Daily Market Analysis | HotForex

HotForex_Broker · November 25, 2015, 3:51am

MACRO EVENTS & NEWS

FX News Today

The U.S. calendar is busy today ahead of the U.S. Thanksgiving holiday tomorrow. Weekly jobless claims are a day early due to Thursday’s holiday, and are expected to rise to 285k from 271k.

European calendar quiet today, with Italian orders, retail sales, U.K. BBA lending.

Crude Oil has made two week highs of $43.40, as geopolitics are seen as the market mover following Turkey’s downing of a Russian military jet. Also providing support to price is the slightly softer dollar, also a rationale for traders to close short positions ahead of the U.S. Thanksgiving break.

U.S. reports yesterday revealed an expected Q3 GDP growth boost to 2.1% from 1.5%. Personal income revisions for both Q2 and Q3 saw a sharp raise in the savings rate, as will be reinforced in today’s monthly income report. The higher savings rate could be seen as evidence of greater household caution, though it also leaves room for a stronger consumption path into 2016.

The Fed discount rate minutes showed 9 District banks voted to hike the rate at its October 26 meeting. That’s one more than at the prior meeting on September 15, as the Boston Fed joined the ranks of those voting for a 25 bp increase in the primary credit rate to 1.0%. The number of District banks voting for an increase has been on the rise all year; in January 9 banks had voted to maintain a steady rate. Directors generally noted positive economic conditions, and those arguing for a tightening saw improving conditions in the labor market which should help boost inflation. This adds to the speculation that the FOMC will vote to lift rates at its December 15th, 16th policy meeting.

The U.K. CBI survey showed a much lower than expected reported sales reading for November, which dropped to 7 from 19 in the previous month. At the same time BoE members sounded dovish, with Chief Economist Haldane saying in his annual report that the balance of risks to growth and inflation outlooks is skewed materially to the downside, more so than reflected in the November inflation report. BoE’s Carney warned that the low interest rate environment is likely to remain for some time to come and BoE’s Forbes said the bank probably won’t have to implement further easing, and that the next rate move is probably more likely to be a hike.

HotForex_Broker · November 26, 2015, 4:00am

EURUSD AT 7 MONTH LOW ON ECB EASING SPECULATION

EURUSD, Daily (Updated)

EURUSD touched fresh 7-month lows of 1.0565, before rallying back over 1.0600, with pre-holiday short covering in play. The EUR, though, is still a bearish market, and with the inevitable interest differential widening becoming more apparent, the USD will continue to grind higher against the EUR over time, until we see a shift in the ECB policy. The next EURUSD downside target (S2) in at 1.0520, representing the April low. Continued downward pressure on the EUR is also supported by speculation of further ECB easing as early as next week’s ECB meeting, following a Reuters report saying central bankers are discussing two tiered charges on banks’ deposits and further bond buying.

HotForex_Broker · November 26, 2015, 5:13am

MACRO NEWS & EVENTS

FX News Today

The U.S. markets are closed today, and the U.S., calendar is empty until next week.

Speculation of further easing from the ECB next week should keep pressure on the EUR, the EUR is down against Yen and USD. The European calendar today focuses on Eurozone M3 numbers.

Stock markets continue to recover, as gains in commodity producers and carmakers drive European stocks up.

Base metal prices are higher today, in the wake of a Bloomberg report highlighting that China may investigate “malicious” short selling of iron ore at local metal exchanges. Copper prices had been trading at six-year lows earlier in the week. Oil prices are showing a decline currently, reversing some of rally seen over the previous three days.

BoE governor Carney, said that the low interest rate environment is likely to remain for some time. The GBPUSD now trades below 1.5100, and near the lowest point seen in the last 17 days.

Main Macro Events Today

• EUR M3 Money Supply: Eurozone M3 money supply growth accelerated to 5.3% y/y in October, from 4.9% y/y in the previous month. Expectations had been for a steady annual rate, so the data were higher than expected. Loan growth meanwhile accelerated with household loans rising 1.2%, vs 1.1% in the previous month, and business loans up 0.6%, versus 0.1% in September. Strong data.

HotForex_Broker · November 27, 2015, 4:59am

MACRO NEWS & EVENTS

FX News Today

U.S. calendar empty today, bond and stock markets will close early.

FX markets are mostly quite over the last 24 hours , with the dollar up slightly versus the EUR and GBP, and 0.1% down on the yen.

The Shanghai Composite closed 5.5% lower its worst daily decline since August. Other markets in the Asia region fared better, though most were down. The catalyst behind the sell-off in China was news that a number of brokerages are being investigated for alleged violation of securities regulations.

Data out of Japan today were mixed, and didn’t have a big impact on markets. Headline CPI 0.3% y/y in October, but the core figure was -0.1%, and household spending dove 2.4% last month, adding to a 0.4% decline in September. Japanese unemployment fell to a 20-year low of 3.1% in October, down from 3.4%, but this was down to a shrinking labour force. The most-recent survey by Reuters found nearly all respondents expecting the BoJ to expand monetary policy at its January meeting, and today’s data shouldn’t change this picture much.

