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Daily Fundamental ForexTime ( FXTM )

Markets to continue adjusting to Trump’s Triumph




Undoubtedly, last week is one to remember for years to come, not only because of Trump’s surprising victory, but the market's reaction to the new president. Instead of equity markets plummeting and bonds surging due to a new chapter of political uncertainty, stocks rallied to new records and U.S. treasury bonds declined to levels last seen in January. Investors decided not to waste time and were very fast to adjust their portfolios based on Trump’s promises of fiscal spending, cutting taxes, trade relations, and less regulations.

Here’s a summary of last week’s markets biggest moves on Trump’s Triumph

• S&P 500 financial sector was up 11.33% to become the third best performing sector for the year, as steepening yield curves and anticipated regulatory relief made it investors best choice.
• Industrials and health care were the second and third best performing sectors gaining 7.95% and 5.82% respectively.
• Utilities “bond proxies” lost 4.08% as U.S. 10-year treasury surged from 1.83% to 2.11%.
• The dollar strengthened across the board, especially against emerging markets currencies which fell the most in 5 years. The Mexican peso traded at new record low shedding 13.16% of its value since Wednesday.

Trump’s transition will remain a big factor influencing financial markets the weeks ahead especially as he starts revealing the names of people who will serve in his administration. We also have a busy economic calendar and speeches from top central bankers.

Investors are pricing in 81% chance for a rate hike in December, and Fed presidents who spoke after the election seems to be in line with the market expectations. Vice Chair, Stanley Fischer welcomed the prospect of expansionary fiscal policies and believes that the case for removing accommodation is quite strong. I think what’s more interesting than a Fed rate hike in December is to see whether the dots “which shows the interest rate projections of the 16 members of the Federal Open Market Committee” starts climbing after falling for several years.

On Thursday, we will hear from Chair Janet Yellen who will testify to the Senate’s Joint Committee. She’s likely to keep December rate hike alive as Trump’s Christmas gift.

Cable traders will also be interested in what BoE’s Mark Carney has to deliver on Tuesday when he releases the latest inflation report, economic forecast and outlook policy. On the data front inflation, employment and retail sales are key figures to determine whether Sterling can continue moving higher.





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

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Daily Fundamental ForexTime ( FXTM

Dollar bulls are back in town for Trump




Dollar bullish investors stole the show during trading on Monday with the Dollar Index surging to eleven-month highs at 100.00 as expectations intensified over the Federal Reserve raising US interest rates in December. The Dollar’s appreciation was complimented with optimism towards Trump’s administration bolstering spending and reviving inflation, a move seen as supporting economic growth in the States.

With recent comments from Vice Chair Fischer, Lacker and Williams adding to the hawkish chorus of Fed officials signaling a December rate hike, the Dollar could be a buyers dream moving forward. Sentiment is heavily bullish towards the Greenback and the 81% probability of a rate hike before year-end could keep the currency buoyed. Much attention may be directed towards Tuesday’s retail sales figures which if exceeds expectations may add to the pool of economic data that continue to display signs of economic stability in the States.

The Dollar Index is bullish on the daily timeframe as prices are trading above the daily 20 SMA while the MACD has crossed to the upside. A decisive breakout and daily close above 100.00 could open the doors towards 100.50 and potentially higher.

Japan’s Q3 GDP a pleasant surprise

Optimism towards Japan’s economic recovery received a boost during early trading on Monday following the nation’s impressive third quarter GDP figure of 0.5% which quelled some fears over faltering economic growth. The unexpected expansion eased anxieties over the ineffectiveness of Abenomics while also providing some support to Japanese Prime minister Shinzo Abe as he faces a potential economic repercussion from the shocking U.S presidential victory.

With Japan’s third quarter economic growth heavily driven by exports rather than consumption, concerns still remain elevated over the sustainability of the current recovery. It should be kept in mind that consumption in the world’s third-largest economy remains weak while fears of Donald Trump’s protectionist views on trade have kept Japanese government officials on edge. The overall outlook for Japan continues to look fragile with risk aversion amid the ongoing uncertainty pressuring the nation further as the Yen appreciates.

The USDJPY is heavily bullish on the Daily timeframe as the combination of Dollars strength and temporary Yen weakness amid the risk-on trading environment encourages bullish investors to attack. Prices are trading above the daily 20 SMA while the MACD has also crossed to the upside. A breakout above 108.00 could trigger a further incline towards 111.00.




WTI bears on the offense

WTI oil was shaky on Monday as the heightened fears over the persistent oversupply of oil in the global markets haunted investor attraction. Recent reports of Iran pumping incessantly in a self-fulfilling quest to reclaiming lost market share continues to attract sellers while optimism has faded over November’s pending OPEC meeting concluding with an effective freeze deal. The Dollar resurgence amid rising US rate hike expectations simply pressured oil prices further with concerns that demand may be waning from slowing global growth capping oils upside gains. The bearish combination of Dollar strength, oversupply concerns, and fears of slowing demand have made WTI Oil fundamental bearish. Steeper depreciations could be expected in the medium term once bears conquer the $43 support.

Currency spotlight – EURUSD

The EURUSD commenced the week under tremendous pressure with prices cutting below 1.0800 as a resurgent Dollar enticed bears to install heavy rounds of selling. Donald Trump’s shock victory swiftly sparked speculations of the European Central Bank extending its QE program at December’s meeting, consequently leaving the Euro vulnerable to losses. The mixture of Euro weakness and Dollar strength has made this pair attractive to sellers with further declines expected as expectations heighten over the Fed raising US rates before year end. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has also crossed to the downside. Previous support around 1.0800 could transform into a dynamic resistance which may open a path lower towards 1.0600.





