Even with the US ISM Non-Manufacturing PMI expanded in July at the strongest pace in a decade and the Atlanta Fed chief Dennis Lockhart, a voting member at the FOMC, also supported September interest rate lift-off, the USD witnessed a weaker closing for the first time in a week as the ADP number, generally considered to be an advanced signal for NFP, tested the trailed behind consensus and prior levels. Services PMIs from EU remained well above the forecast and previous announcements, providing a bit of EUR strength while the GBP remained a tad stronger against majority of its counterparts even after weaker than expected Services PMI as market players keep expecting hawkish word’s in today’s BoE Quarterly Inflation Report (QIR). The AUD, NZD and CAD witnessed mixed trading, loosing against majority of its counterparts except USD while the JPY weakened against majority of its counterparts as market players kept watching for USD and GBP moves while liquidating from JPY.
The super Thursday, that is likely to be dominated by UK releases, mainly including BoE monetary policy announcement, MPC votes for the policy change and the much awaited QIR, have flashed first of its release, Australian labor market details during early hours. The announcement revealed that the unemployment rate rose to its highest in six months in July even as the number of jobs added shot up almost four times more than expected, providing mixed clues for the AUD.
For the rest of the day, market attention would be on BoE releases; however, UK Manufacturing Production and US Jobless Claims will be smaller releases to take care of. As majority of the market speculators expect a bit of hawkish tone from BoE, absence of which could provide considerable near-term damages to the GBP. Hence, it would be worthwhile to wait for the actual announcement prior to taking trade positions.
The “Super Thursday” as it was termed by many of economists, disappointed the GBP bulls who were looking for hints supporting recent hawkish comments from the BoE Governor as the Quarterly Inflation Report from the central bank negated chances of interest rate alteration in near-term while only one policy maker favored interest rate change against two expected. The GBP plunged considerably after the announcements and is still near the lows marked yesterday. The Euro region is concentrating more on the talk to allow Greece the left bailout funds and majority of the releases indicates that by the end of August, the troubled nation will be able to get the bailout funds approval from its international creditors. The US economic calendar remained a bit of shy with only Jobless Claims, that rallied to 270K, as market players await today’s NFP details that is likely to provide clear insight of whether the Fed may hike interest rate in September or not. The commodity basked kept trimming their weights while the JPY weakened across the board with little safe haven demand and lose monetary policy supporting the bears.
During early Friday, the BoJ monetary policy meeting revealed that the central bank favors no change in its current policy and keep remaining hawkish for their economic progression. The RBA, in its quarterly monetary policy statement, removed the need for further weakness in AUD; however, they cut down 2016 growth forecast to 2.5-3.5%, from 2.75-3.75% reported earlier. Market players now await words from the BoJ Governor, soon to hold press conference after the monetary policy meeting, that could drive JPY, mostly upside for a short period of time.
Being the NFP day, it is less likely any of the traders/investors focus on any other details, including Canadian employment figure and Ivey PMI, than the monthly release of the US labor market. The forecast suggest the unemployment rate to remain near previous 5.3% with the NFP figure expected to mark 222K against 223K prior mark. Broader forecasts supports that the Unemployment is more likely to decline further while the weakness in ADP number, released on Wednesday, can become a reason for the NFP to disappoint the USD bulls. Should there be a positive surprise, the USD may rally considerably on the back of September rate hike expectations while disappointment amongst the bulls, with weaker figures, could provide considerable USD damages.