NYMEX crude has drifted lower, in line with broader commodity retreat. A 961k bbl rise in crude stocks. Analyst had been expecting a 1.0 mln bbl increase. Meanwhile, gasoline supplies, seen up 0.5 mln bbls actually rose 2.5 mln bbls, while distillate stocks were up 1.0 mln bbls, versus expectations for a 0.5 mln bbl fall. Refinery usage rose to 92.0% from 90.3%.

HotForex_Broker · November 27, 2015, 7:11am

DOVISH BOE SPEAK COULD BREAK A KEY GBPUSD SUPPORT

GBPUSD, Daily

The GBP has underperformed this week after BoE governor Carney said that the low interest rate environment is likely to remain for some time, while his colleague Haldane said that inflation risks were “skewed materially to the downside.” This Dovish BoE speak is seen as a driver for the GBP weakness , as it suggest that the BoE will wait till after the U.S. Fed and ECB rate moves to take effect before making any move. Technically, the GBP has further downside potential towards the 1.4960′s with room for a deeper mover lower near the 1.4890’s-60.

The downside move could be interrupted provided the key 1.5025 support holds that could support a potential price bounce for a lower top below 1.5335. The current strategy calls for selling into any signs of strength for an initial 1.4960 target, with stops near 1.5335.

HotForex_Broker · November 30, 2015, 4:46am

ECONOMIC WEEK AHEAD

Main Macro Events This Week

• United States: The U.S economic calendar is heavy at the start of the new month, with several important reports due this week, NFP for November employment numbers (Friday). An increase of 200k is forecast, with a steady 5.0% unemployment rate. Those should be more than strong enough to support expectations for rate liftoff. Other market moving data includes the ADP number (Wednesday), expected to show private payrolls rising 190k. ISMs are due, with the manufacturing index (Tuesday) expected to edge up to 50.5 from 50.1. The services index (Thursday) is projected to slip to 57.5 from 59.1, though still reflecting solid growth in the sector. Fed Chair Yellen speaks on monetary policy (Wednesday, Thursday), Yellen will also address the Economic Club of Washington (Wednesday), and then she testifies before the JEC (Thursday). Her speech should reiterate that a rate hike is likely appropriate this year.

• Canada: The BoC’s policy announcement (Wednesday) highlights a busy week for Canadian data. Analysts expect no change to the current 0.50% policy setting, alongside a repeat of the bank’s constructive view on the growth and inflation outlook. The economic data calendar has November employment (Friday), expected to fall 10.0k after the 44.4k surge in October. The unemployment rate is seen at 7.0%, matching the 7.0% in October. Real GDP (Tuesday) is seen rebounding to a 2.3% growth pace in Q3 (q/q, saar) after contracting 0.5% in Q2. But September GDP (Tuesday) is seen flat following the 0.1% gain in August. The trade deficit (Friday) is anticipated to improve to a -C$1.5 bln in October from the -C$1.7 bln shortfall in September. Productivity (Friday) should rise 0.2% in Q3 (q/q, sa) after the 0.6% decline in Q2 as rising hours are outpaced by the expected retu rn to GDP growth. The current account deficit (Monday) is projected to narrow to -C$14.5 bln in Q3 from -C$17.4 bln in Q2. The Ivey PMI (Friday) is expected to improve to a seasonally adjusted 54.0 in November from 53.1 in October.

• Europe: The immediate focus is on the ECB meeting (Thursday), with markets looking to Draghi again. There remains the likely scenario for a cut in the deposit rate. Data releases this week , German HICP (Monday) , the overall Eurozone CPI reading (Wednesday) is seen at 0.3% y/y (median same), up from 0.1% y/y. Headline rates, as well as core inflation, have been trending higher, though that hasn’t stopped Draghi and Constancio from reviving talk about deflation risks in the Eurozone.

• UK: This week’s calendar features the BoE lending data for October (Monday). The Markit PMI surveys will be released too, starting with the manufacturing sector survey (Tuesday), followed by construction PMI (Wednesday) and services PMI (Friday).

• Japan: Preliminary October industrial production (Monday)is seen falling 0.5% m/m, versus the 1.1% gains seen in September. October retail sales (Monday) are expected up 0.5% y/y from the prior 1.7% gain for large retailers, and down 0.5% from -0.2% overall. October housing starts (Monday) are seen up 2.5% y/y from 2.6%, while October construction orders (Monday) are also due. The Q3 MoF capex survey (Tuesday) is forecast to rise 1.0% y/y from the previous 5.6% rise. November Markit/JMMA PMI (Wednesday) is penciled in at 52.8 from 52.4. November consumer confidence (Friday) likely advanced to 41.6 from 41.5.

• China: PMI reports (Tuesday) are on tap. The official CFLP November manufacturing PMI is expected to fall to 49.5 from 49.8. The Caixin/Markit PMI outcome is seen at 48.2 from 48.3, while the services PMI is forecast to rise to 53.0 from 52.0.

