GBPUSD Archives - The Industry Spread

GBPUSD Volatility is Still the Name of the Game

March 14, 2019 by Nikolas Papas Leave a Comment Filed Under: Market News - European Open Tagged: Article 50, Brexit, Brexit votes, commodities markets, economy, EU Parliamentary elections, EUR-USD, GBPUSD, trading platform, UK parliamentary vote

Fresh Chinese worse-than-expected industrial production data which was the lowest output growth in 17 years weighed on Asian equities. In Japan, the Nikkei225 main index lost 0.02 percent to 21,287, and the Hang Seng benchmark in Hong Kong finished flat at 28,834. The Shanghai Composite shed 1.20 percent at 2,990, while stocks in Australia which had been under pressure for most of the afternoon, however, managed to claw back gains in the final hour of trade as the Financial sector improved. The ASX 200 closed up 18 points or 0.3% to 6,179.

In commodities markets, Oil rose above yesterday’s high to a fresh peak since March 1. The high on the first day of the month was $57.88. Crude oil today rallies further beyond $58.50 level, at a 4-month high. Brent oil is also trading higher at $67.95/barrel. Gold is under pressure today trading around $1302 after reaching above the $1312 resistance zone yesterday. XAU may find support at $1297 where the 50-day moving average crosses, ahead of testing 100-day simple moving average down to $1293.

Mixed start for equities in early European trading as investors watch the votes and developments surrounding the Brexit front that can offer the intermediate direction to markets. DAX30 is giving up 0.07 percent to 11,563, CAC40 is 0.32 percent higher at 5,323 while FTSE100 in London is 0.15 lower at 7,149.

On the Lookout: The Swiss State Secretariat for Economic Affairs (SECO) slashed 2019 GDP growth forecast to 1.1% from 1.5% while 2020 GDP growth maintained at 1.7%. In the UK, MPs face another Brexit vote this evening to extend Article 50 to 30 June (or beyond), after ruling out leaving without a deal last night.

In the US economic calendar, the main event will be the US weekly jobless claims, import prices, and the Canadian new housing price index which are due at 12:30GMT. At 14:00 GMT, the US new home sales data will be eyed for fresh USD positions. The UK parliamentary vote on Article 50 extension is scheduled at 19:00GMT, while New Zealand’s business PMI and visitors arrivals data will be published at 21:30GMT and 21:45GMT respectively.

Trading Perspective: The Aussie dollar is trading almost unchanged the last hours at the 0.7065 zone against the worst than expected Chinese macro data. The Kiwi is flat to daily lows at 0.6832. The US dollar index got many offers during US session and broke below the critical 96 level, just to make a small rebound today reaching 96.02.

GBPUSD Hourly (H1) Chart

GBPUSD: Volatility is still the name of the game for the pair this week as good and bad news crossing the wires. Traders are closely watching the developments around Brexit votes and rumors, and we can see huge moves in the pair.

We have a busy Brexit Calendar, here are the main upcoming events:

14th March – Parliamentary vote on extending negotiations/Article 50
21st – 22nd March – EU Leaders’ Summit
29th March – Article 50 end date
9th May – European Council (heads of state) meeting
18th – 23rd May – EU Parliamentary elections
20th – 21st June EU Leaders’ Summit

The technical picture is bullish for GBPUSD, and yesterday the pair reached 1.3382 before falling down to 1.3265. Traders today started with bids regaining the 1.33 area. On the downside, major support will be found at 1.2990 where the 50 and 200-day moving averages are crossing. On the flip side, major resistance can be found at 1.3382 the high from yesterday.

In Pound futures markets, traders added nearly 6.3K contracts on Wednesday from Tuesday’s final 191,938 contracts. Volume, instead, dropped after four consecutive builds by more than 99.2K contracts.

EURUSD keeps the bullish tone that started this week in an attempt to regain some of the previous week losses. The pair is trading above 1.13 for the second day and is looking to break above 1.1342 yesterday’s high in order to establish a new bullish trend targeting 1.14. The low from yesterday session at 1.1277 provides immediate support, while the key support for the pair stands at yearly lows at 1.1175.

In Euro fundamental news, the Italian figures still disappoint with Italy Q4 unemployment rate at 10.6% vs. 10.5% expected by analysts. The unemployment rate ticks higher towards the end of last year as there was a drop of 36K in those employed. The big fallout comes from the industrial and agricultural sector.

On the EU political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist and right-wing option among voters.

