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Global Equities Trade Positive, Major Bonds See Rebound Action, UK Parliament Meeting Eyed

March 30, 2019 by Karthik Subramanian Leave a Comment Filed Under: Market News - US Open Tagged: bonds, European Markets, EURUSD, Forex, risk appetite, USD/CAD, USDJPY

Major risk assets across the globe traded on positive note as risk appetite recovered in market and concerns of recession eased on rebound in bond market and Sino-U.S. trade talks closed on positive note.

Summary: Equity and Forex assets are seeing positive price action across all major markets in both Asian and European market hours today. Since news of Sino-U.S. trade talks hit the market late in Wednesday, risk appetite has seen steadily increasing in global market. While Asian and European markets yesterday saw mixed price action, American market saw major indices and equities close on positive note. Further, bond market also saw rebound activity on all major global bonds after 4 consecutive sessions of bearish price action. The recovery in bond market also improved investor sentiment and eased concerns of recession in US and global economy. This was clearly reflected in price action on risk assets as major risk assets in both Forex and equity market saw positive price action with significant increase in trading volume. European equities also found positive influence stemming from retail sector shares as Swedish apparel giant shares saw sharp spike on reports of increased product sales at full price which helped improve its margins.

Precious Metals: Precious metals traded rangebound in global market with slight positive bias in European market hours. But overall price action is bearish and gold is set to see biggest monthly decline of the year. Price of gold fell below $1300 handle and trade as low as $1288 per ounce during Asian market hours but weakened US dollar on improving risk appetite helped gold rebound above $1290 handle in European market hours.

Crude Oil: Crude oil gained positive momentum today on increased risk appetite in global market. As bond market saw positive rebound action, investor concerns on recession in global economy eased while hopes for positive outcome in Sino-U.S. trade talks also added support to crude oil bulls. Increased risk appetite and rising bond yields are viewed as signs of healthy economic activity which is precursor for good demand for crude oil. There is also support stemming from OPEC enforced production and supply cuts. These factors helped Crude oil price climb above $60 per barrel during today’s trading session.

USD/JPY: The USDJPY pair is trading range bound with both sides struggling for control over price action today. The pair hit an 8-day high of 110.93 during early Asian trading hours but strong resistance near $111 price level resulted in the pair losing out on positive momentum trading range bound slightly below intra-day highs. Healthy risk appetite in the global market and rebound in bond yields underpinned USD but any news that renewed concerns of economic slowdown will result in pair declining sharply. Investors now await US macro data updates for short term profit opportunities.

On The Lookout: The Sino-U.S. trade talks concluded earlier today with U.S Treasury Secretary Steven Mnuchin stating that talks were constructive and set to resume in Washington next week. However, both sides have failed to share details on what was discussed during the talks yet again. Considered history from recent past, this update is likely to have less impact on price action in Wall Street today. However, investors await possibility of US & China closing a trade deal during upcoming talks in Washington as headlines from earlier this month stated that final talks for concluding trade deal has been postponed to early April. In European markets investors await UK parliament’s decision on future Brexit decisions and third vote on UK PM May’s deal. Aside from headlines pertaining to geo-political issues investors await US macro data updates for short term trading cues and profit opportunities.

Trading Perspective: Given rebound in global bond market and prevalent risk on trading environment, US Wall Street is likely to see positive price action today as well.

US Indices: Major US index futures trading in international market ahead of Wall Street opening saw positive price action on prevalent risk on investor sentiment. Trade talks ending on positive note between China & U.S. are also viewed as welcoming news. This suggests that major Wall Street indices are likely to open and trade on a positive note today. However, investors await US macro data updates for short term directional cues.

EUR/USD: After three consecutive sessions of decline, EURUSD pair has finally managed to gain positive price action today in European market hours. A recovery action in global bond market and increased risk appetite among global investors helped the pair find bottom and now the pair is on recovery action. But investors await US macro data for short term directional cues before placing major bets limiting upside move.

USD/CAD: The pair fell from 4-week tops and declined well below 1.3400 handle as Loonie gained strength on rising crude oil price in the global market. Further, increased risk on investor sentiment added strength to CAD bulls resulting in pair trading range bound near intra-day lows. Investors now await Canadian GDP data and US macro data updates for short term profit opportunities and directional cues.