• Australia: The AUD calendar is highlighted by the RBA’s meeting (Tuesday). Analyst expect no change to the current 2.00% rate setting, but economic data has been disappointing of late so the risk is skewed towards another 25 basis point rate cut. The economic data calendar is busy. GDP (Wednesday) is expected to improve to a 0.5% growth rate in Q3 (q/q, sa) following the 0.2% gain in Q2. The current account (Tuesday) is seen narrowing to a -C$17.0 bln deficit from -C$19.0 bln in Q2. Building approvals (Tuesday) are expected to fall 2.0% in October following the 2.2% gain in September. The trade deficit (Thursday) is seen worsening to -A$2.8 bln in October from -A$2.3 bln in September. Retail sales (Friday) are expected to raise 0.3% m/m in October following the 0.4% gain in September. The TD-MI inflation gauge is expected to raise 0.1% m/m in November after the flat reading in October.

HotForex_Broker · December 1, 2015, 3:27am

MACRO EVENTS & NEWS

FX News Today

EUR traders are positioning ahead of the ECB meeting on Thursday, with markets preparing for the Eurozone central bank to cut its deposit rate and hoping for an expansion of the QE program.

Today’s European calendar , on tap U.K. manufacturing PMI, German unemployment. The final EMU manufacturing PMI, likely to be confirmed at 52.8 (median same). German jobless numbers are seen down -7K (median -6K), which will leave the adjusted jobless rate unchanged at 6.4%. The calendar also has the U.K. Manufacturing PMI, which is seen falling back to 53.5 (med 53.6) from 55.5 in October. Switzerland releases Q3 GDP numbers as well as October retail sales.

The U.S. calendar heats up today, to be released out of the U.S. we have, Manufacturing ISM, Construction Spending, and Auto Sales, although traders are mostly waiting for Friday’s NFP report, as well as Fed Chair Yellen’s comments tomorrow. Fed-speak resumes today with remarks from dove Evans of the Chicago Fed, who will be addressing current economic conditions and monetary policy from 12:45 ET. Fed Governor Brainard will next tackle the “Lower Neutral Rate and its Implications for Monetary Policy” from Stanford in California after the close from 20 ET, while VC Fisher speaks at a Financial Stability conference.

RBA left cash rate unchanged at 2.00%; RBI also held policy steady as was widely expected. The board was constructive regarding the economic outlook, saying that “prospects for an improvement in economic conditions had firmed a little over recent months and that leaving the cash rate unchanged was appropriate.” Of course, they maintained scope to ease if needed, saying the “outlook for inflation may afford scope for further easing of policy.” As for the currency, they noted the AUD is “adjusting to significant declines in key commodity prices.”

Asian stock markets are mostly higher, despite disappointing data out of China, with markets in Japan, Hong Kong and Australia rebounding after strong capex data out of Japan and as bargain hunters move in. U.K. and U.S. stock futures are also higher.

HotForex_Broker · December 1, 2015, 5:15am

AUD OUTPERFORMING THE USD, MEASURED MOVE IN PLAY

AUDUSD, Daily

The AUDUSD moves higher in the wake of the RBA, holding steady rates at 2%, as widely anticipated. The economic outlook according to the board at the RBA , are that the “prospects for an improvement in economic conditions had firmed.” As for the currency, they noted the AUD is “adjusting to significant declines in key commodity prices.” Technically, a measure move from the September lows (0.6940) to October highs (0.7380) looks to be in play, since price continues to extend the advance from the November retrenchment lows (0.7015). If price can hold above the FE 61.8% (daily) near 0.7290, this could open up the possibility for a re test of the October highs (0.7360) with 0.7450 as the extended target.

HotForex_Broker · December 2, 2015, 3:54am

MACRO EVENTS & NEWS

FX News Today

The USD traded mostly softer in Monday trade losing some ground following the November ISM missed expectations, while the U.S. stock market rallied in response to the weakness in the ISM index. The November figure dropped to 48.6, below the 50 break-even for the first time since 2012, and is the lowest since 2009. The November U.S. ADP employment survey will be the key event today, while the main market focus will be the scheduled speech from Fed Chairwomen Janet Yellen. However, the Fed Chairwomen will not commit to any specific timing on any interest rate hike, especially ahead of Friday’s jobs report and the FOMC meeting.

Notable U.S. Fed speak from Chicago Fed voter Evans reiterated that he favors later liftoff than his peers and that a gradual pace of hikes is required given downside inflation risks. He thinks it may be appropriate for rates to be below 1% by the end of 2016. He is not optimistic on a quick pick up in inflation as he judges core inflation will be just under 2% by the end of 2018. This is probably the most likely scenario.

The European calendar has prelim Eurozone Nov HCIP, and PPI, UK construction PMI, the main focus will be on the preliminary Eurozone HICP reading for November. The German and Spanish inflation ticked higher, and if confirmed, a 0.3% y/y reading in the overall Eurozone number would still be higher than the 0.2% y/y reported for October. This would then confirm the uptrend that has been visible in the last couple of months. EU core inflation also has been trending higher.

