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2014-04-29 12:00 GMT (or 14:00 MQ MT5 time) | [EUR - German CPI]
if actual > forecast = good for currency (for EUR in our case)
==========
Germany HICP Inflation Accelerates Less Than Expected
Germany's EU measure of inflation accelerated for the first time in five months in April, but the figure came in below economists' expectations.
The harmonized index of consumer prices rose 1.1 percent annually in April, following a 0.9 percent gain in March, preliminary figures from Destatis showed Tuesday.
Economists had forecast an inflation figure of 1.3 percent. The March inflation was the lowest since June 2010, when the rate was 0.8 percent.
Month-on-month, the HICP dropped 0.3 percent in April. Economists had expected a 0.1 percent decline.
The overall consumer price index climbed 1.3 percent in April, which was faster than the 1 percent rise in the previous month. Economists were looking for an inflation figure of 1.4 percent. Consumer prices fell 0.2 percent from the previous month, while economists had forecast a 0.1 percent drop.
Destatis is set to release the final inflation numbers for April on May 14.
April inflation figures for Eurozone are due to be released on Wednesday. In March, Euro area headline inflation fell to a worrying 52-month low of 0.5 percent, way out of the ECB's target of "below, but close to 2 percent'.
Yesterday, European Central Bank Vice President Vitor Constancio said the bank does not have any target in mind for April inflation. He also asserted that a single figure alone cannot prompt a policy change.
The bank is set to hold the next rate-setting session on May 8.
The central bank has several instruments at its disposal and it will use them if there is a need, Constancio reiterated.
Natural Gas Plummets Ahead of Inventories Data
Natural gas futures dropped from a two-month peak in New York as investors speculated that government data to be released on Thursday would show a drastic surge in stockpiles of the commodity used for heating in the wake of dwindling demand following mild weather.
Gas plunged as deep as 1.6%. *Data from the Energy Information Administration may show that gas stockpiles added 77 billion cubic feet within the week ended April 25, according to median estimates from eight analysts in a Bloomberg survey.
“Tomorrow’s storage injection will be well above the five-year average. “Temperatures are going to moderate after the weekend, and that’s eroding the bullish case for gas,” said John Kilduf of New York-based Again Capital LLC.
June delivery natural gas declined 6.3 cents or 1.3% to $4.768 per million British thermal units as of 10:05 am on the New York Mercantile Exchange. Trading volumes for all the futures was 26% lower than the 100-day average. The futures have advanced 13% year-to-date and 9% in April. Gas rose to $4.831 per million Btu on Tuesday, the highest exchange rate since February 26.
On May 7, New York may hit a low of 55 degrees Fahrenheit, 4 lower more than ordinary, and a high of 66, according to forecast by AccuWeather Inc. Chicago temperatures are likely to hit 70 degrees, 3 higher than usual.
An estimated 49% of US homes depend on gas for heating, as per official data. Power plants take in 31% of gas consumption.
As Investing reports, the spring and fall periods witness the lowest demand of natural gas, since mild temperatures mean households don’t consume a lot of gas for heating and air conditioning.
Players in the market will be keenly following tomorrow’s official pronouncements regarding natural gas stockpiles. The supplies might hit 3.422 trillion cubic feet by the end of October, after losing 392 billion since the previous year.
2014-05-01 08:30 GMT (or 10:30 MQ MT5 time) | [GBP - Manufacturing PMI]
if actual > forecast = good for currency (for GBP in our case)
==========
UK Factory Growth At 5-month High
The U.K. manufacturing sector expanded at the fastest pace in five months during April, led by faster growth in output and new orders, survey data from Markit Economics showed Thursday.
The seasonally adjusted Markit/Chartered Institute of Purchasing & Supply Purchasing Manager's Index climbed to 57.3 in April from 55.8 in March, which was revised from 55.3. Economists had forecast a score of 55.4.
Factory output growth hit an eight-month high with gains across the consumer, intermediate and investment goods sectors. New order growth climbed to its highest in three months, led by improved demand from both domestic and export markets.
Employment grew for the twelfth successive month and the pace of increase equaled February's near 3-year peak. Firms expanded capacity to met higher production in the face of rising demand.
Input prices fell for a second straight month, but the latest fall was only moderate and slower than that signaled in the previous month. Output prices rose for the tenth successive month as companies raised prices due to strong demand and efforts to improve operating margins.