Hopes for Avoiding No-Deal Brexit Boosted Risk Appetite, US Inflation Data in Focus

March 14, 2019 by Karthik Subramanian Leave a Comment Filed Under: Market News - US Open Tagged: AUD/USD, forex markets, No-Deal Brexit, US macro, USD, USDCAD, USDJPY

Asian equities fell on risk averse trading activity, but hopes for UK parliament voting against no-deal Brexit outcome helped European markets erase early loss. Investors now eye US macro data for directional cues.

Summary: Global market today saw mixed price action in equity and forex markets owing to dovish cues from yesterday’s disappointing US CPI update and Brexit woes. Following comments of UK attorney general Geoffrey Cox a fresh wave of dovish price action hit global market and this was intensified following rejection of PM May’s Brexit deal in UK parliament. EU members viewed rejection of May’s deal in negative light and retaliated stating that any request from UK to extend article 50 deadline will only be granted if proper justification for request is provided by UK. EU has already begun preparations for no-deal Brexit scenario while PM May’s intentional delay tactics has left UK without any time to prepare for disorderly Brexit. Asian markets today morning saw dovish price action as investor sentiment turned risk averse today and European equities opened with dovish tone as well, however hopes for UK parliament to vote against no-deal Brexit scenario and aim to second Brexit referendum has influenced positive price action in European equity market ahead of UK parliament session today. Since a no-deal exit would be devastating for both economies, traders believe that in case of UK parliament voting against no-deal outcome, UK & EU would work out some sort of compromise or move to reverse Brexit and this is providing some level of support in late European market hours.

Precious Metals: Both gold and silver traded positive in spot and futures market today. US Dollar in which the precious metals are denominated lost strength on yesterday’s disappointing US CPI data and this helped improve participation from emerging markets. As Brexit woes remained high and Asian market hours saw risk averse trading activity, gold and silver saw solid gains on increased safe haven demand and the yellow metal managed to reclaim hold over $1300 handle hitting a new two-week high earlier today.

AUD/USD: The pair saw slight downside move during Pacific-Asia market hours and fell sharp hitting intra-day lows over dovish cues from US Wall Street and Chinese equity markets. But gained momentum and traded with slow but steady upside influence across the day on US Dollar’s weakness in broad market. Investors now await US macro data outcome for directional bias and disappointing US macro data will help the pair erase early loss and post solid gains during American market hours.

USD/JPY: The USDJPY pair saw two-way price action today as the pair fell during Pacific-Asian trading hours on dovish influence from yesterday’s worse than expected US CPI data and risk averse trading activity in Asian markets influenced by concerns of global economic slowdown and Brexit woes. However, hopes for UK parliament voting against no-deal outcome improved risk appetite in European market and this lead to pair erasing early loss and moving back near previous session highs where it is trading range bound await US macro data updates. Positive performance of European and US equities till end of session would lead to USD regaining upper hand during American market hours.

On The Lookout: The majority of focus of global investors and traders in short term is on US macro data scheduled to release for the day as the outcome of same will help USD gain a directional bias for price action for remaining trading sessions of the week. However, the main focus still remains on UK parliament session as key decisions relating to Brexit is still under consideration and is expected to be vote upon during parliament meeting today and tomorrow. While EU has stated that they are unlikely to grant extension for Brexit deadline unless UK provides credible justification as EU members view rejection of the deal in negative light. However, if UK parliament rejects no-deal exit outcome and votes on extension of deadline during tomorrow’s meeting the request is likely to be granted by EU for a short duration as disorderly Brexit will lead to huge economic losses on both sides. Further, investors hope that UK lawmakers would push for second Brexit referendum as current scenario suggests that Brexit will lead to irresolvable mess which may extend indefinitely. Any news of second Brexit referendum will not light fire under market bulls while just avoiding no-deal exit and extending deadline will lead to range bound price action for rest of the day. On release front today, US macro calendar will see the release of PPI, core durable goods order and Crude Oil inventory data.

