a dynamic resistance that encourages a further decline towards $1285.

While the technicals on the daily are currently firmly bearish, an abysmal NFP that diminishes expectations of the Fed raising rates could propel Gold higher.





Source : http://www.forextime.com/market-analysis

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Daily Market Analysis

U.S Dollar consolidates as NFP figures disappoints



The Dollar traded lower on Friday after the recent NFP figures pushed investors to re-evaluate their rate hike expectations.

The U.S economy added only 151 000 new jobs in August compared to estimates of 180 000. This is a significant drop from July figures, which were at 275 000. In the meantime, the unemployment rate stabilized at 4.9% while it was anticipated at 4.8%. Meanwhile, the wages slowed down in August as the average hourly earnings retreated by 0.1% compared to 0.3% previously.

After the release of these disappointing figures, the U.S Dollar immediately plunged across the board (1.3350 against the British pound, 1.1250 against the Euro and 102.80 versus the Japanese Yen) before to trim some losses by the time of the weekly close.

The rate hike probabilities decreased significantly as a move in September has become off the table for the time being. The latest Bloomberg survey show a 32% probability only for September, 36.4% for October, and 59.0% for December.

Looking at the U.S Dollar recent price action after the U.S Jobs report. The Greenback continue to strengthen as FED rate hike is expected before the end of 2016, the sentiment shifted towards buying the U.S Dollar in the recent days.

Technically, prices dropped into a short-term corrective wave and has retraced exactly 50% from the last rally from 94.00 support, this level stands at 95.15 and from where we have seen a strong bounce in the dollar which keeps the near-term outlook bullish for the Greenback. Moreover, prices managed to overtake the bearish trend line in the daily chart and as of now, a move higher in the direction of 96.50 resistance area is likely in the coming days.

In the flipside, 95.15-94.88 levels are considered as a strong support zone for the near-term price action and the downside potential remain limited above this support. Therefore, prices should continue to trade higher during next week as bulls continue to maintain the control.

From a wider angle, the Dollar keep trading sideways in the weekly chart, as investors remain skeptical about the date of the next interest rates hike. Consequently, volatility can persist in the near-term unless we see a clear break above 97.65 peak or below 93.00 weekly support.

Meanwhile, we can see that bulls managed to preserve the higher lows structure that began from 92.95 low, which may lead to further gains in the Greenback especially if a daily close above 96.50 level happens as mentioned above.

Support: 95.15-94.88-94.00

Resistance: 96.25-96.50-96.80







Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

UK Services PMI seizes centre stage




Global stocks received a welcome boost last week following the soft U.S jobs data for August which questioned the likelihood of the Federal Reserve raising US interest rates in 2016. Asian markets commenced Monday on a solid footing with the Nikkei rising +0.66% as expectations heightened over the BoJ implementing further stimulus measures to stabilise its ailing economy. European stocks charged into fresh four-month highs last week with further gains expected today if Asia’s bullish contagion trickles into the European markets. Wall Street was elevated higher on Friday as the combination of Dollar weakness and fading rate hike hopes attracted investors to riskier assets.

Although stock markets may be open to further gains in the short term, the ingredients for a bear trend remain visible and such should keep investors alert. The ongoing concerns over the global economy may spark jitters while depressed oil prices weigh heavily on investor risk sentiment. Uncertainty is still a recurrent theme in the markets which could offer an opportunity for bears to exploit the over-extended relief rally in stocks. While a September rate hike may be discounted following the recent soft U.S jobs report, the 41% possibility of the Fed taking action in December could pressure stocks in the future.

Dollar vulnerable post-NFP

Dollar bulls were left empty handed on Friday following August’s soft NFP headline figure of 151k which instantly dampened hopes over the Federal Reserve raising interest rates in September. Average earnings reduced by 0.1% and when such was combined with the soft headline figure of 155k, many questions were raised over the resilience of the US labour force in this period of uncertainty. Although US domestic data in August has followed a positive path, this soft U.S jobs data may have provided a strong reason for the Fed to remain on standby in September. For December to be a “live” meeting for the Fed to break the tradition of central bank caution, US data may have to repeatedly exceed expectations with the U.S labour showing greater signs of improvement.

