Daily Fundamental Dose

Trading Discussion News and Economy
883

Daily Fundamental Dose: 28 – September – 2017

Hello Traders,

Following last week’s upbeat FOMC announcement, that offered second consecutive weekly gain to the US Dollar Index (I.USDX), the greenback continued trading up since the start of the present week as Fed Chair’s hawkish statement, welcome Durable Goods Orders and Trump’s Tax plan spread optimism concerning the US currency. On the other hand, inconclusive election results at Germany & New Zealand, dovish tone of the BoC Governor and a downbeat RBNZ meeting played their role to disappoint EUR & commodity currency traders. However, some of the crucial economic releases, like US & UK GDP, EU CPI and Chinese PMI, coupled with BoE’s conference, are still left to take place during the rest of the week and hence investors are eagerly waiting for them.

Let’s discuss fundamentals concerning each one of these crucial events/releases.

What Happened Last Week?

While FOMC’s announcement to start curtailing its $4.5 trillion balance-sheet debt soon, together with favor for another rate-hike, helped the US Dollar to ignore soft economics, the EUR also remained a bit stronger with welcome PMI numbers. Though, GBP had to trim majority of its previous gains on Theresa May’s inability to provide details of Brexit and Moody’s British credit rating-cut. Further, the JPY and Gold both declined with rising USD and expectations that Japanese PM will soon announce snap election. Additionally, NZD managed to please buyers with welcome GDP whereas AUD and CAD became the victim of decline in commodity prices.

The Tale Of This Week’s Market Performance

Ever since the start of trading on Monday, financial markets remained too volatile. Firstly, it was the weekend elections at New Zealand and Germany that both couldn’t please ruling parties, even if Angela Merkel secured fourth term as Chancellor, as the pre-election government need to form a coalition with minorities, which aren’t happy with the rulers, to remain in power. Secondly, the exchange of war-like statements between US President and North Korean foreign minister, that were given lesser importance as it seems being a fashion off-late.

Moving on, Fed Chair’s hawkish statement concerning the need of rate-hike, followed by upbeat Durable Goods Orders and US President’s dramatic tax plan to overhaul three decade old patterns pleased USD buyers. As a result, the commodity currencies, like AUD, NZD and CAD, had to decline wherein the NZD has additional drawback of election result and a dovish RBNZ which forecasted weaker economic growth outlook and slowing inflation while the CAD plunged after BoC Governor refrained to praise the need of another rate-hike after already announcing two in the present year.

In case of the EUR, German election and ECB President’s recent statements mentioning currency volatility as a source of uncertainty and requirement of “ample” accommodation provided additional weakness to the regional currency whereas GBP kept being weaker ahead of its GDP release due to disappointment from Brexit proceedings. Additionally, the JPY got another shock, other than rising USD, as Japanese PM finally dissolved lower-house of parliament and signaled snap elections to take place in nearly a month while the Gold also dropped on greenback’s strength. Furthermore, Crude prices couldn’t enjoy declining inventory figures as rising gasoline stocks dragged the energy prices to south; though, early week threat from Turkey to close Kurdish export & optimism by global oil producers still help the energy front prices.

What Next?

Having witnessed all what’s mentioned above, market players are eagerly waiting for Thursday’s US GDP and Friday’s EU Flash CPI & UK GDP, followed by China’s official Manufacturing & Non-Manufacturing PMI scheduled for release on Saturday. Additionally, speeches by some of the global central-bankers at the Bank of England’s conference could also offer important information to determine market moves.

Starting with Thursday, the Final reading of Q2 2017 US GDP is likely to please investors with 3.1% growth-mark, surpassing 3.0% second estimate, 2.6% advance forecast and 1.2% prior rise. Further, Final UK GDP figure for Q2 2017 may confirm initial forecasts of 0.3% growth while EU Flash CPI could please regional currency optimists with five-month high figure of 1.6% against 1.5% prior but Core CPI is expected to remain unchanged at 1.2%. Moving on, US Chicago PMI may register soft figure of 58.5 versus 58.9 earlier whereas China’s official Manufacturing PMI may close the week with 51.8 number against 51.7 earlier mark.

Should we observe BoE’s conference, monetary policymakers from Australian, US and UK are expected to share the stage in discussing their views about global economy while UK celebrates 20 years of independence. As the Fed Chair and ECB President have already spoke for their respective currencies during early-week, chances of them speaking anything more important and causing high volatility are too less. However, Australian central banker could become another reason for the AUD’s plunge.

Hence, while economic data-points are likely to keep helping the USD, the EUR may witness pullback on strong CPI while GBP should justify its strength with upbeat UK GDP.

On the other hand, China’s PMI may help AUD, NZD and CAD to recover some of their latest losses if it prints good numbers; though, comments from central-bankers seem important to analyze before judging any further policy moves.

Additionally, on-going tensions emanating from North Korea is something that market optimists shouldn’t ignore.

Technical Analysis

With the EURUSD’s break of nearly five-month old ascending trend-line, the pair is likely to revisit 1.1665-60 support-zone, breaking which it could further drop to 100-day SMA level of 1.1550 whereas 50-day SMA level of 1.1840 seem immediate resistance for the pair. GBPUSD is also likely to decline with 1.3300 and the 1.3250 being adjacent supports and 1.3460 & 1.3600 acting as nearby resistances. Further, USDJPY is all set to meet 113.70 with 112.30 being a good short-term support whereas USDCAD’s sustained break of 1.2410 indicates its north-run towards 1.2550. Additionally, AUDUSD should dip below 0.7800 in order to test the 100-day SMA level of 0.7755 while 200-day SMA level of 0.7145 seems a strong support for the NZDUSD with 0.7250 being adjacent resistance.

Have a nice trading-day ……

884

Daily Fundamental Dose: 29 – September – 2017

Hello Traders

Thursday’s better than forecast US GDP couldn’t please the US Dollar Bulls, even after fueling the greenback towards completing the best week of 2017, as Republicans struggled to please opposition and some of their own members with the so called “miracle” tax plan of US President, Donald Trump, which some say lacked details. As a result, the EUR got a chance to bounce-back from six-week low while GBP also strengthened after EU & UK representatives confirmed better proceedings of negotiations concerning the Brexit. Further, commodity currencies, like AUD, NZD and CAD, recovered some of their latest losses due to quarter-end buying ahead of week-long holidays in China but the same affected the Crude prices, which have rallied too much recently, with a decline on daily basis. Moving on, JPY and Gold registered positive closings with US Dollar’s weakness and expectations of North Korean action after a week-long silence.

While quarter-end position closings are still giving adverse impacts to majority of currencies on early Friday, the JPY got a good result of more than two-year high inflation and better than forecast industrial production. However, negative release of German Retail Sales is restricting the EUR’s latest recovery ahead of EU Flash CPI whereas GBP is also trading weaker before the UK GDP is scheduled for announcement.

Looking at the rest of the day and rest of the week releases, GDP numbers from UK & Canada, coupled with EU Flash CPI, can entertain investors on Friday while China’s official Manufacturing & Non-Manufacturing PMI could end the week on Saturday. Moreover, speeches by BoE Governor, ECB President and RBA Governor, at the event celebrating 20 years of independence of UK central bank, could offer additional information to determine market moves.

With majority of US details are out, chances of the USD to have less volatility are too high; though, today’s Personal Income and Spending numbers, coupled with Core PCE Price Index, shouldn’t be ignored as the Fed Chair recently said that the central bank would keep giving importance to incoming data-points before deciding any strong action even if the rate-hike is more likely. Further, EU CPI may help the EUR to extend its latest advances while UK GDP might not deliver too upbeat result to please Pound buyers. Moving on, Canadian GDP, with its lesser than prior forecast, might keep nurturing the CAD Bears but strength of overall commodity basket could limit excessive south-run of the currency.

Technical Talk

Although 1.3340-30 offers strong support to the GBPUSD, failure to surpass immediate descending trend-line, at 1.3430 now, continue indicating the pair’s weakness. The USDJPY, on the contrary, may have to clear the 112.20 TL support in order to meet the 111.50 while 112.70 & 113.30 seem nearby important resistances. Further, AUDNZD might find it hard to clear the 1.0925 and 1.0980 resistance, which indicate brighter chances of its drop to 1.0835 and the 1.0800.