Trading Perspective: As hopes to avoid no-deal Brexit boosted risk appetite, European equities are likely to close positive. Forex market will see range bound action on risk averse trading as weak USD in broad market continues to limit downside move. The outcome of US macro data will provide directional bias for major forex pairs and Wall Street indices.

US Index Futures: US stock index futures trading in international markets displayed a flat tone ahead of Wall Street market opening. The flat price action was neutral as investors were sceptical owing to mixed cues from Asian and European markets over risk averse trading activity, Brexit woes and Boeing stocks decline owing to safety concerns and ban for 737MAX flights in India. Investors await macro data outcome to get a complete picture on US inflation data for clue on directional bias before placing major bets. Since Risk appetite returned in European markets on hopes to avoid no-deal Brexit outcome lifting significant dovish influence from market Wall Street is likely to see positive opening today.

EUR/USD: The pair has a subdued start for the day on Brexit woes but gained upper hand as Euro area industrial production data saw better than expected outcome providing fundamental support to market bulls. Further hopes for UK lawmakers voting against no-deal Brexit outcome boosted risk appetite in market and influenced positive price action in European equities reversing early losses ahead of US macro data outcome. This suggests that the pair is likely to see continued positive price action is US data disappoints or consolidate near intra-day highs in case of positive US macro data outcome post which it will continue with ongoing rally for rest of the day.

USD/CAD: The USDCAD pair today saw dovish price action as Crude oil price continued to remain strong for fourth consecutive trading session supported by multiple factors. This gave CAD bulls strong support to establish a downside price rally which was further supported by increased risk appetite in late European market hours and weak US Dollar in broad market owing to yesterday’s disappointing US CPI data resulting in pair hitting one week lows. Investors now await US macro data outcome and positive macro data outcome will lead to range bound action above mid-1.33 handle for rest of the day while dovish macro data outcome will lead to further declines with possibility to fall below 1.3300 handle in American market hours.

Equities Bleed Across Asia & Europe, Mixed Macro Data Had Little Impact On Market

March 6, 2019 by Karthik Subramanian Leave a Comment Filed Under: Market News - US Open Tagged: AUD, Dollar index, European equities, forex market, Impact On Market, Precious Metals, Sino-U.S., US Treasury, USD, USD/CAD, USDJPY, Wall Street, Yen

Mark Carney, Governor of the Bank of England

Dovish cues from US Wall Street and disappointing Chinese macro data caused equities to bleed, macro data from EU was positive but does little to change price action as investor sentiment shows bearish inclination.

Summary: Global market is seeing mixed price activity today influenced by macro data and cues from yesterday’s trading session. US Wall Street last night saw major indices and equities slide as construction spending data was way worse than expected. Further, the cheer with other major markets enjoyed on optimism surrounding Sino-U.S. trade talks failed to have any impact on Wall Street price rally as US investors have grown way of conflicting headlines hitting the streets time and again with no headlines containing any solid data on content trade talks between two nations. Further, disappointing macro data outcome from China and downgrading of growth target for the year ahead in China combined with dovish cues from Wall Street resulted in major Asian and European equities seeing sharp declines today. Meanwhile, forex market saw relatively positive performance as USD lost some ground in market following Wall Street performance last night. Positive investor sentiment and increased risk appetite influenced by optimism surrounding Sino-U.S. trade talks helped major global currencies capitalize on USD’s weakness and trade positive in global market today.

Precious Metals: Increased risk appetite over last two trading sessions has reduced demand for safe have assets in broad market significantly. Further profit booking activities also dragged the price to multi weeks low in recent past. However, Wall Street decline last night and dovish equity performance in Asian and European markets combined with weaker dollar helped precious metals find some peace. This led to both gold and silver trading flat near previous session lows across today’s trading session.

USD/JPY: The pair saw sharp fall during American session last night owing to disappointing US construction spending data and Wall Street decline. Disappointing Chinese macro data and declining Asian equities also added to Yen strength and kept it near overnight lows in early Asian market hours but better than expected EU macro data and healthy risk appetite in broad market helped the pair move back near previous session high where the pair has consolidated in European market hours.

