Daily Fundamental Dose

[FxAnil]

Daily Fundamental Dose: 04 – December – 2018

Hello Traders,

Not only the U.S.-China trade truce but declining yields on American bonds & comments signaling uncertain path of the Federal Reserve’s future policy moves from some of the leading FOMC members also dragged the US Dollar Index (I.USDX) down on Monday. The greenback’s dip & optimism at trade front were aptly capitalized by the EUR, the CAD & the NZD wherein CAD had extra advantage in the form of Crude recovery after Russia & Saudi Arabia pledged to maintain global oil markets, indicating a supply-cut accord soon. However, evening reports from the White House were quite disturbing for trade-watchers as Trump administration struggled to justify what was agreed between the world leaders at G20. The same got additional skepticism after China refrained to provide any hints of 90-day period and car tariffs that Mr. Trump lauded earlier. As a result, the Australian Dollar, which was already bearing the burden of disappointing housing market stats, witnessed negative daily closing whereas GBP couldn’t benefit from earlier positivity as Brexit risks loomed large. It should also be noted that JPY & Gold marked gains on USD’s drop and fears concerning developments at Sino-US trade & Brexit.

As yesterday’s relief-rally didn’t last long and analysts started fearing for a trade-pact, not to forget Fed’s future rate-hikes, traditional safe-havens like JPY & Gold became investors’ favorites during early-Tuesday. Additionally, RBA’s hawkish economic outlook and surprise uptick in Swiss CPI strengthened market favor for the ex-USD currency-bag.

With the recent doubts over Fed’s rate-hike path, every incoming comments from a Fed policymaker gains more important, which in-turn highlights today’s press conference by the FOMC voting member and Federal Reserve Bank of New York President John Williams about local employment and labor force trends. Herein audience questions are expected and answers to the same could further provide clues for the U.S. central-bank tactics moving forward.

Other than Fed policymaker, the BoE Governor Mark Carney, together with three MPC members, are also scheduled to testify about the Brexit Withdrawal Agreement before the Treasury Select Committee. In this case, not only cues for BoE’s readiness to tackle no-deal Brexit could be observed but chances of the same outcome to happen might also gain attention.

At the economic front, UK Construction PMI seems the only left-ones and is likely to post 52.5 mark against 53.2 prior.

Hence, while fewer announcements are likely to take place from either US or China concerning trade-deal and the RBA has already played its role, questions surrounding FOMC & BoE are there to answer.

As majority of the Fed policymakers have already shown their readiness to discuss tapering the rate-hikes, additional support from the New York Fed Chief may weaken the US Dollar, which in-turn can help the JPY & the Gold. However, GBP might not benefit from the same as BoE Governor has been worried about the Brexit and could convey the fears during his today’s appearance.

In case of EUR, comments supporting ECB’s rate-hike from the Bundesbank President and hard work by the Italian & French leaders to solve their issues, namely the budget deficit problem with EU & public outrage against tax respectively, could help the regional currency to maintain its latest strength.

Technical Talk

GBPUSD’s another bounce off the 1.2715 support-line signals brighter chances of its pullback to 1.2770 but near-term TL resistance, at 1.2810, might confine the pair’s further recovery. Alternatively, a downside break of 1.2715 can quickly drag the quote to 1.2660 rest-point. Further, the AUDUSD also refrained to respect yesterday’s dip and is again rising towards 200-day SMA level of 0.7415, breaking which 0.7445-50 may gain buyers’ attention whereas 0.7340 and the 0.7310 could offer immediate supports during the pair’s decline. Moreover, GBPJPY has to provide a D1 close beneath 144.10 in order to please sellers with 143.70 & 143.15 supports else its U-turn to 145.30 & 100-day SMA level of 145.55 can’t be denied.

Have a nice trading-day ……

[FxAnil]

Daily Fundamental Dose: 05 – December – 2018

Hello Traders,

Monday’s risk-on moves couldn’t last long as absence of meaningful statements from China & Trump’s readiness to restart trade-war on failure to clinch the deal rejuvenated market fears. Not only trade related pessimism but UK policymakers’ angst against PM Theresa May’s Brexit plan and FOMC member’s hawkish statements favoring Fed’s gradual rate-hikes also supported the US Dollar Index (I.USDX) to post a positive daily closing by Tuesday-end. The EUR couldn’t avoid overall support for the greenback but JPY & Gold extended their earlier rise based on political uncertainty. Moving on, commodity-linked currencies like AUD, NZD & CAD had to bear the burden of Sino-US tussles wherein Canadian Dollar had extra load from Crude’s decline based on higher API inventories and comments from Saudi Arabia that it isn’t certain to announce production cut at this week’s OPEC+ meeting.

Given the recent lift to risk-safety, early Wednesday’s disappointment from AU GDP provided additional weakness to the Australian Dollar while NZD & CAD continued on their downturns. However, there was a change in sentiment concerning JPY & Gold as the traditional safe-havens dropped after Chinese authorities communicated optimism to sign a deal with US. The EUR & the GBP kept trading southwards as lack of big details/announcements from EU and on-going challenges to UK PM at House of Commons pushed sellers to these currencies.

While global investors reconfirmed their trust in the USD, holiday at American markets in honor of former President George H.W. Bush might challenge the momentum during the day. Though, UK Services PMI, political drama at British House of Commons & monetary policy meeting by the Bank of Canada (BoC) could entertain traders.

The UK Services PMI, core to British GDP, may rise to 52.5 from 52.2 and join the league of recent upbeat numbers from the nation but may not be able to strengthen the GBP unless Theresa May receives support for her Brexit plan. It should also be noted that her party was found in contempt of parliament by restricting full details of the agreed deal with EU leaders whereas opposition & some Tory rebels stand ready to vote her proposal down on December 11. Though, Mrs. May has been able to remain in power with the threat that if UK policymakers reject her deal, the nation won’t be able to get another one from the EU and may have to face further problems. The same could help the Prime Minister to finally push politician towards her plan, even with some mild arrangements like giving parliament a power to reject the deal and know about everything of it at a later stage.

In case of the BoC meeting, the Canadian central-bank has been hawkish so far since early 2018 and has already announced three rate-hikes during the year, which in-turn signal brighter chances of it to avoid being optimistic. However, recent data-stream from the nation and a plunge in Crude prices are the negatives that can play their roles.

Other than what’s already mentioned above, join ministerial monitoring committee meeting between the Saudi Arabia & Russia ahead of tomorrow’s full-fledges OPEC+ gathering could also determine the mood of global oil producers. Both the leaders sound positive of maintaining Crude market at G20 but none of them has clearly supported a production-cut, which US President Donald Trump also criticized.

Even if UK Services PMI favor GBP’s uptick, Brexit worries can keep the Pound under check while CAD might have to witness further disappointment if the BoC puts more emphasis on recent economic weakness & crude price-slid.

Moreover, oil producers are expected to come to a consensus for limiting the oil price-plunge and may offer intermediate strength to the quote. Due to all this, USD may enjoy being a risk-safety but JPY & Gold, not to forget EUR and commodity-linked currencies, can witness lack of buying.

Technical Talk

Following its reversal from seven-week long ascending TL support, the USDJPY may again confront the 113.20 & 113.55-60 resistances prior to targeting the 114.05-10 horizontal-barrier. However, slide beneath the 112.50-55 support-line might not hesitate fetching the quote to 112.25 & 111.80 rest-points. On the other hand, the USDCHF needs to surpass the 1.0005-10 resistance-area in order to aim for 1.0050 & 1.0080 else its pullback to 0.9950 & 0.9920 can’t be denied. Furthermore, CADJPY’s failure to dip below 200-day SMA level of 84.90 and nine-month old ascending support-line near 84.75 can trigger its U-turn to 85.60 & to 86.20-25 resistance-confluence, comprising 50-day SMA & adjacent trend-line.

Have a nice trading-day ……

[FxAnil]

Weekly Fundamental Dose: 06 – December – 2018

Hello Traders,

After a brief risk-on stint, investors turned back to safe-havens on uncertainties concerning US-China trade deal and Brexit. While these political plays can keep offering background music to determine near-term market momentum, Friday’s jobs report from the U.S. will become eye-candy for traders.

Let’s discuss fundamentals relating to them and some more.

Doubts Over Sino-US Trade-Deal Helped The US Dollar

In spite of witnessing sluggish data-points at home & dovish remarks from the Fed Chair, the US Dollar Index (I.USDX) managed to register second consecutive weekly gains on fears that whether world’s top two economies will be able to clinch a deal at G20 or not. With the USD’s rise, traditional safe-havens like JPY & Gold lost their allure but AUD & NZD marked recoveries due to short-covering at commodity-front. Though, CAD had to bear the burden of disappointing data-points. In the same line, EUR also dropped after EU Flash CPI rejuvenated doubts over ECB’s future moves whereas GBP couldn’t avoid Brexit pessimism. The Crude prices, however, stopped south-run on expectations of production-cut from OPEC+ alliance.

Successful G20 Seems Unsuccessful And The Brexit Woes Remain Present

Saturday night dinner between the U.S. President Donald Trump & his Chinese counterpart Xi Jinping offered sigh of relief to trade-watchers after both the nations agreed for a 90-day halt to their tariff-war while Mr. Trump claimed China’s readiness to cut/cancel duties on American cars & import more of farm productions from them. As a result, Monday proved to be a risk-on day for global investors; though, those moves couldn’t last long as White House members struggles to justify details of agreements at a time China was almost quiet about its commitments. Hence, USD regained its risk-safety demand while AUD, NZD & CAD dropped due to challenges at commodity front and negative economics at home. Adding to pessimism, arrest of Huawei’s chief financial officer in Canada on U.S. commands reignited differences between the two global giants.

At Britain, UK PM Theresa May continued struggling to convince British policymakers at House of Commons’ five-day debate over her Brexit deal and is likely to compromise her veto-like power to get the plan supported. Looking at other catalysts, BoJ Governor conveyed downside economic risk while RBA & BoC turned cautious on growth. Additionally, Saudi Arabia & Russia are almost ready to announce oil production-cuts but how much is the point that will be observed during OPEC gathering.

