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Daily Fundamental ForexTime ( FXTM )

NZ dollar bears start to take hold




The New Zealand dollar bulls have been trying to push higher on the charts as of late as the most recent economic data continues to be positive, and the likelihood of a rate cut is starting to slowly diminish. The most recent economic data was positive with Westpac consumer sentiment lifting slightly to 108.00 (106.00 exp), showing that the so called 'rock-star' economy may be starting to get some life back into it with the recent lift in global commodity prices. Certainly the lift in dairy prices has been major catalyst for the economy, and it's expected to continue into the short to medium term. It seems likely that the Reserve Bank of New Zealand will now be looking to hold back on an interest rate cut in the short term to see if the economy does improve, and if inflation will pick up in the near term which could even warrant an interest rate rise.

On the charts the NZDUSD has so far been relatively upbeat and up until recently the bulls had been in control for the most part. The recent double top at resistance at 0.7475 caused the bears to quickly take control and we've seen since a fall through the old bullish trend line. The drop below the 20 day moving average is not a major concern so far, but the rejection of bullish movement at resistance at 0.7319 is of concern for bullish players. The support so far has looked more and more likely to be found in the 50 day moving average, which in the last push was able to bounce back. A strong signal for the bears will be if the 50 day moving average does not provide any support on the charts and drops much lower. This would signal a strong turn and the bears taking charge, something that seems very possible with the USD strengthening as of late.

Silver has so far been an interesting trade as the market continues to play of US data and risk sentiment when it comes to moves in the silver market. For the most part it managed to claim a lot of ground in recent months as markets were very cautious over the Brexit but it has continued to struggle any sort of ground after that. This has been led in turn by the US market looking to lift interest rates which has sucked out a lot of momentum for the USD, as the risk of deflation quickly becomes obsolete.

On the charts silver markets have struggled to maintain momentum and have slipped down to support at 18.791. The market saw some strong pushback higher today, but even that failed to gather any sort of real momentum as it came up short at resistance at 19.298. This strong rejection is certainly looking bearish and I would be surprised to see the bulls come back into the market unless the Fed looked to hold its dovish tone for some time, something that does seem unlikely given how strong their position has been.





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

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Daily Fundamental ForexTime ( FXTM )

USDJPY consolidates before BoJ meeting




It's a big day in the Japanese economic calendar as the market looks poised to focus on what the Bank of Japan has to say in there monetary policy statement for the year. On top of this the Prime Minister Shinzo Abe is likely to further extend support for Japanese firms that were affected by the Brexit in the short term. With all of this it's hard not to be hopeful for something from Japan, however, in this case I feel that we won't see any of the previous fireworks as people had previously hoped. This can easily be seen on the charts as the market continues to show less and less movement in the USDJPY at this stage. The Bank of Japan has been the one holding the breaks in the short term, and that is because the previous rhetoric has worn off in the markets, and only real proactive stimulus is likely to be positive for the market. GDP figures from the start of this month for the previous quarter showed little movement at 0.2% (0.0% exp), and for me it seems a case of the BoJ holding off until the US markets start to make a move and caused the USDJPY to spike again.

On the charts this can most certainly be seen when it comes to technical movements. So far the USDJPY has trended downwards in a bearish move as people feel less inclined to bet on the USD and have been keen to hold into the safety of the Yen. However, the BoJ meeting today has caused a pause in volatility and the market is now converging on both sides into a pennant pattern in anticipation of a breakout in the current market climate. Will the BoJ cause such an event? It would seem unlikely in the current climate. If the BoJ was positive for more stimulus we could see a jump in the USDJPY to resistance at 103.378, which could certainly spark the bears into action. If the BoJ continues on the current path it's likely we will see a further dip to support at 101.387 and even 100.601 in the long run.

Lastly the NZD had a welcome boost today as the milk price forecasts from Fonterra received an increase of 50 cents pushing them well past the breakeven point in New Zealand. This will likely have a large roll over effect in the economy in the long as it is currently the second top export from New Zealand. However, the NZDUSD failed to break through strong resistance at 0.7319 with today's market movements. I would imagine though that we could indeed see further pressure on the NZD with this news and a push through higher to resistance at 0.7375 is likely to be a real candidate for any future movements. Any dips lower are likely to hit the 50 day moving average which will be acting as dynamic support in the long run.





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

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Daily Market Analysis

Central bank policy meetings in focus




A strong feeling of anxiety engulfed the financial markets on Wednesday as investors awaited the heavily anticipated Fed and BoJ central bank policy meeting decisions which have the ability to create explosive levels of volatility. Asian markets rallied this morning with the Nikkei lurching +1.91% higher as of writing after the Bank of Japan overhauled its policy framework. European markets were flat on Tuesday and this could rollover into the new trading day if market participants remain on the side-line ahead of the Fed meeting. Although Wall Street painted a similar static picture to Europe, some direction could be achieved if the Fed takes action or provides further clarity on US rate hike timings.

The praised stock market rally which repeatedly seized the limelight this year continues to display signs of exhaustion as the mixture of uncertainty and concerns over the global economy sour risk appetite. Depressed oil prices have heavily weighed on sentiment while the uncertainty ahead of the US elections could encourage investors to scatter away from riskier assets. With the ingredients of a bear market ripening by the day, stocks could be poised for a steep decline in the future if provided the correct catalyst.

Will the Fed take action?

The Dollar has been on a chaotic rollercoaster ride this month with prices recently displaying an incredible rebound as optimism grows over the Federal Reserve potentially raising US interest rates before the end of 2016. Although expectations that the central bank may take action in September has been thoroughly discounted following the uncertainty and soft domestic data, the glimmer of hope for December being a live meeting could keep the Dollar buoyed. Attention may be directed towards the FOMC meeting where Yellen could potentially tilt towards the hawks which could leave the door wide open for the Fed to break the trend of central bank caution before year end.