Have a nice trading-day ……

885

Daily Fundamental Dose: 03 – October – 2017

Hello Traders

While upbeat economic details and hawkish statement from FOMC Chair, coupled with optimism surrounding US President’s Tax plan, helped the US Dollar Index (I.USDX) to post third consecutive weekly gains, the EUR remained down due to a bit soft Inflation and ECB President’s refrain to praise stronger Euro. Further, the GBP also declined with uncertainty surrounding Brexit details whereas JPY, CHF and Gold became the victims of positive market sentiments while Japanese PM’s call for snap election on October 22 weakened the national currency. Additionally, commodity currencies, like AUD, NZD and CAD, had to bear the burden of rising USD wherein the RBNZ’s repeated support for loose monetary policy provided additional weakness to the NZD. However, the Crude prices kept being strong as decline in gasoline inventory levels and Turkish President’s threat to cut Kurdish exports favored energy Bulls.

Moving towards early days of October, Monday moves were largely governed by thirteen-year high US ISM Manufacturing PMI that propelled the greenback’s previous surge while the EUR got another reason to worry, i.e. from Catalonian independence referendum threat, which dragged the regional currency further towards south. Further, UK Construction PMI weakened the GBP whereas Crude witnessed profit-booking moves and commodity currencies couldn’t avoid their weakness. Moreover, JPY, Gold and CHF kept being despicable due to risk-on market mood.

At the start of Tuesday, news of a gunman killing more than 59 people in Las Vegas hotel and RBA’s concern for growth, together with no change in monetary policy, entertained investors while North Korea’s latest threat to Japan rejuvenated Geo-Political crisis. At the energy front, rising exports from Iraq and some other OPEC members became concern for Crude’s downside.

In addition to Chinese markets’ week-long holidays, the German bourses are also closed for Tuesday because of German Unity Day; though, latest rise in Geo-politics and UK Construction PMI, together with a public appearance of Federal Reserve Governor, Jerome Powell, are likely triggers that could keep investors busy for the day.

With the broader market sentiment favoring USD buyers, any news for the progress on Trump’s proposed tax-plan and/or Fed rate-hike may help the greenback to extend its north-run while no major releases from EUR can keep restricting the currency moves. Further, GBP is less likely to recover its latest gains unless witnessing extremely upbeat PMI figures due to Brexit concerns but commodity currencies may witness profit-booking.

Technical Talk

EURUSD’s sustained trading below 50-day SMA level of 1.1845 signals brighter chances of its downtick to 1.1660-55 horizontal-line while GBPUSD is struggling with an upward slanting TL support of 1.3260, which if broke could flash 1.3160 & 1.3130 on the chart with 1.3340 & 1.3460 seem nearby resistances. Further, USDCHF finally broke the four-month old descending TL level of 0.9740 and is rising towards 0.9800 and 0.9825-30 but failure to sustain the break can again drag the quote to 0.9700 round-figure.

Have a nice trading-day ……

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886

Daily Fundamental Dose: 09 – October – 2017

Hello Traders

With the upbeat ISM Manufacturing PMI & hawkish comments from FOMC members setting the tune of US Dollar’s early-week north-run, welcome numbers from labor market helped the greenback gauge (I.USDX) to post fourth consecutive weekly advance. The EUR, however, had to bear the burden of Independence referendum at Catalonia whereas GBP became the victim of political upheaval at UK and weaker PMI figures. Further, the AUD couldn’t digest the RBA statement as one of the policymaker favored a rate-cut while NZD dropped on downbeat GDT price index and soft commodity prices due to China’s week-long holiday. Additionally, CAD couldn’t enjoy not too weak job report due to plunge in Crude prices, on the back of OPEC secretary’s comments favoring the requirements of strong measures to sustain the recovery in global supply-glut, whereas Gold and JPY maintained their south-run as risk-on market-mood kept hurting safe-havens.

Having witnessed another positive week for the US Dollar, traders booked some profits off from the greenback on Monday as news that the North Korea is preparing for another missile-test that could reach west coast of the United States rejuvenated geo-political worries. Also, no developments on Trump’s tax proposal and worries over Fed rate-hike became additional factors to hurt the USD. The EUR performed a bit better at the start of the week as latest news showed some of the Catalonian troops being against the independence referendum and the GBP also recovered some of its losses. Moreover, commodity currencies also got a boost from China’s return to markets after long holidays whereas Gold and JPY registered recovery on weaker USD. However, soft print of China’s Caixin Services PMI confined excessive gains of the commodity basket.

While renewed Geo-political tensions at US and China’s comeback to trading is helping to drive the anti-USD moves during early-day, holidays at US, Canada and Japan are likely to restrict rest of the day’s momentum. Though, upbeat German Industrial Production might help the EUR to extend its latest recovery and comments from UK PM, relating to no strife between her party, could support the GBP.

In case of the commodity currencies, like AUD, NZD and CAD, China’s active trading sessions may favor their short-covering while latest news that Saudi Arabia would keep restricting its output to support prices may back Crude to reimburse its losses. The USD, however, might not remain too idle as the holiday is a partial one and some markets are still open at the world’s largest economy.

Technical Talk

AUDUSD’s inability to clear 0.7780 indicates its 0.7730 and the 0.7700 re-test while a break of 0.7780 may help it claim the 0.7810. Further, the USDCAD observes the upward slanting TL, at 1.2500 now, and signals 1.2560 & 1.2600 to reappear on the chart. Moreover, CADJPY continue struggling with 89.70-60 and the 89.45 support levels that in-turn favor the pair’s pullback to 90.45 and the 90.80 resistances.

Have a nice trading-day ……

887

Daily Fundamental Dose: 10 – October – 2017

Hello Traders

Having witnessed another positive weekly closing by the US Dollar Index (I.USDX), investors adhered to holiday mood on Monday but didn’t refrain to cover some of their latest profits after a spat between Republicans is seen as a drag to US President’s tax plan and the threats emanating from North Korea strengthened. The same helped the EUR to post a daily gain, together with six year high German industrial output & hawkish comments from ECB member, while the GBP rallied noticeably after UK PM, Theresa May, shunned challenges to her designation and the British Labor cost also rose. Further, AUD and CAD kept being weaker even if Chinese players returned to markets but the NZD recovered a bit whereas JPY declined on market worries ahead of October 22 snap-election at Japan. Additionally, Gold gained on USD’s weakness while Crude also bounced from nearly a month’s low after OPEC Sercretary remained upbeat on production-cut agreement’s performance.

On Tuesday, when majority of traders re-joined their desks after long holidays, early day moves were largely governed by the worries over the North Korea’s missile-test as it might not hesitate to flaunt power on founding-day celebration of its ruling party. As a result, safe-havens like JPY, Gold and CHF remained strong while USD kept being weaker. Commodity currencies, like AUD, NZD and CAD, also turned positive when Chinese Statistics Bureau conveyed their optimism to surpass GDP growth forecast.

Moving forward, UK Manufacturing Production & Goods Trade Balance, coupled with Canadian housing market details, are likely to entertain investors when they observe economic calendar while news from UK, US and North Korea could keep offering interesting market moves. Moreover, public appearance of an FOMC member, Neel Kashkari, could also become important if someone is looking for clues concerning Fed’s next action.

In case of the UK details, the Manufacturing Production is expected to register a bit soft growth figure of 0.3% from 0.5% prior while Goods Trade Balance may reflect a cut in deficit with -11.2B figure against -11.6B prior. Further, Canadian housing market indicators are less expected to help the CAD while FOMC member’s comments can help the greenback regain its strength. However, Geo-politics are something that a traders shouldn’t ignore and are also indicating red signals to the recent rally of the USD.

Technical Talks

With its repeated failures to surpass 112.80, the USDJPY is likely to revisit 112.00 and the 111.50 support-levels while GBPUSD is again heading to confront the 1.3200 TL resistance, breaking which it can rise to 1.3230 but 1.3120 & 1.3090 may offer immediate rests to the pair. As regards to GBPCAD, the pair seems finding its difficult to clear 1.6530-20 resistance-zone and may re-test 1.6360-50 region.

Have a nice trading-day ……

888

Daily Fundamental Dose: 11 – October – 2017

Hello Traders

With a feud between US President Donald Trump and Republican Senator, Bob Corker, spreading worries over the Trump administration’s tax-cut plans, FOMC member Robert Kaplan’s statement favoring a wait and watch approach before announcing another Fed rate-hike dragged the US Dollar down on Tuesday. The EUR, on the other hand, managed to enjoy upbeat German Trade Balance figures when Catalonia’s President announced to discuss issues with Spanish PM & EU leaders before declaring independence while the GBP rallied after Manufacturing Production pleased Pound buyers and the UK PM Theresa May got public support from some of her party members to outline plan B for Brexit. Further, the AUD also closed in positive with welcome consumer confidence number while NZD and CAD followed the suit as overall commodity basket remained benefited from greenback’s weakness. Additionally, Crude extended its latest recovery on upbeat statements from OPEC secretary while JPY and Gold maintained their advances.