Hence, even after witnessing a successful meet between Trump and Xi at the sidelines of G20, uncertainties still loom large over their future trade-deal. Adding to that, Brexit worries, less clarity on crude output cut & central-bankers’ cautious tones have so far troubled market-players.

It’s NFP Time For Analysts!

Having observed sustained pressure of doubts over Sino-US trade-war & Brexit, Friday’s monthly reading of U.S. employment report is likely to gain major market attention as it becomes the only major indicator left to foresee Federal Reserve’s future moves after Wednesday’s holidays at America cancelled Fed Chair’s testimony. Other than that, OPEC meet and U.S. ADP Non-Farm Employment Change can offer intermediate trade opportunities on Thursday whereas Friday’s American Prelim UoM Consumer Sentiment & Saturday’s Chinese Trade Balance may provide active market sessions afterwards.

Starting with the Thursday’s U.S. ADP Non-Farm Employment Change, the early signal for Friday’s NFP is expected to dip to 195K from 227K. On the other hand, the OPEC leaders are likely to announce a production-cut but aren’t clear as to how much considering repeated push from Donald Trump to avoid such actions.

On Friday, US job numbers are mostly up for another mixed-print wherein Non-Farm Employment Change (NFP) may soften a bit from 250K prior to 200K but the Average Hourly Earnings’ growth could rise to 0.3% from 0.2% whereas Unemployment Rate might not change from 3.7%. The Canadian employment stats, to be released simultaneously, indicate weaker Employment Change figure of 10.3K from 11.2K without any change to 5.8% Unemployment Rate. Further, Prelim UoM Consumer Sentiment could drop to 97.1 from 97.5 whereas Chinese Trade Balance might also soften to $34.0B from $34.01B prior.

In case of politics, Theresa May is finally thinking to use her veto-like power to push British policymakers to support her Brexit deal if the five-day debate seem unfavorable to her. In this case, members of house aren’t allowed to wait for the decision on Irish border issue before voting on the deal, which in-turn may raise the chance of her success. However, majority of opposition members and some of Tory rebels may still turn her proposal down and hence continue highlighting the risk to Mrs. May’s position as PM.

At the US-China trade front, the dragon nation has finally started talking in favor of the Saturday’s Trump-Xi meet but haven’t yet being loud mouthed like their American counterparts. On the top of that, recent arrest of an officer from Chinese tech-giant could raise bars for a smooth discussions over 90-day’s trade-talk period. If the talks fails, Mr. Trump has already showed readiness to levy harsh measures on almost all of Chinese imports while Xi & party are also firm not to bow down against unjustifiable US demands.

Considering present political problems at the US, China & the UK, greenback’s risk-safety demand is likely to prevail for some more time; though, disappointments from American employment numbers may confine the USD’s upside. Alternatively, GBP can continue being victim of Brexit woes and same is the case with AUD, NZD & CAD when it comes to pessimism at trade-front herein CAD can witness additional downside pressure if OPEC refrains to give clear details of their expected output cut.

Technical Analysis

Short-term symmetrical triangle confines EURUSD moves between 1.1290 & 1.1420 with 1.1215 & 1.1480 being follow-on numbers to watch during either side break. On the other hand, the GBPUSD rests on important support-line, at 1.2715, but needs to provide a D1 close beneath the same in order to please sellers with 1.2660 & 1.2580 else its pullback to 1.2770 & 1.2850 can’t be denied. Further, USDJPY repeatedly respects two-month long support-line, at 112.55 now, which in-turn can help it revisit the 113.20 & 113.55-60 whereas 112.20 & 111.80 may gain market attention past-112.55.

Talking about commodity-linked currency pairs, the AUDUSD might avail 0.7180 & 0.7160 rest-points before testing the 0.7080 support-mark while 0.7340, 0.7390 & 200-day SMA level of 0.7410 could limit the pair’s near-term advances. Moving on, NZDUSD still remains above 200-day SMA level of 0.6855 that can trigger its U-turn to 0.6920, 0.6970 & 0.7000, if not then 0.6810 & 0.6750 may entertain the Bears. At last, USDCAD could continue aiming for 1.3425, 1.3480 & 1.3530 resistances unless breaking 1.3180 & 1.3060 support-levels.

Have a nice trading-day ……

[FxAnil]

Daily Fundamental Dose: 07 – December – 2018

Hello Traders,

Although arrest of Huawei’s chief financial officer continued raising doubts over the Sino-US trade-truce and helped traditional safe-havens like Gold & JPY, the US Dollar Index (I.USDX) had to mark a negative daily closing as disappointing outcomes of ADP Employment Change & Trade Balance joined cautious comments from FOMC members. The greenback decline supported EUR & GBP without any major positives from their side but AUD, NZD & CAD couldn’t ignore pessimism concerning a trade-deal between world’s two largest economies wherein CAD was badly hit after Bank of Canada (BoC) Governor suggested more gradual rate-hikes. Moving on, Crude failed to enjoy larger than expected drawdown in US inventories as OPEC leaders refrained to convey production-cut during their first-day of meeting.

During early-Friday, the USD recovered some of its latest losses on sluggish German Industrial Production & expectations of strong employment details whereas commodity front remained weaker on uncertainty surrounding US-China deal & global oil output-cut. The EUR slide on German figures and the GBP also dropped due to on-going worries for Brexit. Additionally, JPY trimmed its recent gains based on lesser than forecast Leading Indicators but Gold kept trading strong as political problems at US, China & UK favor risk-off.

Looking forward, US employment details and the OPEC outcome are likely to acquire major market attention for the rest of the day; though, Canadian Job numbers and U.S. Prelim UoM Consumer Sentiment can also offer intermediate trade opportunities. Moreover, political news from trade-front & Brexit may continue challenging investors.

The U.S. employment report is likely to portray a rosy picture of world’s largest economy with the Average Hourly Earnings expected to register 0.3% wage growth versus 0.2% prior and the Unemployment Rate bears the consensus to remain unchanged at 49-year low of 3.7%. The leading Non-farm Payrolls (NFP) might hurt the trade-sentiment if matching 200K forecast versus 250K earlier but even at that level the NFP will be above year’s average in spite of early-year hurricane impact. In case of Canadian job figures, Employment Change can soften to 10.5K from 11.2K previous and the Unemployment Rate may reprint 5.8% stat. Furthermore, U.S. Prelim UoM Consumer Sentiment could dip to 97.0 from 97.5.

At the political front, China is yet to convey its resentment towards the U.S. after Huawei CFO arrest, which if takes place could raise bars for the possibilities of a trade-deal between the two nations. In case of OPEC meet, the oil cartel is up for meeting again on Friday and may seek Russia’s support, even if it’s not in the group, in order to communicate its much anticipated 1 million barrel-a-day cut from the OPEC+ alliance. At last, Brexit debate in UK House of Commons is getting fierce for the British PM day-by-day as not only opposition but her own party-members are seeking to topple her from the power.

While expected upbeat prints of employment figures and on-going tensions at trade front can support the US Dollar strength, doubts over Fed’s future moves may confine the greenback’s advances. Further, the CAD could keep declining on BoC’s statements if job numbers meet expectations but OPEC’s production-cut, if announced, might help the Loonie a bit.

Moreover, GBP is less likely to recover unless there are any positive news for the Brexit, which isn’t expected at the moment. Due to aforementioned catalysts, safe-havens can enjoy few more days of buying and commodity-linked currencies may have to witness selling pressure for quite some time.

Technical Talk

Repeated failures to surpass 1.1415-20 resistance-confluence, comprising 50-day SMA & nearby TL, divert market attention to 1.1300-1.1295 support-zone, which if broken can quickly fetch the quote to 1.1260 & 1.1215 whereas 1.1440 & 1.1500 may please buyers past-1.1420 break. Alternatively, USDCAD has to close beyond 1.3410 in order to aim for 1.3450 & 1.3500 else 1.3330 & 1.3260 are likely coming back on the chart. With this, the EURCAD also struggles to clear 1.5235 trend-line and the 200-day SMA level of 1.5280 to target the 1.5320 that signals brighter chances of the pair’s pullback to 1.5130 & then to 1.5060, including 100-day SMA.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 10 – December – 2018

Hello Traders,

While absence of hawkish statements from FOMC members and doubts over Sino-US trade-pact were challenging sentiments in support of Fed’s future rate-hikes, Friday’s sluggish employment numbers provided additional reason to the greenback doves and fetched the US Dollar Index (I.USDX) towards a negative weekly closing. With the US Dollar bearing the burden of market pessimism, the EUR gave more weight to Italy’s progress in direction to please EU leaders with their renewed budget proposal rather than French problems but the GBP couldn’t ignore disappointing PMIs and Brexit worries. Further, the commodity-linked currencies like AUD, NZD & CAD all became victims of uncertainty over US-China deal whereas the same sentiment helped JPY & Gold to register gains. It should also be noted that Crude managed to recover most of its early-week losses after OPEC-led alliance announced higher than expected production cuts.

Having witnessed renewed tensions between US & China after the arrest of Huawei’s chief financial officer, investors got another blow early this week when Chinese vice foreign minister summoned American ambassador to protest over the issue. Adding to negativity were weaker outcomes for China’s inflation & Japan’s GDP.

Given the multiple eco-political factors stand ready to challenge trade-sentiments, the week-start has been in favor of the traditional risk-safeties, like JPY & Gold, while USD kept running southwards. However, short-covering moves were noticed in most of the major currencies except greenback and the Crude stretched its pullback forward on news of Libya’s output halt due to protests.

Even if developments at US, China & UK political fronts are likely to take the center-stage of market attention, British GDP, Manufacturing Production & Canadian housing numbers could offer intermediate trade opportunities. Out of them, UK GDP may rise to 0.1% from 0.0% earlier but Manufacturing Production could dip to 0.0% from 0.2%. On the other hand, Canadian Housing Starts could soften to 198K from 206K and the Building Permits might also shrink by -0.2% against +0.4% earlier.

With the China’s retaliation over its executive’s arrest, coupled US President’s strict attitude to have a trade-deal before March 01, chances are higher that both the economies might fail to reach much awaited trade-settlement. As a result, USD, JPY & Gold can receive safe-haven demands but greenback’s gains may be challenged by concerns over Fed’s future rate-lifts. Additionally, AUD, NZD & CAD are less likely to stretch their latest up-moves as being heavily dependent on China & international trade where prospects are dark.

