Price Action & Fundamental Discussion

Dollars Rides Trump Rally and carried over by Feds

Dollar is at 14 years high against most currencies, the 0.25 percent hike in Interest Rate was widely anticipated by Global financial markets The USDIX was up by 0.5 percent at 102.62 high since 2003 January, meanwhile euro slides to 21 months low, Chinese Yuan was seen at eight and half years low, USDJPY rejuvenation at 117.65 from 115.37.

Oil price was stabilized due to planned cut short of production headed by OPEC & Russia and the hike in Interest rate by Feds held investors out of commodities. Brent, crude oil futures is at $55.10 per barrel & US oil was trading at $51.25 per barrel.

ANZ bank said on Thursday that oil markets would move into a substantial deficit in the first quarter of 2017 if the Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia go through with their announced cuts of almost 1.8 million barrels per day (bpd) in output

The yellow precious metal future falls narrowly to $1138, 1.68% per Troy ounce after Fed signals three more possibilities of hike in 2017. Silver Future is down by 2.25% to 16.830 to a troy ounce.

The price of gold slid once again on Thursday, continuing a slump, and posting the lowest settlement price in 10 months.A global sell-off in ETFs is the result of lack of investor interest in the gold markets. The weak physical markets in China and India are taking away price momentum from the currency.Chinese traders, moreover, say the government there has limited imports there.
Gold prices gained in Asia on Friday in rebound trade from recent lows, though the downbeat trend remains in track on a stronger dollar and growing appetite for riskier investments
Pivot Point Analysis on Gold
R1-1140.86
R2-1153.46
R3-1162.44
Pivot Points-1131.88
S1-1119.28
S2-1110.3
S3-1097.7

How its going affect on JPY ? and Euro is under presser what may be bottom line?

Eur$ may change its direction from Jan17


USDJPY forming symetric in H1 chart.

If UJ breaks symmetry triangle we can expect to reach the second trend line. (see Chart)

UJ is out breaking downside

Next stop may be at 117.64

What has everyone to say?

NZD/JPY
Target Level: 82.8100
Triangle identified at 16-Dec-05:00. This pattern is still in the process of forming. Possible bearish price movement towards the support 82.8100 within the next 13 hours.
Supported by Downward sloping Moving Average

Elsewhere, GBP/USD held steady at 1.2426, after falling to a three-week trough of 1.2372 on Thursday.
The pound remained mildy supported after the Bank of England’s decision to keep interest rates at a record low of 0.25% and the bank’s bond-buying program target at £435 billion.

Market updates

Dollars moderately down against major currency on Friday as a result of profit booking, the Initial jobless claim of US Labor Department down to 254,000 & Year on Year CPI(US) was up by 1.7% in line to boost bucks rally.

Furthermore to add The Philadelphia fed Manufacturing Index increased to 21.5 high of two years. The strength of green bucks was measured 0.33% down at 102.82

The cable is steady at 1.2425 after bank of England decides to keep the rate of interest at low to 0.25% and banks targeted to buy the bond of 435 billion pounds.

The Ozzie looks weak 0.20 percent at 0.7350 when compared with bucks.
Kiwis cooling heals at 0.7036 recovering slightly from 0.7009

Crude is down even after supply was cut by most oil production countries US Crude January futures was down by 0.15% at $50.83 per barrel. Brent February futures edging up by 0.18% at $54.10 per barrel. On Thursday Kuwait announced to join the hands of OPEC in support to bring the oil price down.

Gold recovering from ten months low but not compromising as fed signal the three more hikes in 2017. Precious yellow metal of New York mercantile exchange February future was delivered at 1136.20 up by 0.55 percent and likely to find support at $1123.50


UJ was out of symmetric and reached 117.64 and currently trading at 117.29, and this is my trading plan for UJ

NZD/JPY
Target Level: 81.5130
SL: 80.1090
Channel Up has broken through the support line at 16-Dec-12:00. Possible bearish price movement forecast for the next 2 days towards 81.5130.
Supported by Downward sloping Moving Average

“At the same time the political risk premium in the EUR is unlikely to dissolve until 2Q17 at the earliest – on the assumption that Le Pen does not beat Fillon to the French Presidency. We judge 1Q17 for peak pessimism in EUR/USD, which could see levels very close to parity. However, at that point, EUR/USD will be around 15% undervalued and assuming: (1) Fillon wins; and (2) the ECB announces tapering in June 2017, EUR/USD should recover some ground into year-end.”

so far the economy has been resilient. While industrial production has disappointed, the leading indicators for exports and production are positive.