In Euro future markets, open interest reverted the previous daily drop and increased by around 1.7K contracts on Wednesday vs. Tuesday’s final 536,724 contracts. The volume rose by the third session in a row, this time by around 55.2K contracts.

USDJPY shows strength in early European session climbing to fresh daily and weekly high, now at 111.67 for an attempt to 112 round figure resistance. Support can be found at the low from yesterday at 111.27.

In Yen futures markets, traders added around 10.7K contracts to their open interest positions on Wednesday, while volume also increased by nearly 44.9K contracts, recording the second consecutive build.

USDJPY Daily Chart

Bulk up for another Pound Roller Coaster Today

March 13, 2019 by Nikolas Papas Leave a Comment Filed Under: Market News - European Open Tagged: Asian stocks, banks, Brexit, EU Parliamentary elections, European Council, EURUSD, FTSE100, FX trading, GBPUSD, trading platform, yen futures

Brexit uncertainties weighed on Asian markets, and in Japan, the Nikkei225 main index lost 0.99 percent to 21,290, and the Hang Seng benchmark in Hong Kong gave up 0.39 percent at 28,920. The Shanghai Composite shed 1.09 percent at 3,026, while stocks in Australia has extended its longest losing streak for the year, recording loses for a fourth straight day with geopolitical concerns continuing to weigh on the local market. Soft US inflation data and further Brexit uncertainties weighed on the ASX 200 as the index fell 13 points or 0.22% to close the session at 6161.2.

In commodities markets, the Crude oil added 30 cents to $57.18/barrel while Brent oil is 21 cents higher at $66.89/barrel. Gold is trading at the daily top around $1306 after yesterday managed to break above the $1300 resistance zone. The precious metal price gets a boost from US-China trade deal, and Brexit uncertainties that favor safe havens. XAU may find support at $1297 where the 50-day moving average crosses, ahead of testing the 100-day simple moving average down to $1293.

Soft tone is prevailing in early European trading as investors watch the developments surrounding the Brexit frontier and can offer the intermediate direction to markets. DAX30 is giving up 0.13 percent to 11,507, CAC40 is 0.28 percent higher at 5,286 while FTSE100 in London is flat at 7,151.

On the Lookout: Yesterday, PM Theresa May suffered another defeat on her Brexit deal as expected, but the defeat was smaller than the first time around (149 versus 230 last time), and 40 Conservative MPs switched, including the former Brexit secretary David Davis. Today, the UK government announced temporary cuts to the import tariffs on agriculture and cars in the case of a no-deal Brexit.

In the US economic calendar, the main event will be the release of durable goods orders data, followed by PPI figures that might influence the US Dollar price dynamics and eventually produce some short-term trading opportunities.

Trading Perspective: The Aussie dollar is trading almost unchanged the last hours at the 0.7065 zone against the news and a big drop in the Westpac consumer confidence index. The Kiwi is losing 30 pips to daily lows at 0.6835. The US dollar index breached the lower band of the recent trading range between 97 and 97.70 and as of writing it is trading to daily lows giving up 0.12 percent at 96.90.

GBPUSD Hourly (H1) Chart

GBPUSD: Volatility is the name of the game for the pair this week as good and bad news crossing the wires. Traders are closely watching the developments around Brexit votes and rumors, and we can see huge moves in the pair.

We have a busy Brexit Calendar, here are the main upcoming events:

13th March – Parliamentary vote on opposing “no deal” exit option
14th March – Parliamentary vote on extending negotiations/Article 50
21st – 22nd March – EU Leaders’ Summit
29th March – Article 50 end date
9th May – European Council (heads of state) meeting
18th – 23rd May – EU Parliamentary elections
20th – 21st June EU Leaders’ Summit

The technical picture is bullish for GBPUSD, and an attempt to 1.33 area looks possible. On the downside, major support will be found at 1.2990 where the 50 and 200-day moving averages are crossing. On the flip side, major resistance can be found at 1.3190, and a break above can lead the way to 1.3260 zone.

Open interest in Pound futures markets increased modestly for the second straight session on Wednesday, while volume extended the uptrend for yet another session, this time expanding by around 76.1K contracts.

EURUSD Hourly (H1) Chart

EURUSD started the day higher at 1.1292 area in an attempt to regain some of the previous week losses. The pair is trading in the middle of the range between the 100 and 200-day moving averages targeting to conquer the 1.13 area. The low from yesterday session at 1.1244 provides immediate support, while the key support for the pair stands at yearly lows at 1.1175.