The Dollar received a heavy blow after the soft U.S jobs report with the Dollar Index finding it difficult to break above 96.00. This Index may turn technically bearish once sellers conquer the daily 20 SMA. A solid breakdown below 95.50 could encourage a further decline back towards 95.00.






Sterling firm ahead of UK services PMI

Sterling experienced an incredible rebound last week with the GBPUSD charging above 1.3300 as the combination of repeatedly positive domestic UK data and Dollar weakness invited bulls to install heavy rounds of buying. Sentiment towards the Sterling has been uplifted following the impressive manufacturing and construction PMI releases which questioned if the Brexit had any negative impacts on the UK economy. With the string of positive economic data eroding expectations over the Bank of England easing further in the future, Sterling bulls have run rampant.

Investors may direct their attention towards the critical services PMI report which may offer clarity on how services have fared post-Brexit. If UK services follow the same positive pattern as construction and manufacturing, then Sterling could be open to extreme gains moving forward.

While further gains in the Pound could be realised in the short term amid the positive data, it still remains too early to come to a decisive conclusion on how Brexit has affected the UK with more time needed to weigh the impacts.

Commodity spotlight – WTI Oil

WTI Oil rallied towards $44.60 on Friday and this has nothing to do with an improved sentiment towards oil but Dollar weakness from fading US rate hike expectations. Although further gains in oil prices may be realised in the short term amid Dollar weakness, this commodity remains fundamentally bearish.

It should be kept in mind that concerns remain elevated over the excessive oversupply of oil in the global markets while the fading hopes over OPEC securing a freeze deal in September’s informal meeting continue to cap upside gains. With crude oil stock piles rising incessantly further losses may be expected in the longer term when bears exploit the current correction to install a heavy round of selling. From a technical standpoint, prices remain bearish and a move back below $44 could open a path towards $40.




Source : http://www.forextime.com/market-analysis

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Daily Market Analysis

NZ economy lifts on data




The New Zealand dollar has managed to claw back some of it's earlier losses as the strong dollar starts to wane, and as economic data out of New Zealand continues to be a mixed back but mostly bullish. Two ANZ surveys released today showed the New Zealand economy picking up as commodity prices lifted to 3.2% (prev 2.0%). At the same time the ANZ truckometer was released which acts as a proxy for GDP readings and it was strongly up 6.7% m/m (prev -5.7%), which shows that expectations for GDP in the coming quarter are slightly weaker, but the following quarter is expected to see an overall lift in GDP for the economy. For many this will be a positive sign for the New Zealand economy, but for the Reserve Bank of New Zealand they will be looking to make sure that house prices are kept in check and that if the economy starts running red hot it may be time to tighten interest rates in order to keep inflation in check.

Technically the NZDUSD has been struggling lately as volatility continues to play havoc for traders trying to trade key levels. The main level being 0.73118, which so far has had a number of attempts to close above it on the daily chart, but all failing in the last fortnight. However, with pressure building it certainly could be a case of a breakout and the NZDUSD would likely run in such a scenario and looking for higher highs. In this case 0.7475 being the next level of resistance traders are likely to find, unless we see some sort of major economic data which boosts the NZ economy strongly.

Across the pacific ocean in the USA we have seen US data recently seem to lack any real power in the marketplace with non-farm payrolls being much weaker than anticipated at 151k (180k exp), this in turn lead to a spike in the unemployment rate to 4.9%. So far the USD has suffered slightly for this, but for the most part people still expect that not even a blip in non-farm payroll can prolong the odds of an interest rate rise in the USA. Expectations around this continue to build, and if we see any further movement in unemployment claims this may add weight to the theory that something may be stifling the labour market at present. For the S&P 500 this weakness followed by bets on a rate hike have stopped it in its tracks and it's currently ranging as a result.

Resistance at 2185 continues to stop any sort of momentum for the S&P 500 and I would be surprised if the recent push higher can gain any sort of traction to push through at this stage. As the S&P dips lower it's playing between two key support levels at 2168 and 2152, any drop to the 2152 support level is likely to find the 50 day moving average which has acted as dynamic support in the past. However, with the technical build up, it's still possible for the S&P 500 to fall further as the bets for rate hikes increase.





