Daily Fundamental Dose

Trading Discussion News and Economy
448

[B]Daily Fundamental Dose: 05–January–2016[/B]

Hello Traders,

During the first trading day of 2016, global slowdown fears and tensions in middle-east, coupled with Chinese pessimism threatened market players, helping the JPY, Crude and the Gold prices while Manufacturing in the U.S., as indicated by the ISM Manufacturing PMI, contracted in December at the fastest pace in more than six years and dragged down the USD. Moreover, the commodity currencies, namely the AUD, NZD and CAD remained sluggish while dent in UK Manufacturing further weakened the GBP. Global equity markets witnessed the worst start to a year in at least three decades due to the reasons mentioned above.

Though, Chinese intervention into the money markets reversed some of the Monday’s pessimism during early Tuesday while market players still await UK Construction PMI and EU Flash CPI to determine the respective moves of the GBP and EUR. Moreover, there isn’t anything new to be released from the US on Tuesday and it signals further downside of the greenback.

Should there be a higher EU CPI, as expected, the EUR can extend its recent upside while UK PMI is more likely to fade speculations of BoE’s interest rate hike and can continue hurting the GBP. Hence, it would be in the best interest of the market players to avoid buying USD ahead of the tomorrow’s FOMC meeting minute release and the Friday’s job numbers.

Have a nice trading-day……

449

[B]Daily Fundamental Dose: 06–January–2016[/B]

Hello Traders,

With the EU CPI printing a weaker than expected number and a UK Construction PMI beating consensus & prior, the USD got a bit of strength against EU while going down against GBP without any major economics to release; however, expected nuclear test in North Korea and continued tensions in middle-east kept favoring the safe haven demand of the JPY and Gold. Moreover, the Chinese Caixin Services PMI, which was expected to supersede the weakness of Manufacturing PMI, failed to meet forecasts and plunged to the lowest reading in 17 months, forcing the Chinese authorities to devalue Yuan and stoking fears of recession in the world’s largest industrial producer. Though, the Crude prices remained weaker as tensions in middle-east faded expectations that the major energy producer may now won’t be able to agree on the production and will keep fueling the global supply-glut.

Having witnessed the weaker print of Chinese Services PMI during the early part of Wednesday, the UK Services PMI, Trade Balance details from US & Canada, US ISM Non-Manufacturing PMI, ADP Non-farm Employment Change and the Factory Orders are likely to govern the global financial markets move during the rest of the day.

As there are many important details scheduled for publish during the rest of the day and the US details are likely marking weaker prints, the USD may close on the negative side while the UK Services PMI, is the core to UK GDP and may help extend its recent strength against majority of its counterparts. However, all eyes would be dependent on the FOMC meeting minutes which would release why the Fed policy makers agreed on the first in a decade interest rate hike and how they could going forward. Should the minutes reveal upbeat details for the economic performance of US and continue favoring four interest rate hikes during the 2016, the USD might reverse its recent downside and may join the north-move prior to the Friday’s NFP details.

Have a nice trading-day……

450

[B]Daily Fundamental Dose: 07–January–2016[/B]

Hello Traders,

With the US ADP Employment numbers marking the highest point since July 2014 and the Trade deficit also shrinking to the two months’ low, the US Dollar gained considerable against majority of its counterparts, except JPY and CHF, during Wednesday. However, the minutes of the December FOMC meeting, released late-yesterday, revealed that the rate-hike decision wasn’t accepted by all the policy makers as some of them were worried about the national Inflation which is too low. The greenback again started trading negatively compared to rest of the currencies after the minutes’ release while the commodity currencies, namely, CAD, AUD and NZD, kept trading negatively as devaluation of the Chinese Yuan stoked fears that the world’s second largest economy is likely witnessing further gloomy days, which in-turn signals weaker demand from the world’s largest industrial players.

As the US Dollar has once again joined south-run even after upbeat data-points, chances are higher that higher Jobless Claims would provide additional weakness to the greenback. Moreover, Improvement in German Factory Orders and UK Halifax HPI may help the EU and GBP to recover some of their recent losses.