Still no clear change in what the GBP should be worth, i.e. more or less. Times like these I trade the technical range if I can spot it. Waiting for the fundamentals to give a clear picture of SOMETHING…
Or, or if they do, hope I see it before it shows up in the charts and end up chasing the trend. Being aware of what’s going on economically, banks and etc is the only way to go (for my trading style)
Even if the Friday’s US NFP failed to match the 222K consensus and the hourly earnings climbed a less-than 2.1% forecast, providing knee jerk plunge to the USD, gain in payrolls followed a revised 231,000 advance in June, coupled with pickup in hours worked, halted the greenback decline, supporting the Dollar Index (I.USDX) to complete the first positive week in three. The Euro region currency remained a bit firm as the Greece is progressing in talks with its international creditors to avail 86 billion Euros ($94 billion) in fresh loans to stave off economic collapse and stay in the euro zone. The Chinese details, released during the weekend signals that the collapse in PPI and the biggest fall in Chinese exports in last four months could continue dragging the industrial economy and to the rest of the commodity world while Japan posted 12 straight monthly balance of payments gains in June. The CHF weakened considerably against majority of its counterparts and tested the five month lows against USD as weaker Manufacturing, CPI and Consumer Climate Index, coupled with a technical breakout, kept hurting the Swiss currency.
Having witnessed headline data points during the first week of August, current week has lesser numbers to print; however, the EU GDP numbers, US Retail Sales and UK Labor market numbers are some of the important details that could drive the forex market. The market consensus shows the four big EU economies are likely to post good growth numbers and the Greece is also progressing in its bailout talks, signaling further advance in EUR strength while the weaker Retail Sales, if produced, could drag the recent USD up-move. Today’s economic calendar doesn’t bear anything important except the speeches by some of the FOMC members. Hence, it would be better to take only short-term trades favoring the USD and the EUR while rest of the currencies is likely extending their declines.
With the Chinese government taking another drastic step to devalue their currency, Yuan, global financial markets ran for safe havens of early Tuesday, favoring the USD, Gold and JPY. Adding to this, news that Berkshire Hathaway Inc. agreed to buy Precision Castparts Corp provided additional strength to the USD. At the European front, the discussion between the Greece and its international creditors are running fast to reach the deal during Tuesday to avail tranche of the bailout funds as soon as possible. Moreover, comments from the Fed and BoE officials, favoring the tighter monetary policy gave an extra shot to the USD and GBP up-moves. Oil prices also rallied on Monday from the lowest in almost five months after China’s crude imports rose to a record.
Chinese central bank set the midpoint for its currency at 6.2298 per dollar, down from Monday’s fix of 6.1162, and said it was aiming for a depreciation of 2%, this could have been the largest devaluation in two decades. Australian Dollar, together with NZD, plunged with such a drastic step. Moreover, the Australian NAB Business Confidence plunged to the lowest in three months comparing with the downwardly revised figure.
For the rest of the day, ZEW Economic Sentiment numbers for EU and Germany, coupled with the Quarterly releases of Preliminary Nonfarm Productivity and Unit Labor Costs from US are likely to provide quantitative details to the market players while Greece discussions are likely to provide qualitative front to the Forex players to track. It seems that the USD have started regaining its glamour amongst market players as September lift-off speculations are running fast and a probable hike during this week’s reading may provide additional USD strength.
[B]AUD/USD[/B]
The Aussie is at fresh multi-year lows against the U.S. Dollar, as the People’s Bank of China (PBOC) kicks the Yuan again, for second day in row . The pair previously saw fall of -1.45% to close at 0.7305 and is currently trading -.75% lower at 0.7252. The PBOC earlier devalued the Yuan by 2% which took Aussie down but the second devaluation forced Aussie to make fresh multi year low. The poor economic data forced china to take the necessary step. As China and Australia are major business partner where china act as importer, the imports will now become costlier for china and the reduced demand will thus affect Aussie sales and production department. The pair has the support level of 0.7185 and the resistance level is set at 0. 7338 and at 0.7419.
Moreover, the recent announcements by Australia’s major banks to raise mammoth capitals from the market, more than what was raise after 2008 crisis, provides additional weakness to the AUD. On the downside, i thing a break of 0.7185 is likely to face 0.7000 and the 0.6835-40 support levels while a pullback above 0.7285 may offer 0.7330-40 resistance area.
