GROWTHACES.COM Trading Positions
EUR/CHF: long at 1.2025, target 1.2040, stop-loss 1.1995
GROWTHACES.COM Pending Orders
EUR/USD: sell at 1.2580
GBP/USD: sell at 1.5800
USD/CAD: buy at 1.1580
AUD/USD: sell at 0.8330
NZD/USD: sell at 0.7880
EUR/USD: Hawkish FOMC Is Likely To End EUR Rally Tomorrow
(our short reached the stop-loss level)
[ul]
[li] The Eurozone PMI Composite rose from November’s 16-month low of 51.1 to 51.7 in December, signaling a modest upturn in the rate of growth. The reading was higher than market consensus (of 51.5) but below our forecast of 52.0. Rates of expansion remained weak in both manufacturing and services. Eurozone manufacturing PMI amounted to 50.8 in December vs. 50.1 November and services PMI amounted to 51.9 in December vs. 51.1 in November.
[/li][li] Weakness was again particularly evident in the core countries. German companies reported the smallest increase in business activity since June 2013, while activity fell in France for the eighth successive month. Outside of Germany and France, activity rose on average at the fastest rate for five months.
[/li][li] PMI showed average selling prices fell for the thirty-third straight month in December. Lower oil and other commodity prices helped bring down input costs in manufacturing, resulting in the largest monthly fall in eight months.
[/li][li] The PMI reading suggests economic growth near 0.1% qoq in the fourth quarter. However, business activity is falling in Germany and France and the upturn is driven by the rest of the region.
[/li][li] There is no clear conclusion from the PMI indexes for the ECB. On the one hand, higher PMI reading supports the view that more time is needed to assess the impact of current policy of the ECB. On the other hand, low rate of economic growth in Germany and France calls for immediate additional stimulus.
[/li][li] The Euro zone’s unadjusted trade surplus in October was EUR 24 bn, up from EUR 16.5 bn a year earlier and EUR 18.1 bn the month before. The surplus was a result of a 4% unadjusted yoy rise in exports and flat imports.
[/li][li] The German ZEW investor confidence index has come in at 34.9 compared to expectations for an improvement to 19.7 and compares to 11.5 previously. In the opinion of ZEW the increase is related to favorable economic conditions such as the weak euro and the low crude oil price.
[/li]
[li] The chief of Germany’s Bundesbank Jens Weidmann said weaker oil prices could lead prices to contract over the next months in the euro zone’s largest economy, but that would not justify broad-based sovereign bond purchases by the European Central Bank
[/li][li] The EUR/USD opened the Asian session at 1.2437 after the USD gained on widening the spread between US Treasuries and German bonds’ yields and yesterday’s dovish comments from ECB’s Nowotny. Today the USD is weakening across the board. Investors are waiting for tomorrow’s Fed’s statement which in our opinion is likely to give a boost to the USD and in our opinion it is still a good idea to use today’s higher levels to get short. However, our EUR/USD short reached the stop-loss at 1.2530. We are looking to get short at 1.2580.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.2569 (high Nov 21), 1.2575 (high Nov 20), 1.2599 (high Nov 19)
Support: 1.2415 (low Dec 15), 1.2392 (10-dma), 1.2384 (low Dec 12)
GBP/USD: BOE’s Carney Downplays Fall In Inflation
(sell at 1.5800)
[ul]
[li] British inflation fell to 1.0% yoy in November, its lowest level since September 2002, compared with 1.3% in October.
[/li][li] The Office for National Statistics said motor fuel prices fell 5.9% yoy. Food prices fell 1.7% yoy, their biggest fall since June 2002. The Bank of England said last month it expects inflation to fall below 1% in the next few months, and since then oil prices have fallen further. The BoE has predicted CPI will hit its target of 2% only towards the end of 2017.
[/li][/ul]
[ul]
[li] BoE Governor Mark Carney would have to explain formally to finance minister George Osborne a move in the CPI of more than one percentage point away from the BOE’s 2% target. The fall in inflation is, however, good news for households because it rises their real earnings and that is great news for the government ahead of May’s election.
[/li][li] Mark Carney said today that falling oil prices were net positive for the UK economy and that the inflation data left the bank’s policy stance unchanged.
[/li][li] The Office for National Statistics said prices at the factory gate fell 0.1% yoy in November. Separate data from the ONS showed house prices in Britain rose 10.4% yoy in October, compared with 12.1% rise in September.
[/li][li] The GBP/USD rate fell to 1.5610 after the release of inflation data, but recovered to 1.5724 soon after the BOE governor said in “hawkish tone” that a fall in oil prices is net positive and rose later to a day’s high at 1.5785. In our opinion short GBP/USD position ahead of tomorrow FOMC decision could be a good choice. We are looking to sell GBP/USD at 1.5800.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.5747 (high Dec 15), 1.5757 (high Dec 11), 1.5826 (high Nov 27)
Support: 1.5602 (low Dec 15), 1.5541 (low Dec 8), 1.5507 (low Sep 2)
USD/JPY: Yen Rally Continues
(stay sideways)
[ul]
[li] The USD/JPY continues to fall from yesterday’s high of 119.05. The JPY rally was stopped at significant support trend line (see the chart). Breaking below this line will open the way to further fall to 114.00.
[/li][li] The JPY rally is the consequence of rising risk aversion. The markets are under pressure of weakening ruble. The central bank of Russia raised interest rates to 17% from 10.5% to counteract against further depreciation of the ruble today.
[/li][li] The JPY tends to strengthen at times of economic stress (“safe haven currency”) as it is often used as a funding currency for investments in higher yielding assets.
[/li][li] We still believe the USD/JPY to move higher in the next year, especially given current government and BOJ policies. In our opinion more easing from BOJ is still possible.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 117.44 (hourly high Dec 16), 117.49 (hourly high Dec 16), 118.01 (high Dec 16)
Support: 115.32 (low Nov 13), 115.00 (psychological level), 114.91 (low Nov 12)
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