Traders Join Exodus as Forex Probes Add Pressure on Costs (based on bloomberg article)
The foreign-exchange market is losing a slew of traders from big banks as a probe into alleged manipulation of benchmark rates widens and pressure mounts on the industry to reduce costs.
More than 30 traders from 11 firms have been fired, suspended, taken leaves of absence or retired since October, when regulators said they were investigating the market, according to data compiled by Bloomberg. London-based Barclays Plc (BARC) and Zurich-based UBS AG (UBSN) have been the worst-hit, each suspending at least half a dozen employees, the data show.
“That’s a considerable percentage of the workforce,” said Brad Bechtel, managing director at Faros Trading LLC in Stamford, Connecticut, who estimated the world’s largest banks have 80 to 160 voice traders for spot rates in the currencies market. “That explains the lack of liquidity in the market, and why what would normally be considered a small trade can actually push the market around more than normal.”
Regulators around the world are investigating allegations traders colluded to rig key foreign-exchange benchmarks used by investors and companies by pushing through trades before and during the 60-second windows when the WM/Reuters rates are set. At the same time, banks are trying to fight shrinking margins by replacing humans with computers, accelerating a longer-term shift in trading onto electronic platforms.
About 200 traders at smaller firms focus on spot exchange rates, Bechtel estimated in an e-mail.
UBS gained less than 1 percent to 18.40 Swiss francs today in Zurich. Barclays rose 0.8 percent to 252.2 pence in London.
‘The Mafia’Authorities are examining whether bank traders communicated with dealers at other firms and timed trades to influence benchmarks and maximize profits. Some exchanged information on instant-message groups with names such as “The Cartel,” “The Bandits’ Club,” “One Team, One Dream” and “The Mafia.” No firms or traders have been accused of wrongdoing by government authorities.
EUR/USD Fundamental Analysis May 2, 2014 Forecast
The EUR/USD is trading at 1.3880 inching higher on Thursday having ridden out two days of worse than expected news on Eurozone inflation and the US economy that have not fundamentally altered perceptions of the policy outlook in either. The US dollar weakened on disappointing GDP numbers and seemed to ignore the continuing tapering by the Federal Reserve.
This year’s dominant trend on major currency markets is the euro’s continued strength in the face of a steady reining in of US monetary policy stimulus and expectations the European Central Bank would be forced at some stage to do the opposite. A number of analysts had predicted low euro zone inflation on Wednesday, following lower than forecast figures out of Germany a day earlier, might be enough to turn the single currency significantly weaker.
Policymakers at the euro zone’s central bank have talked aggressively about their willingness to take action to head off a debilitating cycle of falling prices and demand, and as such have outright opposed any further gains for the euro.
But they face substantial barriers to delivering the sort of decisive policy action that would weaken the currency at a time when capital is flooding back into the euro zone’s peripheral economies and stock markets.
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.
Economic Data May 1, 2014 actual v. forecast
Cur.
Event
Actual
Forecast
Previous
China – Labor Day
AUD
AIG Manufacturing Index
44.8
47.9
CNY
Chinese Manufacturing PMI
50.4
50.5
50.3
GBP
Nationwide HPI (YoY)
10.9%
10.0%
9.5%
GBP
Nationwide HPI (MoM)
1.2%
0.7%
0.5%
GBP
Manufacturing PMI
57.3
55.4
55.8
USD
Core PCE Price Index (MoM)
0.2%
0.1%
USD
Fed Chair Yellen Speaks
USD
Initial Jobless Claims
319K
329K
USD
ISM Manufacturing PMI
54.3
53.7
(Kitco News) - Gold prices ended the U.S. day session moderately lower Thursday. A lack of fresh, bullish news for the gold market is allowing the technical traders to dominate—and the near-term technical posture for gold remains bearish. Also, generally upbeat U.S. economic data released Thursday fell in favor of the bearish camp of gold traders. June gold was last down $10.70 at $1,285.00 an ounce. Spot gold was last quoted down $6.00 at $1,285.75. May Comex silver last traded down $0.079 at $19.04 an ounce.
After digesting Wednesday afternoon’s FOMC statement from the U.S. Federal Reserve, the “take away” from that report is that the U.S. economy is picking up momentum after a rough winter. Thursday’s U.S. economic data fell in line with the FOMC statement. Such has allowed the major stock indexes to hover near their recent record highs, and in turn is a bearish underlying factor for other asset classes, including gold and silver.
