Hello sir, now since the core CPI and CPI disappointed which resulted in a week dollar and mixed Labour market result be lastly political interference. How long will this weakness hampering the dollar?
IMHO, the greenback is now likely to witness further downside unless something too optimistic comes up from US politics. The Federal Reserve optimism is in doubts because of sluggish economics and hence a fortnight or so seems a quite accepted time-frame to see USD’s further south-run. However, a drastic plunge is still not likely as ECB can offer noticeable moves.
Hope it was helpful.
Daily Fundamental Dose: 17 – July – 2017
Hello Traders,
With another data-driven disappointment from US, coupled with political turmoil over Trump administration’s linkages with Russia, the US Dollar Index (I.USDX) plunged to the lowest levels in 10 months during last week. As a result, the EUR & GBP gained noticeable strength, even after witnessing not so hawkish details, whereas commodity basket managed to enjoy upbeat sentiment at China. The AUD and NZD rallied with traders’ shift to commodity currencies while CAD got additional support from BoC’s rate-hike and rising Crude prices due to sharp drop in US stockpile figure. Further, the JPY and Gold strengthened on greenback’s weakness but the CHF remained sluggish because of improvement in investors’ risk appetite.
Moving forward, Monday started with an additional support to commodity Bulls on China’s upbeat GDP and Industrial Production figures. The GDP topped forecasts with 6.9% growth while the Industrial Production rallying to April highs. Due to the same, AUD, NZD and CAD got extra-strength; however, buyers remained cautious due to too long up-moves and triggered a pullback of such currencies. Additionally, Japanese markets are closed due to Marine Day but Crude kept pleasing buyers as upbeat Chinese stats signal higher energy demand and US rig counts also slowed down during last week.
Having witnessed active sessions during the early-day, traders might be interested in observing Final reading of EU CPI, US Empire State Manufacturing Index and quarterly announcement of New Zealand CPI. On the political front, second round of Brexit talks between EU-UK will start on Monday while updates concerning Trump’s role in 2016 Presidential election could keep pumping market uncertainty. Moreover, one of the RBNZ officials recently spoke in favor of weaker Kiwi and such news might offer extended profit-booking moves in NZD.
While there is no change expected in EU inflation, which can keep helping the regional currency, likely soft numbers from US & New Zealand may hhurt respective currencies more. Also, strong arguments against Trump’s connection with Russia could further raise doubts on the administration’s capacity to offer promised policies, which together with sluggish economics, can weaker greenback more. Hence, an active start of the week could be stretched during the rest of the day; though, less likely that it might favor the USD unless any strong positive pops-up.
Technical Talk
With the AUDUSD’s failure to surpass April 2016 high, coupled with overbought RSI, indicating the pair’s pullback, the 0.7780 & 0.7750 gain importance with a break above 0.7835-40 favoring pair’s rally towards 0.7900 round-figure. In case of the NZDUSD, lower high formation around 0.7370 signals 0.7300 come-back but successful clearance of 0.7370 can propel the quote to 0.7410. Further, the CADCHF is struggling with seven-month old descending trend-line figure of 0.7630 and may re-test 0.7600 support-mark.
Have a nice trading-day ……
Daily Fundamental Dose: 18 – July – 2017
Hello Traders,
In an another blow to already languishing US Dollar, two of the Republican senators voted against Donald Trump’s repeal/replace of health-care reform bill, popularly known as Obamacare, which presently makes the bill incapable of being a law and raising doubts on Trump administration’s capacity to deliver ambitious promises. Additionally, the Empire State Manufacturing Index lagged behind consensus & prior that, together with political uncertainty, dragged the US Dollar Index (I.USDX) to fresh ten-month low. On the other hand, no change in EU CPI and start of four-day long Brexit talks strengthened EUR but weakened the GBP. Further, strength in Chinese data-points propelled commodity basket; however, AUD and CAD witnessed a bit of pullback while NZD declined with lowest CPI figure since January 2016. Moving on, JPY and Crude also witnessed slight profit-booking whereas Gold kept rising on weaker USD.
During early Tuesday, market remained volatile mainly due to RBA meeting minutes which propelled AUD prices by praising the economic developments and signaling a neutral interest-rate to be at two percentage points far from the present levels, which traders considered as a sign for upcoming rate-hikes. On the commodity front, Crude prices regain their strength as news on Monday showed increased Chinese demand that in-turn helped NZD and CAD to remain strong whereas GBP & EUR are putting some more weights.
For the rest of the day, UK CPI will gain the limelight as recent change in favor of rate-hike by BoE Governor, Mark Carney, increases the importance of headline inflation gauge. Moreover, on-going Brexit talks and political turmoil at US will also entertain investors. Furthermore, ZEW economic sentiment figures from EU & Germany could offer noticeable information to predict immediate EUR moves.
Even if the UK inflation level is less likely to change from 2.9%, a strong number might rejuvenate the recent calls from BoE policymakers that it’s the time for a rate-hike, which in-turn could fuel the Pound. However, a disappointment may get stronger response at the Cable is already at high position. Moving on, US Dollar has lesser triggers, except the political uncertainty, and might not refrain from extending its south-run while EUR can benefit from Brexit proceedings and the commodity basket can celebrate recent optimism.
Technical Talk
Break of 112.30 signals the USDJPY’s additional drop to 111.80-70 support-zone but an upside clearance of 112.30 can flash 112.80-85 on the chart. Further, USDCAD failed to surpass 1.2700 during its latest pullback and is again indicating 1.2600 re-test while AUDCAD cleared six-week old TL, at 0.9960 now, and is aiming for 1.0030 resistance-level.
Have a nice trading-day ……
Daily Fundamental Dose: 19 – July – 2017
Hello Traders,
Tuesday was no different for USD traders as Republican failure to pass health-care reform bill strengthened doubts over the President Donald Trump’s capacity to deliver pro-growth promises. On the other hand, weaker Inflation and languishing data-points continue pushing investors to question Fed’s optimism by being skeptic on another rate-hike. Hence, the US Dollar Index (I.USDX) kept trading to south while rest of the major currencies and commodity basket remained benefited. The EUR Bulls ignored soft ZEW figures while GBP dropped after the headline CPI unexpectedly slowed for the first time since October, which in-turn questioned BoE’s latest hawkish statements about rate-hike. Further, AUD was the biggest gainer after upbeat RBA minutes while rest of the commodity currencies, namely NZD and CAD, also flashed strength. Moving on, JPY and Gold continued celebrating the USD weakness whereas Crude couldn’t move much as API released higher inventory level.
Having witnessed continuous trading against the US Dollar in last few days, the market is being calm during early Wednesday, mainly due to the dearth of economic triggers. As a result, pullback in EUR, JPY and CAD can be witnessed. However, AUD and NZD maintain their strength versus the greenback but Gold and Crude seem trimming some of their recent gains while GBP is recovering yesterday’s losses.
Looking at the economic calendar, Canadian Manufacturing Sales, US Building Permits and Housing Starts, followed by weekly release of EIA Crude Oil inventory, are some of the details that investors might be interested in reading. While Canadian data-point may extend latest pullback of the Loonie, together with Crude stockpile, the US housing market numbers are likely to trigger the greenback’s short-covering.