Moving forward, early-Wednesday moves were quite silent as absence of any news mentioning missile-test from North Korea eased geo-political tensions a bit while some traders were eagerly waiting for FOMC minutes to be released today. However, neither the commodity basket nor the safe-havens softened their stance but the GBP witnessed pullback.

Looking at today’s economic calendar, surge in Japan’s Machine Orders offer additional strength to the JPY while US JOLTs Job Openings & New Zealand FPI are the only data-points left for publishing during the rest of the day. Meanwhile, FOMC minutes become the crucial even of the day in addition to on-going political drama at US, EU & UK.

As Federal Reserve signaled one more rate-hike before 2017 end, coupled with gradual trimming of balance-sheet debt, in its latest meeting, the minutes will be closely observed to see how many FOMC members were in favor of such decision. Moreover, recent communications from policymakers have been mixed and that in-turn increases the importance of the event. Furthermore, JOLTs Job Opening may become another employment number, after NFP, which might reveal soft figure.

At the political front, news concerning how Republicans view their inside cracks with Mr. President and North Korea’s missile-test could offer noticeable USD moves. Further, it would also be interested to see how Catalonia’s situation and Theresa May’s public support help EUR and GBP respectively.

Technical Talk

Considering a short-term ascending trend-channel formation, the EURUSD is likely heading to 1.1860-65 resistance-region while a downside break of 1.1795 can fetch it to 1.1750 re-test. In case of the NZDUSD, break of 0.7050 could quickly drag the pair to 0.7000 while 0.7100 & 0.7150 acts as nearby resistances to watch. Furthermore, EURJPY might find it hard to clear the 133.00–133.10 region and can revisit the 132.20 TL support.

Have a nice trading-day ……

889

Weekly Fundamental Dose: 12 – October – 2017

Hello Traders

While last week’s upbeat economics favored the US Dollar Index (I.USDX) to complete fourth consecutive weekly advance, feud between Republican leaders and not so strong FOMC minutes has been dragging the greenback down during the week. As a result, commodity basket and safe-havens recovered some of their latest losses while EUR and GBP also managed to shine. However, receding tensions emanating from North Korea and Catalonia again emphasize on US inflation figures to determine near-term moves of the US Dollar after the Fed policymakers seem more concerned for it prior to performing on their promise of another rate-hike.

Let us discuss fundamental that could direct immediate market momentum.

What Happened Last Week?

With the rising US wages and ISM Manufacturing, coupled with hawkish comments from FOMC members, the USD managed to sustain its previous strength but the EUR had to bear the burden of ECB President’s refrain to appreciate strong currency and tensions emanating from Catalonia’s Independence referendum. Further, political difference amongst Theresa May’s party and downbeat PMI readings kept weakening GBP whereas JPY and Gold continued trading south on greenback’s strength. Additionally, commodity currencies, like AUD, NZD and CAD, remained mostly down due to China’s absence and soft data-points while Crude dropped heavily on concern that global production-cuts require more efforts to balance oil market.

The Tale Of Current Week

Present week started with holidays at US, Canada and Japan but speculations concerning North Korea’s another missile-test on anniversary of its party foundation helped the JPY and Gold to recover some of their losses whereas China’s return to market after week-long holidays favored AUD, NZD and CAD to remain strong. The US Dollar then got a hit from Wednesday’s FOMC minutes which showed some policymakers still remain concerned for sluggish inflation and want to examine the causes before favoring another rate-hike.

Further, the EUR got support from receding tensions from Catalonia after President decided to have to a word with Spanish and EU leaders before formally announcing the independence while GBP strengthened as Theresa May conveyed no strife between the party and signaled optimism about Brexit negotiation. Moreover, the Crude remained mostly volatile by rising early-week on OPEC Secretary’s upbeat comments and trimming some weight on API inventory data.

What Next?

Having received mixed signals from FOMC members and recent minute statements, investors are more concerned about Friday’s US CPI as a soft figure might push some of the policy doves to vote against another rate-hike. Additionally, Retail Sales and Preliminary UoM Consumer Sentiment are some other consumer-centric data-points, scheduled for release on Friday, which might entertain analyst fraternity. On the other hand, China’s Trade Balance seems the only reading to please commodity traders.

Prior to the crucial Friday, Thursday’s US PPI and official announcement of Crude inventories, together with few speeches from FOMC members, could offer intermediate trader opportunities.

Starting with Thursday’s US PPI, the factory gate inflation could please Bulls with 0.4% number versus 0.2% prior but Crude Inventory figure might follow API numbers by registering -1.9M drawdown against -6.0M prior. Moving on, Friday Chinese Trade Balance might hurt upbeat sentiment of commodity traders by flashing 266B stat from 287B prior.

While observing US Consumer-centric details, previous month CPI pleased investor fraternity with 1.9% YoY figure (0.4% MoM) and the forecasts concerning tomorrow’s release are also indicating 2.3% mark (0.6% for MoM). Though, Core CPI isn’t expected to change from its 0.2% mark on a monthly basis but might rise a bit to 1.8% from 1.7% earlier YoY number. In case of Retail Sales, the stat can reverse -0.2% contraction with +1.5% growth while Core Retail Sales may extend prior 0.2% expansion to 0.9% advance whereas Prelim UoM Consumer Sentiment could again paint a rosy picture of US consumer sentiment with 95.4 mark compared to downwardly revised 95.1 prior.

In case of speeches from FOMC members, two policymakers, namely Lael Brainard and Jerome Powel are both expected to speak on Thursday and might convey their thoughts on inflation and rate-hike chances, which in-turn could direct immediate USD moves.

Considering upbeat expectations from US Inflation figures, together with no action from North Korea, the US Dollar is likely to recover its early-week losses after the CPI figure if the actual releases match forecast.

For EUR and GBP, latest optimism concerning Brexit and Catalonia are the forces that might help both these currencies while commodity basket, together with safe-havens, could trim some of their recent weights on greenback’s strength.

Technical Analysis

Even after breaking the 1.1840 resistance-mark, the EURUSD needs to surpass the 1.1915-20 in order to aim for 1.2000 while 1.1700 and the 1.1665-60 continue being strong downside supports for the pair. The GBPUSD cleared immediate TL resistance and aims for 1.3300 and the 1.3380 resistances with 1.3130 & 1.3020 acting as nearby rests while USDJPY needs to close below 200-day SMA level of 111.80 to revisit 111.00 but an upside break of 112.40 can help it register 113.10 on the chart. Further, AUDUSD again heads to 0.7860-65 with 0.7745 support whereas NZDUSD’s latest bounce from 0.7050-55 support-zone indicates brighter chances of its up-move to 200-day SMA level of 0.7160. At the end, USDCAD’s closing beneath 1.2400 may fetch the quote to 1.2340 & 1.2300 with 1.2600 keep acting as strong upside resistance to the pair.

Have a nice trading-day ……

890

Daily Fundamental Dose: 17 – October – 2017

Hello Traders

Having posted a negative weekly closing, the US Dollar Index (I.USDX) managed to recover some of its latest losses on Monday as seven-year high Empire State Manufacturing Index and speculations that Fed’s next leader could be a hawk propelled the greenback. The EUR, on the other hand, declined on political tensions emanating from Austria, Catalonia and Germany whereas GBP dropped as expectations of a hard Brexit grew. Commodity currencies, like AUD and CAD, also trimmed their gains earned after China’s inflation release but the NZD remained strong due to better than forecast inflation figure. Further, Gold and JPY adhered to losses due to USD’s rise while Crude stretched its north-run on escalating tensions between Iraq & Kurdistan.

While market speculations favored USD on Monday, the Bulls seem extending their support to the greenback on Tuesday as recent improvement in US manufacturing figures and Fed Chair’s hawkish statements continue indicating one more rate-hike during 2017. However, latest threat from North Korea is keeping the US Dollar’s up-moves under check while problems as Iraq and Kurdistan, coupled with EIA report showing higher commitment to production-cut by OPEC, helped the Crude prices. Moving on, the early-day release of RBA minutes provided additional weakness to the AUD as the central bank kept praising lower interest-rate.

Observing today’s economic calendar, one thing is clear that Tuesday is an important day for the GBP traders as UK CPI and BoE Governor’s testimony in front of British parliament’s treasury committee, the fist after June election, are scheduled for the day. While the UK CPI is likely to keep pushing the BoE for the first in a decade rate-hike, it would be interesting to see how Mr. Carney sees the national economics and central bank’s role going forward. Hence, sustained advances by the British inflation gauge and Governor’s hawkish statement, which are more likely, could help the GBP to regain its strength. Though, a disappointment could also have higher repercussions and hence proper care should be taken while trading the cable.