Source : http://www.forextime.com/market-analysis

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Daily Market Analysis

Oil uplifted by renewed freeze deal hopes


WTI Oil displayed an incredible rebound on Monday with prices piercing above $46 after Russia and Saudi Arabia pledged to stabilise the saturated oil markets. With Russia and Saudi Arabia being the largest oil producers in the world, the prospects of a potential deal formed by these powers has generated sharp speculative boost in prices. Although there have been talks that the cooperation marks a “new era” which would have a “critical significance”, it still does not change the current oversupply woes which have made Oil fundamentally bearish. While the short term gains from freeze deal speculations have been impressive, the commodity remains pressured with further losses expected if September’s informal OPEC meeting concludes without an effective deal.

Oil’s woes remain the oversupply fears which have haunted investor attraction and a freeze deal at the current record output levels may do little to ease these anxieties consequently weighing heavily on investor risk sentiment. For Septembers meeting to have a significant impact on Oil prices there needs to be a solution to remove the excessive oversupply but the question is are other OPEC members willing? It should be kept in mind that OPEC’s crude production jumped to a record high in August while Iran remains on a self-fulfilling quest to reclaim lost market share. The cartel faces an obvious prisoner’s dilemma from cutting production which may entice US shale to jump back into the markets.

WTI is still technically bearish on the daily timeframe as prices are trading below the daily 20 SMA while the MACD trades to the downside. $46 could act as a significant resistance which encourages bears to drag prices back down lower towards $44. A decisive breakdown below $44 could encourage a steeper decline lower towards $40.

Commodity spotlight – Gold

Gold was propelled higher last week with the metal charging towards $1330 following the soft U.S labour report which dented expectations over the Federal Reserve raising US interest rates in 2016. This yellow metal remains highly sensitive to US rate rise speculations and with current hopes fading, further gains could be accumulated in the short term. With concerns still lingering over the health of the global economy, Gold could regain some allure as investors flock to safe-haven safety. Although prices are still technically bearish on the daily timeframe, Dollar weakness could propel the metal back above $1345 consequently handing bulls back control. From a technical standpoint, Gold needs to strongly break above $1330 to signal a further incline towards $1345.






Source : http://www.forextime.com/market-analysis

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Daily Market Analysis

AUD bulls look cautious




The Australian dollar has come managed to climb the charts on the back of USD weakness today, but all is not as rosy as it seems and it's becoming clear that the Australian economy is really struggling after all three PMI readings this month fell below expectations. Manufacturing and Services PMI readings showed large drops which had many worried, and now Construction PMI data out today came in at 46.6 (51.6 prev) showing a contraction in the sector. This is nothing new that the Aussie economy is struggling but it does lend weight behind the idea that the Reserve Bank of Australia should look to prop up the economy and an interest rate cut may be needed here. However, the property market will be a major concern with housing approvals jumping on the most recent reading on weaker interest rates over all.

Technically on the charts the AUDUSD has broken out of the bearish widget that it was forming and has pushed up to resistance at 0.7690 and is looking very unlikely to continue this movement unless we see further USD weakness. For me a pullback is more likely on the cards given the weak data that continues to come out of the Australian economy and shows no signs of letting up, so support at 0.7638 has become all the more tangible in recent times. I would also watch the 50 day moving average which has been acting as dynamic support and resistance as well for the market.

The New Zealand dollar was spoken about heavily yesterday, and for good reason as pressure was finally building and it seemed that we may indeed see a break out for the NZDUSD. After today it can be confirmed that the bulls have looked to take back control after markets pushed through the ceiling of resistance at 0.7311. This has been lead in two parts, firstly by the shocking ISM non-manufacturing PMI which has shown a bigger drop than anyone expected in the USA to 51.4 (55.0 exp). This has had a large impact as USD selling as a whole was heavy today. Additionally we saw positive data out of the NZ market as manufacturing sales q/q lifted to 2.2% (-2.6% prev), and will be a welcome note to the NZ economy which has for the most part been struggling as of late and looked like further rate cuts may be on the horizon. It will be hard to justify them now given the recent economic turnaround, but the NZD will remain a concern for the RBNZ and it's likely it will look to talk down the high flying NZD.