HotForex_Broker · December 2, 2015, 7:00am

GBPUSD TO DROP ON WEAKENING MACRO DATA, DESCENDING TRIANGLE SUPPORTS THE MOVE

GBPUSD, Daily

Weakening U.K. macro data, dovish guidance from BoE governor Carney, and a series of consecutive lower tops and bottoms on the GBPUSD price is creating a technical bearish descending triangle that supports my view that the pair will trend lower towards the price objections 1.4960 (Target 1) and 1.4890 (Target 2). Given that this week is filled with scheduled market moving events i.e U.S. Fed Speak, Friday NFP, which should create wide price swings, supports my view to look for an opportunity of strength to sell into around the 1.5170 – 1.5225 zone.

HotForex_Broker · December 3, 2015, 5:01am

MACRO EVENTS & NEWS

FX News Today.

The U.S. ADP employment data came in better than expected, we also saw an uptick in Q3 productivity and unit labor costs; the data gave some support for the USD on Wednesday. The U.S. Fed chair Yellen appeared to put in place the foundations for a December rate within the next two weeks hike during her speech yesterday. For the time being, the market will remain “data-dependent” with all eyes now on the jobs report due out tomorrow. Unless the jobs report is a complete disappointment, markets will continue to adjust for a rate hike.

European markets will focus on today’s ECB decision, analyst projections call for a cut in the deposit rate of at least 20 basis points, maybe even larger if there are sizeable exemptions and a widening of the pool of eligible assets under the QE program.

The EUR is under selling pressure against the USD ahead of the ECB’s policy decision; EURUSD short sellers may have been profiting-taking yesterday, however, the downtrend continues today after a short lived rebound attempt yesterday after the pair hit a new multi-month low.

Main Macro Events Today

• EUR Final EMU Services PMI: revised down to 54.2 from 54.6 reported previously but still up from 54.1 in October. The composite reading was also revised down to 54.2, but remained up from 53.9 in the previous month. So economic expansion still accelerated in November and all major Eurozone countries are reporting growth, although November readings were mixed, with the Spanish PMI coming in higher than expected at 56.7, up from 55.9 in the previous month. The Italian reading meanwhile was unchanged at 53.4, while the final French number was revised down to 51.0 from 51.3 and the German reading was confirmed at 55.6.

• EUR ECB Interest Rate Decision: a cut in the -0.2% deposit rate plus a tweak in the QE program is likely. The widening of pool of assets under QE would give Draghi more room to manoeuvre in the future and add weight to his promise to do everything needed to bring inflation back towards the 2% mark.

• GBP Services PMI: The U.K. has the Services PMI for November, which we expect to bounce back to 55.5 (median 55.0) from the 54.9 reading in October.

• USD Unemployment Claims: U.S. initial jobless claims are expected to be 269k (median 271k) in the week-ended November 28. Continuing claims are expected to rise to 2,244k for the week-ended November 21.

• USD ISM Non-Manufacturing PMI: The U.S. ISM-NMI is expected to fall to 57.5 from 59.1 in October. The July spike to 60.3 set a new post-recession high.

• USD Fed’s Yellen Testifies.

HotForex_Broker · December 3, 2015, 9:50am

EURUSD SURGES 300+ PIPS ON ECB RATE CUT AND EXTENDED QE PROGRAM

EURUSD, Daily

The ECB cut the deposit rate by 10 basis points to -0.3% from -0.2%, while leaving the key refinance rate unchanged. European stock markets have sold off in the wake of Draghi’s disappointing measures since the central bank’s cut in the deposit rate was less than anticipated and the widening of QE purchases not as aggressive as the markets would anticipate.

At the time of this writing, the EUR trades above the 1.08 level, up nearly 280 pips for the session; most of the market was caught by surprise as market sentiment had been poised for a downside move. However, the week is far from over as tomorrow’s all important and widely anticipated U.S. Non-Farm payroll report could offer traders even more surprises.

Technically, the EURUSD could possibly return towards resistance area 1.1090. For the moment, traders may seek for higher prices before entering any new short positions.

HotForex_Broker · December 4, 2015, 4:49am

MACRO EVENTS & NEWS

FX News Today

Yesterday was a historic trading day for EUR traders in the wake of the ECB’s and Mario Draghi’s surprise move that disappointed the EUR short sellers in the market, after the ECB cut the deposit rate by just 10 basis points when the market had priced in at least a 20 basis point cut. High EURUSD price action after the disappointing announcement likely blew up short sellers as the pair surged higher by 450+ pips on the day.

EURUSD short sellers will be further tested today as today’s U.S. jobs report could offer some more surprises. A stronger NFP number could flip some of EURUSD recent gains, however on the other side of the trade, if we see a big NFP drop off, we could quickly see a EURUSD pop the late October’s levels near 1. 1100.

The EUR gets a bit of further support today as the German manufacturing orders at the start of the session came in much higher than anticipated at 1.8% m/m and September data were revised sharply higher.

