Having successfully registered ten week of winning streak, US Dollar Index (I.USDX) traded negative for the first day of the week on yesterday as Federal Reserve Bank of New York President, William C. Dudley, said in his public speech that the stronger US Dollar can hinder the growth of the world’s largest economy and is also detrimental for the goals of the Fed. Moreover, the Existing Home Sales also lagged behind the previous and forecast numbers. ECB President, in his testimony yesterday, said that the economy is currently facing a tough time; however, the ECB is active enough to fight-back.
Early today, HSBC Flash Manufacturing PMI, from China, remained ahead of the previous reading and beating the forecast, which provided strong ground to the AUD since the early hours. Moreover, various PMI readings from Europe together with Canadian Retail Sales are likely to fuel the Forex market today. Also, the speeches by some of the FOMC members can continue fueling the market.
After witnessing consecutive movements in a single direction, market is witnessing a pullback against the US Dollar. Should the ongoing plunge of the greenback extends further with the FOMC members’ speech and weaker economic numbers, chances of witnessing a sharp decline in US Dollar can’t be denied.
US Dollar remained weaker on the second day of the week as the greenback buying stalls at the higher levels and the threat communicated by Federal Reserve Bank of New York President William C. Dudley concerning the strength of US Dollar kept luring greenback sellers. Further, the Japanese Yen witnessed positive wipes after the U.S. said earlier in the week that it conducted first airstrikes in Syria, boosting demand for the safest assets. Moreover, the SNB President, in his speech at St. Gallen, Switzerland, said that the Swiss National Bank is prepared to buy unlimited amounts of foreign currencies and, if necessary, take further measures immediately. The SNB cut its inflation and growth forecasts last week, due to weak momentum in the euro area, the biggest destination for Swiss exports. Hence, the speculations concerning the monetary action by SNB to weaken CHF is again paving the way for across the board weakness of the CHF.
Today, the New Zealand Dollar, Kiwi, rebounded from a one-year low against USD as the trade deficit unexpectedly narrowed in August. The German Ifo Business Climate and the US New Home Sales are the events that can fuel volatility into the forex market in addition to another speech by FOMC member Mester.
As the greenback has started liquidating the gain before registering the biggest quarterly gain in three years, it will be better for the market players to remain cautious before entering a long position for USD. However, the cross currencies have started gaining momentum and it would be better to capitalize the movement rather being Dollar friendly player.
[B]Daily Fundamental Dose: 25 - September - 2014[/B]
Hello Traders,
With US New Home Sales re-testing the highest level since May 2010, the US Dollar again became buyers’ darling and market players liquidated gains from the rest of the currencies in support of the greenback. The NZD slid to the weakest in a year as the central bank signaled possible intervention while the weaker number as Canada and Switzerland kept hurting their respective currencies. Moreover, the Euro, AUD, JPY and GBP kept declining on the break of important technical levels by signaling continuation of downtrend against the US Dollar.
Early today, the RBA Governor, Glenn Stevens, resurfaced the housing market problem which was discussed in semiannual financial stability review yesterday while the ECB President, Mario Draghi, kept on saying that the ECB takes price stability mandate very seriously which signals towards further easing.
US Durable Goods Orders and weekly Jobless Claims together with the speech by BoE Governor, Mark Carney, are some of the important releases that are left to be published and can continue fueling volatility into this active market today.
As the markets have again turned Dollar positive and there are important readings scheduled throughout the day, it is better to take small profits with US Dollar buying and wait for the decisive US Dollar closing before taking the positional trades, which should generally be in favor of the greenback.
Improved fundamentals, like housing market details and GDP number, kept fueling the US Dollar last week and the greenback is heading for its best month since 2012. The Euro region currency continued remaining weak across the board as pessimistic German readings coupled with the ECB President Draghi’s readiness to quantitative easing kept supporting sellers. The New Zealand’s dollar was set for its biggest three-day drop since 2011 after the Reserve Bank said its sales of the currency in August were the most in seven years while the Australia’s dollar declined to the lowest level since January as protests in Hong Kong kept fueling the tension that its largest customer China will face tough days ahead.
