With the FOMC meeting its expectations of no change, the US Dollar registered its first positive daily close of the week on yesterday. The policy makers said the risk of lower inflation can’t be denied but the FOMC maintains its pledge to alter interest rate on a patient way. The RBNZ provided considerable damages to the NZD by signaling chances of near-term interest rate cut while the Aussie also weakened heavily as market players continue betting higher chances for the RBA to cut interest rate in its meeting on Feb 03. Moreover, the CAD, CHF and the GBP also weakened against its US counterpart with overall market sentiments favoring a better US numbers in future supporting near-term interest rate hike.
During the early hours of the day, New Zealand trade deficit widened more than expected and provided additional decline to the Kiwi. For the rest of the day, German Prelim CPI and the US Jobless claims along with the Pending Home sales, are likely important details to fuel forex market volatility.
As the market against turned towards the US Dollar after initial weakness, there are likely better days to support the greenback buying. However, US GDP numbers, tomorrow, can become an important information to determine near-term USD moves.
Yes, it did support the USD but weaker Housing Numbers dent the USD strength. However, today’s US GDP number will become an important signal to determine near-term USD strength.
With the RBNZ announcing plans to cut its benchmark interest rate soon, speculations concerning rate cut by the RBA also strengthened and that caused considerable decline into the AUD & NZD yesterday. Moreover, negative CPI number, to -1.0%, the most in five years, couldn’t provide more weakness to the broadly weaker Euro as the German Unemployment Change declined. The US Jobless Claims declined and provided some support to the USD but the negative Pending Home Sales wiped out the profits and the USD remained fragile at the end of the day. The NZD Building Consents also plunged negative with the Japanese Household Spending while Japanese CPI & Industrial production remained near to the previous releases and couldn’t provide much movement.
Market players may now target the Advance estimation of US Q4 2014 GDP number together with the Flash version of EU CPI in order to determine near-term market moves. Moreover, the Spanish GDP & Flash CPI together with German Retail Sales, Canadian GDP & US Chicago PMI are some other details that can provide intermediate market moves.
Should the US GDP number falls below its forecast of 3.0% the USD can witness a mild pullback while the Euro isn’t likely to strengthen even if there is an improvement in CPI reading.
With the weaker Durable Goods Orders and the lower than forecast reading of Advance GDP number for Q4 2014, the US Dollar Index (I.USDX) registered its first negative closing during seven weeks. The Euro region currency witnessed a mild pullback with the Spanish GDP numbers registering highest yearly growth figure since 2008. However, commodity currencies continue their decline with weaker china and political turmoil continued affecting the commodity prices. The Russian Central bank triggered another surprise action on Friday as it cut down the main interest-rate to 15% after pushing the rate down by 6.5% before nearly a month. Chinese official manufacturing PMI declined below 50 level for the first time since September 2012 during the Sunday release while the HSBC Flash Manufacturing PMI remained below 50 level for the second consecutive month.
Having witnessed pullback into the USD strength, today’s Spanish Unemployment Rate, UK Manufacturing PMI and the US ISM Manufacturing PMI are likely to be observed closely in determining near-term USD moves. However, important events, like RBA, US NFP and BoE, are likely to take the center stage in determining the market moves.
Hence, market players should take note of these events very seriously before plunging to any trade decision as we have been witnessing improvements in US labor market numbers and the recent pullback into the strength can become a strong buying opportunity. However, should the numbers weaken heavily, the greenback can extend its decline in a considerable downturn.
On first day of the week, Manufacturing PMIs from China, EU, UK & the US occupied the headlines of news readings wherein PMIs from EU & UK performed better than the forecast and previous readings while the US ISM Manufacturing PMI lagged behind expectations and previous reading by hurting the US Dollar Index. Moreover, weaker Chinese PMIs spurred speculations that the dragon nation may soon announce additional stimulus and helped commodity currencies (AUD, NZD and CAD) register a positive day. Also, Greek effort to restore its debt and to announce that it would deny Troika (EU, ECB & IMF) relief helped the regional currency, Euro, extend its pullback towards the positive closing against majority of its counterpart.
During the early hours of today, RBA joined hands with rest of 12 monetary authorities in announcing its rate cut and hurt the AUD & NZD; However, the decline in Australian Building Permits & Trade Balance figures was lesser than the expected number and helped causing a bit of pullback.