Fed Chair Yellen finished her JEC testimony on policy without adding anything new. She repeated several times that the economy is growing and the labor market is near full employment. Liftoff went on to say, also doesn’t mean the FOMC is embarking on a pre-determined course, and added, the trajectory will be gradual. So it looks as though it’s all systems go for a small hike.

Asian stock markets are down across the board, following on from heavy losses in the U.S. and especially the Eurozone, as Draghi’s package of easing measures fell short of expectations.

The weaker USD drove up oil prices though short covering ahead of today’s OPEC meeting has been viewed as the culprit. A lack of agreement on production cuts from the Vienna meeting, will see the global supply glut picture come back to center stage and further oil price losses may be expected.

Main Macro Events Today

• EUR German Manufacturing Orders: Surged 1.8% m/m, a much stronger rebound than expected and with the September number revised up sharply to -0.7% m/m from -1.7% m/m, the numbers tie in with the better than expected confidence readings this month. Still, this was the first improvement since June, and the three months trend rate still dropped to -2.9% from -2.7% in the three months to September. The German recovery may for once be driven by consumption, rather than exports and manufacturing, but still, these are weak numbers that suggest a slowdown in activity at the start of next year.

• German construction PMI: Jumped to 52.5 from 51.8 in the previous month. More signs that the construction sector is picking up as low interest rates fuel demand for property investment and the refugee crisis will mean additional demand for housing. Something then to counterbalance the weak manufacturing sector, which is facing a drop in demand.

• USD NFP: November nonfarm payrolls are expected to increase by 200k, with a 190k private payroll gain. Forecast risk: upward, as lean claims readings should provide some tail wind. Market risk: downward, as substantial weakness could put a December rate hike on hold. The unemployment rate is expected to remain steady from 5.0%. The workweek is expected to remain at 34.5 from September. Hourly earnings are expected to grow 0.1% which would leave a 2.2% y/y rise. Hours-worked should be up 0.1% for the month following a 0.3% increase last month.

• USD Trade Deficit: The October trade deficit is expected to hold steady from -$40.8 bln in September. Exports in October are expected to fall 1.6% while imports show a 1.3% decrease on the month. Forecast risk: downward, if October service trade captures some of the goods-trade weakness. Market risk: downward, as weaker than expected data would push back rate hike assumptions. The trade deficit has failed to narrow significantly in 2015 despite a sharp price-led drop in petroleum imports, thanks to weakening foreign demand and a strong dollar.

• CAD Unemployment: Employment is expected to fall 10.0k in November after the 44.4k surge in October. Forecast Risk: Canada’s job surge in October was driven by a 32.0k surge in public administration payrolls that was largely due to temporary work associated with the federal election. A pull-back seems in the cards as those temporary workers are let go with the conclusion of the election. But education payrolls could provide a boost, having declined 3.6k in October on top of the 51.3k plunge in September that was the largest on record. Hence, the risk is mixed given the divergent risks associated with public admin and education.

• CAD IVEY PMI: Canada’s Ivey PMI is expected to rise to 54.0 in November from 53.1 in October on a seasonally adjusted basis.

HotForex_Broker · December 8, 2015, 3:08am

MACRO EVENTS & NEWS

FX News Today

Asian stock markets are sharply down and Australian bonds posted the sharpest gains since July, as China’s exports fell for a fifth month and a sharper than expected decline in foreign exchange reserves fuelled fears about the health of the Chinese economy. Oil prices are little changed and close to the lowest level since 2009. U.S. stock futures are also lower, but U.K. stock futures are managing slight gains. Eurozone markets stabilized yesterday, with yields coming off and the DAX bouncing back from the sharp losses seen in the wake of last week’s ECB meeting. Released overnight, U.K. BRC retail sales came in much weaker than expected and should support bond futures. The calendar also has U.K. production and the final reading of Eurozone Q3 GDP.

China’s Exports fell 6.8% y/y in November, while the analysts expected for 5.0% contraction. Trade surplus narrowed to $54.1 bln in November,contrary to expectations for an increase relative to the $61.6 bln surplus in October. Exports fell 6.8% y/y in November after the 6.9% drop in October. Imports contracted at a 8.7% y/y clip in November following the 18.8% pull-back in October. The report confirms the ongoing challenges for China’s trade outlook. China’s equities are lower, with the Shanghai Composite down 1.5%. The Nikkei is down 1.0%, while the Hang Seng is off 1.7%, as Asia’s stock markets key off the declines in the US

Japan’s real GDP was revised to a 1.0% gain in Q3 (q/q, saar) from the previous 0.8% drop. An upward revision was expected, but to a very modest gain. Hence, Japan’s economy did not fall into recession after all, with contraction confined to the revised 0.5% drop in Q2 (was -0.7%). Capital spending was revised to a 0.6% gain in Q3 from the initial 1.3% drop. The improvement in Q3 growth, notably the gain in capital spending, trims the chance that the BoJ will implement further stimulus early next year. The yen is little changed, with USD-JPY holding in the 123.3 region.

