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The pound moved higher against the dollar on Friday, recovering from a one-month low reached in the previous session, but gains were limited following the release of mixed U.S. economic data.
GBP/USD ended Friday’s session at 1.6812, up 0.12% for the day after falling to lows of 1.6730 on Thursday, the weakest since April 16. For the week, the pair lost 0.35%.
Cable was likely to find support at 1.6730 and resistance at 1.6881, the high of May 13.
The Commerce Department reported Friday that U.S. housing starts rose 13.2% last month, after a 2.0% increase in March.
It was the largest increase in five months, indicating that the economy is shaking off the effect of a weather related slowdown over the winter.
The upbeat housing data was overshadowed by a report showing that consumer confidence in the U.S. deteriorated this month. The University of Michigan's consumer sentiment index dropped to 81.8, from 84.1 in April. Analysts had expected a slight uptick to 84.5.
Sterling remained broadly softer after the Bank of England played down speculation over the timing of possible rate hikes on Wednesday, saying the economic recovery was still at an early stage.
The BoE left its forecasts for growth and inflation largely unchanged in its quarterly Inflation Report and indicated that it is still in no rush to hike interest rates.
The bank said there is scope to further reduce the amount of slack in the economy before hiking rates and reiterated that when rates did start to rise they would do so only gradually.
The pound had already weakened earlier Wednesday after official data showed that the U.K. unemployment rate fell to a more than five-year low in the three months to March but wage growth slowed, dampening optimism over the recovery.
The U.K. unemployment rate dropped to 6.8% in the three months to March, down from 6.9% in February but average wages rose by a weaker than expected 1.7% in the first quarter from the same period a year earlier.
Elsewhere Friday, sterling was higher against the euro, with EUR/GBP at 0.8146 in late trade, not far from the 16-month trough of 0.8125 reached on Wednesday.
The single currency remained under pressure after weaker-than-expected data on euro zone first quarter growth on Thursday added to pressure on the European Central Bank to ease monetary policy at its next meeting in June, in order to safeguard the recovery in the region.
In the week ahead, investors will be looking to the minutes from the Federal Reserve's latest monetary policy meeting, due for release on Wednesday, for insight on the central bank's view of the economy.
U.K. data on consumer prices and retail sales will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday, as there are no relevant events on this day.
Tuesday, May 20
- The U.K. is to release data on consumer price inflation, which accounts for the majority of overall inflation.
- In
the U.S., Federal Reserve Bank of Philadelphia Charles Plosser and
Federal Reserve Bank of New York President William Dudley are to speak.
Wednesday, May 21- The U.K. is to release data on retail sales, the
government measure of consumer spending, which accounts for the majority
of overall economic activity. Meanwhile, the BoE is to publish the
minutes of its May meeting.
- Fed Chair Janet Yellen is
to speak at an event in New York. Later Wednesday, the Fed is to publish
the minutes of its latest meeting.
Thursday, May 22- The U.K. is to publish revised data on first quarter
economic growth, as well as reports on business investment and public
sector borrowing. The U.K. is also to produce private sector data on
industrial order expectations.
- The U.S. is to release its weekly report on initial jobless claims and private sector data on existing home sales.
Friday, May 23The euro slid lower against the dollar on Friday following the release of uneven U.S. data, as concerns over the strength of the recovery in the euro zone added to pressure on the European Central Bank to ease monetary policy.
EUR/USD was at 1.3693 late Friday, holding just above the two-and-a-half month low of 1.3647 struck in the previous session. For the week, the pair was down 0.45%.
The pair is likely to find support at 1.3647 and resistance at 1.3731, Thursday’s high.
The Commerce Department reported Friday that U.S. housing starts rose 13.2% last month, after a 2.0% increase in March.
It was the largest increase in five months, indicating that the economy is shaking off the effect of a weather related slowdown over the winter.
The upbeat housing data was overshadowed by a report showing that consumer confidence in the U.S. deteriorated this month. The University of Michigan's consumer sentiment index dropped to 81.8, from 84.1 in April. Analysts had expected a slight uptick to 84.5.
The single currency remained under pressure after weaker-than-expected data on euro zone first quarter growth on Thursday added to pressure on the ECB to ease monetary policy at its next meeting in June, in order to safeguard the recovery in the region.
The euro zone’s gross domestic product grew just 0.2% in the first quarter Eurostat reported, compared to expectations for growth of 0.4% and expanded by a smaller than expected 0.9% from a year earlier.
The French economy stagnated in the first three months of the year, while Italy, Portugal and the Netherlands all reported contractions.
Germany’s economy, the euro zone largest, outperformed in the first three months of the year, expanding 0.8%, beating expectations of 0.7%.