Have a nice trading-day, Keep looking here for the updates
With the continuation of Yuan weakness that resulted the currency to test four year lows, following drastic steps by the Chinese central bank on Tuesday, global financial markets favored the safe haven assets, namely, Gold, USD and JPY. However, the central banks did say on Wednesday that they were not looking for steady depreciation of the currency. The agreement between the Greece and its international creditors provided noticeable EUR gains that were troubled with mixed ZEW economic sentiment numbers. Moreover, news that Australian banks are planning to raise whooping amounts, surpassing the funds raised during aftermath of 2008 crisis, provided additional weakness to the commodity currencies that are already facing pessimism due to China while the Crude prices also extended their downward trajectory.
During early Wednesday, Australian Westpac Consumer Sentiment rallied by the highest since February 2015 while the Wage Price Index matched 0.6% forecast. Moreover, the Chinese Industrial Production grew at a slowest pace in three months with 6.0% advance and the Retail Sales also missed the 10.6% consensus by printing 10.5% mark.
With the Yuan plunge helping the safe haven and Greece agreement favoring EUR advance, today’s UK labor market details could provide considerable forex moves. Moreover, the Greek parliament is going to vote today on the bailout agreement; though, it is likely to favor the same, an unexpected votes against the agreed measures could weaken the Euro.
With the Chinese Yuan extending its decline and a weaker US JOLT Job Openings, the US Dollar another decline on Wednesday while the nearness to Greece from its more awaited aid program fueled the EUR against majority of its counterparts. The JPY tested weaker grounds after the Japanese machinery Orders contracted the most since July 2014, adding concerns for second quarter GDP contraction after the exports slumped and consumer spending slackened. Oil prices also stopped their declines on Thursday after the negative US crude stockpiles and hawkish comments from IEA. The GBP, even with mixed labor market numbers, plunged against majority of its counterparts.
The current declines of Yuan seems soothing on Thursday when the Chinese central bank said it will step in when the market is “distorted”, providing a bit of relief to the commodity markets and to the USD as well. Early on Thursday, after the Japanese machinery orders fell, market players would start noticing CHF moves based on Swiss PPI while the US Retail Sales would govern the rest of the day’s Forex moves.
Considering the current market status, it would be in the best interest to again support the USD ahead of Retail Sales that are likely to reverse their previous declines; however, another weaker mark could fade the near-term interest rate hike speculations and could provide additional weakness to the USD. Moreover, the Greece is still at problem front as the agreement details required harsh budget cuts that would put the nation into two years of recession, providing immediate weakness to the EUR.
Even with the US Retail Sales matched 0.6% forecasted gains, reversing prior decline, and the Jobless Claims remained a bit up from the consensus, market failed to favor the USD in a much stronger way, providing only a bit of strength to close positively. The Euro region currency seems heading for the largest gains against the greenback in nearly three months as Greece is near to its debt plan while the Yuan plunge helped the region’s players. Greece’s international creditors are set to meet today, providing final verdict of whether they will give the Greece required bailout or not; however, the parliamentary votes for the much required bailout terms is still not complete at the Greece and may hinder the procedure. The Yuan finally managed to stop its plunge after the Chinese central bank hiked its reference rate a bit and provided hawkish words to stop the large-sized depreciation of currency, if needed. Crude oil prices extended their declines as another set of crude oil stockpiles data from US revealed higher supplies.
The RBA Assistant Governor, Christopher Kent, provided a bit of optimism to the AUD players by saying the labor market is flashing good results, helping the central bank to extend the three month pause in its interest rate cut.
As the Greece is on the edge with crucial day deciding its fate, announcements from Greece policymakers and EU leaders would likely providing much of the market volatility together with the GDP details from Germany, France and EU giving extra support to fuel the market liquidity. Market players would look for the US Consumer Sentiment and PPI details to determine the Fed’s September move after the Retail Sales matched expectations. Hence, today is a good day to expect considerable volatility; though, less is expected to favor the USD and can make the greenback test a negative region on a weekly basis unless either the Greece create a problem or there are considerably optimistic economic numbers.
