Geo-political tensions in Middle East continued taking centre stage during last week with the US boldly announcing air strikes on Thursday night which caused some of the market players to lock-in US Dollar gains resulting into mild positives for the strong US Dollar. The ECB remained stable even with the weaker inflation by stating, it was well expected while the BoJ strengthened JPY even after downgrading growth forecast as chances of near-term additional stimulus have been denied. The Chinese trade balance numbers, even after being higher, caused worry for the international players as the import numbers decline, signaling a weakness in domestic market. The Canadian employment numbers together with the Building Permits and Ivey PMI continued signaling mixed picture and hurt the CAD.
In addition to the on-going geo-political tensions, this week has some crucial events which can fuel volatility into the forex market; however, these aren’t from US. The UK Inflation report and the employment number are likely to take the centre stage of readings on Wednesday while the Japanese, European and UK GDP numbers on Wednesday, Thursday and Friday are likely to continued fueling forex market which is likely to have little moves on Monday. The German Zew Economic sentiment and the Australian NAB Business Confidence are the important events of Tuesday. Moreover, the US Retail Sales and PPI numbers together with the Preliminary reading of the UoM Consumer Sentiment are the releases from the US scheduled during the current week.
As the markets have released majority of the H1 2014 details, the majors scheduled during the week aren’t likely to generate more surprises; however, the media conversations of BoE can become strong points for the GBP moves which I support to be strong.
News about Russia’s conclusion of military exercises near Ukrainian border gave a sigh to the geo-political tensions on Monday; however, US Dollar witnessed positive closing on the first day of the week against majority of its counterparts. Moreover, the GBP strengthened against some of its counterparts as the CB Leading Index tested the highest level in five months.
Early today, Australian NAB Business Confidence tested the highest level in the year 2014 and strengthened AUD across board. Market players are awaiting ZEW Economic sentiment Index from Europe’s largest economy, Germany, in order to determine the EUR movement for the day. Also, the JOLTS Job Openings from US, scheduled to release later today, is also an important indicator to know the strength of US labor market.
With the small details available to track from the economic front and the easing geo-political tensions, market players are likely to carry their last week moves; however, any surprises from the geo-political front can fuel volatility into the market ahead of the important Wednesday when Japan, China, UK and US will fill the economic calendars.
Yesterday, pessimistic ZEW numbers contributed to the Euro’s weakness while the easing geo-political tensions slowed the fuel for US Dollar; however, the greenback managed to conclude on the positive day as overall fundamentals remain supportive.
Today’s Japanese GDP number met the expectations of -1.7% due to the Sales Tax effect while the minutes of recent BoJ monetary policy signaled that the policy makers remained scattered about the economic outlook of the world’s third largest economy as uncertainty about the global export market dent the inflation outlook of the nation. The Australian readings, namely Westpac Consumer Sentiment and Wage prices flashed mixed signals while the Chinese New Loans, Money supply, Industrial production and Fixed asset investment declined.
For the rest of the day, UK labor market details and the inflation reports likely to fuel momentum into the market. Should the labor market numbers signal continued positive and the inflation report, followed by the press conference by BoE Governor, says that the spare capacity into the economy has been absorbed, the GBP can regain its strength. However, the otherwise case can badly hurt the GBP. Moreover, European industrial production and the CHF Zew Economic expectations can continue to provide data flow to the market. Also, speeches from FOMC members and business inventories are the small events that provide volatility to the forex market.
To sum up, the forex market is likely to witness considerable volatility during the day as majority of important details are scheduled to release. However, it would be better to stay out of trading ahead of the releases.
Have a great trading-day
Yesterday, the Big day for the Forex market ended up by providing BIG losses to the GBP even as the Claimant Count Change and Unemployment Rate tickled down. Market players gave higher weight to the decline in the average earnings. Moreover, the inflation report also highlighted lack of wage growth and tamed down the speculation of early rate hike sooner than May 2015. Decline in the US Retail Sales were mostly ignored as the Dollar ended up in the positive cadre backed by continued Geo-political tensions in Gaza.
Today, the GDP releases from Euro zone are likely to take the center stage of the market during the early hours while the US Jobless Claims will continue supporting the volatility at the later part of the day. Considering the recent declines in the EU economics these figures are likely to support EURO pessimism. Moreover, the jobless claims are also likely to continued depicting weaker US labor markets.