In case of Brexit, Theresa May government’s fate will be sealed on Tuesday’s vote at House of Commons but fewer analysts expect parliament support to her proposal and a challenge to the PM’s power, which in-turn can keep dragging the GBP to south.

As UK & US offer lesser reasons to buyers, not to forget pessimism at commodity front, EUR can benefit if French President pleases domestic protesters and Italy regain EU policymakers’ support.

Technical Talk

Inability to cross immediate trend-line resistance, at 1.2790 now, continue signaling brighter chances of the GBPUSD’s extended south-run towards 1.2660 & then to the 1.2600. If at all the pair manage to surpass the 1.2790 barrier, the 1.2850 & the 1.2885 can still question buyers’ strength. Alternatively, NZDUSD’s U-turn from 0.6840 may help it challenge the 0.6910 resistance, breaking which 0.6940 & 0.6970 can grab the traders’ eye-share. However, pair’s dip beneath the 0.6840 could avail 0.6810 & 0.6770 rest-points. At the end, the NZDJPY’s latest pullback can’t be considered as a sign of its rally as 78.00 & 78.35 may restrict the pair’s near-term advances, which in-turn highlights the importance of the 77.25 & the 76.60 supports.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 11 – December – 2018

Hello Traders,

When everybody on the floor was waiting for Tuesday’s British House of Commons’ vote on Brexit plan, wildcard announcement from Mrs. May that scheduled voting is canceled for the time being in order to avail greater concessions from the EU triggered risk-off across the board. Adding to this, early-day disappointments from Chinese & Japanese data-points also played their roles and helped the US Dollar Index (I.USDX) to post gains while negatively affecting JPY & Gold. The EUR couldn’t ignore French protests and stronger greenback whereas GBP plunged as deferred voting highlights the risk of no-deal Brexit. On the other hand, AUD & CAD dropped based on pessimism at commodity front but the NZD refrained from declining. Furthermore, Crude prices also traded southwards as doubts grew that production-cut announcements from OPEC-led alliance isn’t sufficient to conquer present supply-glut.

With the Brexit factor out of the view till Theresa May returns to parliament, investors shifted their attention back to economic calendar and the trade-war concerns, not to forget political plays at EU & US. In case of Sino-US trade-deal, news that Chinese Vice Premier Liu He and the U.S. Treasury Secretary Steven Mnuchin talked on phone about timetable for future discussions helped AUD & NZD a bit during Tuesday-start but the pending decision over whether to allow bail to CFO of China’s Huawei kept challenging optimism surrounding a trade-deal between world’s two largest economies. Elsewhere, the European Commission showed willingness to accept Italy’s budget deficit it’s not exceeding 1.95% during next year; though, Italian policymakers are still craving for 2.0% mark after their 2.4% proposal was turned down earlier.

The economic calendar is up for releasing monthly readings of UK jobs report, US PPI, EU ZEW Economic Sentiments & Japanese PPI during the day. Among them, British Unemployment Rate & Average Hourly Earnings aren’t expected to change from their 4.1% & 3.0% levels but the Claimant Count Change may dip to 13.2K from 20.2 prior. Further, the US PPI could soften to 0.0% from 0.6% previous and the Japanese PPI might also weaken to 2.4% from 2.9% whereas EU ZEW Economic Sentiment is likely flashing -23.2 figure versus -22.0 earlier.

Given the cancellation of Brexit vote, catalysts like trade-war, politics and headline economics can witness increased response from traders. Out of them, uncertainty at trade-war can keep helping the USD but expected soft PPI may restrict the USD’s upside momentum while news on Italy seems positive for the EUR unless ZEW numbers don’t flash extremely negative numbers.

The Japanese Yen may recover some of its latest losses if USD weakens and PPI marks positive change but commodity-linked currencies, like AUD, NZD & CAD, and GBP may have to bear the burden of uncertainty at trade-front & Brexit respectively.

Technical Talk

Not only its bounce off the 100-day SMA but a successful D1 close beyond 50-day SMA also favors the USDJPY’s recovery to 113.55-60 and then to 114.00 resistance-mark while the 113.00, the 112.50 and the 100-day SMA level of 112.25 could limit the pair’s immediate downside. On the contrary, AUDUSD struggles between 50-day SMA level of 0.7180 and the 0.7230 figure including 100-day SMA with the 0.7160 & the 0.7280 likely being follow-on numbers to appear on chart after either side break. Moreover, the CADCHF seems finding it hard to extend its downturn as nine-month old support-line, at 0.7370, stands tall to challenge Bears, which in-turn can pull the quote back to the 0.7400 & the 0.7435 upside levels whereas 0.7300 & 0.7250 may entertain sellers past-0.7370 clearance.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 12 – December – 2018

Hello Traders,

Even if optimism at trade-front, Trump’s repeated attacks on Fed’s rate-hike & sluggish PPI tried hurting the greenback, the U.S. Government shutdown fears and political pessimism at UK & EU favored the US Dollar Index (I.USDX) to post another daily positive closing. At the trade-front, news that Huawei’s CFO was given a bail at Canada, Mr. Trump assured he would intervene to the arrest matter if it helps the trade deal and China showed interest in cutting duties on American cars spread positive vibes and helped the commodity-linked currencies like AUD, NZD & CAD. However, French PM’s comments that President’s readiness to calm protests will widen budget deficit and UK policymakers’ intent to raise a no-confidence motion against Theresa May negatively affected market sentiment and respective currencies, namely EUR & GBP, despite upbeat economics from Europe & Britain. With the investors’ getting good signals at trade-front, JPY & Gold had to decline but Crude witnessed pullback after surprise drawdown in industry numbers showing oil inventories.

During early Wednesday, traders favored commodity-linked currencies and Crude on hope for a trade-deal between world’s two largest economies but the US Dollar trimmed some of its latest gains with receding political tiff amid US President Donald Trump & their opponents. Though, there was little help for the EUR & the GBP due to problems at their hands.

Given the recent boost to market expectations concerning a successful Sino-US deal, developments at that front will be closely observed whereas UK policymakers’ readiness to topple Theresa May from PM seat creates additional problem for the GBP that’s still struggling with Brexit. At EU, France and Italy can keep making EU policymakers busy and disappoint regional currency buyers but upcoming ECB may restrict the regional currency’s downturn if showing hawkish mood of Mr. Draghi.

Other than trade and politics, U.S. CPI also become an important catalyst for the market. Forecasts suggest, the yearly figures might shrink to 2.2% from 2.5% and there prevails consensus of 0.0% MoM mark against 0.3% prior. The Core CPI, on the other hand, may remain unchanged at 0.2% on monthly basis but can rise to 2.2% YoY from 2.1% earlier.

If the US inflation posts soft numbers, odds against Fed’s future rate-hikes will be high considering President Trump’s criticism to the central-bank’s policy-moves. As a result, the US Dollar might witness a pullback but Mr. Trump’s threat to shutdown government if his Mexican border plan isn’t approved can keep highlighting USD’s safe-haven appeal.

To sum up, political plays at EU, US & UK, together with US inflation numbers and trade developments, can add another volatile day into the trading week.

Technical Talk

While EUR weakness dragged EURUSD southwards on Tuesday, support-line of a month-old symmetrical triangle stopped the pair’s further declines; though, the 1.1350 & the 1.1400 can challenge the quote’s recent recovery, which in-turn may fetch it back to 1.1305 formation support. Should prices slid beneath 1.1305, the 1.1260 & the 1.1215 might please sellers. Alternatively, USDCHF bounced off the 0.9865-55 rest-zone and may aim for 0.9960 ahead of confronting the 0.9970-75 resistance-confluence, including 50-day SMA & immediate TL. If at all the pair manages to conquer the 0.9975 barrier, its surge to 1.0000 & then to 1.0040 can’t be denied. Given the pair fails to sustain latest strength, the 0.9855 and the 200-day SMA level of 0.9845 could confine its downturn. At last, EURAUD’s inability to rise past 50-day & 200-day SMA keep portraying its weakness to test 1.5630 & 1.5580 supports with 200-day SMA level of 1.5845 and the 1.5870, comprising 50-day SMA, being nearby important resistance to watch during its U-turn.

Have a nice trading-day …

[FxAnil]

Weekly Fundamental Dose: 13 – December – 2018

Hello Traders,

Positive developments at US-China trade front and Theresa May’s ability to overcome no-confidence vote helped trigger market optimism but monetary policy meeting by the ECB, EU & US PMIs and American Retail Sales are still left for release. Additionally, political plays surrounding US, China, EU & UK can keep offering background music to trade-sentiment.

Let’s start discussing each one of them in detail.

Disappointments Dragged USD Down

Not only absence of hawkish comments from Fed members but sluggish prints of US monthly jobs numbers also spread disappointments that the U.S. central-bank might refrain to extend its rate-hike trajectory in 2019, which in-turn flashed a negative weekly closing of the U.S. Dollar Index (I.USDX). When USD was bearing the burden of uncertainty concerning Fed’s future moves, pessimism relating to Brexit and Sino-US trade-deal played their roles to drag GBP & commodity-linked currencies like AUD, NZD & CAD southwards. Though, JPY & Gold benefited from market risk-off due to their traditional risk-safety status whereas Crude prices also ticked up with OPEC-led alliance surprising energy Bulls with higher than expected production cuts. It should also be noted that EUR managed to rise despite not so positive economics as USD’s drop pushed traders to the regional currency.

A Volatile Week So Far

Present week has been too volatile since start as early-week retaliation by China in the matter of Huawei’s CFO arrest and scheduled parliament vote on Brexit kept supporting the risk-on mood but Theresa May’s announcement to postpone the House of Commons’ voting on her Brexit plan, together with Mr. Trump’s readiness to jump in CFO arrest case, gave a sigh of relief to investors afterwards. Though, the relief was tepid as British Tories planned to topple Mrs. May from her PM seat by raising ‘no-confidence’ vote and there were political problems between EU-Italy and amid US leaders.