Even if the economic calendar is favorable to the USD for the day, political environment continue flashing red signals for the greenback as democrats continue opposing republican policy proposals and are strong at the moment. Additionally, charges against Trump administration, for the linkages with Russia during 2016 election campaign, are still alive and may trigger havoc. On the other hand, Brexit talks between the EU & UK can offer enough of headlines to keep EUR & GBP trades busy for the rest of the day.
Hence, while there are less of economics to observe, slew of political updates can keep entertaining traders.
Technical Talk
EURUSD’s latest reversal from 1.1580-85 signals brighter chances of its 1.1485-90 re-test while 1.1610 seem near-term important resistance for the pair. In case of the GBPUSD, the 1.2970 and the 1.3120 are likely immediate levels to watch with downside more expected while EURAUD is struggling to break 100-day SMA level of 1.4545 before testing the 1.4435 while 1.4630 acts as adjacent resistance to watch.
Have a nice trading-day ……
Daily Fundamental Dose: 20 – July – 2017
Hello Traders,
While Friday’s disappointing US inflation set the stage for early-week drop in US Dollar, Republican leaders’ failure to pass health-care reform bill strengthened the greenback Bears on concerns of Trump’s inability to offer pro-growth policies and doubts over Fed’s hawkish mood. However, with less economics on hand, investors may now concentrate on big events of the week, namely ECB and UK Retail Sales, in order to determine rest of the week moves. Let’s quickly understand the fundamentals behind them.
Early Week Dominated By Greenback Bears & Commodity Optimists
With the Chinese Industrial Production & GDP figures again flashing welcome numbers & US Manufacturing figure remaining dismal, traders favored commodity currencies and shed their USD longs in anticipation of further downside by the greenback. On the top of that, Trump administration’s another failure to get enough votes for proposal to repeal/replace Obamacare provided additional weakness to the US currency till Wednesday. However, upbeat housing market stats helped the US Dollar to recover some of its latest losses ahead of the crucial ECB.
On the other hand, EUR kept pilling its weight even with not so hawkish data-points while GBP retraced a bit as weaker UK Inflation damaged recent optimism triggered by BoE members and on-going Brexit talks added worries for Pound traders. Further, AUD was the biggest winner as upbeat monetary policy meeting minutes and strong employment figures helped the currency to challenge two-year high while NZD portrayed volatile moves with New Zealand CPI’s decline. Moving on, CAD managed to enjoy Crude’s up-move, backed by US inventory depletion, whereas JPY trimmed some of its early-week gains on Thursday when BoJ once-again postponed timing for reaching inflation target and disappointed the Yen Bulls. Additionally, Gold and other commodity prices gained on USD weakness.
All Eyes On ECB Now
Although UK Retail Sales, the largest contrinutor to British GDP, seems important for the GBP, investors are more interested in watching how ECB President, Mario Draghi, maintains his latest hawkish mood conveyed during the central banking forum at Portugal.
Consensus reveal a +0.4% growth of UK Retail Sales compared to -1.2% and no change of monetary policy by the European Central Bank (ECB). Also, monthly release of US Philly Fed Manufacturing Index is likely to provide another drawback for the greenback with 23.4 figure versus 27.6 earlier.
Even if the ECB President is less likely to backtrack from his recent optimistic words, he might chose to say least about tapering of QE or not speak at all concerning the much anticipated aspect of the central bank’s mammoth monetary measure. However, his praise of the economic development could become sufficient for the EUR to stretch its upward trajectory beyond the recently tested 14-month high. In case of GBP, strong Retail Sales can rejuvenate calls for monetary policy tightening and can help the Pound to recover its immediate losses.
Moving on, Canadian Retail Sales & CPI will be the last figures to close the week wherein both the headline measures for the economy likely to disappoint CAD Bulls with -0.1% & +0.3% numbers against +0.1% & +0.8% respective priors.
At the political front, US President is making plea to Republicans to back the repeal/replace the Obamacare program before they start summer vacation whereas EU-UK seem at the loggerheads to start Brexit proceedings. Further, fears emanating from allegations on Trump administrations’ linkages with Russia during 2016 Presidential election and North Korean threat to keep filling their armor with missiles haven’t receded yet.
Hence, while ECB is more likely to keep nurturing the EUR Bulls, which in-turn may harm the USD, political turmoil at US could offer additional weakness to the greenback.
Moreover, GBP should recover some of its latest losses but slow pace of Brexit developments may keep the currency in check whereas CAD might have to witness a pullback in case if headline data-points register weakness.
However, JPY and the AUD are expected to maintain their strength with USD weakness helping both the majors.
Technical Analysis
EURUSD has already surpassed weekly trend-line and is aiming for the 1.1610-15 and the 1.1720 with 1.1430 being nearby support. GBPUSD is likely to struggle between 1.3130 and the 1.2930 area as it recently reversed from TL resistance while USDJPY’s break of “Head & Shoulders” indicate further downside of the pair to 111.20 with 112.80-85 acting as nearby resistance. Furthermore, AUDUSD witnessed a pullback from 0.7960 and can revisit 0.7850 but more downside is less likely while NZDUSD needs to clear 0.7370 in order to claim 0.7410 with 0.7250 seem adjacent support. Moreover, USDCAD failed to extend its downturn below 1.2570 and might revisit 1.2770 on weaker data-points while 1.2500 seem strong support on the downside if the pair keep declining.
Have a nice trading-day ……
Daily Fundamental Dose: 21 – July – 2017
Hello Traders,
When ECB President, Mario Draghi, surprised markets by his hawkish statements during central banking forum in Sintra, Portugal, investors’ fraternity welcomed it with a buying spree of EUR and expected the leader to maintain the same mood on his appearance at the official press conference after monetary policy meeting. As a result, when Mr. Draghi said bond purchases will be discussed in autumn, everybody perceived it as a strong comment and piled their EUR longs, making it post the highest level in 23 months against the broadly weak US Dollar.
On the other contrary, the US President got another drawback after his failure to get Obamacare repeal/replace on Thursday. This time, the U.S. special counsel, who looks into the Trump’s alleged role in 2016 Presidential election to take Russian help, stretched his investigation towards checking the personal finances of Mr. President. With this, the US Dollar plunged heavily as one after the other problems keep signaling Trump’s inability to provide promised policies.
Looking forward, the AUD and NZD kept rallying against the greenback with commodity basket’s strength while CAD witnessed less buying due to Crude’s pullback. Further, JPY and Gold also registered noticeable up-moves but the GBP failed to advance as updates from Brexit talks between EU & UK signaled that British policymakers may walk away from negotiation even without a deal if EU maintains its strict behavior.
Following a heavy drop since the start of the week, US Dollar seems holding back further downside during early Friday while dovish comments from RBA policymaker dragged the AUD to south and upbeat statement of New Zealand Finance Minister helped NZD. However, the GBP seems recovering some of its latest losses while EUR continued on its march but the CAD is a weaker one due to Crude’s extended profit-booking.