With the Chinese central bank’s ability to shrug some of the last week’s Yuan losses, market players have started favoring the USD that declined considerably with the same decision as weaker Yuan may hurt the US economy’s export income and may delay the September rate hike. The Euro region currency printed a month’s high during last week with mixed bag of economic detail and weaker Yuan reducing the import bill while GBP also gained against majority of its counterparts even with the weaker labor market details. The Yen weakened during majority of past five day’s trading while gaining on Monday as GDP numbers plunged lesser than expected. The Crude prices tested six years low and the Gold prices registered first weekly gain in last eight majorly backed by safe haven demand.
Having witnessed the Japanese growth numbers, marking -0.4% against -0.5% expected, reversing prior two quarters’ gains, market players would likely concentrating on Swiss Retail Sales, US Empire State Manufacturing Index and the NAHB Housing Market numbers to determine rest of the day’s trading patterns.
Even with some of the positive details, like PPI & Factory Production, speculations for the September rate hike would largely be dominated by this week’s CPI numbers. Should the number surpasses 0.3% prior, chances of the Fed introducing first interest rate hike since 2006 during its September meeting gets strengthened, fueling considerable USD strength; however, the minutes from recent FOMC would also provide considerable news of what Fed thinks for September rate hike. Hence, it would be better to put intra-day buy trades for the USD.
Even with the Empire State Manufacturing Index’s plunge to the lowest since April 2009, -14.92, the USD managed to close the day is a positive territory as the global market favored the Fed’s soon to be tighter monetary policy than the rest of the world’s weaker paths. Moreover, the NAHB housing Market Index tested the highest level since a matching reading almost a decade ago provided additional strength to the greenback. The Euro region currency remained in a bit more compressed mode after last week’s considerable gains as market players await third Greek parliamentary approval to the bailout terms on Wednesday while the GBP liquidated its gains earned during early day as many doubted the central banker’s comment supporting tighter monetary policy. The JPY remained in trouble with GDP numbers while the commodity currencies kept trading in the negative territory following the Chinese actions and a pessimism from commodity front that faces weaker days due to US summer and weaker Asian demand.
On early Tuesday, the RBA minutes reiterated that the current monetary policy, with the hold to its interest rate cut regime, favor the economy via better exports and is well expected to maintain the same, helping the a bit of optimism for AUD traders. For the rest of the day, UK CPI, US Housing Market numbers and New-Zealand details are likely to provide considerable Forex moves.
As expected, the market have started favoring the greenback ahead of the important details scheduled for announce during the week; however, should the readings miss the forecast, spreading pessimism for September rate hike speculations, the USD can become vulnerable to extend its recent decline, Hence, it becomes important to take some small trades favoring USD on an intra-day basis while for the bigger trades, it is better to wait till the weekend.
Ludicrous to think that the world won’t be affected by China
Zak Mir and James Hughes were joined by David Buik, senior market commentator for Panmure Gordon, to discuss China and its impact on the rest of the world.
Summer blues ignoring fundamentals
Buik noted that the world is largely oblivious to the on goings in the holiday months in July and August, and that the headlines this summer aren’t being reacted to properly. He goes on to describe how some of the markets in the world are false, whilst commodities and share prices are crashing down, and that the idea of a rate hike is still a long way off. He concluded that there are so many worrying fundamentals with no reaction.
Yellen may say that the US isn’t ready
Buik commented on China’s growth rate, identifying that it is more like 3% than the predicted 7%, and also that there has only been a 40% correction and thus the Chinese stock market is still 110% up. Thus Buik came to the conclusion that as a result of this, Yellen is likely to say that the US isn’t ready, whilst he highlighted that China will effect the whole of the world, noting that the UK imports 9% from China. Mir added that the People’s Bank of China highlights the lack of experience and quality of human infrastructure to get them out of this hole. Buik finished by looking at US and UK growth rates, and argued that the US won’t achieve the growth rate predicted of 2-2.5%, meanwhile, the UK will fail to reach its predicted level of 2.8% GDP in Q4.