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

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Daily Fundamental ForexTime ( FXTM )

US retail sales lead to strong rallies




So far the US markets have continued to be a massive market driver in the recent weeks, as the recent political events and the volatility surrounding the race for the presidency caused markets to create large opportunities for traders. With all the passing euphoria now over the Donald Trump victory the markets are looking forward and at the possibility of Trump fulfilling promises to ‘make America great again’ and the expectations thus far are that he will spend up to 1 trillion USD in order to boost infrastructure spending and help bolster the economy. For the economy this will have a very large effect and the flow is expected to see an increase in inflation rates and the possibility of further rate rises to match the inflation rate. This was bolstered with retail sales m/m coming in at 0.8% (0.6% exp) which represents the economy being stronger than expected, and with the US economy consumption orientated it’s likely to have large flow on effects for the economy. It will now be quite interesting to see the reaction of the FED and how it anticipates inflation rising in the near term and if they look to still increase interest rates before December is out. There is still hope amongst a few economists that this may come true and the dollar bulls are likely to be ready.

The flow on effects are likely to be felt for some time in the US market and none more so than the S&P 500 which continues to be a catalyst for the growth that is expected. So far the S&P 500 has rallied strongly on the back of trumps win and today touched a key resistance level at 2183. For me this level for some time has remained strong, but the current prognoses is that it could break and markets will be looking to test this level over the coming days. Anything above this would be psychological levels at 2200 and 2250 for resistance.

Once again oil continues to find itself under pressure. The idea of the economy increasing in the USA has so far been positive for oil markets, and there are even reports of OPEC leaders flying between the various oil producing states in an effort to discuss the flagging prices. However, what can’t go unnoticed is the current surpluses that we are seeing in the long run, and if they are going to continue to hamper the prospect of oil prices continuing to go higher.

So far Oil has moved higher on the charts, but it’s unlikely to remain that way if the surplus build up does come true and well above expectations. Resistance at 46.19 was slowly missed and the market is looking slightly down as a result. Expectations though around the surplus could lead to a push back lower and support could possibly be found at 44.90 on the charts. Regardless of the surplus though OPEC continues to be the wild card element for oil traders and could lead to further volatility.






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

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Daily Fundamental ForexTime ( FXTM )

Oil weakens on inventory surplus




Oil market as predicted yesterday continue to show signs of weakness, as US Crude Oil Inventories continued to show surpluses in the marketplace. This has been a target squarely on the back of oil bulls who have been looking to finally drive oil higher. It feels that the only way we are going to see a deficit of oil is if OPEC actually intervenes and is able to push down the production levels of oil. Russia also continues to be a strong voice in the oil market, how much can be believed is slightly debatable as they are not an official member of OPEC but have been working with OPEC to get some benefits. Regardless of today I would expect markets to continue to remain bullish in the long given the recent boost from Trump that is expected when he announces his promise to get America working again.

Chart wise, oil continues to be a slightly mixed bag with the markets playing off news, but also the movements around oil surpluses and deficits in the US. This will continue to be the main theme for some time, but the technical patterns continue to remain strong. Resistance can be found at 46.19 and has been very strong as of late, with today's movements failing to close out above this key area. Support levels on the way down can be found at 44.90 and 43.47 and are likely to come under further pressure in the coming days, especially if the US dollar continues to strengthen.

The New Zealand economy has been going through some rocky times at present (no pun intended), but the employment situation has been improving to say the least as ANZ job advertisements were slightly up to +0.6% on the previous month, showing that there was still room for growth in the labour market. For the most part there is a lot uncertainty around the New Zealand economy after the recent earth quakes and this might put more pressure on the Reserve Bank of New Zealand to cut interest rates sooner and faster than previously expected to help businesses and home owners who are struggling. Even though banks have not been carrying over the most recent cut on their own interest rates.

The NZDUSD is looking very bearish at present as the USD bulls have so far been quite strong, but also the NZD has come under immense pressure in the wake of recent natural events. So far the NZDUSD has dipped sharply and the 0.70 psychological level is ever present in traders' minds and has been holding back further lows. Support at 0.7032 lead to some buying today, but it's unlikely to be sustained given the bleak outlook in the face of what has happened. Any pull back higher on the charts is likely to find resistance at 0.7113, which has been acting as a strong level in recent times.






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

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Daily Fundamental ForexTime ( FXTM )

USDJPY continues to rally




The so called Trump rally has been ongoing for USD dollar bulls in recent times, and this can be very clearly seen on the USDJPY, as the market has done an about turn and is currently seeking risk than the previous attempt to hedge its bets. So far the rapid ascent of the USDJPY has been something that the Bank of Japan will be happy with, as the market continues to scrutinise the Japanese economy and its ability to generate inflation. Abenomics might have had a struggle but the recent Trump change in the US economy might be the helping hand it so needs to get ahead. Despite the drop today in Core CPI to 0.1% (0.2% exp) and the Philly fed manufacturing index dipping lower; the market continued to rally on the basis that unemployment claims were better than expected. As the market continues to believe that Trump will look to spend and stimulate the economy, especially around the areas of infrastructure.

For the USDJPY the bull rally has been strong and any admission of running of steam looks off the cards for the time being as it continues to charge forward. The only question is will it pause and there are some strong resistance levels on the horizon. So far 111.843 is likely to be the first major level for the USDJPY as it climbs higher, but I would also look even further to 114.030 for the next level of resistance. Any pull backs on the chart are likely to play of the 20 day moving average which is closely following the bullish movements that we have seen. If we do see a breakthrough of the 20 day moving and an ABC pattern forming I would expect a bounce to occur around support at 109.147 at this stage. Unless we see higher highs over the next few days.