For the rest of the day, Canadian Retail Sales and CPI are the only details left for publishing and may entertain traders who have seen too much volatility during the week. However, political plays surrounding UK, EU & US might keep offering intermediate moves to the market players wherein the USD is more likely to extend its south-run with EUR expected to continue rising.
Technical Talk
While NZDUSD is heading to 0.7480, the dip below 0.7400 can once again fetch it to 0.7350-55 support-area but the EURUSD isn’t likely to refrain from meeting August 2015 high around 1.1720 unless it trades above 1.1610. Further, GBPNZD seems all set to visit six-month old ascending trend-line figure of 1.7415 with 1.7550-60 acting as nearby resistance.
Have a nice trading-day ……
Daily Fundamental Dose: 24 – July – 2017
Hello Traders,
With the case against Trump administration getting stronger in the matter related to Russian meddling in 2016 Presidential election, failure to get Obamacare repealed/replaced became additional force to voice chances concerning inability of Mr. Donald Trump to deliver his upbeat promises. Other than this, present optimism at some of the Federal Reserve’s arch-rival, namely, ECB, BoE & BoC, coupled with soft economics, dragged the US Dollar Index (I.USDX) towards posting consecutive second weekly decline.
Alternatively, ECB President’s avoidance in terming recent EUR strength as problematic and indicating QE taper to be discussed in autumn offered noticeable boost to the EUR. Further, GBP became the only major currency to drop against the greenback as soft inflation number scaled back expectations favoring BoE’s rate-hike while AUD rallied heavily on upbeat data-points even as the RBA official toned down central bank’s recent hawkish stance. Moving on, NZD ignored weaker inflation after one of the RBNZ member termed robust economic growth whereas CAD posted fourth back-to-back positive closing against USD due to commodity basket gains and positive data-points. Moreover, Crude couldn’t enjoy the dip in US inventories as Ecuador, an OPEC member, indicated its inability to keep complying with production-cut accord but the Gold and JPY remained favorite of investors with greenback’s downturn pushing them to such safe-havens.
During the early hours of fresh week, JPY witnessed a bit pullback when latest news showed BoJ policymakers are more worried about downside inflation risk while the Crude recovered somewhat on the day when global energy producers are scheduled to meet in Russia in order to discuss the production-cut which is in practice till March 2018. However, the US Dollar remained weak as fresh updates from political front revealed that White House spokesman, Sean Spicer, resigned from his post on Friday and the elder son of Mr. Trump is now grabbed in the turmoil to reveal more secrets of his meeting with Russian people, as he conveyed the same during mid-month.
Looking forward, Flash Manufacturing & Services PMIs from EU & US, together with US Existing Home Sales and Canadian Wholesale Sales, are some of the data-points that can kick-start the week which includes FOMC and GDP figures. Considering forecasts, EU figures can keep helping the regional currency to extend its north-run while Canadian data-point may pull the CAD a bit back but the USD might not be able to enjoy positive outcomes as political pessimism can keep weighing on the currency.
Technical Talk
Considering the USDJPY’s latest pullback from 110.80, chances of its U-turn to 111.50 are much higher but a dip below 110.80 can quickly fetch the quote 110.00. Further, AUDUSD bounced-off from immediate ascending TL of 0.7900 and aims for 0.7960 while break of 0.7900 can drag it to 0.7870 & 0.7830 supports. Moreover, GBPJPY got a good support from 50-day SMA level of 143.85 and signals 144.70 to appear on the chart.
Have a nice trading-day ……
Daily Fundamental Dose: 25 – July – 2017
Hello Traders,
Following its second consecutive weekly drop, the US Dollar Index (I.USDX) managed to recover a bit on Monday as Flash readings of Manufacturing & Services PMIs registered upbeat results while EUR witnessed the counter-effect when EU & German PMIs dropped. Further, the GBP also portrayed a pullback from its earlier decline with weaker EUR and news concerning UK ministers’ acceptance to transitional Brexit helping the Pound. Additionally, Gold and JPY remained weaker but there was no drop in commodity currencies, namely AUD, NZD and CAD, due to the strength in Crude prices. The energy front gained supported through global oil producers’ meeting wherein Saudi Arabia seemed too optimistic about the production-cut accord and criticized those nations that aren’t adhering to agreement.
Even after posting a positive closing on the first week day, the US Dollar failed to extend the recovery on Tuesday as political turmoil concerning Russian meddling in 2016 Presidential election kept hurting the greenback. The senior advisor to Republicans, also son-in-law of Donald Trump, Mr. Jared Kushner, yesterday told senate that he met to Russian officials four-times during the election but never asked any helps for the same. On the other hand, Mr. Trump told fellow republicans to start repealing/replacing the Affordable Care Act, popularly known as Obamacare, but everybody knows that upper house keep avoiding such proposals to become rules and that in-turn dragged the USD towards south.
On the economic front, traders are worried a bit about tomorrow’s heavily packed schedule, including FOMC, AU CPI & UK GDP, and have less to observe for today, namely German IFO Business Climate and US CB Consumer Confidence. However, overall sentiment stil remain against the US Dollar due to slew of downbeat data-points appeared lately and help the EUR to maintain its across the board strength.
In case if the US Consumer Confidence prints welcome figure, investors may turn to senate appearance by the Donald Trump’s son and former election campaign Chairman, Paul Manafort, on Wednesday, in order to get near-term USD direction before the FOMC takes place. Alternatively, an upbeat UK GDP may reignite speculations concerning BoE’s rate-hike but absence of any big releases from EU could help trigger the EUR’s pullback in case if rest of the global economics remain upbeat.
Hence, with the lesser details on hand and prevailing political turmoil at US, chances of the greenback’s further downside are much brighter but today’s Consumer Confidence figure could play its role to direct immediate USD moves.
Technical Talk
NZDUSD repeatedly fails to clear 0.7450 and indicates 0.7390 & 0.7375 re-test if 0.7415 is broke while GBPUSD struggles with immediate resistance-line, at 1.3050 in order to challenge 1.3100 mark with 1.2980 acting as adjacent support. Further, EURJPY’s moves are restricted by near-term symmetrical triangle between 128.70 & 130.30 levels.
Have a nice trading-day ……
Daily Fundamental Dose: 26 – July – 2017
Hello Traders,
Upbeat earnings from leading US companies, coupled with higher than estimated CB Consumer Confidence and Republican leaders’ capacity to start debate on a bill to repeal/replace Obamacare program, helped the US Dollar to register one more day of gains on Tuesday. However, the EUR refrained from bending down as German Ifo Business Climate Index rallied to record high whereas GBP strengthened a bit due to optimism about Brexit proceedings. Further, commodity basket stretched their north-run on upbeat corporate results indicating higher demand, which in-turn helped AUD, NZD and CAD to remain firm, but the JPY and Gold had to bear the burden of market optimism due to waning safe-haven allure. Additionally, Crude prices also rallied as decline in API stockpile figures and news concerning slowing growth in US shale output favored energy front.