US consumer credit rose $16.0 bln in Octoberafter surging $28.6 bln in September (revised from $28.9 bln), with the August increase nudged down to $14.6 bln from $16.0 bln. Non-revolving credit continued to lead the strength, rising $15.8 bln versus the $21.9 bln jump previously (revised from $22.2 bln). Revolving credit was up $0.2 bln versus September’s $6.7 bln gain.

Main Macro Events Today

EU GDP: The final reading of Eurozone Q3 GDP is out today and should confirm growth rates of 0.3% q/q and 1.6% y/y, with the breakdown expected to show that growth remains driven by consumption and domestic demand.

Canada Housing Permits: are released today and are seen dipping 1.0% in October after the 6.7% tumble in September and 3.6% pull-back in August.

BoC Governor: The Bank Of Canada governor Poloz will be speaking today on “The Evolution of Unconventional Monetary Policy. The most recent policy announcement remained cautiously optimistic regarding the expected recovery in growth and acceleration in underlying inflation through 2017.

HotForex_Broker · December 9, 2015, 3:08am

Macro Events & News

FX News Today

German trade surplus continues to widen.Germany posted a sa trade surplus of EUR 20.7 bln in October, up from EUR 19.2 bln in the previous month, as exports declined 1.2% m/m, which was counterbalanced by a 3.4% m/m drop in imports. Import numbers have been very volatile and as this is nominal data also driven by exchange rate and especially oil price developments. Unadjusted data show a trade surplus of EUR 208.8 bln in the first 10 months of hteyear, up from EUR 177.8 bln in the corresponding period 2014. The current account surplus widened to EUR 199.5 bln in the January to October period from EUR 168.8 bln last year. So Germany is likely to remain under attack for its widening trade surplus, despite the fact that for once overall growth is actually driven largely by consumption and domestic demand.

China’s CPI grew at a 1.5% y/y pace in November, slightly better than expected following the 1.3% y/y clip in October. The annual CPI growth rate had been slowing since seeing a year high 2.0% y/y rate in August (September was +1.6% y/y), and the pick-up in November suggests government stimulus efforts may have provided some lift to demand. The PPI fell 5.9% y/y in November, matching the rate of decline in October. China’s stocks are unchanged, while the Nikkei is down 1.1% and the Hang Seng is off 0.7%.

BoC Poloz downplayed the September GDP plunge, noting that it was driven by special factors. Notably, there was a fire in the oil sands that shut-down some production. That production was back on line in October, he noted. As for Q3, he reminded that the Bank projected it would be “puffed-up” by special factors, notably the child tax credit. Moreover, the weak hand-off to Q4 was also anticipated. They will review the Q4 projection for the January MPR. He reminded that “data do not go in a straight line.” These comments were consistent with his ongoing view that the economy is evolving roughly as they expected in October. In a separate answer, he counseled patience, saying that only half the impact of the policy action this year has been seen. Poloz shot down drawing any conclusion for the discussion of unconventional policy in today’s prepared remarks. “There is no need to contemplate these measures,” he said. He said all the ingredients for Canada’s recovery are in place. “We are not talking about doing that (lowering rates to the lower bound), we are making sure our tool kit is up to date,” he said. He said the bank would use unconventional again in the case of a major shock, such as was seen in 2008. On the growth trajectory, he added that “like we said last week and in October, the pieces are coming together.”

US JOLTS job openings fell 151k in October to 5,383k, following September’s 157k rebound (revised from 149k). That caused the rate to dip to 3.6% from 3.7%. Hiring rose 57k to 5,137k after declining 1k previously (revised from -32k). The rate was unchanged at 3.6% (September was revised up from 3.5%). Quitters rebounded 52k in September after falling 44k previously (revised from -51k). The quit rate was steady at 1.9%. The data are on the old side and won’t impact the FOMC, especially as the November jobs data revealed a solid round of numbers.

Main Macro Events Today

US Wholesale Trade: October wholesale trade data is out today and should show sales up 0.5% (median 0.3%) following a 0.8% drop in August. Inventories should be down 0.1% following a 0.5% addition in September. Data in line with these forecasts would leave the I/S ratio steady at 1.31 for a third month from August.

RBNZ rate decision: The Reserve Bank of New Zealand is expected to cut the official cash rate today to 2.5% from 2.75% after the governor Wheeler repeated his comment that “some further easing in the OCR seemes likely”. However, as mentioned this is not the first time the governor says this.

HotForex_Broker · December 9, 2015, 6:57am

GBP IS ATTRACTING BUYERS

AUDGBP, 240 min

The pound has found its feet after underperforming over the last several sessions. UK think tank NIESR helped as it issued, yesterday afternoon in London, an upward revision to its UK GDP estimate for the three months to November, now expecting 0.6% growth versus 0.5% previously. That would mark a tick higher from the official 0.5% growth clip seen in Q3. NIESR is also anticipating the BoE to hike the repo rate by 25 bp in February, which is well ahead of most forecasters and with (as the FT highlights) sterling markets factoring just 11% odds for such a move as soon as February.