This week becomes critical for the forex market players as important events are scheduled for release; this includes US NFP, ECB - BOE meeting and the UK PMI numbers. Today’s economic calendar seems a bit lighter as German Prelim CPI and US Pending Home Sales are the only releases scheduled for publish.
With the continued flurry of US Dollar buyers, the greenback is likely to maintain its upward trajectory for some more time. Moreover, the Euro and the NZD together with the AUD are likely to witness further weakness based on technical and fundamental reasons. However, critical events, scheduled during the week, can become decisive in determining near-term movement of these currencies.
Even after trimming some of its gains yesterday due to the overbought signals, the US Dollar rallied heavily during the early day as the fundamentals concerning the rest of the economies remained pessimistic.
The European CPI numbers matched the forecast by remaining at 0.3% and the unemployment rate also left unchanged at 11.5%; however, market players kept forecasting additional QE from ECB on Thursday’s meeting. The Final GDP numbers and the current account details from UK were mixed and affected the GBP inversely. The GDP numbers revised upward to 0.9% while the current account deficit rose with -23.1B. Earlier during the day, HSBC Final Manufacturing PMI legged the forecast of 50.5 by being at 50.2 and provided weakness to the AUD while the ANZ Business Confidence kept declining for the seventh continuous month and weakened NZD heavily.
Having released majority of the scheduled numbers, Forex calendar is left with Canadian GDP and US CB Consumer Confidence which are likely to weaken CAD and strengthen USD respectively.
Considering the failure to lose heavy strength after yesterday’s decline, it become wiser to support the USD strength; however, the labor market numbers, starting from tomorrow’s ADP, can become turning point for USD. So, be cautiously bullish for USD.
Across the board pessimism fuelled US Dollar strength even with the lower number of CB Consumer Confidence. The stagnant EU Flash CPI together with plunge in German numbers kept fueling the Euro decline while the UK numbers were also remained weaker, including today’s Manufacturing PMI and helped GBP to extend its decline. Moreover, Australian Dollar slid to an eight-month low as Retail Sales grew lesser than previously. The Canadian dollar slumped to a six-month low after reports showed economic growth stalled in July. The Bullions, Gold and Silver remained worst affected as Gold futures fell to the lowest since January while the Silver dropped to a four-year low. Both these metals registered their first quarterly decline in 2014.
Early today, Chinese Manufacturing PMI matched the expectations of 51.5 and the Australian Retail Sales declined to 0.1% growth than the 0.4% growth registered earlier. UK Manufacturing PMI registered 51.6 number against the previous reading of 52.2. For the rest of the day US ADP and the ISM Manufacturing will create headlines while tomorrows ECB meeting is likely to continue hurting the EUR strength.
Considering the pros of US, it becomes wise to continue supporting US Dollar buying than the otherwise case
Friday’s upbeat US Job market numbers bolstered expectations of near-term rate hike by Fed and the weaker economic sentiment from the Euro-zone kept hurting the regional currency across the board. The Dollar Index tested the highest level since June 2010 by gaining in twelfth consecutive week. However, the greenback lost some of its gains during the first day of the week on short covering. The Canadian Dollar gained due to the strong Ivey PMI numbers while the weaker German Factory Orders kept hurting the Euro.
Early today, the RBA and the BoJ left their monetary policies unchanged; however, the RBA talked the risks of housing markets and the BoJ revised down their view on output due to sales tax hike which in turn negatively affected AUD and JPY respectively. The UK Manufacturing Production details and the Canadian Building Permits are the indicators to watch for the rest of the day while the speeches by some of the FOMC members can becomes influential for the Forex market.
With the improved job market numbers, near-term rate hike speculations became stronger and the minutes due out on Wednesday can become a guiding point. Moreover, the Australian labor market numbers and the BoE meeting will become the center of the market during the week. It would be better to continue support US Dollar strength.