Coming to the crucial day for market, i.e. Wednesday, traders have been active since the start of the day with Australian CPI declining to five quarter low and the RBA Governor indicating lack of readiness to join global counterparts that support tighter monetary policies. As a result, AUD declined while NZD and CAD also followed the suit due to profit-booking in Crude prices. On the other hand, US Dollar continues maintaining its strength whereas JPY and Gold witnessed some buying as investors’ worry for the important day supports risk-free portfolio.
While AU releases/events have already started the day, Preliminary reading of UK Q2 2017 GDP, US New Home Sales, Crude inventories and the FOMC are likely to keep the market alive for the rest of the day. On the political front, start of house debate on repeal/replace of Obamacare, coupled with scheduled appearance of Trump’s elder son and former election campaign Chairman, Paul Manafort, in front of the senate could offer meaningful information to determine near-term market direction.
Considering the contrasting signals from latest UK Inflation figures and optimism about Brexit, a weak GDP might force the GBP to drop but increased chances of have smooth exit from EU can limit its plunge. In case of the USD, FOMC isn’t expected to alter its moneatary policy but signals for balance-sheet cut can help the greenback to maintain its up-moves while political turmoil still remains as a barrier for the US currency’s advances. Should the Republicans wins debate favoring the healthcare program repleal/replace and the Trump’s son’s ability to secure administration could offer noticeable strength to the USD.
With majority of the US politics being highly uncertain, FOMC’s optimism can’t be considered as a sure thing to help the USD.
Technical Talk
EURUSD again trades around 1.1615 support, breaking which it can drop to 1.1570 with 1.1710 keep offering strong resistance. In case of the AUDUSD, the pair’s failure to surpass 0.7970 indicates brighter chances of its pullback to 0.7830 if 0.7880 is broke while 0.8000 seem crucial upside figure to watch. Further, EURNZD indicates indecision unless it trades within the 1.5730-35 and the 1.5600 range.
Have a nice trading-day ……
Daily Fundamental Dose: 28 – July – 2017
Hello Traders,
While a dovish FOMC statement hurt US Dollar in late Wednesday sessions, the greenback gauge (I.USDX) managed to register a bounce from thirteen month low on Thursday after Durable Goods Orders unexpectedly rallied to three-years high, giving room to speculations of witnessing higher GDP figure today. The EUR, however, didn’t lose its chart as investors still consider ECB to be on upper hand than that of the Federal Reserve. Further, GBP gained a bit as well after a private survey concerning Retail Sales, known as CBI Realized Sales, rose to three-month high whereas JPY and Gold softened due to greenback’s allure. Additionally, AUD and NZD marked fresh highs but failed to sustain the same during later sessions but the Crude closed on a higher note after key OPEC members indicate cut in oil exports.
Moving towards another crucial day for investors’ fraternity, Japanese data-points entertained traders during early market hours with improvement in household spending and a surprise drop in unemployment-rate helped the JPY. However, the response from commodity basket seemed muted and the greenback wasn’t also active as market players were mostly worried about today’s US & Canadian GDP figures. In case of the AUD, soft Australian PPI figures dragged the Aussie further towards south while CAD also dropped a bit on Crude’s profit-booking.
Looking at the latest data-points from US, including the CB Consumer Confidence and Durable Goods Orders, the US GDP growth is likely to increase by 2.5% from 1.4% registered during early quarter mainly due to improving consumer spending. However, inflation figures are still not up-to the mark and some of the data-points, including the Manufacturing & Services PMIs, are also not that strong which in-turn might trigger disappointment for the USD optimists. On the other hand, Canadian GDP is likely to maintain its 0.2% growth-rate and the recent rate-hike from BoC makes it little important unless flashing extreme figures.
At the political front, Republicans are still not tired of trying to repeal/replace Obamacare Health Bill and the latest news signals even partial repeal isn’t gaining majority votes in house. Additionally, Trump administration is still in doubts to have Russian linkages around Presidential election. Hence, both these details are indicating pessimism for the US Dollar and if today’s GDP figure fail to please investors, chances of the currency’s further downside can’t be ruled out.
Technical Talk
Although failure to sustain 1.3150 break triggered GBPUSD’s pullback, the pair can’t be termed weak unless clearing 1.2980 TL support while USDCAD’s latest bounce from 1.2415 signals its extended recovery to 1.2650. Moreover, CHFJPY’s break of 115.40-35 horizontal-line supports Bears to expect 100-day SMA level of 113.65 to appear on the chart.
Have a nice trading-day ……
Daily Fundamental Dose: 31 – July – 2017
Hello Traders,
Even after witnessing upbeat data-points, the US Dollar registered third weekly loss as Trump administration’s inability to win house approval on Obamacare repeal/replace and dovish FOMC, coupled with North Korea’s two missile-tests, kept flagging political and economic uncertainty over US. The EUR reaped benefits of hawkish ECB mood and avoided not so positive PMIs while GBP flashed gains on optimism concerning smooth Brexit as well as better than prior GDP. Further, the commodity basket was also pilling profits on weaker USD, which in-turn helped AUD, CAD and NZD, while CAD has additional benefits from rising Crude prices and welcome economics. Additionally, JPY and Gold kept being traders’ favorite amid greenback’s drop and Geo-political problems whereas Crude got support from global oil producers’ meet and decline in US stockpile figures.
While political turmoil kept dragging the US Dollar down during last week, start of the present crucial week, comprising many headline details/events including NFP & Super Thursday, helped a bit to the US currency. On the other hand, upbeat industrial production favored JPY while commodity currencies, namely AUD, NZD and CAD, needed to trim some weights on soft Chinese PMI figures and a pullback in Crude.
Moving forward, upcoming Flash reading of EU CPI, US Chicago PMI & Pending Home Sales could continue offering intermediate moves to the traders before the start of August wherein monetary policy meetings of RBA and BOE, coupled with US jobs report and UK PMI, are likely to dominate the market momentum.
Considering the forecasts, EU CPI is likely to remain unchanged at 1.3% and the US Chicago PMI might flash 60.8 number compared to previous 65.7. However, Pending Home Sales could keep portraying strong US housing market with +0.9% growth against -0.8% previous contraction. As a result, the US Dollar may continue witnessing downside pressure while the EUR is less likely to lose its charm.
At a political front, US Republicans seem unaffected due to their recent failures to get Obamacare replaced/repealed and may again approach the house in search of victory while North Korean attempt seem a big blow to US strength and could help the safe-havens. Additionally, allegations on Trump administration, in case relating to Russian intervention in 2016 Presidential election, and slew of reformation of government authorities also give rise to downbeat outlook for the US Dollar. The commodity basket, mainly the Crude, takes this as an advantage and with latest threat to witness US sanctions on Venezuela might further strengthen energy front, which in-turn can help AUD, NZD and CAD.
Technical Talk
EURUSD seem supported by a week-long ascending trend-line, at 1.1700 now, and may again confront 1.1775-80 region before challenging the 1.1810 while GBPUSD is indicating 1.3050 re-test with 1.3160 acting as immediate resistance for the pair. Further, NZDJPY’s latest pullback might find it difficult to clear the 82.80 support-confluence and hence the pair is signaling its bounce to 83.15 & 83.30 adjacent numbers.