In overnight news, the much-anticipated China official manufacturing purchasing managers’ index came in at 50.4 in April from 50.3 in March, it was reported Thursday. That reading was right in line with market expectations and had little impact on the market place.
The market place is awaiting what is arguably the most important economic report of the month on Friday: the April U.S. employment situation report from the Labor Department. The key non-farm payrolls number is forecast to come in at up around 215,000.
The Russia-Ukraine crisis is still on the radar screen of the world market place. However, there has been little fresh news coming from that region this week. Still, this situation is likely to get worse before it gets any better. Gold and other safe-haven assets will likely at least see selling interest limited due to the instability in Ukraine.
The London P.M. gold fixing is $1,278.50 versus the previous P.M. fixing of $1,288.50.
Technically, June gold futures prices closed near mid-range Thursday. Gold bears have the near-term technical advantage. A six-week-old downtrend line is firmly in place on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,306.60. Bears’ next near-term downside breakout price objective is closing prices below solid technical support at last week’s low of $1,268.40. First resistance is seen at Thursday’s high of $1,293.00 and then at $1,300.00. First support is seen at Thursday’s low of $1,277.30 and then at $1,268.40. Wyckoff’s Market Rating: 3.5
May silver futures prices closed nearer the session high Thursday after hitting a 10-month low early on. The bears have the solid overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $19.91 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of $18.68. First resistance is seen at Thursday’s high of $19.17 and then at $19.45. Next support is seen at Thursday’s low of $18.75 and then at $18.68. Wyckoff’s Market Rating: 1.0.
May N.Y. copper closed up 50 points at 303.45 cents Thursday. Prices closed near the session high on short covering. Bulls and bears are on a level near-term technical playing field. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at this week’s high of 313.90 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 300.00 cents. First resistance is seen at 305.00 cents and then at 308.35 cents. First support is seen at Thursday’s low of 301.25 cents and then at 300.00 cents. Wyckoff’s Market Rating: 5.0.
Dollar in limbo before jobs data; sterling pauses after rally
Dollar index hovering above 3-week lows, focus on U.S. jobs
Forecasts centre on 210,000 nonfarm payrolls in April
Sterling holds near 5-year peak after upbeat UK data
The dollar hovered above a three-week low against a basket of major currencies on Friday, as investors stayed on the sidelines ahead of a closely watched U.S. jobs report and appeared unmoved by clashes between Ukrainian forces and pro-Russian separatists.
The dollar index held steady at 79.543, having fallen to 79.414 on Thursday, its lowest since April 11. Investors had sold the greenback after data on Wednesday showed the U.S. economy stalled in the first quarter.
Major currencies showed limited reaction to the latest developments in Ukraine, where government forces launched a "large-scale operation" to retake Slaviansk, pro-Russian separatists holding the town in eastern Ukrain said on Friday.
Jitters over a crisis that has provoked the biggest confrontation between Russia and the West since the Cold War have at times weighed on risk sentiment and lent some support to safe haven currencies such as the yen, but on Friday the market's focus was locked on the U.S. employment report.
The dollar held steady against the yen at 102.36 yen. The greenback has been range-bound versus the yen since early February, having traded roughly between 101 yen to 104 yen over that span.
"I think a low print on nonfarm payrolls will see ... dollar/yen test the bottom of that range," said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore.
The euro eased 0.1 percent to $1.3862, having backed off slightly from Thursday's three-week peak near $1.3890.
According to a Reuters poll, U.S. nonfarm payrolls probably added 210,000 jobs in April, that would leave hiring well above its first-quarter average of 177,667 jobs per month.
"We would expect confirmation of above 200,000 jobs growth to erase some of the concerns raised by the weak reading on Q1 GDP, and this should be consistent with some recovery in the dollar," analysts at BNP Paribas wrote in a note to clients.
"Most forecasts fall between 200,000 and 235,000, and it would likely take a result significantly outside that range to generate more dramatic FX moves."
Sterling held steady at $1.6886, taking a breather after reaching a near five-year high of $1.6921 on Thursday, in the wake of upbeat UK economic indicators.
Data on Thursday showed British manufacturing surged last month and house prices rose at the fastest pace since June 2007.
The pound, which is up 0.5 percent on the week, faces resistance on monthly charts at around $1.6950, the top of the cloud on the monthly Ichimoku chart -- a popular technical analysis tool.