Hence, it would be advisable to wait till the Friday’s US job details prior to taking any new buying orders for the USD as chances are higher that the weaker print could provide noticeable downside to the US currency.

Have a nice-day….

451

Hello Traders,

While higher than expected US Jobless Claims, coupled with improvement in global market risk sentiment, following the halt in Chinese plunge, draw down the greenback on Thursday while the same weakness is being carried on during Friday as Chine blew the markets with removing circuit breaker rules and has hiked the Yuan reference rate for the first time in eight days. Chinese move helped commodity basket and the commodity currencies during Thursday and the Friday while Crude prices, which gained a bit on Friday are more likely to continue witnessing downside with global supply glut.

Coming on to the crucial NFP day that started with weaker than prior AU Retail Sales, the UK Trade Balance and the Canadian job numbers could continue fueling the forex moves while the soft labor market numbers from the US may drag the USD further to downside. Moreover, the said US details are less likely to provide medium-term decline to the greenback as being the last of 2015 wherein the rate hike is already being announced. Hence, an optimistic number may have higher repercussions than the downbeat prints could cause.

Have a nice trading-day……

452

[B]Daily Fundamental Dose: 11–January–2016
[/B]

Hello Traders,

Even after witnessing the highest NFP since March 2015, the US Dollar Index failed to register a weekly gain as Chinese turmoil kept spreading pessimism across the globe and helped supporting the speculations that the Fed would find it difficult to have four interest-rate hikes, as planned, during 2016. The dragon nation, which introduced a circuit breaker system during last week, had to withdraw the same after continuous flow of weaker data-points dragged the Chinese markets down and the PBOC have to announce eight consecutive times of Yuan devaluation prior to holding it stable for last two days. The same moves rattled the global equity markets and the commodity world and hurt the AUD, NZD and CAD the most, in addition to forcing the Crude prices to downside. However, the same move helped safe-haven currencies, namely CHF and the JPY, together with triggering a pullback in Gold prices as market players rushed to secure their funds.

After witnessing the Manufacturing & Non-Manufacturing weakness by China, the CPI and PPI also magnified their weakness by printing lower than forecast numbers during weekend. Today being the Japanese Bank holiday and the Chinese absence of market, there prevails less of liquidity as the traders are worried about future moves following the last week’s worst run.

However, AU job details and US Retail Sales, PPI and Empire Manufacturing Index, together with BoE announcement, are some of the details that could fuel liquidity during rest of the week which contains less of the economic numbers to flash.

Have a nice trading-day…

453

[B]Daily Fundamental Dose: 12–January–2016[/B]

Good Morning Traders,

Even if the Dallas Fed’s new president, Robert Kaplan, said on Monday that the Fed might it difficult to announce four hikes during 2016, mainly due to fears over a cooling Chinese economy, the US Dollar registered a daily hike as market players were concerned more with the Chinese pessimism and forced the Crude prices to test 12 year low, helped the USD and the JPY, together with Gold, prices to gain. The JPY, however, was the strongest due to the safe-haven demand while the commodity currencies extended their downside, except the AUD which witnessed a small pullback after plunging heavily during last weekend. Moreover, threats of Britain’s exit from EU and the weaker fundamentals kept forcing the GBP towards south while the EUR remained more or less stable with no major economics to release.

Unlike Monday, today’s UK Manufacturing Production, speech by the BoE and BoJ heads, could propel some of the volatility into the markets after the Chinese industry-wide vehicle sales rose at the slowest pace in three years. However, pressure is continue to surround near the commodity markets and the AUD, CAD and NZD, due to the Chinese trauma while AU job numbers, scheduled for tomorrow, becomes crucial for the AUD moves.

Hence, it would be in the best interest of the market players to determine whether there will be continuous decline in Chinese markets, forcing the rest of the world to worry about their future and stop Fed from its four rate hikes planned during 2016. Though, up-till now it has been pretty clear that these things (Chinese) would continue hurting the global markets and favor the JPY and Gold. So, waiting till the Friday’s US releases before taking any trades to favor the USD becomes prudent.