As majority of the important events for the week have already been releases, forex market is likely to continue following the established trend. However, GBP is likely to witness a pullback as yesterday’s liquidation wasn’t acceptable considering the overall strength of the UK economy.
Weaker economic numbers couldn’t hurt US Dollar during last week as it completed its five-week rally against a basket of six currencies while the Euro remained on the downside by weaker GDP numbers and the expectations that the ECB should take further steps to fuel the ailing economy. The GBP remained largely affected due to the weaker average earning numbers and the inflation report which highlighted lack of wage growth and tamed down the speculation of early rate hike sooner than May 2015 while the AUD remained strong as business and consumer confidence improved to the higher levels.
Having witnessed higher US NAHB Housing Market Index and the pessimistic RBA meeting minutes during the week, today’s UK CPI numbers together with the PMI numbers from China and Europe, on Thursday, likely to be the headlines of the week.
The GBP is likely to reverse from the lower levels if the CPI numbers prove to be supportive’ alternatively, the pound is likely to continue witnessing weaker days ahead. There are lesser important events from the US during the current week except the FOMC meeting minutes which can continue singing the saga of wait and watch before increasing the interest rates. Moreover, the speeches at Jackson Hole Symposium can become important for the US and EU.
Better Housing Numbers coupled with continuation of geo-political crisis kept on supporting the US Dollar strength for the second day of the week. The greenback is trading near important levels against majority of its counterparts, like EUR, NZD, GBP, JPY and AUD. Should the current strength of the US Dollar results into the sustained breakout of such critical technical levels, the US Dollar is vulnerable to witness heavy strength.
For the day, UK BoE MPC voting on Asset Purchase Facility and the Official Bank Rate, even though carrying no change expectations, are likely to be closely observed by the GBP traders. Should any of the MPC members support the change in the monetary policy or more importantly the interest rate change the GBP is vulnerable to re-gain its strength. The Canadian Wholesale Sales and the FOMC meeting minutes are also key to fuel volatility into the market during the rest of the day. Market players are awaiting signals for the near-term rate hike by FOMC, which can provide heavy strength to the US Dollar.
Moreover, the geo-political crisis are again on the course and kept on generating uncertainty into the market and fuel the safe haven demand of the USD and JPY together with precious metal to some extent.
It is advisable to trade with the trend and the buy the US Dollar rather than taking contrarian trades. However, being too optimistic isn’t a vice choice as many of the important events are scheduled to release today.
Yesterday, US Dollar Index (I.USDX) climbed to the highest level in six months as FOMC minutes supported speculations of early rate hike by Federal Reserve. Even though no concrete timing for interest rate hike being discussed, majority of the MPC members saw bench-mark interest rate rising sooner than their earlier expectations. The minutes clearly said that “Many participants noted that if convergence toward the committee’s objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated,”
Moreover, the release of Bank of England’s MPC Official Bank Rate Votes revealed that two of the policy members were in favor of a rate hike which triggered the GBP strength during the early day; however, the US Dollar recovered early losses and remained considerably strong against majority of its counterparts at the end of the day. The Canadian Wholesale Sales were also higher than expected, but could help CAD to gain versus USD.
Today being the important day as many of the PMI releases and the UK Retail Sales is likely to fuel the volatility into the market. The Chinese Manufacturing PMI by HSBC declined below its forecast and hurt the AUD while the French Manufacturing PMI remained well below the prior and forecast with Services PMI rising above both the levels.
From US side, the weekly Jobless Claims and Philly Fed Manufacturing Index, scheduled to release later today, are likely to provide momentum to US Dollar. After witnessing heavy US Dollar gain backed by FOMC minutes, market players are likely to wait for Jackson Hole speech by Fed Chair, scheduled for Friday, in order to get additional hints for near-term rate hike.
As there are many important readings to be published for the day, it would be better for market players to wait for the releases before taking positions; however, after the yesterday’s USD strength, it becomes favorable to BUY USD.
Hello….
Even after continued getting the economic support, US Dollar witnessed a pullback from the technical side as the US Dollar Index continued observing ascending trend channel and reversed from the resistance line. UK Retail Sales and majority of the PMI releases yesterday remained more or less softer.
