Daily Fundamental Dose

Trading Discussion News and Economy
1123

Daily Fundamental Dose: 21 – September – 2018

Hello Traders,

With the expectations that latest Sino-US tariffs be less harmful to global growth than initially thought activating risk-on during Thursday, the US Dollar Index (I.USDX) had to visit the July month lows amid depleting safe-haven demand. Not only USD but the JPY also couldn’t avoid declining but the Gold benefited from the greenback’s drop. On the hand, optimism at trade front fueled AUD, NZD & CAD to extend their recent north-runs while EUR surged without much on its hand. Further, the GBP rallied as UK Retail Sales beat pessimistic consensus and progress at Brexit whereas Crude prices dropped on concerns that OPEC-led alliance might listen to Mr. Trump’s repeated push towards cutting energy prices by increasing output.

Having witnessed risk-on performance the other day, which resulted weaker safe-havens, short-covering moves were experienced by USD traders at the start of Friday; however, Japanese PM Shinzo Abe won the third consecutive term as leader of the ruling Liberal Democratic Party, which in-turn portrayed brighter chances of BoJ’s ultra-loose monetary policy and kept dragging the JPY southwards. Moreover, Brexit front also revealed some bad news as EU policymakers weren’t happy with UK PM Theresa May’s draft proposal and asked her to improvise on it.

At the economic front, Japan’s National Core CPI met upbeat forecast but still remained far away from the central-bank’s 2.0% target while the Flash Manufacturing PMI lagged behind market expectations. Also, news that S&P Global Ratings upwardly revised Australia’s AAA debt rating to stable from negative helped the AUD to maintain its strength.

Looking forward, Flash readings of EU Manufacturing & Services PMIs, coupled with Canadian CPI & Retail Sales, could entertain short-term traders while US Flash Manufacturing & Services PMI might offer intermediate trade opportunities. Alternatively, developments at Brexit and trade-front, be it Sino-US or NAFTA, should also be closely examined.

EU Flash Manufacturing & Services PMIs are likely to maintain their previous stages at 54.4 and 54.5 respectively. Further, the Canadian Retail Sales could reverse earlier contraction of -0.2% with +0.3% growth but the CPI may drop to -0.1% from +0.5%. Moreover, US Flash Manufacturing PMI may print 55.1 figure against 54.7 prior and the Services PMI could register 54.9 mark versus 54.8 earlier.

In case of politics & trade front, the Brexit discussions have started being tough for Mrs. May while there aren’t any signs of NAFTA deal between the U.S. & Canada even after four rounds of talks. Also, China & America are likely to remain on wait & watch mode till September 24 but Chinese communication on the details of upcoming trade-talks with US may affect trade moves.

While broader risk-on is expected to support the commodity-basket for now, rest of the majors may find it hard to carry their latest trend forward. Herein, the GBP could struggle with Brexit pessimism and the EUR may also have to face the burden of PMIs while JPY can keep trading southwards due to Abe’s victory supporting sustained monetary easing. As a result, the USD may witness some recovery but any disappointment from eco-politico front should not be taken lightly.

Technical Talks

Unless clearing 1.2955 support-turned-resistance, the USDCAD can’t avoid meeting the 200-day SMA level of 1.2860, breaking which can drag it further downwards to 1.2800. However, an upside break of 1.2955 can quickly print 1.3000 on the chart. Same is the case with USDCHF that is gradually coming down to test the 0.9570 and the 0.9520 supports with 0.9680 & 0.9735 acting as nearby resistances for the pair to tackle. At the end, the NZDCHF follows BPC formation and indicates the 0.6440, the 0.6460 & 0.6500 to comeback on the chart while the 0.6385, the 0.6370 and the 0.6340 may entertain sellers during the pair’s decline.

Have a nice trading-day ……

1124

Daily Fundamental Dose: 24 – September – 2018

Hello Traders,

Not only lower than initially promised tariffs on each others’ goods by the U.S. & the China, but optimism that global economies can withstand Sino-US trade-tussles also fueled investors rush to riskier assets and dragged the US Dollar Index (I.USDX) down for consecutive second week. Alternatively, the EUR benefited from mixed data-points and weaker greenback while the GBP rallied as CPI & Retail Sales joined hands with progress on Brexit summit; however, the Pound got a shock on Friday when UK PM Theresa May communicated that her proposal was rejected by the EU without any reasons. Moving on, the AUD, NZD & CAD surged with welcome stats at home and receding trade-tensions helping commodity baskets whereas the JPY dropped as market-rush to risk-safety and dovish BoJ disappointed Yen traders. Additionally, Crude prices kept pleasing Bulls as looming sanctions on Iran and depleting US inventories, coupled with expectations that OPEC-led alliance won’t increase their output, signaled energy supply-crunch.

While market optimism took a U-turn on Friday with negative news from Brexit, China’s rejection to planned trade talks with U.S. officials and OPEC-led alliance’s refrain to respect Mr. Trump’s push for increased supply rejuvenated the risk-off sentiment during the weekend. Moreover, Italian Deputy Prime Minister’s comments signaling displeasure with push to curb fiscal measures and suggestion that ECB should consider monetary policy tightening soon also spread worries for global investors.

With the risk-safe assets regaining market attention, the US Dollar got a good start to the week but fewer economics and holidays at Japan & China confined major moves. However, monthly prints of German Ifo Business Climate and speech by ECB President Mario Draghi could entertain short-term traders. The German Ifo Business Climate is expected to post 103.2 mark against 103.80 earlier whereas Mr. Draghi’s speech at EU Parliament may try justifying the central-bank’s wait before following the Fed-line monetary policy tightening.

Even if the Chinese and Japanese market are close and there prevails lesser details/events on hand to observe, the US Dollar is more likely to maintain its latest upside on trade-war concerns. Moreover, the GBP could also witness profit-booking at blow to Brexit optimism seems a tough challenge for the UK currency. In case of the EUR, the regional currency may have to suffer from Italy’s political problems but Draghi’s hawkish statements can limit the Euro’s downside.

At the commodities’ front, absence of Chinese players from market after the cancelled trade-talks and stalled NAFTA talks might restrict the AUD, NZD & CAD’s moves but the export-oriented economies could find it hard to please the buyers.

Technical Talks

Failure to extend latest recovery beyond 1.1800-1810 region indicates EURUSD’s pullback to immediate ascending TL figure of 1.1710, breaking which another support-line at 1.1645 could challenge the sellers. In case the pair surpasses 1.1810 upside barrier, it can rise to 1.1840 and then to the 1.1900 resistances. On the other hand, the GBPUSD seems all set to revisit the 1.3040 and the 1.3000 rest-points with 1.3130 & 1.3180 likely restricting the pair’s near-term advances. Furthermore, GBPNZD can continue signaling the 1.9520 and the 1.9450-40 re-tests unless it successfully clears the 1.9670-75 and the 1.9745-50 resistances.

Have a nice trading-day ……

1125

Daily Fundamental Dose: 25 – September – 2018

Hello Traders,

While China’s refrain to meet US officials until they stop threatening to expand trade-tariffs rejuvenated the US Dollar’s safe-haven demand during early-Monday, news that U.S. Deputy Attorney General Rod Rosenstein will leave his post triggered the political drama inside Trump administration and confined the greenback’s gains. However, that didn’t stop JPY, AUD, NZD & CAD from declining on trade-war concerns even if Chinese & Japanese markets were off but the Gold witnessed some buying on weaker USD. On the other hand, the EUR surged due to ECB President’s hawkish comments favoring vigorous pick-up in inflation while the GBP recovered some of its Friday’s losses after comments from Brexit minister & Germany raised hopes of a deal between the EU & the UK by divorce deadline. In all this, the Crude didn’t lose its charm and kept trading northwards as not only OPEC-led alliance’s rejection to respect Mr. Trump’s push for higher production but statements from Iran that Saudi Arabia & Russia have lesser capacity to keep inflating output also pleased energy buyers.

Having witnessed an active start to the week, early-Tuesday couldn’t help the US Dollar as a trade-deal between US & South Korea scaled some market fears off the table. Though, there was little reaction to the same by commodity-linked currencies, like AUD, NZD & CAD, as return of Chinese players after extended weekend activated mild selling at commodity basket. Moving on, the EUR stretched its recovery forwards on upbeat prints of German WPI while the GBP also maintained its strength based on absence of further negatives from Brexit but the JPY couldn’t please buyers ahead of Abe-Trump meet.