Yesterday, the US Dollar witnessed another weaker day as the FOMC member (Narayana Kocherlakota, President of the Fed Bank of Minneapolis) said that the US labor market is still “distressingly weak,” and policy makers should wait for confirmation before hiking the interest rate. Also, the New York Fed President William Dudley, in his speech early today, said that the “It still is premature to begin to raise interest rates,” as “The labor market still has too much slack and the inflation rate is too low.” However, the greenback gained during the early day as the International Monetary Fund cut its global growth forecast which boosted demand for haven assets. Moreover, it also said that the U.S. economy is seen expanding 3.1 percent, compared with a 3 percent pace forecast in July, which provided additional strength to the greenback.
IMF forecast release said “The world economy will grow 3.8 percent next year, compared with a July forecast for 4 percent, the IMF said. It also cut the euro area outlook for the period to 1.3 percent from 1.5 percent and Japan’s to 0.8 percent from 1.1 percent.”
After the release, the Yen and the US Dollar gained a bit while the rest of the currencies continued maintaining their downturn. The Chinese HSBC Services PMI, which lagged behind previous release, provided weakness to AUD and NZD. The Australia’s statistics bureau said today that the seasonally adjusted jobs estimates will be revised so they are the same as the original series for July, August and for the September data due tomorrow. The Canadian Building Permits declined heavily and the CAD liquidated its Monday’s gains.
For the rest of the day, market movement is more likely to remain centered around the FOMC meeting minutes, due out later today. Should the meeting drop the word “Considerable time” to hike the interest rate, it will be considered as a green signal for the near-term rate hike and the US Dollar can rally heavily. However, considering the recent speeches by some of the FOMC members, there are lesser chances of the same and the Us Dollar is expected to witness sideways to positive day. Moreover, the Canadian Housing Starts become another event to take note of.
Yesterday, US Dollar declined heavily against majority of its counterparts and tested the two week’s low against Euro as the speculation concerning near-term rate hike curtailed after the FOMC minutes said number of FOMC members were worried about the decline in global growth and a high US Dollar. Moreover, the tune of keeping the interest rates low for a “considerable time” got lauding response from the FOMC members. The JPY also trimmed some of its weight as policy makers readied to discuss an exit strategy to a monetary policy program that has hurt the Yen. The concern for the Australian labor market numbers kept fueling the AUD strength towards the third positive day against USD; however, today’s labor market numbers weakened some of the strength due to weaker readings.
Having witnessed Australian labor market numbers, market players are more likely to concentrate more on the other important details for the day, namely BoE meeting & ECB President Draghi’s speech. The BoE isn’t expected to alter their current monetary policy while the speech by ECB President is more likely to weaken the regional currency, Euro. Moreover, the US Jobless Claims and some of the speeches by FOMC members together with the G20 meeting likely to keep fueling volatility into the forex market for the rest of the day.
As the recent FOMC tamed down the expectations supporting near-term rate hike, USD is likely to liquidate more of its gains; however, today’s ECB President Draghi’s speech can become important for determining the near-term Euro moves. I continue supporting the strong USD however chances of the pull-back can’t be denied after dovish FOMC minutes.
Yesterday, the US Dollar gained first positive closing of the week as Jobless Claims declined from its previously revised figure and the forecast while the Euro region currency extended its drop as the ECB President repeated its readiness to adopt drastic monetary measures if needed. Moreover, he also cited the need for structural overhaul in the European economy as the IMF said the European leader should take steps to avoid recessionary fears in the central bankers gather for annual meetings of the World Bank and International Monetary Fund. The Japanese Yen is heading for the first weekly decline after August as the fears of global slowdown spurred safe haven demand of the currency. The AUD, GBP, CAD, CHF and NZD also declined against its US counterparts after the market players supporting US Dollar buying after the jobless numbers.
Early today, Japanese Tertiary Industry Activity and the Australian Home Loans registered declines while the French Industrial Production, UK Trade Balance and the Canadian Labor market numbers are in the pipeline to be released later in the day. Moreover, the ongoing G20 meeting can provide flow in news if any of the political leader comments on their economic stance.
It would be better to support the US Dollar even after the recent drop as the internal fundamentals are supportive to the growth of world’s largest economy while rest of the global economies are experiencing lacking evidence of growth.