AUD/USD: The pair is seeing two way price action today as bulls on both sides of currency pair have some level of fundamental support. While macro data in Australia was mixed the PMI’s were positive and RBA maintained neutral stance and comments mirrored last month’s sentiment. However, Dollar’s strength supported by US T.Yields and disappointing Chinese macro data added dovish influence to AUD resulting in pair falling from intra-day highs to lows and both sides waging war for control resulting in range bound price action.

On The Lookout: In American market hours today, macro data outcome and speech by Bank of England governor Mark Carney are the main events. But investors are also focused on price activity in US Treasury market as long term government bond yields dropped following Wall Street’s decline last night. This in turn weighed down US dollar in broad market helping forex market seeing positive price action today despite equities seeing sharp declines. In US market, the key release of the day as ISM Non-Manufacturing PMI, US Federal budget balance & New Home Sales data. Also in Pacific-Asian market hours speech from Bank of Japan’s board member Harada, Japanese house hold spending and Australian GDP data are expected to provide directional cues in Forex markets.

Trading Perspective: Given the fact that US Wall Street has proved itself resilient to headlines pertaining to Sino-U.S. trade talks, macro data outcome is likely to be key driving force behind price action in Wall Street tonight. Forex markets are likely to continue range bound action with positive bias ahead of US macro data updates while equities are likely to open positive as fundamentals remain in favor of market bulls.

US Indices: Ahead of US market opening, major index futures trading in international markets such as S&P500 and NASDAQ 100 futures were up nearly 0.15% and Dollar index which measures its strength against six major global currencies is trading positive. This suggests that markets bulls have strong fundamental support and US Wall Street is likely to see positive opening. Positive price action in major stocks will lead to US indices trading positive during today’s market hours.

EUR/USD: Bears seem to have a solid grip on common currency in global market as the pair failed to capitalize on better than expected macro data outcome and build a recovery rally. The pair continues to trade range bound ahead of US macro data update as USD remains strong in broad market despite suffering slight dovish influence earlier today on cues from Wall Street and US T.Yields going down from recent highs. A positive US macro data outcome will lead to pair taking a bearish nosedive.

USD/CAD: While US dollar suffered in global market, the pair continues to trade positive as CAD seems to lack fundamental support to establish positive rally despite crude oil trading with significant gains in spot and futures market as Friday’s disappointing GDP data from Canada seems to be still weighing on the loonie. Political tensions in Canada is also continuing to weigh down CAD meanwhile strong fundamentals for USD bulls adds strength to Greenback suggesting that regardless of macro data outcome the pair is expected to remain trading in green for rest of the day.

Global Growth Worries Send Asian Stocks Lower

January 22, 2019 by Nikolas Papas Leave a Comment Filed Under: Market News - European Open Tagged: Asian stocks, AUDUSD, banks, Brexit, Capital Markets, economy, EURUSD, Financial markets, monetary policy, Sino-U.S trade, US-China trade, USDJPY

Asian indices dropped Tuesday as global growth worries are on the headlines again. Japan’s Nikkei225 index shed 0.5%, while Hong Kong’s Hang Seng lost 0.9% and Shanghai Composite index fell 0.7%, Australian stocks have snapped a five-session winning streak with the ASX 200 declining by 32 points or 0.5% to 5859. The Aussie dollar has also fallen to its lowest levels in a fortnight as it eased throughout the local session. Australian 10-year bond yields fell one basis point to 2.30%. Ten-year Treasury yields lost 3 basis points to 2.75%.

European indices started weaker today taking their cue from a downbeat session in Asia as the IMF cut its global growth forecast for 2019 to the lowest level in three years. FTSE100 in London is down 0.55% to 6,934, the DAX in Frankfurt is losing 0.49% to 11,084 and CAC40 gives up 0.29% to 4,855.

On the Lookout: International Monetary Fund (IMF) downgraded its forecasts for global economic growth to 3.5% in 2019 and 3.6% in 2020, down from 3.7% for both years previously as risks surrounding uncertainty in US-China trade relations persist along with a potential “no-deal” Brexit for the UK and EU.

There are monetary-policy decisions for the Bank of Japan on Wednesday, the Bank of Korea and the European Central Bank on Thursday.

The World Economic Forum, the annual gathering of global leaders in politics, business and culture, opens in Davos, Switzerland on Tuesday.

