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EUR/USD Technical Analysis: Corrective Bounce Seen Ahead (based on dailyfx article)
The Euro may be preparing correct upward against the US Dollar after putting in a bullish Morning Star candlestick pattern. A daily close above falling trend line resistance at 1.1339 exposes the 23.6% Fibonacci retracement at 1.1444. Alternatively, a reversal below the 14.6% Fib expansion at 1.1206 opens the door for a challenge of the 23.6% threshold at 1.1074.
Gold To Trade Flat, Palladium To Outperform In 2015 (adapted from kitco article)
The London Bullion Market Association (LBMA) rounded up a panel of experts to forecast precious metal prices in 2015 -and while prospects may be neutral for gold they are bullish for silver, platinum and palladium
he panel, made up of analysts from various banks and research firms worldwide, is predicting that the gold price will remain broadly flat for the year, with an average forecast of $1,211 an ounce. Ross Norman of Sharps Pixley is the most bullish analyst with a gold forecast of $1,321 and Adam Myers of Crédit Agricole, London was the most bearish with $950.
However, the market experts are forecasting silver to have an average price of $16.76/oz., platinum $1,294/oz. and palladium at $838.40 for the year. This marks a 2.1% increase for silver from last year’s price projections, a 5.6% increase for platinum and a 5.3% hike for palladium.
The reasons cited by the experts for the restrained gold price were the possible strengthening in the U.S. dollar, interest rate hikes by the Federal Reserve in the second half of 2015, quantitative easing in Europe and a weak oil price reducing gold’s attraction as a hedge against inflation.
Russian Forex traders displeased with 1:50 leverage cap (adapted on leaprate article)
Russian retail Forex traders are broadly unsupportive of the leverage cap of 1:50, outlined in the Forex law, a recent survey has shown.
In December 2014, Russia’s “Centre for Regulation in OTC Financial Instruments and Technologies” (CRFIN) conducted a survey amid retail Forex traders in the country, asking them to voice their opinion on the maximum leverage limit set by the lawmakers. The list of questions covered matters like who should be responsible for determining leverage limits and what should the optimal cap be. The results of the survey became known earlier today, with the overwhelming majority of respondents viewing a cap on leverage of 1:50 as too strict and, instead, supporting way higher levels of up to 1:500.
Meager 6% of those surveyed said they approved a maximum leverage limit of 1:50. The bulk of respondents supported more generous leverage. The optimal maximum leverage should be at 1:100, according to 25% of respondents, and at 1:200, according to 26% of the respondents. The favorite maximum leverage level for 30% of those surveyed is 1:500.
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At least 38% of the respondents disapproved of the narrowing of the current level of leverage they use. These percentage of respondents claimed that such a move would have a negative effect on their trading results. And yet they do not expect that a leverage cut would lead to a massive outflow of participants from the Forex market.
The survey also showed that Russian FX traders seek as much freedom as possible when it comes to trading conditions. Whole 47% believe that the maximum leverage level should not be stipulated in a law or by a regulator, and that instead traders should determine the leverage cap they need. A more humble portion of the respondents – 27%, approved the idea that the law should determine the leverage cap. Only 17% said the self-regulatory organization should set the leverage limit, while 9% said this right should be given to Forex companies.
Approximately 1,500 traders took part in the survey.
The chapter of the Russian Forex law that imposes a leverage cap of 1:50 on Forex trading comes into force on October 1, 2015. The Bank of Russia is allowed to raise that level to 1:100 when it sees fit.
Gold Slips as Crude Oil Prices Rebound (based on wsj article)
Gold futures eased Monday as higher oil prices tempered investor appetite for haven assets.
The most actively traded gold contract, for April delivery, was recently down $4.50, or 0.4%, at $1,274.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
Gold has drawn support from tumbling crude-oil prices in recent weeks, as concerns about the impact on the wider energy market sent investors in search of ways to protect their wealth. Some traders view gold as a haven from political and economic turbulence, believing it will keep its value better than other assets.
On Monday, oil prices rebounded, with the U.S. benchmark recently trading up 36 cents, or 0.8%, at $48.60 a barrel on the Nymex.
“The rally in oil took some of the pressure off the reasons to buy gold,” said Ira Epstein, a broker with the Linn Group in Chicago.
Mr. Epstein added that the recent surge in gold prices, which took futures up 8% in January, made the market vulnerable to correct lower as investors move to lock in profits.
“This is a necessary pullback, but it’s not showing any signs that the rally is over,” he said.
Still, gold’s slide was limited by weaker U.S. economic data. The ISM manufacturing purchasing managers’ index fell to 53.5 in January from 55.1 in December, and missed forecasts of 54.3. A reading above 50 points to expansion in factory activity, while a print below that level indicates contraction.