Today, being the last day of the week, important economic numbers from Canada and US are scheduled to release. However, Jackson Hole Speech by US Fed Chair will take the center stage of the market. Should it continued depicting the rosy picture of the US labor market, which is actually rosy, the US Dollar can re-fill the yesterday’s losses. However, her habit of not giving clear signals for the rate hike can provide a weakness to the US Dollar.
It gives a good trade signals for the bears with small SL against US Dollar as market players have high hopes for today’s speech and, as general, Fed Chair is likely to turned down all. Also, tomorrow’s Jackson Hole Speech by ECB President can also become a fuel for market during weekends.
For the next week, Preliminary reading of US GDP is the main event.
Last week’s Jackson Hole Speech by ECB and Fed representatives provided a strong drag to the EURUSD as the US Fed Chair said that the U.S. economy is recovering together with the labor market improvements. Further, the ECB President continued to provide bold statements of doing whatever necessary and take more unconventional actions to fuel the sluggish euro-zone economy. Moreover, the Minutes of the Fed’s July meeting, published Wednesday, provided considerable strength to the US Dollar as some officials believed that the strengthening economic recovery and ongoing improvement in the labor market can push the Fed towards tightening monetary policy sooner.
Geo-political tensions in Gaza took a new turn during last weekend as it registered air-strikes by Israel. Also, the increase in Russian forces near the border with Ukraine was noted by NATO. Hence, market players are advised to update themselves regarding the present stance of geo-political tensions from time to time during the week in order to be aware of sudden change into the market direction.
Today, the UK market is closed due to the Summer Bank Holiday; however, German Ifo Business Climate and the US New Home Sales can continue providing data points for the market to remain volatile.
With unusually high level of strength coupled with a weaker New Home Sales data, market players liquidated some of their gains from the US Dollar ahead of the Durable Goods Orders and CB Consumer Confidence details, scheduled to publish later today. Moreover, downbeat German Ifo Business Climate continued supporting the speculations that the ECB will do something to save the sluggish economy which in-turn provided additional weakness to the Euro region currency. There aren’t any important details scheduled from EU. However, tomorrow’s GfK German Consumer Climate and the German Prelim CPI m/m, scheduled for Thursday release, can become important for the Euro ahead of the Friday’s Flash CPI which is likely to provide another push to ECB for introducing additional monetary policy measures.
Market players are advised to take a cautious view for US Dollar buying ahead of the US GDP, scheduled to release on Thursday. Till then, enjoy the intermediate moves of the US Dollar and keep ripping the benefits.
Having registered negative closing on the first day of the week, US Dollar Index (I.USDX) gained headily on Tuesday as Durable Goods Orders tested the highest level in a history while the Consumer Confidence continued its advance by being near the October 2007 high. The EURUSD declined to the lowest level in almost a year as market players keep speculating additional monetary measures to take place during next week’s ECB meeting on the back of weaker economic numbers.
Even after Russian President said that the talks with Ukrainian authorities were “positive” towards the political resolution, fighting in eastern Ukraine continued. Moreover, the Hamas agreed Tuesday to an open-ended ceasefire after seven weeks of fighting with their Israel counterparts. Hence, the Geo-political tensions that have been causing uncertainty into the market since last 6 months is about to end which can become a positive for investors; however, the safe haven avenues can feel a cold feet.
Today, after the German Consumer Climate Index lagged behind the expectations and previous releases, there aren’t any big releases to fuel volatility into the market. Hence, it is better to take the intermediate gains before the US GDP release tomorrow and EU Flash CPI y/y the day after.
Higher than expected GDP numbers coupled with the tallest level of Consumer Confidence since October 2007 fueled US Dollar towards completing seven weeks of its rally. However, the US markets enjoying a holiday and less volatility to expect for today.
The Geo-political crisis in Gaza and Ukraine continued taking center stage as Vladimir Putin calls for talks on ‘statehood’ in southeast Ukraine. Moreover, Ukrainian President Poroshenko said Saturday that fresh peace talks grouping representatives of Ukraine, Russia and the Organization for Security and Cooperation in Europe (OSCE) would take place in Minsk on Monday.
The current week offers plenty of important events to fuel volatility into the forex market which started with the Chinese Manufacturing releases of HSBC and Official numbers that remained below the forecasts but above the contraction level. Moreover, the US Holiday is likely to deter the forex market volatility during the day. UK Manufacturing PMI, released recently remained well below the forecast of 55.1 by being at 52.5 level and continued signaling weakness for the GBP.