Bank of Japan keeps rates unchanged

Yen bears were unleashed on Wednesday following the Bank of Japans decision in setting a long term interest target in an overhaul of its monetary stimulus programme. The central bank left negative rates unchanged at 0.1% but discarded its base money target which was replaced with a yield curve control. Although the markets warmly welcomed this unexpected change in policy framework, questions may be asked on the sustainability of both the positivity and Yen selloff.

Japan remains entangled in a fierce battle with slowing economic growth while static inflation has left the Bank of Japan under noticeable pressure. If this policy overhaul fails to improve Japan’s situation in the medium term, then the Yen could regain ground as optimism fades over the central bank’s ability to revive growth.

Sterling gripped by lingering Brexit jitters

Sterling was left vulnerable to heavy losses on Tuesday with the GBPUSD sinking towards 1.294 after news highlighting the UK’s uncertain future relationship with the EU enticed sellers to attack. Sentiment remains bearish towards the Sterling with further declines expected as the post Brexit jitters haunt investor attraction towards the currency. It seems like investors are slowly digesting the impacts of Brexit to the UK economy with fears heightening over the potential long-term economic damages. Although the Bank of England decided to leave UK interest rates unchanged in September’s policy meeting, the bias towards further rate cuts in the future could keep the Sterling pressured.

From a technical standpoint, the GBPUSD is bearish on the daily timeframe as prices are trading below the daily 20 SMA while the MACD has crossed to the downside. Previous support around 1.3000 could transform into a dynamic resistance which encourages a further decline towards 1.2900.

Commodity spotlight – WTI Oil

WTI Oil rebounded from six week lows on Tuesday with prices lurching towards $44.50 after comments from OPEC sparked discussions that a production freeze deal could last longer than anticipated. Regardless of the short term gains, Oil remains heavily pressured and could be destined for steeper declines as the oversupply concerns haunt investor attraction. Oils main focus will be the pending informal OPEC meeting which if concludes unsuccessfully could leave prices exposed to steep losses. From a technical standpoint, bears need to break back down below $44 to trigger a steeper decline towards $41





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

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Daily Fundamental ForexTime ( FXTM )

NZD lifts on RBNZ interest rate pause




The New Zealand dollar has managed to pause in the wake of the recent Reserve Bank of New Zealand interest rate statement, as the RBNZ has held interest rates flat at 2.00%. This was for the most part expected in the long run as the current economic data had been relatively positive, and we had recently seen a boost in commodity prices which would carry over into the domestic economy. It's however hard to justify further rate cutting in the near future, if we do see further rises in the economic data and pressure on inflation it could be a case of the RBNZ reversing their tune very rapidly, and I would anticipate with the lift in commodity prices could add this pressure that has been missing. The final move from the RBNZ during the meeting was to try and jawbone the currency, but the market was in no mood as it has heard it time and time again when it comes to central bank policy.

The NZDUSD has so far paused and provided little in the way of movement in the wake of the RBNZ announcement. Resistance levels at 0.7375 have so far held back any higher highs, but the reality is that we could see further pressure for the currency to lift higher than it currently is, as jawboning has failed miserably from the RBNZ and I feel that the outlook is still quite positive for the NZ economy. The next level of resistance is at 0.7401 and is likely to be a tipping point before the major level at 0.7475 which I would be surprised to see the NZDUSD move beyond.

US markets are still struggling to understand the motives of the Federal Reserve after the recent speech from Yellen was very hawkish but failed to offer any real hints as to what the future might hold. This seems like further rhetoric from the FED in the face of mixed economic data, but some key elements were gleamed from the ensuing press conference where she outlined that the FED did not have to worry too much about inflation at this stage. Yellen went on further to add "if we continue on the course for jobs without and shocks, I expect a hike this year" - this was the most hawkish statement and holds the course for an expected rate rise in the near future, but the market is still cautious about the reality of this given the dovish nature of the FED in previous years.

The market was quick to react when it takes a dovish feel of things and the S&P is no stranger to the volatility of the FED in recent teams as the bulls leapt on the chance to grab some ground after a month of volatility. Resistance is likely to be found at 2164 at this stage, and it will be interesting to see if further momentum can be found in the market at present, or if the market will indeed accept a hawkish fate and look to slip lower in the long run.





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

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Daily Fundamental ForexTime ( FXTM )

Once again markets got it right




“We trust the economy, yet not enough to tighten monetary policy” this was the message sent by Chair Janet Yellen to markets on Wednesday to explain the motives for keeping rates on hold in September.

Although the monetary policy decision was viewed as dovish which sent equities higher across the board and the dollar lower, the Federal Reserve has never been seen as divided so far this year.

Three out of the ten voting members dissented against the decision, calling for an immediate rate hike, this made the call for a December rate increase much stronger. Although Yellen confirmed that a November meeting is a live one, her body language didn’t really reflect high confidence and neither markets did buy it with only 12% priced in for a move in November.

Key takeaways from the Fed’s decision:

Major changes in statement: “The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.” A strong signal that a move will come by December.

Dots continue to fall: The “dot plot” used by Federal Reserve members to mark their expectations for the path of interest rates showed 25 basis points increase by end of year, but more interestingly projections were scaled down in 2017 and over the longer run, suggesting a new normal for interest rates. In 2017 expectations are now for two rate hikes instead of three, and to reach 2.9% on the longer run versus 3% in June’s projections.

Growth scaled down: Growth expectations were trimmed by 0.2% in 2016 to 1.8%. Remarkably, the 2% magical number is hard to reach on the longer run too, with medium forecast falling to 1.8% from 2%.

Equities rise, yields slump

Markets received a boost today with Asian and European equities following Wall Street higher after Nasdaq Composite closed at a record high. European bond markets also got a lift with yields dropping across the curve. Yields on German 10 year bonds fell back into negative territory, while UK bonds among the best performers with yields on 10, 15 and 30 years gilts falling more than 7 basis points.