On the other hand, ZEW Economic Sentiments for EU & Germany, followed by EU Final CPI, are likely triggers that the EUR traders shouldn’t miss while US Industrial Production may help the USD to extend its recent recovery. However, Geo-political concerns, be it from North Korea or from middle-east and Europe, in addition to festival demand from India, could rejuvenate the JPY and Gold strength.

Technical Talk

Following its failure to surpass 0.7200, the 0.7145 and the 0.7110 are likely regaining focus as far as the NZDUSD is concerned; though, an uptick beyond 0.7200 could help the quote to aim for 0.7240 & 0.7260 resistances. Further, the USDCAD again rises towards 1.2600 and the 1.2665-70 north-side numbers with 1.2450 & 1.2400 acting as immediate supports. Additionally, EURAUD seems failing to justify its bounce from 50-day SMA support of 1.4970 and hence the 1.4895-90 confluence comes back into the traders’ attention.

Have a nice trading-day ……

891

Daily Fundamental Dose: 18 – October – 2017

Hello Traders,

While upbeat US Industrial Production confirmed the strength of manufacturing activity into the world’s largest economy and propelled chances of the Fed rate-hike, the US Dollar Index (I.USDX) managed to post consecutive second positive daily closing. The EUR continued struggling with its own political problems at Spain and Germany which led the former to cut its 2018 growth forecast whereas lesser than expected ZEW Economic Sentiment provided additional weakness to the regional currency. Further, the GBP ignored upbeat CPI on comments from BoE Governor who cited hard Brexit risk whereas JPY and Gold remained tilted to downside due to stronger USD. Commodity currencies, namely AUD, NZD and CAD, became victims of profit-booking ahead of twice in a decade conference of China’s rulling party while Crude maintained its strength on declining API inventory figures.

At the start of Wednesday, markets remained calm and investors were all ear to Chinese President’s inaugurating speech at once in a five-year party conference which will continue for a week. Mr. Xi put pressure on Geo-political uncertainty in the opening remarks but later assured of good performance by the world’s second largest economy. As a result, AUD, NZD and CAD all started declining while Crude managed to remain unaffected due to prevailing Geo-political tensions at Iraq, Iran & US.

In addition to news from China, traders are also likely to observe UK Jobs report, US housing market details and crude inventory to determine near-term market moves. Moreover, speech by ECB President and public appearances of some FOMC members could also influence the day’s trade sentiments.

Looking at the UK employment stats, increase in Claimant Count is a thing that might keep hurting the GBP while US housing market figures are likely to favor greenback’s extended north-run. Though, comments from policymakers might affect the currencies adversely if any of the leaders chose to deviate from their respective central bank communications.

Technical Talk

Break of immediate TL support and expected increase in UK Claimant Count Change is what indicating GBPUSD’s further downside to 1.3110 and the 1.3070 supports while 1.3250 and 1.3290 may act as nearby resistances for the pair traders to watch. Further, AUDUSD is presently trading around 0.7825 TL support, breaking which it could drop to 0.7795 and then to 0.7770 with a break above 0.7865 signaling pair’s rise towards 0.7900. At the end, the EURCAD’s repeated failures to clear the 100-day SMA level of 1.4775 seems finally drags the pair in direction to 1.4630 and the 1.4590 supports.

Have a nice trading-day ……

892

Daily Fundamental Dose: 23 – October – 2017

Hello Traders,

Last week, upbeat Manufacturing indices and US Senate approval to the President’s 2018 budget blueprint were the main triggers that helped the US Dollar Index (I.USDX) to regain its weekly strength while EUR couldn’t please the Bulls as soft economics and political problems at Spain continued hurting the regional currency. Further, the GBP failed to sustain its early-week gains after sluggish Retail Sales joined Brexit uncertainty whereas JPY and Gold both kept trading downwards on greenback’s strength. The NZD had to bear the burden of doubts concerning new governments’ ability to run the economy while AUD couldn’t enjoy upbeat Chinese and AU figures due to overall selling at commodity front. Additionally, Crude prices managed to extend its previous advances as depleting stockpiles and efficiency of global oil production-cut accord, coupled with tensions at Iraq and Kurdistan, favored the energy buyers.

During the weekend, the political plays at Japan and Spain offered enough of leverage to offer an active start of the present week. The Japan Prime Minister Shinzo Abe’s coalition won with a two-third majority in lower house of parliament while Spain went a step forward to dismiss Catalonian independence referendum result by taking control of key institutions, including public media and the regional police force. Additionally, British PM also sound optimistic for the second round of Brexit talks, scheduled for December, after the first completed with no major threats.

As a result, the JPY plunged against majority of its counterparts with the hopes that Abe would continue with his loose monetary policy favor whereas the EUR weakened with Spain’s desperate steps and GBP recovered some of its latest losses. In case of commodities, AUD and NZD witnessed short-covering but the CAD couldn’t stop declining.

With the on-going political waves offering good trade momentum during early-day, investors are less likely to stay disappointed due to small economic calendar, which only contains Canadian Wholesale Sales. At the political front, Catalan separatists are going to meet and prepare for the reply to Spanish efforts while discussions about Abe’s next move as strong leader and how Trump could entertain market players.

Even if the Catalan problems are vague at the moment, the same are less likely to affect the EUR badly as sooner or later the Germans and EU leaders might plunge on to handle the situation. In case of USD, recent victory of US President Donald Trump in getting the senate approval to his optimistic tax plan could help the greenback extend its north-run while speculations relating to next Fed leader might offer intermediate US Dollar moves. Due to this, the JPY, Gold and some of the commodity currencies might keep witnessing downside pressure but profit-booking at the start of the week can’t be denied.

Technical Talk

EURUSD is taking support of immediate TL figure of 1.1750, break of which could drag it to 1.1715 & 1.1670 while 1.1780 and 1.1830 continue being strong near-term resistances for the pair traders to watch. Further, break of 0.7830 indicates brighter chances of the AUDUSD’s further declines to 0.7800 & 0.7770 while NZDJPY’s recent bounce from important support-line, at 78.90 now, might help it aim for 79.50 and the 80.00.

Have a nice trading-day ……

893

Daily Fundamental Dose: 24 – October – 2017

Hello Traders,

With the political plays at EU, UK & New Zealand marking their presence to welcome the week, lack of economic details couldn’t actually be felt on Monday. While the Catalan separatists’ plan to react to the latest Spanish moves and Germany’s far-right AfD’s readiness to clash with other parties hurt the EUR, the GBP remained benefited from the UK PM’s comments that revealed optimism surrounding Brexit. On the other hand, the NZD turned too volatile wherein it dropped heavily during the initial trading hours on upcoming government’s plans but later on recovered due to improvements in commodity prices that also helped the AUD. Further, the CAD failed to enjoy the commodity basket strength with weaker than expected Wholesale Sales and profit-booking in Crude prices. Moving on, JPY and Gold also gained as investors termed Japanese PM’s victory as positive for the country whereas festival demand helped the yellow-metal.

Heading towards the Tuesday when early-day moves were mostly in favor of the USD as US President, Donald Trump, said recently that he is very very close to announce next Fed Chief and the market perceived contestants for the top job as hawkish. Also, political uncertainty at New Zealand and EU kept hurting their respective currencies while JPY rejoined the south-run with Flash Manufacturing PMI from Japan declining to the lowest in three months by lagging behind the forecast.

Looking at the rest of the day’s economic calendar, Flash Manufacturing & Services PMIs from EU, Germany & US are likely to determine near-term market moves while clashes between Catalan & Spanish leaders, together with the German political parties’ fight for senior parliamentary post, could entertain the traders from political front. Furthermore, China’s week-long 19th Congress gathering officially comes to an end, which in-turn give rise to the concerns of who would preside over the country after Mr.Xi vacates the place in 2022.

Consensus suggests softer EU & German PMIs hurting the EUR ahead of the ECB while US details are likely to help the greenback. On the political front, chances of the EU’s intervention to the Spain’s act are too high but the Madrid is all set to arrange vote in the national Senate to implement direct rule on Catalonia on Friday that could stretch political show and weakness for the EUR. At the German front, Angela Merkel may well come out from the recent crisis and can soothe the pains while UK PM’s optimism can support GBP’s up-moves for the time-being.

