IronFX - Market Analysis - page 49
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
IronFX Daily Commentary | 08/05/15
Language English
Every UK poll was wrong; Conservatives win Every poll and all the bookmakers were wrong. For weeks or even months, we had heard that the Conservatives and Labour were neck-and-neck and both far short of having a majority, implying that it would take weeks before either side could form a government. But as soon as the polls closed at 2100 GMT, the exit polls were released showing that the Conservatives were likely to increase their representation to anywhere from 316 to 325 of Parliament’s 650 seats, meaning they might have a majority by themselves (effectively they need 323 seats, because five representatives from Northern Ireland never take up their seats). The Scottish National Party (SNP) is expected to win almost all of Scotland’s 59 seats, more than they dreamed of, meaning Labour was eliminated north of the border. The Liberal Democrats are expected to collapse to around 10 seats from 57, with the Greens and UK Independence Party winning two each. The end result is that the Conservatives can probably form a minority government by themselves, since even if they don’t have a majority, none of the other parties will want to bring the government down and re-run the election again. They may also be able to count on the support of the Democratic Unionists in Northern Ireland, who won eight seats last time.
Sterling rallied sharply on the news, since it avoids all the worst-case scenarios: a long, drawn-out period of forming a government, a Labour government with the backing of the SNP, or no government at all. This is the appropriate reaction in my view and I would expect this relief rally to continue for some time, although some of the UK indicators recently have not been quite as robust as before. Nonetheless the major political risk is off the table for now and sterling can trade on its fundamentals again. I say for now because, with his strong showing, UK PM Cameron is bound to hold a referendum in 2017 on whether the UK should be in the EU. I think that will cause another spike in political risk. The UK is dependent upon foreign direct investment to fund its enormous current account deficit, but that FDI is likely to be on hold in the run-up to the referendum. That would probably cause the pound to weaken. On the other hand, the SNP has pledged that if there is a referendum, they will insist that it not only get a majority of voters total, but also a majority in each of the UK’s constituents. Since Scotland is strongly pro-EU, that would mean the referendum would never pass. We’ll have to see how that shapes up.
The other problem facing the country is Scotland’s growing demand for autonomy, if not independence.. The near-sweep of Scotland’s seats by the SNP guarantees that it will press its demands further. That presents considerable problems for the UK the way it’s currently structured. English voters object to the fact that Scottish representatives sit in Parliament and vote on matters concerning England, but England is not similarly represented in deciding on Scottish affairs. Furthermore, if Scotland demands more autonomy, then Wales and Northern Ireland can’t be far behind. This growing federalization is going to be a major issue in the UK. Moreover, there’s the question of whether Scotland will hold another vote on independence. SNP head Nicola Sturgeon has not said she would hold one, but has also refused to rule one out.
RBA lowers growth forecast in Statement on Monetary Policy In Australia, the RBA released its quarterly Statement on Monetary Policy. The Bank lowered its growth forecast, predicted higher unemployment and said it was prepared to “adjust policy if needed” if growth doesn’t recover. That means in my view that it has adopted an easing bias, although there was no mention of this in the statement following this week’s RBA meeting. I expect China demand to slow further and that they will indeed have to “adjust policy,” leading to a weaker currency. Note the 6.4% yoy decline in Chinese exports and 16.2% yoy collapse in imports in April that was announced today!
Today’s highlights: In Norway, industrial production for March is coming out.
In Norway, industrial production for March is coming out.
In the US, it’s nonfarm payrolls day! The market consensus for April is for an increase in payrolls of 230k, up from the unexpectedly low 126k in March. At the same time, the unemployment rate is forecast to tick down to 5.4% from 5.5%, while average hourly earnings are expected to accelerate a bit on a yoy basis. Following the poor reading in March, April’s labor report has a greater significance as a reading above 200k and a possible upward revision of the March’s figure would do a lot to confirm that the March number was just a temporary blip and not the start of a new, softer trend. A strong employment report would suggest that recent string of weak Q1 data was due largely to the bad weather and the port strike and that the Fed remains on track to raise rates. It could therefore help the USD to recover some of its lost glamour. The graphs below show the impact of the nonfarm payrolls on EUR/USD in the hour following the release.
Canada’s unemployment rate for April expected to rise a bit, and the employment to show a decline from the month before. The rise in the unemployment rate could weaken CAD at the release.
We have two speakers on Friday’s agenda: ECB’s Constancio will speak on “Reinforcing financial stability in the euro area” and New York Fed President William C. Dudley speaks on community banking. onstancio’s speech will be closely watched to see if he mentions anything about the recent volatility in the bond market and what the ECB thinks about it.