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

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Daily Fundamental ForexTime ( FXTM )

GBPUSD recovery pauses after Boris Johnson headlines



After recovering ground following a return to levels not seen in over a month below 1.29, the bounce in the GBPUSD appears to have lost momentum at the conclusion of the week following headlines being made by UK Foreign Secretary Boris Johnson that the process of leaving the European Union does not need to take two years once Article 50 is invoked. The Foreign Secretary also made comments that Article 50 will be invoked early next year and while this has been widely reported elsewhere, the explicit comments have likely made investors reconsider options on the British Pound.

The present expectations are for the British Pound to be maintained at what are historically depressed levels for a prolonged period. Although economic data from the United Kingdom might not hit the extent of an immediate downturn that was feared, there is still an anxious road ahead once the UK Government actually make the turn towards beginning to exit the European Union.

Let’s put it this way. The outcome of the EU referendum could be compared to a sentence being declared, but the UK still has to begin the process of leaving the European Union and the possible ramifications that this could have on investor sentiment. Right now all that has been priced into the Pound is the EU referendum outcome, the unknown of what will really happen with the EU exit is still ahead and does present risks for investors that they will need to take into account.

Overall, Dollar weakness is still seen as the major catalyst and motivator behind recovery rallies in the British Pound. I still maintain my own view that the GBPUSD can still realistically conclude the year between the 1.20 – 1.25 levels if the expectations to invoke Article 50 early next year are realised. At best, the GBPUSD can head back towards the 1.34 zone if you are looking at the technical possibilities but we have seen time and time again throughout 2016 that the investor strategy towards the currency is to sell rallies rather than buy low.

Traders once again reject the BoJ

While the Federal Reserve interest rate decision is attracting the most headline attention, the major market action this week has been in the Japanese Yen where traders have once again rejected the efforts by the Bank of Japan (BoJ) to resume weakness in the Japanese Yen. Despite the BoJ making a significant change to its policy framework that some are seeing as a different direction of monetary easing from a central bank, investors rejected the efforts in spectacular fashion with this leading to the USDJPY returning to the major psychological level around 100.

The Yen has weakened since then with the USDJPY returning just above 101.230 in the early hours of trading on Friday, but the reason for this could be that the BoJ intervened in the markets following the USDJPY meeting a major support level. I also maintain the view that there is very little to BoJ can do to encourage a return to Yen weakness with this being in spite of any detrimental impacts that the fascinating Yen correction has had on an already-struggling Japanese economy.

What to look out for today

The spotlight is going to remain firmly on the US Federal Reserve with three officials from the central bank scheduled for speeches later today. Perhaps the markets will be monitoring to see if any of the expected speeches indicate any further divide of opinions on US interest rate policy within the Federal Reserve after three out of 10 voting members voted for a US interest rate rise this month.





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

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Daily Fundamental ForexTime ( FXTM )

The week ahead: Focus shifts from central banks to politics




Oil prices on both sides of the Atlantic have plunged by 4% on Friday due to the skepticism that the world’s largest oil producers can reach a deal – when they meet on Wednesday – to end the supply glut that dragged prices by more than 60% since mid-2014.

Earlier on Friday oil was trading in positive territory based on reports that Saudi Arabia has offered to cut production if Iran agrees to freeze output at current levels. However, the rally turned into a freefall after another report indicated that Riyadh does not expect any deal to be struck.

Traders are getting seriously frustrated and mislead from comments here and there, which explains the huge volatility seen in oil prices most recently.

Deal or no deal?

Recent action in terms of price shows that investors are expecting very little from the OPEC/non-OPEC informal meeting next week in Algeria on the sidelines of the International Energy Forum.

As always we argue that a deal could be reached if the Saudi’s and Iranian’s decide to put their political conflicts on the side and cooperate towards ending the supply glut.

Iran has repeatedly indicated its plan to boosting output to pre-sanction levels after the U.S. lifted it in the wake of the key nuclear accord. Now with output of 3.6 million barrel per day, they’re still 400,000 thousand short of the targeted figure. Though if the Saudi’s are seriously considering a cut instead of a freeze, then it would be a fair deal for Iranian’s to freeze at current levels.

Considering there is lot of pessimism over reaching a deal, I believe the magnitude for prices moving higher is far larger than moving lower. The bad news is already priced in, which will limit the downside, but if a surprise deal comes out, get ready for a strong rally.

Round one: Clinton vs Trump

Monday’s US presidential debate will probably break a new record, not in the S&P 500, but the number of viewers which according to media analyst could reach over 100 million Americans, surpassing Carter-Reagan debate in 1980 which attracted 80.6 million viewers.

With Donald Trump closing the gap with Hillary Clinton in latest polls, the debate is becoming more interesting than any other TV show.

America's direction, achieving prosperity and securing America are the three major topics at the first presidential debate.

Investors are becoming increasingly concerned on how to tweak their portfolios before Nov 8. Nasaq’s Biotech index plunged 4.5% in two days (24-25 Aug) on one tweet from Hillary Clinton criticizing the recent price hikes on EpiPens, which suggest that investors and portfolio managers are seriously considering having different asset allocation strategies on the outcome of the election. However, I still believe that a Trump win will be perceived as a negative factor to the overall market.





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

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Daily Fundamental ForexTime ( FXTM )

US politics cast shadow over NZD



It's been an interesting start to the week as politics is looking likely to take centre stage amongst a market which is becoming increasingly worried over the result of the US presidential election. Obviously this has a flow on effect for the USD, and many pundits are starting to worry that a swing in the polls for Trump could cause a sell-off in the USD, as investors look for safe havens around worries that we could see negative economic policy for the US. The politics at hand certainly have had a big impact on the USD and have so far dragged attention away from the FED and it's hawkish talk that it has put on to bolster the USD.

Regardless of the FED movements and politics, early in the week the focus switched to the NZD as it looked to be a case of bad news for the New Zealand economy as exports shrank to 3.39B (3.58B exp) and the New Zealand trade balance slipped to -1265M (-751M exp). This will put pressure on the Reserve Bank of New Zealand as it's a keen watcher and commentator of the balance of payments for New Zealand. However, at the same time the recent economic news has been relatively upbeat and an interest rate cut may not be the answer in the short term to help the economy. At present the strong NZD is what is hurting exports and preventing a stronger recovery, so it could end up being a case of the NZD looking to be jawboned by the RBNZ if they have their way.