See more at: Ludicrous to think that the world won’t be affected by China | TipTV.co.uk
With the US Housing Starts rallying in July to the highest level in almost eight years and the Q3 2015 forecast by the Atlanta Federal Reserve increasing to 1.3% against previously defined 0.6% provided considerable strength to the US Dollar on Tuesday; however, a drop in Building Permits restricted the big gains of the greenback. The GBP also registered noticeable gains after the UK CPI beat expectations, pressing support that the Bank of England will raise interest rates in the coming months. The commodities front kept witnessing declines, this time lead by the Copper, as Chinese market maintained their weakness while the Crude Oil prices remained at their lower levels ahead of the US Crude stockpile data to be released during the later part of the day. The Euro region currency kept struggling with no major details to track while the JPY weakened against majority of its counterparts with speculations favoring a break of 125.80 mark for the USDJPY.
During the early part of the day, Japanese trade details provided another disappointment to the JPY as the Trade Deficit widened to the highest levels in five months in July, as exports slowed and imports fell by less than forecast. Market players are likely to concentrate more on the US CPI and the minutes of recent FOMC meeting, scheduled to release during the later part of the day while the EU current account and details from Greece many provide additional market liquidity.
As the market kept favoring the USD ahead of the important details day, it would be wise to expect winning streak for the greenback; however, a weaker Inflation is likely to provide largest damages to the expectations that support September lift-off. Hence, it would be wise to wait till the actual releases being announced.
Weaker than expected Inflation numbers, coupled with the inability on the part of FOMC to provide clears signs of September rate hike caused the US Dollar Index (I.USDX) to register first negative closing of the week. The Inflation gauge printed 0.1% mark against 0.2% forecast & 0.3% prior while the policy makers said lagging inflation and weaker global economic outlook restricts the Fed from clearly signaling the interest rate lift-off even if they are planning to do one such hike during current year. At the European front, nothing was important and the Euro traded in its own way while the GBP rallied against majority of its counterparts as outgoing BoE policy maker said the central bank is approaching interest rate hike soon. The JPY strengthened with the rise of uncertainty while the Chinese Yuan, coupled with commodity prices, kept declining as IMF delayed the earliest date that the Chinese currency can join the lender’s basket of reserve currencies.
With the major details of the week, namely the Inflation and FOMC minutes, are already out, the UK Retail Sales, US Jobless Claims, Existing Home Sales and Philly Fed Manufacturing Index, are the leftovers that the market players would like to concentrate. However, the recent round of USD selling, with not so hawkish FOMC and weaker CPI, is likely to be tamed during the later part of the day while the GBP is also likely to continue extending its stronger path.
With the fading support for speculations concerning Fed’s first interest rate hike during September, the US Dollar continued witnessing declines even with five year high Home Sales number and better than expected Philly Fed Manufacturing Index while the UK currency also faced the negative closing against majority fo its counterpart as market players expects BoE to follow the Fed while weaker than expected UK retail sales added fuel to GBP declines. The Euro region currency was a clear winner, not because of its own fundamentals but because of the weakness of USD and GBP supported considerable gains, nearly 3.3% on a monthly basis, for the regional currency. The global commodity and industrial world witnessed one more passive news on Friday when the Chinese private factory gauge plunged to the lowest since March 2009. Crude oil prices are heading for its longest weekly losing streak since 1986 as the weakness in China and global supply glut favored the crude bears to result eighth straight weekly decline.
Having witnessed the Chinese Caixin Flash Manufacturing PMI, which tanked to 47.1, the lowest since March 2009, compared with the 48.2 estimate, Manufacturing PMIs from EU, Germany and France, coupled with the CPI and Retail Sales from Canada are likely important details to rule the forex market during the rest of the day. Moreover, US Flash Manufacturing PMI can also provide some of the market liquidity that is majorly opposing the USD strength now.
