Press review - page 345

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Gold Prices Slip on Strong Dollar (based on wsj article)

  • "Gold prices edged lower on Wednesday as a stronger dollar and gains in equity markets tempered investor appetite for the haven asset."
  • "The most actively traded contract, for December delivery, was recently down 70 cents, or 0.1%, at $1,139.10 a troy ounce on the Comex division of the New York Mercantile Exchange."
  • "Gold rallied to a one-week high on Tuesday as turbulence in global stocks and fears of an economic downturn in China sparked a rush to assets perceived as low risk, like precious metals. Gold doesn’t derive its value from a country or government and has historically weathered financial and economic upheaval better than stocks and bonds, whose value is backed by private or public institutions."
  • "But as stability returns to global stock markets, gold’s allure is fading. The S&P 500 stocks index was recently up 1% at 1933, while the Dow Jones Industrial Average is up 1.1% at 16,236."
 

Trading the News: European Central Bank (ECB) Interest Rate Decision (based on dailyfx article)

Even though the European Central Bank (ECB) is widely expected to retain its current policy in September, the fresh updates coming out of the Governing Council may trigger a selloff in EUR/USD should the committee show a greater willingness to expand/extend its quantitative easing (QE) program.

What’s Expected:


Why Is This Event Important

Dovish rhetoric accompanied by a downward revision in the ECB’s growth & inflation forecast is likely to dampen the appeal of the Euro, and central bank President Mario Draghi may talk up bets for additional monetary support in an effort to further insulate the fragile recovery in Europe.

Nevertheless, we may get more of the same from the ECB as the non-standard measures work through the real economy, and the near-term bound in EUR/USD may gather pace in September should the central bank endorse a wait-and-see approach.

How To Trade This Event Risk
Bearish EUR Trade: ECB Shows Greater Willingness for Larger/Longer QE Program

  • Need red, five-minute candle following the policy announcement to consider a short EUR/USD trade.
  • If market reaction favors a bearish Euro trade, sell EUR/USD with two separate position.
  • Set stop at the near-by swing high/reasonable distance from cost; need at least 1:1 risk-to-reward.
  • Move stop to entry on remaining position once initial target is met, set reasonable limit.
Bullish EUR Trade: President Draghi Continues to Endorse Wait-and-See Approach
  • Need green, five-minute candle to favor a long EUR/USD trade.
  • Implement same strategy as the bearish euro trade, just in the opposite direction.
Potential Price Targets For The Release

EURUSD Daily


  • Despite expectations for a greater deviation in the policy outlook, need a break of the near-term bullish trends in price & RSI to favor a further decline in EUR/USD.
  • Interim Resistance: 1.1760 (61.8% retracement) to 1.1810 (38.2% retracement)
  • Interim Support: Interim Support: 1.0790 (50% expansion) to 1.0800 (23.6% expansion)
 
2015-09-03 13:30 GMT (or 15:30 MQ MT5 time) | [USD - Trade Balance]
  • past data is -45.2B
  • forecast data is -43.2B
  • actual data is -41.9B according to the latest press release

if actual > forecast (or previous data) = good for currency (for USD in our case)

[USD - Trade Balance] = Difference in value between imported and exported goods and services during the reported month. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation's exports. Export demand also impacts production and prices at domestic manufacturers.

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"The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $41.9 billion in July, down $3.3 billion from $45.2 billion in June, revised. July exports were $188.5 billion, $0.8 billion more than June exports. July imports were $230.4 billion, $2.5 billion less than June imports."

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EURUSD M5: 166 pips price movement by USD - Trade Balance news event:


 

The Royal Bank of Scotland: Non-Farm Employment Change and basic trading scenarios (based on efxnews article)

The Royal Bank of Scotland evaluated some scenarios concerning NFP for today (September 4 at 13:30 GMT).

  • "250k to 300k:  Long USD/CHF."
  • "200k to 250k (Base-Case): Short EUR/USD."
  • "150k to 200k: Short USD/CAD."
  • "150k or below: Short USD/JPY."

