Press review - page 363

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Sergey Golubev:

Trading News Events: EUR - Retail Sales (based on the article)

What’s Expected


EURUSD, M15: 35 range pips price movement by EUR - Retail Sales news event:


 

USD/CAD Intra-Day Fundamentals - Ivey PMI and 37 pips price movement

2016-01-07 15:00 GMT | [CAD - Ivey PMI]

if actual > forecast (or previous one) = good for currency (for CAD in our case)

[CAD - Ivey PMI] = Level of a diffusion index based on surveyed purchasing managers. It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.

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  • "The Ivey Purchasing Managers Index (PMI) by the end of December 2015 stood at 49.9. The corresponding Ivey PMI figure for November 2015 was 63.6, for December 2014 was 55.4 and for December 2013 was 46.3."
  • "The Employment Index for December 2015 was 59.7, the Inventories Index was 50.8, the Supplier Deliveries Index was 54.3 and the Prices Index was 61.9."
  • "The PMI is provided in two formats, unadjusted and seasonally adjusted. It shows responses to one question: "Were your purchases last month in dollars higher, the same, or lower than the previous month?" A figure above 50 shows an increase while below 50 shows a decrease."

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USDCAD M5: 37 pips price movement by CAD - Ivey PMI news event :


 

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2014.05.11 15:39

Fundamental Analysis

Fundamental analysis is the study of statistical reports and economic indicators of countries to trade currencies more effectively. Changes in interest rates, employment reports, and the latest inflation figures, all fall under the purview of fundamental analysis, which forex traders must pay close attention to, because they can have a direct bearing on the value of a nation’s currency. Data used in forex fundamental analysis can be classified by the degree to which they affect the market:

  • Short term factors – These include unexpected news, to which the markets usually react within a day. Such news and events can be used for fast speculative trades.
  • Long term factors – These include data on the general state of economy, such as inflation, unemployment rate or dramatic changes in the benchmark interest rate. Their impact on the exchange rates can last for weeks, months or even years.

Given the importance of these indicators, it is necessary to closely follow economic calendars, and know beforehand when they are scheduled for release. The most powerful indicators that move forex market include:

  • Interest rate
    Generally, if a country increases its interest rates, its currency will increase in value because investors will shift their assets to that country to gain higher returns.
  • Gross Domestic Product
    GDP is the primary indicator of the strength of economic activity in a country, and is generally reported quarterly. A high GDP figure leads to expectations of higher interest rates, which is mostly positive for the given currency.
  • Employment
    A decreases in payroll employment is considered as a sign of weak economic activity, and could eventually lead to lower interest rates, which has a negative impact on the currency.
  • Trade balance
    A country with a significant trade balance deficit is likely to have a weak currency as there will be continuous commercial sellings of its currency.

Traders, who rely on fundamental analysis to study markets, will typically create models to formulate a trading strategy. These models generally utilize a host of empirical data and try to forecast market behavior and estimate future currency levels. This information is then used to draw out specific trades that best exploit the situation. Forecasting models are as varied and numerous as the traders that create them. Two people can analyze the exact same data and come up with two completely different conclusions about how it will impact the market. Therefore is it important to understand what is more relevant to the current market and economic conditions, and not succumb to ‘paralysis by analysis.’


 

Trading News Events: U.S. Non-Farm Employment Change (based on the article)

What’s Expected:


Why Is This Event Important:

Despite the cautious tone laid out in the Fed Minutes, a further improvement in labor market conditions may encourage the committee to adopt a more hawkish tone at the January 27 interest rate decision as Chair Janet Yellen remains confident in achieving the 2% inflation goal over the policy horizon.

However, the slowdown in business outputs along with the persistent weakness in private-sector consumption may drag on job growth, and a dismal NFP print may prompt the FOMC to endorse a wait-and-see approach in an effort to mitigate the downside risk for growth and inflation.

How To Trade This Event Risk
Bullish USD Trade: NFP Climb Another 200K or Greater, Wage Growth Picks Up

  • Need red, five-minute candle following the NFP print to consider a short trade on EUR/USD.
  • If market reaction favors a bullish dollar trade, sell EUR/USD with two separate position.
  • Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
  • Move stop to entry on remaining position once initial target is hit; set reasonable limit.
Bearish USD Trade: U.S Employment Report Disappoints
  • Need green, five-minute candle to favor a long EUR/USD trade.
  • Implement same setup as the bullish dollar trade, just in the opposite direction.
Potential Price Targets For The Release
EURUSD Daily



  • Long-term outlook for EUR/USD remains tilted to the downside amid the deviating paths for monetary policy but, failure to preserve the bearish setup carried over from the previous month may highlight a larger correction in the exchange rate.
  • Interim Resistance: 1.1052 (November high) to 1.1090 (50% retracement)
  • Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)