For the rest of the day, EU Spanish Unemployment Change, UK Construction PMI and US Factory Orders are likely to take the center stage in fueling the forex market. Should the Factory orders also decline higher the chances that the Fed would wait for some more time before announcing the Interest Rate after witnessing weaker Durable Goods Orders & GDP figure. Hence, market players should wait for the actual numbers before supporting the USD buying as the greenback seems on the correction mode and a bitter number can extend the recent decline on USD.
On Tuesday, multiple factors ranging from weaker Factory orders to rallying commodity prices continue forcing the greenback to register heaviest decline in nearly a year. With the -3.4% reading of factory order, following the plunge in Durable Goods Orders and lesser than the forecast GDP numbers, triggered considerable USD weakness while the comments from Greek PM that they aren’t rigid in canceling the on-going bailouts and aren’t thinking for Euro exit have provided noticeable strength to the regional currency Euro. Moreover, the Crude Oil surged for the fourth consecutive day as speculations surged that the weaker production may lead to Crude shortage that in-turn strengthened the Canadian Dollar. Early today, the Reserve Bank of New Zealand Governor, Graeme Wheeler said to support a static interest rate and provided considerable strength to the NZD which, together with the AUD, gained heavily during the later part of Tuesday. The Chinese HSBC Services PMI declined to the lowest in six months by testing the 51.8 level; however, speculations concerning the announcement of additional measures to fuel the economy kept supporting the commodity currencies while higher than forecast UK Construction PMI, released on Tuesday, provided meaningful support to the GBP.
With the New Zealand market numbers providing mixed signals, with Employment Change rising to five month high and Unemployment Rate increased to three month high, UK Services PMI, US ADP number & ISM Non-Manufacturing PMI and Canadian Ivey PMI reading are likely to provide busy signal to the forex market traders.
As the forex market has turned against USD with the strong support from fundamental readings, it would be better not to support the USD buying ahead of the Friday’s labor market readings; however, today’s ADP reading can trigger some pullback into the greenback. Moreover, should the UK Services PMI also beats the estimations, the GBP is likely to rally with nearly all important indicators supporting the strong UK fundamentals.
Hi FXAnil, thank you for your analysis on USD, GBP and NZD. Ideally, I think over the next couple of days the USD will struggle against the GBP. I also expect NZD to enjoy some upward movement against the USD. From a trading perspective, I would be looking at a short-term buy position, but the overall outlook is still in favor of the USD with the interest rate uptick in the horizon.
You’re welcome MiddayTrader. I also think that the USD should weaken against the GBP but for NZD is think the same could not happen as the greenback is comparatively stronger than the Kiwi; however, a break of 0.7450 can trigger the NZDUSD up-move towards 0.7600 while a close above 0.7600 becomes important for the pair. Downside support of 0.7300 & 0.7120 are imp for the pair.
Even with the weaker ADP numbers, the USD registered big gains on Wednesday as Services numbers fared better. Moreover, Services PMIs from Europe and the UK also performed considerably well and strengthened to the GBP while the Euro remained weaker as political turmoil in Greece, after the ECB said it’ll no longer accept Greek government bond as a collateral from next week, spurred worried about the future of the Greece. The NZD strengthened after the RBNZ Governor’s optimistic tone supported the commodity driven currency while the surprise cut in lenders’ reserve requirements by the Central Bank of China, the first since May 2012, supported expectations that the China has rolled up its sleeves for another measures to fuel the economy. The Canadian Ivey PMI plunged to least since February 2011 and provided additional fuel to the CAD sellers.
During the early hours of the day, the Australian Retail Sales lagged behind expectations by printing 0.2% growth which was higher than the previous release of 0.1% growth. Market players are likely to concentrate on EU Economic Forecast, published once in four month, in additional to the Trade balance figures from US and Canada and US Jobless Claims. Moreover, BoE is more likely to become a non-event and can continue supporting the recent GBP up-move; however, a surprise action or an indication can trigger strong changes into the pair’s connected to UK currency.
After the yesterday’s strong pullback, ignoring the ADP numbers, the USD is likely to reverse its previous losses and can become a good point for buying; however, labor market details, scheduled for release tomorrow, becomes important in determining near-term USD moves.