In Euro future markets, traders reduced their open interest positions by nearly 9.9K contracts on Tuesday from the previous day. Volume, instead, rose for the second session in a row, this time by around 162.2K contracts, the largest daily build so far this year.

USDJPY continues the choppy activity around 111.30 with low volume that opens the door for the continuation of the sideline theme in the mid 111.00 for the short-term horizon.

In Yen futures markets open interest shrunk by more than 2.7K contracts on Tuesday vs. Monday’s final 199,681 contracts, extending the choppy activity so far this week. Volume, instead, rose by more than 14.3K contracts, reversing the previous day drop.

Asian Markets Trading Higher, Nikkei Adds 2.44%

January 7, 2019 by Nikolas Papas Leave a Comment Filed Under: Market News - European Open Tagged: Asian Markets, AUDUSD, EURUSD, FOMC, GBPUSD

Jerome H. Powell

Asian markets ended higher with Hong Kong’s Hang Seng gain 0.7%, and the Shanghai Composite index climbed 0.4% while Nikkei added 2.44%. On Friday, the FED chairman Jerome H. Powell said that the Fed would be flexible amid market turbulence and broader concerns about slowing global growth. The comments sent shares in the United States higher, as did strong job numbers and the resumption of trade talks between the United States and China.

European stocks opened positive as well, following Friday’s stock market performance after several days of drops. Futures trading predicting how Wall Street will start the week also painted a bullish picture.

On the Lookout: The economic calendar, today sees German Factory Orders and Retail Sales (December) as well as Euro-Zone Retail Sales. North America sees Canada’s Ivey PMI and US ISM Non-Manufacturing for December. Later in the week we see the US Trade Balance, as well as Headline and Core CPI.

Morten Helt, senior analyst at Danske Bank, points out that on Friday, Federal Chairman Powell said that the FOMC’s policy is flexible and that officials are ‘listening carefully’ to financial markets.

“Powell also said that the Fed will be patient as it observes how the economy evolves and referred to 2016 as an example where the FOMC indicated four hikes but only raised the target range once in December.”

“Powell’s comments came after FOMC members Kaplan (on Thursday) and Mester (earlier on Friday) said something similar and overall, the Fed is clearly indicating flexibility in its policy both in terms of the interest rate and quantitative tightening. The market expects the Fed to stay on hold in March.”

Trading Perspective: EURUSD positive momentum is still intact and now the pair trading in 1.1436 helped by positive macro news, as European Monetary Union Retail Sales (MoM) registered at 0.6% above analyst’s expectations (0.1%) in November. The monthly high of 1.1486 is the next resistance. On the flipside previous week low at 1.1345 is the first support area.

AUDUSD hits 2 week highs at 0.7126, and now the buyers are in control looking for the first resistance at 0.7170 area. Investors are optimistic about a US-China trade deal with high-level negotiators meeting in Beijing today and tomorrow.

GBPUSD is trading higher today in an attempt to break above the 50 day moving average at 1.2770 a level which if breached will attract the bulls. Open interest in GBP futures markets shrunk by almost 5.6K contracts on Friday vs. Thursday ’s final 214,437 contracts. In the same line, volume decreased by around 1.6K contracts, recording the second consecutive drop.

Markets cautious ahead of holidays and political instability in the US

December 24, 2018 by Nikolas Papas Leave a Comment Filed Under: Market News, Market News - European Open Tagged: Asian stocks, EURUSD, GBPUSD, Markets cautious, Steven Mnuchin, USDJPY

Steven Mnuchin, US Treasury Secretary

Asian stocks start of a holiday-shortened week mostly lower with thin volumes on Monday as a Wall Street slump and a partial U.S. government shutdown stemmed holiday cheer. In Japan Nikkei 225 stock index slipped 1.11% to 20166.19, the Shanghai Composite index rose 0.1%, Hong Kong’s Hang Seng lost 0.4 percent to 25,651.38. Australian stocks started with a pulse of selling that saw the ASX 200 at a 57 point deficit in opening trade. Thereafter, the Index steadied as the selling ebbed and the market reeled in some of its initial losses to close 26 points or 0.5% higher at 5493.8. The S&P 500 on Friday index slipped 2.1% to 2,416.62 and the Dow Jones Industrial Average was down 1.8% at 22,445.37. The Nasdaq composite tumbled 3% to 6,332.99. US indices lost over 7% last week marking the worst week in seven years.

European exchanges are also trading in the red CAC is down 1.11% while FTSE100 in London gives up 0.90%. In company news Euronext the pan-European exchange operator said it was buying the Oslo stock exchange.