The Australian economy is struggling at present after the recent Reserve Bank of Australia comments it comes a slight surprise, but the unemployment figures were much worse than expected coming in at 9.8k (16k exp). I've voiced concern over Australian unemployment figures as they have shown temporary jobs taking centre stage and this does not equal a strong economy at the end of the day. But for now the unemployment rate has remained static at 5.6% which will be somewhat of a positive sign. However, going forward the AUDUSD will struggle as the USD strengthens and Australia's economy shows signs of weakness.

On the charts the bears are firmly in control of the AUDUSD as it dips down the charts being chased by the 20 and 50 day moving average. Right now with the current speed of movement and the volatility the only stable support level possible is looking like 0.7328 and 0.7226. The question is now how long can the bears take control before the Trump euphoria wears off. But in reality it may be a case of only just getting started as he has not even come to power yet.






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

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Daily Fundamental ForexTime ( FXTM )

Markets consolidate as Trump reality sinks in





Global stocks were noticeable mixed during trading on Monday as bullish investors took a break from the Trump fueled market rally. Asian shares casually floated between losses and gains, pressured by a resurgent Dollar and rising US rate hike expectations that could spark further outflows from emerging markets. European stocks were contaminated by the lack of direction in Asia with the absence of momentum potentially trickling into Wall Street later today. It is becoming clear that market participants have digested the Trump reality with most waiting for further news relating to Trump's economic team which could provide additional clarity on how he plans to lead the U.S economy.

Dollar bulls unstoppable

The market shaking Dollar appreciation has highlighted how the combination of Trump’s presidential triumph and heightened hopes of a US rate hike in December can provide the foundation needed for bulls to attack incessantly. Sentiment towards the Dollar is extremely bullish and the optimism towards Donald Trump’s presidency bolstering US economic growth has ensured the greenback remains buoyed. With economic data in the States repeatedly pointing to economic stability and Fed officials all singing a similar hawkish chorus, the Dollar has become a buyers dream. Much attention may be directed towards Wednesday’s FOMC meeting minutes which could provide the final piece of clarity needed to cement expectations of a US rate increase in December.

From a technical standpoint, the Dollar Index is bullish on the daily timeframe as there have been consistently higher highs and higher lows. Previous resistance around 100.50 could transform into a solid support which could provide bulls encouragement to send prices back towards 102.00.

Sterling bears here to stay

The ongoing Brexit episode may have irritated traders with the battle of words between financial heavyweights on how to handle the hard Brexit scenario adding to the nasty cocktail of uncertainty. Sterling remains heavily weighed down by this anchor known as Brexit with steeper declines expected if buying sentiment towards the currency continues to deteriorate. With expectations rising over the Fed raising US rates in December, the bearish combination of Sterling weakness and Dollar strength could spark a sharp decline on the GBPUSD. The weekly close below 1.240 on the GBPUSD may have sealed the deal for bears to drag prices lower towards 1.220.





WTI commences the week positively

WTI Crude staged a miraculous rebound during trading on Monday with prices rallying to $47 as expectations were revived over OPEC members securing a freeze deal at the November 30th formal meeting. Comments from Iran’s oil ministers and Russian President Vladimir Putin on their optimism of OPEC agreeing to a proposed supply cut coupled with the Trump effect has renewed some investor attraction towards oil. While the abrupt short-term gains are undeniably impressive, WTI still remains dogged by the overwhelming oversupply woes. The current technical bounce could act as an opportunity for sellers to pounce if OPEC repeats the events of Doha at the formal November meeting.

Currency spotlight – EURUSD

The EURUSD descended deeper into the abyss last week with prices closing below 1.060 as a dovish Draghi coupled with concerns revolving around political instability in Europe swiftly haunted investor attraction towards the Euro. Expectations remain elevated over the ECB extending its monetary policy amid the uncertainty while a strengthening Dollar from rising US rate hike expectations continues to enforce downside pressures on the EURUSD. Mario Draghi is due to testify before the European Parliament in Strasbourg today with any further dovish hints potentially leaving the Euro vulnerable to further losses. From a technical standpoint, the EURUSD is heavily bearish on the daily timeframe as there have been consistently lower lows and lower highs. Previous support around 1.075 could transform into a dynamic resistance which could re-open a path back below 1.060.







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

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Daily Fundamental ForexTime ( FXTM )

Sterling pressured ahead of Autumn statement




Sterling/Dollar struggled to maintain gains during trading on Tuesday with prices eventually sinking back towards 1.240 as the persistent hard Brexit anxieties dented buying sentiment towards the currency pair. It has become evident that Sterling remains trapped by the ongoing Brexit uncertainty, with the future of the post-Brexit UK economy haunting investor attraction. Monday’s mystery upsurge on the GBPUSD was unsustainable and simply acted as a firm foundation for bears to install heavy rounds of selling. If the Brexit uncertainties persist, Sterling weakness could be the new norm moving forward with steeper declines expected on the GBPUSD amid a strengthening Dollar.

Much attention may be directed towards the heavily anticipated Autumn Statement where Chancellor of the Exchequer Philip Hammond offers clarity on the state of the UK economy and discusses the government’s future spending plans. With the sensitive Brexit situation still a dominant theme in the markets, today’s Autumn Statement could provide a unique touch. If the economic forecasts for next year highlight the Brexit impacts and paint a gloomy picture, then Sterling could be exposed to further downside risks. On the other hand, an aggressive outlook pointing to a stronger economic recovery may recreate another mystery move on Sterling similar to Monday’s sharp upsurge.

When dissecting the Sterling/Dollar in a technical a fashion, this pair remains noticeable pressured on the daily timeframe. Prices are hovering above the daily 20 SMA while the MACD is unnaturally flat. Bears need to conquer the stubborn 1.240 support which should encourage another decline lower towards 1.220.