By Thursday, positivity came back to its fore with Theresa May successfully winning over rebel’s effort to snatch her power and China also undertaking some measures, like importing US Soybeans & expected to announce lesser tariffs for American cars, to win over trade-deal.

With this, safe-havens like US Dollar, JPY & Gold lost some of their previous gains and commodity-linked currencies taking advantage of the same. The EUR also recovered due to Italy & EU seems finally coming closer to a budget deficit target and the GBP surged after Theresa May’s victory. While currencies & commodities were registering wild moves, Crude prices kept declining as higher than expected US inventory draw-down & doubts over energy-producers’ ability to cap supply-glut worries the oil traders.

Active Sessions Ahead

Even if upbeat sentiments at EU, UK & trade-front are likely pleasing investors now, Thursday’s monetary policy meeting by the European Central Bank (ECB), Friday’s Manufacturing & Services PMI from the EU & the U.S., together with American Retail Sales and Chinese Industrial Production, could still trouble analysts. Moreover, US policymakers are continuously pushing China for more reforms and UK PM won the no-confidence vote by not so big difference, which in-turn continue highlighting political worries to observe.

Starting with ECB meeting, the European Central Bank is expected to announce end of its 2.6 trillion euros ($3 trillion) of stimulus but investors are more concerned about Mr. Draghi’s press conference after the rate-statement. The central-bank President is scheduled to retire from his duties in October 2019 and market expects a rate-hike announcement from his before he leaves the job. In order to do so, he must maintain the hawkish economic outlook and signal preference for rate-change, which can boost EUR traders’ morale for the time being.

The Chinese Industrial Production isn’t expected to change from 5.9% but recent releases from dragon nation have been quite worrisome and can keep challenging the commodity-basket. Further, EU Flash Manufacturing PMI may recover to 51.9 from 51.8 while Flash Services PMI likely being static at 53.4. On the contrary, U.S. Retail Sales shows disappointing forecast of 0.1% expected growth versus 0.8% previous together with Core Retail Sales that’s likely declined to 0.2% mark compared to 0.7%.

In case of politics, Mr. Trump pushes US politicians to support his Mexican border plan and threatens to shutdown the government if they fail whereas presence of one rebel in every three Tories could harden the road for Theresa May’s Brexit proposal when it appears for voting in the parliament. Also, comments from U.S. Commerce Secretary Wilbur Ross were also raising doubts over Mr. Trump’s readiness to help in Chinese official’s arrest and demands from White House continue surging when they see China is already doing something to please them.

Hence, scheduled economics are less likely to activate US Dollar’s recovery but any negative developments at either trade-front & Brexit or amid domestic politicians could highlight the greenback’s risk-safety status and can also help JPY & Gold to remain strong.

AUD, NZD & CAD may benefit from presently pleasant progress at US & China’s trade talks but weakness of Chinese stats & Crude can act as challengers. At the end, ECB President should convey positive outlook for rate-hike during 2019 in order to win over the EUR bears.

Technical Analysis

Unless clearing short-term symmetrical triangle, presently between 1.1310 & 1.1430, the EURUSD is less likely to register much moves while either side breaks can open the door for 1.1230 & 1.1495-1.1500 respectively. On the other hand, GBPUSD needs to close beyond 1.2720 support-turned-resistance in order to aim for 1.2830 otherwise its additional declines to 1.2475 and the 1.2350 can’t be denied. Further, the USDJPY also has to cross the 113.95 resistance-line if it is to meet the 114.15 & 114.55 numbers whereas 50-day SMA level of 113.00, the 112.50 and the 112.35-30, including 100-day SMA & a quarter-old ascending TL, may keep limiting the pair’s short-term downside. Moving on, USDCHF couldn’t dip beneath 0.9865-55 support-zone, needless to mention about 200-day SMA level of 0.9850 rest-point, which in-turn highlights the importance of 0.9970 and the 1.0000 as adjacent upside barriers.

Moreover, AUDUSD’s reversal from 50-day SMA can help it challenge the 0.7260 & 0.7300 but downside breach of 0.7185 support might not hesitate fetching the quote to 0.7150 & 0.7100 levels. In the same line, NZDUSD successfully trades beyond 200-day SMA and continue signaling upside to the 0.6900, the 0.6940 & the 0.6970 resistances with 0.6815 & 0.6750 being expected figures to appear on chart past-0.6845 break. At last, USDCAD has 1.3320 & 1.3210 as adjacent supports contrast to 1.3440 & 1.3500 acting as nearby hurdles to north.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 14 – December – 2018

Hello Traders,

While optimism surrounding Sino-US trade deal and record U.S. budget deficit dragged the greenback down during early Thursday, dovish comments from the European Central Bank President Mario Draghi helped US Dollar Index (I.USDX) to register a positive daily closing. Mr. Draghi conveyed downside risks to euro-area economy and prospects of hard Brexit while speaking at the press conference after the regional central-bank officially announced an end to its 2.6 trillion euro QE. With this, the EUR dropped across the board but GBP refrained from registering downside as Theresa May managed to retain her position of British PM and also because EU leaders seem discussing to provide formal declaration on Irish backstop issue that may ease Brexit pressure off the UK PM. Alternatively, welcome developments at US-China trade front favored commodity-linked currencies like AUD, NZD & CAD but the same resulted losses of the JPY and the Gold. Moreover, Crude prices also benefited from concerns that world’s two largest economies are progressing to reach a trade-pact soon.

At the start of Friday, investor sentiment again turned towards risk-safety due to disappointing Industrial Production & Retail Sales from China, not to mention RBNZ’s likeliness to harden reserve requirements in order to withstand shock to economy, which in-turn triggered a plunge of AUD, NZD & CAD. Additionally, GBP also trimmed some of its latest gains after EU policymakers turned down Mrs. May’s appeal to renegotiate previously agreed Brexit proposal.

With the commodity-linked currencies, EUR & GBP witnessing selling pressure, the US Dollar maintained its strength but there was absence of buying for JPY & Gold. It should also be noted that negative news from China, world’s largest oil importer, dragged the Crude prices south on speculations of weak future demand.

Having recovered majority of its last-week losses, the USD traders are now waiting for monthly release of Retail Sales & Flash PMIs, up for later today, prior to being ready for next-week’s Fed rate-hike and clues for the 2019 policy moves. Moreover, questions are also up for the partial U.S. government shutdown if American policymakers don’t agree on Mexico border wall that Mr. President insists. Other than US catalysts, Flash reading of EU Manufacturing & Services PMIs are also scheduled for release today.

The EU Flash Manufacturing PMI may inch a bit up to 51.9 from 51.8 but no change is expected in Flash Services PMI figure of 53.4. On the contrary, U.S. Flash Manufacturing PMI could weaken to 55.1 from 55.3 with unchanged Flash Services PMI number of 54.7. Moving on, Retail Sales shows disappointing forecast of 0.1% expected growth versus 0.8% previous together with Core Retail Sales that’s likely declined to 0.2% mark compared to 0.7%.

Given the scheduled economics less likely to extend greenback strength, buyers’ attention may shift towards pessimism at Brexit & rest of the major economies in order to help the USD close in positive territory by weekend. However, welcome trade developments and government shutdown fears may limit the U.S. currency’s rally.

Technical Talk

USDCAD’s recovery from 1.3320 again fuels it towards nearby resistance-line, at 1.3400, breaking which 1.3440 and the 1.3500 may become buyers’ favorites; though, pair’s dip beneath 1.3320 can quickly test 1.3260 prior to availing the 1.3220 trend-line support as a rest. On the other hand, GBPUSD failed to surpass 1.2715-20 support-turned-resistance and could revisit the 1.2550 and the 1.2470 numbers to south but an upside clearance of 1.2720 might not hesitate propelling prices to the 1.2850 and then the 50-day SMA level of 1.2900. Furthermore, CADJPY struggles around immediate TL support of 84.80, breaking which 84.30 & 84.00 may please sellers whereas 85.15-25 and the 85.60 can keep restricting the pair’s near-term advances.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 17 – December – 2018

Hello Traders,

In addition to ECB President’s dovish comments and U.S. government shutdown fears, disappointing stats from EU & China, together with political pessimism surrounding Brexit, countered positive developments at Sino-US trade-front and helped the US Dollar Index (I.USDX) to post gains by weekend. While USD benefited from safe-haven buying, the JPY & the Gold couldn’t register much advances as greenback’s strength adversely affects traditional risk-safety measures whereas EUR & GBP dropped due to the reasons already mentioned. In case of commodity-linked currencies, AUD, NZD & CAD couldn’t please buyers in spite of a likely trade-deal between world’s two biggest economies as sluggish Chinese data-points and lowered down economic growth forecasts from global leaders point to weaker commodity demand in future. With this, Crude also failed to enjoy production-cut news at a time US inventories continue posing problems for energy traders.

With the renewed worries concerning global economic strength, investors remained on sidelines during early-Monday. However, USD witnessed pullback after news of multiple likely alterations in the team of White House officials, including Commerce Secretary Wilbur Ross. As a result, AUD, NZD, EUR & GBP took advantage of the greenback’s dip but CAD, JPY & CHF fall short of being market favorites based on their individual fundamental weakness, namely soft oil prices, sustained support for loose monetary policy and downbeat economics. Additionally, updates from UK that Theresa May government isn’t planning for another Brexit referendum eased some more tension off the Pound traders.

While presence of Fed’s much awaited rate-hike decision and few other top-tier releases highlights the importance of this week, today’s final reading of EU CPI & U.S. Empire State Manufacturing Index can entertain short-term traders. Not only this, Theresa May is likely to face problems at UK parliament after EU rejected her appeal to re-discuss previously agreed Brexit proposal. Moreover, changes in the White House team, Trump’s statements surrounding chances of U.S. government shutdown and progress at US-China trade discussions could offer intermediate market moves to observe.

EU Final CPI isn’t likely to deviate from 2.0% initial forecast but the U.S. Empire State Manufacturing Index may soften to 20.1 from 23.3 earlier. Also, Mr. Trump seems strong enough to shake White House team and announce partial government closure in order to achieve predetermined goals.