A clear breach of that level would be a bullish technical signal. On the other hand, there are some signs of short-term overheating, with sterling's 14-day relative strength index now at above 70 and in overbought territory. (Additional reporting by Masayuki Kitano in Singapore; Editing by Simon Cameron-Moore)
EURUSD Forex Signals: Trading the Non-Farm Payrolls Report
EUR/USD forex signals show that the pair is trading inside a symmetrical triangle on its 4-hour time frame as traders can’t quite establish a clear direction on the pair. Price is testing the top of the triangle around the 1.3875 levels but stochastic is reflecting selling pressure.
A selloff from its current levels could take the pair back to the bottom of the triangle at the 1.3775 area. Consolidation around the current levels could be seen for the most part of the day as traders await the results of the non-farm payrolls report for April.
EURUSD Forex SignalsRecall that the US dollar reacts to fundamentals during this release, as a strong jobs figure tends to support the currency while a weak reading leads to a selloff. The past report has printed a bleak result but there could be a stronger showing this time around. The consensus is at a 216K rise in employment, which could push the jobless rate down to 6.6% from 6.7%.
In this case, EUR/USD might selloff to the bottom of the triangle and an even stronger figure could lead to a breakdown. Take note that the chart pattern is roughly 300 pips in height, which suggests that the resulting selloff could be of the same size.
The fundamental bias for the EUR/USD pair is still to the downside, given the divergence in monetary policy plans of the Fed and the European Central Bank. Keep in mind that the ECB will make its policy announcement next week and that officials are already considering negative deposit rates or further easing measures. Meanwhile, the FOMC statement earlier this week turned out to be relatively upbeat as the Fed decided to push through with its taper and give optimistic comments on the US economic recovery.
If the NFP turns out to be a downside surprise though, EUR/USD forex signals might indicate a strong upside break from the triangle resistance and rally until the previous highs near the 1.4000 major psychological level.
How to Trade Short-Term (Day-Trade)
- While short-term trading is attractive, it can also be dangerous.
- Short-term traders will often exercise poor risk management, and this can have very negative consequences.
- We share a strategy that can be used to trade short-term momentum with a focus on risk.
For every 10 traders that come to markets, at least 7 of them want to ‘day-trade,’ or as we call it in the forex market, ‘scalp.’ Even though many of these traders are still learning the market or are very new to trading, they know they want to embark on short-term trading.The rationale behind this desire makes sense. After all, for most things in life the biggest rewards are for the hardest workers; those exhibiting the utmost of control and discipline long enough to properly implement their plan or strategy.
But trading is much different in the fact that this ‘greater control’ that might be offered by short-term time frames introduces other, more difficult variables into the equation of a trader’s success.
Many of the reasons that traders lose money become even more difficult to contend with when ‘scalping’ or ‘day-trading.’ And if these traders are making other mistakes, such as using too much leverage or inappropriate strategy selection that top trading mistake can become even more problematic.
So, first and foremost before we get into the process of short-term trading, I want to specify that this is often the most difficult way for new traders to get started. Preferably, new traders will start with longer-term charts and approaches that may be more forgiving, and as they gain experience and comfort they can then elect to move into faster time frames.
The Biggest Challenge of Short-Term Trading
The biggest challenge of short-term trading is the same as the Top Trading Mistake. Too few traders looking to scalp actually do so correctly, under the incorrect presumption that trading on really short-term charts gives them enough control to trade without stops
While keeping your finger on the trigger may give you more control, it means absolutely nothing if prices gap against your position or if a really big piece of news comes out that completely de-rails your trading plan. So, even though you may be watching price action on a five or fifteen-minute chart, protective stops are still needed.
Further to this point, traders need to be able to focus on winning more when they are right than they lose when they are wrong. To put this another way, just because one is trading very short-term, it doesn’t mean that they can ignore The Number One Mistake Forex Traders Make.
This can be a huge challenge on really short-term charts where near-term price movements are unpredictable. But it’s not impossible. In this strategy, I’ll attempt to show you a way to do this.
An additional concern is variance. Per statistical analysis, the less information that is being analyzed in a data set, the less ‘reliable’ that information becomes. If we’re looking at longer-term charts, such as the daily or the weekly charts, quite a bit of information is going into the formation of each individual candle. On a very short-term chart, the opposite is true. Significantly less information goes into each candle, and thereby each candle is less reliable as a forecast of future candle formations.