Technical Talk

USDCAD is confronting the 100-day SMA level of 1.2665, breaking which it could rise to 1.2700 with 1.2610 acting as immediate support for the pair. Further, the NZDUSD broke the longer-term TL support and may test the 0.6880 mark while a daily close beyond 0.7000 could restore the investor confidence into the pair. At last, GBPCAD is struggling with 200-day SMA level of 1.6690 and is likely to avail the 1.6600 and the 1.6530 rests during its pullback.

Have a nice trading-day ……

894

Daily Fundamental Dose: 25 – October – 2017

Hello Traders,

In addition to growing expectations that the John Taylor, considered to be a hawk, is getting more support to become next Federal Reserve Chief, strong US Manufacturing PMI helped the US Dollar Index (I.USDX) to post another positive daily closing while upbeat earnings report buoyed investor sentiment in favor of the world’s largest economy on Tuesday. The EUR also recovered some of its latest losses after Flash Manufacturing PMIs for EU, Germany & France all surpassed expectations but the GBP refrained from adding gains due to dearth of economics and Brexit noises. Further, AUD and CAD went down because of stronger USD hurting commodity basket whereas chances of shrinking economic growth under new PM-elect provided noticeable weakness to the New Zealand Dollar. Additionally, JPY and Gold both kept declining as a result of broader market optimism pushing investors off from safe-havens while Crude offered the highest close in more than six months on declining Gasoline and Distillate inventory figures from API.

On early Wednesday, comments from Saudi Arabia, world’s top oil exporter, reflected the nation’s readiness to end a supply-glut and pleased the energy buyers while softer than expected Australian inflation numbers eroded concerns for RBA’s rate-hike and damaged AUD. Moving on, Chinese President, Xi Jinping, didn’t reveal any clear signs of potential heirs after he retires in 2022 which in-turn triggered a bit of pullback in commodity front.

Having observed an active start to the day, investors are likely to witness a busy trading session going forward as UK GDP, US Durable Goods Order and momentary policy meeting by the Bank of Canada (BoC) are all scheduled for release today. Additionally, weekly release of official US crude inventory figures, US New Home Sales and New Zealand Trade Balance are some other data-points that might offer intermediate trade opportunities.

While UK GDP is less likely to change from 0.3% mark, expected weakness in US Durable Goods Orders, to 1.0% from 2.0% prior, together with soft New Home Sales number of 555K against 560K earlier, might trigger profit-booking in USD. The CAD, which has been declining off-late, could recover some of its losses if the BoC communicates optimism for the economic growth and signal rate-hikes for the next year. Further, NZD may also adhere to pullback if the trade deficit register forecasted decline to -900M versus -1235M prior.

Other than the economic data-points/events, the political front is also active wherein some of the US Republicans are saying not to vote in favor of the Trump’s tax-plan as it still lacks many crucial details. Moreover, situations at Spain and Catalonia are far from silent and may hurt the Euro region currency.

Technical Talk

With a near-term symmetrical triangle confining GBPUSD moves, the pair’s present test to the formation support, at 1.3110, might witness a pullback to 1.3170 and then to the 1.3200 resistance-line, if not, it can quickly drop to the 1.3060 support ahead of challenging the 1.3030-25 horizontal-area. Further, USDJPY remains well above the descending trend-line resistance-turned-support of 113.55 and is heading to challenge the 114.00 and then the 114.25-30 horizontal-area but a dip below 113.55 may drag it back to 113.20 & 112.55 rest-points. Moreover, GBPAUD is struggling with 1.7000–1.7010 region to justify its latest channel-break and may register a dip to 1.6960 & 1.6900 supports whereas an upside break of 1.7010 could help it target the 1.7050 and the 1.7120 resistances.

Have a nice trading-day ……

895

Weekly Fundamental Dose: 26 – October – 2017

Hello Traders,

Having rallied over the past week on optimism concerning US tax reform, upbeat data-points and speculations that the next Fed Chair would be a hawkish one, the US Dollar Index (I.USDX) took a breather on Wednesday due to disappointing corporate earnings and latest criticism of Trump’s tax plan by fellow Republicans. However, scheduled releases of Advance Q3 2017 US GDP and European Central Bank’s (ECB) monetary policy meeting are the main events that investors might rely on to determine near-term market moves.

Let us describe fundamentals concerning this week’s residual economic details/events.

The Tale Of Last Week’s Market Performance

During the last week, US Dollar regained its strength and registered fifth positive weekly closing in previous six as absence of any missile-tests by the North Korea, Republican leader’s ability to get 2018 budget blue print passed by the U.S. Senate and welcome manufacturing indices portrayed rosy picture of world’s largest economy. On the contrary, the EUR had to take the burden of political turmoil at Germany and Spain while GBP dropped with sluggish Retail Sales and Brexit developments. Further, rumors that new government might hurt the latest developments in New Zealand economy weakened the NZD whereas AUD and CAD adhered to weakness in commodity basket. Additionally, strong USD and market optimism dented the safe-havens, namely JPY & Gold, but the Crude extended its earlier recovery on depleting stockpiles and concerns that global oil production-cut might keep pleasing energy traders.

What Happened During The Present Week?

With the upbeat Manufacturing PMI and speculations for Fed Chair’s positions helped the US Dollar to extend its previous week strength till Wednesday, the greenback couldn’t confront disappointing earnings report and Republican agitation against the US President’s tax plan. The EUR, which was weak since the start on Spain’s effort to thwart Catalan independence, recovered ahead of the ECB meet with German IFO Business Climate registering welcome number. Further, the GBP was a clear winner as strong GDP figure boosted probabilities of BoE’s rate-hike while commodity currencies, namely AUD, NZD and CAD, failed to acquire buyers’ attention with CAD losing more because of dovish statements from Bank of Canada. Moving on, Crude shed some of its early-week gains with higher US inventory number whereas the JPY and Gold finally strengthened on USD’s weakness.

Forecast For The Remaining Week

While there was enough of noise in the market till Thursday, the investors remained calm during the start of the crucial day which includes monetary policy meeting by the ECB. The European Central Bank is expected to announce a start of its more than two-year old QE’s tapering to 30 billion euro from 60 billion euro a month and would also indicate how long the bond-purchase will last. The President, Mario Draghi, is also scheduled for a press conference after the rate-announcement, which market players always keenly observe.

Ever since the ECB announced this QE in early 2015, speculations concerning when it would be wound continued directing EUR moves. Finally the time has come when the central bank has openly favored such an idea with majority of the policy makers supporting end of bond-purchase, together with clues relating to rate-hike. However, this wouldn’t be an easy task for the regional central bank as the inflation is still lingering to prove its strength and there are differences in US and EU which the ECB seems forgoing while following the Fed’s path.

Given the ECB manages to please EUR Bulls with expected tapering and a clear deadline to QE, coupled with rate-hike signals, it would be a big positive for the regional currency that might affect the USD adversely.

In addition to the ECB, Advance estimate of US Q3 2017 GDP, up for Friday, becomes one more important even of the week. Having witnessed 3.1% growth for the Q2 2017, USD Bulls might not welcome the first forecast of Q3 GDP growth at 2.7%, scheduled for Friday. Though, considering the hurricane season, the expected figure is also a strong one to help the Federal Reserve to go ahead with their planned hawkish stand.

Should the US GDP again surprises investors with an uptick, chances of another Fed rate-hike in 2017 become loud and clear, which in-turn could affect the safe-havens, namely JPY and Gold in a negative way while helping the greenback to post one more positive weekly close.

Other than these headline figures/events, Thursday’s US Pending Home Sales and Friday’s Japanese Inflation stats are some second-tier details that traders might observe. Forecasts suggest, Pending Home Sales could keep portraying strength of US housing market with 0.7% growth against -2.6% previous contraction but no change is being expected in Japanese inflation figures as National Core CPI & Tokyo Core CPI are both likely to hold their respective previous stands of 0.7% and 0.5%.

In case of Geo-political worries, Republican’s threat to Trump’s tax plan and tensions at Spain and Germany may keep offering intermediate moves to the USD and EUR respectively while surprises from North Korea could be welcomed with buying in JPY and Gold.