As important events are scheduled during the whole week, market players are advised to take cautious view before taking BIG positions.
Even with the larger magnitude of important economics, from the rest of the world, signaling improvement in respective economies, the US Dollar continued maintaining its up-move against majority of its counterparts as market players kept fueling speculations of higher job numbers and near-term rate hike.
Today, Australian Trade Balance and Retail Sales started the day with supportive numbers and the AUD strengthened across board during early hours of the day. Further, the Bank of Japan meeting remained dormant as the policy makers spread different words with no action and the JPY remained weaker. The German Factory Orders surprisingly tested the highest level since December 2011; however, market players remained cautious ahead of the ECB press conference and kept a weaker note for the Euro.
In addition to the ECB press conference, the ADP Non-farm Employment Change from the US together with Trade Balance and Weekly Jobless claims are likely to fuel volatility into the market. Should the ADP number don’t oblige with its forecast of no change and rises with the great numbers, the USD can witness considerable strength ahead of tomorrow’s labor market numbers.
Considering the overall improvement into the US Dollar ahead of important labor market details, it is better to be with the trend the BUY USD rather than taking a contra trade. However, the buying should be small and intraday in addition to not being ahead of the important event.
Having witnessed large data sheets and central bank actions fueling heavy volatility during last week, the current week offers lesser economic indicators to move the markets. However, critical releases from US, UK and China coupled with the on-going geo-political tensions continue moving the forex market with a small but steady rhythm.
Today, the Japanese Current account figures remained a bit lower while the GDP numbers met expectations of -1.8%. The Chinese and the German Trade Balances rallied to landmark high; however, the import numbers are flashing the worrisome signs. The CAD Building Permits is the only economic indicator to be flashed today.
As the ECB has already signaled weakness by surprise rate cut, the lower NFP numbers couldn’t hurt the USD and that signals the strength of the US Dollar against majority of its counterparts. It will be better to take the buy side of USD than the otherwise case.
Even with no major details to track, US Dollar maintained its strength across board for the first day of the week by heading towards its July 2013 high (as signaled by I.USDX). Moreover, the Canadian Building Permits, even after beating the estimates, hurt CAD strength as it tested the lowest level in 3 months.
Early today, NAB Business Confidence remained lesser than the previous reading while the minutes of recent BoJ meeting provided additional weakness to the JPY as it focused more on sustainability of inflation till 2015. UK Manufacturing and the speech by BoE Governor, Mark Carney, at Liverpool can become important for the pairs connected to GBP ahead of the critical inflation report hearings, scheduled for Wednesday. Also, the Canadian Housing Start is another indicator signaling additional weakness of CAD.
Moreover, Talks about permanent solution to geo-political crisis between Hamas and Israel are progressing while the ceasefire at Ukraine continued making people relaxed for the time being. Scotland’s vote on Sept. 18 on whether to break away from UK is fueling the uncertainty into the market.
To sum up, the important details from UK can become headlines for the market today while the US dollar is likely to continue its up-move in absence of major details.
Forex Market is playing the tensed tone ahead of FOMC announcement tomorrow; however, the US Dollar remained firm on the first day of the week with the empire state manufacturing being at the highest level since April 2010. The European market also remained sideways with no major economics to track on yesterday.
Moreover, normalization of life in Gaza have eased the global geo-political tension between Hamas and Israel while the fragile ceasefire in Ukraine is repeatedly reported to be breached in different regions and the NATO members have started delivering armed vehicles to the troubles nation in order to fight back against pro-Russian separatists.
Today’s forex calendar includes important details from UK and EUR to be released. The UK CPI is likely to remain lower while the ZEW Economic Sentiment numbers from Germany and Europe citing the side effects of Russian sanctions.
The market is likely to gain momentum ahead of the crucial FOMC and the US Dollar becomes eye-candy for traders. However, it should be noted that it should be in the best interest of the traders to read between the lines of FOMC statement and economic projections in order to determine near-term US Dollar movement. The GBP and the Euro are likely to strengthen should the actual releases signals optimism; however, nothing great is expected from Euro and only a drastic positive can save the regional currency from falling further.