Also Thursday, Eurostat reported that the annual rate of inflation in the euro zone was unchanged at 0.7% in April, in line with forecasts. The inflation rate is still well below the ECB target of close to but just under 2%.
Meanwhile comments by a senior EBC official fuelled speculation that the bank is preparing to act at its next meeting in June to shore up the recovery in the currency bloc and stop inflation from falling too low.
In an interview with The Wall Street Journal, ECB Vice President Vitor Constancio said Thursday the central bank was open to more monetary easing and was determined to act swiftly if required.
EUR/JPY ended Friday’s session at 139.03, down 0.17% for the day, after falling to lows of 138.78 earlier in the session, the weakest since February 12.
In the week ahead, investors will be looking to the minutes from the Federal Reserve's latest monetary policy meeting, due for release on Wednesday, for insight on the central bank's view of the economy.
The euro zone is to publish what will be closely watched data on private sector activity on Thursday.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, May 19
- Germany’s Bundesbank President Jens Weidmann is to
speak at an event in Frankfurt; his comment will be closely watched.
Later in the day the German central bank is to publish its monthly
report.
Tuesday, May 20- In the euro zone, Germany is to release data on producer price inflation.
- In
the U.S., Federal Reserve Bank of Philadelphia Charles Plosser and
Federal Reserve Bank of New York President William Dudley are to speak.
Wednesday, May 21- The euro zone is to release data on the current account.
- Fed
Chair Janet Yellen is to speak at an event in New York. Later
Wednesday, the Fed is to publish the minutes of its latest meeting.
Thursday, May 22- The euro zone is to release data on manufacturing and
service sector activity, while Germany and France are to release
individual reports.
- The U.S. is to release its weekly report on initial jobless claims and private sector data on existing home sales.
Friday, May 23One of the biggest insider trading cases in Australian history puts the spotlight on the forex market. Ben Butler and Georgia Wilkins report.
Oil Futures Edge Higher on Ukraine, Driving Demand
Oil prices edged higher on Friday amid hopes of soaring demand as the market approaches the summer-driving season and tensions in Ukraine intensified.
The June delivery West Texas Intermediate (WTI) added 52 cents from the previous day to close at $102 a barrel. The per-barrel price of Brent North Sea crude for July delivery was $109.75 in London.
As Channel News Asia reports, the oncoming US summer season will experience increased driving, in essence supporting oil prices.
Prices of gasoline jumped alongside those of Brent as markets anticipated a shortfall of supplies due to escalating violence in Ukraine. The futures added as much as 0.7%.
NATO Secretary General Anders Fogh poured cold water on Russia’s assurances that the country did not intend to invade Russia, in the wake of rising tensions towards Ukraine’s presidential election scheduled for May 25.
“Today I think we’re reflecting the Brent market. It looks like gasoline is just bouncing off Brent, a little of WTI as well. Expiring June Brent yesterday was much stronger than what anybody had thought,” Andrew Lebow of New York-based Jefferies Bache LLC told Bloomberg.
The price of gasoline for June delivery was $2.971 per gallon as of 10:43 am after adding 0.68 cents on the New York Mercantile Exchange.
Gasoline’s crack spread in relation to WTI crude thinned 13 cents to $22.87 per barrel. Gasoline’s premium to Brent dropped 14 cents to $14.47.
Data from AAA in Heathrow, Florida, showed that US pump prices stood at $3.648 per gallon after increasing 0.7 cents. Prices have surged 4.7% from a year earlier.
June-delivery ultra low sulfur diesel climbed 1.17 cents or 0.4% to $2.9623 per gallon.
Diesel’s crack spread compared with WTI crude was flat at $22.43 for every barrel. The premium to Brent crude of the motor vehicle’s fuel reduced 11 cents to $14.50.
2014-05-18 22:45 GMT (or 00:45 MQ MT5 time) | [NZD - PPI Input]
if actual > forecast = good for currency (for NZD in our case)
NZD PPI Input = Change in the price of goods and raw materials purchased by manufacturers
==========
New Zealand Q1 PPI Outputs Add 0.9%, Inputs Up 1.0%Output producer prices in New Zealand climbed 0.9 percent on quarter in the first quarter of 2014, Statistics New Zealand said on Monday.
The output PPI - prices received by New Zealand producers - topped forecasts for an increase of 0.7 percent following the 0.4 percent contraction in the fourth quarter.
Input prices - prices of goods and services used by New Zealand producers - climbed 1.0 percent on quarter, topping expectations for 0.4 percent after shedding 0.7 percent in the three months prior.