Given the lesser likelihood of U.S. President changing his earlier notions on Mexico border, coupled with British politician’s anger over Theresa May’s Brexit plan, the USD’s risk-off demand may continue to please greenback buyers. Though, weaker manufacturing PMIs & progress at trade-talks with China might confine the currency’s surge.

On the other hand, no change in inflation can continue pushing ECB President towards cautious moves and drag the EUR to south while GBP may have to g through some more pain unless Brexit problem solves.

Technical Talk

Even after reversing from 1.1270-65 support-zone, EURUSD has to clear the 1.1355-60 resistance-area in order to aim for the 1.1400 mark otherwise its pullback to 1.1265 and then to 1.1215 can’t be denied. Further, AUDUSD also took a U-turn from 0.7150 rest-point but is still to cross 0.7200 upside hurdle to target the 0.7235-40 else 0.7150 & 0.7100 may come back on the chart. At the end, AUDCHF observes BPC formation that could fetch the quote to 0.7100-0.7095 and the 0.7055 supports unless it surpasses the 0.7195 support-turned-resistances, which in-turn might fuel prices to the 0.7235 and the 0.7255 levels.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 18 – December – 2018

Hello Traders,

Not only personnel changes within Trump administration but the President’s repeated attacks on Fed’s rate-hike and disappointing results of NAHB Housing Market Index also challenged market mood on Monday, which in-turn dragged the US Dollar Index (I.USDX) down at the start of crucial week. Other than uncertainty surrounding Fed’s 2019 action-plan, fears of global economic slowdown also dominated investor performance and pushed them towards traditional safe-havens like JPY & Gold.

While growing doubts over the Federal Reserve’s future policy moves hurt the greenback, the EUR benefited from the sentiment despite witnessing slower than expected growth of EU CPI whereas GBP ticked up after Theresa May announced previously delayed Brexit vote in the parliament to hold in mid-January. Additionally, AUD & NZD took advantage of the USD’s decline but CAD had to bear the burden of Crude’s decline, based on supply-glut outlook, together with dovish comments from the BoC President.

When confidence on the trade-floor was already shaken, comments from Chinese President Xi Jinping during early-Tuesday raised bars for enthusiast. Mr. Xi, speaking at the 40th anniversary of Deng Xiaoping’s globalization efforts, sound worried for the economic well-being of China amid rising trade-protectionism and sluggish stats. He seemed pushing policymakers to undertake extra efforts to maintain the nation’s stage as world’s second largest economy. With this, commodity-linked currencies like AUD, NZD & CAD stretched their earlier rise on expectations of more easing from their largest consumer and probable US-China trade-deal. Among them, NZD has additional positive in the form of ANZ Business Confidence that surged to eight-month high.

Although start of two-day monetary policy meeting by the U.S. Federal Reserve and developments at Brexit are likely being the biggest catalysts for now, German Ifo Business Climate Index, US Housing market numbers and New Zealand Westpac Consumer Sentiment could offer intermediate trade opportunities.

The German Ifo Business Climate Index may soften to 101.8 from 102.00 and the New Zealand Westpac Consumer Sentiment is likely to extend recent trend of declining from 103.5 mark. However, the U.S. Building Permits might provide short-term strength to the USD if matching 1.27M forecast compared to 1.26M prior when Housing Starts aren’t expected to deviate from 1.23M figure.

Looking at the qualitative factors, Fed may emphasize on slowing rate-hike pace considering global economic weakness and not so strong inflation at home while Theresa May might not win over fellow politicians in the parliament votes unless satisfying some of their demands, including formal clearance of Irish border issue, right to vote on final Brexit and less proximity to EU. Also, US-China trade-front has been quiet off-late mainly due to Mr. Trump’s focus on taming Fed rate-hike and the same may delay solution within 90-day deadline.

With the scheduled economics bearing lesser importance than the broader qualitative factors, improvements in market sentiment after the stat release, if any, might be ephemeral. As a result, US Dollar could keep finding it hard to remain strong ahead of tomorrow’s FOMC outcome and the same can help ex-USD majors, together with risk-safe asset classes.

Technical Talk

Unless breaking 112.40-35 support-confluence, comprising 100-day SMA & a quarter old ascending TL, the USDJPY is less likely to revisit the 111.80 and the 111.00 rest-points, which in-turn continue highlighting the importance of 50-day SMA level of 113.00, the 113.55-60 and the 113.85 resistance-line. Alternatively, NZDUSD has to surpass immediate trend-line barrier, at 0.6860 now, in order to aim for the 0.6900 mark otherwise its pullback to 0.6755 & 0.6700 can’t be denied. Elsewhere, EURJPY dropped beneath near-term important support-line, which in-turn signals its further downturn to the 127.50 & the 127.00 whereas the 128.15 and the 128.75, including 50-day SMA, seem crucial upside hurdles for the pair.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 19 – December – 2018

Hello Traders,

With the U.S. President Donald Trump warning Fed to avoid “yet another mistake” of a rate-hike and the equities also taking their toll on global economic outlook, the US Dollar Index (I.USDX) couldn’t avoid consecutive second negative daily closing on Tuesday. While USD was bearing the burden of uncertainty concerning Fed’s future moves, the EUR & the GBP benefited from the greenback’s decline. Additionally, AUD & NZD also registered gains as soft USD favors commodity basket but the CAD couldn’t please buyers as pessimism surrounding future economic growth & higher API inventories fetched the Crude prices downwards. Moving on, JPY & Gold also surged as doubts over global economic health & weaker USD propelled traditional safe-havens.

At the start of decision-day for the U.S. Federal Reserve, investors remained worried about the central-bank’s announcement considering heavy pressure from Donald Trump and mixed economics challenging its rate-hike trajectory during 2019. As a result, the US Dollar extended its previous losses forward, which in-turn helped rest of the majors to maintain their earlier strength. However, the Canadian Dollar recovered some of its recent losses on Crude’s short-covering moves whereas JPY declined a bit after Japanese trade balance flashed disappointing numbers.

Even if FOMC decision is surely expected to take front-seat of market attention, monthly releases of UK & Canadian CPI, followed by New Zealand’s quarterly GDP, could offer intermediate trade opportunities. The British CPI is likely to test the 2.3% mark against 2.4% prior and the Canadian CPI may drop to -0.4% from +0.3%. Also, the New Zealand Q3 2018 GDP shows brighter chances of marking 0.6% growth versus 1.0% earlier.

Moving to the Federal Reserve meeting, the central-bank is almost certain to inflate the benchmark target for rates by a 0.25% margin. Though, what’s more important is how policymakers weigh Fed’s future moves and quarterly economic forecasts against the backdrop of financial market turmoil and Mr. Trump’s pressure. In order to gain more insight about these aspects, investors will closely observe the FOMC statement and Fed Chair’s press conference.

Federal Reserve Chairman, Jerome Powell, sound a bit dovish during his November appearance and is likely to be questioned about how he feels for 2019 rate-hikes. In answering them, the Fed Chair might use neutral tone if he wants to avoid confronting Trump and other doves in the panel. If at all the Mr. Powell refrains to respect President’s pressure and remain hawkish, further questions seeking details of his decision can be expected.

In light of latest market speculations, it is much debated that the Fed might announce a dovish rate-hike, i.e. a rate-hike with dovish message for future moves of the central-bank and can negatively affect the USD. However, nothing can’t be said for sure unless the event results spread out.

Given the broader expectations of a dovish rate-hike likely dragging the USD further down, rest of the currency majors and commodity basket can take advantage of the same but it should also be noted that any surprise will have higher repercussions across the board.

Technical Talk

In spite of registering pullbacks in last few sessions, GBPUSD is yet to surpass the 1.2715-20 resistance-zone in order to justify its strength in targeting the 1.2800 mark, failing to which can drag the pair back to 1.2575 support-line and then to the 1.2515 rest-point. On the same line, USDCAD also needs to provide a D1 close beyond 1.3500 to visit the 1.3540 and the 1.3600 landmarks otherwise chances of its slide to 1.3385 and the 1.3320 can’t be denied. Moreover, EURCAD’s sustained trading beyond 200-day SMA opens the gate for its rally to 1.5360 & 1.5420 numbers to north with 200-day SMA level of 1.5245 and the resistance-turned-support line at 1.5195 being nearby supports to watch during the pair’s declines.

Have a nice trading-day …

[FxAnil]

Weekly Fundamental Dose: 20 – December – 2018

Hello Traders,

In spite of ignoring Mr. Trump’s repeated attacks on rate-hikes and signaling two such changes in 2019 against broadly expected one, the U.S. Federal Reserve fall short of boosting investor confidence, which in-turn highlights the importance upcoming catalysts from the UK, the U.S. and Canada.

Before discussing those events/details, let’s have a look at immediate market moves and major news.

Global Pessimism Helped US Dollar

During last week, positive developments surrounding US-China trade-deal failed to soothe market pain as sluggish data-points from EU, China & US, coupled with political problems at America & Britain, continued being louder. As a result, traders rushed to US Dollar in search of risk-safety and trimmed their bets in favor of other majors. With the greenback’s rise, traditional safe-havens like JPY & Gold couldn’t gain buyers’ attention while ECB President’s dovish remarks were enough for the EUR to stretch its downside. On the other hand, the GBP had to bear the burden of Brexit uncertainties and commodity-linked currencies, like AUD, NZD & CAD, also remained weak on strong USD and disappointing stats from China. Finally, Crude Bulls seems requiring more than a production-cut news to shift back to energy front.

Negativity Spread To Greenback Even After Fed’s Rate-Hike

Ever since the week containing much awaited FOMC began, worries for global economic growth jumped to the front and challenged US central-bank’s rate-hikes, together with Donald Trump. The same played its role in fetching the greenback downwards till the Fed announced a quarter percentage change to its benchmark Fed rate ignoring Mr. Trump’s repeated attacks. The Federal Reserve not only raised its benchmark rate but also announced two such actions that may take place in 2019 compared to broadly expected one. Though, comments from FOMC statement and Fed Chair were slightly dovish and the economic projections also trailed backwards for the upcoming year. With this, the US Dollar continued trading down and rejected the central-bank’s efforts to rejuvenate USD.