Glancing at the technical's and as I mentioned yesterday the next level of resistance is looking likely at 0.7475. Any pulls backs are a real possibility after yesterday's move, but I would anticipate support to now be formed at 0.7311 and the likelihood that the previous bullish trend line will hold up further movements. The 20 day and 50 day moving average are also providing support and are just below the trend line and likely to prop up any further drops and assist bulls.





Source : http://www.forextime.com/market-analysis

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Daily Fundamental ForexTime ( FXTM )

Dollar retreats as Fed hike hopes fade



Dollar bears were unleashed on Tuesday following the disappointing U.S ISM services data which dented hopes over the Federal Reserve raising US interest rates in September. The ISM non-manufacturing PMI for August came in at 51.4, making it the lowest since February 2010 consequently rekindling concerns over the health of the US economy. September has been a painful start for the Dollar bulls with the recent soft domestic economic releases challenging the bullish sentiment which initially elevated the Dollar. If US data continues to miss expectations then talks of September being a live meeting to raise rates could be thoroughly discounted with a move in December hanging on a thin line.

The Dollar Index plummeted on Tuesday with prices breaking below 95.00 as hopes over the Fed breaking the tradition of central bank caution faded into the distance. Prices are trading below the daily 20 SMA while the MACD has also crossed to the downside. If the bearish momentum holds then the Dollar Index could trade lower towards 94.20.

Sterling bulls unchained

Sterling has enjoyed an extended period of gains with the GBPUSD charging to eight week highs at 1.344 as the combination of impressive UK economic data and Dollar weakness attracted bulls to install heavy rounds of buying. Sterling has had a good run with the string of positive PMI releases over the past week dispelling ongoing concerns that the EU referendum outcome may have an immediate negative impact on the UK economy. Although further gains in the pound may be accumulated in the short term as expectations diminish over the BoE unleashing further stimulus measures, it may be slightly early to come to a decisive conclusion with more time needed to weigh the impacts of Brexit to the UK economy.

Investors may direction their attention towards the UK manufacturing production data which could provide additional clarity on how the sector has fared post-Brexit. A release which follows the same positive pattern and exceeds expectations could reinforce further confidence into the UK economy consequently propelling the Sterling higher.

The BoE inflation report hearing may be the event which seizes centre stage today where Governor Carney will testify to the Treasury Select Committee. Mark Carney may likely reiterate his dovish mantra on the health of the UK economy while potentially suggesting of further stimulus measures in the coming months to retain economic stability. While questions may be asked if the BoE acted too swiftly to easing monetary policy post Brexit following the recent string of positive data, it still remains too early to gauge the effects of Brexit to the UK.

Commodity spotlight – Gold

Gold displayed an incredible appreciation on Tuesday with prices lurching towards $1352 following the soft US ISM services data which eroded optimism over the Fed raising US interest rates in September. The sharp uplift was complimented with Dollars vulnerability which provided a solid platform for bulls to install heavy rounds of buying. With hopes fading over the Fed stepping forward to raise rates in September, this yellow metal could be open to further gains moving forward. From a technical standpoint, prices have turned bullish on the daily timeframe and the breakout above $1345 could open a path towards $1355.




Source : http://www.forextime.com/market-analysis

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Daily Fundamental ForexTime ( FXTM )

Commodity currencies take the spotlight




The Canadian dollar managed to buck the trend and rise up the charts today against the USDCAD as despite keeping rates on hold at 0.50% and Ivey PMI slipping to 52.3 (55.9 exp) the CAD remained firm. But this was not just purely on the back of positive data, instead it was helped also by oil prices managing to rise and the Canadian dollars correlation with oil prices also helping to drive home the movements that we saw against the USD. Oil's jump was led in part by talk of a large drawdown in US crude oil inventories, but at the same time it was announced that 3 billion barrels had been found in West Texas via shale and this was likely to put into production in the next few years. For me the Canadian dollar continues to be a popular currency to trade with its strong swings being attractive to traders

Looking at chart movements it's clear that a bullish trend line on the daily chart is having a large impact for traders, and any movements lower are likely to find support at this key area. The push back up to resistance at 1.2913 lacked momentum today, but a touch on the trend line could lead to a push through this level with some serious volatility. If the trend line was likely to break then I would expect a push down to support at 1.2568 as traders look to take the wind out of the bulls.