Have a nice trading-day….

454

[B]Daily Fundamental Dose: 13–January–2016[/B]

Good Morning Traders,

While there was no major economics to observe during Tuesday, except the UK Manufacturing Production, which maintained its contraction of -0.4% against +0.1% forecast and continued dragging down the GBP, forex market helped USD extend its recent gains. However, the commodity currencies, namely NZD, AUD and CAD, kept trailing losses due to Chinese pessimism which also drove down the Crude price below $30 and wiped near 25% since 2016 start while losing 70% since the mid-2014. The JPY, on the other hand, kept gaining with the strong safe-haven demand support.

During the early Wednesday, Chinese Trade balance gave sigh of relief to the global forex market after it beat the forecast of 339B surplus with 382B mark. The move helped triggering profit booking moves to the Crude and a bit of recovery into the AUD, NZD and CAD; however, with another day of no major economic details, chances are higher that the market players may witness continued negative wipes from China and a weaker commodity basket while US Dollar is less likely to show much of the moves and can continue its up-move.

Have a nice-trading……

455

[B]Daily Fundamental Dose: 18–January–2016[/B]

Good Morning Traders,

Even as the US Retail Sales, PPI, Manufacturing & Industrial numbers, together with Jobless Claims, marked downbeat numbers , the broader risk-off market mode, coupled with absence major data-points from the rest of the globe and a six month highs Consumer Sentiment provided a positive weekly closing to the US Dollar. The JPY was a biggest gainer of the week due to its safe-haven demand while the Gold also gained some ground with the same reason. Moreover, GBP extended its downside with continued stream of negative economics while the EUR performed negatively without any major data-point together with the commodity currencies that went on south-run as Chinese pessimism kept dragging the Crude prices.

During later last week, the Iran got its oil export sanctions completely lift-off; however, the US levied some sanctions on sanctions against 11 companies and individuals for their ties to Iran’s ballistic missile program. Further, China, which hiked the Yuan reference rate on Monday to the highest level in a month, took another step to curb its financial market volatility with stricter reserve requirement ratio (RRR) on some banks involved in the offshore yuan market. Moving on, JPY lost some of its grounds with the same reason as market players felt a bit relieved after fresh Chinese moves.

With the US markets close on Monday, coupled with no major economics to track, global financial markets are likely to witness lesser moves during the rest of the day; though, important economic details, scheduled during the current week might be useful to witness magnified market moves. Hence, it would be better to support the USD, JPY and a bit of Gold buying considering the current global market uncertainty and Chinese pessimism while commodity currencies, namely, AUD, CAD and NZD, are expected to maintain their slide.

Have a nice trading-day……

456

[B]Daily Fundamental Dose: 19–January–2016[/B]

Good Morning Traders,

Even with the US markets close on Monday the greenback managed to secure positive closing against EUR, JPY and GBP while trimmed some of its recent gains against the AUD, NZD and CAD and the Crude Oil maintained its downturn due to the Iran’s announcement of ramping up Crude production after the nation’s ban was lifted during weekend. As there was no economic news, Chinese efforts to support the beleaguered Yuan seem to have played a role in yesterday’s movement. However, the Chinese GDP Industrial Production released on early Tuesday revealed that Q4 2015 Chinese growth marked 6.8% expansion against 6.9% expected & prior, the slowest since 2009, while the Industrial Production growth softened to 5.9%, lesser than 6% forecast & 6.2% prior.

With the recent Chinese details again fueling the pessimism, commodity basket and the commodity currencies started their renewed downside; however, the JPY lost some of its recent gains due to profit booking.

Having witnessed Chinese details during the early part of the day, UK CPI and the ZEW indices from Europe, coupled with EU Final CPI, are likely to govern the market moves during the rest of the Tuesday. With most of the details again favoring the uncertainty of global markets, chances are higher that the greenback might continue on its recent advance; though, an improvement in UK details might help triggering a GBP pullback. Hence, it is in the best interest of the market players to support the USD and take a risky call in GBP buying while continue to favor the JPY longs.