In addition to the pessimism emanating from US-China trade-relations and worries from upcoming negotiations between the U.S. & the Japan, NAFTA and Brexit are likely other factors that could keep highlighting global trade as a crucial catalyst. Not only trade, but recent political plays from US relating the Deputy Attorney General’s leave that might provide vacuum on the investigation of Russian meddling in 2016, together with UK PM Theresa May’s struggle to convince her own party members, might become crucial to observe. Furthermore, economic calendar also has some second-tier details like US CB Consumer Confidence and the New Zealand Trade Balance to watch.

In case of the scheduled data-points, the U.S. CB Consumer Confidence is likely to print 132.2 mark against 133.4 prior whereas New Zealand Trade Balance may show higher deficit figure of -930M compared to -143M earlier. At the political front, White House officials may struggle to find suitable official to replace the departing Deputy Attorney General while the UK PM could also find it hard to please EU & her own party-members accept the chequers plan, which has recently been rejected by the regional authorities, during the stipulated two-week’s ultimatum given by UK parliament leaders. Additionally, Japan is ready to offer some incentives to the U.S. in order to avail a permanent relief from witnessing extra tariffs on its cars but Mr. Trump wants more than that and the same could make today’s Abe-Trump meet more interesting.

Given lesser likelihood of scheduled economics to help USD and NZD, qualitative factors like politics & trade front could acquire major investor attention wherein Mr. Trump’s “America First” agenda could support the US Dollar to maintain it safe-have allure and negatively affect the commodity-currencies. Also, EUR & GBP might have to bear the burden of Italy’s denial to respect EU fiscal norms and Brexit problem while the JPY could continue being weaker unless Mr. Abe manage to please his US counterpart on trade.

Technical Talk

USDJPY trades above the medium-term descending trend-line, at 112.75 now, which in-turn offers brighter chances for the pair’s rise to 113.20 and the 113.60 before aiming the 114.00 round-figure but failure to close beyond 112.75 might not hesitate dragging the pair back to 112.40 and the 112.00 supports. Further, NZDUSD rests around 0.6630 TL, breaking which 0.6600 & 0.6560 can come-back on the chart while 0.6670 & 0.6700 can restrict the quote’s immediate advances. Moreover, AUDJPY needs to close beyond 81.90-82.00 resistance confluence in order to aim for 82.80 & 200-day SMA level of 83.30 otherwise its pullback to 81.00 & 80.60-50 can’t be denied.

Have a nice trading-day ……

1126

Daily Fundamental Dose: 26 – September – 2018

Hello Traders,

Although U.S. Consumer Confidence jumped to 18 year high and Mr. Trump maintained his “America First” attitude at UN, the US Dollar Index (I.USDX) couldn’t register a positive daily closing as investors raised concerns about the Fed’s ability to keep offering rate-hikes next-year. With this, the EUR and the GBP managed to take advantage of the greenback’s decline while JPY remained under pressure when US-Japan leaders talk the trade-terms. On the other hand, the AUD & CAD benefited from recovery in Chinese markets after extended holidays while NZD traders concentrated more on rebound in business confidence than record high trade-deficit. Moreover, Crude witnessed pullbacks after API registered unexpected rise in stockpiles.

During early Wednesday, investors remained cautious ahead of monetary policy decisions from the U.S. Federal Reserve and the Reserve Bank of New Zealand (RBNZ). However, news that Italy will soon communicate its next year’s fiscal targets dragged the EUR a bit downwards whereas recently hyped challenges to the UK PM triggered GBP’s profit-booking. Additionally, trade representatives of the U.S. & the Japan concluded their meeting and seemed optimistic to have good results after Abe-Trump end their discussions, which in-turn helped the JPY to recover some of its latest losses.

While FOMC & RBNZ are likely to command today’s market moves, US New Home Sales and weekly Crude Oil Inventories, together with trade-related issues, could offer intermediate moves to entertain traders. Amongst them, increase in New Home Sales to 630K from 627K could help the USD to remain solid ahead of Fed results while Crude may continue on its recent declines if the inventories post -0.7M forecast compared to -2.1M prior. Also, improvements in US-Japan trade relation, if Abe stands ready to cut deficit with the U.S., can cut the greenback’s safe-haven demand and may help the JPY to remain strong for a bit longer but Sino-US trade-war could keep restricting the USD’s downside.

In case of central-bankers, the Federal Reserve is almost certain to announce a quarter-point increase to fed-rate, the third in a year, while the RBNZ isn’t expected to change its present monetary policy. As broader results from Fed & RBNZ are known to everybody, what is more important is how the Sino-US trade-tussles could affect respective central-bank’s future policy moves. Herein, Fed’s dot-plot and the speeches from respective heads will come into focus.

Given the Fed continue maintaining its hawkish tone, by offering another hike in Decembers and three or four more in 2019, the USD could regain its strength while Mr. Powell’s worrisome statements considering protectionism’s negative impact on monetary policies might not hesitate dragging the greenback further to south. In case of the NZD, the central-bank has been dovish off late but recent data-points started coming surprisingly positive. If the RBNZ Governor respects such stats by signaling possible changes in the monetary policy, the Kiwi could extend its rally.

Other than respective currencies, a hawkish outcome from the Fed could again highlight monetray policy contraction between the Fed and rest of the world and might weaken rest of the majors whose central-banks still favor loose policies, like JPY & NZD. Furthermore, EUR & GBP can also struggle to maintain their gains if Fed pleases greenback buyers as political problems at Italy & UK may regain market attention.

Technical Talk

Considering short-term ascending trend-channel on the AUDUSD’s H4 chart, the pair is likely rising towards the 0.7295 TL resistance, breaking which channel-resistance mark of 0.7345 could gain buyers’ attention. Though, a downside break of 0.7225 formation-support might not hesitate fetching prices to 0.7160. Further, the USDCAD needs to clear the 1.2970-75 resistance-area in order to aim for the 1.3000 and the 1.3045-50 numbers to north else its pullback to 1.2885-80 and then to the 200-day SMA level of 1.2865 can’t be denied. At the end, the NZDJPY follows BPC pattern with 75.55 & 76.30 being nearby resistances to confront whereas 74.65 & 50-day SMA level of 74.20 act as adjacent supports.

Have a nice trading-day ……

1127

Weekly Fundamental Dose: 27 – September – 2018

Hello Traders,

With the FOMC & the RBNZ results already being out & loud, in addition to an end to Abe-Trump talks, the trade-war concerns emanating from US-China & NAFTA, together with few second-tier details from UK, US & Canada, can offer busy days ahead to global investors.

Let’s start discussing fundamentals about each one of them.

Market Optimism Dragged The USD Downwards

In spite of witnessing fresh tariff-war between the U.S. & the China, market-players sensed a sign of optimism from the rate of levies that were lower than previously promised. As a result, the US Dollar Index (I.USDX) marked consecutive second weekly loss due to cut in its safe-haven demand while commodity-linked currencies like AUD, NZD & CAD took advantage of such positivity. Further, welcome data-points at home and progress at Brexit summit played their role in fueling the GBP whereas EUR surged on the USD’s decline. However, the JPY couldn’t enjoy greenback’s drop because of its risk-safety status & the BoJ’s dovish statements but the Gold benefited from the US Dollar’s weakness. Additionally, Crude prices aptly portrayed supply crunch based on depleting US inventories, upcoming sanction on Iran & speculations that OPEC-led alliance won’t increase their output at the last-weekend’s meeting.

Greenback Pared Early-Week Losses After FOMC

At the start of present week, trade & political factors remained in highlight as UK PM’s announcement that recent Brexit talks resulted an impasse met with China’s rejection to US trade-talk invitation and US Deputy Attorney General’s leave. Though, optimism surrounding US-Japan discussions and bets that Fed might find it hard to extend rate-hike trajectory to next-year dragged the greenback down before FOMC. However, upbeat dot-plot and hawkish statements from the Fed Chair Jerome Powell rejuvenated the US Dollar’s strength and is likely pushing it towards a weekly positive.

On the other hand, recently erupted political crisis in EU due to Italy’s budget issues weakened the EUR whereas GBP seems losing its momentum on lack of fresh positives from the Brexit. Moving on, the JPY also started recovering some of its latest losses after Abe-Trump agreed to start bilateral trade-talks and put a halt on US tariffs on Japanese cars. Furthermore, AUD, NZD & CAD are likely failing to extend their latest gains as not only dovish statements from RBNZ but pessimism at Chinese economy & Sino-US trade-war also hurt commodity basket. At the end, Crude kept stretching its north-run despite higher US stockpile & White House announcement to drop plans of using strategic reserves as OPEC-led alliance refrained to respect Mr. Trump’s push for higher output.