Stock markets charge into gains

A strong feeling of positivity dispersed across the financial markets on Tuesday after the Dow Jones closed above 19,000 for the first time in history. The combination of rising oil prices, the Trump effect and improving confidence towards the global economy may have revived investor risk appetite. Asian shares commenced Wednesday on a solid footing as optimism rose over the global economy tolerating higher US interest rates. European markets charged into gains on Tuesday and may be poised to open positive today by borrowing Asia’s bullish contagion. While these stock market gains are highly impressive, questions still linger over the sustainability of the rally in the event of falling oil prices and an imminent US rate increase.

Dollar still remains king

King Dollar has maintained dominance across the currency markets this week with the Dollar Index hovering around 14 year highs at 101.00 as expectations inflate over a US rate increase in December. The Fed funds have priced a shocking 100% probability of a US rate hike before year consequently making the Greenback a buyers dream. Much attention may be directed to the FOMC meeting minutes this evening which if hawkish should provide additional buying momentum for the Dollar. From a technical standpoint, the Dollar Index is heavily bullish on the daily timeframe with any depreciation in prices seen as a technical correction for bulls to send prices higher. Previous support around 100.50 could transform into a dynamic resistance for an incline higher towards 102.00.





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

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Daily Fundamental ForexTime ( FXTM )

NZ economy lifts on better than expected trade balance data




The New Zealand economy has been positive so far today after the recent trade balance data came out and was stronger than expected at -846M (-950M) this was lead in part by stronger than exported exports coming in at 3.90B (3.75B). It's likely that after the recent natural disaster that the New Zealand economy will see some GDP growth as spending picks up sharply in the wake of it all to repair everything over the next few years. It will be interesting to see how the Reserve Bank of New Zealand reacts in the coming months, and if inflation picks up in line with all the spending that is predicted.

So far the NZDUSD on the chart continues to find heavy pressure by the bears as they look to push it lower on the back of USD strength. So far the NZDUSD has managed to find strong support at 0.6994 and the market is continuing to see if it can find itself below the psychological barrier level at 0.70. Further support levels lower are likely to be found at 0.6948 and 0.6888 as the market looks to drift lower. However, if the market were to turn upwards they would find resistance at 0.7030 and 0.7060, but given the current market sentiment which is bearish towards all commodity currencies it seems less likely to happen than the bears clawing their way down further.

The Canadian dollar has also been one of the radar of traders with the recent movements in the oil markets and the likelihood that OPEC may in fact sign a deal in the short term. However with Iran and Iraq not agreed and American oil drillers likely to keep pumping at full capacity, it could be some time off before we actually see a rise in oil, and in turn a rise in oil prices which many have been predicting. For the Canadian dollar this means it's unlikely to fight back against the USD movements that we have been seeing lately.

The USDCAD has been pushing up the charts on the back of the USD strength and the 50 day moving average has so far been acting as dynamic support. The market has seen some brief volatility and consolidation around the major support level of 1.3402 and this has so far held up against any bearish movements. I would anticipate that this area will likely see some further movement before the bulls look to continue on their recent run, especially as oil markets continue to show a lack of general momentum higher.





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

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Daily Fundamental ForexTime ( FXTM )

Japanese data sets the tone for week




There has been no major moves economically speaking in the market, but there is plenty on the horizon and markets will shortly be focused on data out of Japan with household spending likely to be the main focus. Japan's ability to spend has been sharply in the microscope under Abenomics as he tries to break the culture of saving and push Japanese to be more consumer friendly with their cash to boost GDP but also to help increase tax revenue. It's likely that the market will be looking for weaker numbers here and expecting the market to rally further against the Yen, which has recently clawed back some ground against the USD.

Technically speaking the USDJPY ran out of steam at resistance at 114, as the market started to unwind some of its positions to take profit. Since then we have also seen it push down to support at 111.843 before failing to find any further legs for the bears, this is a bullish signal for the most part and the market may look to restart further moves higher as a result. If we did see further drops I would expect the 20 day moving average to finally play catch up and act as dynamic support for the USDJPY. Expectations around the bulls breaking higher will find the next level of resistance at 116.591.

On Thursday I spoke about the Canadian dollar and it continues to struggle to find any ground other than through the current OPEC meetings. There is however a number of Canadian economic events on the horizon which will have some impact, and I am expecting this to flow onto the market. It will be hard to beat the current USD strength though without some sort of major data boost or an OPEC deal (a struggle at this time). Certainly with the Trump dollar in full force and markets looking forward not backwards the USDCAD could certainly still remain in the territory of the bulls for the time being.

The obvious correlation between oil and the CAD has so far helped it not further erode anymore ground to the USD and support at 1.3402 continues to be a major level which has prevented further drops on the charts. One thing that is worth noticing is the 50 day moving average which is creeping up the charts and looking very imposing as a possible catalyst for dynamic support, after future touches on the daily chart were met with strong buying. In the even the bulls do manage to regain control the market is likely to jump back up to 1.3542, but with the USDCAD long term horizons always need to be careful as the pair is known to range.





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

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Daily Fundamental ForexTime ( FXTM )

Moment of Truth for OPEC, be ready for volatility ahead




Everybody wants a deal, but not everyone is willing to participate in making one. This is how it currently feels with just 24 hours before ministers from OPEC meet to reveal their strategy for ending a 3-year global supply glut. Iran and Iraq remain to be the major obstacle to any meaningful production cut, and Saudi’s energy minister comments on Sunday that the market would balance itself in 2017 even if producers did not intervene brings more pessimism and doubts than hopefulness over the long-term outlook.

Although it might be true that markets will rebalance in 2017 whether a production cut is reached or not, oil bears are just waiting for a signal to push the sell button, and 15% decline towards $40 looks very reasonable incase no significant deal was reached. However, markets still believe that a production cut of 500,000 to 1 million barrel per day is achievable tomorrow and this explains Monday’s price action where both major benchmarks rose by more than 2%.