Have a nice trading-day….

457

Anil,

I’m interested in hearing your thoughts on the New Zealand economy after today’s GDP number. Especially in relation to the direction that the Australian economy is heading.

I have ideas running wild through my head here.

458

I would say the NZD is held from a plunge only because of mild support from dairy prices else it would have dragged down like CAD. Hence, it would be in the best interest of the market players to keep the NZD on the short-side unless the China recovers and the commodity sell-off holds.

459

[B]Daily Fundamental Dose: 20-January-2016[/B]

Good Morning Traders,

Even if the US economic calendar was quite empty on Tuesday, the greenback registered a negative daily closing as the IMF cut US growth forecast of 2016 to 2.6% from 2.8% predicted in October; however, the EUR remained firm after the fund upwardly its overview for 2016 growth to 1.7% from 1.6% prior while the JPY maintained its gains as the global economic growth outlook was cut down to 3.4% from 3.6% expected three months ago. The GBP maintained its slide even after better than expected inflation numbers as the BoE Governor said he has no set time-table for raising interest rate while the commodity currencies kept testing grounds as the Crude plunged to the new lows while the weaker than consensus print of New-Zealand CPI pulled the NZD even lower.

The crucial Wednesday, which includes many important details namely UK job numbers, BoE and US Inflation, coupled with US housing market details, is more likely to strengthen the USD and may fetch the GBP further down if the actual readings match expectations. Moreover, the present uncertainty in the market is a strong support that could propel the JPY’s upward trajectory even higher and the Crude plunge may drag the CAD. However, if the BoC refrains from cutting down the interest rate and the Governor sound hawkish in his speech, the Loonie, as it is nicknamed, may recover some of its recent downside.

Have a nice trading-day….

460

[B]Daily Fundamental Dose: 21-January-2016[/B]

Good Morning Traders,

While upbeat UK jobs report gifted a positive closing to the GBP against most of its counterparts, unexpected plunge in US inflation, coupled with weaker housing market details, dragged the US Dollar down on Tuesday. Moreover, the Crude prices witnesses a profit booking bounce while the Bank of Canada’s decision of not altering interest-rate, against expectations of 0.25% cut, fueled the CAD together with AUD and NZD. The JPY maintained its up-move during the current uncertain environment while the CHF and Gold also gained support of safe-haven buying and the Euro gained a bit ahead of Thursday’s ECB meeting.

During the early Thursday, market again behaving like it was and trimmed some of the Wednesday’s bounce with Crude prices re-joining south-run points and the USD also gaining without any major news except the ECB monetary policy meeting.

Even if the European Central Bank is less likely to alter its current monetary policy, President’s speech will be eyed for determining the EUR moves. If the policy hawk maintains his optimistic wordings, chances of the EUR gaining a bit more can’t be denied. Further, the commodity currencies, after gaining on Wednesday, are likely to dip again and hence are advised to hold on the short side.

Have a nice trading…

461

:57: Thanks for that Anil.

462

[B]Daily Fundamental Dose: 22-January-2016[/B]

Good Morning Traders,

Even with the six months high US Jobless Claims and one more negative print by the Philly Fed Manufacturing Index, though, of a lesser magnitude than forecast, the US Dollar managed to close in the positive territory on Thursday as dovish comments by the ECB President, coupled with the expectations of more monetary easing from BoJ, helped the greenback. With the diverging monetary policy between the Fed and the rest of major economies again taking the center stage of markets, the USD is more likely to extend its immediate up-move. The ECB President, during his speech on Thursday, said that the China-led slowdown is muting impact of ECB stimulus on inflation and the bank, in its March meeting, might go for further monetary easing for which there are no limits, which dragged down the EUR. Further, the GBP and the Crude prices extended their recent bounces as colder weather in EU and US, coupled with the lesser than forecast increase in US Crud stockpiles, provided the Crude prices extended support, in-turn helping some of the commodity currencies, including CAD, AUD and NZD.

