[B]Atlanta Fed’s Lockhart Speaks:[/B]
A hump day interview with the Federal Reserve Bank of Atlanta President Dennis Lockhart gave USDX bulls something to cheer about, indicating that the US economy is ready for its first increase in interest rates for nearly 10 years.
“It will take a significant deterioration in the economic picture for me to be disinclined to move ahead.”
Read the full Asian Session Morning on the Vantage FX News Centre here.
The following is a bit of a follow up to a previous Gold post in the Technical Analysis section of the Vantage FX News Centre in which we spoke about getting in early for a break of major support.
Maintaining a bearish bias on Gold due to the imminent rate hikes from the Federal Reserve, I see two main scenarios for managing risk from the short side here.
Read the full Technical Analysis Post on the Vantage FX News Centre here.
[B]British Pound Thursday:[/B]
From the US to the British Isles, attention shifts across the Atlantic Ocean tonight. Markets will receive an unprecedented data dump from the Bank of England, tonight releasing the quarterly inflation report alongside their monetary policy decision and meeting minutes.
Similar to Tuesday’s RBA decision in Australia, markets aren’t expecting the BoE to front run the Fed and raise rates tonight, but the wording in the statement will be the key.
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]Bank of England Recap:[/B]
Cable pulled back against all of the major currencies overnight as the Bank of England disappointed the market with its Monetary Policy announcement.
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]NFP Does Enough:[/B]
Although Friday’s Nonfaarm Payrolls number missed expectations, it wasn’t enough to put a dampener on expectations of an interest rate hike from the Federal Reserve as early as September.
“USD Non-Farm Employment Change (215K v 222K expected)”
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]Inflation Limitation:[/B]
The Fed speaker merry-go-round continued overnight with comments from both Fischer and Lockhart, speaking at the Federal Reserve Bank of Atlanta’s conference. It was Fed Vice-Chair Stanley Fischer that got the ball rolling in his opening remarks, bucking the recent trend and expressing his opinion that inflation might be too low to begin raising rates in September.
“The interesting situation in which we are is that employment has been rising pretty fast relative to previous performance and yet inflation is very low.”
“And the concern about the situation is not to move before we see inflation as well as employment returning to more normal levels.”
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]Chinese Currency Devaluation:[/B]
China’s Central Bank, the People’s Bank of China (PBOC) yesterday weakened it’s currency by 1.9% to it’s lowest level in more than 2 decades. The move was swift and unexpected by markets. With traders waiting patiently for Australian NAB Business Confidence data less than 15 minutes before the PBOC made its move, many were left scrambling to change their AUD/USD plan of attack.
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]Reality Check:[/B]
With the Forex markets buzzing on the uncertainty that the Chinese have entered the so called currency wars, the volatility and whipsaws have given traders an extra reason to question the Fed.
With both the Fed and the BoE looking at a huge global shift in the direction of monetary policy, these moves out of China come at a time when markets are most on edge. Markets are asking whether these moves imply weakness in the Chinese economy more so than that being officially reported.
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]Consumer Driven Recovery:[/B]
Last night saw US Dollar bulls make a return, with US Retail Sales data coming in largely as expected.
“USD Core Retail Sales m/m (0.4% v 0.4% expected)”
“USD Retail Sales m/m (0.6% v 0.6% expected)”
Last month’s number revised up to 0.4% from -0.1% previously provided the kicker that the USDX needed after this week’s uncertainty out of China.
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]Your DAY’S Trading Inspiration:[/B]
We begin what is expected to be a range-bound week across the majors with news that Australia’s Jason Day has clinched his first major, taking out the PGA Championship this morning. If you are ever looking for an inspirational story on persistence, practice and hard work to hit your trading goals then this man’s story is the one. Definitely worth doing some more reading.
Read the full Asian Session Morning on the Vantage FX News Centre here.
As we spoke about in this morning’s Daily Market Update, AUD/JPY is hanging precariously on for dear life after breaking major weekly trend line support.
Read the full Technical Analysis Post on the Vantage FX News Centre here.
[B]RBA Monetary Policy Meeting Minutes:[/B]
While the Reserve Bank of Australia leaving rates unchanged really surprised nobody (well all but the two surveyed economists that enjoyed their time in the contrarian sunshine of course), a few key changes to the wording of the accompanying statement did give the Aussie markets a bit of a buzz.
The big one being the fact that the RBA dropped the line:
“Further depreciation seems both likely and necessary.”
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]FOMC Minutes:[/B]
With yesterday’s RBA monetary policy minutes not offering us anything new, we move onto tonight’s US inflation data and FOMC minutes.
With Fed speakers indicating that inflation is still a key driver of the timing of the imminent rate hike, tonight’s CPI data will give us a heads up on whether the economy is still moving toward the Fed’s 2% target. On the other hand, the FOMC minutes look backward to the previous meeting and with all the Chinese currency shenanigans between then and now not featuring in any discussions, the lag factor may feature in the way traders digest what is said.
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]Fed Timing Hazy:[/B]
The FOMC July meeting minutes showed that the central bank’s policy makers were still undecided on whether the US economy has a solid enough base to begin the normalisation of interest rates. The main points to come out of the minutes were that the labour market is near or at least very close to where it needs to be in order to lift rates, but it is the inflation outlook that is creating all the doubt.
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]US on the Edge:[/B]
US stocks took a tumble overnight with both the SP500 index and the Dow falling to their lowest levels since February last year.
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]Monday Brace for Market Violence:[/B]
With US stock indices falling off a cliff (or going through a healthy correction, depending on who you speak to), traders have real fears that more market violence is yet to come.
European indices led the charge to the bottom with all major markets deep into the red, while the SP500 broke major weekly trend line support in the rout and closed down big on the night. Monday’s futures market open has seen a gap down and shows a real possibility that this is only the beginning of something big.
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]Rip Your Face Off:[/B]
Have you heard traders talk about a rip your face off type move? Well that right there was everyone’s collective face getting ripped off.
The following SP500 charts tell you all you need to know about the type of moves we saw last night while the Dow Jones Industrial Average was at one stage down more than 1000 points!
Read the full Asian Session Morning on the Vantage FX News Centre here.
Let’s take a look at the damage Black Monday has done to our Forex charts. We have a look at what price has done to begin the week and most importantly try to look forward and discuss some actionable ideas around where to from here.
Read the full Technical Analysis Post on the Vantage FX News Centre here.
[B]PBOC Comes to the Party:[/B]
The People’s Bank of China has finally made their move. After the Shanghai Composite turned negative for the year, the country’s central bank responded by once again cutting interest rates.
While seen as stimulatory on the surface, it is another public admission from the secretive, planned economy that Beijing is still worried about the sharp decline in economic growth coming out of the country.
“CHINA CUTS RRR RATIO BY 50 BPS TO 18%, CUTS INTEREST RATES.”
“CHINA CUTS 1 YEAR DEPOSIT RATE, LENDING RATE BY 25 BPS EACH.”
Read the full Asian Session Morning on the Vantage FX News Centre here.
[B]Markets Turn Classic Risk Off:[/B]
Risk-Off sentiment returned to the US Dollar overnight, causing the USDX to snap sharply higher.
Following the giant squeeze up in EUR/USD that we’ve seen this week, it would seem that enough weak hands have been shaken out for the currency to prepare its descent lower again. So often volatile moves one way are met with equally violent moves the other and if you throw in a Fed speaker or two then this is what you get!
Read the full Asian Session Morning on the Vantage FX News Centre here.