Hello Traders,
Market players took serious notes of IMF’s downward revision global growth forecast, published during last week. The JPY tested the four–week high against the dollar while the greenback lost heavily as the FOMC minutes, released during last week after the IMF’s release, tamed down the expectations supporting early rate hike by saying that the slowdown in global growth will affect the world’s largest economy and it would be better to wait for considerable time before altering their current monetary policy. Moreover, various FOMC members and the Vice Chairman Stanley Fischer also communicated the threat of economic slowdown and said that the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise. Hence, the IMF caused the US Dollar Index to register first negative weekly closing in last thirteen weeks. Australian dollar also strengthened against its US counterpart and climbed from near a four-year low as China registered an unexpected pick-up in imports and better-than-forecast export growth.
Today, the financial markets in the U.S. and Japan are shut because of public holidays and thin liquidity can fuel the unexpected volatility into the markets. Hence, it would be better to trade with the trend and take minimum risks as price spikes may eat up your stop-loss levels. I continue supporting the US Dollar buy even after the recent correction as the overall fundamentals are still favoring the greenback.
After extending last weekend’s loss towards the first day of the week, US Dollar is gaining since the start of the day as market players think the decline in US Dollar is more of a buying opportunity than the permanent sell-off. The Euro region currency fell across the board as weaker forecast of the industrial production and the ZEW indices kept revealing the lag the troubled economy has. The Yen is correcting a bit due to the strength of USD and the weaker PPI numbers. The Aussie gained with the fact that China’s central bank cut an interest rate it pays lenders on repurchase agreements, signaling possible monetary easing. The GBP remained a bit sideways ahead of the CPI release. To sum up, the market started trading reverse direction since early today ahead of the important releases from EU and UK.
ZEW Economic sentiment indices, for Europe and the Germany, together with the Industrial production, are likely to take the centre stage of the market. Moreover, the UK CPI is also likely fuel volatility into the pair connected to GBP.
As the markets has reversed since the early today, it would be better to support US Dollar buying, as I have been telling, rather than looking for the higher levels to sell greenback. Moreover, important details from US will start hitting the floor after tomorrow which can cause the US Dollar to trigger considerable moves.
Finally, market participants noticed that the IMF has not only downgraded global growth forecast but also upgraded growth forecast for US and the greenback again became darling of everyone out there. Moreover, the fundamental releases from UK and Euro caused serious worries for both these economic leaders and forced market players to divert funds towards the US Dollar. The UK CPI tested the lowest level since October 2009 while the German ZEW Economic Sentiment and European Industrial Production plunged in negative zone. Further, the ZEW Economic Sentiment tested the lowest level since December 2012. Negative ZEW number for the Europe’s largest economy causes worry for the rest of the world that the Europe is likely to once against plunge towards recession. Also, German Economy Ministry cut its 2014 forecast to 1.2% from 1.8%; it also cut its next year’s estimate to 1.3% from 2%.
Early today, the Chinese CPI number declined to the Feb. 2010 lows and provided a reason to worry for the industrial world and commodity currencies. Hence, the NZD, AUD and CAD continued on their yesterday’s decline.
During the rest of the day, there are many important events scheduled that can continue fueling volatility into the market. However, speech by ECB President, UK labor market numbers and US Retail Sales, PPI as well as Empire State Manufacturing Index are likely to create headlines.
As the market focus has once again shifted towards the strength of the US Dollar and the rest of the globe have started flashing weaker economic numbers, it would be better to go long on US Dollar and take the short—term benefits as and when earned.
With the 0.3% decline in September Retail Sales and an unexpected plunge in wholesale prices for the first time in a year, the US Dollar lost heavily against majority of its counterparts yesterday. Market players worried that even with the recent improvements into the US economics, the weakness in global economy can continue hurting the world’s largest economy and will delay the change in their interest rate. Moreover, the labor market numbers from UK signaled mixed picture as the unemployment rate fall and the earnings improved while the Claimant Count Change increased heavily. Tensions at the Euro-zone keep boiling the traders’ blood as The European Union started a two-week austerity scrutiny to gauge their budgetary stance as probable remedies for the debt problems, if needed. The Australian Dollar fell as the Chinese government seemed inclined to strengthen their Yuan which can become a negative factor for its biggest trading partner.