Trading Perspective: Global growth concerns continued to remain a drag on forex markets. EURUSD lost the bullish momentum yesterday as the price broke below the 50-day moving average at 1.1380. Demand can emerge at previous week low at 1.1350, but I expect more solid buying at monthly lows around 1.12670 area. On the upside, major resistance is at 1.1412 yesterday’s high and then at 1.1491 the previous week high. European macro news is disappointing, yesterday it was German PPI, in December fell by 0.4% on the month, and that was worse than the 0.2% decline that analysts were expecting. The November report showed a 0.1% increase in growth. The fall in PPI indicates that demand is weak, and that ties in with the other disappointing economic indicators that Germany has produced recently.

EURUSD Daily

USDJPY is trading in just 30 pips consolidative trading range as traders are indecisive at current levels. In the hourly chart the 100-hour moving average is the immediate support at 109.26 while more support the pair will find at 108 figure. On the flipside, the first resistance is at 109.78 the yesterdays high and then at 110.

AUSUSD is trading lower for the third session in the row hitting two weeks low at 0.7120. Negative macro news from China and the downgrade for global growth from IMF send investors to USD. The pair has trapped in descending channel in the hourly chart, and a break below 0.7115 would imply the end of the corrective bounce from end of year lows below 0.70. Immediate support is at 0.71, while more solid support can be found at previous monthly low at 0.7014. On the flipside, the first resistance is at 0.7161 and then at 0.7183 previous daily high.

AUDUSD H1

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.

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.

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.

Markets searching for direction after global selloff

December 7, 2018 by Nikolas Papas Leave a Comment Filed Under: Market News - European Open Tagged: Crude Oil, EURUSD, GBPUSD, US-China Trade Talks, USDJPY

Summary: Asian shares ended the trading session slightly higher as worries over U.S-Sino trade war were calmed by conciliatory comments from Beijing. In Tokyo Japan’s benchmark Nikkei225 added 0.8% to 21,680.15, and Australia’s S&P/ASX 200 gained 0.4% to 5,680.90. South Korea’s Kospi rose 0.3% to 2,076.42. Hong Kong’s Hang Seng index edged 0.1% lower to 26,133.53, while the Shanghai Composite was flat at 2,605.89. Shares also rose in India, Indonesia and Taiwan.

Crude Oil : Crude Oil prices slipped in Asia trading session, as the meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria failed to announce any output decision. U.S. crude inventories fell by 7.3 million barrels to 443.2 million barrels as of Nov. 30 from last week, the first drop in 11 weeks, according to the Energy Information Administration on Thursday.

AUDUSD : AUDUSD struggled to build on overnight attempted recovery from over three-week tops and traded with a negative bias for the fourth consecutive session. Despite yesterday’s bearish mood for the pair the psychological 0.72 level managed to hold, traders now expecting a recovery to 0.7240 area.

USDJPY : USDJPY is trading in narrow trading range between 112.92 and 112.60, Karen Jones, analyst at Commerzbank, notes that the USDJPY pair recovered after being sold off towards the base of the cloud at 112.16 and further support is seen along the 8 month support line at 111.93.

“This may hold the initial test BUT the sell off is looking directional and failure here would target the 110.59/109.77 200 day moving average and August low. If the 109.77 August low were to give way, the June 8 low at 109.20 would be in focus.”

“Failure there would imply a slide back to the 108.12 May 29 low and the mid February high at 107.91. Minor resistance comes in along the 55 day ma at 113.07.”

EURUSD : EURUSD started the European trading session with gains around 1.1380 area with investors looking to developments in Italy and the Brexit negotiations as main drivers of the price action. PM Conte’s government is expected to submit a revised version of the budget proposal at some point next week, while the crucial vote in the House of Commons is due on December 11. CME Group, investors added nearly 1.5K contracts to their open interest positions on Thursday from Wednesday’s final 535,856 contracts. In the same direction, volume rose sharply by almost 128K contracts.

GBPUSD : GBPUSD upside momentum capped at 1.28 with the pair giving up Asians session gains just to start European trading at 1.2750. CME Group’s advanced data for GBP futures markets noted open interest rose by almost 2K contracts on Thursday vs. Wednesday’s final 235,336 contracts. Volume followed suit, up by around 62.1K contracts, partially reverting the previous draw.