Yesterday, with another fall in US economic numbers, this time with highest trade deficit since June 2014 and Lower than forecast, but higher than previous, level of Jobless Claims, the US Dollar bulls just found an excuse to step-back from greenback buying. Moreover, some of the economists (for example, JP Morgan Chase) lowered down their forecast for US GDP. The Euro, even after being in trouble by the Greece, registered another daily gain as profit booking supported the regional currency. The GBP rallied considerably as all three PMIs released during the week surpassed previous releases and expectations, with no change in yesterday’s BoE. Market players now wait for BoE Inflation report, scheduled for release on Feb. 12, in order to witness cues for the further advance of GBP. The Australian Dollar witnessed another negative during early hours of the today as RBA, in its quarterly monetary policy statement, lowered down its forecasts for 2015 growth and inflation numbers in addition to predicting an increase in unemployment. Hence, supporting additional raft of expectations that this week’s rate cut wasn’t enough and the RBA can go for another interest rate cut in the near future.
Having witnessed RBA’s Quarterly Monetary Policy Statement, the Swiss Retail Sales, UK Trade Balance and Canadian building permits with labor market details are likely to provide intermediate moves to the market ahead of the crucial US labor market details.
Should the US NFP & Unemployment Rate observe the same trend of registering weaker readings, the greenback is likely to plunge heavily. However, an NFP reading above 200K isn’t likely to trigger more of the USD weakness. If the NFP plunges below 200K, the US Dollar can become vulnerable to extend its decline with the great vigor. Hence, market players are advised to wait for the actual readings of US labor markets before executing any trade orders.
After the US Non-farm Payrolls surpassed consensus gains in January, registering the biggest three-month increase in 17 years, the US Dollar Index reversed majority of its early week losses; however, it couldn’t close in positive territory against majority of its counterparts. The Euro remained mostly volatile during last week as newly formed Greek Government continue saying that they will scrap the bailout terms agreed previously by the old government. The new government said they will restore the tax-free threshold for individual workers and will gradually raise the minimum wage, these changes would reverse the conditions laid out under the Greece bailout program. The Greece Government will hold the emergency meeting with the euro area’s finance ministers on Feb 11. Geo-political crisis in Ukraine took another turn when Russian foreign minister warned that the U.S. and its allies are sending weapons to Ukraine. Leaders of Germany, France, Ukraine and Russia are scheduled to meet on Feb. 11 in order to form a Ukrainian peace agreement; however, Russian President said first everyone must be agree on their positions as to which country they are supporting before they indulge into discussion.
Earlier on Sunday, China registered in Trade Balance details that signaled biggest slump in more than five years into the Import numbers while the Japanese Current account details, released on Monday, tested the highest level since November 2011. For the rest of the day, there aren’t any big events scheduled for release and that could continue supporting the USD advance. However, market players should also look for any movement into the commodity currencies, AUD, CAD and NZD, before taking trade against them as rise into the commodity prices can support an intermediate up-move.
With the US Dollar losing some of its post NFP gains, the Forex market turned towards the commodity currencies on the first day of the week due to bit of improvement in commodity prices. Moreover, Chinese CPI registered the slowest pace in more than 5 years while the PPI number deepened its decline into the negative region, supporting the speculations that he dragon nation should be announcing new stimulus measures, providing additional support to the commodity front. Moreover, the risk relating to the Greece and Ukraine continue supporting the safe haven assets, Gold and JPY, after they liquidated gains on Friday. Greece said it will ask for nearly $11.3 billion of short-term financing to avoid being default that is loomed over it in nearly the end of February. The talks between the Greece Finance minister and the European leaders, on Wednesday, will be crucial. Also, the discussion between Russia, Ukraine, Greece & Germany, on Wednesday, will also play crucial role in fueling uncertainty into the market and supporting the safe havens.
Having witnessed higher than previous Australian NAB Business Confidence and the weaker Chinese Inflation numbers, the UK Manufacturing Production and a speech by one of the FOMC member will attract enough attention for the rest of the day.
It seems that the market continue punishing the USD and it would be into the best interest of the market players to avoid supporting short-term buying into the greenback; however, the longer-term investment should become a good point to consider as the overall strength of the US and speculations concerning near-term interest rate hike can continue supporting the US currency.