A meaningful deal is required more than ever as GCC economies fiscal deficits continues to widen and lower public spending is weighing heavily on growth, but given the political differences between OPEC members there’s a high chance we’ll end up with only a face saver deal.

Traders should be prepared for a volatile session ahead with many headlines to hit the wires in the next 24 hours and this volatility will spread beyond oil to equities and fixed income markets.

The dollar rally coming to an end?

Profit taking and mild declines in U.S. treasury yields pulled back the U.S. dollar slightly from its 13-year highs. Most of the sell-off was seen against the Japanese Yen which recovered almost 1.5% from its lowest levels since February. Monday brought the question on whether the rally on the U.S. dollar was over, or it’s only a slight correction before it resumes the uptrend? To answer this question, we need to know what is the Fed thinking of. Will they raise rates in December and wait longer for a second hike? Or a series of hikes will be projected for 2017? A couple of Fed presidents are scheduled to speak this week, and if they indicate that tighter monetary policy is needed in 2017 the dollar rally will likely resume, if no guidance is given then traders should rely on economic data, specifically Friday’s non-farms payroll. However, any declines in U.S. dollar are likely to be minor especially against the Euro and the Pound given that many political tensions are likely to hit the Euro Area in the next couple of weeks.





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

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Daily Fundamental ForexTime ( FXTM )

OPEC talks look set to falter




OPEC has dominated headlines today and with good cause, as the once former oil monopoly continues to struggle with internal politics in an effort to alter the current price of oil by cutting production and supply all together. There is only one problem... the rest of the world continues to pump oil outside of OPEC, and the various OPEC members are suffering from low prices so much that cutting production may not actually support them at all. It has so far got to the point where some pundits are calling the odds of an OPEC deal even happening at 50/50, my guess would be to put this figure much lower given the politics at play and how unlikely Iran is to enable any production freeze at all. So where to for oil markets from here? It's likely that markets will shift their focus back on US oil inventories data again as the main catalyst for movement and also focusing on global growth as a sign of a pick-up in the market.

So where to now if the OPEC talks break down on the charts. My focus would likely be on the key support level of $42.00 at this stage, given that the market has rushed down to that level before and will look for some sort of land in the sand, failing that the next support level down could be found just below this around the $40.00 psychological level. While it's easy to play levels it's important to realise this is politically driven so the patterns will only support movements that depend on the OPEC deal and right now the market is predicting the talks might indeed fail, and cause Saudi Arabia to flood the market in any case.

The US markets however continue to find strength from the economic data with recent figures out today on consumer confidence lifting to 107.1 (exp 101.2), this was a strong result when you compare the previous months reading of 98.6 and shows that consumers are looking to spend in the build up to Christmas. Preliminary GDP q/q also lifted to 3.2% (3.0% exp), and this is in-line with the expectations around Trump and the infrastructure building that is expected to take place over the next 4 years of his term to boost the American economy.

The S&P 500 has benefited the most from the recent movements and its lift up the charts should come as no surprise as the hawks are back in play, but also there is a look for government to spend. At present the S&P 500 has pushed through the 2200 market and at present using this level as support before looking to push higher. Market expectations are that 2250 is likely to be on the cards in the short term given the optimism from a business standpoint in the US economy, but also based on the fact the USD continues to strengthen making it cheaper for US businesses to operate. Any further drops on the chart are likely to find support though on the 20 day moving average and I would expect this to play a big part if we do find any bears still present.





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

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Daily Fundamental ForexTime ( FXTM )

NZD dips on trade index data





In recent days the NZD has managed to find itself in a bit of resurgence up the charts against the USD as positioned were unwound and people were looking for some positives out of the NZ economy. The bulls today have suffered a minor set-back as they look to climb they charts with the NZ trade index coming in much weaker than anticipated at -1.8% q/q (0.0% exp). This drop in the trade index has been lead by lower commodity prices at the farm gate and continues the trend in the last five quarters of a drop. The flow on effects to the economy at this stage are estimated to be substantial especially with the fixed income traders who have instead turned their attention back at the USD as it looks likely the NZ economy will have to sustain low interest rates for some time.

The NZDUSD managed to fight back today but stalled briefly at the 100 day moving average, however it managed to quickly jump higher before the bears took a big swipe and have since pushed it back down aggressively on the chart. It has so far stopped just short of the 0.7061 support level as the market is once again frets with the idea of looking to push lower and take on the 70 cent psychological barrier. The hard level of support and floor that seems to be appearing is likely to be found flat on 0.6994, with multiple tests coming at this level. At present the 200 day moving average is also acting as dynamic resistance and I would expect it to continue to hold out against movements higher in the marketplace.

Lastly oil has certainly made its mark today as OPEC stunned the vast majority of investors by actually coming to some sort of agreement. In the process though it did kick out Indonesia and then redistribute its supply amongst the members, which in turn has lead to this large rush, but not as big as one might expect. The next thing many are looking for is if the non OPEC countries like Russia look to actually play ball and cut back production as well in an effort to bolster prices further. Certainly there is still a glut of oil in the world, and something does need to happen for it disappear.

Chart wise WTI oil has so far been looking strong with the bulls and rushed up to the $50 dollar a barrel mark before retreating slightly. Resistance for going higher is likely to be found at 49.80 and I would expect the market to struggle past this point unless the non OPEC countries come into line with the agreement. Any falls for oil are likely to be found at 47.88 which is acting as a hard level of support in the marketplace and with the 50 day moving average hovering around this area it will be tough for traders to push past with the current situation.





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

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Daily Fundamental ForexTime ( FXTM

OPEC is back, who else wants to join the party?