Technical Analysis

With the EURUSD’s another confrontation with 50-day SMA ahead of the ECB, chances of its rally to 1.1980 become brighter if the central bank pleases EUR buyers while 1.1750 and the 100-day SMA level of 1.1670 seem near-term important supports for the pair. In case of the GBPUSD, 1.3340 and the 1.3030 can confine the pair’s immediate moves whereas USDJPY’s failure to clear 114.30 may fetch it to 112.80 with 114.50 & 115.00 being follow-on resistances to observe. Moving on, AUDUSD refrained to respect the 200-day SMA and is now indicating 0.7630 to appear on the chart but a close beyond 0.7710 can again propel it to confront the 0.7740-45 horizontal-area. At the end, NZDUSD runs down to visit 0.6820 and the 0.6780 levels with 0.6950 acting as adjacent resistance whereas USDCAD broke 100-day SMA and is rising towards 1.2860 & 1.2940 resistances; though a close beneath 1.2650 can fetch the Loonie to 1.2590-85 area.

Have a nice trading-day ……

896

Daily Fundamental Dose: 27 – October – 2017

Hello Traders,

Although ECB delivered it’s much anticipated tapering of monthly bond purchase program from 60 billion Euros to 30 billion Euros, President Mario Darghi’s statement that QE won’t have sudden end while the economy still needs extensive monetary easing prior to announcing a rate-hike dragged the EUR towards south on Thursday. As a result, upbeat earnings from tech giants & news that House Republicans accepted US President’s tax plan got additional support to propel the US Dollar towards marking sixth weekly gain in previous seven. On the other hand, the GBP couldn’t sustain its previous rally due to speculations concerning hard Brexit while JPY and Gold also declined on USD’s strength. Further, dovish BoC continued hurting the CAD while NZD and AUD couldn’t withstand in front of stronger greenback. Moving on, Crude prices recovered earlier losses and registered the fresh six-month high on Saudi Arabia’s hawkish comments favoring global production-cut.

Having received a tentative tapering from the European Central Bank (ECB), investors were all happy to observe Friday’s Advance estimation of Q3 2017 US GDP figure and continued supporting the greenback ahead of the announcement. With this, the EUR and GBP had to carryover yesterday’s downside while unchanged Inflation dragged JPY further towards south in addition to the losses borne by the currency due to dip in safe-haven, which also dragged the Gold. However, the same isn’t true for the NZD that witnessed a pullback from May month low, coupled with the Crude which also faced profit-booking, but the CAD kept extending its downturn. The Australian Dollar had a fresh blow from its political front when Deputy Prime Minister Barnaby Joyce was announced as ineligible to hold the present post by the nation’s high court after it was found that the political leader held New Zealand citizenship when elected, which in-turn threatened the PM Malcolm Turnbull’s one seat majority in parliament and calls for deputy PM to face another election in December to prove himself worthy.

While the early-day moves were quite interesting, investors are weighing chances of another surprise from US GDP figure even if Hurricanes are expected to result in a soft growth mark of 2.6% compared to the previous 3.1%. At the political front, latest hawkish news from house of republicans becomes strong boost for the greenback to mark another weekly positive closing. However, all that depends upon the GDP number which is up for later today.

Given the growth mark remains near to consensus of 2.6% or rises towards 3.1% prior, it would have a positive impact on the USD but a bit softer number isn’t likely to provide much of the damage to the greenback as it is already been forecasted by the FOMC and might not change the central bank’s outlook for rate-hike. Though, a disappointing figure could carry a high risk of dovish statement from the Fed when it meets next week and can trim majority of the USD’s present week gains. Hence, it would be better for market players to wait for the crucial announcement before taking any big trades.

Technical Talk

USDCHF seems all set to meet 1.0005 and the 1.0025 resistances if supported by upbeat US release but a disappointment, together with overbought RSI, can quickly fetch the pair to 0.9965 and the 0.9930 supports. With a recent political turmoil from Australia, the AUDUSD is likely to test nearly eleven-month ascending trend-line, at 0.7565, with 0.7600 being intermediate halt, whereas 0.7670 and the 200-day SMA level of 0.7690 acts as near-term resistances to watch. Further, AUDCHF has lesser downside before it can confront the 0.7590 and the 0.7570-65 supports, which indicates brighter chances of its U-turn to 0.7660 and the 0.7680 upside numbers.

Have a nice trading-day ……

1 Like
897

Daily Fundamental Dose: 30 – October – 2017

Hello Traders,

While welcome US economics, in the form of Flash PMIs, Durable Goods Order and GDP, coupled with upbeat earnings report from Tech giants, strengthened optimism concerning the world’s largest economy, speculations that next Fed Chair will be a hawk propelled the US Dollar Index (I.USDX) to post sixth positive weekly closing in previous seven. Contrast to the greenback, the EUR had to register worst week of the year as ECB’s tentative tapering and problems between Spain & Catalonia dragged the regional currency towards south. Further, the GBP, even after rising against the Euro, failed to confront majority of its counterparts irrespective of better than forecast GDP as investors feared that the expected once in a decade rate-hike from the BoE might not be the signal for sustained cycle of monetary policy tightening.

In case of the JPY, Abe’s magnanimous victory in snap election and positive inflation helped the currency to gain on the weekly basis while Gold couldn’t please buyers due to stronger USD. Commodity currencies, namely AUD, NZD and CAD, also dropped due to tough greenback affecting the basket while dovish BoC, soft AU inflation and political uncertainty at New Zealand provided additional weakness to these currencies. Additionally, Crude prices rose for the third consecutive weekly basis on expectations that global production-cut accord might get extended beyond its March 2018 deadline.

Moving towards the present week, which contains many important details, the early-day moves were mostly favoring the US Dollar on optimism relating to the Federal Reserve’s next leader and the news that US House committee is set to release a tax bill on November 01 that is considered to be Trump’s biggest victory since elected. The EUR, on the other hand, kept declining as Spanish authorities dissolved Catalan parliament using special rights and called for snap election after the nation recently announced independence. Moreover, the JPY added a bit more on positive Retail Sales while the Gold and Crude prices witnessed profit-booking.

Looking at the rest of the day’s scheduled data-points/events, US is up for releasing monthly details of Personal Income and Spending together with Core PCE Inflation mark that is the preferred inflation gauge of the Federal Reserve. Though, there aren’t any big releases scheduled from the rest of the world, except German Prelim CPI & Japanese Industrial Production, which in-turn could offer a bit softer start to the week.

In addition to the economic details, which are largely expected to help the greenback extend its north-run, some of the US giants are also likely to please investors with strong earnings and selection of Fed Governor, Jerome Powell, as the next Fed chair after Yellen retires in February could offer extra strength to the greenback. Furthermore, house of congress’s announcement of Trump’s tax bill and rejuvenated doubts on Trump administration’s probable meddling with Russia in 2016 presidential election could entertain market players.

Technical Talk

EURUSD’s bounce from 1.1570 can’t be considered as a strong signal for the pair’s pullback unless it clears the 100-day SMA level of 1.1680 on a daily closing basis, which in-turn indicates brighter chances for the pair’s dip to 1.1570 & 1.1490. For the NZDUSD traders, 0.6800 seems soon appearing on the chart with the 0.6770 being follow-on rest; though, pair’s ability to surpass 0.6880 may help it aim for 0.6930 and the 0.7000 resistance-levels. At last, EURJPY is expecting a pullback from 131.75-70 support-line and may revisit 132.40 and the 132.60 resistances.

Have a nice trading-day ……

898

Daily Fundamental Dose: 31 – October – 2017

Hello Traders,

Following its strong up-moves during last-week, the US Dollar witnessed profit-booking on Monday due to the news that President Donald Trump’s former campaign manager is under charge by US authorities investigating possible Russian meddling in 2016 election campaign. Additionally, speculations that policymakers responsible for assenting Trump’s tax plan are planning not to announce it as intact and go via gradual reduction of tax also hurt the greenback buyers’ confidence. With this, the EUR got a reason to take a breather from its recent plunge while GBP rallied on expectations favoring BoE’s rate-hike. Further, the AUD and NZD also recovered a bit with commodity basket’s pullback because of soft USD but the CAD couldn’t stop declining as Crude prices weakened on concerns that higher exports from US & Iraq are coming on the way to damage global production-cut accord. Moving on, JPY and Gold managed to take advantage of US Dollar’s drop whereas rejuvenation of global geo-political crisis added strength into safe-haven buying.

Even if the global moves were quite active on the first-day of trading week, absence of major economics confined the market volatility. However, that didn’t last long as Tuesday’s releases of softer than expected Chinese official Manufacturing PMI and BoJ’s refrain to alter monetary policy by cutting down inflation outlook offered the busy start of the day. Moreover, news that New Zealand’s new government took a major step to restrict foreigners to buy homes in the nation hurt the NZD while the weaker Chinese data-point affected AUD and CAD adversely. Though, JPY and Gold stretched their prior up-moves on investors’ rush for risk-safety amid the crucial week.