On the charts the NZDUSD has so far managed to climb back up after some sharp selling at the end of last week. The recent push through the 50 day moving average was a strong bearish signal but the recovery today comes on the back of a weaker USD and in reality little has changed for the NZD on the whole. The push higher though was hit with some serious resistance at 0.7287 and it's likely this level will look to hold out against the bulls in the short term at the very least, unless of course we see further selling of the USD in the wake of recent political events. If the bears do take hold then I would expect support to be pushed on and the next levels down can be found at 0.7221 and 0.7180, which are likely to be the main targets.

Lastly, the pound continues to struggle to find any sort of real momentum in the current market climate, and I would expect this to continue as it looks to find a way to push through strong support at 1.2939. Traders have been very apprehensive to have any sort of bullish run, and a push lower looks more on the cards, but it's a case of the market holding back until it gain a clearer picture of the upcoming presidential elections and how polls are moving.

 

Daily Fundamental ForexTime ( FXTM )

Markets: Round One Clinton 1 – 0 Donald




Round one of the U.S. presidential debate is over and as expected big punches were exchanged from both sides, but clearly no knockout blows were landed.

Although polls were showing different outcomes of who won the debate, financial markets obviously declared Clinton as the winner.

Asian shares recovered some of yesterday’s losses and European stocks opened higher, meanwhile U.S. futures are also indicating a positive open. However, the best financial asset proxy to the U.S. presidential race is the Mexican Peso which rose by more than 1.5% against the U.S. dollar after declining to a new record low yesterday. The higher the Mexican currency goes suggests higher probability for Clinton reaching the White House as Trump repeatedly raged against globalisation and free trade agreements.

The Aussie, Kiwi and Yen also supported the opinion that Hillary Clinton won the first presidential debate. The high yielding commodity currencies are favored when appetite to risk is high due to carry trade opportunities, while the Yen gets sold out when signs of risk aversion fades. However, I believe there is more volatility to come with 41 days left to the presidential election day.

Oil prices saw some profit taking after trading sharply higher Monday with nervous investors awaiting the outcome of OPEC’s unofficial meeting. Markets are still unconvinced that an agreement will be reached with Iran downplaying yesterday the chances of OPEC and non-OPEC producers sealing a deal to curb output.

Considering there is lot of pessimism over reaching a deal, I believe the magnitude for prices moving higher is far larger than moving lower. The bad news is already priced in, which will limit the downside, but if a surprise deal comes out, get ready for a strong rally.





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

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Daily Market Analysis

Market volatility on a comeback




Financial markets may experience extreme levels of volatility in the coming weeks as the catalytic combination of sporadic oil prices, ongoing Brexit anxieties and anticipation ahead of the U.S presidential election leave investors on edge. Stock markets received a slight welcome boost on Tuesday with most major arena's swinging back into gains as talks of Hillary Clinton winning the first US presidential debate renewed risk appetite. Although Asian equities managed to charge into green territory post-debate, gains were swiftly relinquished in Europe amid the heavy losses in banks and carmakers. Wall Street could be exposed to steeper losses if the bearish domino effect from Europe provides a solid foundation for sellers to attack. It is becoming increasingly clear that the short term gains observed in stocks are becoming unsustainable with the ingredients of bear market potentially leaving stock markets exposed to heavy losses in the future.

Concerns over the global economy remain elevated while the mounting uncertainty ahead of the U.S presidential election could repel investors from riskier assets. Central bank caution remains a recurrent theme which has a negative grip on global sentiment and oil prices volatility continues to sour risk appetite. The ingredients for a bear trend ripen by the day and it could take an unexpected catalyst to trigger a steep stock market selloff.

Sterling bears exploit Brexit anxieties

Sterling bears were unleashed last week with the GBPUSD approaching post-Brexit lows as the persistent Brexit anxieties haunted investor attraction towards the currency. It is becoming quite clear that the Brexit has a firm grip on the Sterling with investors slowly digesting the unfavourable impacts it may have on the UK economy in the longer term. Sterling may be exposed to further losses with uncertainty mounting over when article 50 will be triggered and warnings growing over the UK being unable to have a trade deal with the European Union in two years.. From a technical standpoint, the GBPUSD is under pressure on the daily timeframe as prices are trading below the daily 20 SMA while the MACD has crossed to the downside. A breakdown below 1.2950 could encourage a steeper decline towards 1.2850.





Dollar remains pressured

The withering expectations over the Federal Reserve breaking the tradition of central bank caution this year have left the Dollar under noticeable pressure. Although the Fed attempted to leave the doors open last week for rates to be raised in December, concerns over the health of both the US and global economy could sabotage all efforts taken by the central bank to act. There may be an increasing focus on US domestic data which if exceeds expectations, could provide a justifiable reason for US rates to be raised at least once in 2016. Investors may direct their attention towards the US consumer confidence data which may provide additional clarity on the health of the US economy. An improvement in consumer confidence could elevate sentiment towards the States consequently providing Dollar bulls a lifeline.

The Dollar Index is pressured below 96.00 on the daily timeframe. Prices are trading below the daily 20 SMA while the MACD is in the process of turning to the downside. A breakdown below 95.00 could open a path lower towards 94.00.





Commodity spotlight – WTI Oil

WTI Oil found resistance below 46.00 on Tuesday as optimism crumbled over the success of this week’s informal OPEC meeting in Algeria. Saudi Arabia on Tuesday destroyed all hopes of oil producers securing any deal whatsoever after the nation said the informal meeting was one of consultation while Iran’s oil minister has stated that it was not the right time for OPEC to make a decision. This development should be no surprise as OPEC is notorious for inflating expectations of a freeze deal before leaving investors empty handed. With the excessive oversupply of oil in the markets still a dominant theme, WTI could be exposed to steeper losses if the informal meeting concludes with no changes. WTI Oil bears may make an appearance once the $43 support is conquered.