November 2015 U.S. Non-Farm Payrolls
EURUSD M5: 60 pips range price movement by Non-Farm Employment Change news event:


 

Week Ahead: what we’re watching - the Fed is on the verge of changing its outlook (based on the article)


  • USD: "threats to the divergence trade? - Risk aversion can still challenge the Fed’s outlook. Solid US retail sales needed next week to limit any risk aversion-driven USD underperformance against JPY, EUR and CHF."
  • GBP: "enough pounding? - Improving UK data and the largely unchanged BoE outlook could offset Brexit fears to a degree and support GBP."
  • AUD: "remain cautious - AUD latest underperformance could continue next week in view of Australian and Chinese data releases."
  • NOK & SEK: "ahead of CPI - CPI data out of Sweden and Norway may matter less in the face of low oil prices and Riksbank’s FX intervention threat."
  • XAU: "Gold shines - Gold has been the best performing asset in our universe since the start of 2016 as risk aversion burnished its safe haven appeal."
 

Forex Weekly Outlook January 11-15 (based on the article)

Markets began 2016 in a sour mood, and this resulted in a “risk off” sentiment”. US Crude Oil Inventories, Australian Employment data, UK rate decision, US Retail sales, Producer prices and Consumer sentiment stand out. These are the highlights of this week.

The U.S. Non-Farm Payrolls report showed a remarkable job creation of 292,000 during December closing out 2015 with a bang. The only disappointment was in wages, which actually fell slightly, but if job growth continues, wage gain should accelerate according to analysts. This did little to cheer investors, as worries about China, crashing oil prices and various geopolitical fears all triggered worries. This benefits the euro and the yen against the dollar while hurting all the rest.

  1. US Crude Oil Inventories: Wednesday, 15:30. The weekly petroleum report showed U.S. commercial crude inventories contracted by 5.1 million barrels, maintaining a total U.S. commercial crude inventory of 482.3 million barrels. Economists estimated an increase of 700,000 barrels in crude inventories. Total gasoline inventories leaped by 10.6 million barrels last week, moving into the upper half of the five-year average range. WTI tumbled to lows seen in 2004, and this reflects worries not only about high supply, but also low demand.
  2. Australia Employment data: Thursday, 0:30. Australia’s unemployment rate declined to 5.8% in November, amid a whopping job gain of 71,400 positions. The unemployment rate reached a 20 month low. The reading was contrary to analysts’ expectations predicting a loss of 10,000 jobs. The participation rate rose to 65.3% from 65% in October. Full-time employment increased by 41,600, and the number of part-time jobs rose by 29,700. The employment figures showed the strongest two-month period of jobs growth since December 1987 and January 1988. Australian economy is expected to shed 10,300 jobs in December while the unemployment rate is expected to rise to 5.9%.
  3. UK Rate decision: Thursday, 12:00. The Bank of England maintained interest rates at 0.5% amid expectations that inflation will remain subdued after another sharp drop in the oil price and a levelling off in wage growth. Policymakers estimated domestic demand has remained unchanged in November. The central bank noted the UK policy depends only on the inflation outlook and will not be influenced by other central banks actions.
  4. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits declined to 277,000 from more than a five-month high of 287,000. The reading suggests the labor market remains firm despite signs of weakness in economic growth during the fourth quarter. Analysts expected claims to reach 274,000. The four-week moving average of claims dropped 1,250 to 275,750 last week. The four-week moving average of the so-called continuing claims fell 4,000 to 2.22 million. The number of jobless claims is expected to reach 278,000 this week.
  5. US Retail sales: Friday, 13:30. Retail sales increased 0.2% in November after rising 0.1% in the previous month. The reading was in line with market forecast. However, automobile sales were weak falling 0.4% following a 0.3% decline in the prior month. Excluding vehicles, core sales rose a very solid 0.4% beating forecast for a 0.3% rise. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, slowed in September and October. The weakness came despite a tightening labor market, which has started to lift household income.
  6. US PPI: Friday, 13:30. U.S. producer prices edged up 0.3% in November, despite the moderate inflation trend. The reading followed a 0.4% decline in October. Economists forecasted a flat reading. Excluding food and energy categories, core prices increased 0.3% while analysts expected a 0.2% gain. Overall producer prices were down 1.1% in November from a year earlier, the 10th straight year-over-year decline. Core prices were up 0.5% from last year.
  7. US UoM Consumer Sentiment: Friday, 15:00. The University of Michigan’s final reading of December’s consumer sentiment came in at 92.6, higher than a first reading of 91.8 reaching its highest level since July this year. Consumers were more optimistic over their current conditions due to lower inflation, which increased real incomes, however, consumers were less confident about their future situation. Meanwhile, inflation expectations for the next year decreased slightly.
 