Looking forward, today’s heavily filled economic calendar, which started with early-day releases from China and Japan, could give a feel of fast-moving currency trading to market players with crucial data-points/events. Notable among them are, EU Flash CPI, Canadian GDP, US Chicago PMI & Consumer Confidence and the New Zealand Jobs releases. Forecasts suggest no change in EU inflation gauge and positive outcome from New Zealand employment figures but the US details are showing mixed picture with increase in consumer sentiment likely favoring the greenback’s up-moves and the Chicago PMI’s drag could become first from the latest manufacturing details to soften. Additionally, Canadian GDP might please CAD’s counter-trend traders with an uptick in growth figure.

Not only the economic calendar but latest Geo-political concerns are also expected to entertain global investors on Tuesday. To name a few, the Spain and Catalan policymakers are still at loggerheads while US investigative committee is on ride to grab some more of the crucial Trump administration (either present or past) to dig into possible election campaign manipulation case. Furthermore, Trump tax plan is getting an eye from all whereas New Zealand’s government seems all set to overhaul the economy to perform on its promises.

Hence, while plethora of data-points could offer intermediate trade opportunities, investors shouldn’t ignore the Geo-politics while taking any big trades.

Technical Talk

USDJPY’s latest break of ascending trend-line support, at 113.45 now, indicates the pair’s further downside to 112.80 and the 112.30 while 113.45, the 114.00 and the 114.30-35 act as nearby resistances. Further, AUDUSD is again confronting with 200-day SMA level of 0.7700 in order to extend its latest recovery towards 0.7745-50 but the commodity basket’s weakness signals brighter chances of the pair’s dip to 0.7650 and the 0.7630 supports. Moreover, EURGBP sustained its TL break and is now declining towards 0.8790 and the 0.8755-45 area whereas 0.8835 & 0.8865 seem nearby upside numbers to watch during its U-turn.

Have a nice trading-day ……

899

Daily Fundamental Dose: 01 – November – 2017

Hello Traders,

Be it upbeat economics or nearness to Trump’s Fed Chair selection, the US Dollar had it all to post another daily positive closing on Tuesday. In addition to this, welcome earnings report pushed investors to risk-off stand that in-turn hurt the JPY and Gold prices. Further, the EUR kept being weaker due to lesser than expected CPI whereas GBP managed to shine ahead of much anticipated once in a decade rate-hike from the BoE. Moving towards commodity currencies, early-day release of soft Chinese official manufacturing PMI dragged the AUD and CAD but the NZD recovered after quarterly jobs details topped estimates. Additionally, Crude prices also gained with EIA’s latest report showing record high gasoline demand.

As the optimism surrounding Trump’s tax-plan and rate-hike have helped the US Dollar Index (I.USDX) to register second monthly gain, investors welcome November month with headline PMIs and FOMC standing ready to extend prior market volatility.

During early Wednesday, China’s Caixin Manufacturing PMI respected the broader consensus of 51.00 and helped the commodity basket to witness a bit of pullback whereas upbeat Japanese Manufacturing PMI helped the JPY to recover some of its latest losses. Moreover, the Gold also rose on speculations that US House Ways and Means committee isn’t still ready to announce Trump’s proposed tax-plan and some minor or major changes are hidden under the carpet.

Turning to the rest of the day’s economics, UK Manufacturing PMI, US ISM Manufacturing PMI and ADP Non-Farm Employment Change could offer intermediate trade opportunities to investors before the FOMC arrives to inflate market moves. Also, weekly release of Crude inventory is what can help determine immediate CAD & Crude ticks.

After China’s unchanged Manufacturing PMI, rest of the manufacturing indices, mainly from US & UK, are expected to remain largely unchanged and can negatively affect the respective currencies. However, the Crude might extend its advances with expected dip in stockpile.

In case of the FOMC, the central bank isn’t expected to alter its present monetary policy and absence of quarterly economic forecast and Fed Chair’s press conference reduces the importance of today’s meeting. Though, change in FOMC statement’s language is what investors might be looking at, which could offer noticeable market flips after announcement.

On the political front, Trump clearly said he will announce next Fed Chair on Thursday while his tax budget is also scheduled for release on the same day when the BoE is likely to please traders with a rate-hike after a decade long wait. Hence, anticipation for Thursday’s moves, coupled with today’s data-stream/events, could portray today’s market trend.

Technical Talk

GBPUSD again challenges the 1.3290–1.3300 resistance-zone and soft PMIs might again drag the pair to 1.3220 and then to 1.3190. Further, USDCAD has to pass through 1.2920, the 1.2940 and then the 1.3020 in order to aim for 1.3100 while a dip below 1.2860 indicating its pullback to 1.2780. At the end, NZDCAD is struggling with 50-day SMA level of 0.8910 and should clear 0.8980 TL and the 0.9030 to justify its strength else chances of its pullback to 0.8880 and then to the 0.8820 can’t be denied.

Have a nice trading-day ……

1 Like
900

Weekly Fundamental Dose: 02 – November – 2017

Hello Traders,

Even as welcome economic data-points from US & UK, coupled with almost a close choice of Fed Governor Jerome Powell as next Fed Chair, portrayed the market optimism during early-week, the once in a decade rate-hike from BoE and Friday’s US NFP now grabs investors attention. Additionally, announcement of US President Donald Trump’s tax plan and UK Services PMI might offer intermediate market moves.

Let us start discussing fundamentals concerning each one of them.

It Was Another Positive Week For The US Dollar

Be it upbeat economics or the speculations that next Fed Chair will be a hawk, needless to mentioned about Trump’s tax-plan & upbeat earnings from tech-giants, the US Dollar had all around positive news to flash another positive week on the chart. For the EUR, the same wasn’t true as problems in Spain and Catalonia met with the ECB’s tentative tapering to drag the regional currency toward south whereas GBP also declined even after witnessing upbeat GDP as the BoE’s much anticipated rate-hike is likely to be one and done case. Further, JPY registered gains after Shinzo Abe managed to achieve noticeable majority in snap election but the Gold had to bear the burden of stronger USD. Additionally, AUD dropped on disappointing inflation figure and the CAD adhered to the BoC’s dovish stand while NZD justified uncertainty surrounding new government’s plan to overhaul the economic and monetary aspects of the nation. However, the Crude prices refrained to respect the broader weakness in commodity basket with repeated favors to global production-cut supporting reduction in supply-glut situation.

Pullback In USD, Rising GBP And Volatile Markets Welcome The New Month

Having registered handsome gains during last week, the US Dollar witnessed some profit booking during the start of the week after the news broke that President Donald Trump’s former campaign manager is under charge by US authorities investigating possible Russian meddling in 2016 election campaign. However, the same couldn’t last long after the FOMC upgraded its economic assessment and reinforced December interest-rate hike. Though, the EUR still awaits a pullback because softer than expected Flash CPI restricted the regional currency moves but the GBP rallied considerably after upbeat Manufacturing PMI and optimism surrounding the Brexit. Moreover, AUD and CAD kept treading water WITH China’s sluggish PMI whereas NZD gained on better upbeat employment figures. The JPY lost some of its charm in front of the greenback but the Gold advanced during the crucial week which carries many important event/details while the Crude softened a bit on concerns of higher US production.

Everyone Awaits BoE’s QIR And US NFP For Now

As we arrive to the crucial Thursday when the BoE is all ready to announce its once in a decade rate-hike and the US President is also scheduled to reveal his choice of Fed Chair, in addition to House of Congress’ declaration of Trump’s tax-plan, majority of investors are eagerly waiting for the outcome. Furthermore, Friday’s NFP and UK Services are extra burden that analysts have to take care after tackling today’s events.

Starting with the US President’s choice for the next Fed Chair, it is almost clear by now that Fed Governor, Jerome Powell, will be at the helm of Federal Reserve after February. Mr. Powell has been supporting the present Chair and has never crossed her analysis. So, market players expected continuation of the Yellen-like rule even after her retirement.

In case of the Trump’s tax proposal, the House Ways And Means Committee is still struggling to describe how the deficit, due to tax cuts, would be funded and there are many other loopholes in the tax plan which needs to be resolved. Hence, any more delay or drastic alteration to the President’s promised guide could come out and hurt the USD.

Coming to the crucial component of Super-Thursday, the Bank of England (BoE)’s monetary policy meeting and release of Quarterly Inflation Report (QIR). While the rate-hike is almost given, investors would analyze the QIR and Mr. Governor’s language during press conference in order to determine chances of further such moves.