"The higher prices for electricity generation contributed to both the higher input and output PPIs in the latest quarter," prices manager Chris Pike said. "This often happens in March quarters, due to spot-market conditions and low lake levels."
The output electricity and gas supply price index rose 14 percent, which contributed more than half of the rise in the output PPI. The input electricity and gas supply price index (up 20 percent) contributed nearly three-quarters of the rise in the input PPI.
Higher prices for raw milk resulted in an increase in prices received by dairy cattle farmers (up 4.0 percent), and an increase in input prices paid by dairy product manufacturers (up 3.1 percent) in the latest quarter.
On a yearly basis, producer rice outputs climbed 4.0 percent after gaining 3.8 percent in Q1, while inputs added 3.1 percent after rising 2.8 percent in the previous three months.
On a yearly basis, the output electricity and gas supply price index rose 2.8 percent, while inputs rose 0.7 percent.
The prices received by the dairy cattle farming industry surged 47 percent, and the prices paid by the dairy product manufacturing industry spiked 39 percent.
Also on Monday, the bureau said that capital goods prices in New Zealand were up 0.6 percent on quarter in Q1.
The major upward contributions to the capital goods price index came from the residential buildings price index (up 1.1 percent), and the non-residential buildings price index (up 0.8 percent).
The gains were offset by a decrease in the price index for transport equipment (down 0.4 percent). The appreciating New Zealand dollar against most key currencies also influenced this price change.
On a yearly basis, the CGPI rose 2.1 percent. The increases for residential buildings (up 4.6 percent) and non-residential buildings (up 3.5 percent) were the highest since 2008, the bureau noted.
Finally, the Performance of Services Index came in with a score of 58.9 in April, up from the upwardly revised 58.5 in March (originally 58.3) - and accelerating above the line of 50 that separates expansion from contraction.
Week Ahead: Alibaba Rival IPO, Fed Minutes, Home Sales, Microsoft
Markets remain jumpy despite recent highs for stocks, and the jitters could continue in the week ahead with the release of minutes from the Federal Reserve’s last meeting and two crucial updates on U.S. home sales – all of which can be ultra sensitive to traders and their algorithms.
The language used in the Fed minutes is always pored over for hints on when interest rates will be allowed to rise from their historic lows, and home sales data is central to the confidence of the U.S. economy. Federal Reserve officials make a number of speeches throughout the week.
JD.com, China’s second-biggest e-commerce firm behind Alibaba Group, is expected to raise as much as $1.7 billion in a U.S. initial public offering.
Earnings due this week from home improvement companies Home Depot and Lowe’s will give further clues to broader economic conditions.
And new Microsoft CEO Satya Nadella is expected to unveil at least one new version of the company’s Surface tablet as it attempts to compete with products from Apple and other rivals.
Monday sees former Fed chairman Ben Bernanke speaking in Dallas, as well as current San Francisco Fed president John Williams and Dallas Fed president Richard Fisher.
Monday also brings a conference at the U.S. Financial Stability Oversight Council to consider whether the asset management industry is systemically important enough to warrant supervision by the Federal Reserve.
Earnings expected Monday include results from Urban Outfitters and Campbell Soup.
Tuesday sees earnings from Home Depot, Staples, Dick’s Sporting Goods and Salesforce.com, and a new product launch from Microsoft CEO Satya Nadela as he seeks to dazzle the market with at least one new version of Microsoft’s Surface tablet.
Tuesday also brings speeches by Philadelphia Fed president Charles Plosser and New York Fed president William Dudley, and the annual meeting of JPMorgan Chase which will see a potentially controversial vote on its executive compensation plans.
On Wednesday, the Federal Reserve will provide the minutes from the April 29-30 meeting of the Federal Open Market Committee that reduced further the Fed’s unconventional bond-buying stimulus measure that has helped keep interest rates near zero for more than five years.
Expect traders and their ultra high-frequency trading algorithms to twitch and gyrate – rightly or wrongly — on any nuance in the language.
Around the same time as the FOMC minutes are released, Fed chair Janet Yellen will be speaking at a graduation ceremony for New York University at Yankee Stadium.
Also expected as early as Wednesday, retail website JD.com, China’s second-biggest e-commerce firm behind Alibaba Group, is expected to raise as much as $1.7 billion in a U.S. initial public offering. The whole of JD.com could be worth up to $24.6 billion, according to analysts.
Wednesday also brings earnings from retailers Target, Tiffany, Lowe’s and American Eagle Outfitters, as well as an update on U.S. mortgage applications.
Thursday will bring big updates on U.S. existing home sales, leading indicators, initial jobless claims, and earnings from Hewlett-Packard, Gap, Dollar Tree and Best Buy.