Have a nice trading-day ……
Daily Fundamental Dose: 01 – August – 2017
Hello Traders,
Monday was no different day for the USD optimists who had to pass through another disappointing session as firing of US communications director, Anthony Scaramucci, just after 10 days of appointment, was the second instance from Trump administration’s latest overhaul that added fuel to already existing political turmoil. Additionally, Chicago PMI flashed three-month low and ousted positivity spread via first in a four-month increase by Pending Home Sales. Due to this, the US Dollar plunged to more than 2.5 years’ low against the EUR and tested nearly 10 month’s low while compared with GBP.
On the contrary, EUR got benefitted from inflation figures and the GBP celebrated chances of soft Brexit, coupled with expectations concerning a hawkish tone of MPC members during “Super Thursday”. Further, commodity basket recovered early-day losses, emanated from soft Chinese PMI, which helped AUD and NZD, but the CAD witnessed profit-booking on weaker RMPI & IPPI figures. Moving on, JPY and Gold remained subdued, but in positive territory, whereas Crude continued rising on the hope that OPEC-led alliance is now helping to reduce global energy support-glut.
During the first few hours of August-start, market players tried helping the USD but remained worried about its political problems restricting growth opportunities and hindering FOMC’s another rate-hike plan. The EUR and GBP also witnessed a bit of pullback ahead of active economic calendar-day whereas NZD and CAD trimmed some of their heavy weights even after receiving upbeat figures of China’s Caixin Manufacturing PMI. The Australian Dollar, which initially strengthened on Chinese data-point, lost after RBA refrained from welcoming recent AUD strength and termed it as a barrier in employment and economic growth.
Going forward, start of August month also offers active economic case with UK Manufacturing PMI, EU Flash GDP, US ISM Manufacturing PMI & quarterly reading of New Zealand employment figures likely taking the lead. Amongst them, UK manufacturing gauge is likely to remain almost unchanged with 54.4 mark against 54.3 prior while its US counterpart may flash another drag for the greenback with 54.6 figure compared to 57.8 previous. Further, New Zealand Employment Change is likely to reveal soft growth, to 0.7% from 1.2% earlier, and a dip in Unemployment Rate from 4.9% to 4.8%.
Other than economics, political plays at US, concerning the North Korea, Russia and overhaul in Republican leaders, could keep entertaining intraday traders. However, chances of recovery in US Dollar are too low unless some surprises pop-up, which are less likely to appear before the Friday. Though, gains in EUR and GBP also have limited upside as they already have rallied too much too fast and chances of early-month pullback are high. Hence, its advisable to remain on sidelines and be cautious before taking any big positions before “Super Thursday” and Friday’s NFP.
Technical Talk
While USDJPY’s reversal from 112.00 dragged it to 110.00, its further downside might require a bounce towards 111.60 before declining further. However, a clear break of 110.00 can fetch the quote to 109.20 and the 108.80 supports. Further, NZDUSD refrained from breaking 0.7460-55 support-zone but is likely finding it hard to surpass 0.7530 and the 0.7560 resistances while GBPJPY’s sustained trading above near-term ascending trend-line, at 145.00, indicates 146.30 to appear on the chart.
Have a nice trading-day ……
Daily Fundamental Dose: 02 – August – 2017
Hello Traders,
Irrespective of soft ISM Manufacturing PMI & Personal Spending details, the US Dollar witnessed pullback moves during first day of the August month as better than forecast Apple results and a month-start buying ahead of Friday’s crucial job reports supported traders to buy the greenback. As a result, the commodity basket, including Gold and Crude, together with commodity-linked currencies like AUD, NZD and CAD, witnessed the counter-effect. The Crude and CAD had additional reasons, in the form of increase in API stockpile and news signaling highest level of OPEC production during 2017, to flash losses whereas disappointing New Zealand Employment Change dragged the NZD further towards south.
In case of the EUR, the regional currency failed to stretch its up-moves beyond Monday’s high, which was also the highest level in more than two-year, while the GBP couldn’t sustain gains registered after upbeat Manufacturing PMI. Additionally, JPY became the victim of investors’ optimism surrounding equity markets but the CHF remained strong due to Swiss National Day holiday.
Having observed a good start to the month, the US Dollar managed to remain strong during early Wednesday against majority of commodity currencies whereas the Gold and Crude also remained weak. The Australian Dollar failed to portray the four-month high Building Approvals while CAD kept being subdued ahead of today’s release of US official Crude inventory levels. Further, GBP is likely regaining a bit before the UK Construction PMI become live and the EUR also recovered some of its latest losses after political turmoil at US took another turn when US President is likely being too disappointed with China’s unfair trade practices and may take any decision for the same.
Moving forward, in addition to the UK Manufacturing PMI and Crude oil inventories, US ADP Employment Change, an early signal to forecast Friday’s NFP, seem crucial for investors to observe. While UK PMI & US Crude stockpile both expected to please latest sellers of GBP and Crude Oil, the US job number may help greenback progress further in its recovery. However, political turmoil at US continues being a major drag for the US Dollar which shouldn’t be avoided.
Technical Talk
Even if the break of immediate ascending trend-line signals AUDUSD’s downside towards 0.7575-80, chances of its further drops are less likely. On the contrary, a clear break of 0.8000 can again propel it to challenge the 0.8045 and the 0.8065 resistances. For USDCAD, the pair struggles with 1.2580-85 resistance, breaking which it can rise to 1.2640 but a surprise drop in US inventories may again fetch the quote to 1.2485 re-test. Moreover, EURCAD successfully trades above 50-day SMA level of 1.4820 and is indicating additional advances to 1.4920 and then to the 1.4960-70 horizontal-region.
Have a nice trading-day ……
Daily Fundamental Dose: 03 – August – 2017
Hello Traders,
While overhaul in Trump administration and North Korea’s missile tests added strength to already looming political turmoil at US, uninspiring data-points continued playing their role in dragging the US Dollar Index (I.USDX) towards testing the lowest level in fifteen months. On the other hand, hawkish mood at ECB & BoE, backed by comparatively stronger economics, has been helping the EUR and the GBP respectively while commodity basket and the commodity linked currencies, like AUD, NZD and CAD, managed to capitalize greenback’s south-run.
However, Thursday’s announcement of Quarterly Inflation Report (QIR) by the Bank of England (BoE), followed by Friday’s monthly release of Employment report, continue to maintain their higher degree of importance in the eyes of investors to forecast near-term market moves. Let’s quickly understand fundamentals behind them.
Economics & Politics Both Remain Against The USD
Even if latest US GDP, housing market figures and Durable Goods Orders portrayed strength of world’s largest economy, disappointing Inflation details seem a big barrier into the Fed’s rate-hike plan for which traders are also concerned. Additionally, political upheaval, including North Korea’s repeated missile-tests, allegations on Trump administration to avail Russian help during 2016 Presidential election and Republicans’ failure to get Healthcare bill repeal/replace passed in house, continue raising bars into the implementation of Donald Trump’s pro-growth policies on which he was selected to become 45th President of US. Though, majority of Federal Reserve policymakers continue expecting a reversal in inflation and stick to their plan of offering another rate-hike by this year-end together with cut to balance-sheet debt.