Even if the market has rolled down the bets for September rate hike, providing considerable damages to the greenback, major currencies and the gold prices are trading at crucial technical levels, signaling considerable declines should there prevails any strong comments from the US Fed policy makers. Moreover, the Greece has already got what it was looking for so long, the $86 billion of bailout, from which the tranche has already been paid and there are lesser news from Greece now on to track.
With the widespread unrest in the financial markets, the Forex was also roiled, with Euro, JPY, Gold and CHF, gaining considerably on safe haven ground. The euro hit a 6.5 month high and the Yen marked 1.5-month high against the USD while as per the Bloomberg stats more than $5 trillion has been erased from the value of global stocks since China unexpectedly devalued the yuan. Gold prices capped its biggest weekly advance since January while the Oil prices broke below $45 for the first time since March 2009 as Iran mentioned not to tame the or Oil production and the active oil rigs in the U.S. rose for the seventh time in eight weeks, Baker Hughes Inc. data showed Friday. Commodity currencies, like AUD, NZD and CAD were also amongst the biggest losers.
During the current week, second version of GDP readings from US and UK, coupled with Swiss GDP numbers, are likely to gain much of the attention. Moreover, US Durable Goods Orders and Consumer Confidence numbers are also likely to be catalyst of this week’s forex moves.
With the uncertainty over the global forex markets helping the safe havens, it is less advisable to trade against them; however, the favor is drastic and some pullbacks, or possibly the reversal, should also take place duing the week should the US GDP numbers are stronger than expected. Hence, be ready for the volatile week ahead.
AUD/USD
The Aussie remains threatened as fears of slowdown in Chinese market remain very palpable. Aussie today is trading -1.20% lower at 0.7230 making fresh 6 year low. The health of Aussie is directly related to health of Chinese economy and as the world’s second largest economy is under the threat of slow down the pair could see huge selling. Previously, the pair ended the day with a fall of -0.24% to close at 0. 7321 as the China’s PMI for August came at 6 year low. The pair has breached the support level of 0.7296 and is currently trading at fresh 6 year low, so the new support level to watch is 0.7100 and resistance is placed at 0.7349 and then at 0.7419.
Moreover, expectations concerning additional rate cuts by the RBA, disturbing recent halt to its monetary policy, could provide further weakness to the AUD.
Considerable improvement in Core Durable Goods orders, that rallied to a year’s high, coupled with strong CB Consumer Confidence Index, helped fueling the US Dollar strength off-late. The greenback ignored the comments made by Federal Reserve Bank of New York President William C. Dudley, also vice chairman of the Federal Open Market Committee that the “September lift-off to the interest rate is in doubt; though, not off the table.” Moreover, easing worries from the China, as signaled by a bit of pullback into the equities also helped the global financial markets again concentrate on USD and cover their longs from JPY and Gold, resulting the biggest fall in five weeks to the Gold prices. The JPY, that strengthened heavily after the safe haven demand also witnessed one more reason to liquidate some of its recent strength as the BoJ Governor recently said that event though the current scenario isn’t forcing the BoJ for additinoal monetary easing, chances of introducing more easing, if needed, can’t be denied. The Crude oil also rallied a bit after the decline in US crude inventories; however, strong USD capped the energy prices.
After witnessing some of the good readings of headlines numbers during last two days, the market have again turned supporting the greenback and wil concentrate more on today’s Prelim US GDP number that is expected to register 3.2% growth against previously noted 2.3%. Moreover, the Pending Home Sales are also likely to reverse its previous declines and could help extending the recent USD up-move.
Should the GDP number matched consensus, chances are higher that the USD recovers majority of its recent losses and again captures the upward trajectory, fueling the September rate hike speculations. However, a weaker number may become a strong negative and can liquidate recent gains of the USD. Hence, it would be important to keep tracking the market details prior to taking any big trades that favor USD.