On the Lookout: Treasury Secretary Steven Mnuchin held calls with top USA bankers over the weekend following the recent selloff in equities, and made plans to convene a group of officials sometimes referred to as the “Plunge Protection Team.” The political drama in Washington will be another area of focus for traders, with the government facing a partial shutdown that is likely to last until at least Dec. 27, according to Senate Majority Leader Mitch McConnell. The yield on the US 10-year bond climbed 2 basis points. Other global yields were mostly lower or flat. This should provide the Greenback with some support today.

Trading Perspective: EURUSD is trading in narrow trading range and thin trading from 1.1370 to daily highs of 1.1411. Holding neutral stance for the pair during holidays with upside target the 1.14 round number level and next the 1.1445 area the 38.2% Fibonacci level, with strong supply expected in the 100 day Moving average and previous week top at 1.14786. Moving south, the 50% Fibonacci of the rally from 1.1269 to 1.1485 at 1.137 could provide first support for the common currency.

USDJPY looks weak in early European trading session after previous week sharp selloff. The pair has entered a bearish face as prices are hovering below the hourly and daily moving averages. 111.40 is the immediate resistance for the pair and then the 50% Fibonacci level of the rally from 109.76 to 114.54. On the flipside the pair will meet supply at 112.

GBPUSD try to digest the late rally from yearly lows to 1.27, currently is trading in the mid 1.26’s as investors are cautious awaiting developments from the Brexit frontier and political instability in the US. 1.2630 the 200 hour moving average will act as support during the holidays and 1.27 previous week top will meet some supply.

Calm Trading Day as Investors Awaiting FOMC decision

December 18, 2018 by Nikolas Papas Leave a Comment Filed Under: Market News - European Open Tagged: AUDUSD, DAX, EUR-USD, European shares, FOMC decision, GBPUSD, global economy, Trading Day

Slowing global economy worries continue to put pressure on risky assets around the globe. Wall Street indices extended their slump as investors braced for an interest rate hike by Federal Reserve on Wednesday. The Nasdaq Composite dropped 2.27% and the S&P 500 lost 2.08% to hit its lowest since October 2017. The Shanghai Composite index dropped 1%, as did Australia’s S&P ASX . In Tokyo the Nikkei 225 index was 1.6% lower and in South Korea the Kospi dropped 0.4%. Hong Kong’s Hang Seng lost 0.9 percent.

European shares started the day in negative territory, DAX gives up 0.32 percent, the CAC is down 0.60 percent and FTSE in London loosing 0.11 percent.

Chinese President Xi Jinping offered no fresh comments to open or stimulate the world’s second-biggest economy in a keynote speech. Xi assured markets that China will control risks to the economy and will improve economic structures, expand domestic demand and support the development of the non-state economy.

On-the-Lookout: UK Prime Minister Theresa May delivered a fresh round of talking points on Brexit before the UK’s parliament on Monday, but little new developments were delivered. Italian newspaper Il Sole, reported that Italian government slashed the GDP growth estimates in the latest budget proposal for next year from 1.5% to 0.9% – 1.0%.

The Reserve Bank of Australia (RBA) board agreed that the next move in the cash rate is more likely to be an increase than a decrease but also believed there is no strong case for a near-term adjustment in monetary policy, minutes of the December 2018 meeting released soon before press time revealed. RBA increased the Expected Q3 GDP growth to be above 3 pct for the year (vs actual 2.8 pct). Meanwhile, Australia HIA New Home Sales (MoM) rose from previous -0.8% to 3.6% in November.

Trading Perspective: Markets will be focused on the pace of any further Fed tightening in 2019 as well as the FED’s assessment of the economy amid a trade conflict with China.

EURUSD commenced European trading day in positive mood and trading at the daily highs around 1.1370. US dollar weakness across the board helped the single currency to rebound from two week lows. Easing concerns regarding Italy’s budget crisis, as represented by the narrowing spread between the 10-year Italian government bond yield and its German counterpart could also put a bid under the EUR. Looking at the hourly chart, the pair reiterated the short term bullish outlook today breaking above the 200h moving average. EUR/USD will face a strong resistance at 1.14 a level that rejected the pair twice the last two weeks. On the flipside yesterday’s low at 1.1302 is the first support, and then 1.1265 previous week low will attract some buyers.