During its August QIR, the BOE revised down GDP & Inflation forecasts and expected labor market to improve and hence clues relating to the strength of the economy will be closely analyzed. Further, Mark Carney also has to sound optimistic about the MPC members’ assent to rate change and should convey likeliness to many such moves in the upcoming future in order to win the hearts of Pound buyers.

With the Fed’s next chair likely having same characteristic as the present one, uncertainty surrounding the Fed Chair’s economic outlook and the rate-hike have diminished. However, the tax plan is an issue for the USD traders to watch.

For the GBP, while the rate-hike is a known factor, the QIR should include upward revision to the economy and the BoE should also signal many such future moves in order to win confidence of the Pound buyers.

Now moving towards the Friday, early-day momentum is likely to be governed by the UK Services PMI, the lead indicator for the economy, which might hurt GBP Bulls’ bias with 53.3 figure compared to 53.6 previous. Though, expected improvement in US jobs report might boost the traders’ morale afterwards.

Forecasts suggests better employment report than the last month when NFP suddenly plunged into negative territory due to hurricane season. The Nonfarm Payrolls (popularly known as NFP) is likely to recover from -33K to 311K and the Average Earnings might soften to 0.2% from 0.5% prior while no change is expected to happen into the Unemployment rate of 4.2%.

Considering the political uncertainty, which is likely to hurt the greenback for short-term, Jobs report should register strong figures to let the USD sustain its previous month rally.

Technical Analysis

EURUSD continue trading below the 100-day SMA level of 1.1700 and indicate brighter chances of its drop to 1.1550 whereas USDJPY may struggle between 112.80 and the 114.50 region. Further, GBPUSD should clear the 1.3340 in order to meet 1.3410 until then chances of its re-test to 1.3110 can’t be denied while USDCAD’s inability to sustain 1.2900 break may fetch it to 1.2770. Moreover, AUDUSD seems heading to confront the 0.7750 with 0.7630 acting as nearby support but the NZDUSD’s recent recovery from 0.6820 may find it hard to clear the 0.6950 and the 0.7000 resistances.

Have a nice trading-day ……

901

Daily Fundamental Dose: 03 – November – 2017

Hello Traders,

Having witnessed all the drama concerning Fed’s next Chair, Trump’s tax-plan and BoE’s almost one and done rate-hike, needless to mentioned about an uneventful FOMC, global traders are all set to bet on today’s monthly release of US Jobs report, including NFP, Unemployment Rate and Average Earnings. While the hurricane season damaged last month’s employment details, the figures are likely to post welcome numbers during later in the evening and may help the US Dollar to recover some its latest losses. Before we discuss much about this aspect, let us first understand what happened on the crucial Super Thursday.

During the much awaited Super-Thursday, the US Dollar failed to please investors even with if Trump’s tax plan being presented in front of the house with minimal changes and Fed Governor, Jerome Powell, was formally announced as next Chairman of US Federal Reserve. To predict some of the reasons, market players’ anticipation that Mr. Powell is more like Janet Yellen and may not change the monetary policy much was on the front-line whereas the tax-proposal bearing weaker chances of becoming a law could be considered as another guess.

In case of the GBP, the British currency plunged even after witnessing once in a decade rate-hike by the Bank of England as the central bank seemed not so curious to undertake such monetary policy changes in near-future unless highly required. Further, the EUR benefited from all these weakness whereas AUD, NZD and CAD managed to stretch their recent pullbacks due to commodity basket buying and greenback’s correction. Additionally, JPY and Gold were mildly up as disappointed investors from UK & US rushed to safe-havens while Saudi Arabia & Iraq’s support to global production-cut favored the Crude prices.

Moving on, early-Friday moves were mostly affected by the Australia’s consecutive third month disappointing Retail Sales and the start of US President’s longest tour to Asia. Though, improvement in China’s Caixin Services PMI and holiday at Japan did offer additional details for market players to observe.

As said earlier, consensus indicates better employment report than the last month when NFP suddenly plunged into negative territory due to hurricane season. The Nonfarm Payrolls (popularly known as NFP) is likely to recover from -33K to 311K and the Average Earnings might soften to 0.2% from 0.5% prior while no change is expected to happen into the Unemployment rate of 4.2%. Due to this the USD might be up for the day and can even register another weekly gain, should the job numbers please greenback Bulls.

Other than US employment stats, UK Services PMI, Canadian Jobs numbers, the US ISM Non-Manufacturing PMI & Factory Orders are some extra data-points that can entertain short-temr traders. While the UK Services PMI is expected to flash a bit softer figure of 53.3 versus 53.6 prior, US ISM Non-Manufacturing PMI signals to register 58.3 mark against 59.8 earlier. Further, US Factory Orders aren’t likely to deviate much from its 1.2% earlier by being around 1.1% and the Canadian Employment Change is likely improving to +0.8% from -0.2% prior contraction whereas the Unemployment rate could drop to 4.7% from 4.8%.

Hence, with the US jobs report signaling USD strength, a surprise increase in UK Services PMI may help the Pound to recover some its latest losses while Canadian employment details may also support the Loonie to have a good day at the end of the week.

Technical Talk

EURUSD’s latest failure to surpass the 1.1680-85 resistance-region indicates brighter chances of its pullback to 1.1600 and then to the 1.1570 but an upside break can propel it to 1.1730. For USDCAD traders, the 1.2780 and the 1.2690 are likely nearby supports to watch with 1.2850 and 1.2900 being adjacent resistances while observing the chart. Moreover, GBPNZD’s break of 1.8860-75 intermediate support-zone signals its further downside to 1.8785 and then to the 1.8730 while 1.8950 and the 1.9000 can act as immediate stops during its up-moves.

Have a nice trading-day ……

902

Daily Fundamental Dose: 06– November – 2017

Hello Traders,

While slew of economic and political news/updates portrayed ample market moves during last-week, the US Dollar Index (I.USDX) managed to post another weekly advance due to upbeat data-points and optimism surrounding Trump’s tax-plan. However, the EUR had no major fundamental drivers to rely, except Flash CPI that registered softer than expected mark, whereas the GBP plunged heavily on BoE’s much expected one and done rate-hike. Further, the AUD had to bear the burden of softer indicators signaling no change in RBA’s upcoming monetary policy whereas NZD recovered some of its early losses on strong employment report and the CAD also strengthened due to rising Crude prices. Additionally, Gold and JPY also drifted lower with broader trade-sentiment remaining titled towards risk-off.

Not only during the week, the weekend was also quite interesting with updates concerning Trump’s Asia-tour and tax-hike giving triggers to early-week USD traders while Saudi Prince’s anti-corruption crackdown that included high profile arrests propelled the energy prices higher. Also, the Bank of Japan Governor, Hruhiko Kuroda, during his appearance on Monday, again favored the central bank’s ultra-loose monetary policy and dragged JPY towards south. Moreover, New Zealand’s softer than expected Inflation Expectations activated the NZD’s pullback whereas Chinese central-bank governor’s threat relating to surprise economic effect offered a bit weaker start of the AUD and CAD.

Moving forward, the present week’s economic calendar isn’t that heavy like last-week and the Monday being no exception has only Canadian Ivey PMI and final readings of EU PMIs up for release. However, the political front could keep entertaining investors with Trump’s Asia visit, tax plan updates and start of Eurogroup meeting. Further, political upheaval at Saudi Arabia and also at New Zealand might become second-tier news segments to trigger intermediate trade opportunities in commodity currencies.

With the latest doubts over Mr. Trump’s tax-plan and possible meddling with Russia during 2016 Presidential election, coupled with US President’s aggressive behavior at the start of Asia visit, chances of USD to liquidate some of its recent gains are high; however, the fundamental aspects concerning Fed’s rate-hike may deny chances of a greenback crash. Further, Canadian Dollar is up again and may extend its recovery with increasing energy basket whereas AUD and NZD moves may depend upon upcoming monetary policy meetings of the RBA & RBNZ respectively.

Hence, it becomes safe to say that even with less economics, a close observance to political news may offer good trade opportunities to market players.

Technical Talk

USDJPY struggles to clear the 114.50 TL resistance and may witness a pullback to 113.80 if can’t offer a daily close beyond the trend-line while on the flipside 115.10 and the 115.50 may please the pair buyers. In case of the NZDUSD, the pair’s inability to clear the 0.6935-40 horizontal-resistance signals its 0.6860 & 0.6815 re-test with 0.7000 acting as near-term strong resistance on the upside. At the end, CADCHF confronts the immediate TL resistance of 0.7845, break of which could accelerate its recent recovery in direction to 0.7900 but a dip beneath 0.7795 may fetch it 0.7730.

Have a nice trading-day ……

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