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

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Daily Fundamental ForexTime ( FXTM )

USDJPY technicals in control




The Yen continues to find itself stuck between a rock and a hard place when it comes to trading, but seems to present itself with the odd opportunity for traders in recent days as it once again finds itself stuck on a slow bullish trend line, despite the bearish down turn. For the most part the Bank of Japan has been looking at monetary policy to help improve the current market, but with the USDJPY still sitting above the 100 mark it seems unlikely they will budge to bolster the currency. Many analysts predict that the BoJ will only act if the USDJPY drops below the 95 mark and threatens the current outlook for an increase in inflation. For many in the Bank of Japan it seems that the outlook for inflation is very optimistic with the market however feeling that's not the case hence the recent fall in the USDJPY since the start of the year.

When looking at the USDJPY it's easy to find the trend that has been the most dominant and that is the strong triangle pattern that has formed in the recent months as the USDJPY has struggled to find any momentum below the 100 mark. Any push upwards has also been met with stiff resistance at 101.387 and the bearish trend line that has been in play now for almost a year. With all this movement so far it's looking more and more likely we will see some large swings from the USDJPY as it the bearish and bullish trend lines in play come together. I would expect to see it sink lower, as traders have a history of baiting the BoJ into taking affirmative action when devaluing the Yen when it slips too much. So that push down to the 95 level may in fact become a reality once we see the convergence of the triangle and the market look to slip lower.

Oil markets have also been swept up in the headlines as of late, as OPEC continues to try and bring something to the table to stabilize the current oil volatility around the low $40 dollar a barrel mark. It has so far asked for a production freeze in order to stabilise things, however the geopolitical situation is making very little sense, with both Libya and Iran looking unlikely to abide by such a thing. And Russia, Canada and the United States likely to keep on pumping in the near term in order to satisfy their own goals.

Any further dips lower than the current price level are likely to find stiff resistance at 43.00, which has so far been the line in the sand for the bears. Below this level and 41.46 becomes the next leg down to support, and after this we are back into volatility that leads to wild swings in the present market climate. With the USD becoming stronger coupled with OPEC's weakness to control the market it seems all the more likely that the bears may indeed get to take another bite out of oil in the short term.

 

Daily Market Analysis

Informal OPEC meeting seizes limelight




Global stocks were chaotic on Tuesday with most equities vibrating between losses and gains as the mixture of anticipation ahead of OPEC’s informal meeting and ongoing discussions over the results of the first presidential debate created explosive levels of volatility. Asian shares started Wednesday on a shaky footing with the Nikkei descending -1.31% lower following oil’s steep decline which soured investor risk sentiment. Although European stocks have displayed signs of resilience, the lingering concerns over Deutsche Bank could cap upside gains. Wall Street received a welcome boost following Hillary Clinton’s firm performance against Donald trump in the presidential debate which boosted appetite towards riskier assets. While the short term gains in stocks are somewhat impressive, investors should remain diligent as the elevated concerns over the global economy and persistent Brexit uncertainty could trigger another wave of risk aversion.

Dollar edges higher

Dollar bulls received a lifeline during trading on Tuesday following the impressive consumer confidence report which elevated sentiment towards the US economy. As of late, the Greenback has been pressured by the diminishing expectations over the Federal Reserve raising US interest rates in 2016 but yesterday’s data provided somewhat of a lifeline. With the visible Fed divide amplifying the Dollar sensitivity, more explosive moves could be observed in the future. Although sentiment remains somewhat Bullish towards the Dollar, further positive domestic data may be needed for the Fed to justify raising US rates in December. Attention may be directed towards Fed Chair Janet Yellen's testimony which could provide additional clarity on when the central bank plans to break this prolonged trend of central bank caution. The Dollar Index remains pressured below 95.50 and a decisive break down below 95.00 could open a path lower towards 94.00.

Will OPEC disappoint again?

WTI received a slight uplift on Wednesday with prices perching towards $45.00 after industry data displayed an unexpected draw in U.S crude stocks. Regardless of the short-term gains, Oil remains heavily pressured with the ongoing concerns over the excessive oversupply providing a foundation for bears to attack. There is very little optimism over Wednesday’s informal OPEC consultation meeting concluding with a solution to the oil glut and this should cap upside gains. It is becoming increasingly clear that major OPEC members are engaged in a quest to reclaim market share with this prisoner’s dilemma ensuring low oil prices remain a recurrent theme in the medium to long term. Bears are on the prowl, and the catalyst that could send oil lower may be if investors are left empty handed once again today. From a technical standpoint, WTI may be vulnerable to heavy losses once the $43 support is conquered.

Commodity spotlight – Gold

Gold tumbled to fresh weekly lows at $1322.40 on Wednesday following Dollars resurgence which enticed Gold bears to install repeated rounds of selling. This commodity is currently engaged in a fierce tug of war with risk aversion, Dollar sensitivity and fluctuating expectations over the Fed raising US interest rates in December. Although Hillary Clinton's firm performance against Donal trump enticed investors towards riskier assets, the uncertainty ahead of November’s presidential election could rekindle the yellow metal's safe haven lustre. A hawkish tilted Yellen today may leave Gold open to further losses as optimism renews over the Fed stepping forward this year. From a technical standpoint, Gold is trapped in a wide range with support at $1305 and resistance at $1350. It could take an unexpected catalyst to provide Gold the direction investors have long sought.





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

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Daily Fundamental ForexTime ( FXTM )

Week Ahead: Deutsche Bank settlement, Brexit talks, and U.S. jobs report




Deutsche Bank’s woes dominated market’s sentiments past week and revived memories of the worst global financial crisis in 2008 when Lehman Brothers went bust. The German bank hit a record low on Friday, wiping almost a quarter of its market cap since the U.S. Department of Justice requested the bank to settle a $14 billion in charges related to miss-selling mortgage backed securities prior to the financial crisis. Fears were intensified on news that several hedge funds that clear trades with the bank pulled billions of dollars to cut their exposure.