AUDUSD is trading in 30 pips narrow trading range, between 0.7170 – 0.7203 as the RBA minutes earlier failed to inspire any moves. The 100 day moving average at 0.7221 is the most important level for the pair, we are looking for a clear break above that level to enter a long position. Failure to break above the key daily moving average means that sellers remain in short -term control and it would require stronger conviction for buyers to hold a break above and justify shifting the bias in the pair to being more bullish instead.

GBPUSD is also building momentum about FOMC decision, Karen Jones, analyst at Commerzbank, comments: “While rallies remain capped by the 20 day ma at 1.2711 we will regard the market as vulnerable on the downside. Below 1.2477 targets the 78.6% retracement at 1.2109. Above the 20 day ma lies the 1.2840 current December high but while capped by the resistance line at 1.2933 it will remain offered. Only a rise above the July, September and October highs at 1.3258/1.3363 would put the June high at 1.3473 on the cards.”

Pressure on UK PM Theresa May continues to increase as Jeremy Corbyn of the UK labour party has now threatened to call for vote of ‘no confidence’ in her following her statement that MPs would not vote on her Brexit deal until the week of 14 January.”

Traders Awaiting the Key Fed Decision Wednesday

December 17, 2018 by Nikolas Papas Leave a Comment Filed Under: Market News - European Open Tagged: European stocks, EURUSD, Fed Decision, FED’s decision, GBPUSD, investors, USDJPY

Investors have a week of central bank events looming with meetings of the U.S. Federal Reserve and the Bank of England likely to move markets around the globe. Asian markets gain some ground Monday morning after a tough week for global stocks. In Tokyo Nikkei225 index end the trading session 0.6% higher while Hong Kong’s Hang Seng stock index was up 0.1%, Australia’s S&P ASX 200 finished 0.9% higher.

European stocks started the week mixed with tiny gains in London, DAX trading 0.18% lower and CAC40 gives up 0.49%.

According to analysts at Danske Bank, majors will be awaiting the key Fed decision this Wednesday as the market has priced the Fed notably more dovishly recently, which suggests that risks are tilted towards a hawkish surprise. “There is a key risk that the FOMC could lower rate expectations (aka the dots) further out. For USD, it will thus be key whether Fed Chair Jerome Powell and co come across as (a) adamant to get to neutral or (b) cautious in not making policy contractionary. The former is our base case, which should be USD supportive near term.”

The Federal Open Market Committee is expected to raise its short-term interest by a quarter-point to a range of 2.25% to 2.5% after a meeting on Wednesday. This would be its ninth hike since late 2015.

EURUSD is trading higher around 1.1340, as risk appetite improves across Europe, and the USD correction across the board regains momentum. The pair facing strong resistance USD hit 19-month highs versus its main competitors at 97.71 on Friday, after Chinese economy slowdown fears intensified following weaker Chinese macro data. In Italian budget crisis, ANSA reported that the Italian coalition leaders have reached an agreement over the budget accord.

USDJPY traded to a high of 113.674 overnight which is basically where immediate resistance for today lies (113.60-70). Currently is hovering around 113.30 awaiting FED’s decision. The next resistance level is at 114.00. Immediate support can be found at 113.20 (overnight lows). The next support level lies at 112.70. Net speculative JPY shorts increased to a total of JPY 109,100 from JPY 104,800 bets. These are the largest net total of shorts since March this year.

GBPUSD is gaining bullish momentum as in early trading managed to break above the 50h moving average at 1.2591 and now is challenging the 100h moving average at 1.2614. A strong resistance is previous week top at 1.2660 where also the 200h moving average waits. The economic calendar is light today, leaving room for Brexit speculation to have its say. The chances of a second referendum are rising, but PM Theresa May rejects these calls.

Oil prices in quite trading after slipping by around 2% the previous week, but remained under pressure from oversupply and concern over the prospects for global economic growth and fuel demand. Saudi Arabia, the world’s biggest oil exporter, will release its budget for next year. It needs prices to climb beyond $80 a barrel to balance it, according to Fitch Ratings.

Asian Markets take a hit after Economic Data

December 14, 2018 by Nikolas Papas Leave a Comment Filed Under: Market News - European Open Tagged: Asian Markets, Bank of China, Capital Markets, ECB, economy, EUR-USD, European trading, European Union, Financial markets, financial services, Forex, GBPUSD, monetary policy, trade war, trading session, trading volume

Asian Markets take a hit after two days of gains as macro data from China disappointed investors. China’s industrial-production growth slowed to 5.4% in November, the lowest number since the start of 2016 and the retail-sales increase was 8.1%, the least in 15 years. China’s National Bureau of Statistics (NBS) is reporting that global economic growth continues to decline, with an increasing number of uncertainties impacting the impetus for growth, and that weaker industrial production, and slowing retail growth shows that downward pressure on China’s domestic economy continues to increase largely due to the US-China trade war.