As we know - Non-Farm Payrolls is the most high impacted news event which can move the price for the pairs and estimate the direction of the trend for the next week for example.
Just to remind about this news event:

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2015-09-03 13:30 GMT (or 15:30 MQ MT5 time) | [USD - Non-Farm Employment Change]

  • past data is 215K
  • forecast data is 215K
  • actual data is n/a according to the latest press release

if actual > forecast (or previous data) = good for currency (for USD in our case)

[USD - Non-Farm Employment Change] = Change in the number of employed people during the previous month, excluding the farming industry. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.

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EURUSD M5 : 44 pips price movement by USD - Non-Farm Payrolls news event:


 

Trading NFP by Credit Agricole (based on efxnews article)

Credit Agricole expects NFP to be 220K and unemployment rate of 5.3%:

  • "A NFP print in line of stronger than consensus accompanied by solid weekly earnings' gains will suggest that lift-off cannot be postponed for too long. Given that the investors have pared back significantly their rate hike expectations for September and October, a stronger NFP print will also have a more pronounced market impact in our view. We expect the USD to do well under this outcome with EUR and risk-correlated among the biggest losers."
  • "A weak print, eg a NFP print below 190K and a soft weekly earnings' gain (essentially a sub 2% YoY growth), could lead the markets to pare back lift-off bets. We suspect that while negative for USD, the overall impact may be less pronounced and could see investors selling USD against JPY, EUR and CHF yet again. Any relief rally in risk-correlated currencies should prove short-lived."
 
2015-09-04 13:30 GMT (or 15:30 MQ MT5 time) | [USD - Non-Farm Employment Change]

if actual > forecast (or previous data) = good for currency (for USD in our case)

[USD - Non-Farm Employment Change] = Change in the number of employed people during the previous month, excluding the farming industry.

==========

2015-09-04 13:30 GMT (or 15:30 MQ MT5 time) | [USD - Unemployment Rate]

if actual < forecast (or previous data) = good for currency (for USD in our case)

[USD - Unemployment Rate] = Percentage of the total work force that is unemployed and actively seeking employment during the previous month.

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This is ranging price movement during this high impacted news events. Ranging because of the following:

  • [USD - Non-Farm Employment Change]:  173K < 215K = bad for USD related to EUR for example (the price is moved on the way to EUR)
  • [USD - Unemployment Rate] 5.1% < 5.2% = good for USD related to EUR (downtrend for EUR/USD pair).

That is why ranging.

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EURUSD M5: 100 pips ranging price movement by USD - Non-Farm Employment Change news event:


 

Forex Weekly Outlook September 7-11 (based on forexcrunch article)

September began with more volatility and more uncertainty. Rate decisions in Canada; New Zealand and the UK, Employment data in Australia and US consumer sentiment all stand out. These are the main events on our calendar for this week. Join us as we explore these financial highlights.

The U.S. economy produced 173,000 jobs in August,falling short of estimates but with positive revisions and upbeat wage growth. The release came at a crucial timing of the rate-hike debate and the mixed report raised uncertainty, but we think the Fed could still bring on a “dovish hike”. In the euro-zone, things are far from quiet, with Draghi showing his will to act, weighing heavily on the euro. Commodity currencies couldn’t enjoy the Chinese holiday and were hit hard. Things are going to get messy again.