The Australian economy had a bad day yesterday when it came to economic data and today was not to different with GDP figures showing a drop much worse than expected. GDP q/q was down to 0.5% (0.6% exp) and GDP y/y slipped to 3.3% (3.4% exp). By any standards this is still a strong reading for any developed economy, but in the case of Australia it shows the economy consistently slowing down at present with sluggish capital spending and all the PMI figures showing a slowdown it's a matter of time before the Reserve Bank of Australia talks down the AUD over the issues that are at hand. With all of the current issues a rate cut will also being priced in by the market, and bets are likely to increase with further negative data that the rate cut will come sooner rather than later. There is little hope in waiting for a US rate hike at this stage to help push the AUD down, as data continues to be a mixed bag throughout the USA.

The AUDUSD has so far stalled from going any higher at 0.7690 as it acts as a strong level of resistance in the market. At this stage given the negative fundamental data it's likely that the bears will use technical's to play the AUDUSD down in the long run, while also betting on the Reserve Bank of Australia to say something. Support levels can be found at 0.7635 and 0.7582, with traders likely to targets these levels as the AUDUSD falls and the bears look to make the most of the negative fundamental data we are seeing.





Source : http://www.forextime.com/market-analysis

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Daily Market Analysis

Draghi disappointment propels Euro higher



The Euro was flung onto a chaotic rollercoaster ride on Thursday following the European Central Bank’s decision to keeping its monetary policy stance unchanged despite the worrying state of the European economy. Official interest rates were left unchanged while monthly asset purchases of $80 billion were confirmed to run until the end of March 2017 which left investors empty handed. With uncertainty still a recurrent theme in the markets, most central banks have adopted a stance on inaction and such was displayed in today’s ECB meeting. Although Draghi pledged that the ECB would act by using all instruments available within its mandate to bolster Eurozone growth, this may have fallen on deaf ears.

It is becoming increasingly clear that the Eurozone is entangled in a losing battle with faltering growth while static inflation levels continue to question the ECB’s credibility. Although Draghi also suggested that the economic recovery in Europe is likely to be dampened by the UK’s Brexit vote, this was still not enough to prompt the central bank to act. While Draghi’s dovish rhetoric may have opened doors for an extension to bond buying program beyond March 2017, the visible disappointment could propel the Euro higher. Sentiment remains bearish towards the Eurozone and today’s inaction may spark further questions over the central bank’s ability to jumpstart Eurozone growth.





Source : http://www.forextime.com/market-analysis

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Daily Market Analysis

Dollar rebound after ECB meeting



We have seen a big drop in the dollar during the beginning of this week, after ISM Non-Manufacturing figures sank to 6-year low, sending a clear message to the market that a rate hike in the near future is very unlikely, especially after the recent disappointment in the U.S jobs report last Friday.

Immediately after these figures, September rate hike probability fell to 26.0% 30.8% in November while the chances for a move in December remain at 54.0%.


As of today, the U.S Dollar managed to bounce in the beginning of the U.S trading session on profit taking as September FED meeting looms.

Looking at the major economic releases which came out today, the ECB rate decision was a disappointment for investors today as the central bank decided to keep all the three-benchmark rates unchanged and to keep asset purchase program at 80 billion euros a month. In the meantime, the bank reaffirmed that it is planning to run QE until March 2017 or beyond if needed.

The Euro rose to as high as 1.1327 before to retreat below 1.1300 handle as the bullish momentum faded.

In the U.S, initial jobless claims dropped to 259K down from 263K previously while the continuing claims came out below estimates at 2144K.