In Tokyo, the Nikkei225 index ended down 2.2% with Topix index declining -1.40% for Friday trading session. Singapore STI index joins others in falling 1.3% and the Hang Seng index fell 1.6%.

European markets and U.S. equity futures followed Asian stocks lower after data showed continued weakness in China’s economy. London stocks fell in early trade on Friday, the FTSE was 0.70% the DAX30 losing 1.50% and CAC40 started 1.32% lower.

ECB yesterday lowered its growth projections for 2018 to 1.9% vs +2.0% previous and 1.7% for 2019 vs +1.8% prior. Meanwhile, the yearly inflation rate for 2018 was revised higher to 1.8% from 1.7% previous but was largely offset by a weaker outlook for 2019, now seen at 1.6% vs. 1.7% prior.

EUR/USD making new monthly low breaking the 1.13

EURUSD started the European trading session making new monthly low breaking the 1.13 as German and French PMI’s missed analyst’s expectations, The slowdown of the economic activity in the Eurozone was broad-based with new business inflows almost stalling, job creation slipping to a two-year low and business optimism deteriorating. Mario Draghi reaffirmed a dovish shift by the ECB, forcing investors to scale back expectations for a rate hike next year, a key point that we mention in our yesterday’s daily report. According to the Eurozone money market futures, investors are now pricing in roughly 60% probability for the ECB to hike rates next year, which marks a heavy drop from around 75% probability seen yesterday.

EUR/USD currently trading at 1.1290 breaking the support at 1.13 and the 50h moving average, now a level for traders to watch is 1.1275. A clear break of that level will drive the price down to yearly low at 1.1215. On the flipside, the 1.1375 yesterday’s high is the immediate resistance point. Karen Jones, analyst at Commerzbank, suggests that the EUR/USD remains underpinned very near term by the 1.1321 support line and further gains to the November high at 1.1500 are on the cards and 1.1530/1.1622 (the 2018 downtrend and 16th October high). “This will need to be overcome to negate downside pressure. Dips lower will ideally be contained by 1.1300 and while above here the market will be viewed as bid. This guards the 1.1216 November low.

Below the 1.1216 November low lies the 61.8% Fibonacci retracement of the 2017-18 advance at 1.1186. Failure there would put the late May and June 2017 lows at 1.1119/10 on the cards.”

GBP/USD

GBPUSD today canceled the positive momentum that built yesterday as the rally stalled at 1.2670 area. The break of 100h moving average (red line) earlier today accelerated the selling pressures for sterling sending the price down to 1.2580. The 1.2560 is the first support for the pair today a break below that level will give bears the control and the pair can end at the 1.2485 level. The volatility is likely to remain over the coming days as Theresa May updated Brexit plan was swiftly rejected by the European Union.

Another victim of weak China macro data was AUDUSD which penetrated the 100d moving average entering the bearish phase.

Gold is trading lower for the second consecutive day at $1238 as retracement from 5 month top continues. The bullish momentum for the precious metal is still intact but we can’t rule out a move down to 1234 horizontal support. On the flip side, the $1242 level now seems to act as first resistance, which if cleared might lift gold back towards $1249-50 highs.

Its Draghi Day, Today

December 13, 2018 by Nikolas Papas Leave a Comment Filed Under: Market News, Market News - European Open Tagged: Brexit, ECB, EURUSD, GBPUSD, Mario Draghi

Asian stocks record a positive day as trade tensions may continue to ease further, boosting the outlook for global economic growth. President Trump also informed markets yesterday that China has agreed to restart purchases of American Soybeans and reduce the tariff on American car imports. China’s government and senior policy advisers are drafting the replacement for Made in China 2025 which would allow greater access for foreign companies, according to the Wall Street Journal.

In Tokyo, the Nikkei rose 1%, Hong Kong stocks have jumped again, outperforming others across Asia. The Hang Seng Index rose 1.2%, and Australia’s ASX 200, which also gained more than 1% yesterday, ended the day just 0.1% higher.

European stock markets started the day in quite note as traders are watching the Brexit and Italy related news. Italy’s Finance Minister Tria is scheduled to travel to Brussels for budget talks with the European Union, having proposed yesterday a revised budget deficit target of 2.04 percent. The spread between the 10-year Italian government bond yield and its German counterpart could continue to narrow in the near future.