  1. Canadian rate decision: Wednesday, 14:00. Canada’s central bank decided to lower its benchmark interest rate to 0.5% in July. This was the second cut this year, aimed to boost the economy. The BOC reduced its growth estimate in 2015 from its April projection after showing a mild contraction the first half of the year. However, the Central Bank forecasts a rebound in the second half of 2015, expecting 1.9% growth this year. Analysts expect the BOC will maintain rates this time.
  2. US JOLTS Job Openings: Wednesday, 14:00. Job opening are eyed by the Fed as they provide a wider indication about the job market, even if this figure is delayed. In June, the figure stood on 5.25 million, and a rise to 5.33 million is on the cards for July.
  3. New Zealand rate decision: Wednesday, 21:00. New Zealand’s central bank cut its benchmark interest rate by 25 basis points to 3.0% in July, in hope of raising inflation and boosting economic activity. The rate cut was in line with market forecast. The Central Bank growth outlook deteriorated since the last policy meeting in June. However, the local currency has decreased noticeably since then, aiding manufacturers with weaker commodity export prices. Analysts expect further cuts in September and in October as the slowdown in China starts to affect New Zealand’s economy. Economists forecast another rate cut to 2.75% this month.
  4. Australian employment data: Thursday, 1:30. The unemployment rate in Australia edged up 0.2% in July reaching 6.3%, despite a job creation of 38,500 positions in July. Analysts expected a smaller addition of 10,200 jobs and unemployment rate of 6.1%. The reason behind the sharp rise in unemployment was an increase in the participation rate, reaching 65.1%. The rise in the number of job seekers may contribute to jobs growth in the coming months, which is a good thing for the Australian economy. Analysts expect a job gain of 5,200 positions and a decline in the unemployment rate to 6.2%.
  5. UK rate decision: Thursday, 11:00. The Bank of England maintained interest rates at 0.5% in August despite one voting member calling to raise rates. Lack of inflationary pressures delayed the Central Bank’s decision to raise rates. However, Bank governor Mark Carney said a rise is “drawing closer”, but cannot “be predicted in advance”. The collapsing stock market in China and the talks over Greece’s debts painted a grim outlook of global growth, contributing to the Bank’s decision to postpone the rate hike. Nevertheless, the Bank expects inflation to return to target next year, rising 0.25% in the first four months and may double from 0.5% to 1% by the end of 2016. Analysts see not change in Carney’s monetary policy this time.
  6. US Unemployment Claims: Thursday, 12:30. The number of Americans filing new applications for unemployment benefits rose last week by 12,000 to 282,000, exceeding forecasts of 273,000. However, the number of applications remain relatively low in time of a global slowdown. The four-week average increased 3,250 to 275,500. That average has fallen 9.2% over the past 12 months. The combination of steady job growth and low levels of applications suggests that the US economy will continue to expand in the coming months. Economists forecast the number of new claim will reach 279,000 this week.
  7. US PPI: Friday, 12:30. U.S. producer prices in the US increased for a third straight month in July, rising 0.2% after a 0.4% gain in July. However, inflation pressures remained subdued against the backdrop of lower oil prices and a strong dollar. In the 12 months through July, the PPI declined 0.8% following 0.7% drop in June. It was the sixth straight 12-month decrease in the index. Producer prices are expected to decline by 0.1% in August.
  8.  US UoM Consumer Sentiment: Friday, 14:00. U.S. consumer confidence weakened for a second month in August, as households were more pessimistic the rate hike aftermath. The University of Michigan’s preliminary index of sentiment contracted to 92.9 from 93.1 in July. Economists expected a reading of 93.5. The global financial turmoil caused by China has yet to affect future sentiment reports. Americans forecast an inflation rate of 2.8% in the next 12 months, the same as in July, the report showed. Over the next five to 10 years, they anticipated a 2.7%, down from 2.8%. U.S. consumer sentiment is expected to dip further to 91.6.
 

USD, EUR, JPY, GBP, AUD: Outlooks For The Coming Week - Morgan Stanley (based on efxnews article)

USD: USD Strong Against EM. Bullish.
"We believe that USD strength will continue to be focused against commodity and EM currencies. Volatility remains elevated and risks surrounding China could keep it high. Should China be resolved, this could lead to a temporary rally in EM FX, but it would not be long before the market started bringing forward the timing of the first Fed hike, ending any relief rally in EM FX. We remain generally bullish USD."

EUR: The ECB Pushes Back. Neutral.
"The latest ECB press conference was dovish in tone, and the central bank increased the amount it can purchase of new issuances. In only making one adjustment to its current policy, the central bank kept the door open for further easing, contributing to the weakness seen in EUR. The central bank will need to maintain its dovish tone going forward to avoid the currency gaining ground once again off the back of its current account surplus and inverse relationship with risk."