The data underscore the uneven nature of the U.S. economic recovery, which has struggled to fire on all cylinders since the 2008 financial crisis.
EUR/USD Monthly Technical Analysis for February 2015 (based on fxempire article)
The EUR/USD finished sharply lower during January after the European Central Bank announced it will begin buying Euro Zone sovereign debt in an effort to revive the economy and prevent it from sliding into economic stagnation.
The plan is for the ECB to buy 60 billion Euro, or $69 billion, of government bonds a month until at least September 2016, or until there’s a “sustained adjustment in the path of inflation” toward the central bank’s target of 2 percent. The total stimulus package amounts to about 1.1 trillion Euros.
With the central bank planning to use newly printed Euros to fund its program, the Euro is expected to remain under pressure against the U.S. Dollar for close to two years. Sure there may be a few short-covering rallies along the way, but until there is meaningful improvement in the Euro Zone economy, the bias should be to the downside for this Forex pair.
The key fundamental factors driving the ECB into its decision are weak Euro Zone inflation of about -0.2 percent and 11.5 percent unemployment that may still be trying to find a bottom.
On January 29, the U.S. Federal Open Market Committee maintained its pledge to be “patient” on raising interest rates. Fed members noted global risks, saying they will monitor “international developments” when deciding how long to keep rates low. It also raised its view of the economy and labor market, but expressed concerns about low inflation, saying it even anticipates inflation to fall further in the near term.
Traders interpreted the Fed’s statement to signal the central bank will begin raising rates perhaps as early as June. With the Fed set to raise rates and the ECB just starting its quantitative easing program, the interest rate differential is heavily favoring the U.S. Dollar at this time.
Chinese banks to join new gold fix from March (based on ft article)
The replacement for the near-century-old London gold fix will start in March, with the hope of attracting at least 11 members, including Chinese banks for the first time.
UK financial authorities are undertaking an assessment of financial benchmarks in the wake of a series of scandals, including over the gold fix.
The presence of Chinese banks would give the world’s second-largest consumer of the precious metal a greater say in the global gold price. Participants in the fix aggregate orders from clients on to a platform to determine the price.
“Interest has been very positive and creates a more diverse pool of participants, which includes Chinese banks,” said Ruth Crowell, chief executive of the London Bullion Market Association, a trade body for London’s gold and silver markets.
if actual > forecast (or previous data) = good for currency (for AUD in our case)
[AUD - Cash Rate] =Interest rate charged on overnight loans between financial intermediaries. Short term interest rates are the paramount factor in currency valuation - traders look at most other indicators merely to predict how rates will change in the future.
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RBA Lowers Cash Rate On Tempered Growth And Inflation OutlookThe Reserve Bank of Australia cut its cash rate on Tuesday at its February meeting, with the decision premised on the central bank's downgraded growth outlook and the impact of falling oil prices.
The Monetary Policy Board lowered the cash rate to 2.25 percent from 2.5 percent. The markets were divided over their expectations concerning a rate cut, although the equity market did price in a rate cut and advanced on Monday despite the broad based weakness in Asia.
Ahead of the decision, the cash rate had been maintained at 2.5 percent since August 2013.
The bank said that commodity prices declined sharply and that the price of oil has fallen significantly over the past few months.
These trends appear to reflect a combination of lower growth in demand and, more importantly, significant increases in supply. The much lower levels of energy prices will act to strengthen global output and temporarily to lower CPI inflation rates, the bank noted.
Gold Price Forecast Based on Algorithms: An Average Return Of 1.23% In 14 Days (based on gold-prediction article)
Short:
A top Federal Reserve official on Tuesday downplayed the Fed's nod to international developments in its latest policy statement, saying it was simply an acknowledgement of constant U.S. central bank discussion on the potential impact of global market events.
St. Louis Federal Reserve Bank President James Bullard said the Fed always takes international events into account and, in his view, the insertion of the word "international" was a recognition of that.
Bullard repeated his view that the Fed needs to raise rates sooner and then move gradually higher after that. He also said that the oil price plummet is distorting market-based inflation expectation measures, and that these measures should be set aside until energy prices stabilize.
Bullard was speaking at the annual Delaware Economic Forecast event at the University of Delaware.
Fed should delete 'patient' from next policy statement: Bullard (based on reuters article)
The Federal Reserve should delete the word "patient" from its next policy statement, a top Fed official said on Tuesday, which would give the central bank more flexibility on when to raise interest rates.
St. Louis Fed President James Bullard said if the Fed removes "patient" from its next policy statement in March, it does not mean the central bank has to hike at the next meeting.
Removing the word at the next meeting gives the Fed better "optionality", Bullard said.
Bullard is not a voting member on this year's policy-setting committee.