Stocks of Deutsche bank then managed to recover later on Friday’s U.S. trading session, surging by 14% on record volume after a report from AFP suggested the bank will pay less than 60% of the initial announced settlement.

The European banking system is clearly going through tough times, with high levels of non-performing loans, squeezed margins due to negative interest rates, tougher regulations, weak economic growth and competition with the FinTech booming industry. However, I’m against comparing Deutsche Bank to Leman brothers as the U.S. investment bank was extremely over leveraged while the German lender still have a solid balance sheet.

Deutsche bank will continue making headlines the week ahead with the adjusted settlement expected to be announced in the next couple of days according to AFP. With one more week to the earning season, expect any news related to Deutsche bank to become a key catalyst to risk.



Finally, some clarity on the Brexit timeline!

Theresa May announced on Sunday that U.K.’s divorce from the EU to start within 6-months. Article 50, the official notification to Britain’s partners will be triggered before the end of March 2017, which gives another two years to agree on the terms of the most complicated divorce in recent history.

The pound’s imminent reaction was a drop of 0.5% against the dollar in early Asian trading session, nothing compared to the 11% freefall after U.K.’s vote to leave the EU on June 23.

Now with timeline being set, the terms-negotiation will be a key driver for sterling going forward, but I expect it to be rough ride in the next few months.



U.S. Jobs

Investors will take a break from politics to shift back into the health of the U.S. economy with an interest rate hike looming on the horizon.

Friday’s non-farm payrolls report will be a key indicator to shape expectations for the Fed’s December meeting. The economy is expected to add 170,000 jobs in September, compared with 151,000 in August, meanwhile unemployment rate is forecasted to held steady at 4.9%.

Average earnings, which is forecasted to rise to 0.3% in September from 0.1% in August will share the same importance of the headline figure, as it might suggest that the labor market finally started to tighten and it’s only about time to start feeding inflation.





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

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Daily Fundamental ForexTime ( FXTM )

Commodity currencies struggle




The Canadian economy got a welcome boost today as trade balance data was more positive than economists expected, coming in at -1.9b (-2.5b exp). This was greeted positively in the Canadian economy which has so far been struggling under the weak commodity prices and especially around oil prices in particular. However, oil has been on the rebound as of late and this has been seen in the short term to offer some reprieve for the Canadian economy, which is still pushing on with its own commodity focused programs to boost the economy. The reality of the recent jump in oil prices is if it can actually be sustained, many are wondering if we had bottomed out and we may even see further upside potential after the recent crude oil inventory in the US showed a drawdown of -2.98M barrels. I would expect a slow recovery in oil and anything above the $50 dollar a barrel mark is likely to struggled unless OPEC actually puts in production cuts.

For the USDCAD it has been a mixed bag as many had expected that the USDCAD would fall as the Canadian economy improves and as oil continues to push upwards. However the US dollar has found some strength as people find themselves being bullish for the most part and economic data today out of the US painted a rather positive picture. The USDCAD lacked enough momentum to hit resistance at 1.3275 and this has set up a decent head and shoulders pattern on the charts. It looks likely we could see some further falls lower to support around 1.3149 and 1.3000 which is acting as the psychological level in the market. The 50 day moving average could also move upwards and it will be interesting to see if it can hold back any further bearish movement in the long run.

The Australian dollar also was relatively upbeat today as retail sales m/m came in at 0.4% (0.2% exp) beating the previous months flat reading of 0.0%. The Australian dollar has for the most part found itself under a fair amount of pressure in recent days after the cash rate was held at 1.50%, but the Reserve Bank of Australia warned of difficult market conditions on the horizon and that Australia may be further impacted. I've spoken previously about how the Australian economy is struggling, but for the AUD it still finds itself to be a popular currency for its interest yield; hence the appreciation in the currency at the end of the day.

AUDUSD technically speaking has struggled to find momentum today after some large swings. Dynamic support was formed around the 20 day moving average and it has so far been held up at the 23.6 fib ratio. Below these levels support is likely to be found at 0.7582, with the next major level at 0.7467. I would expect that if the USD remains strong we may see further losses for the AUDUSD when it comes to bearish movement.



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

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Daily Fundamental ForexTime ( FXTM )

Non-farm set to dominate metals trading




It's non-farm payroll day for the global economy, and the markets are just starting to get warmed up ahead of the reading tonight, the market consensus so far is for around 174K and this will be a strong reading going on from last month and for unemployment to stay flat at 4.9%. The power of a stronger non-farm payroll reading could send markets reeling lower, especially if it's above the current rate as pressure builds for a December rate hike from the FED, which would set the tone for next year and restoring accommodative monetary policy. Pairs to watch would be GBPUSD, AUDUSD and NZDUSD which would all be very volatile during this period. But the main focus I feel will be on the commodities in general as gold and silver are expected to move rapidly, as markets have been punishing bears over the last few days.

Silver in particular has seen sharp falls losing 2 dollars an ounce in the previous day - pushing all the way down to strong support at 17.133. If we have a strong non-farm reading I would expect a strong push even lower through support at 16.708 and all the way down to 15.933. If there was a large touch on 15.933 I would expect strong profit taking from traders looking to exit. In the event of a bad reading the market will likely swing back upwards and look to find dynamic resistance on the 200 day moving average.

For gold it's looking like more of the same with a hard level of support likely to be found at 1208 as the market looks to punish gold bulls in the short term, as bets increase over a US rate hike. The market can be very trigger finger over gold though, and volatility is likely to increase in the build up to non-farm payroll as traders look to capture people to leveraged. One again the 200 day moving average is likely to be the key level of resistance in the event that gold does indeed break upwards on the charts.

The New Zealand dollar is likely to be heavily affected by the USD movements over the next 24 hours and after the recent disappointing global dairy trade auction traders will be bearish on the NZDUSD. Pushing down the charts in the wake of the recent economic events it has so far struggled to find any upward momentum as resistance was found on the 100 day moving average. From here the next level down for support is likely to be at 0.7113 and in the long run it may in fact be a case of further lows and even a push on the psychological level of 70 cents.