Trade Front & Economic Calendar To Regain Investor Attention

With most of the important details/events already announced, investors may shift their attention back to U.S. trade-tussles with China & Canada in addition to observing Brexit developments. Moreover, political problems at Italy and second-tier stats from US, UK, Japan & Canada can offer intermediate trading opportunities to market-players.

Starting with the trade-tussles, after China’s rejection to US trade-talk invitation Mr. Trump criticized the dragon nation’s policies at UN and maintained his tough stand favoring “America First” agenda. On the other hand, Trump administration’s NAFTA negotiations with Canada couldn’t end well and the White House leader has already announced inclination to present details of Mexico only deal, which Canada can later-on join if situations improve. In case of Brexit, Labor party promised to vote against Mrs. May’s plan at parliament and may cause second referendum on the British departure from the EU, which in-turn resulted worries to UK PM’s political future at a time when she is already finding it hard to please regional leaders to accept her proposal.

At the political front, departure of U.S. Deputy Attorney General, who was looking over the Russian meddling in 2016 Presidential election, raised tensions for the Trump administration as the upcoming authority might tighten Robert Mueller’s investigation. Additionally, EU leaders got another worrisome sign from Italy as the nation will soon present its budget and may not respect the regional guidelines.

Coming to the economic front, Thursday offers US Durable Goods Orders and Final GDP while Japan’s Tokyo Core CPI, UK Final GDP, EU Flash CPI, Canadian GDP, US Chicago PMI and Personal Spendings are up for release on Friday.

While Final reading of Q2 2018 U.S. GDP isn’t expected to change from 4.2%, the Durable Goods Orders may please greenback buyers if matching the +1.9% growth forecast against -1.7% prior contraction. Further, Japan’s Tokyo Core CPI may also remain unchanged at +0.9% and the same goes with UK Final GDP of 0.4%. However, the EU Flash CPI may rise from 1.0% to 1.1% and the Canadian GDP could also improve to 0.1% from 0.0% earlier. Moreover, the U.S. Personal Spending might soften to 0.3% from 0.4% previous whereas the Chicago PMI could also disappoint USD Bulls with 62.3 mark versus 63.6 earlier.

To Sum Up, while factors like trade-war & upbeat Durable Goods Orders could help the USD to post its first positive weekly closing in three, domestic political pessimism might confine the greenback’s surge.

For others, Italy can keep creating problems for the EUR but upbeat Inflation can help the regional currency whereas Brexit could continue causing problems for the GBP. Further, the JPY can stretch its recent up-moves based on successful US-Japan talks but overall USD strength may limit the traditional safe-haven’s rise.

Moving on, commodity-linked currencies might find it hard to stop their declines as rejuvenated trade-war concerns and sluggish fundamentals at home could play their roles.

Technical Analysis

Break of short-term ascending TL seems dragging the EURUSD to 1.1655 & 1.1610 supports with 1.1755 & 1.1815-20 being strong upside resistances whereas GBPUSD is likely coming back to 1.3020 & 1.2985 supports while 1.3300 & 1.3365-70 act as important resistances. Further, the USDJPY’s failure to sustain the 112.75 TL break may drag it to 112.15 & 111.80 with an upside break of 112.75 likely confronting the 113.15 & 113.70. Moreover, AUDUSD’s inability to clear the 0.7280-90 resistance-region could recall the 0.7200 & 0.7130 on chart with 0.7370 being follow-on level to watch past-0.7290. Furthermore, NZDUSD has 0.6620-15 & 0.6540 as supports with 0.6690 & 0.6725 likely resistances while USDCAD has to close beyond 50-day & 100-day SMA confluence of 1.3045-50 in order to meet the 1.100 & 1.3180 else its pullback to 1.2955 & 1.2865 can’t be denied.

Have a nice trading-day ……

1128

Daily Fundamental Dose: 28 – September – 2018

Hello Traders,

Following upbeat results of Wednesday’s FOMC, the Fed Chair’s rejection to chances of US recession for at least next two years, coupled with strong readings of Q2 2018 US GDP and Durable Goods Orders, propelled the US Dollar Index (I.USDX) on Thursday. While US Dollar was rising, JPY & Gold dropped due to their generally inverse relationship with safe-havens whereas commodity-linked currencies, like AUD, NZD & CAD, plunged on continued pessimism surrounding Sino-US trade conditions. On the other hand, the EUR has to bear the burden of Italy’s refrain to respect EU guidelines on deficit targets while GBP couldn’t avoid negativity at Brexit front. Moreover, Crude prices extended north-run as upcoming sanctions on Iran & refrain by the U.S. policymakers to use strategic reserve for price control pleased energy buyers.

During early Friday, investors mostly carried on their previous buying in favor of the USD while booking some more profits off the EUR & GBP. Further, the JPY couldn’t respect better than forecast Tokyo Core CPI and there was little impact of the recent news that US-Mexico will announce formal NAFTA soon that can be joined by Canada.

While surge in USD is pleasing forex traders, economic calendar also has some crucial stats to entertain analyst fraternity. Among them, UK Final GDP & EU Flash CPI will be the first to play their roles, followed by Canadian GDP, US Personal Spending & Chicago PMI.
The UK Final GDP isn’t expected to change from 0.4% forecast while the EU Flash CPI may inflate to 2.1% from 2.0%. Further, the Canadian GDP might strengthen to 0.1% from 0.0% whereas US Personal Spending could dip to 0.3% from 0.4%. Also, the US Chicago PMI may weaken to 62.3 from 63.6 earlier.

Even if US details are less likely to flash upbeat signals, on-going trade-tussles and political pessimism at China, EU, Canada and UK may help the greenback to extend its recent advances. However, increase in EU Flash CPI may limit the EUR’s losses but the same can’t be told for GDP figures from UK & Canada.

Hence, with economic calendar carrying higher number of details to watch and the USD is also rising, market-players may find the Friday entertaining.

Technical Talk

In addition to the break of six-week old ascending trend-line, the EURUSD’s D1 close beneath 100-day SMA also indicates brighter chances for the pair’s further drop to 50-day SMA level of 1.1610 but the 1.1530-20 horizontal-region might confine its extra downside. Alternatively, the 1.1655 and the 1.1700 are likely nearby resistances that the quote needs to surpass in order to portray its strength. On the other hand, USDJPY’s successful break of 113.20 confronts the 113.60 barrier before running towards 114.00 & 114.40 resistances with 112.75 acting as follow-on rest if prices dip below 113.20. Moving on, the USDCHF also struggles to justify its strength as 0.9780-90 region still stand tall to disappoint buyers targeting 0.9830 & 0.9860-65 resistance-confluence, which in-turn highlights the importance of 0.9730 mark, comprising 200-day SMA, and the 0.9700 supports.

Have a nice trading-day ……

1129

Daily Fundamental Dose: 01 – October– 2018

Hello Traders,

In spite of extending its south-run during early last-week, the US Dollar Index (I.USDX) managed to defy Bears for the first time in previous three-weeks as not only upbeat FOMC but strong readings from US GDP & Durable Goods Orders also strengthened argument in favor of the Fed’s future rate-hikes. While USD was bearing the fruits of upbeat fundamentals, the EUR had to gulp down Italy’s refrain to respect EU advices when setting budget deficit targets whereas GBP couldn’t avoid Brexit challenges at sluggish data-points. Moving on, AUD & NZD failed to maintain earlier gains due to rising USD & pessimism surrounding Sino-US trade-terms but the CAD rose with surge in Crude prices and welcome data-points at home, not to forget speculations that Canada will end-up joining US-Mexico in trilateral deal. At the end, JPY & Gold traders remained disappointed as strong greenback curbed the demand of traditional safe-havens while Crude rallied on supply crunch signals emanating from OPEC-led alliance and the U.S. Not only weekdays but weekends were also interesting to watch during last-week as announcement that Canada will be joining US & Mexico for a trilateral deal propelled the CAD further to north.

At the start of present week, Sunday’s release of Chinese PMIs added weakness into the commodity front while beginning of the UK Conservative party’s annual conference dragged GBP towards south. Additionally, news that US & Saudi Arabia talked over the energy concern stopped Crude from rising further whereas holidays at China & Australia played their roles to confine market moves around early Monday.

Looking forward, monthly prints of UK Manufacturing PMI & the U.S. ISM Manufacturing PMI are likely important stats to read from economic calendar while investors’ response to recently agreed Canadian deal may entertain momentum traders when they initiate the week-start trading session. Moreover, political developments at UK might also make traders busy. Forecasts suggest 52.6 mark for UK Manufacturing PMI against 52.8 prior with the U.S. ISM Manufacturing PMI expected to flash 60.1 figure compared to 61.3 earlier.