In forex markets ,GBPUSD rallied from 20 month lows at 1.2475 to 1.26 after May survived a party no-confidence vote. The pair has reached the first resistance that we mention in yesterday’s report at 1.2667, trading above the 50h and 100h moving averages thus giving a sign of life for the bulls, the 200h moving average is still a strong resistance point at 1.2682. High volatility is expected also for today as Brexit-related headlines might continue to influence sentiment surrounding the Sterling and infuse volatility across GBP forex pairs.

The upbeat mood is also helping to lift EURUSD early morning at the daily high 1.1393. The pair has regained the bullish momentum after it crossed successfully the 200h moving average. Draghi will set the tone for the pair today as the ECB is expected to end its EUR2.6 trillion stimulus package and communicate next growth and inflation forecasts. Italy budget crisis is a risk for the ECB rate decision and might affect the commitment to maintain low interest rates until summer 2019. Analysts at Rabobank offer a sneak peek at what to expect from the final European Central Bank (ECB) monetary policy decision

“The ECB will maintain the risk assessment of “broadly balanced”, and recent solid wage data will probably be Mr. Draghi’s key argument when selling the ECB’s economic outlook. Forward rates guidance is likely to remain unchanged at “through the summer of 2019”, the end of net asset purchases is likely to be confirmed, reinvestment modalities will highlight flexibility, and there will be no explicit maturity extension (i.e. no Twist).

A new capital key will likely only be applied to asset re-investments, there will be no active re-balancing of the ECB’s portfolio, and only minor changes to the forward guidance, with no provisional to-be end-date specified. In terms of LTROs, they expect no announcement in December, but potential hints to pave the way for these in 2019 Q1.

Put another way, ECB monetary policy is now as fantastically complicated as in China; but put more simply, they are going to stop QE with CPI well below target, growth slowing, and politics looking messy, and then keep their fingers crossed it isn’t a huge policy error, leaving EU citizens and markets to cry “Despicable them!”

1.1350 is the immediate support for the pair and 1.1325 is the next point, of previous week support the 1.1305 is the more important one as it formed a double bottom the past two weeks. A clear break below that area could trigger more bearish pressure testing 1.1250 area. On the flip side, bulls are looking for the 1.14 region where the pair has already rejected three times the last two weeks. 1.1445 is the December high until today.

The policy statement is due at 1:45 p.m. Central European Time, or 7:45 a.m. Eastern, with Mario Draghi’s news conference at the ECB’s Frankfurt headquarters set for 2:30 p.m. CET, or 8:30 a.m. ET.

European Stocks and Sterling Rebounds from Recent Lows

December 11, 2018 by Nikolas Papas Leave a Comment Filed Under: Market News, Market News - European Open Tagged: Asian stocks, EURUSD, GBPUSD, German ZEW, gold, Sterling Rebounds, USDJPY

Asian stocks got a bounce today after reports that Chinese and U.S. officials spoke by phone, a sign that discussions between the world’s top two economies continue even after the arrest of Huawei’s CFO. The Shanghai Composite rose 0.4%, but the Nikkei225 in Tokyo was again under performing other markets in the area, with the Japanese stock index down 0.34%. In macro news the Japan Machine Tool Orders (YoY) fell from previous -1.1% to -16.8% in November.

In Europe we had been scheduled to see a vote on Brexit deal today, but is now called off and UK Prime Minister Theresa May is going back to EU meeting Angela Merkel to seek changes on the deal, including the backstop. European Commission President Jean-Claude Juncker reiterated that Brexit deal on the table is the only deal possible and said that reopening of the withdrawal agreement will not happen.

In forex markets, USDJPY traded with negative bias in Asian session and erased a part of the previous session’s strong upsurge to near one-week tops. The pair gained over 100 pips to over one-month lows set last Thursday and surged back above the 113.00 level. The technical bias is bullish in short term testing 113.65 area. First support is seen around 112.75 level. A clear break below that level could drive price to neutral zone in nearest term retesting 112.50, the 112.00 key support area still remains a good place to buy.

GBPUSD shaken by the latest Brexit drama and tumbled across the board yesterday after the PM Theresa May called off a highly anticipated Brexit parliamentary vote. The pair today started on positive momentum and refreshed session tops above 1.26 on upbeat UK labor market report. Immediate resistance for GBP/USD is near the 1.2655-60 region, above which the major is likely to aim towards reclaiming the 1.2700 round figure mark. On the flip side, the 1.2600 area now seems to protect the immediate downside, which if broken might trigger some fresh weakness and accelerate the slide further towards the 1.2535 intermediate support en-route the 1.2500 handle. All in all I expect high volatility for the pair as traders watching their terminals with flashing news from the Brexit frontier.