Whatever way you look at the next 24 hours, volatility will be heavy as traders bet heavily on the result and the FED looking to utilise the result as a platform to lift rates in the near future.




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

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Daily Fundamental ForexTime ( FXTM )

Week Ahead: U.S. Earnings and Fed speakers under the spotlight




The flash crash of the British pound on Friday overshadowed the U.S.’s no.1 market moving economic indicator, the non-farm payrolls. As the pound plunged 6.1% in less than two minutes in early Asian trade, some investors recalled the flash crash of May 2010 that sent the Dow Jones Industrial Average 1000-points lower in a matter of minutes - in what seemed to be one of the most turbulent periods in the history of financial markets. Unlike the 2010 crash, this time the pound’s plunge did not spread over into other financial assets but this incident should serve as a wakeup call especially when we expect similar moves attributed to the computerized trading in today’s trading environment. We can now see that there have been changes in the algorithms as well as regulators are no longer stepping in.


U.S. earning season finally kicks off this week, with banks including JP Morgan, Citigroup and Wells Fargo all due to release their third quarter results. If S&P 500 companies reported a decline in earnings for Q3 it will be the sixth straight quarter of year-over-year drop and with forward price-to-earnings ratio sitting above 17, it will be hard to justify news highs on the index. Markets are expecting about a 1% decline in earnings from last year, but based on the typical upside surprises there’s a high probability that Q3 will mark the end of the profit recession. Although this might seem optimistic, a year-end rally in stocks requires more than just upside surprise in earnings, but also a positive guidance.


With markets pricing in a 65% possibility for a rate hike in December, minutes of September’s FOMC meeting on Wednesday will provide more insights on how the Fed is thinking. The jobs report on Friday didn’t change the odds for a December rate hike, but lowered November’s expectations from 15% to 8% according to CME’s fedwatch. The U.S. labor market in fact did disappoint with only 156,000 jobs added to the economy versus expectations of 172,000 and unemployment rate spiked higher to 5%. The weaker than expected figures are not enough to rule out a rate hike in December as it remains satisfactory and you can still debate that the rise in unemployment rate is due to the increase in the labor force participation and make it look as better news. However, with two more job reports until Decembers meeting many things could change.


Many of the Fed members are due to speak this week including Fed Chair Janet Yellen at the annual economic conference hosted by the Federal Reserve Bank of Boston. If they continued to express their satisfaction on the path of the U.S. economy this could lend additional support to the U.S. dollar which fell against the Yen on Friday for the first time in 9 sessions.


On the U.S. data front, we have to wait until Friday for tier one data releases. Retail sales will be a key figure to watch as consumer spending will be a major driver to U.S. third quarter GDP. Markets expect a 0.6% rebound in September from -0.3% drop a month earlier.




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

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Daily Fundamental ForexTime ( FXTM )

Oil jumps on OPEC signs of a deal




Oil has stormed back up the charts after the recent OPEC meeting has yielded some fruit, albeit limited for the time being. So far Iraq has agreed to limit its oil production at around 4.75M - 5.0M barrels per day, which is the first OPEC concession to actually limit supply that we have seen in a long time. I'm myself a sceptic at times of OPEC but it would seem that they have finally managed to make headwind on the subject of oil prices and it will be interesting to see if others follow suit. The market reaction has of course been positive at this new, and this no doubt surprising given that oversupply fears had been one of the major problems for the oil sector and bullish traders in general. This comes on top of a day where even Saudi Arabia and Russia have said that they will both look to limit oil production in an effort to boost prices and bring about stability in the market. However, Russia is a hard one to follow and it will be interesting to see if they will a) stick to an agreement and b) want more concessions from others before even considering it in the first place. The more likely scenario is them freezing output near 11 million barrels a day - a near record high.

The technical's on the chart are very strong however, and the bulls are looking to get back in control especially with the fundamentals being so strong as of late. It's now not unthinkable to even consider oil being around the $60 barrel mark come year end. The recent push has so far touched on resistance at 51.53 before slipping back, however with the bulls looking to take control I wouldn't expect to see this level hold, especially if OPEC gets its way. The next major level up would be at 54.09 with the most major level likely to be found at 60.28, and the level I would struggle to see markets push past this year unless there were very major concessions which seems unlikely with Russia and the majority of non-OPEC nations.

Regardless of the oil all commodities have been bouncing around the charts lately, none more so the silver which fell sharply before recovering on the back of the weaker than anticipated non-farm payroll on Friday. It has so far managed to climb back up the charts and is looking a little worse for wear, failing to even break through the 200 day moving average today. While we did see a double bottom scenario at 17.133 it's likely it will struggle to hold further momentum unless we see further weakness in the US dollar, or alternatively the global economy struggling. Regardless of this the bears are looking to take a quick swipe back at silver and the recent profit taking will do little to deter them at the end of the day.






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

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Daily Fundamental ForexTime ( FXTM )

Commodity currencies feel the pain of a strong USD




The dollar has taken centre stage today, as commodity currencies and many major pairs saw sharp dips against the USD as it strengthened rapidly during the American trading session. The GBP, EUR, CAD, NZD and AUD saw very large drops against the USD and so far it seems that the storm may not be over. All of this has been set off by the never ending prospect of a US rate hike which seems more and more likely come the month of December. Many are expecting that the USD could rise even further by the end of the week as Yellen is set to speak on the economy after retail sales data is released and consumer sentiment. The US economy has always been consumer driven so this will certainly add a lot of weight behind her plans and I would expect her to remain very hawkish with such a strong labour market at present.

For the commodity currencies it has come at a time of weakness for a lot of them, despite the fixed interest trading opportunities they have provided thus far. The NZDUSD in particular saw sharp drops and this is no surprise given that the NZ economy has been languishing as of late, with global dairy results down in the last round of auctions and the Reserve Bank of New Zealand being vocal about the high NZD and the effect it will have on the economy.