With the important “meetings-day” on cards, market players turned towards the risk-off mode as multiple signs showed that the Greece could agree with the intermediate solution than to become aggressive and losing its status as a Euro member. The JPY decline heavily against majority of its counterparts as pullback during the last weekend triggered the technical breakouts against the Japanese currency. The GBP, even after registering weaker Manufacturing numbers, gained considerably ahead of its quarterly inflation reports while the USD registered positive closing as JOLTS Job Openings in December vaulting to their highest level since early 2001. However, the U.S. wholesale inventories rose by 0.1%, signaling that the Q4 GDP may come out weaker than expected. Moreover, the Canadian leaders signaled that the slack in labor market and decline in crude prices can continue hurting the nation’s inflation to remain lower than BoC’s target of 2.0% while the Chinese central bank said it was ready to fight an economic/inflation downturn but will avoid taking risks with credit creation.
With the G20 meetings going on, the finance leaders pictured uncertain outlook for the global growth and signaled to take monetary/fiscal measures to tame the risk of economic downturn. The Australian Westpac Consumer Sentiment rallied to 13-month peak as the consumers remain positive after week’s cut in interest rates.
Even if there are no important economic details to be published from the major economies, meetings to solve Greece standoff and the talks of Russia and Ukraine can continue fueling uncertainty into the market. Hence, it would be advisable not to be too aggressive as any crucial announcements from either G20, Greece talks or the Russia can fuel the market with considerable moves.
With both talks on Greece and Ukraine on hold, the market players are facing indecision restricting the liquidity into the world’s largest financial market. Yesterday, the Greece failed agree on bailout package with the troika (EU/ECB/IMF) and the final talks will be held on Monday while the talks concerning ceasefire between Ukraine and Russia seems on hold even though IMF signaled its readiness to support Ukraine with additional funds to restore war damaged economy.
During the early hours of today, Australian labor market details shackled the forex market with 12.5 year high of unemployment rate and 5 months low Employment Change number. As against empty economic list of yesterday, there are many important details to track on Thursday ranging from the quarterly release of the BoE Inflation Report and the US Retails sales to the speech by RBA Governor and the EU Economic summit.
As recent uncertainties over the Greece and Ukraine have extended a bit, it would better for the investors to wait for some more time before taking any longer-term calls. However, ongoing progresses in talks continue to support the rising expectations concerning Grexit and a turf between the Russia and the west and should support the demands safe haven currencies. However, should there be a peace talks, the USD and EUR can gain considerably as market players may start investing into these assets on the hope of getting better returns. Moreover, there are more chances that the GBP will regain its strength should the BoE continue witnessing the optimistic economy. Also, should there be a decline in US Retail Sales, speculations concerning the lowered down GDP number gain momentum and that can equally hurt the USD.
Thursday was an eventful day for the Forex market that encompassed many meetings and economic readings together with some unexpected announcements. The flow of releases started from Greece talks wherein the Greece and the European leaders failed to agree on a solution to looming Greece bailout package and postponed to talks to Monday. However, the main opponent, Germany, and the Greece seems to come to a compromised solution in behind-the-scenes negotiations that could pave the way for Greece to extend its rescue program and assure its financing. In another release, the tough Russian leader agreed to Ukrainian Ceasefire after bearing much of stress during recent times from Western sanction that hurt Moscow economy in a bitter way. Further, Quarterly Inflation Report by the Bank of England remained more hawkish as it increased the forecast for Inflation and Growth with the Governor saying the next move of interest will probably be on the up-side. He also said that the interest rate hike, as supported by the robust growth numbers and improvement in labor market details, may be soon than most participants expect. The same news provided considerable strength to the GBP. In another announcement, the JPY rallied heavily against majority of its counterparts as the Bank of Japan signaled that they are thinking for a halt to more easing after introducing noticeable measures in past as further stimulus will be counterproductive to the Japanese Economy. The US Dollar witnessed considerable declines as the Retail Sales plunged below expectations and the Jobless Claims rose to three week highs. The commodity currencies, AUD, NZD & CAD, also rallied considerably as eased uncertainty fueled commodity demand.
Even after witnessing considerable releases during Thursday, many of which are still to affect market and yet to be complete, the Euro-zone Flash GDP and the US UoM Consumer Sentiment Index, together with the Canadian Manufacturing Sales m/m, are likely provide ample moves into the Forex market.