Technically, the dollar remain bearish in the daily chart, while in the near-term, the outlook is flat. The Greenback keep trading sideways between 96.25 level in the upside and 94.00 support in the downside, which keeps the short-term view unclear. Therefore, traders should focus on this zone, as a break outside of it will trigger a big move in the dollar during the following days.

Looking at the levels of interest in the hourly chart, 94.40 is seen as the short-term support, in the opposite, 95.00/20 is considered as a strong resistance zone.








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Daily Fundamental ForexTime ( FXTM )

Brainard speech boosts equities, U.S. dollar on the defensive




Global equity markets received a boost on Tuesday after remarks from Fed governor Lael Brainard lowered the odds of an imminent rate hike when the Federal Reserve meets next week. Markets were anxiously awaiting Brainards’ comments to see whether recent economic data were was sufficient to turn one of the most dovish members into a hawk, but she made it clear that there are a’s number of factors to be taken into consideration before pulling the trigger on hiking rates such as the absence of accelerating inflationary pressures and risk from abroad.

Fed officials who were trying so hard to prepare markets for tightening monetary policy as early as September are now being ignored, as future traders are pricing in just a 15% chance for a hike in September down from 28% before Ms. Brainard spoke.

Although delaying a rate hike might continue to provide some artificial support to equity markets I still believe that valuations are high and aren’t supported by economic fundamentals or corporate earnings. When looking at last Friday’s price action, all major U.S. indices dropped by more than 2%., Wwhile gold and U.S. 2-years treasury bonds, which are supposed to be more sensitive asset classes to changes in monetary policy, just fell slightly. This indicates that we are likely to enter a phase of sharp volatility heading into fourth quarter, with risks tilted to the downside.

The greenback traded slightly lower against most of its major peers on Monday but remained in a relatively tight range today. Today’s UK inflation data is likely to provide some price action on the pound with August CPI expected to reach its highest level since December 2014 at 0.7%. But the more interesting release this time is from PPI’s input prices which is forecasted to show a huge spike of 8.1% in August compared to 4.3% in July, making the case harder for BoE to continue loosening monetary policy when the central bank meets on Thursday.




Source : http://www.forextime.com/market-analysis

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FXTM Forex Market Update | 13/09/2016

Stock markets staged an incredible rebound on Monday following the dovish comments from Fed officials which quelled expectations of the Fed taking action this year. With expectations fluctuating over the central bank raising US rates, the Dollar was flung onto a chaotic roller coaster ride. Sterling still remains somewhat pressured by the post-Brexit concerns. In the commodities arena, WTI Oil traded lower as the ongoing concerns over the excessively oversupply haunted investor attraction. • The EURUSD is pressured below 1.1200 • The GBPUSD bears could reclaim control below 1.3250 • Gold continues to search for direction above $1315





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Daily Market Analysis

Commodity currencies dip on negative data




The 'rock star' economy of New Zealand is no longer flying high after the recent GDP figures came in much weaker than expected with GDP q/q slipping to 0.9%. Expectations had been high that we would see a boost in the data, and while we did see a jump on last quarter it was well below the market expectations and economists' predictions. The NZ business manufacturing index also slipped to 55.1 (prev 55.8), however it's still showing signs of expansion just not at the rate that was seen before. The trough of negative data for the NZ economy will take its toll and markets will be looking for a exit plan for the NZD, with many analysts expecting it to correct back down into the 0.70 range as the USD strengthens and the NZ economy struggles.

On the charts technically it has been looking very interesting for the NZD after the recent plunge through the bullish trend line which the market was semi respecting. For me it would seem that the bears have taken hold for two reasons. Firstly, the NZDUSD has rejected off its previous bullish trend line which is a strong bearish signal, and secondly the push higher before GDP figures was shot down by the 20 day moving average. Moving lower for me the next big signal would be the 50 day moving average which has so far been a large point of strength for any bearish movements trying to flex their muscle at the bulls. Below this support can be found at 0.7163 and 0.7046; with market expectations looking for a low around the 0.70 mark over the next few months.