In case of the EUR, the ECB have now started respecting inflow of upbeat data-points and signaled autumn will be a time when policy tightening will be discussed, which in-turn helped the EUR to become the strongest G10 currency at the moment. Further, GBP also gained form BoE’s hawkish sentiment and welcome economics, together with expectations concerning soft Brexit, while JPY and Gold remained as buyers’ favorite due to their safe-haven feature. Additionally, global oil producers’ commitment to stick to the production-cut accord have now started helping the Crude prices with summer season and decline in gasoline inventories being additional reasons for energy prices to rise. Due to this, CAD, AUD and NZD have been in green region; however, recent dip in New Zealand’s quarterly jobs report and soft Chinese stats have been a concern for such currencies’ traders to refrain from being too hawkish.
During the present week, contrasting Manufacturing PMIs from China’s official and private sources, coupled with a bit dovish RBA and negative New Zealand employment change, affected the AUD and NZD while CAD couldn’t celebrate rising Crude prices and reversed from 200-week SMA while comparing to the USD. Further, some of the Fed policymakers continued terming inflation downtick as temporary and remained committed to their promise of another rate-hike in 2017 together with balance-sheet cut. Moreover, EU inflation figures remained strong by helping EUR up-moves and mixed announcements from UK PMIs couldn’t drag the GBP down. Additionally, the JPY and Gold failed to extend their prior advances due to month-start profit-booking and WGC report signaling drop in Gold demand during H1 2017.
The Super Thursday & Jobs-Day Gain Market Attention
Having observed a sustained downtick in the US Dollar during early-week, contrast to the on-going increase in EUR & GBP, market players are now trading slowly during the start of “Super Thursday” when BoE is scheduled to announce its QIR details. For the USD traders, Friday’s monthly release of employment details will become crucial to judge whether the Fed could keep maintaining its promise or not.
Let’s first talk about today’s UK Services PMI which is up for release before BoE meeting. The leading indicator to predict UK GDP seems strong to flash 53.7 mark v/s 53.4 previous number and can keep pleasing the GBP Bulls before the BoE releases Quarterly inflation report and its monetary policy meeting outcome. Even if the BoE isn’t expected to alter its present monetary policy, press conference from BoE Governor, just after the policy statement release and QIR announcement, together with QIR forecasts, will be observed closely.
During its May QIR release, the BoE revised down Unemployment forecasts but raised the labor productivity predictions while registering a short-term downward bias for the Inflation and less change in GDP.
Considering latest raft of optimism at BoE, Given the hawkish sentiment at BoE, upbeat economic projections in the QIR, coupled with positive Services PMI, could help the GBPUSD to extend its north-run while in an otherwise case the downturn may have limited tenure to prevail because of soft Brexit concerns.
Moving towards US employment report, the Non-Farm Payrolls (popularly known as NFP) registered a four-month high, to 222K, during its early-July release but is expected to print a bit soft number, to 183K, in Friday’s scheduled announcement. However, likely increase in Average Hourly Earnings, to 0.3% from 0.2%, coupled with a dip in Unemployment Rate, to 4.3% from 4.4%, may again depict the strength of US labor market. Additionally, Thursday’s ISM Non-Manufacturing PMI & Factory Orders are both signaling contrasting forecasts with ISM Non-Manufacturing PMI likely posting 56.9 mark against 57.4 but the Factory Orders may rise by +2.7% versus -0.8% prior.
At the political front, US seems eyeing to levy heavy duties on Chinese products in the country as policymakers doubt the dragon nation is violating some property rights while Russia’s order to cut US staff on its land performing diplomatic missions in response to new sanctions levied on Kremlin also seem a reason for worry to USD Bulls. Furthermore, uncertainty over Trump administration’s alleged relation with Russia during 2016 Presidential election and introduction of new leaders add the fuel to US political turmoil.
Hence, with economics likely registering mixed outcomes concerning the strength of US economy, coupled with political turmoil continue raising worrisome signs, chances of the US Dollar’s upside are less likely. However, strong jobs report may offer intermediate strength to the greenback in recovering some of its latest losses.
Other than US & UK details, Canadian jobs numbers, scheduled for release on Friday, also gain attention from investors as Canadian Employment Change might follow the route of weakness with 14.6K figures against 45.3K prior but with no expected change in Unemployment rate, which is at present 6.5%. As a result, the CAD’s present profit-booking might get extended.
Technical Analysis
EURUSD continues aiming for 1.2000 psychological mark but its follow-on up-moves might be confined by 1.2020-40 horizontal-region whereas GBPUSD has to clear 1.3280 resistance in order to meet the 1.3440-50 resistance-area. Further, USDJPY bounced off from 110.00 and may now aim for 111.55-60 but AUDUSD’s break of short-term ascending trend-line indicates its further downside to 0.7870 with 0.8015-20 acting as nearby resistance. Moving forward, NZDUSD may take a rest around 0.7370 and could reverse to 0.7480 while USDCAD needs to clear 1.2640 & 1.2770 in order to aim for 1.2860 but a dip below 1.2530 can again fetch it to 1.2425 support-mark.
Have a nice trading-day ……
Daily Fundamental Dose: 04 – August – 2017
Hello Traders,
Although “Super Thursday” offered noticeable GBP moves, mostly downside, another turn in US politics again dragged the US Dollar towards south. The GBP got a heavy drawdown when Bank of England (BoE) conveyed dovish messages in its Quarterly Inflation Report (QIR). The UK central bank lowered its forecasts for growth, inflation and wages while maintaining the monetary policy intact during Thursday’s announcement. Moreover, the Governor, Mark Carney, failed to impress Pound Bulls with his comments favoring much needed rate-hikes as he also communicated threats from Brexit. On the other hand, news that U.S. Special Counsel, Robert Mueller, is all set to impanel a grand jury to better investigate the alleged Russian intervention during 2016 Presidential election hurt the greenback which couldn’t enjoy upbeat Factory Orders’ print.
The EUR, on the contrary, remained benefited from the declines of USD and GBP because investors perceived ECB’s hawkish sentiment to be more authentic than that of its US & UK counterparts. Commodity currencies, like AUD, NZD and CAD, also failed to generate buyers’ interest as broader disappointment from US & UK signals weaker demand. The CAD had additional reason to decline with Crude getting hit by concerns of OPEC members’ progress on production-cut accord while JPY & Gold enjoyed safe-haven support.
Having witnessed magnified volatility during previous-day, market players remained on sidelines during early Friday when US is scheduled to announce monthly Job figures. However, mixed dialogues from RBA, via quarterly monetary policy statement, coupled with soft AU Retail Sales numbers and worries about US stand against China’s violation of intellectual property rights, kept offering intermediate moves.