So far the NZDUSD has crashed through the 50, 100 and now the 200 day moving average, which points to some very bearish signals on the charts. As a result traders will be looking at the next level downs if it can push through the psychological 70 cent level which is always a barrier. Support below this key level can be found at 0.6994, 0.6948 and 0.6888 with the last level likely to be a major level that will be hard for traders to push through. Something to add further consideration to this all is the upcoming food price index m/m which gives an indication of inflation figures for the NZ economy. I would like at this as a guide for future RBNZ movements at this time as they look for a signal to cut rates further to a) help fight deflation and b) stimulate the economy as it struggled to find momentum back into its current previous form.

Across the globe the USDCAD has also been jumping sharply on the charts, and this has been a surprise given the recent advances in oil as well - something that has a very strong correlation normally to the CAD. However resistance at 1.3275 continues to be a barrier for advances and unless we see the USD pick up the pace against commodity currencies it could be some time until that level is broken. Also the upcoming OPEC meeting is likely to add weight to jumps in oil prices which could in turn see it swing down and support levels at 1.3149 would likely be the next target.






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

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Daily Fundamental ForexTime ( FXTM )

Sterling attempts to find stability – but for how long?




It has been another dramatic 24 hours for the British Sterling with the currency hitting the floor once again during trading yesterday in what looked like a continuation of the phenomenal fall from the “flash crash”, before the Sterling found stability and regained some ground overnight following the news that Prime Minister Theresa May will hold a “full and transparent debate” with UK Parliament on the Brexit strategy. When you consider that there will be a high percentage of the UK Parliament that will be strongly against leaving the European Union this has provided the opportunity of stability for the Pound after a dramatic couple of days.

While the Pound has found stability since the news of a parliamentary debate on the Brexit strategy, many are still going to ask the question for how long can the currency remain stable. The problem with the flash crash from last week is that such a dramatic decline in the Pound would have eliminated many buyers and consequently encouraged investors to heavily think twice before considering buying the currency in dips. The market in general remains heavily short and the tense comments from both the UK Prime Minister and her EU counterparts on tough negotiations last week have made investors incredibly nervous.

The buying sentiment towards the Pound is still at extraordinarily low levels and it will likely remain this way if the concerns that a “hard brexit” will have severe consequences on a services-led economy and threaten access to the single market of the EU. Members of the UK parliament who are strongly against exiting the European Union are going to have to win the debate and push plans against rushing on EU negotiations, which would mean Theresa May would be under pressure to back down on such a strong approach and this would then reduce the immediate market fears about what is possible to come ahead.

Unless there are reassurances provided that the UK can retain single market status, sellers will remain in the driving seat with the Pound remaining at its weakest level in a generation.





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

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Daily Fundamental ForexTime ( FXTM )

Dollar buoyed by hawkish Fed minutes





Dollar bullish investors were on the offensive on Wednesday as September’s hawkish FOMC meeting minutes reinforced expectations over a US interest rate rise before year-end. Market participants were provided some clarity after the minutes showed September’s inaction being a “close call” with several members even agreeing that the Fed should raise rates in the near term if US data continued to strengthen. Bullish investors warmly welcomed the hawkish bias with the Dollar Index lurching towards 98.00 as optimism rose towards the central bank breaking its tradition of caution this year. With US domestic data repeatedly displaying signs of stability and inflation slowing treading towards the golden 2% target, there seems to be a justifiable and compelling reason for the Fed to pull the trigger in the coming months.

A key talking point from September’s Fed minutes was the growing divergence within the committee, as several officials warned about the potential costs of keeping rates unchanged for prolonged periods. Although the overall market reaction was somewhat muted, the minutes have displayed the Federal Reserve’s intentions to raise US rates this year, consequently providing the markets a cushion for the shock beforehand.

Sterling on a chaotic ride

Sterling was flung onto a chaotic rollercoaster ride this week with prices violently swinging between losses and gains as the explosive combination of hard Brexit jitters, political uncertainty, and a resurgent Dollar left investors on edge. Surprisingly the Brexit-gripped pound was the best performing currency on Wednesday following UK’s Prime Minister Theresa May’s agreement to hold a Parliamentary debate on the strategy for the Brexit negotiations. It is becoming increasingly clear that the Brexit anxieties have left the Sterling extremely sensitive and this was displayed on Wednesday when the GBPUSD spiked up over 200 pips. Regardless of these short-term gains, the Pound remains heavily depressed with steeper losses expected as the Brexit jitters haunt investor attraction towards the currency.

Sterling/Dollar remains fundamentally bearish with prices potentially trading closer to the parity dream as the toxic mixture of hard Brexit fears and renewed Fed hike hopes entices sellers to attack incessantly. From a technical standpoint, the breakdown below 1.2200 could trigger a further selloff towards 1.2000.

WTI under pressure again

WTI Oil stumbled towards $49.50 on Wednesday after the Organization of the Petroleum Exporting Countries (OPEC) reported its oil production hitting an eight-year high in September consequently rekindling concerns over the excessive oversupply. The downwards move was complimented with uncertainty over Russia’s willingness to trim production following comments from Rosneft boss Igor Sechin over how his company will not cap oil production as part of the potential OPEC freeze deal. OPEC and Russia have talked a big game on the potential freeze deal and could pay heavy prices if investors are left disappointed once again.

Although the recent surges in oil have been impressive, sentiment towards the commodity remains bearish with further declines expected as the oversupply fears haunt investor attraction. Attention may be directed towards Thursday’s crude oil inventories report which could send oil lower if there is a build-up in inventories.

Commodity spotlight – Gold

Gold has hovered above four-month lows at $1257 this week as expectations mount over the Federal Reserve raising US interest rates before year-end. This zero yielding metal could be vulnerable to further losses as the combination of Dollar strength and rising Fed speculations create a foundation for bears to install repeated rounds of selling. Wednesday’s hawkish Fed minutes may have cushioned the markets for a pending rate hike and such could translate to downside risks for Gold. From a technical standpoint, a decisive break down below $1255 could trigger a selloff towards $1240.





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

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