Thursday also sees Mary Jo White, chair of the U.S. Securities and Exchange Commission, and BlackRock CEO Larry Fink, slated to speak at the Investment Company Institute in Washington.
Finally, Friday brings updates on U.S. new home sales.
2014-05-19 07:00 GMT (or 09:00 MQ MT5 time) | [EUR - German Deutsche Bundesbank (Buba) President Weidmann Speech]
Speech at a Symposium organized by Deutsche Bundesbank, in Frankfurt
==========
BUBA’s Weidmann says ECB will closely monitor FX moves when weighing policy decisions
Here we go, right on cue
EURUSD a little higher at 1.3719 on the view that a weaker euro could prompt adverse impact so they will be careful on driving it lower.
Why Is Qatar Investing In Deutsche Bank?
The news that Qatar is to be the anchor investor in Deutsche Bank’s new €8 billion fundraising increases once again the stake the gas-rich Emirate has in western banks. But why?
Alongside a €6.3 billion rights issue, €1.75 billion will come directly from the Qatari royal family through its Paramount Services Holdings vehicle. While this will not be enough to earn the Qataris a seat on the board, for example, nor even a particularly significant stake, it is an interesting additional move into a sector the country now knows well. In 2008 it put £6.1 billion into Barclays, through a combination of Qatar Holding – the direct investment arm of the Qatar Investment Authority sovereign wealth fund – and Challenger, which was an investment vehicle of the former prime minister of Qatar. The QIA, through Qatar Holding, also holds 6% of Credit Suisse and has stakes in Bank of America and Agricultural Bank of China.
The Indian rupee surged the most in 11 months, continuing it with its 2.1 percent advance last week after the main opposition party won the elections with more than enough majority, boosting investor confidence.
The rupee surged 0.5 percent to 58.4975 a dollar in mid-morning trade in Mumbai. It rose to a session-high of 58.4750, the highest level since June 18. Last week, the currency had earlier advanced the most in a week since September.
The opposition Bharatiya Janata Party clinched 282 of the 543 seats in the parliament, which was more than the required majority of 272 seats, reported the Election Commission. The poll results was the first time a single party had won the majority seats since 1984, fuelling optimism that the incoming government will fast-track economic growth without the burden of divisive coalition politics, reported Bloomberg News.
“The election result was clearly better than we expected,” said Craig Chan, the head of currency strategy at Nomura Holdings for Asia ex-Japan in Singapore. “The outlook for reforms, potential foreign inflows and growth prospects will be even more positive now.”
Most analysts expect the currency to rally to 55 a dollar to 57 per dollar by the end of this year. However, further rises in the currency will be limited by dollar demand from the central bank and oil importers. There are also fears that a stronger rupee may hurt the country’s exports.
The rupee’s one-month implied volatility, which measures the expected shifts in the exchange rate used to assign prices to options, declined 0.31 percentage point, or 31 basis points, to 8.34 percent, the weakest since March 17.
Japanese Yen and Euro Remain the Currencies to Watch in Week Ahead
Forex market conditions favor continuation of Japanese Yen gains versus the downtrodden Euro, while USD trades at support. Which trades are worth watching?
Definitions
Volatility Percentile – The higher the number, the more likely we are to see strong movements in price. This number tells us where current implied volatility levels stand in relation to the past 90 days of trading. We have found that implied volatilities tend to remain very high or very low for extended periods of time. As such, it is helpful to know where the current implied volatility level stands in relation to its medium-term range.
Trend – This indicator measures trend intensity by telling us where price stands in relation to its 90 trading-day range. A very low number tells us that price is currently at or near 90-day lows, while a higher number tells us that we are near the highs. A value at or near 50 percent tells us that we are at the middle of the currency pair’s 90-day range.
Range High – 90-day closing high.
Range Low – 90-day closing low.
Last – Current market price.
Forum on trading, automated trading systems and testing trading strategies
Market Condition Evaluation based on standard indicators in Metatrader 5
newdigital, 2014.05.19 17:51
There is very interesting and unique situation for USDJPY for now : breakdown for D1 and W1 timeframes.
D1 timeframe: Chinkou Span line of Ichimoku indicator is crossing historical price on open bar from above to below, and D1 price is located below Ichimoku cloud/kumo. Nearest support level is 101.31
Possible breakdown.
W1 price: Chinkou Span line is crossing the price on open W1 bar from above to below, but W1 price is located above kumo. Nearest support level is 101.31
Possible correction.
If D1 price will break 101.31 support on close D1 bar so we may see good price movement with the primary bearish to be continuing.
If W1 price will break 101.31 support on close W1 bar so this tendency for downtrend will become long term situation.
If not so we may see the ranging market condition.