The Australian dollar continues to find itself under ever increasing pressure, as despite rates being high and it still be an attractive buy for fixed interest rate investors, the economy continues to struggle. With no end in sight the market is now worried about the unemployment figures which are due out shortly. Westpac consumer sentiment came in at 0.3% (1.0% exp) yesterday, and the market for the most part is ever cautious now about being optimistic at all. Despite all of this the Australian employment market can be very hard to predict and we have seen many surprises when the market was all priced in for doom and gloom. So sometimes it's a requirement to take anything with a grain of salt.

On the charts the AUDUSD is being dominated by the bears who are trying to push it lower in a tight channel which has so far shot to prominence. The 0.50 level on the fibonacci is so far holding back any dips lower, however, this level can crack under major pressure and this could very much be the case in the coming weeks. I would expect a push through here to lead to further support at 0.7346 and 0.7226. For me the coming strength of the USD and the Australian weakness in the economy create a golden opportunity that should be watched carefully.




Source : http://www.forextime.com/market-analysis

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Daily Market Analysis

Equities continue to tumble; Volatility set to rise



The global equity selloff resumed on Thursday with most Asian indices declining for the sixth consecutive day. Europe also opened in red as dropping oil prices and uncertainty over central banks policies kept investors on edge.

Concerns that the Fed will soon tighten monetary policy has been an excuse to keep cash off the table as investors want to get past the meeting on September 21st to adjust their portfolios. If we assume that the Fed will not hike rates next week, which we believe so, this could be interpreted as good news for riskier assets, but the focus will turn again to the Fed’s December meeting and this never ending debate will keep going on and on. The real question which should be asked is, what have the years of unconventional easy monetary policies by central banks done to the global economy? And the answer is simple, very little. U.S. economic growth is tracking at a 1% rate in 2016, the Eurozone is barely growing and Japan’s economy continues to struggle. This is likely to raise doubts on the effectiveness of future central bank actions, which is a major reason for volatility to resume in the months ahead.

It’s a busy day for the U.K. with Bank of England’s monetary policy decision and retail sales scheduled to be released today. Back in August the BoE cut its key interest rates by 25 basis points and increased asset purchases by 60 billion pounds with a new initiative to buy 10 billion of corporate bonds. Economic data since then has showed resilience with all PMIs nudging higher, retail sales increased rapidly (due to the pound slump) and unemployment remained unchanged at 4.9%. This would lead BoE to remain pat at today’s meeting, but sterling traders would need to know if the vote is going to be unanimous, and whether the statement is dovish enough to pull sterling lower.

Later today, traders focus will turn to U.S. retail sales after a very quiet week on the data front. Expectations are set for a slight improvement of 0.4% in retail control, a measure that excludes volatile items such as gasoline and auto sales. This won’t be enough to shift markets expectations on a rate move, but an upside surprise is likely to push the U.S. dollar higher.





Source : http://www.forextime.com/market-analysis

 

Using fundamental analysis might required good understanding and update data on realtime, but often indeed after news has been released then making the market move very volatile and often randomly

 

Daily Market Analysis

Dollar on standby ahead of US inflation report




The Dollar edged lower on Thursday following August’s disappointing US retail sales report which thoroughly dampened expectations over the Federal Reserve raising US interest rates next week. Headline retail sales fell 0.3% marking its first decline in five months while industrial production stumbled to -0.4% simply cemented concerns over the health of the US economy. Repeatedly conflicting comments from Fed officials on US rate timings had already left the Dollar under noticeable pressure with yesterday’s soft retail sales potential providing a foundation for bears to attack. While it is widely expected that rates are left unchanged next week, the element of surprise continues to leave investors on edge. There could be a possibility that the Federal Reserve observes US economic data in Q4 before justifying raising US interest rates in December.

Attention may be directed towards Friday’s US inflation data which could provide further clarity on the health of the US economy. Price stability is one of the key prerequisites for the Fed to take action with a US inflation which displays signs of improvement potentially renewing optimism over the central bank pulling the trigger this year.

From a technical standpoint, the Dollar Index is almost on standby with prices trading within a modest range. A breakdown below 95.00 could encourage a steeper decline towards 94.00.