On Friday, important Flash PMIs from EU, Germany and France, coupled with UK Retail Sales, Canadian CPI and US Existing Home Sales, are likely to govern the market moves amidst the broader optimism for the greenback due to its stronger monetary actions took place during December 2015. Given the EU numbers print weaker marks, chances of further EUR downside become more expected while an upbeat UK Retail Sales could help the UK currency extend its recent bounce.

Moreover, the Crude prices are less likely to sustain its recent pullback as the overall supply-glut can continue dragging down the energy prices while the recent improvement in CAD and the AUD-NZD prices are likely to be reversed soon.

Have a nice trading-day and a great weekend…

463

[B]Daily Fundamental Dose: 25-January-2016[/B]

Even with not so good economics, the US Dollar Index managed to gain positive marks for second consecutive week as pessimism at China and dovish remarks of ECB President, coupled with JPY pullback on the back of expectations favoring further monetary easing, helped the greenback. The ECB President, during his speech on Thursday, mentioned that the current global market situation, mainly driven by Chinese pessimism and weakness in Crude prices, might prompt the central bank in announcing further monetary easing measures, if needed, while one of the BoJ policymaker also favored additional monetary stimulus by the Japanese central bank. Moreover, cold in northern hemisphere, together with short-covering from 13-year lows, pulled the Crude prices up towards marking a weekly positive closing for the first time in four weeks, helping the commodity currencies, namely AUD, CAD and NZD, towards completing the week on the plus side.

During the early Monday, the Japanese Trade Balance details showed exports skidded 8% from a year earlier, a deeper drop than forecast and down for the third straight month, favoring further JPY correction ahead of the crucial BoJ. Further, the USD trimmed some of its last week’s gain, though remaining on the positive side and the commodity currencies remained choppy with no new releases to track except the German Ifo Business Climate Index and the speech by ECB President.

While Australian markets are close on Monday and there aren’t major releases to track, the EU releases will gain major attention, if the ECB head repeats last week’s dovish words, chances of further EUR correction, coupled with strong USD, can’t be denied. Moreover, recovery in the crude price, that helped gain the NZD, CAD and AUD, may also continue and can help build further gains by these currencies.

Have a nice trading-day….

464

[B]Daily Fundamental Dose: 27-January-2016[/B]

Good Morning Traders,

Even as the US Consumer Confidence maintained its surge and the house prices also accelerated, the greenback failed to hold its recent strength during the early days of week as global market meltdown, coupled with a year’s low of Flash Service PMI, favored speculations that the Federal Reserve may refrain from its path of four rate hikes in 2016; however, the USD gained against its Japanese and Swiss counterparts due to risk-off sentiment. The Euro and the GBP maintained their recent advance while the commodity currencies, which gained support from abrupt rise in Crude prices, extended their pullbacks as Chinese markets also witnessed some profit-booking moves from lows. The Gold prices kept rallying with the major central bankers favoring easy money policy and the rise of physical demand due to wedding season at India.

On early Wednesday, the Australian inflation numbers, mainly the RBA’s favorite Trimmed Mean CPI, marked welcome prints and helped the AUD while the US New Home Sales and the FOMC, coupled with the RBNZ announcement likely to take the center-stage of the rest of the day moves.

Although today’s FOMC announcement isn’t followed by the Fed Chair’s press conference, neither does the central bank expected to alter its monetary policy, market players are likely to concentrate on the language of FOMC statement to foresee the central banker’s next move in March when the ECB is likely revealing further stimulus. Moreover, the RBNZ, which is also expected to stand pat with its current monetary policy, might communicate some hawkish words considering recent advances in dairy prices, and may help the NZD up-move.