Although scheduled data-points are less likely to offer any noticeable positive signs for either the USD or the GBP, challenges to the UK PM and optimism surrounding Fed’s future rate-lifts can keep hurting the Pound and support greenback to rise. Meanwhile, the CAD may witness further strength at the start of US & UK sessions when most of the global market players could take advantage of receding pessimism attached to US-Canada trade relations.

Hence, news from US-Canada trade front and Manufacturing PMIs could gain market attention to take over Monday Blues.

Technical Talk

Although Canada’s ability to please US policymakers and join the trilateral deal between US, Canada & Mexico dragged USDCAD to four-month lows, the 1.2800 and the 1.2760 could still trigger the pair’s pullback moves toward the 1.2880 and then to the 1.2930 resistances. In case of GBPUSD, the pair may find 50-day SMA level of 1.2980 and the 1.2930 as strong supports with 1.3060 and 1.3130, comprising 100-day SMA, expected to limit the quote’s immediate upside. Furthermore, the NZDCHF has to clear the 0.6495 TL & the 50-day SMA level of 0.6525 in order to avoid revisiting the 0.6450 and the 0.6415 supports.

Have a nice trading-day ……

1130

Thanks for the detailed post!

1 Like
1131

Daily Fundamental Dose: 03 – October– 2018

Hello Traders,

While hawkish statements from the Fed Chair Jerome Powell helped lift the US Dollar Index (I.USDX) to a moth’s high on Tuesday, a near collision between the U.S. and the Chinese warship in disputed South China Sea, coupled with earthquake & tsunami at Indonesia and political fears emanating from Italy, propelled traditional safe-havens like JPY & Gold. As a result, the EUR had to respect sellers fearing another debt-crisis in EU whereas GBP dropped on the UK Construction PMI’s weakness and also because Mr. Boris Johnson, former foreign secretary, won cheers at the Conservative Party’s annual conference by attacking PM Theresa May’s Brexit plan. Moving on, commodity-linked currencies like AUD, NZD & CAD failed to ignore the greenback’s strength & on-going Sino-US trade-war whereas Crude also registered first negative daily closing in a week after API registered surprise increase in inventories.

Although concerns that Italy could trigger another EU debt-crisis dragged the regional currency downwards yesterday, news that Italian policymakers are likely to step-back from their previous budget deficit target of 2.4% to 2.0% gave a sigh of relief to the EUR traders around early Wednesday. On the other hand, disappointing AU Building Permits further damaged the AUD when other commodity-currencies are already witnessing downside pressure while GBP recovered some of its latest losses ahead of UK Services PMI & PM’s speech at party annual conference.

Looking forward, British Services PMI & UK PM Theresa May’s speech are likely to become crucial for the GBP traders while monthly readings of the U.S. ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI, together with weekly Crude inventory figures from official US handle, could entertain momentum traders. It should also be noted that Mr. Powell is also scheduled to participate in a panel discussion at The Atlantic Festival.

Forecasts suggest a 54.0 mark for the UK Services PMI against 54.3 earlier while ADP Non-Farm Employment Change may strengthen to 185K from 163K and the ISM Non-Manufacturing PMI could soften to 58.0 from 58.5. Furthermore, weekly release of official US Crude inventories can please the energy Bulls if meeting the 1.1M consensus versus 1.9M prior.

Coming the qualitative details/events, Mrs. May will try hard to convey importance of her Brexit proposal and assure a good deal to the UK policymakers during her concluding speech at party conference but may find it difficult to please some hard-liners, like Boris Johnson, and could end-up disappointing Pound optimists. However, Mr. Johnson’s refrain to question her political position might support the British currency from declining further. In case of Mr. Powell’s speech, the central-banker has already been hawkish off-late and may rephrase some of his latest positive statements, which in-turn could help the USD to remain positive; though, soft ISM figure and recent political improvements at EU can restrict the currency from rising further.

To sum up, active economic calendar and speeches from influential personalities from the UK & the U.S. could offer an important day to the investors’ fraternity.

Technical Talk

With the short-term descending trend-line portraying NZDUSD’s weakness, the pair is likely to revisit the 0.6560 and the 0.6525 support-levels but an upside clearance of 0.6600 TL barrier could propel the quote to 0.6620 & 0.6670 resistances. Further, USDCHF again heads to confront the 100-day SMA level of 0.9865, breaking which 0.9910 & 0.9955 can please buyers while 0.9820 & 0.9800, comprising 50-day SMA, seem nearby crucial supports for the pair. Additionally, EURJPY is taking support of 200-day SMA level of 131.00, not to mention the importance of two-month old ascending trend-line, at 130.70, which in-turn helps prices to aim for 132.00 & 132.50 numbers towards north.

Have a nice trading-day ……

1132

Weekly Fundamental Dose: 04 – October– 2018

Hello Traders,

Not only upbeat services PMI & private-sector payrolls but hawkish comments from Federal Reserve Chairman has also helped fueling the US Dollar so for during present week. However, monthly release of US & Canadian employment numbers are still pending for publish on Friday and become crucial to observe.

Other than jobs report, Thursday’s Canadian Ivey PMI and US Factory Orders, followed by Friday’s AU Retail Sales and Trade Balance from the U.S. & Canada, are some additional stats that could offer intermediate trading opportunities. Moreover, political plays at EU & UK are extra catalysts that require market attention as well.

Before we move onto discuss what’s left to watch, let us analyze what happened recently in the global financial markets.

Fed Played Its Role

Be it hawkish dot-plot and rejection of recession fears for at-least two years or welcome numbers of GDP & Durable Goods Orders, all the factors were enough for the US Dollar Index (I.USDX) to stop previous declines and mark a first positive weekly closing in earlier three. With the greenback’s strength dragging the commodity-linked currencies like AUD & NZD downwards, the CAD managed to remain strong on rising crude prices and positive data-points. Further, the EUR couldn’t avoid Italy’s challenge to the EU rules whereas Brexit & sluggish stats proved harmful for the GBP. Moving on, the JPY & the Gold failed to confront stronger USD while Crude benefited from supply crunch & declining inventories.

Good Start To The Week

Having witnessed volatile sessions during last-week, the weekend announcement of Canada finally joining US & Mexico for trilateral trade deal, start of annual conference by UK’s conservative party and China’s weaker than expected PMIs entertained momentum traders during early week. It should also be noted that China’s week-long holidays tried limiting the commodity moves but ended being unnoticed due to the greenback’s strength.

One topic that’s been gaining market attention and fueled treasury yields was the Fed Chair’s repeated supporting statements for the U.S. central-bank’s future rate-hikes, which together with upbeat data-points, stretched the USD a bit more towards north.

On the other hand, the EUR witnessed downside pressure even as Italy lowered down its budget deficit target and respected the EU guidelines while the GBP remained in red as the conservatives’ conference portrayed political difference in the Britain’s ruling party.

In case of traditional safe-havens, namely JPY & Gold, rising USD curbed their upside but the Crude didn’t respect surprise increase in US stockpile due to fears emanating from looming Iranian sanctions.

What Next?

At the start of Thursday, news that Saudi Arabia & Russia have secretly pledged to increase output couldn’t activate the Crude’s profit-booking moves whereas USD witnessed pullback as FOMC members seemed divided over the December rate-hike. Though, the same fall short of helping the commodity-linked currencies as declining Chinese Yuan & overall strength of the greenback continued hurting AUD, NZD & CAD.

Looking forward, Canadian Ivey PMI & US Factory Orders will be the focus point during rest of the day at the time when most of the U.S. stats have been pleasing investors. The Canadian Ivey PMI may flash 62.3 mark against 61.9 previous while the U.S. Factory Order can reverse earlier contraction of -0.8% with +2.2% growth.

Moving on to Friday, early-day moves are likely to be governed by AU Retail Sales, that’s expected to post +0.3% growth versus 0.0% prior, while employment details and trade balance could command market sentiment at the end of working week.

Starting with the US details, the much followed Non-Farm Payrolls (NFP) may soften a bit to 185K from 201K prior and the Average Earnings are also likely to weaken to 0.3% from 0.4% but the decline in Unemployment Rate to 3.8% from 3.9% could speak louder for the strength of world’s largest economy. Also, the Trade Balance deficit might provide additional strain to Mr. Trump if matching -53.4B deficit against -50.1B earlier.

For the Canadian part, the Trade Balance number may shrink further downwards to -0.5B from -0.1B but the Employment Change could rise to +25.0K from -51.6K and the Unemployment Rate might also dip to 5.9% from 6.0%.

At the political front, Italy’s on & off for EU’s regional directives and challenges for the UK PM to go ahead with the Brexit plan, be in from her own party members or from EU policymakers, could provide background music to market momentum when China is away on holiday.