On Wednesday OPEC defied sceptics by telling the world we’re still united. When many thought that OPEC had no more influence on oil prices, yesterday proved them wrong with Brent prices surging by 9% to trade above $50. For the first time since 2008 the cartel members managed to put their political conflicts aside and strike a deal that benefits their economic agenda by reducing output 1.2 million barrels a day starting January 2017 for six months.

Russia also said it will come on board and cut output by up to 300,000 barrels per day in H1 2017, and still to be seen whether other countries will join when OPEC and non-OPEC producers meet on December 9 in Doha.

Energy stocks around the world are enjoying one of their best days in many years with S&P/ASX and Topix energy indices up by more than 7% and U.S. S&P500 energy index closing 5% higher yesterday.

Will prices continue to move higher?

If you were long oil early Wednesday, then you’ve received your Christmas gift already, but whether prices will continue to surge higher depends on multiple factors.

• Which countries other than non-OPEC Russia will commit to a cut?

• Will the process be monitored effectively, or chances of prisoner’s dilemma that encourages some members to exceed their production quota come into play?

• Will U.S. drillers return fast if prices held above $50 and how many rigs will be reactivated?

• On the demand side, are we going to see higher revisions due to Trump’s infrastructure policies?

If oil prices traded in the range of $50-$60, shale isn’t likely to return in massive levels, however if prices spiked above $60 then the shale industry will return as a major player to rebalance prices. The bottom line is OPEC’s deal will put floor on the downside, but on the upside multiple factors should be taken into consideration.





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

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Daily Fundamental ForexTime ( FXTM )

Italy continues to dominate headlines as Euro hits 20-month low





Political risk is showing no signs of escaping the headlines after the European Union was plagued into fresh political turmoil overnight following confirmation that Italian Prime Minister Matteo Renzi suffered a humiliating defeat in the referendum over constitutional reforms, which will lead to the handing of his official resignation to the President of Italy later today.

While political change in Italy is not something that the world is immune towards, there is anxiety that this round of political instability will rock economic confidence and negatively impact the Italian banking industry that is considered to be a danger spot for the Eurozone. It is no hidden secret that the Italian banking industry is plagued with bad debt and it is widely conceived that the Italian Government does not have the money to support the troubled banks, which could run the risk of eventually leading to an EU bailout similarly to what we have seen happen elsewhere in the past.

The market reaction to the events in Italy have not been disastrous, but it has attributed to the negative trading environment to commence the week in Asia and there are concerns over how financial stocks could react when the markets in Europe open in a couple of hours. The Euro has as expected been the major loser to the events in Italy, with the Eurodollar sinking to a fresh 20-month low marginally above 1.05 early on Monday morning.

There is no hiding away from the fact that this represents another victory for the anti-establishment with this also wrapping up events in 2016 that have included unpredictable upsets in both the United Kingdom and the United States. The concern is that the constitutional referendum in Italy was originally seen as a measure to speed up reforms in Italy for the greater good, but it was later turned towards an opportunity for voters to display their unrest with the current economic situation in the country and dissatisfaction towards the Italian government.

When you consider that there are major elections in both France and Germany in 2017, investors will be unable to ignore that there will be further political risks to come next year and that the surprises seen in 2016 could be viewed as a warning shot as we head into the new trading year. The elections scheduled for 2017 represent major event risks and following the political upsets that have caught investors by surprise throughout 2016, the upcoming elections in both France and later Germany provide a reason why many believe that the Euro could head for additional declines over the medium and longer-term.

Pound awaits Supreme Court hearing

While the British Pound is still enjoying a bounce following the comments that it might be possible to purchase access into the single-EU market once the United Kingdom finally leaves the European Union, there is a risk that the currency could begin retracing its gains once the Supreme Court begins a landmark hearing later on Monday on whether Parliaments consent is required before official negotiations can begin on the United Kingdom leaving the EU.

The hearing of 11 different justices is supposed to last four days and while the official outcome is not expected to be announced until 2017, any hint that Prime Minister Theresa May might be able to invoke Article 50 as previously planned for around March 2017 will encourage selling opportunities in the Cable.


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

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By Jameel Ahmad, VP of Corporate Development & Chief Market Analyst

 

Daily Fundamental ForexTime ( FXTM

Markets become increasingly acclimatized to negative news - adjustments never faster





Investors are getting used to bad news, and the lessons learnt in the past couple of months were implemented on Monday after the Italian referendum results. It’s true that a “No” vote was priced in to some extent, but the heavy defeat with 60% lead for those who rejected the reform of the constitution suggests that anti-establishment populists in Italy are on the rise. Although the Five Star Movement may be pushed away until the spring of 2018, there are many uncertainties ahead especially for Italy’s financial system.

The Brexit vote took a couple of days to be shrugged off, and Trump's electoral victory shock lasted only a few hours before bulls took control of the market, so why not respond in a similar way to Italy’s referendum? The EURUSD fell more than 150 pips in the immediate aftermath of the vote result testing 1.0503, and in less than 24 hours the pair surged by 290 pips. We can have a list of reasons to justify the price action, such as buy the rumours sell the news, Italy’s referendum vote doesn’t mean Brexit, or short squeeze occurred, but the most obvious fact is that markets are acting in such a weird way, where bad news is received with open arms, and this trend may not last too long.

Reserve bank of Australia held its final meeting for the year, and as expected kept rates at a record low of 1.5% after reducing them by 50 basis points in 2016. Very little changes were seen in the statement too, indicating that the central bank is in watch and see mode, and the Australian dollar reaction was mild, moving in a 40-pip range against the U.S. dollar. Traders should keep an eye on tomorrow’s GDP release where the Australian economy is expected to contract for the first time in 5 years.