Traders are now eyeing U.S. jobs data which will be released later today as a way to gauge the country’s economic stability and for hints as to whether the US economy may be losing steam in the face of US – China trade tensions.

Asian Markets Tumbles over 2%

December 6, 2018 by Nikolas Papas Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: bullish momentum, EURUSD, FTSE100, gold, greenback, Nikkei, Reuters, stock markets, USDJPY

Asian markets indices took a hit on the chin led by technologies stocks after Canadian authorities arrested the chief financial officer of Huawei Technologies for allegedly violating Iran sanctions. Huawei is one of the world’s largest makers of smartphones and telecommunications network equipment.

In Tokyo Japan’s Nikkei fell 1.9%, South Korea’s Kospi fell 1.5%, and Singapore stocks fell over 1%.

European stock markets started the session in negative tone with Germany’s DAX down 1.5%, FTSE100 in London give up 1% and France’s CAC40 is trading 1.40% lower.

Gold bullish momentum is still intact as investors looking for safe heaven, with the price trading near five month highs touching the $1240 level yesterday, just to fall in the Asian trading session to 1235 amid modest US dollar demand. 1228 is the first strong support area while yesterday’s high at 1240 is the short term resistance.

USDJPY is trading around 113 after hitting the daily lows at 112.56. I expect the pair to keep in consolidation mood with 114 level a quite strong resistance and 11.80 the first test in the downside. CME Group’s preliminary figures for JPY futures markets, open interest dropped by almost 1.8K contracts on Wednesday from Tuesday’s final 226,835 contracts. In the same direction, volume dropped noticeable by nearly 101K contracts, although greatly influenced by the holiday in the US markets.

The recent rejection from the 1.14 level for EURUSD gave power to bears following headlines from the Italian budget crisis, after rumors that PM Conte could be assessing the probability of lowering the 2020/21 budget, while Italian newspaper La Repubblica says Salvini and Di Maio will not revise the deficit below the 2% level. I don’t expect any major look for major gains at this point because there are so many concerns for European Union right now.

In the latest Reuters poll of more than 60 currency analysts, taken Nov. 28-Dec. 5, the dollar was forecast to be weaker against major currencies in a year, leaving the Euro at $1.20, up over 6% from around $1.1340 seen on Thursday.

While sterling was forecast to gain over 7% to $1.37 in 12-months from $1.28 on Wednesday, it was slightly lower than the $1.38 predicted last month.

But the dollar index .DXY, which measures the greenback against a basket of six major currencies, was forecast to close out 2019 at 91.90, down over 5% from around 97.20 last minutes. That suggests the greenback will reverse and shave off all the gains made this year in 2019

In our calendar today, German Factory Orders expanded at a monthly 0.3% in October. Later in the session, US ADP report is due along with Initial Claims, Services PMIs, Factory Orders and the key ISM Non-manufacturing.

Risk, Stocks Settle On China Trade Pledge, Dollar Climbs

December 6, 2018 by Michael Moran Leave a Comment Filed Under: Market News, Market News - Asia Open Tagged: AUD/USD, EUR-USD, G20 summit, Treasury, USDJPY, Wages

Summary: Markets settled in Asia and Europe following Wall Street’s rout as China pledged to start delivering upon trade agreements with the US. American stock futures rose even as their markets will close today to remember the life of ex-President George H.W. Bush.
The Dollar edged up in quiet trading. Weaker-than-forecast third quarter GDP weighed on the Australian Dollar which slumped 1.09%. The Euro was little-changed even as Italian bonds rallied on optimism for a positive end to its budget dispute with the European Union. Canada’s Loonie fell 0.95% even as the Bank of Canada left its benchmark rate unchanged at 1.75%. The Bank of Canada saw economic momentum waning for the fourth quarter this year.
Global bond yields steadied. The benchmark US 10-year treasury yield was unchanged at 2.91%.