As the recent rout of actions eased some of the uncertainties over the forex market, higher are the chances that the US Dollar can liquidate some of the additional gains as market players may take risk on the back of recent optimism. Hence, it would rather be in a benefit of investors/traders to stay out of USD, except considerable gains in Consumer Sentiment, for some more time before extending their long bets.
Hello Anil, thank you for your comprehensive fundamentals data from yesterday’s events. Now that all over sudden things are looking pretty good for GBP, AUD, NZD and CAD, do you think they could continue their bullish run through next week? Personally I am fancying the USD to hit back. Just my observation. Thanks.
I think the GBP to remain strong considering recent comments from BoE, while the USD is likely to be affected by the FOMC Meeting minutes. Moreover, the commodity currencies are likely to remain sideways to negative in my opinion. Let’s see where the world goes during the current economic events filled week.
With the plunge in US Retail Sales, on Thursday, and an unexpected decline in UoM Consumer Sentiment, on Friday, pushed the greenback into negative territory while the hawkish stance of BoE Pushed GBP higher together with the strength in JPY backed by the rise in safe haven demand coupled with comments from the BoJ members that the bank may think of putting a hold to their expansionary policy as higher money will be counterproductive. Moreover, the Japanese Preliminary GDP for the Q4 2014, even after falling behind the expectations, summed up with the positive year close and signaled the end to the deflationary stage that provided additional support to the JPY. The NZD also gained considerably after the Retail Sales climbed to the highest level since August 2013 while the AUD and the rest of commodity currencies also rose backed by improving commodity prices. The Euro gained ahead of the Greece talks, scheduled for today, as both parties are more likely to avoid the risk of Grexit.
US markets are closed today due to the Presidents’ Day holiday and there are no important details to track from the market except the Eurogroup meeting that will decide the fate of Greece. Moreover, the Ukrainian crisis are still not completing their fights as government in Kiev and pro-Russian militants accusing each other of violations less than a day into the truce. Hence, any considerable move can fuel the safe haven demand heavily.
As the US market is close, and other than the Geo-politics, there isn’t anything to track, market players should support the safe haven trading, Gold and JPY, or to some extent US Dollar to gain quick profits. However, trading GBP also becomes a profitable trade if acted accurately.
Even after the US markets were closed due to President’s Day holiday on Monday, the US Dollar Index (I.USDX) remained positive as Eurogroup meeting, targeted to have an amicable solution over the Greece debt talks, remained fragile and market players bet on USD to have safe trading. The discussion between European leaders and the Greece again stalled on early Tuesday after both the parties failed to agree on a Greece debt deal as Eurogroup wants the Greece to first agree on the extension of current bailout package that expires on February end while the Greece eagerly wants to exit the bailout package and needs a bridge financing option to sustain their economy before rejecting bailout package. The Eurogroup still allowed the Greece to think before the Friday’s meeting and come up with readiness to accept the bailout extension. Hence, another rout of uncertainty is triggered into the market and this hurts the Euro in a bitter way. Moreover, the Japanese economic minister, Akira Amari, said that the current level of the Yen is productive for the export oriented economies like Japan and that in-turn supported the JPY. The minutes of recent RBA meeting, wherein the central bank announced interest rate cut signaled that the weakness in domestic spending and the pessimism over China forced the central bank to go with the rate cut; however, debate over the practice of same interest rate cut continue supporting the AUD up-move. Moreover, the ceasefire agreement between the Ukraine and Russian also failed as incidents of fight between the rebels continue to take place.
Hacing witnessed failed talks during Eurogroup meeting and inability of the Ukrainian Geo-political crisis to remain silent, uncertainty over the financial market re-ignited and that could become a cause for volatile markets for the near-term. Moreover, the UK CPI, US NAHB Housing Market Index and ZEW Economic Sentiment Indices for Germany and Euro-zone, speech by the SNB President and the New Zealand GDT Price Index are likely to provide additional details to the Forex market to remain active during the rest of the day.
Amidst the current uncertainty, improvement in economic numbers from UK & US could provide considerable strength to the GBP & USD respectively in additional to rising safe haven demand of the JPY & the Gold. However, it should be borne in mind that sooner or later the Eurogroup & the Greece have to agree on the deal otherwise it would spark a BIG negative for the Euro and many troubles for the Greece. Hence, uncertainty like this could become productive for the safe assets like USD, JPY & the Gold but the USD is on its way to a bit of pullback and it would be better to wait for the big releases out of US before supporting the USD buying.