To sum up, even after likely being not so strong, the US jobs report may still favor the December rate-hikes and further more during the next year and can help the USD to remain positive by the week end unless posting extremely pessimistic numbers.

As a result, the commodity-linked currencies may have to extend their south-run but CAD can witness lesser losses if scheduled Canadian stats match forecasts. In all this, the JPY & Gold might have to revisit the negative region due to the US Dollar’s strength and growing market optimism.

The EUR & the GBP could find it hard to regain buyers’ support but Crude can continue pleasing the Bulls on supply crunch fears.

Technical Analysis

EURUSD is likely coming down to 1.1430 & 1.1360 unless trading below 1.1530, breaking which 1.1610 may regain market attention. Further, the GBPUSD is struggling around 1.2930-20 support-zone that’s followed by the 1.2800 & 1.2750 rest-points with 1.3050 & 1.3115 acting as immediate resistances to watch during the pair’s upside. Moving on, USDJPY has to surpass the 114.75 barrier in order to aim for the 115.30 & 116.00 otherwise its pullback to 113.50 & 112.60 can’t be denied while USDCAD’s D1 close beyond 1.2900 could help it aim for the 1.3020 & 1.3055 resistances with 1.2780 & 1.2730 likely adjacent supports. Furthermore, the AUDUSD’s dip beneath 0.7080 indicates its plunge to 0.7000 and the 0.6950 levels with 0.7200 & 0.7260 being nearby resistances whereas NZDUSD may also drop to 0.6450 & 0.6360 until clearing the 0.6540 & 0.6620 upside barrier.

Have a nice trading-day ……

1133

Daily Fundamental Dose: 05 – October– 2018

Hello Traders,

Notwithstanding better than forecast Factory Orders and Jobless Claims, the US Dollar Index (I.USDX) registered first negative closing in more than a week as absence of Fed Chair’s comments & surge in treasury yields pushed investors to remain cautious ahead of today’s monthly job reports. With this, the EUR managed to take a break from recent plunge whereas news that Britain is ready to avoid extensive border checks at Ireland after Brexit signaled likelihood of a EU-UK deal and helped the GBP to remain positive by day end. Moreover, JPY & Gold also recovered some of their latest losses on greenback’s weakness but AUD, NZD & CAD couldn’t avail such benefit due to rejuvenated Sino-US trade war concerns after report of China using hardware to spy users of few American companies’ products. Additionally, increasing stockpiles at key U.S. pipeline at Oklahoma, following seven-month high print by official inventory reading, dragged the Crude prices downwards.

During early Friday, increase in Japan’s Household Spending & Leading Indicators favored the JPY to stretch its recent recovery but upbeat German Factory Orders couldn’t help the EUR to remain strong. Same is the case with GBP that just failed to hold its upswing on Brexit worries while commodity-linked currencies like AUD, NZD & CAD continued trading southwards. The USD wasn’t much stronger as optimists remained on sidelines before crucial employment details and Trade Balance figures. In addition to the U.S. employment stats & Trade Balance numbers, Canada is also up for releasing its monthly stats concerning employment & trade.

Although increase in US wage growth is what most market players are likely to search for in today’s jobs report, forecasts aren’t confirming the same. The Average Hourly Earnings is expected to mark 0.3% wage growth against 0.4% earlier whereas Non-Farm Payrolls (NFP) could print softer mark of 185K compared to 201K previous outcome. Though, likely dip in Unemployment Rate to 18-year low of 3.8% from 3.9% could please the USD Bulls. In case of Trade Balance, deficit might widen to -53.4B versus -50.1B prior.

On the other hand, the Canadian Employment Change can reverse earlier contraction of -51.6K with a +25.0K figure and the Unemployment Rate may also drop to 5.9% from 6.0%. Moving on, the Trade Balance figure might disappoint Loonie buyers if matching -0.5B consensus vis-a-vis -0.1B posted last-month.

Other than aforementioned fundamentals, developments at Brexit, Italy and US-China trade front could also offer a busy Friday to investors. Though, one thing is near to certain that the US Dollar stands ready to post another weekly positive closing unless witnessing extremely sluggish job numbers. As a result, commodity-linked currencies, EUR, GBP & Gold are likely to remain weaker for a bit long but JPY can trim some of its losses on latest economics. Furthermore, fears of sanctions on Iran & supply crunch could keep energy prices high unless either US or a producer from OPEC-led alliance announces anything that supports increase in oil output.

Technical Talk

Even after taking a U-turn from 114.55, USDJPY has limited room on the downside as a month-old ascending TL, at 113.35 and the 112.60 are likely important supports that could trigger the pair’s recovery. On the upside, a clear break of 114.55 can avail 114.75 as an intermediate halt before aiming the 115.00 round-figure. Further, AUDUSD’s sustained trading below 0.7080 indicates brighter chances for the quote’s additional south-run to 0.7030 & the 0.7000 mark whereas an uptick beyond 0.7080 may revisit the 0.7130 resistance-level. At the end, the EURAUD is also expected to extend its rise towards 1.6355 & 1.6465 with 1.6220 & 1.6170 acting as nearby resistances to watch in case of the pair’s decline.

Have a nice trading-day ……

1134

Daily Fundamental Dose: 08 – October– 2018

Hello Traders,

Last week was more or less same to the previous one when hawkish comments from the Fed Chair and mostly welcome data-points pleased USD Bulls; however, absence of Chinese players and optimism concerning Brexit were the changes that entertained momentum traders. As a result, the US Dollar Index (I.USDX) registered consecutive second weekly advance whereas GBP also rose despite sluggish PMIs. In case of commodity currencies, news that China spied on some US goods’ users by inserting hardware three years ago and absence of upbeat stats dragged the AUD, NZD & CAD to south. Moving on, political pessimism at Italy and stronger greenback hurt the EUR but JPY & Gold refrained to extend their downturn as risk-off mood helped traditional safe-havens. Additionally, Crude had to stop its north-run with rising US stockpiles & Saudi Arabia-Russia’s readiness to help market with enough supplies when sanctions on Iran take place.

During early this week, investors responded to the China’s central-bank action that eased reserve requirements for lenders and last-week’s accusations on the dragon nation infiltrated products of some US companies. With this, commodity basket and commodity-linked currencies dropped further whereas USD got an additional boost even if markets at US, Canada and Japan are close. It should also be noted that Crude witnessed extra declines when Saudi Arabia said it can use its spare capacity immediately if the Iranian sanctions hurt energy supply.

At the economic front, plunge in German Industrial Production and weaker EU Sentix Investor Confidence played their roles in fetching the EUR more to south and help the USD in-turn. However, strong readings of China’s Caixin Services PMI couldn’t lure optimists at the time when the world’s second largest is at loggerheads with the U.S.

Looking forward, absence of US, Canadian & Japanese traders may confine Monday’s trade sentiment but developments at China, EU & Britain could offer intermediate opportunities to market players. Moreover, recent news suggested that US policymaker will avoid meeting Chinese Premier during his visit to Beijing due to recent political tussle could add weakness into the commodity front whereas North Korean leader’s eagerness to meet Mr. Trump soon provided additional strength to the USD on the back of US President’s political victory in turning hermit kingdom away from nuclear missiles.

Hence, when overall fundamental strength of the US economy and pessimism at rest of major economies might continue helping the USD to extend its recent recovery, holidays at US, Canada & Japan might disappoint intra-day traders.

Technical Talk

Unless breaking a week-long descending TL, at 1.1525, chances of the EURUSD’s further declines to the 1.1460 and then to the 1.1430 can’t be denied whereas an uptick beyond 1.1525 may reprint 1.1570 & 1.1630 on the chart. Further, the GBPUSD is also likely visit the 1.3070 resistance-turned-support, breaking which 1.3020 and the 1.3000 could play their roles but sustained rise above 1.3130 might not hesitate flashing 1.3200 as a quote. At the end, the AUDNZD’s moves are confined by a short-term symmetrical triangle formation between 1.0970 & 1.0875 levels with 1.0930 & 1.0900 acting as immediate supports contrast to 1.1000 & 1.1030 being following resistances to watch past-1.0970.

Have a nice trading-day ……

1135

Daily Fundamental Dose: 09 – October– 2018

Hello Traders,

In spite of holidays at Canada, US & Japan, global markets kept favoring the US Dollar & the JPY in search of safe-havens during Monday as fears emanating from China, EU & UK pushed investors towards risk-safety. While PBOC’s fourth cut in reserve requirement ratio in the present year highlighted challenges faced by the world’s second largest economy, Italian politicians’ refusal to accept the EU criticism of its budget plan and threats to UK PM’s Brexit proposal weakened the commodity basket, EUR & GBP respectively. However, absence of major market-players from trading triggered short-covering moves of the AUD & the NZD while CAD couldn’t avoid Crude’s dip after Saudi Arabia showed readiness to inflate production should sanctions on Iran hurt global supply.