While US Dollar was suffering from less faith on Fed’s future rate-lift trajectory, the EUR benefited from upbeat export numbers and EU-Italy peace whereas GBP witnessed pullbacks after Theresa May announced mid-January deadline for previously postponed parliament votes on Brexit. However, the JPY & the Gold became market favorites as pessimism on the trade-floor brightened safe-haven assets. Even if some of the major ex-USD currencies were marking gains, AUD, NZD & CAD failed to enjoy such liberties due to doubts over future commodity demand, including Crude, joined weaker stats from China & at home to challenge the buyers.

What Next?

Although the year’s much awaited event, December FOMC, is already over, investors still have some frontline details from the UK, the U.S. and Canada in order to continue market volatility. Among them, Thursday’s UK Retail Sales and monetary policy meeting of the Bank of England (BoE) will appear first. Then after, British, American & Canadian GDP numbers, coupled with U.S. Durable Goods Orders, Personal Income & Spending and Canadian Retail Sales, might play their roles. It should also be noted that political developments relating to US-China trade-deal, Brexit and US Government shutdown could keep offering intermediate market moves.

Starting with UK Retail Sales, the leading indicator to predict British GDP may please the Pound buyers if matching 0.3% forecast against -0.5% prior contraction; though, communication of the problems relating to hard Brexit and recently weaker data-points from the BoE could keep the Cable under check. The British central-bank isn’t expected to alter its monetary policy.

Turning towards Friday, GDP numbers from UK & US both are likely to remain intact at their initial estimates of 0.6% and the 3.5% respectively but Canadian GDP may reverse from -0.1% earlier to 0.2% growth. The U.S. Durable Goods Orders may also recover previous contraction of -4.3% with +1.6% while Core Durable Goods Orders can rise further to 0.3% from 0.2 Moreover, US Personal Income & Spending are both expected to soften to 0.3% against their previous releases of 0.5% & 0.6% respectively.

At the political front, Treasury Secretary Steven Mnuchin recently announced a Sino-US trade meeting between the world’s two largest economies in January considering latest positive developments at both the ends. However, no contact between the authorities to take place before then and the same may keep raising mixed signals to market players.

In case of U.S. Government shutdown fears, Democrats finally agreed to provide a stopgap fund bill to avert a partial federal shutdown on Friday but the bill is yet to pass and Mr. Trump wants assurance for his $5 billion demand for building U.S. border wall adjacent to Mexico.

For Brexit watchers, Theresa May is trying hard to please party rebels and opponents which pushed her to announce that she’ll reveal what concessions the present proposal got from EU which she earlier never conveyed.

Given the present market pessimism surrounding health of global economy and future moves of the Fed remain strong, US Dollar is less likely to post a weekly positive closing unless scheduled data-points flash extremely welcome numbers, which in-turn could keep fueling EUR, JPY & Gold.

Even if USD remain weak, commodity-linked currencies aren’t expected to surge considering doubts over future demand and sluggish data-points at home and at their largest consumer, i.e. China.

Technical Analysis

With its frequent bounces off the 1.1265-60 support-zone, EURUSD now aim for 100-day SMA level of 1.1485 with 1.1430 being intermediate halt; though, a downside close beneath 1.1260 might not hesitate fetching the quote to 1.1215 and the 1.1200. Further, GBPUSD is still lacking strength to surpass 1.2715-20 resistance-region, that could help it visit 1.2800, which in-turn signal brighter chances of its pullback to the 1.2570, the 1.2530 and the 1.2475. Moving on, the USDJPY’s slide under 100-day SMA highlights the importance of 111.80, the 111.30 and the 200-day SMA level of 110.85 while successful clearance of 112.45 can propel prices to the 113.00, the 113.15 and the 113.55-60 consecutive resistances.

Looking at the commodity-linked currency pairs, the AUDUSD is likely to revisit the 0.7040 and the 0.7020 before taking rest on the 0.7000 round-figure with 50-day SMA level of 0.7195 and the 0.7215, including 100-day SMA, being expected nearby resistances for the pair. On the other hand, NZDUSD tests 50-day SMA level of 0.6730, breaking which 0.6700 and the 0.6665 mark comprising 100-day SMA may please sellers whereas 200-day SMA level of 0.6835, followed by 0.6915, seem immediate upside barriers for the pair traders to watch. At the end, USDCAD has to conquer 1.3500 hurdle in order to target the 1.3540 and the 1.3610 else its profit-booking moves towards the 1.3430, the 1.3385 and the 1.3320 can’t be denied.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 21 – December – 2018

Hello Traders,

While Fed’s refrain to respect global economic risks was already taking toll on investors, U.S. President Donald Trump’s refusal to approve intermediate funds to government and renewed tensions between US & China damaged trade sentiment and the US Dollar further on Thursday. Mr. Trump took another dramatic step by turning down stopgap funding bill until senate approves his Mexican border plan, which in-turn spread the risk of government shutdown on Saturday of policymakers continue remaining at loggerheads by Friday night. Elsewhere, the U.S. Justice Department accused two Chinese officials of taking part in stealing intellectual property and other crucial information from various companies and few government agencies.

With the negative vibes from trade, monetary policy & American government threatening investor optimism, safe-havens like JPY, Gold & CHF were mostly in demand. Not only risk-safe assets but AUD & NZD also recovered some of their earlier losses as weaker greenback favors commodity-basket; though, CAD couldn’t ignore Crude’s drop on sluggish outlook for future demand. Moreover, EUR took advantage of USD’s dip whereas GBP benefited from upbeat UK Retail Sales but the pound’s gains were limited after BoE sound worried about ‘no-deal’ Breixt.

Having witnessed criticism from their American counterparts, China turned red on world’s largest economy during early Friday and demanded withdrawal of any such allegations relating to IPR theft & hacking. The same were separated from trade by Treasury Secretary Steven Mnuchin but market players seemed less agree on it and weighed brighter chances of a failed trade-talks between the U.S. & China.

Looking forward, in addition to trade-war fears & political pessimism, upcoming announcements of UK, US & Canadian GDP, together with U.S. Durable Goods Orders, Core PCE & Personal Income-Spending, are likely to offer a busy Friday.

The UK & the U.S. GDP are less likely to deviate from their earlier estimations of 0.6% & 3.5% while Canadian GDP may rise to +0.2% from -0.1% prior. Moving on, U.S. Durable Goods Orders may also recover previous contraction of -4.3% with +1.6% while Core Durable Goods Orders can advance to 0.3% from 0.2%. Moreover, US Personal Income & Spending are both expected to soften to 0.3% against their previous releases of 0.5% & 0.6% respectively. Additionally, Core PCE Price Index, Fed’s preferred measure of inflation, might improve to +0.2% from +0.1%.

Considering lesser likelihood of a peace between the US policymakers, not to forget among US-China leaders, present market fears aren’t expected to fade soon, which in-turn can continue dragging the US Dollar downwards. However, upbeat economics may help restricting the greenback’s plunge.

Alternatively, Brexit fears are again at the forefront and weaker UK GDP may prove more harmful for the GBP. Furthermore, commodity-linked currencies, safe-havens & EUR can continue being beneficiaries without performance unless US Dollar regains its strength.

Technical Talk

Not only USDJPY but USDCHF also bounced off the 200-day SMA and registered pullbacks in direction to 111.60 and the 0.9900 mark respectively. Should prices manage to surpass their near-term resistances, the 112.00 and the 0.9940 may reappear on charts whereas extended downturns beneath 110.90 & 0.9865 SMA numbers can fetch the quotes to 110.00 & 0.9815 levels in the earlier order. On the other hand, GBPNZD struggles around 1.8630-10 resistance-turned-support, breaking which it can drop to 1.8500 and the 1.8380-60 but an upside clearance of 1.8820-30 may propel the pair to the 1.8970-80 and then to the 1.9000 psychological mark.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 24 – December – 2018

Hello Traders,

Sentiment in financial markets remained fragile during last-week as worries over US-China trade-war, fears of Fed’s rate-hike to take toll on economic performance and U.S. Government shutdown pushed investors to risk-safety. With this, the US Dollar Index (I.USDX) had to forgo previous gains and mark negative weekly closing while safe-havens like CHF, JPY & Gold registered rallies. The EUR, on the other hand, benefited from the greenback’s plunge despite witnessing no upbeat economics and the GBP also ignored Brexit pessimism & BoE’s dovish remarks by taking advantage of welcome stats. However, the commodity-linked currencies, like AUD, NZD & CAD, failed to please buyers as broader negativity concerning future demand and Sino-US tussles over IPR theft joined hands with sluggish details at home. Moving on, the Crude prices slumped as doubts on demand-supply mismatch grew stronger amid consensus of global economic slowdown and increasing US stockpiles.

As if aforementioned catalysts were small to dismantle traders’ optimism, speculations that the U.S. President Donald Trump is planning to oust Fed Chairman Jerome Powell resulted additional damages to market performance by the weekend. Though, Treasury Secretary Steven Mnuchin & White House Budget Director Mick Mulvaney came forward to appease investors by turning down any such actions or intentions from the President.

Having witnessed slew of negative news, trade-moves remained mostly silent around early-Monday as comments from American policymakers and holidays at major bourses gave little room for activity. Though, the U.S. market is still open today and with issues relating to trade and government shutdown looming large, chances of active trading hours around later day seem brighter.

In case of its trade-talks, China recently said vice-ministerial talks has been on between world’s two largest economies in order to have lesser differences when they meet in mid-January. Alternatively, U.S. maintains its allegations of IPR theft on two Chinese representatives and demand hard efforts from the dragon nation to please Mr. Trump before they confront him.

Talking about government shutdown, majority of the U.S. officials are off the work due to Mr. Trump’s refrain to sign intermediate funding bill unless policymakers approve funds for his Mexican border demand. Some among the White House have already conveyed that the issue may stretch a bit longer till new government takes control of lower house, January 03, and the same can raise more bars for the fund approval which is highly criticized by Democrats.

Other than U.S. developments, Brexit is also a live case where Theresa May is struggling to get British politicians behind her proposal before it appears for parliamentary vote. Herein, lesser leaders are likely to support her plan unless EU rectifies demand, which the region has already turned down.