The US S&P 500 bounced off its low at 2698 to close at 2718, up 0.6%. The latest Federal Reserve’s Beige Book report, released at the NY close today, showed modest growth in the economy. The report is consistent with the expectations that the Fed will only gradually raise interest rates and buoyed Wall Street stock futures.
USD/JPY – rallied 0.45% to close at 113.18 from 112.80 at the close yesterday. The Dollar held steady together with the US bond yields. The yield on Japan’s 10-year JGB closed flat at 0.06%. The recent 112.60-113.60 looks set to continue for now. The speculative market remains short of Yen and this should limit the topside of USD/JPY.
EUR/USD – finished the day flat at 1.1340. The multi-currency is having difficulty making a decisive move either way and had a relatively quiet trading range of 50 pips. Euro-area services PMI were mostly flat as pointing to moderate GDP growth in the region. EUR/USD has traded between 1.1300 and 1.1420 for a week now. We can expect more of the same with the impetus to come from tomorrows US Payrolls and Wages number.
AUD/USD – after a strong rally in the past week to a high of 0.7393, the Aussie slumped back under 0.73 cents to close at 0.7268 last night. Australia’s growth in the third quarter printed weaker-than-expected at 0.3% against a forecast of 0.6% and Q2’s 0.9%. A rise in China’s Caixin Services PMI in November steadied the Aussie.

On the Lookout: With the US markets out today to remember the life of ex-President George H.W. Bush, trading conditions should stay relatively quiet. The established ranges on the ‘majors’ against the USD will stay intact, for now. Emerging Market currencies were stable with moves contained. Today’s data sees Australia’s Retail Sales and Trade Balance for November, Germany’s Factory Orders and the US Weekly Jobless Claims and Factory Orders. US Federal Reserve Chairman Jerome Powell is due to speak on the economy to a Housing Council’s annual event in Washington DC (9.30 am, Dec 7 Friday in Sydney). Finally, tomorrow is Friday US Payrolls Day with Wages the clear focus.

Trading Perspective:

AUD/USD – the Aussie was pummelled on the dismal Q3 GDP data. The steam out of the recent rally has evaporated and we can expect some downside tests. AUD/USD was trading around the 0.7345 level when the data was released. Traders sold the Aussie down to 0.7285 where it steadied before further selling saw a low of 0.7260. We can expect support at the 0.7260 level to hold first up. Further support lies at 0.7220. Resistance is found at 0.7300. Look for a trading range today of 0.7230-0.7280. The latest CFTC report saw net speculative AUD shorts pared to -AUD 53,903 contracts. Still a decent number of shorts.
EUR/USD – should hold the 1.1310 lows last night with a probable range today of 1.1310-1.1370. Yesterday Italian Deputy PM Luigi Di Miao noted that the climate was changing in its budget talks with the European Union. Di Miao reiterated that Italy wants to avoid any disciplinary action from the EU. The yield on Germany’s 10-year Bund rose one basis point to 0.27%.
USD/JPY – The Dollar rallied from 112.65 lows to a high of 113.24 this morning before settling at the close at 113.18. One of the key themes for 2019 is that of monetary policy convergence. Global central banks, including the BOJ will follow the path of the US Fed in removing accommodative policy stances and gradually raising interest rates. In July this year the BOJ introduced monetary policy adjustments and allowed a wider trading range for Japanese Government Bonds (JGB’s). The market believes that the BOJ will continue with its ultra-loose monetary policy. Speculative trades have been to increase short JPY bets. This number has grown to -JPY 104,324 from +JPY 5,000 in June 2018. USD/JPY has ranged between 110.40 and 113.80 since then. For today, look for further consolidation with a likely range of 112.75-113.35.
USD/CAD – The US Dollar closed up 0.97% against the Loonie at 1.3385 (1.3255 yesterday). The Bank of Canada left its benchmark interest rate unchanged at 1.75%. In late October the BOC raised its rate and indicated that rates would need to rise to keep inflation in check. Since then global oil prices have experienced a steep decline and this has impacted Canada’s energy sector, a big driver for their economy. Speculators are modestly short Canadian Dollars from the latest CFTC report (-CAD 8,630 contracts). The 1.3400 level is strong resistance and it’s hard to see a clean break of that just now unless the US Dollar should strengthen considerably.