With the liquidating US Dollar positions during Tuesday, markets players are crossing their fingers while entering into the crucial day of the week and the greenback is also depicting the same. Canadian releases and the German ZEW sentiment strengthened their respective currencies while the UK CPI, even after being lesser than the forecast, provided support to the GBP ahead of the important details today and tomorrow.
Today being the important day which carries crucial releases from US, UK and EU, market players are trading the tensions ahead of the releases. The US FOMC, which becomes the most crucial, is at the latest of the day and is likely to provide considerable movement to the forex market. Even though the market players are waiting for any hints relating to near-term rate hike by Fed, I expect not to get anything except the words that WE ARE FAR FROM RECOVERY AND IT IS STILL A WAY TOO LONG TO TIGHTEN THE MONETARY POLICY. If this happens, the greenback can decline heavily. Moreover, the UK labor market details and MPC voting together with the final reading of the EU CPI are also important in a way that the UK labor market numbers are likely to support the GBP while the EU CPI is expected to register an uptick and can support the EU as well. However, there are lesser chances that the MPC voting can affect the market as BoE Governor has already signaled the Spring 2015 to be the deadline for taming the interest rates.
Hence, it would be better for the market players not to enter the market with huge positions ahead of the important releases and if already entered maintain strict money management rules.
Having witnessed the Federal Reserve officials’ hike in target-rate forecast near the end of 2015, the US Dollar continued its up-move even though the Fed Chair kept saying that there is “considerable time” for a rate hike even after winding down a bond-purchase program and the “significant under-utilization of labor resources” being cited.
The ECB announced today the allotment of its first targeted lending program; however, the EU banks were not that much excited and only €82.6 billion were allotted in TLTRO which were less than expected of €150 billion.
UK Retail Sales matched the expectations of a 0.4% increase; however, the voting on Scottish referendum snatched the eyes of GBP traders as Yes and No votes continued fueling uncertainty over Scottish departure from UK. Should the Yes supporters outshine the No ones the UK currency will be hardly hit.
Moreover, the SNB meeting remained unchanged with no change into their monetary policy meeting; however, it said that Measures can be expected in near future as Franc Poses Deflation Risk and the CHF continued its weakness.
After the Scottish referendum ends today, there are lesser events to track for the rest of the week except the Canadian CPI and Wholesale Sales on Friday.
Overall sentiment of the market supports the USD and GBP; hence, I continue supporting the Bulls for greenback while the reignited strength of GBP also supports some buying for the UK currency.
The US Dollar Index witnessed another negative day of the week as weaker Housing and Manufacturing numbers outshine the labor market improved registered via jobless Claims. Moreover, market players are in a mood to liquidate some of its gains as the recent FOMC tamed down the early rate hike expectations. However, overall sentiment for the greenback remained positive as the longer-term forecast for the rate hike remained positive.
The BIG day for UK, due to the Scottish referendum voting, completed yesterday with 29 of 32 councils reporting the No side had captured 55 per cent of the vote, to 45 per cent for Yes, and the voting is on counts. The UK Currency GBP continued gaining with the good news and is likely to complete its second weekly advance against majority of its counterparts.
With no major economic events to release, except Canadian CPI and Wholesale Sales, market players are likely to continue observing their initial path of slow US Dollar liquidation with GBP being the Bulls favorite. It is advisable that the US dollar now be toppled by GBP to generate BUY bids. However, the greenback isn’t weak for the longer run and it is expected to continue gaining its path slowly.
Having witnessed considerable volatility during last week, majorly fuelled by FOMC and Scottish Independence vote, Forex market has lesser economic numbers to track during the current week. However, this doesn’t mean that the scheduled events aren’t capable enough to fuel volatility into the world’s largest market.
During the week, PMI figures from various global economies together with the speeches by some of the FOMC members and the ECB President’s testimony will take the center stage in fueling the volatility into the forex market.
Today, the ECB President is due to testify on monetary policy before the European Parliament’s Economic and Monetary Committee while the speech by FOMC member Dudley and the Existing Home Sales are some of the events scheduled from US. Market is likely to focus more on the qualitative events, the testimony and the speech, in order to determine future monetary policy of ECB and Fed respectively.
Where the ECB President is likely to discuss future moves of ECB and the ongoing impact on the economy, the speech by FOMC member may become important in knowing how strong is the support for near-term rate hike.
It would be better to closely examine the details as majority of the news has already been capitalized.