For the rest of the day, Canadian Manufacturing Sales, EU Final CPI, US Jobless Claims and manufacturing indices can continued generating headlines of the day. Should the final reading of EU CPI decline more than the initial estimate, the Euro can decline heavily while the US is vulnerable to witness a on more negative day should these indicators signal further weakness.
Have a best trading-day…….
With the improvement in US Jobless Claims, Industrial Production and Philly Fed Manufacturing Index, the US Dollar closed the day on the positive side amid global uncertainty. Moreover, President, St. Louis Federal Reserve Bank, James Bullard, has publicly signaled that the Federal Reserve should consider delaying the end of its bond-purchase program to halt a decline in inflation expectations. The Japanese Yen kept rallying while the NZD lost heavily after RBNZ said that they have wrongly released September comments saying the currency’s level was unjustified. Moreover, the Chinese Yuan is targeting second weekly gain even after the policy makers have reduced their growth forecast and which can be easily witnessed on AUD trading which is liquidating some of its gains.
Due to the recent turmoil in the market, the gauge of expectations for currency volatility surged to an eight-month high this week. Moreover, the Ebola has been a new term to generate pessimism into the market and support safe haven assets.
During the rest of the day, Canadian CPI numbers, US Building Permits, Housing Starts and Preliminary reading of UoM Consumer Sentiment can become headlines while the speech by Fed Chair at the Federal Reserve Bank of Boston’s Conference on Inequality of Business Opportunity also becomes important to take care of. However, I still support the Dollar Bulls.
Even after weaker Retail Sales and PPI continued damaging the US Dollar for the second consecutive week, later week releases of Michigan confidence and housing market numbers helped the greenback to trim some of the losses during late week. Moreover, the UK labor market numbers strengthened GBP while the Euro region economics kept ruining optimism for the region. Moreover, the AUD remained sluggish with mixed news from China. To sum up, the greenback was again the BIG loser in majors as weak economics caused market players to liquidate some of the forces that were fueling near-term rate hike speculations.
The Russia again got a hit to weaken Rubble as Moody’s Investors Service downgraded the sovereign one level to Baa2 from Baa1 and kept a negative outlook on the rating which was in line with Fitch Ratings Ltd.’s credit grade and one step above Standard & Poor’s, which lowered Russia to BBB- in April.
Current week becomes critical for the forex market as there are large numbers of economic releases scheduled during the week. Flash PMIs from China, US and Europe together with GDP releases from UK and China are likely to fuel volatility into the current week. Moreover, US Housing Market numbers, CPI and the Bank of Canada’s meeting can become additional forces that may fuel volatility into the market.
During the day, Canadian Wholesale Sales is the big release that can fuel CAD pairs while there are no important releases from the rest of the globe. The US Dollar is likely to continue its weaker path unless there are huge positives to support the greenback; however, that doesn’t hurt the longer-term bull perspective for the world’s largest economy.
With the improvement in Existing Home Sales numbers, released yesterday, and the expected halt to decline in CPI number, scheduled to release today, US Dollar closed positive yesterday. However, traders’ bet supporting the October 2015 rate hike by Fed declined to 46.2% from 55% a week earlier. The Euro region currency declined heavily yesterday as ECB bought covered bonds for a second day, signaling more QE towards corporate-debt purchases. Also, dovish comment by billionaire hedge-fund manager, David Tepper, also supported the Euro sell-off yesterday. Australian dollar erased yesterday’s declines after today’s data showed annual consumer-price gains slowed in line with forecasts.
Today, there are more number of important details to shackle the market. Amongst them, BoE meeting Minutes, Canadian Retail Sales and BoC meeting together with US CPI are likely to take the center stage. The Press conference after BoC meeting is more likely to fuel pairs connected to CAD. Moreover, should the US CPI registers another plunge below 0.0%, chances of higher US dollar liquidation can’t be denied. Hence, it would be better to take the cautious view before trading.