The Strategy
With all of the above being said, trading on short-term charts is still possible. It just requires that traders utilize even more control and discipline over their trading approaches and risk management. For new traders that often struggle with risk management, or staying disciplined; the results can be disastrous. But if those boxes are checked, traders can look to exert the upmost of control over their approach with shorter time frames.
But just because we’re trading on shorter-term charts, does that mean we want the entirety of our analysis to be performed on those time frames? Absolutely not. We can still incorporate analysis from longer time frames into our approaches in an effort to get the best probabilities of success.
The indicators that I add are the 8 and 34 period exponential moving averages, based on the hourly chart but plotted on the 5-minute chart (shown below).
Multiple time frame analysis can help traders see the ‘bigger picture’
These indicators act as a compass for the strategy, helping to see what’s taking place with a longer-term time horizon. If the faster 8 period moving average (based on the hourly chart) is above the slower 34 period moving average (also based on the hourly chart), then the strategy is looking to go long, and to only go long. As long as the hourly 8 period EMA is above the hourly 34 period EMA, only buy positions are entertained.
The hourly moving averages work like a compass, showing traders which direction to trade the trend
Once the trend has been identified, and the bias has been obtained, the trader can then look for entries in the direction of that trend; looking for momentum to continue on the 5-minute chart as it has been displayed by our hourly-moving averages.
And when looking to buy, we ideally want to ‘buy low’ or ‘sell high.’ So, just because the trend is up and we’re looking to buy, it doesn’t mean we want to blindly do so. We still need a ‘trigger’ for the position, and for this, we can incorporate another exponential moving average.
The trigger for this strategy is another 8 period exponential moving average, but this one is built on the shorter-term five-minute chart.
When price crosses the 8-period five-minute EMA in the direction of the trend, the trader can look to buy in anticipation of the ‘bigger-picture’ trend coming back in force.
The ‘trigger’ in the strategy is when price crosses the 8-period five-minute EMA in the direction of the trend
The large benefit behind the strategy is that just by the very act of price moving in the trend-side direction over the shorter-term EMA, traders are buying or selling short-term retracements in the direction of the momentum.
Risk Management
The most attractive part of the strategy is that it allows for traders to ‘buy cheaply’ in anticipation of bullish momentum, or to ‘sell expensively’ in anticipation of bearish momentum.
When prices make those short-term retracements, they create swings in price action. And per price action logic, of up-trends making ‘higher-highs’ and ‘higher-lows,’ traders can look to place the stop for their long position below the previous ‘higher-low’ so that if the up-trend doesn’t continue – the trader can exit the position for a minimal loss.
Stops for long positions go below the prior period’s opposing-side swing
In the case of short positions, traders would want to look to place stops for short positions above the previous ‘lower-high,’ so that if the down-trend does not continue, the short position could be closed in an effort of mitigating the damage as much as possible.
In my opinion, this is the most attractive part of this type of strategy. It allows traders to attempt to avoid The Number One Mistake that Forex Traders Make even though very short-term charts are being used to trigger positions.
If momentum does continue in the trend-side direction, the trader could be in a very attractive position as prices continue to move in their favor.
Position Management
If the trend does continue, should the trader just sit on their limit order and wait for the sound of the cash register to ‘cha-ching?’
No way. When trading on short-term charts, things can change VERY quickly, and it’s the day-trader’s job to manage that risk.
When the position gets in the money by the amount of the initial stop (a 1-to-1 risk-to-reward ratio), the trader can look to move the stop to break-even so that, worst-case scenario should prices and momentum reverse, the trader puts themselves in a position to avoid taking a loss.
At this point, the trader can also begin ‘scaling out’ of the position. Since a 1-to-1 risk-to-reward has been realized, the trader is actively attempting to avoid The Top Trading Mistake; and should momentum continue in the trend-side direction, the trader stands to profit considerably more.
As prices continue in the direction of the trader’s position, additional pieces of the trade can be closed or ‘scaled out’ as prices move in their favor.
The goal is to get the ‘average out’ from the strategy as large as possible, and if momentum is to continue, this strategy can allow the trader to do just that.
After the stop has been moved to break-even, and the initial risk is removed from the position; traders can even look to add-to the trade with new positions or new lots in an attempt to build a larger position with a significantly smaller amount of risk.