WTI Oil finds comfort below $44

WTI bears were unleashed this week with prices sinking to the lows of $43.24 as the persistent oversupply concerns haunted investor attraction towards the commodity. Wednesday’s shocking build in US distillates inventories enticed sellers to attack while the fading optimism over September’s informal OPEC meeting quelling the oversupply has ensured Oil remains depressed. With major oil producers still engaged in a self-fulfilling quest to reclaim market share, this is a bears world and steeper declines are expected. There will be an increasing focus on the pending informal OPEC meeting in September which most hope could provide a solution to the oversupply woes. If the meeting follows the same pattern as Doha with investors left empty handed, then WTI could be poised for steeper declines.

From a technical standpoint, WTI is under pressure with the decisive breakdown below $44 enticing bears to drag prices lower towards $41.

Commodity spotlight – Gold

Gold stumbled to fresh two week lows on Thursday around $1309 as the ongoing uncertainty over the Federal Reserve policy encouraged investors to offload positions. Although expectations have been thoroughly discounted over September being a live meeting to raise US interest rates, the element of surprise has left investors on edge consequently punishing Gold. It seems likely that price action is driving Gold prices lower as the technicals are bearish on the daily timeframe. While further declines could be expected in the early sessions of Friday morning, the pending US inflation report this afternoon has the power to provide Gold a lifeline or even drag the commodity lower. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. If bears conquer the intraday $1315 support then the next target could be $1305.








Source : http://www.forextime.com/market-analysis

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Daily Fundamental ForexTime ( FXTM )

Week Ahead: It’s all about central banks




The greenback ended sharply higher against it major currency peers on Friday, boosted by stronger than expected inflation figures for the month of August. The rises in medical costs along with higher rents were enough to offset the declines in gasoline and transportation. The core CPI which excludes the volatile food and energy items climbed 2.3% in August when compared to last year suggesting that inflation in the U.S. might have started to build-up.

A rate hike is justified.

Theoretically, if the Federal Reserve acts upon its twin objectives of stable prices and maximum employment, then a rate hike is justified. Atlanta Federal Reserve Bank president Dennis Lockhart, already mentioned that 1.6% inflation and 4.9% unemployment rate call for a lively discussion when the central bank meets on September 20-21. Several other Fed officials also argued that recent economic data supports a rate hike as early as September, but will they?

Why not?

Chances of pulling the trigger are very low and I will be very surprised if the Fed hiked rates for several reasons.

• U.S. service industry which makes up more than 80% of the economy expanded at weakest pace in six years in August according to the Institute of Supply Management, indicating that there are serious signs of economic slowdown.

• The manufacturing sector continues to struggle with weak business spending, slowing exports, strong dollar, and uncertain global outlook.

• Retail sales declined in August, diminishing hopes of strong rebound in growth which is led by consumers.

• The race to the white house has tightened with Hillary Clinton’s lead declining considerably in the past several weeks.



The market shares our view with only 12% priced in for a rate hike according to CME FedWatch, suggesting that investors are not well prepared for action, and even a dovish rate hike will create serious headwinds to financial markets. However, I believe that Janet Yellen will take the opportunity to start building the case for a December rate hike, which could continue sending the dollar higher.



BoJ: Deeper into negative territory?

The Fed is not the only central bank under traders’ radar. Bank of Japan is likely to provide more action on Wednesday with speculation of cutting rates deeper into negative territory is being considered as BOJ's massive economic stimulus proved insufficient to boost growth and inflation.

The BoJ might also consider increasing purchases of short term bonds and reduce the ones of longer maturities, an operation change to steepen the yield curve by keeping short term borrowing costs low, meanwhile helping the financial system to find some returns on the longer run.

The 2% inflation target set on January 2013 seems like mission impossible for the central bank to achieve in the next two years, so pushing the target again is highly anticipated but we don’t expect the BoJ to lower or drop their commitment as of yet.

The Yen is not fully pricing in a rate cut, so a 10 basis point cut would drag the Yen lower with a potential of USDJPY reaching 105 over the short-medium term, but this also depends on what the Fed will do later on Wednesday.





Source : http://www.forextime.com/market-analysis

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