At the start of Tuesday, when majority of global traders are back from extended weekend, news that IMF cut its global growth forecast for the first time since 2016 carried the risk-off sentiment forward. As a result, statements from St. Louis Fed Chief James Bullard that pickup in productivity seems prerequisite for the U.S. economy to sustain its present positive stand couldn’t disappoint greenback buyers. Additionally, Italy’s rebellious act to denounce some leading EU authorities, lack of positive developments at Brexit and worries that the weekend gathering of global leaders at IMF might create a scene between the U.S. & the China played their roles to offer active session. Though, Crude recovered some of its latest losses after reports revealed that Iran’s exports are declining and hurricane is moving across the Gulf of Mexico.

While pessimism concerning global trade and politics welcomed the investors during early trading hours, better than forecast figures of AU NAB Business Confidence and German Trade Balance couldn’t lure the buyers. Looking forward, Canadian Housing Starts becomes the only reading left for publish on the economic calendar. The housing market stat is expected to improve to 203K from 201K.

As economic calendar has lesser details/events scheduled to entertain momentum traders, political developments at EU, UK, China & US will be observed closely. Herein, the EU policymakers might show their discomfort with recent act from Italy while White House administration may term China as a currency manipulator with its repeated efforts weakening the Yuan. Further, UK PM, Theresa May, need to fasten the process of draft Brexit proposal in order to please EU leaders, which in-turn could also acquire ire from her own party members, whereas China isn’t seem in good mood after problems at home due to Mr. Trump’s trade protectionism and may turn down allegations of altering currency rate for benefit.

Hence, even if fewer stats are available to observe, political & trade related pessimism could continue providing active trading sessions to investors and may highlight the importance of USD & JPY while negatively affecting EUR, GBP & commodity-linked currencies like AUD, NZD & CAD.

Technical Talk

Not only short-term descending trend-line, at 1.3000, but 50-day SMA level of 1.3015 also could challenge the USDCAD’s latest recovery, which in-turn highlights the importance of 1.2880 & 1.2840 supports. On the other hand, USDJPY has 113.60 & 114.00 barriers to conquer in order to regain its strength in targeting the 114.75 & the 115.30 resistances whereas 112.60 & 112.00 are likely nearby rests that the pair may avail during further declines. With this, the CADJPY needs to surpass the 87.50 to aim for 88.25 else its extended pullback to 86.90, 86.60 & 86.20 can’t be denied.

Have a nice trading-day ……

1136

New to the forum, and very impressed by your analysis and would like to learn more. Thanks for the elaborated posts.

1 Like
1137

Daily Fundamental Dose: 10 – October– 2018

Hello Traders,

During its first active day of trading, the US Dollar Index (I.USDX) failed to extend last-week’s winning streak as Mr. President, Donald Trump, expressed his dislike for the Fed’s rate-hike speed. As a result, greenback’s main advantage, mainly the monetary policy divergence with rest of the central-banks, was questioned and the same dragged USD southwards. While USD was going further away from its recent high, the EUR benefited from German Trade Balance and ignored political pessimism at Italy whereas GBP surged on news that EU-UK policymakers are on the brink of a deal. At the commodities front, US Dollar’s weakness helped the AUD, NZD & CAD to stretch their recent recovery forward while Crude prices also recovered some of its previous losses on hurricane fears. Additionally, the JPY and the Gold took advantage of USD’s decline and speculations that America might not hesitate levying fresh extra tariffs on Chinese products if the dragon nation retaliates to their latest measures.

Having witnessed a volatile day, investors have shifted their attention back to USD’s strength at the start of Wednesday. The reason being Federal Reserve Bank of New York’s Survey of Consumer Expectations that indicates softer Inflation numbers likely helping the Fed to remain on its rate-hike plan. With this, traders almost ignored upbeat prints of AU Westpac Consumer Sentiment but couldn’t avoid positive outcomes of Japanese Core Machinery Orders supporting to JPY to hold its strength. It should also be noted that Crude prices have started refraining to push more towards north on expectations that Saudi Arabia & Russia will now increase their output as agreed earlier.

Unlike prior two-days of the week, economic calendar has some important readings scheduled for release and the same could become additional reason for momentum traders to be happy. Among them, UK’s monthly reading of GDP, Manufacturing Production & Goods Trade Balance will be the first, followed by Canadian Building Permits and US PPI.

Forecasts suggest 0.1% growth for British GDP against 0.3% prior and the 0.1% expansion of Manufacturing Production versus the -0.2% earlier dip. Moreover, the UK Goods Trade Balance can disappoint Pound optimists if matching -10.9B consensus compared to -10.0B previous mark. On the other hand, Canadian Building Permits may post +0.5% growth against -0.1% earlier contraction whereas US PPI could keep pleasing greenback optimists with +0.2% figure vis-a-vis -0.1% prior.

While scheduled data-points are likely to help USD & CAD more than the GBP, positive news from the Brexit front and/or surprise rise in British figures can continue fueling the Pound but any negative comments from White House concerning Fed’s act may flash another negative closing of the greenback. Moving on, the EUR might have to depend on USD moves with no fresh data-points up for release and on-going tussle between EU & Italy whereas JPY & Gold can take advantage of the prevailing risk-off mood if USD refrains to turn stronger.

Technical Talk

While AUDUSD has to clear the 0.7130 resistance in order to confront the 0.7180 trend-line barrier, the NZDUSD also needs to surpass the 0.6500 round-figure if it is to aim for 0.6540. Should both the pairs fail to conquer aforementioned resistances, the NZDUSD may drop to 0.6460 & 0.6420 whereas AUDUSD can revisit the 0.7085 & 0.7040 rest-points. Further, GBPCAD could also find it hard to maintain its strength unless breaking seven-month old descending trend-line, at 1.7075, adjacent to 100-day SMA level of 1.7110, which in-turn highlights the importance of 1.6920 and the 50-day SMA level of 1.6880 support-levels.

Have a nice trading-day ……

1138

Weeekly Fundamental Dose: 11 – October– 2018

Hello Traders,

While some of the headline stats from US & UK have already been released and couldn’t justify their outcomes due to statements from Mr. Trump & Brexit policymakers, investors will now concentrate on the late-week meeting of global financial leaders in Bali together with observing the scheduled U.S. consumer-centric details.

Though, it’s important to know what happened in the markets till now prior to discussing fundamentals relating to pending issues.

Fed’s Optimism Fueled Greenback For One More Week

Repeated statements safeguarding the Federal Reserve’s rate-hike actions by the Chairman Jerome Powell & upbeat releases of Factory Orders & ISM Non-Manufacturing PMI helped the US Dollar Index (I.USDX) to give less importance to soft NFP and marked second consecutive weekly gain. However, the EUR had to bear the burden of greenback’s rise at a time when Italy is causing problems for regional political leaders whereas GBP surged on UK PM’s ability to conquer allegations at party’s annual conference & positive developments at Brexit. Further, JPY & Gold also recovered some of their latest losses on worries concerning Sino-US trade & rising US treasury yields but commodity-linked currencies like AUD, NZD & CAD couldn’t ignore global trade-tussles and news that China spied on users of US goods. In case of Crude, energy traders booked some profits off due to rise in US stockpile and news that Saudi Arabia & Russia stand ready to compensate for market supply loss at the time of Iran sanctions.

Updates From IMF & Trump Administration Rule Market Sentiment

While upbeat statements from the Fed pleased USD optimists during last two weeks, the present week, which started with a holiday at Japan, US & Canada, couldn’t stretch those gains forward as Mr. Trump took aim at Fed’s rate-hikes and IMF also downgraded global economic growth forecasts for the first time since 2016. As a result, the EUR managed to benefit despite on-going problems between EU-Italy while the GBP extended its north-run as EU leaders said they are too close to Brexit deal with the Britain. Alternatively, AUD & NZD enjoyed Chinese central-bank’s efforts to boost money supply for the fourth time in a year but CAD kept trading southwards on declining Crude prices, mainly because of IMF’s reduced growth forecast meeting receding fears of hurricane & rising inventories at the U.S. In all these, JPY registered noticeable rise as pessimism across the board favored traditional safe-haven but the Gold couldn’t enjoy such status due to doubts over its largest consumers’ future demand.