Hence, while holidays at major bourses and lack of big releases can continue trade-sentiments, U.S. developments can play their role and offer intermediate moves this Christmas-eve.

Technical Talk

AUDUSD’s refrain to slid beneath 0.7020 can’t be considered as a sign of its strength even for a short-term unless the pair crosses 0.7085 trend-line resistance, which in-turn continue highlighting the importance of 0.7020 & 0.7000 supports for the pair traders. In case the pair surpass 0.7085 upside barrier, the 0.7125 and the 0.7150 may mark their presence on the chart whereas 0.6960 is likely being on Bears’ radar past-0.7000 break. Same is the case with NZDUSD that reversed from 0.6700 but yet to conquer the 0.6750 hurdle to confront 200-day SMA level of 0.6830. As a result, the 0.6700 and the 0.6665 can keep their place intact on sellers’ favorite-list. Furthermore, GBPCAD has to provide a daily closing beyond 1.7225-30 resistance-confluence in order to aim for the 1.7310 and the 1.7420 numbers to north otherwise its pullback to the 1.7160, the 1.7050 and then to the 1.7000 consecutive supports can’t be denied.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 26 – December – 2018

Hello Traders,

China’s efforts to please Trump administration before January meet seem falling short of restoring investor confidence during holiday season as lack of economics & political tumult at the U.S. continue challenging trade-sentiment and drag the US Dollar Index (I.USDX) down. While US President Donald Trump kept showing his uneasiness with Fed’s policy measures and Treasury Secretary Steve Mnuchin trying hard to assuage rising anxiety, partial shutdown of the U.S. government and speculations of darker days for global economy pushed traders to safe-havens like JPY, CHF & Gold. It should also be noted that EUR & GBP received prize without performance on greenback’s decline but AUD, NZD & CAD couldn’t avoid fears of Sino-US trade-war as the While House still wants China to accept its role in IPR theft. On the other hand, Crude remained despicable to market-players considering a higher toll on energy demand due to expected future economic weakness.

Even if it was Christmas-day, Mr. Trump didn’t allow FOMC members to take a sigh of relief and tweeted that the Fed will “get it pretty soon.” As a result, concerns grew that the Republican leader may prove early-week Bloomberg news right which mentioned Mr. Trump is in the process to take measures against Fed Chair Jerome Powell. With little on hand, due to year-end inactivity, earlier pessimism surrounding a cold war between US political & monetary authorities, the first of its kind, hurt the USD, Crude & commodity-linked currencies, like AUD, NZD & CAD.

Contrast to previous moves, commodity-basket witnessed pullback during early Wednesday after China released new rules promising to treat all companies equally and removing some more barriers for their trade-deal with world’s largest economy. Alternatively, Bank of Japan Governor Haruhiko Kuroda also sought to boost JPY further as he said Japanese mechanism is strong enough to resist global stock market shocks.

Looking forward, US S&P/CS Composite House Price Index and Richmond Manufacturing Index are the only releases scheduled for publish when majority of EU, Canada & UK are busy celebrating year-end holidays. The S&P/CS Composite House Price Index may soften to 4.8% from 5.1% prior but the Richmond Manufacturing Index could recover some losses if matching 16 forecast against 14 previous-mark.

Although economic platter indicates mixed outcomes, uncertainty on how long US Government shutdown will last and whether Trump administration shall continue challenging monetary policy & China could keep dominating immediate trade-sentiment and push investors close to risk-safety. With this, the US Dollar is likely having some more room to downside before regaining its favorite spot in the minds of traders’ fraternity.

Technical Talk

In spite of registering failure to surpass 100-day SMA, short-term ascending trend-line, at 1.1380 now, seem limiting the EURUSD’s immediate declines, which if broken can fetch the quote to 1.1330 & 1.1300 supports. Alternatively, the 1.1425 and the 1.1445-50 are likely nearby resistances for the pair to conquer in order to aim for 1.1500 round-figure. Further, USDJPY dropped beneath 200-day SMA and the 110.00 could soon appear on Bears’ radar, breaking which 109.70 & 109.30 might please them. Should the quote takes U-turn from present levels, the 110.95-111.00 area including 200-day SMA, can continue restricting its near-term advances prior to fueling prices to 111.55-60 resistance-zone. Moreover, GBPNZD heads to another important upside hurdle, namely the 1.8970-80, before targeting the 1.9000, the 1.9060 & the 1.9150 consecutive numbers to north but the pair’s dip below 1.8730 highlights the importance of 1.8630-15 region for one more time.

Have a nice trading-day …

[FxAnil]

Weekly Fundamental Dose: 27 – December – 2018

Hello Traders,

Not only easing pressure at Sino-US trade front but White House confirmation that Fed Chair’s job is 100% safe and Mastercard details showing upbeat U.S. holiday shopping also triggered relief rally on Wednesday. As a result, rejuvenated risk-sentiments and trade-resumption after brief Christmas holidays at major bourses, not to forget few second-tier economics, can offer active markets to investors during the year-end period.

Let’s start discussing what happened in recent days prior to jumping on fundamentals concerning rest of the week’s details/events.

Fed’s Failure To Placate Pessimists Dragged USD Downwards

Even after announcing a quarter percent hike to benchmark Fed rate and promising two such rate-lifts during 2019, the Federal Reserve couldn’t please the pessimists weighing such actions to take toll on global economic growth. Other than FOMC’s refrain to respect Donald Trump’s repeated pushes off the rate-lifts, U.S. government shutdown & Sino-US tussles also disappointed greenback buyers and registered a weekly negative closing of the US Dollar Index (I.USDX). With the USD’s decline, EUR benefited without performance but the GBP respected welcome Retail Sales and GDP with a rise in currency value. However, AUD, NZD & CAD couldn’t enjoy such liberties as allegations of IPR theft on China and sluggish data-points at home dragged these currencies downwards. It should also be noted that Crude prices stretched their south-run forward as growing doubts on demand-supply mismatch and steadily increasing US output threatened energy traders. In all these, JPY, CHF & Gold remained as market favorites due to their safe-haven appeal.

After All The Negativity, It’s Finally A Relief That Played Its Role

Having witnessed tumultuous week, early-days of the present week were also not too good as Trump’s hate for Fed, refrain to sign intermediate spending bill for government re-start and frequent changes at White House team continued troubling investors and hurting the USD. However, it was Wednesday when markets finally received some good news when White House adviser Kevin Hassett assured of Fed Chair’s job and news circulated that U.S. delegates will reach China in two weeks to discuss much awaited trade deal. Adding to that, Mastercard report showed upbeat U.S. buying during holidays season.

While recent surge in the USD & renewed risk-sentiment pleased investors on Thursday, the US Dollar is still down on a weekly closing basis as Mr. Trump is still avoiding intermediate spending bill unless he gets the fund for Mexican border. With this, the EUR & GBP are also up and so do the safe-havens like JPY, CHF & Gold. Though, NZD & CAD still bear the burden of weakness at commodity front, including Crude, but China’s efforts to please US with new norms for companies and some other amendments to their policies helped AUD recover some of their latest loses.

What Next?

Although markets welcomed overnight news from the U.S., uncertainty surrounding US-China trade-deal and government shutdown, not to mention slew of weaker stats from China, can still challenge trader fraternity when major bourses are up after Christmas holidays. At the data-front, U.S. CB Consumer Confidence, Chicago PMI & Pending Home Sales, coupled with Japan’s Tokyo Core CPI, Unemployment Rate & Preliminary Industrial Production, can play their roles as well.

Starting with scheduled stats for Thursday, U.S. CB Consumer Confidence could weaken to 133.0 from 135.7 while Japan’s Tokyo Core CPI is expected to soften to 0.9% from 1.0% and the Preliminary Industrial Production might contract with -1.6% versus +2.9% prior growth. Additionally, Japanese Unemployment Rate bears the consensus of no change from its 2.4% mark.

Moving on to Friday, U.S. Chicago PMI & Pending Home Sales are likely to close the week with forecasts favoring 61.2 number for Chicago PMI vis-a-vis 66.4 earlier and a 1.1% growth for Pending Home Sales compared to -2.6% previous contraction.

In case of politics, Brexit issues are calm unless Theresa May announces any new trick to please parliament members to vote in her favor during January Brexit voting. Alternatively, US White House is still trying to convince investors that Donald Trump isn’t in a process to oust Fed Chair. Moreover, Democrats are in no mood to release tax-payers’ funds for Mexican border but the U.S. President Donald Trump is also not ready to accept any intermediate funding till his border demand gets approved. Furthermore, China is finally realizing importance of a trade-deal with the U.S. as recent stats from world’s second largest economy have started showing impact of a trade-war. Though, their US counterparts are less cordial and continue to allege China over IPR theft case, which in-turn may create problems for future deal when they face Beijing in January.

To sum up, recent relief from the U.S. and opening of major bourses can offer active trading sessions during year-end period but the present positivity can still be challenged by US government shutdown and chances of no-deal between world’s two largest economies.

Additionally, scheduled economics are also likely not to add much strength into the respective currencies and hence highlight safe-havens till any more positive news flow from the U.S.

Technical Analysis

Break of fortnight long ascending trend-line signals brighter chances of the EURUSD’s dip to re-test 1.1300 and 1.1260 support-levels but 1.1215 might confine the pair’s further downside. On the contrary, the 1.1400, the 1.1445-50 and the 1.1500 seem immediate resistances to watch during the pair’s U-turn. Likewise, GBPUSD also confirmed short-term “Rising-Wedge” break and may drop to 1.2530 and the 1.2475 rest-points but an upside clearance of 1.2690 can again fuel prices to the 1.2745 resistance and then to the 1.2810 number to north. Further, USDJPY defied 200-day SMA level of 111.00 and could revisit the 111.80 and the 100-day SMA level of 112.40 whereas 110.30 & 109.80 might please sellers under 111.00.