Have a nice trading-day………

465

[B]Daily Fundamental Dose: 28-January-2016[/B]

With the US Federal Reserve, mainly constrained with recently downbeat data-points, revealing a worried tone for the global economic development, chances of its March rate-hike, coupled with four lift-offs in 2016, gets tamed, which in-turn dragged the US Dollar further down on Wednesday. Though, the greenback managed to close on the positive side against JPY, NZD and GBP as concerns from further monetary easing by the BoJ and dovish tone of the RBNZ, together with weaker UK HPI, fetched these currencies down. Moreover, the pullbacks in Crude and Gold fueled strength in the CAD and AUD which was later cut down by the higher US EIA stockpiles and Russian denial to cooperate with OPEC for controlling global oversupply.

While the USD started gaining its ground on Thursday as the FOMC didn’t say that they are going to cut the possibilities of four rate hikes a year, other commodity currencies and the Gold prices also pulled back. Further, the market players are likely to keep looking at the UK GDP, US Durable Goods Orders and the Pending Home Sales to determine respective moves of the GBP and USD.

As the global economy continue ruffling with the FOMC and RBNZ dovish tone, Friday’s BoJ will be crucial as the JPY has started liquidating its gains and a dovish tone of the central bank Governor and/or further monetary easing announcement could magnify the JPY downside. Hence, it would be in the best interest of the market players to hold their shorts against Japanese currency while the USD is more likely to recover its recent losses after the Durable Goods upbeat prints.

Have a nice trading-day……

466

[B]Daily Fundamental Dose: 29-January-2016[/B]

With US Durable Goods Orders plunged the steepest since September 2014 and the Core reading marking the fastest contraction since January 2014, coupled with slower than expected hike in Pending Home Sales, the US Dollar marked another negative day again majority of its counterparts while the EUR weakened against some currencies due to larger magnitude of German CPI. Moreover, the GBP managed to extend its recent advance after the Preliminary number of UK GDP matched 0.5% consensus versus 0.4% prior and the commodity currencies maintained their up-moves backed by improvement in commodity prices. The Crude prices rose heavily due to expectations favoring global supply cut talks by the Russia while the Gold took advantage of weaker USD and present global uncertainty.

However, the surprise negative interest rate announcement by the Bank of Japan (BoJ) during early Friday, coupled with the OPEC’s denial of getting any meeting request against the wish of some members, ruined the market formation and everything started favoring the USD again. With the BoJ announcing negative interest-rate as a surprise market players rushed for the USD and made the greenback gain heavily during early Friday. Though, EU Flash CPI and GDP numbers from US and Canada are likely to be on the top of the list of market watchers.

Should there be a welcome number in US GDP and/or the weaker EU CPI, the USD might reverse it prior declines and register positive weekly closing. Moreover, the present JPY turmoil might lose its strength if there erupts another wave of global uncertainty, which can help the safe-haven demand of the currency while the CAD, AUD and NZD might extend their downside as the Crude prices have started liquidating their gains and might result in higher downside during the weekend trading.

Have a nice trading and a great weekend……

467

[B]Daily Fundamental Dose: 01-February-2016[/B]

Good Morning Traders,

Even if a bit of worried tone and soft economic numbers, including Durable Goods Orders & GDP, held the USD up-move, surprise negative rate announcement by the BoJ and a dovish tone of ECB and BoE central bank heads, helped the greenback Index (I.USDX) manage to close flat. Moreover, pullback in commodity prices helped the AUD, CAD and NZD during last week while no rate-cut by the RBNZ provided additional support to the NZD.

While everything remained USD supportive during the weekend, the same move seems stretched during early Monday when the Chinese official PMI dragged down for consecutive sixth month and marked the lowest point since September 2012. The same news dragged the AUD, NZD and CAD in addition to providing fresh life to Crude sellers while are presently looking at a bit higher than forecast Caixin Manufacturing PMI from China; though it also remained below 50.

Following dismal announcement of Chinese Manufacturing number, the UK and US are also scheduled to release indices relating to same sectors during the rest of the day which may fuel Forex volatility. Moreover, ECB President’s testimony is another important event that could help determine near-term EUR moves. Should there be continuous pessimism in Draghi’s tone, chances of the further downside by the Euro, coupled with strong USD, can’t be denied.

Have a nice trading-day……