The crucial US employment report is expected to reveal a mixed outcome as the Non-Farm Payrolls (popularly known as NFP), which registered a four-month high, to 222K, during its early-July release, might print a bit soft number, to 183K. However, likely increase in Average Hourly Earnings, to 0.3% from 0.2%, coupled with a dip in Unemployment Rate, to 4.3% from 4.4%, may again depict the strength of US labor market. On the other hand, Canadian Job numbers are also scheduled for release and may generate CAD traders’ interest. The Canadian Employment Change might follow the route of weakness with 14.6K figures against 45.3K prior but the Unemployment rate isn’t likely to change from its 6.5% mark.
While NFP is likely to flash a number near to 2017 average and the Unemployment, together with Average Earnings, seeking to post positive figures, the US currency might benefit from it. However, latest news concerning a tighter hold of Counsel on Trump administration, due to taking Russian help, as well as possible hard stance against China, may keep raising red signals for the US Dollar. Hence, it would be better for the USD Bulls to wait till the actual announcement and not being too greedy considering the political turmoil. In case of CAD, decline in Crude and expectedly soft employment figures can further stretch its latest profit-booking.
Technical Talk
Considering the EURUSD’s sustained trading above immediate ascending trend-line support of 1.1845, the pair is likely to challenge 1.2000 psychological magnet but may not surpass the 1.2020-40 horizontal-region. For USDCAD, the 1.2630 and the 1.2700 can act as nearby resistances with 1.2530 & 1.2480 being adjacent supports to watch. Further, EURGBP is struggling with 0.9045-50 horizontal-line, breaking which it can rise to 0.9130 & 0.9165 but a dip below 0.9000 may drag it to 0.8920 support.
Have a nice trading-day ……
Daily Fundamental Dose: 08 – August – 2017
Hello Traders,
Having witnessed first in three-week positive closing by the US Dollar Index (I.USDX), mainly due to Friday’s strong Job numbers suggesting another Fed rate-hike and a balance-sheet cut, the greenback gauge tried holding its last weekly profits during Monday. However, comments from two Federal Reserve officials, namely St. Louis Fed President James Bullard and Minneapolis’s Neel Kashkari, couldn’t allow the USD to enjoy that status as both the policymakers considered soft Inflation as a barrier for the central-bank’s future policy-path. Additionally, North Korea’s denial to accept the UN sanctions and negotiations over its nuclear program until US drops its hostile policies strengthened geo-political tensions for the US currency traders.
On the other hand, the EUR shrugged weak German Industrial Production release off with gains while GBP dropped on concerns that BoE wouldn’t be able to deliver its promised rate-hike. Further, commodity currencies declined with extended profit-booking in the overall basket while soft Inflation Expectations’ reading from New Zealand provided additional weakness to the NZD. Moving forward, JPY and Gold also witnessed some selling while Crude kept weakening on news concerning higher production from Libya & US hurting global output cut accord.
As we reach Tuesday, it’s another day filled with less of economics that started with upbeat Australian NAB Business Confidence Index and higher Trade Balance surplus from China. As a result, the commodity basket regained its strength and helped AUD, NZD and CAD to recover latest losses. For the rest of the day, Canadian Housing Starts, US JOLTS Job Openings and API crude inventories could offer intermediate market moves to the traders’ fraternity. Also, news that global rating institute, Fitch, raised its global growth forecast might help the commodity basket and the linked currencies to remain positive.
Unlike economic line, which is a bit shorter, the political platform has many on-going developments to observe. Among them, North Korea’s latest retaliation on UN sanctions and the US republicans’ failure to get their policies passed through House may gain the highest attention. Also, tensions between US, China and Russia, coupled with probe over Trump administration’s alleged relations with Kremlin during 2016 Presidential election, can keep entertaining investors.
While US JOLTS Job Openings may again portray strength of the labor market in world’s largest economy, market players might then become eager to witness upbeat Inflation figures on Friday to welcome the Fed’s hawkish mood. Though, political problems at US and optimistic ECB may not allow the greenback to rally across the board.
Technical Talk
With the break of seven-week long ascending trend-line support, GBPUSD seems now aiming to re-test 1.2980-75 support-zone with 1.3010 being nearby rest; however, pair’s recovery beyond 1.3060 can help it confront the 1.3100, clearing which it can again challenge 1.3150-60 area. Further, 111.00 and the 109.85-80 keep restricting USDJPY’s moves while NZDJPY struggles with 50-day SMA level of 81.40 in order to meet 81.00 and the 80.70 supports with 81.70 horizontal-line likely confining its near-term advances.
Have a nice trading-day ……
Daily Fundamental Dose: 09 – August – 2017
Hello Traders,
Following Friday’s upbeat employment details from US, the monthly figure of Job Openings and Labor Turnover Survey, or JOLTS, rallied to record high on Tuesday and reinforced trade sentiment that favors Fed’s tighter monetary policy. As a result, the US Dollar Index (I.USDX) managed to post a positive daily closing while EUR and GBP had to bend down against the greenback. However, the GBP was comparatively weaker after private UK data revealed that consumer spending fell for straight three months in July. Further, the AUD, NZD and CAD also witnessed downside pressure due to overall weakness in commodity basket whereas Crude oil weakened with mounting speculations that global oil-producers may not be able to conquer macro supply-glut. Even if everyone was ready to accept USD’s strength, the JPY and Gold refrained to do so mainly because of the prevalent geo-political tensions.
During late-Tuesday, also in early Wednesday, global financial markets witnessed another blow from US – North Korea relations after leaders of both the nations exchanged heated arguments to press after North Korea indicated its readiness to hit Guam, a US Iceland, with ballistic missile. With this, the safe-havens, mainly the JPY and Gold, rallied considerably while US Dollar and commodity currencies nursed losses. Also, the early-day releases of China’s soft CPI figure and unchanged PPI, together with disappointing AU Westpac Consumer Sentiment, dragged the AUD, NZD and CAD towards south. Furthermore, leaders of OPEC & non-OPEC countries that together agreed to cut their production stood ready to exert more pressure on some participants which aren’t following the rules strictly, which in-turn helped the Crude recover a bit.
For the rest of the day, Canadian Building Permits, US Prelim Nonfarm Productivity and Unit Labor Costs might entertain short-term traders before the official release of Crude oil from US and RBNZ’s monetary policy meeting come forward to shake the desks. Also, any news concerning North Korea and US might keep giving additional hints to investors that can propel safe-havens.
Looking at the forecasts, Canadian data-points may hurt the Loonie (CAD) but the losses can be limited if Crude inventories follow API pattern of higher drawdown. In case of the USD, concerned economics are likely offering strength to the greenback but political turmoil may drag the greenback towards south while NZD can witness further downside if RBNZ utters some dovish statements even if its not expected to alter present monetary policy.
Technical Talk
NZDUSD is resting on the 50-day SMA level of 0.7305 ahead of the RBNZ, breaking which chances of its drop to 0.7280 & 0.7250 can’t be denied; though, 0.7400 continue being strong resistance for the pair. Further, EURUSD broke 1.1740 and may re-test 1.1680 support with 1.1830 acting as nearby resistance while EURJPY continue declining towards 128.55-45 support-zone with 129.50 likely adjacent resistance to watch.