The key central bank meeting for the week is Thursday’s ECB meeting. The €80 billion asset purchase program will end in March 2017 and the key question is going to be whether the Central Bank will continue buying bonds at the same pace or reduce the amount in a similar tactic to the U.S. Fed, which started reducing its monthly purchases by $10 billion in December 2013. Italy’s no vote will undoubtedly be discussed; however, any sort of bailout will create political chaos, but it remains to be seen whether it will indirectly impact the ECB’s decision.




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

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Daily Fundamental ForexTime ( FXTM )

CAD claws back ground




The Canadian dollar has finally managed to gain some ground against the strong USD after weeks of the market waiting for it to react to oil prices beginning to show some turn after the recent OPEC agreements. However, Ivey PMI data out today showed weakness in the Canadian economy was still apparent as it came in at 56.8 (60.0 exp) showing that despite the optimism in Canada there is still weakness in the economy and the fact it was slightly down on last month will be concerning. For the most part the Canadian economy will benefit greatly if oil prices continue to remain high in the wake of the recent OPEC meeting. What will be key for the Canadian Dollar will be how non-OPEC members such as Russia react to the agreement. There is still a degree of hesitation around dealing with Russian and its needs to pump as much as possible to sustain the deficits it currently runs.

On the charts the USDCAD has broken through a number of key support levels as it slips down the charts in a bearish motion. The largest being the 1.3402 level which managed to hold out for a few days before the market pushed through on the back of oil prices. Currently though the 1.3267 support level is holding up further drops on the charts and the 50 day moving average is acting as dynamic resistance on the chart. This is likely to cause the bulls a little hesitation and they may look to play of key levels rather than focus on turning the trend at this stage. When looking further ahead I would expect the bears to look to play to lower levels at 1.3149 before pausing and looking for further oil movements which may indicate direction for the USDCAD.

Silver has been an enigma as of late as it has bucked the trends and dived lower in a tough market for commodities. For the most part it has looked to follow the market and indeed climb higher as commodity prices have improved in the long term, relatively speaking though silver is very much a precious metal and traders have been pushing it around as a hedge for market sentiment. Despite all of this silver has so far struggled as well with a higher USD which has pushed the metal lower and into the $16 dollar range where it has not been since June.

Silver on the charts has been a technical traders dream as of late as it plays of psychological levels and moving averages very clearly. So far it has held up on support at 16.708 but this looks unlikely to hold in the short term as the market continues to look bearish with the incoming Trump presidency. The 20 day moving average has acted also as a level of dynamic resistance in the market place, and is likely to hold back further movements unless we see drastic change. The next level of support down is at 15.933 and I expect this will be a tough one for the market to crack.






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

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Daily Fundamental ForexTime ( FXTM )

WTI bears on the prowl





WTI Crude was vulnerable to sharp losses on Tuesday following reports of OPEC’s output rising to a worrying record high of 34.19 million barrels per day in November which revived the oversupply concerns. It is becoming quite clear that the effects of last week’s expectation-defying production cut deal in Vienna is warring off as investors come to terms with the painful OPEC reality. For the cartel to bring production back down to the optimistic 32.5 mbpd in January after November’s high, a mammoth 1.7 million barrels will have to be trimmed which could be challenging. When keeping in mind countries such as Libya and Nigeria that are exempted from the limits of the latest agreement amid the record high outputs, concerns may mount over OPEC failing to fulfil the agreed production cut next year. There are still many unanswered questions and patches of uncertainty over how the cartel may solve this complicated production cut jigsaw consequently pressuring oil further.

Much attention may be directed towards the OPEC and Non-OPEC meeting on the 10th of December which could spark a selloff in oil if non-OPEC refuses to cut production by 600,000 barrels per day. Russia’s oil production continues to hit fresh post-Soviet highs while Russian officials have repeatedly stated that output cuts will be implemented moderately which could impact the pending deal. If pessimism persists over the production cuts and oversupply fears intensify then WTI bears could install another heavy round of selling. From a technical standpoint, bearish investors could exploit the breakdown below $50 to encourage a decline lower towards $48.50.

Sterling bears make a comeback

Sterling relinquished short term gains on Tuesday with the GBPUSD sinking towards 1.265 after reports of the British government requesting parliament to honour its plan to divorce the European Union renewed the Brexit fears. The main theme driving the Sterling this year has been the ongoing Brexit saga with uncertainty and fears over the longer term impacts of Brexit to the UK economy diminishing investor attraction towards the currency. While bulls may be applauded on their ability to exploit the noise and optimism over Brexit being delayed to propel Sterling higher, the technical bounce should act as a firm foundation for sellers to drag prices lower. Investors may direct their attention towards the UK Manufacturing Production report which if exceeds expectations could provide bulls a slight lifeline. Although data from the UK continues to repeatedly display signs of economic stability, it has become clear that Brexit remains the main theme that has made Sterling sellers’ dream in the medium to longer term.





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

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Daily Fundamental ForexTime ( FXTM )

US equities jump sharply




US markets saw a massive rise today as the Dow was up 300 points and the S&P 500 was up 29 points showcasing that investors believe the advent of Trump will have a positive effect on the US economy. This result while being based around the politics was further backed by the strong results the US market has been seeing with JOTLS job openings up to 5.53M - a reversal on a drop in the last 2 months. However this may also be a seasonal shift with many jobs created around the busy Christmas shopping season. Consumer credit was also much lower at 16.0B (18.8B exp) after two very large previous months where consumer credit saw large growth. For the most part though the US economy looks poised to make the most of the Christmas season and many are expecting trump to take the US economy that one step further in the New Year. It could be a hard landing for markets if he fails to deliver, but for now the market optimism seems ever increasing.