With the better US CPI numbers and the continued global pessimism, US Dollar registered its first weekly gain in last three. The ECB’s stress test results, which showed No French, German or Spanish institutions were required to find more capital, provided some relief to the ECB policy makers during the early hours of today. Moreover, the crucial week, that carries FOMC, Mid-year forecast from Australian economy, US Advance GDP and ECB Flash estimate, has the heavy fuel to shake the market.
Today, the market players kept supporting the Euro after the ECB stress test, revealed late yesterday, signaled that the ECB identified a 25 billion-Euro shortfall ($32 billion) for the region’s lenders, and said 12 of them have now raised enough funds. Eleven banks need more capital, including Monte Paschi with a gap of 2.1 billion Euros. The German Ifo Business Climate is awaited to further impress the Euro traders while the US Pending Home Sales are likely to support the greenback during the later part of the day. Moreover, marker players are more likely to wait for the tomorrow’s Durable Goods Orders and Consumer confidence numbers to determine the USD strength ahead of FOMC.
To sum up, with the highly important events scheduled during the week, market players are advised not to take higher risks ahead of the events. Moreover, they are intelligent enough if they also wait for the confirmation of market behavior and than act accordingly.
On Tuesday, US Dollar registered second consecutive daily loss as weaker Durable Goods’ number outshined the benefits signaled by better consumer confidence details which in-turn fueled speculations that the Fed will not conclude its monthly asset purchase program in today’s FOMC meeting. However, the greenback strengthened against its Japanese counterpart.
During the early hours of the day, Japan’s industrial production rose at its fastest pace since the beginning of the year, which provided considerable strength to the JPY while the ANZ Business Confidence climbed to three month high. Further, US Secretary of State, John Kerry, has warned Russia that an election planned by separatist rebels in republics of Donetsk and Luhansk, on Sunday, can force them to break international agreements. Moreover, the Ukrainian authorities are also worried about the election as it may hinder peace.
Today, market players are more concerned about the FOMC meeting and the decision to determine the near-term moves of US Dollar. Should the meeting concludes the asset purchase program with the final tapering of $15 billion, investor focus will then divert towards the rate hike signals that can probably gift considerable strength to the US Dollar. Alternatively, a halt to tapering or minor tapering can cause market players to think that the world’s largest economy is expecting weaker days ahead and can result damages to the greenback.
And finally the Fed concluded its monthly asset-purchase program that ran for two years after adding nearly $1.66 trillion to its balance sheet. The FOMC meeting, ended yesterday, concluded its monthly asset purchases in a final tapering of $15 billion; however, it remained static on its comment of holding the keep borrowing costs low for a “considerable time.” The underlying cause for the decision was improvement in labor market numbers as sighted by the FOMC. The US dollar gained heavily after the announcement and rallied to four week high during early hours of the day as the final tapering caused market players to push speculations of near-term rate hike by the world’s largest economy’s central bank.
The Bank of Japan (BoJ) Governor, Haruhiko Kuroda, is scheduled to appear in parliament today before a policy meeting tomorrow. Further, the Reserve Bank of New Zealand (RBNZ) kept its interest rates unchanged by signaling a threat from unjustifiably high currency level and slowing inflation. The RBNZ Governor also omitted the statement that supported near-term interest rate hike should the inflation causes the problem to the economy. Moreover, the Bank of Canada (BoC) Governor, Stephen Poloz, signaled that the recent weakness in Canadian Dollar is helpful for the nation’s exporter and become an aid to survive lower crude prices.
For the rest of the day, German Prelim CPI, Spanish Flash CPI and Flash GDP numbers are still awaited to fuel the regional currency. Advanced estimation of Q3 2014 GDP for the US is likely to create headlines while the US Jobless Claims and a speech by the Fed Chair at the Board of Governors of the Federal Reserve System’s National Summit can provide additional hints for the market players to move the market.
Having seen too much of the central bank actions during yesterday and early today, the BoJ is still left to shake the JPY pairs tomorrow while the Euro-zone CPI Flash Estimate y/y can become an indication for the ECB’s next move. Market players are advised to take serious note of the fundamental events to forecast near-term moves of the respective currency pairs; however, US Dollar seems to be heading for upward journey after the final tapering yesterday.