Also, the housing market collapse is likely to be averted, as some leading indicators suggest an upturn as early as in H1 2017.

“Should it materialize, instead of the current consensus forecast of 1.1% growth in GDP in 2017, we will see growth above 1.5% says Augulyte.

The Bank of England (BoE) has multiple times repeated that the GBP weakness is partly due to worsening economic prospects after the Brexit referendum. 12:00 pmLike


“Making sense of Trump’s policies

Donald Trump has offered a mixed bag of policies to ‘Make America Great Again’. The job of the market is to interpret which policies will see light of day and how the dollar will react. The potential dollar positives, to which the market subscribes so far, are the kind of reflationary fiscal policies last seen under Ronald Reagan in the early 1980s. The potential dollar negatives are President-elect Trump’s isolationist stance to world trade and presumably his resistance to a sharply stronger dollar – where dollar strength would undermine Trump’s support for the neglected US manufacturing sector.
While Trump’s fiscal plans may not fully echo those of Reagan (we see tax cuts more than government spending driving the fiscal thrust), it looks as though Trump’s plans will continue to drive the dollar higher through 2017. We say this because the Trump policy most likely to be enacted looks to be a US corporate tax holiday. This certainly was the impression we received during a very recent US corporate marketing trip.
Since the Global Financial Crisis, US corporates have amassed more than US$2trn in retained overseas earnings. An early announcement in 1Q17 of a tax holiday, which could see US corporates repatriate funds at 10% instead of 35%, should help the dollar indirectly through raised expectations for US share buybacks and dividends, if not capex as well.”
USD: Back to the 80s - ING

Consequences of a Strong Dollar:

  1. Less Exports, More Imports, Wider Trade Deficit
  2. Lower Inflation
  3. Lower Commodity Prices
  4. Weaker Earnings for US Companies with Significant Foreign Revenue
  5. Less Pressure on Major Central Banks like ECB to Ease
  6. More Pressure on Emerging Market Nations with Dollar Denominated Debt
  7. More M&A Transactions (which may not be a consequence)
  8. Weaker International Investment Returns
  9. More Pressure to Outsource
  10. Less Demand for Currency Alternatives such as Gold and Bitcoins 10:34 amLike

Dollar ends flat despite mildly upbeat U.S. data

The greenback surrendered the gains made after release of mildly upbeat U.S. GDP and ended the day broadly flat against majority of its peers on weak U.S. income data.

The Commerce Department said gross domestic product grew at a seasonally adjusted annual rate of 3.5% in the three months ended September 30, up from a previous estimate of 3.2% and above expectations for a reading of 3.3%.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.2% after an upwardly revised 0.4% increase in October. Economists polled by Reuters had forecast consumer spending advancing 0.3% last month. Spending in October was previously reported to have risen 0.3%.

Versus the Japanese yen, despite trading sideways in Asia and Europe, the greenback rose briefly to session high at 117.88 at New York open after the release of slightly better-than-expected U.S. GDP and durable goods. However, dollar pared its gains and tumbled to session low of 117.27 in New York morning, later price edged higher to 117.69.

The single currency traded with a firm bias in Asia and gained to 1.0470 in European morning on cross-buying vs sterling before dropping to 1.0429 at New York open after release of U.S. economic data. However, euro found renewed buying there and rallied to an intra-day high at 1.0499 in New York morning but lack of follow-though buying quickly led to long liquidation, price later retreated to 1.0432.

The British pound briefly edged up to 1.2379 in Asian morning before falling to 1.2328 in European morning on cross-selling of sterling especially vs euro, cable remained under pressure in New York session and fell to a 1-moonth low at 1.2277 near New York close.

In other news, sources said ‘ECB aims to wait until after Germany’s Sep election b4 next policy move; ECB sees no option off table if economy worsens; ECB to buy as few bonds as possibly below dep rate fm Jan.’

On the data front, The Commerce Department said on Thursday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.2 percent after an upwardly revised 0.4 percent increase in October. Economists polled by Reuters had forecast consumer spending advancing 0.3 percent last month. Spending in October was
previously reported to have risen 0.3 percent.

Data to be released on Friday:

Japan market holiday, Germany consumer sentiment, France consumer spending, UK GDP, current account, Canada GDP, U.S. new home sales and University of Michigan consumer sentiment.