At the economic front, US PPI matched upbeat forecasts while UK GDP, Manufacturing Production & Goods Trade Balance all flashed softer than expected numbers. Moreover, German Trade Balance added strength into the EUR but Canadian housing market stats weakened.

US Economic Calendar & Comments From Global Policymakers To Be Watched Closely

Having witnessed fears of future growth & Mr. Trump’s attack on Fed, together with scheduled data-points, Thursday’s release of US CPI and comments from BoE Governor at IMF Fintech panel discussion would gain investor attention. After that, China’s Trade Balance, two-day meeting of global financial chiefs at Bali & US Prelim UoM Consumer Sentiment could grab limelight on Friday.

Starting with Mr. Carney’s speech, the UK central-banker is less likely to offer any signals for the BoE’s upcoming rate-hike but might communicate his worries concerning trade protectionism & Brexit, which in-turn could negatively affect the GBP. Shifting to US inflation numbers, the CPI may dip to 2.4% from 2.7% YoY and can remain unchanged at 0.2% on a monthly basis but the Core CPI could impress buyers with 2.3% yearly consensus against 2.2% earlier and 0.2% MoM result compared to 0.1% prior.

Coming to Friday’s global financial leaders’ meeting at Bali, trade-war and its negative impacts are likely being in highlights, which in-turn may criticize Mr. Trump’s “America First” attitude and could hurt the USD. However, chances are higher that China may try to improve its impression and could turn ready to talk with White House administration. It should also be noted that the Prelim UoM Consumer Sentiment could also rise to 100.4 from 100.1.

At the political front, Brexit developments may help the GBP to remain strong unless focus on the internal political divide among Theresa May’s party come to forefront whereas Mr. Trump’s victory of having his nominee Brett Kavanaugh to the supreme court could join hands with his another success at handling North Korean nuclear threats and may speak good for the US currency. Furthermore, EU-Italy plays may add pressure on the EUR.

Given the expected welcome prints from the U.S. consumer-centric data-points, the USD is less likely to carry its present weakness forward unless either Mr. Trump keep hammering the Fed and/or Bali meetings embarrass Trump administration.

With this, EUR, JPY & commodity-linked currencies are likely to trim some of their recent gains; however, the GBP could maintain its strength unless any negatives prop-up from the Brexit and/or British political front.

Technical Analysis

In spite of taking a U-turn from 1.1460-65, the EURUSD still has to surpass the 50-day & 100-day SMA levels of 1.1585 and the 1.1630 respectively in order to justify its strength otherwise chances of its pullback to 1.1460, 1.1430 & 1.1300 can’t be denied. On the contrary, the GBPUSD has already crosses 100-day SMA barrier and seems all set to aim for 1.3300 & 1.3360-65 resistances till it trades beyond 1.3100 SMA figure, which if broken might not hesitate fetching it to 1.3050-40 & 1.30000 rest-points. Further, the USDJPY can also avail the 50-day SMA level of 111.80 & the 111.25, including 100-day SMA, as bouncing-points, if not then it could drop to 110.00 whereas 112.60 & 113.50 might keep restricting the pair’s near-term upside.

Moving on, the USDCAD cleared immediate TL resistance but has to break the 100-day SMA level of 1.3065 on a daily closing basis if it is to aim for 1.3120 & 1.3150 otherwise 1.3000 & 1.2880 could regain investors’ attention. Additionally, the AUDUSD traders have to closely observe 0.7030 & 0.7000 supports as break of which can drag the pair to 0.6930 with 0.7100 & 0.7170 acting as adjacent resistances for the quote. At last, the 0.6500 & the 0.6540-45 become important upside barriers for the NZDUSD with the 0.6420 and the 0.6390 likely being strong supports for the pair.

Have a nice trading-day ……

1139

Daily Fundamental Dose: 12 – October– 2018

Hello Traders,

On Thursday, weaker than forecast lift in headline US CPI numbers pushed investors to doubt the Fed’s future rate-hikes at a time when Mr. Trump refrains to stop attacking the central-bank’s monetary policy tightening. As a result, the US Dollar Index (I.USDX) marked consecutive third negative daily closing, which in-turn was aptly utilized by the JPY & the Gold to portray noticeable gains. While US President’s criticism & weaker data-points dragged the greenback, upbeat statements from ECB meeting minutes helped the EUR to maintain its gains whereas GBP also surged on positive developments at Brexit. Moving on, AUD, NZD & CAD took benefits of the USD’s decline but the Crude dropped heavily as fears concerning global growth & rising US stockpiles disappointed energy traders.

With the U.S. inflation numbers’ failure to please greenback buyers, market-players shifted their attention to gatherings of global policymakers at G20 & IMF during early Friday. However, dovish statements from the RBA’s Financial Stability Review and China’s strong Trade Balance figures offered intermediate trade opportunities.

At the IMF gatherings, Fed Chair Jerome Powell was targeted due to Mr. Trump’s negative statements on the bank’s performance but central-bankers from rest of the world came to Mr. Powell’s help. Meanwhile, US & China both tried to gain supports for their trade proposals but were entertained less as the global lender has already blamed trade protectionism as a drag for future growth figures. On the other hand, G20 asked to solve trade related issues by the involved countries themselves as the same is creating major threats for rest of the world.

While comments from policymakers at G20 & IMF meetings are likely to continue entertaining analysts for rest of the day, U.S. corporate earnings season for the third-quarter begins with JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. scheduled to release their numbers on Friday, which in-turn could put more emphasis on US markets when the meeting goes on. Additionally, US Prelim UoM Consumer Sentiment is also up for revealing its monthly result wherein consensus favor 100.4 mark against 100.1 earlier.

As trade protectionism and attacks on Fed remains in limelight at the global financial leaders’ meeting, statements from US President, Chinese Premier and Fed Chair become crucial to observe. Herein, Mr. Trump’s harsh attitude on Fed & China, together with the dragon nation’s retaliation, could keep supporting safe-havens while upbeat results from US giants and consumer sentiment gauge might confine the greenback’s south-run.

Technical Talks

Failure to take a decisive reversal from three-week old ascending support-line, at 0.9880 now, continue highlighting the importance of 0.9820 & 0.9800 supports for the USDCHF traders while 0.9900 and a month-old downward slanting TL around 0.9955 could keep limiting the pair’s near-term advances. Further, the GBPUSD’s successful trading above 100-day SMA can help it confront the five-month long resistance-line, at 1.3280, breaking which the 1.3440-45 and the 1.3500 level, including 200-day SMA, could appear on the Bulls’ radar to target. Alternatively, the 1.3215 and the 100-day SMA level of 1.3100 seem crucial supports to watch during the pair’s decline. With this, the GBPCHF also aims to challenge the 200-day SMA level of 1.3130 and the 1.3200 round-figure but inability to surpass the 1.3130 could reprint 1.3020 and the 1.2950 on the chart.

Have a nice trading-day ……

1140

Daily Fundamental Dose: 15 – October– 2018

Hello Traders,

In addition to global financial chiefs’ ire over US trade protectionism, Mr. Trump’s repeated attacks on Fed’s rate-hike and sluggish data-points from the world’s largest economy printed first in three-week negative close of the US Dollar Index (I.USDX) by last weekend. With this, the EUR could ignore lack of big releases and political turmoil at Italy while GBP surged over EU-UK decision-makers’ positive comments on likeliness of Brexit deal. Not only EUR & GBP, but AUD and NZD also took advantage of the greenback’s decline, coupled with China’s upbeat trade balance figures, whereas CAD failed to please buyers due to Crude’s plunge based on expectations that weaker global growth could confine future energy demand. In all this, JPY & Gold were the gainers as investors rushed to risk-safety.

While negative impacts of trade-war & monetary policy divergence were much discussed topics in Bali, which in-turn kept highlighting safe-havens during early-Monday, political front entertained market-players at the week-start. Among them, weekend news that EU-UK leaders are finding it difficult to reach a Brexit deal dragged the GBP downwards while the U.S. President Donald Trump turned angry on Saudi Arabia and threatened the kingdom as one of the nation’s crucial journalist went missing from there since early-month and is suspected to be killed. Also, China seems in no mood to backtrack from retaliating against the U.S. tariffs as it recently announced fresh anti-dumping duties on imports of hydroiodic acid from the United States and Japan. Furthermore, comments from the U.S. Treasury Secretary Steven Mnuchin that the nation wants to include a provision to deter currency manipulation in future trade deals, including with Japan, doubted the recent trade-ties between the economies.