JPY: Watch Wages. Neutral.
"More global asset market volatility would support the safe haven JPY, but we have to increasingly be aware of the risk of a BoJ response. After a 2Q contraction, the ramp into 3Q growth remains disappointing. Key will be cash earnings to test if the BoJ’s narrative of higher corporate profits filtering through to wages is gaining traction."

GBP: Waiting for Opportunities to Sell. Bearish.
"We maintain our bearish GBP view, but are cautious that current levels may not be the most attractive to enter short positions. Markets have pushed the timing of the first hike in the UK back to August 2016, well beyond our economists’ expectation of a February hike. However, risk appetite remains weak and concerns in China are high. GBP tends to underperform in periods of heightened volatility, and this could continue."

AUD: Domestic Story Deteriorating. Bearish.
"Despite the sell-off already seen in AUD, we believe there is scope for further weakness. It’s notable that AUD has sold off even as iron ore prices rose recently, suggesting that it is more than simply a reflection of external factors. Indeed, domestic data continue to deteriorate and the market is now pricing in nearly a full cut by the end of the year. Still, with our economists expecting a cut in November, we believe the market will move to our more dovish view, pressuring AUD."

 

EUR/USD forecast: sideway trading for today and breaking the levels for tomorrow (based on efxnews article)

United Overseas Bank made a forecast for EUR/USD for today expecting the ranging market condition between 1.1105 and 1.1205:

  • "Expect sideway trading for today, likely between 1.1105 and 1.1205."
  • "As long as 1.1255 is not taken out, we continue to expect an eventual move lower to 1.1015."

Let's evaluate this forecast to estimate the levels for today and tomorrow.

EUR/USD: ranging for today and break the levels for tomorrow. This pair is ranging between 100-SMA and 200-SMA within the following key levels:

  • 1.1339 key resistance level located above 100-SMA/200-SMA in the primary bullish area of H4 chart;
  • 1.0947 key support level located below 100-SMA/200-SMA in the primary bearish area of the chart.

That means - if the price crosses 1.1339 resistance from below to above so we may see the bullish breakout with the reversal of the price movement to the bullish market condition. If the price crosses 1.0947 support so it may be reversal to the bearish with good breakdown possibility.

Resistance
Support
1.13391.0947
1.1713
1.0807



So, the forecast of UOB may be the correct one but with the following levels: 1.1339/1.0947. By the way, the daily levels for tomorrow are the following: 1.1713 key resistance and 1.0807 key support: the price is ranging between those 1.1713/1.0807 levels, and if the price breaks one of those level - we may see the primary bearish/bullish trend to be continuing/started.

Thus, intraday levels are 1.1339/1.0947, and the levels for daily trading for this week are 1.1713/1.0807. 

 

Intraday Outlooks For EUR/USD, EUR/JPY, GBP/USD - SEB (based on efxnews article)

EUR/USD: Downside risks still persist. "Last week ended with some rather choppy hours post the NFP and the hourly chart indicates either a possible bear triangle or a bear flag in the making. The first alternative points at resuming sellers in the 1.1170’s and latter one closer to 1.12. Both alternatives will be given a bearish confirmation breaking below 1.1090."


EUR/JPY: Should soon run into offers. "Last week ended with another clearly bearish weekly candle, the second consecutive one. On a shorter time frame the market traced, as outlined, out a couple of fresh lows before started to correct some of the latest decline. This corrective move higher is seen primarily ending towards 133.65. Thereafter our focus will again turn to the downside and a resumption of the bear trend."


GBP/USD: A small bounce, then lower again. "The pair reached 1.5170 support on Friday and the much muted reaction from the support is clearly sending a bearish message. The weekly candle also became a good follow through one to the preceding week’s bearish key week reversal. All in all the downside pressure remains high and only a minor bounce should hence be justified from current levels."


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