On the charts the S&P 500 has certainly reached higher and the market is looking for a solid resistance level to pause at and take profit. In the past, resistance levels in uncharted territory tend to happen around key psychological levels and in this case 2250 looks likely to be the hard line that will be tough to cross for the bulls. Beyond this the obvious next level above will likely be at 2300 and I would expect the market to take a breather until Trump looks to swing his economic might to help bolster the US economy. Any push lower to support is likely to find it though at 2183 or alternatively dynamic support on the 20 day moving average, which has been quick to push back any bearish activity as of late.

Across the pacific in the New Zealand economy recent comments from the Reserve Bank of New Zealand have sparked up the market somewhat, as the governor of the RBNZ believes that the NZD has turned a corner and may be starting to retreat. However, the recent Global Dairy Auctions had its 4th consecutive jump in recent weeks and this was further backed by the ANZ commodity price index lifting 2.7% on the previous quarter, adding further fuel to traders seeking safety and yield overseas away from the turmoil.

The NZDUSD has been the major trading target and has so far managed to hold up firmly on support at 0.7113 as it looks to shrug off the bears and recent comments from the RBNZ. Right now it's even reaching outwards resistance at 0.7180 and the market will be looking to see if has the momentum and pace to continue further movements higher on the weaker USD. Despite the movements, the USDs run feels like it may not be over and more Trump economics could certainly see it moving rapidly against all the major and commodity currencies out there.





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

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Daily Fundamental ForexTime ( FXTM )

Markets throw caution to the wind




Markets have thrown caution to the wind when it comes to movements as of late as once again US equities set the scene with another stellar rise, though not as big as yesterdays. The main catalyst for this move was the US unemployment claims figures which showed a drop on the previous weeks result to 258K (257K exp). While still slightly above the expected figure it shows that the labour market is still very much alive and kicking in the lead up to Trumps swearing as president and that the market is certainly poised to grow if the infrastructure projects that many expect do in fact go ahead. On top of this financials have also been stronger, as many expect Trumps government to likely cut back on financial regulation in areas to help free up capital for further uses. The long term effects of this will be hard to measure but markets are expecting big things.

The S&P 500 had its maiden touch today as it clipped 2250 before retreating as some traders looked to unwind their positions in the market. I had mentioned yesterday that this would be the psychological barrier that traders would look to play off, the question is now where to from here. I would expect to see the S&P to rally higher, but with 2250 now acting as a strong level of support expect to see some ranging unless we get further Trump news, or an update from the FED. Any further falls are likely to touch on support at 2211 and also the 20 day moving average, which has so far been acting as dynamic support for any rises in the market.

For the Aussie dollar it has been another day of pain as it continues to struggle in the market, and is starting to look like it's consolidating against the USD rather than trending. It was not helped at all today by the recent Australian Trade Balance data coming in at-1.54B (-0.71B exp). This is a reflection of the strong Australian dollar when it comes to commodities which have been feeding the trade balance data for some time. The long term effects of the commodity prices being slightly depressed and not rebounding is likely to be felt on the markets as traders look to punish the AUD. Certainly for the Reserve Bank of Australia this will not be appealing and they may look to cut further in the future, but for now it's likely a wait and see game.

For the AUDUSD resistance at 0.7490 has so far held its grounds, and for the most part I expect and anticipate that we could see further falls on the charts given the strong USD, and the poor economic data we continue to see out of Australia. What will be key is the short term bullish trend line on the daily chart, when this breaks it will give the bears clear control and markets are looking ready to pounce on the opportunity. Looking for a strong level of support it can be found easily at 0.7326 and is likely to hold up against a first attempt to break through.





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

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Daily Fundamental ForexTime ( FXTM )

Chinese data set to move AUD & NZD




It's been a slow start to the global calendar today as the markets were relatively quiet from an economic data perspective but there was some slight selling of the USD across the major pairs which saw the commodity currencies take centre stage. None more so that the NZDUSD which had its housing data report come back showing housing sales down -6.0% (-14.2% prev), while visitor arrivals were also up 2%. This bodes somewhat well for the current state of the NZ economy which has also seen some political change in the last few weeks, and as the economy looks to pick up in the wake of the recent earthquake. But, it's not all doom and gloom over that side of the world and the NZD continues to be a strong currency in the wake of it all, even as the RBNZ made comments last week that the time for the NZD was now to fall.

The NZDUSD has not fallen, in fact today it rallied strongly on the back of USD selling to touch a strong level of resistance at 0.7180 before pausing and failing to maintain any further momentum. The net level above at 0.7222 is looking all the more cautious, but at present further USD selling could propel the kiwi much higher at this rate. Support levels are also keenly watched and none more so than 0.7113, which has held up any further movements lower. Just below this key support level is the 200 day moving average which the NZDUSD has been respecting quite frequently, and I would expect hold back any further bearish movements in the event of a swing lower.

The NZDUSD may have some of the spotlight but it's not hard to look past the AUD as well as Chinese data is due out shortly in the day and as usual it will have a large impact. Traders will be sharply focused around the Industrial Production reading at present, but also the Australian data due out on business confidence with expectations low for a strong reading given the recent turmoil that Australia has endured from an economic perspective.

On the charts the AUDUSD continues to be a mixed bag and looks very similar to the NZDUSD when it comes to patterns. So far resistance around 0.7490 has been quite strong and the market is looking for further direction from the economic events from today before looking to move either higher or lower. I would expect the 100 and 50 day moving average may look to slow traders who are quite bullish, but it's no guarantee when it comes to such important economic data. The 20 day moving average has thus far managed to act as dynamic support I would expect that to remain the case as the USD weakness continues in the marketplace. However, overall the bullish trend is pointing upwards and it may be a matter of time before the AUD looks to take charge again against the USD bulls.





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

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