Danske Bank: Caught In 1.05-1.10 Range; What's Next? (based on the article)


  • "EUR/USD is in our view caught in the 1.05-1.10 range, but later on we expect a rebound on no renewed policy divergence and strong EUR fundamentals."

D1 price is on ranging market condition located inside Ichimoku cloud for waiting for the direction:

  • Tenkan-sen line is located above Kijun-sen line of Ichimoku indicator which is indicating the primary bullish market condition.
  • Chinkou Span line is above the price indicating the ranging bullish market condition in the near future.
  • Ddescending triangle pattern was formed by the price to be crossed to below for good possible breakdown with the reversal.
  • Nearest support levels are 1.0710 and 1.0522.
  • Nearest resistance level is 1.1059.
If daily price will break 1.0710 support level on close bar so we may see the bearish market condition up to 1.0522 as the next bearish target.

If daily price will break 1.1059 resistance level so the price will be on the beginning of the primary bullish market condition without secondary ranging.
If not so the price will be ranging within the levels.

  • Recommendation for long: watch close price to break 1.1059 for possible buy trade
  • Recommendation to go short: watch the price to break 1.0710 support level for possible sell trade
  • Trading Summary: ranging
Resistance
Support
1.10591.0710
N/A
1.0522

SUMMARY : ranging
TREND : waiting to break the levels

 

USD/CHF Intra-Day Fundamentals - Retail Sales and 10 pips price movement

2016-01-07 15:00 GMT | [CHF - Retail Sales]

if actual > forecast (or previous one) = good for currency (for CHF in our case)

[CHF - Retail Sales] = Change in the total value of inflation-adjusted sales at the retail level, excluding automobiles and gas stations.

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USDCHF M5: 10 pips price movement by CHF - Retail Sales news event :


 

Strongest Quant Signals This Week - SEB (based on the article)

  • "If going shorting EUR/JPY and/or USD/JPY one should definitely be wary and operate with a tight stop loss."

Daily price is located below SMA with period 100 (100-SMA) and below SMA with the period 200 (200-SMA) within 23.6% Fibo resistance at 118.30 and Fibo support level at 116.69. Descending triangle pattern was formed by the price with 117.22 support to be crossed for the bearish trend to be continuing for 116.69 target to re-enter.

  • If the price will break 118.30 resistance level so the local uptrend as the bear market rally will be started with 120.11 target to re-enter with good bullish reversal possitility.
  • If price will break 117.22 support on close daily bar to below so the bearish trend will be continuing up to 116.69 as the next bearish terget to re-enter.
  • If not so the price will be ranging within the levels.
Resistance
Support
118.30117.22
120.11116.69


  • Recommendation to go short: watch the price to break 117.22 support level for possible sell trade
  • Recommendation to go long: watch the price to break 118.30 resistance level for possible buy trade
  • Trading Summary: bearish

SUMMARY : ranging

TREND : bearish
 

GBP/USD Intra-Day Fundamentals - Manufacturing Production and 39 pips price movement

2016-01-12 09:30 GMT | [GBP - Manufacturing Production]

if actual > forecast (or previous one) = good for currency (for GBP in our case)

[GBP - Manufacturing Production] = Change in the total inflation-adjusted value of output produced by manufacturers.

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  • "Total production output is estimated to have increased by 0.9% in November 2015 compared with the same month a year ago. There were increases in 3 of its 4 main sectors, with the largest contribution coming from mining & quarrying, which increased by 10.5%."
  • "Manufacturing output decreased by 1.2% in November 2015 compared with November 2014. The largest contribution to the decrease came from the manufacture of machinery & equipment not elsewhere classified, which decreased by 13.7%."
  • "Total production output is estimated to have decreased by 0.7% between October 2015 and November 2015. There were decreases in all of the main sectors, with manufacturing, mining & quarrying and electricity & gas having the largest contributions to the decrease."
  • "Manufacturing output decreased by 0.4% in November 2015 compared with October 2015. The largest contribution to the decrease came from the manufacture of basic pharmaceutical products & pharmaceutical preparations, which decreased by 4.9%."
  • "In the 3 months to November 2015, total production and manufacturing output increased by 0.2% and 0.5% respectively on the previous 3 months."
  • "In the 3 months to November 2015, production and manufacturing were 9.1% and 6.1% respectively below their values reached in the pre-downturn GDP peak in Quarter 1 (Jan to Mar) 2008."

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GBPUSD M5: 39 pips price movement by GBP - Manufacturing Production news event :


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