AUDGBP has fallen to a 0.4765 support after turning lower around 0.4900. In addition to being at support the pair is trading outside the descending regression channel which suggests that the move by the latest down candle has taken the market too far down too fast. In addition the RSI is firmly in the oversold territory. This turns the focus to the area between 0.4791 and 0.4825 and we should be looking for short entry signals should the pair rally there. My targets for a successful short entry are at 0.4721 (T1), 0.4670 (T2).

HotForex_Broker · December 10, 2015, 3:14am

MACRO EVENTS & NEWS

FX News Today

Reserve Bank of New Zealand cut rates to 2.50% from 2.75%. The rate cut was widely anticipated. The reduction in the official cash rate as “monetary policy need to be accommodative to help ensure that future average inflation settles near the middle of the target range,” Governor Wheeler said. He expects this can be accomplished at the current rate setting, but assured the bank will reduce rates further if needed. On the exchange rate, he said the recent rise in the value of the New Zealand dollar has been “unhelpful and further depreciation would be appropriate in order to support sustainable growth.”

Japan’s PPI improved to a 3.6% y/y rate of decline in November from -3.8% in October. Granted, that is still troublesome for the Bank of Japan’s efforts to reflate the economy, but at least the rate of decline did not worsen. The PPI fell 0.1% m/m in November after the 0.6% plunge in November.

Australia employment surged 71.4k in November after the revised 56.1k gain in October (was +58.6k). The hefty gain in November, which was the largest one month gain since July of 2000, contrasted with expectations for a modest dip following the sizable rise in October. Full time jobs grew 41.6k in November after the 38.4k rise in October (was +40.0k). Part time jobs rose 29.7k after a 17.7k gain (was +18.6k). The unemployment rate fell to 5.8% in November from 5.9% while the participation rate rose to 65.3% in November from 65.0%. Two consecutive months of stellar job growth confirms that the RBA’s stimulus efforts are working. Moreover, it trims prospects for further cuts from the RBA next year. We see no change for an extended period. AUD-USD shot higher to the 0.7300 area from 0.7250 ahead of the report.

Main Macro Events Today

SNB Rate Decision: The SNB was in luck and Draghi didn’t quite deliver the bazooka markets had been hoping for, which meant market reaction didn’t go quite according to plan and this gives the SNB some time to watch how things develop. That doesn’t mean, there couldn’t be further easing outside a policy setting meeting if there is fresh upward pressure on the currency. BoE Rate Decision: No change is expected in the Bank of England’s 0.5% rate policy.

Canada Capacity Utilization: We expect the capacity use rate, due Thursday, to recover to 82.0% in Q3 (median 82.1%) from 81.3% in Q2. The anticipated improvement tracks the 2.3% rebound in Q3 GDP after the 0.3% drop in Q2 and the 0.7% pull-back in Q1.

US Initial Jobless Claims: Initial claims data for the week of December 5 are out today and should show claims at 268k (median 267k) for the week, down from 269k in the week prior but above the 260k reading before that. Despite improvements in claims data we tend to see increased volatility around the holiday season which accounts for some of the increase in the November average to 269k. We expect a December average of 266k which compares to our forecast for nonfarm payrolls of 190k for the month.

HotForex_Broker · December 10, 2015, 5:39am

USDJPY RATTLED BY THE MACRO DATA

USDJPY, Weekly

USDJPY has dropped below the previous trading range and has since bounce higher from another range near 121.00. Japanese core machinery orders data yesterday showed a jump of 10.7% m/m in October. The market consensus had been for a 1.5% decline, and the data follows a 7.5% m/m gain in September. In y/y terms, orders are up 10.3%. The data are encouraging, and follows a big upward revision in Japan’s Q3 GDP this week, to +1.0% y/y from the -0.8% originally reported, which shows that the country didn’t fall into a technical recession after all. The data has softened the possibility for the BoJ expanding its QQE policy in January, which is the prevailing market expectation.

In the weekly picture USDJPY has broken below a rising trendline and since made a return move to it. Price failed to move above the trendline after which it corrected lower. This creates a third lower high in the weekly picture since June this year and signals that this market is getting bearish. The nearest weekly resistance level is at 122.25 while a weekly high from September at 121.24 acts as the nearest support.

USDJPY, 240 min

The bounce from the 121.24 support suggests that the price could rally to previous support area at 122.60 – 122.80. This area is likely to be a resistance now. This area coincides roughly with the 30 and 50 period moving averages. We will be looking sell signals should the price rally to this area. My targets are 121.50 (T1) and 120.62 (T2).

HotForex_Broker · December 11, 2015, 3:07am

MACRO EVENTS & NEWS

FX News Today

German Nov HICP inflation was confirmed at 0.3% y/y, as expected. The national rate was steady at 0.4% y/y and the CPI rate excluding energy fell back marginally to 1.3% y/y from 1.4% y/y. The sharp difference between headline inflation and the ex-energy figure highlights, however, once again that lower energy prices are the main driven behind the weak numbers, which also means the risk of a real deflationary spiral is limited.