Meanwhile, AUDUSD still has to close beneath 0.7020 in order to aim for the 0.7000 round-figure and 0.6900 mark comprising 61.8% FE until then 0.7080 & 0.7150 can keep being buyers’ favorites. NZDUSD also slid below 50-day SMA and may test the 100-day SMA level of 0.6665 ahead of highlighting the 0.6600 support while 0.6750, including 50-day SMA, and the 0.6830 barrier comprising 200-day SMA could act as strong resistances for the pair. Moving on, USDCAD is likely to challenge 1.3620 for one more time, breaking which the 1.3640 and the 1.3800 can flash on Bulls’ radar with 1.3560, 1.3500 and the 1.3440 being adjacent supports to play their role in case of price reversal. At last, USDCHF bounced off 200-day SMA and could aim for 50-day SMA level of 0.9980 before diverting market attention to 1.0000-10 territory whereas 200-day SMA level of 0.9865, followed by 0.9820 and 0.9790-80, might restrict the quote’s near-term declines.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 28 – December – 2018

Hello Traders,

Wednesday’s risk-on rally fall short of pleasing investors on Thursday as renewed tensions at Sino-US trade front joined hands with sluggish U.S. consumer confidence & brighter chances of an extended government shutdown at the world’s largest economy. As a result, the USD had to forgo previous gains while JPY, CHF & Gold held their favorite spot in the minds of buyers. Market started responding steepest decline of the U.S. CB Consumer Confidence in 40+ years and then the news broke that Trump administration is planning to release an executive order declaring national emergency during 2019 barring American companies from availing any products of China’s giant technology firms like the Huawei and the ZTE. Additionally, White House is still at loggerheads with Democrats and the government shutdown is less likely to be resolved before first week of 2019 as majority of policymakers are off for holidays.

With the renewed pessimism concerning trade-deal between world’s two largest economies, AUD, NZD & CAD declined whereas EUR & GBP took advantage of the greenback’s dip. Furthermore, Crude prices also failed to stretch earlier pullback forward after API registered a hike in oil inventories and doubts over the strength of global economy signal weaker demand in future.

During early Friday, China took another step to amuse trade watchers by saying they have made concerted efforts to end the U.S. standoff and may take some more steps to get the trade-deal. At the data front, Japan’s Industrial Production shrank lesser than expected but Retail Sales & Unemployment Rate disturbed the optimism.

Looking forward, U.S. Chicago PMI & Pending Home Sales are the only data-points left for entertaining short-term traders wherein the Chicago PMI may flash 61.4 mark against 66.4 but the Pending Home Sales could grow by +0.9% from -2.6% prior contraction. Moreover, weekly release of US Crude Oil stockpile might offer intermediate strength to energy basket if meeting the -2.9M consensus versus -0.5M prior.

In case of politics, U.S. Republicans may undertake their last-minute step to get Mexican border funds in order to restart the government failing to which can postpone the efforts till Wednesday due to year-end breaks. Also, Trump administration might praise China as the nation has recently taken many steps to get closer to a good trade-deal; though, they are still far from negating their role from IPR theft and the same can push White House policymakers to criticize the dragon nation.

Hence, few second-tier data-points and on-going political plays at the US, be it concerning trade-deal or government shutdown, can offer some more market moves, mostly in favor of the safe-havens, before welcoming 2019.

Technical Talk

GBPUSD’s recovery from 1.2615 may find it hard to remain for long unless conquering the 1.2685 and the 1.2740 resistances, which in-turn highlights the importance of 1.2615 & 1.2600 supports for the pair traders. On the other hand, USDCAD also needs to justify its strength by maintaining its strength beyond 1.3640 in order to aim for 1.3800 else chances of witnessing a pullback to 1.3560 & 1.3500 can’t be denied. Moving on, NZDCHF could take a U-turn from either the 100-day SMA level of 0.6590 or the medium-term support-line figure of 0.6570, if not then 0.6540 & 0.6500 might please the sellers. Alternatively, the 0.6700 and the 0.6730-35 resistance-confluence comprising 50-day & 200-day SMAs, are likely numbers to appear on the chart during the quote’s reversal.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 02 – January – 2019

Happy New Year Traders,

Final week of 2018 couldn’t please the greenback Bulls as on-going worries concerning US-China trade-war and the U.S. government shutdown joined sluggish economics to flash another negative weekly closing of the U.S. Dollar Index (I.USDX). While USD was bearing the burden of political pessimism and doubts over Fed’s future moves, the EUR & the GBP took advantage of this decline without registering any big positives but commodity-linked currencies like AUD, NZD & CAD stretched their downturn further as troubles for their largest consumer, China, played their roles. Further, JPY, CHF & Gold marked heavy gains as market fear favored safe-havens whereas Crude couldn’t stop its south-run due to expectations of demand-supply mismatch.

At the start of 2019, Asian investors witnessed lack of confidence after disappointing Manufacturing PMIs from China carried signals of darker future forward. Not only downbeat numbers from China but sustained close of U.S. government and recent threats from North Korea and China also offered additional push to risk-off moves.

Looking forward, the U.S. President Donald Trump has finally called representatives of both the parties to negotiate a deal that could re-open government offices but he still remains firm on his demand of funds for Mexican border, which in-turn might continue leading bargain hunting at the parliament. On the other hand, North Korean leader said the nation would take a “new path” in nuclear talks if White House doesn’t soften economic sanctions while Chinese President lauded their technological advancements and showed readiness to confront future trade negotiations.

At the economic front, it seems a day of Manufacturing PMI as Germany, EU, UK, Canada and US are all lined up for releasing final reading of their respective Manufacturing PMI numbers. Among them, German & EU stats are less likely to deviate from their 51.5 & 51.4 readings but the UK reading could threaten GBP traders if matching 52.5 forecast compared to 53.1 prior. Moreover, the Canadian Manufacturing PMI may follow the suit by printing a lesser number than 54.9 but the U.S. Final Manufacturing PMI could remain unchanged at 53.9.

Even if most of the scheduled Manufacturing PMIs are expected to push present risk-off sentiment forward, that can hurt the commodity basket and USD, Mr. Trump’s ability to re-start U.S. government offices may help the greenback to recover some of its latest losses during the first trading-day of 2019.

Technical Talk

AUDUSD struggles around 0.7020 & 0.7000 supports, breaking which it can drop to 0.6930-25 whereas an upside clearance of 0.7080 may trigger the pair’s pullback moves to 0.7110 and then to the 0.7150 resistances. In the same way, NZDUSD also flirts with 0.6700 & 0.6690 rest-points that can fetch it to 0.6630 while 0.6730 & 0.6750 could keep restricting the pair’s near-term advances. On the other hand, EURNZD has to provide a daily closing beyond the 1.7110-25 resistance-region, comprising 200-day SMA, in order to aim for the 100-day SMA level of 1.7210 & the 1.7260-70 resistances otherwise the 1.7000 psychological mark & the 1.6880 support might regain sellers’ attention.

Have a nice trading-day …

[FxAnil]

Daily Fundamental Dose: 03 – January – 2019

Hello Traders,

First trading day of 2019 proved to be good for the US Dollar as optimistic comments from the Donald Trump concerning trade deal with China, stock market & North Korea pushed investors to the greenback. However, JPY & Gold didn’t lose their allure as overall risk-sentiment remained confined due to on-going U.S. government shutdown and White House policymakers’ refrain to praise China’s recent reforms to ease the trade-tussle. Adding to pessimism was sluggish manufacturing numbers from the dragon nation, Canada, EU & the U.S. As a result, commodity-linked currencies like AUD & NZD had to extend their previous south-runs but CAD benefited from Crude’s pullback on news of Saudi Arabia’s planned export-cut. Moving on, the EUR couldn’t ignore weaker Manufacturing PMIs while GBP failed to take advantage of exceptional surprise from the same PMI thanks to Brexit uncertainties.

During early Thursday, global market witnessed a ‘flash-crash’ in the pairs connected to AUD & JPY. The slide wasn’t backed by any big news but lack of liquidity during Japanese holidays was assumed to trigger big algorithmic orders. Some also argued that a cut in growth forecast from Apple Inc. could also be considered as a reason for the bloodbath.

In addition to AUD & JPY, rest of the financial markets also faced heavy selling pressure and the same favored safe-havens like JPY, CHF & Gold while negatively affecting the commodity basket, including Crude. The US Dollar, however, remained more or less on the positive side mainly due to its risk-safety status but there was no respite for the EUR and the GBP.

Even if markets are gradually recovering from early-day plunge, UK Construction PMI, US ADP Non-Farm Employment Change & ISM Manufacturing PMI are still left to perform their duties, not to forget political plays surrounding Sino-US trade, U.S. government shutdown and US-North Korea tension.

The UK Construction PMI is expected to register the 52.9 mark against 53.4 prior whereas U.S. ISM Manufacturing PMI may weaken to 57.7 from 59.3 but no change is likely to take place in 179K figure of ADP Non-Farm Employment Change.

In case of politics, Mr. Trump couldn’t get his $5 billion for Mexican border passed during Wednesday’s parliamentary meet without which he isn’t ready to restart the government. On the other hand, White House officials continue to undermine Chinese efforts to please the U.S. President which in-turn may give rise to rough talks when representatives from world’s top two economies gather to discuss trade-deal. Moreover, Mr. Trump said he received a “great letter” from North Korean leader Kim Jong Un that signals good relations between both the countries. He also showed eagerness to visit the hermit kingdom for the second time to strengthen the ties.

Hence, while early-day volatility and on-going political pessimism can continue helping the safe-havens and hurt commodity front, chances of USD’s recovery can’t be denied if scheduled numbers post welcome outcome & Mr. Trump agree to restart the government. Alternatively, GBP is less likely to benefit from the PMI unless any positive news from Brexit erupts.

Technical Talk

USDJPY needs to surpass 107.90 in order to overcome its ‘flash-crash’ woes and revisit the 108.80 & 109.50 otherwise pair’s slide beneath 106.70-50 support-zone might not hesitate fetching it back to the 105.60, the 105.30 and then to the 104.75 numbers to south. Further, USDCHF also has to conquer the 0.9935 trend-line barrier if it is to aim for 0.9960 & 1.0005 else 0.9790 & 0.9760 can come back on the chart. At last, NZDCAD may bounce towards 0.9170, 0.9220-25 as not only 0.8995-90 support-zone, incl. 50-day SMA & upward slanting TL, but 200-day SMA level of 0.8900 & 0.8830-20 rest-region also stand unbroken.

Have a nice trading-day …