EURUSD is trading in narrow trading range between 1.1350 and 1.1385 seeking a break for the next move. Italy budget crisis remains high on the European agenda. Deputy PMs Matteo Salvini and Luigi di Maio refuse to discuss a budget deficit of under 2%, but there are reports of readiness to compromise. Italian headlines will likely move the Euro against majors. Technical, on a convincing move above the 1.1425 immediate resistance, the pair is likely to aim towards reclaiming the key 1.1500 psychological mark, on the flipside support can be found at 1.1320 that supported the pair last week, and then by 1.1305 which was a swing low in late November. The trough of 1.1270 is next down the line.

GOLD edge toward the 200-day moving average at 1,255

GOLD continues to edge toward the 200-day moving average at 1,255. This moving average has capped prices since June 14 2018. Speculative investors increased their net long futures positions by more than 47,000 contracts in the week to December 4, according to the latest data snapshot from CFTC. Global Exchange Traded Fund flows have turned positive for 2018 as at end-November, according to a World Gold Council report dated November 30.

Later today we have UK jobs numbers, where consensus is a gain of 25K and unchanged y-o-y earnings at 3.0% – but we all know there is only one job we are all thinking about, and that’s Theresa May’s.

In Europe, we have the German ZEW survey, which is seen edging down to 55.05 from 58.2, as analysts grow gloomier.

In the US we have the NFIB small business reading, seen staying at a buoyant 107.0, and then PPI, which is expected flat m-o-m and up 0.2% ex-food and energy.

Global Markets Start a Tough Week

December 10, 2018 by Nikolas Papas Leave a Comment Filed Under: Market News - European Open Tagged: AUDUSD, Fibonacci, GBPUSD, Hang Seng, investors, Nikkei225

Investors returned from the weekend facing the crucial Brexit vote on Tuesday and with stocks around the world hit by concerns that global trade worries will weigh further on the economy and potential auto tariffs are also clouding the world economic outlook. France is starting to slip into trouble as “yellow vests” riots and protests threaten to present uncertainty around president Macron’s future. The International Monetary Fund’s (IMF) Chief Economist Maurice Obstfeld said in an interview on Sunday, the US economic growth is likely to slowdown in the coming years.

The economists’ conviction that the European Central Bank (ECB) would raise rates in the third quarter of 2019 has faded over the last month as the probability of recession has risen, according to Reuters poll conducted Dec. 4-7.

In Tokyo the Nikkei225 ended lower by 2.12% at 21,218.50, Hang Seng index was down 1.4% and the Shanghai Composite index lower by 0.8%.

AUDUSD fell to the lowest level since early November, while AUDJPY slid to a five-week low. AUDUSD support at the 50day MA of 0.7183 was tested earlier today, and so far looks as if it may hold on the day. The moving average has supported prices on a closing basis since October 31.

GBPUSD is trading at the 4 month lows around 1.2720, according to Karen Jones, an analyst at Commerzbank, the GBPUSD pair remains above the bottom of its 4-month trading range and will find initial resistance at the 1.2840, current December high, and is likely to remain capped by the resistance line at 1.2986.

“Support at 1.2662, the August low, has been tested and held 3 times now. Below 1.2662 would trigger further weakness to the 61.8% Fibonacci retracement of the 2016-2018 advance and the June 2017 low at 1.2593/89 and below the 78.6% retracement at 1.2109.”

Target rate Probabilities for 10 Dec 2018

“Above 1.2986 lies the November 14 high at 1.3072. Further resistance comes in at the 1.3175 November high below which we will retain a longer term bearish bias.”

Euro started the week higher against US dollar as traders worry that economic growth has peaked and the Federal Reserve may pause its rate tightening cycle sooner than previously thought.

Gold rose to a six-month high of $1,251, having closed higher by 2.10 percent last week – its biggest weekly gain since March.

US yield curve inverted last week, triggering recession fears, which were bolstered by Friday’s weaker-than-expected non-farm payrolls and wage growth release. Further, China’s export growth slowed sharply in November, highlighting a weakening global demand, Meanwhile, imports growth also decelerated, indicating anemic domestic demand.

At press time, gold is trading at $1,249 just below the session high 1250.45/oz.