Due to all the aforementioned political events spreading fears across trading desks, traditional safe-havens, like JPY & Gold, stretched their previous gains forward while USD & GBP weakened. It should also be noted that tensions between Saudi Arabia & US helped Crude to recover some of its latest losses but restart of some oil production units around Gulf of Mexico after hurricane Michael restricted the energy instrument’s upside.

Looking forward, monthly releases of US Retail Sales & Empire State Manufacturing, followed by the quarterly outcome of New Zealand CPI & a bi-annual US Treasury Currency Report, could keep providing acting trading sessions for rest of the day together with political plays.

The U.S. Retail Sales is expected to register 0.7% & 0.4% growth mark for headline & core readings respectively against 0.1% & 0.3% earlier whereas the Empire State Manufacturing might also rise to 20.4 from 19.00. In case of New Zealand CPI, the inflation gauge may please Kiwi buyers with 0.7% forecast versus 0.4% prior. The Treasury Currency Report bears a tentative deadline for publish start from today and becomes crucial as treasury committee is likely avoid terming China a currency manipulator but could use provision to use the same in future.

Hence, while political plays surrounding US, Saudi Arabia, UK, EU & China are likely to keep offering intermediate trade opportunities, active economic calendar could provide a busy Monday to market participants.

Technical Talks

EURUSD’s U-turn from 1.1530 again fuels it to 1.1610, which if broken can help it aim for 1.1655 & 1.1700 while 1.1530 & 1.1500 may act as immediate supports during the pair’s pullback. Further, the NZDUSD also rises towards 0.6540 before targeting the 0.6570-75 but pair’s decline below 0.6495 can drag it to 0.6460. On the contrary, the EURGBP seems losing its strength and may revisit the 0.8770 & 0.8745 supports unless clearing the 0.8835 and the 0.8850 nearby resistances.

Have a nice trading-day ……

1141

Daily Fundamental Dose: 16 – October– 2018

Hello Traders,

With the sluggish Retail Sales & six-year high deficit, not to forget the US-Saudi Arabia tussle over missing American journalist, the US Dollar Index (I.USDX) registered negative daily closing on Monday. While Geo-politics were playing their roles and economics were also not up to the mark, investors rushed to traditional safe-havens, namely JPY & Gold, whereas commodity-linked currencies, namely AUD, NZD & CAD, benefited from the greenback’s decline. Among them, the NZD surged after quarterly reading of New Zealand CPI rose more than all the forecasts.

On the other hand, EUR took advantage of Italy’s ability to submit a budget on time together with the USD’s dip while the GBP surged as UK PM & French President sound optimistic about Brexit deal. Looking forward, Crude prices dropped on concerns of weaker future demand.

During early Tuesday, investors extended their risk-off mood even as Saudi Arabia is likely to prove that they’ve not killed the missing US journalist on purpose by releasing a report claiming the death because of failed interrogation. However, the same gave additional weakness to the Crude prices as energy traders now feel that US-Saudi tensions may soon recede. It should also be noted that Mr. Trump’s recent rhetoric was very well criticized by the EU Trade Commissioner that cautioned to respond US moves if it levies fresh tariffs on EU cars.

At the data-front, minutes of recent RBA meeting favored weaker currency and praised recent economic improvement while China’s upbeat CPI had to confront soft PPI figure in order to please commodity players.

Alike active start of the day, data-points from EU, US & US, together with earning reports from Goldman Sachs Group Inc. are likely to entertain momentum traders for the rest of day. Out of them, UK Average Earnings Index and Unemployment Rate are both likely to remain unchanged at 2.6% & 4.0% respectively but slide in Claimant Count Change to 4.5K from 8.7K may help the GBP to maintain its recent strength. Alternatively, the EUR might find it hard to hold its rise as ZEW Economic Sentiment figures for the region and the Germany are expected to plunge further southwards to -9.2 & -12.3 from their respective earlier releases of -7.2 & -10.6. Also, the US Industrial Production may soften to 0.2% against 0.4% previous growth. In case of politics, how US responds to Saudi report and how UK PM manages to please EU leaders before the EU summit starts tomorrow could gain major market attention.

Given the on & off mode at Brexit, the GBP might find it hard to keep pleasing the buyers if jobs report prints weak numbers and the EUR could also dip on scheduled data-points. As a result, the USD could recover some of its latest losses but Geo-political pessimism & anticipated dip in Industrial Production could restrict the greenback’s rally.

Technical Talk

Unless clearing the 1.3195-1.3200 support-turned-resistance, the GBPUSD is less likely to revisit the 1.3255 and the 1.3310 levels, which in-turn can drag it back to 1.3080 & 1.3030 supports. Further, the USDJPY bounces off the seven-month old ascending TL, at 111.60, towards 112.60 & 113.20 but a D1 close beneath the 111.60 can shift market attention to 111.25 and the 110.80 levels. Moreover, the EURNZD might also witness pullback in direction to 1.7730 & 1.7835 unless it trades beyond 1.7565-60 support-confluence, breaking which the quote can dip to 1.7490-75 support-zone.

Have a nice trading-day ……

1142

Daily Fundamental Dose: 24 – October– 2018

Hello Traders,

Even if Atlanta Fed President favored the U.S. central-bank’s fourth rate-hike and doubts over the Saudi Arabia’s hand in death of American journalist grew stronger, the US Dollar Index (I.USDX) declined on Tuesday as China’s readiness to fuel its economy and announcement that US & Chinese leaders will meet on the sidelines of G20 reduced the safe-haven appeal of the greenback. As a result, the EUR managed to give less emphasis on looming Italian political crisis whereas the GBP surged after news broke that EU leaders are likely to offer a UK-wide customs union to the Britain after Brexit. On the other hand, JPY & Gold kept being strong on the USD’s dip & broader risk-safety moves while AUD & CAD took advantage of optimistic updates from China but NZD remained under pressure without any major reasons. Moving on, Crude prices plunged after Saudi Arabia communicated its readiness to pump more production if Iranian sanctions hurt global demand-supply scale.

During early Wednesday, investors turned a bit optimistic on China’s moves and also diverted their attention a bit to Iranian sanctions that in-turn helped Crude & commodity-linked currencies like AUD, NZD & CAD. With this, the JPY has to trim some of its recent gains despite registering upbeat Flash Manufacturing PMI but EUR couldn’t hold its strength due to sluggish PMI numbers from France & Germany. It should also be noted that CAD had additional benefits in terms of expected rate-hike from the Bank of Canada (BoC) later in the day.

At the political front, US is again turning hard on Saudi Arabia as Mr. Trump said that the kingdom staged the “worst cover-up ever” for the death of American journalist Jamal Khashoggi. Additionally, the U.S. President, Donald Trump again criticized the Federal Reserve for its rate-hikes. Moreover, the GBP also dropped ahead of the British Prime Minister Theresa May’s speech at the parliament to Conservative Party lawmakers.

Looking forward, Flash Manufacturing & Services PMIs from EU and US are likely to please momentum traders for the rest of the day while monetary policy meeting by the BoC & New Zealand Trade Balance could offer intermediate trade opportunities. Also, developments at US-Saudi Arabia spat & how Mrs. May manages to please her party members to support Brexit proposal become crucial to watch.

In case of EU Flash PMIs, the Flash Manufacturing PMI may soften to 53.0 from 53.2 and its Services counterpart might also drop to 54.5 from 54.7. In the same way, the U.S. Flash Manufacturing PMI could also weaken to 55.4 from 55.6 but the Services PMI could grow stronger to 54.1 from 53.5 earlier. Further, the BoC is widely expected to announce a 0.2% rate-hike to its benchmark overnight rate whereas the New Zealand Trade Balance might register declining deficit figure of -1365M against -1484M.

While upbeat economics at US and rejuvenated political problems at EU & UK are likely to help the US Dollar recover some of its latest losses, NZD & CAD may benefit from scheduled events given the forecast prove right. However, JPY & Gold are less likely to lose their allure considering macro political pessimism.

Technical Talk

Notwithstanding the pair’s inability to surpass 1.3130 resistance, USDCAD still trades successfully above 100-day SMA level of 1.3070, which in-turn signals brighter chances of its pullback to 1.3130 & 1.3180; though, a D1 close below 1.3070 can quickly fetch the quote to 50-day SMA level of 1.3010 prior to highlighting the 1.3000 round-figure. Further, NZDUSD’s sustained trading beyond 0.6530 could help it aim for 0.6580 & 0.6610 levels while dip beneath 0.6530 can flash 0.6500 on the chart. At the end, the GBPNZD can keep being considered strong unless breaking seven-week old ascending TL, at 1.9720, conquering which it could drop to 1.9630 & 1.9540 whereas 1.9900 & 2.0020-30 might entertain the buyers.

Have a nice trading-day ……