Both BoE and SNB left policy unchanged at yesterday’s council meeting, as expected. The BoE is still eying a rate hike, but is clearly in no hurry, and if anything the statement was a tad more dovish than the November inflation report. The SNB meanwhile remains ready to intervene on currency markets if necessary. The BoE minutes, released at the same time, showed an 8-1 majority in favour of steady policy, with McCafferty continuing his dissent in favour of a rate hike. The vote to maintain the stock of purchased assets at GBP 375 bln was taken unanimously, as in the last meeting. The BoE’s November inflation report was already a tad more dovish and the MPC said today that the risks to the view back then that “if Bank Rate were to follow the gently rising path implied by the prevailing market yields then inflation would exceed slightly the 2% target in two years and then rise further above it”, lie a little to the downside in the first two years. This means under the implied gentle tightening path inflation may no longer exceed target in two years’ time, but not necessarily that it won’t reach the target.

US reports revealed the expected big trade price hits from commodity prices in November before likely bigger declines in December, with broad-based price drops beyond commodities, and particular weakness in export prices. We also saw a 13k initial claims rise to 282k in the first week of December that extended the 9k bounce to 269k in the Thanksgiving week of November. The sharp 22k two-week climb for claims raises the stakes for next week’s report, though for now the rise can be attributed to holiday volatility. We still expect a 200k December payroll rise that undershoots big recent gains of 211k in November and 298k i n October as well as the 210k average year-to-date gain for 2015, but that beats the 174k Q3 average monthly gain.

Main Macro Events Today

US Retail Sales: November retail sales are out today and should reveal a 0.3% (median 0.3%) headline with a 0.3% (median 0.3%) increase ex-autos. This follows October figures of 0.1% and 0.2% respectively. Despite the firm auto sales data for November, retail sales are facing headwinds from the decline in gasoline prices and a drop in construction hours worked as we discussed in Monday’s commentary.

US PPI: November PPI should reveal a 0.1% (median unchanged) headline with a 0.1% (median 0.1%) increase for the core. This should bring the y/y figure to -1.2% from -1.6% in October which set a new recent low. Declines in oil prices over the past year have acted to hold down most inflation measures.

US Business Inventories: October business inventories should come in unchanged (median 0.1%) headline for inventories with shipments for the month down 0.2%. This follows respective September figures of 0.3% for inventories and unchanged for September. Data in line with this forecast would leave the I/S ratio at 1.38, steady from September.

HotForex_Broker · December 15, 2015, 4:00am

MACRO EVENTS & NEWS

FX News Today

The European calendar today will focus on German ZEW investor confidence and U.K. inflation data for November; USD traders will keep on eye on the CPI numbers, while the CAD could see some price action as the BoC Governor Poloz will make a speech later in the evening.

The USD is under some selling pressure ahead of today’s CPI numbers, and the EUR continues its charge higher, however, market volatility should prevail in the up-coming trading days as we move closer to the end of year FOMC highlight meeting on Wednesday. This meeting will set the trading stage for the future of the USD interest rate expectations.

U.S. stock markets finished up +103 points at the start of the week while stock markets in Asia stock ended mostly down; Japan’s Nikkei dropped by more than 1.6%. Oil prices are pulling back slightly after yesterday’s price rally, U.S. Oil is currently trading above the USD 36 per barrel mark in risk on trading.

The theme for the remainder of the week is an increase in market volatility ahead of the Fed rate decision tomorrow, however, its expected for markets to absorb the expected rate hike with ease since this event has had plenty of time to price in. Traders should never the less remain on alert as market’s surprises can never be ruled out.

Main Macro Events Today

• EUR German ZEW: ZEW Investor confidence is seen rising slightly to 11.2 (med 17.3) from 10.4 in the previous month, although analyst view the risk is to the downside as the ongoing sell off in commodities has been weighing on stock markets and investor confidence. The prospect of a Fed rate hike meanwhile has been pretty much absorbed by the markets.

• U.K. GBP CPI: We expect inflation to tick higher, forecasting the headline CPI rate to lift to 0.1% y/y (median same) from-0.1%, and the core CPI rate to rise to 1.2% (median same) from 1.1%. As the BoE has been foretelling, inflation will start to pick up as the impact of oil-driven price declines from a year ago start to drop out of y/y comparisons. The BoE is forecasting CPI to pick up through 2016, though only moderately, expecting that it will remain below 1.0% into the second half of the year.

• USD Consumer Price Index: November CPI is out today and should reveal a 0.1% (median unchanged) headline with a 0.2% (median 0.2%) increase for the core. This follows October figures of 0.2% for both the headline and the core. Energy prices have kept inflation measures depressed recently and analyst expect that trend to continue in this release with an anticipated 2% gasoline price decline.

• USD Empire State Manufacturing Index: The December Empire State Index is out today to kick off the month’s producer sentiment data. Analyst expect an increase to -8.0 (median -6.0) from -10.7 last month. Sentiment measures have been trending sidewards over the course of the fall with the ISM-adjusted average of all reports holding at 50 since September.