Have a nice trading-day ……
Daily Fundamental Dose: 10 – August – 2017
Hello Traders,
While last week’s US employment details helped the US Dollar Index (I.USDX) to register first in a previous four-week positive closing, this week’s JOLT’s Job openings and Prelim Nonfarm Productivity supported the greenback gauge to maintain its strength. However, recent geo-political tension between US & North Korea has been a big reason of worry for the global traders which in-turn curbed the USD’s gains. Though, lack of influential economics kept restricting market moves ahead of UK Manufacturing Production & US Inflation figures which now gain investors’ attention together with on-going political turmoil.
Let’s briefly discuss some fundamentals relating to the upcoming details/events to better target trade opportunities.
Lack Of Big Releases Drove Investors To Politics
With only few releases on hand till now, including Chinese Inflation figures and RBNZ meeting, global financial-market players concentrated more on the political tensions between the North Korea and US. Due to this, the safe-havens, namely, JPY, Gold and CHF, remained strong during the present week; however, JPY couldn’t shine as much as Gold and CHF mainly because of the Japan’s proximity to the North Korea which may hurt its currency if the war-like situation breaks out.
The EUR on the other hand, remained a bit shy while GBP dropped on concerns that last week’s not so positive BoE announcement might hinder UK’s growth. Further, AUD had to remain calm on China’s soft CPI while NZD dropped on RBNZ’s comments saying accommodative monetary policy are here to stay for longer due to inflation threats. Additionally, CAD failed to enjoy Crude’s strength gained from depleting US inventory levels.
US Inflation Gains the Lime-Lights
Even if exchange of hard statements from US & North Korean leaders have been on headlines till now, Thursday’s US PPI, followed by Friday’s CPI, could gain investors’ attention as the same could reflect whether the Fed is capable enough to make its promises true. At the UK, monthly releases of Manufacturing Production & Goods Trade Balance can entertain GBP traders while geo-political news could keep offering intermediate moves.
Looking at the latest communications from few FOMC members, many of them are still worried about the inflation and term it as a barrier for the Fed’s rate-hike plan; however, majority of them have no doubt about the central bank’s intention to curtain US balance-sheet debt. Hence, US inflation gains even more importance while forecasting upcoming moves of the Federal Reserve.
Some of the economists term recently weak USD to benefit the CPI and consider the gauge to rise soon. Though, there are many who doubt on the Fed’s capacity to offer another rate-lift during 2017 due to the weakness in price-rise.
The inflation gauge, CPI, is likely flashing 0.2% mark on a monthly basis versus 0.0% prior and 1.8% YoY increase against 1.6% earlier. However, Core CPI may register a 0.2% MoM growth compared to 0.1% earlier but being stagnant at 1.7% while considering yearly stat. Moving towards PPI, the factory gate price-measure isn’t likely to change from its 0.1% prior MoM but might increase to 2.2% from 2.0% if considering YoY numbers.
If we consider the upcoming US inflation gauge as important, which actually is, then the greenback might have a reason, as per the forecasts, to remain strong; however, political turmoil concerning US, China, Russia and North Korea may restrict the USD’s gains.
In case of the UK Manufacturing & Goods Trade Balance, Manufacturing Production likely to recover from its -0.2% contraction to 0.0% figure and the Goods Trade balance might portray less deficit of -11.0B against -11.9B prior. Other than the UK economics, the on-going uncertainty relating to the BoE’s future path of actions and Brexit discussion may add to the GBP volatility.
With UK data-points indicating storng GBP to remain for some more time, macro uncertainty is a factor that can curb the Pound’s strength.
Technical Analysis
Following its failure to sustain 1.1900 break, the EURUSD seems all set to revisit 1.1610 support, breaking which it can drop to 1.1485 while an upside break of 1.1825 and the 1.1910 become necessary for the pair to target 1.20000 psychological magnet. For GBPUSD traders, 50-day SMA level of 1.2920 seems coming back on the chart, breaking which 1.2840 may be next to watch with 1.3160 continues acting as near-term important resistance. Further, AUDUSD needs to clear 0.7830 support in order to meet 0.7725 but on upside 0.7950 can be considered as strong resistance while NZDUSD already dropped below 0.7300 and is aiming 0.7200 with 0.7370 acting as adjacent resistance. Additionally, USDCAD may rise towards 1.2770 to flash 1.2860 with USDJPY keep signaling 109 to reappear on the chart and the USDCHF likely confined between 0.9550 & 0.9770.
Have a nice trading-day ……
Daily Fundamental Dose: 11 – August – 2017
Hello Traders,
Even if Donald Trump’s first round of warning to North Korea was taken lightly by investors, US President’s tough remarks to promise massive response to missile-tests against America or its allies shook global trading desks on Thursday. With the run towards risk-safety market players supported JPY, Gold and CHF prices while cutting down the commodity and USD bets. The US Dollar has additional drawback in the form of four-month low PPI & higher than expected Jobless Claims. On the other hand, the EUR managed to remain firm but the GBP had to ignore positive Manufacturing Production outcome as UK trade deficit widened. Further, Crude prices also witnessed downside pressure even if major OPEC members pledged to meet promised production cuts as recent reports showed OPEC output rallied to year’s high thanks to Libya.
While political tension between US & North Korea has been grabbing the headlines off-late, yesterday’s disappointing US PPI raised worries of greenback Bulls ahead of today’s headline CPI announcement. On the economic front, RBA Governor, in his testimony before the House of Representatives Economics Committee, said the bank’s next move into the interest-rate would likely be up but it won’t come too soon, which in-turn dragged AUD further towards south. Additionally, weak German WPI triggered a mild profit-booking in EUR while the JPY also kind of stopped rising further during the Mountain Day public holiday in Japan.
For the rest of the day, headline release of US inflation and comments from two FOMC members, namely Robert Kaplan and Neel Kashkari could shift market attention a bit off from geo-political crisis. During his public appearance on Thursday, the New York Fed President, William Dudley, said that the inflation may take some more time to reach Fed’s 2.0% target and hence today’s CPI would be closely observed to justify his forecast. Also, following statements from Presidents of Federal Reserve Bank of Minneapolis and Dallas could convey US central bank’s say on the actual inflation mark.
Given the Inflation figures meet its 0.2% mark on MoM and 1.8% on YoY, chances of the USD to recover some of its latest losses are high. However, on-going war-like situation between US & North Korea can keep greenback’s gains under check. In all these worrisome environment, JPY, Gold and CHF are likely to be benefitted but upbeat US details may push them toward trimming some of their recently added weights.
Technical Talk
While short-term descending trend-channel portrays AUDUSD’s downturn, the 0.7840-35 horizontal-line and the 0.7820 channel-support are likely immediate rests that the pair can avail in case of stronger US CPI; though, 0.7890 & 0.7920 may restrict its immediate upside in otherwise scenario. Further, break of 109.00 indicates brighter chances for the USDJPY’s drop to 108.30 with 109.50 & 109.85 acting as adjacent resistances. As a result, AUDJPY is more likely to extend its south-run towards 85.00 after it recently broke 85.65-60 horizontal-line but an upside clearance above 50-day SMA level of 86.15 may help it aim 86.55.
Have a nice trading-day ……