Currency Titles:
EUR/USD collapses after failing to break above 1.1375
EUR/GBP collapses after the UK general elections
NZD/USD continued lower
Gold continues lower
WTI collapses back below 60.00
Currencies Image Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/08May2015/EURUSD_08May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/08May2015/EURGBP_08May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/08May2015/NZDUSD_08May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/08May2015/XAUUSD_08May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/08May2015/CLM5_08May2015.PNG
Currencies Text:
EUR/USD collapsed on Thursday after failing to close above the 1.1375 (R2) barrier, and is currently trading back below the 1.1260 (R1) hurdle. Since the possibility for a higher low still exist, the short-term picture remains cautiously positive. However, I would prefer to take the sidelines now, and the reason is because I see negative divergence between both our short-term oscillators and the price action. What is more, the RSI has dipped back below its 50 line and points south, while the MACD has topped and fallen below its trigger line. A clear break above 1.1375 (R2) will make me again confident on the upside and perhaps pave the way for our next resistance at 1.1445 (R3), marked by the peaks of the 13th, 17th and 19th of February. As for the broader trend, the break above 1.1045 (S3) signaled the completion of a possible double bottom formation, something that could carry larger bullish implications. As a result, I would treat any further declines that stay limited above the 1.1045 (S3) barrier as a corrective move before buyers seize control again.
• Support: 1.1170 (S1), 1.1080 (S2), 1.1045 (S3).
• Resistance: 1.1260 (R1), 1.1375 (R2), 1.1445 (R3).
EUR/GBP collapsed during the Asian morning Friday after an exit poll and early election results suggested that David Cameron is likely to stay Prime Minister. The pair plunged and during the early European morning Friday, it is trading between the support line of 0.7220 (S1) and the resistance of 0.7270 (R1). A break below 0.72280 is likely to extend the negative move and perhaps target the next support barrier at 0.7170 (S2). Our short-term oscillators detect negative momentum and amplify the case for the occurrence of the aforementioned scenario. The RSI fell sharply and now looks ready to enter its below-30 territory, while the MACD has topped and fallen below its signal line. Moreover, both the oscillators broke below their respective upside support lines. On the daily chart, today’s decline brings into question the completion of a double bottom pattern. Therefore, I prefer to maintain my flat stance as far as the overall path of EUR/GBP is concerned.
• Support: 0.7220 (S1), 0.7170 (S2), 0.7135 (S3).
• Resistance: 0.7270 (R1), 0.7300 (R2), 0.7335 (R3).
NZD/USD continued to trade lower on Thursday, but the decline was halted at 0.7420 (S1). After the completion of a double top pattern on the 4-hour chart, the short-term bias has turned negative. Hence, I would expect a break below 0.7390 (S2) to pull the trigger for another leg down, perhaps towards the 0.7320 (S3) territory. However, taking a look at our short-term oscillators, I would be careful that an upside corrective move could be in the works before the bears pull the trigger again. The RSI rebounded from near its 30 line, while the MACD has bottomed and could move above its trigger soon. We also have positive divergence between the RSI and the price action. On the daily chart, the failure of the pair to overcome the 0.7740 territory and the subsequent decline, make me switch my view on the overall path to neutral, at least for now.
• Support: 0.7420 (S1), 0.7390 (S2), 0.7320 (S3).
• Resistance: 0.7520 (R1), 0.7575 (R2), 0.7625 (R3).
Gold continued to trade lower on Thursday, breaking below the 1186 (R1) support (now turned into resistance). Subsequently, the rate hit support at 1179 (S1) and rebounded somewhat. If the bears continue pushing the metal lower and manage to break the 1179 (S1) obstacle, I would expect them to pull the trigger of our next support at 1170 (S2). Our momentum studies support the notion. The RSI stays below its 50 line and points somewhat down, while the MACD stands below both its zero and signal lines. It points south as well. Although the decline may continue, with no clear trending structure on the 4-hour chart, I maintain my view that the outlook is neutral. On the daily chart, both our short-term oscillators gyrate around their equilibrium lines, confirming the trendless short-term picture.
• Support: 1179 (S1), 1170 (S2), 1160 (S3).
• Resistance: 1186 (R1), 1200 (R2), 1215 (R3).
WTI plunged on Thursday, falling back below the psychological round number of 60.00 (R3). The price is now trading between the support line of 58.30 (S1) and the resistance of 59.10 (R1). I believe that the fall back below the 60.00 line shifted the short-term bias negative. Therefore, a clear break below the 58.30 (S1) area is likely to open the way for the next support at 57.30 (S2). Our hourly momentum studies detect strong downside momentum and amplify the case that we are likely to experience further declines in the near future. The 14-hour RSI stands near its 30 line and could move below it soon, while the hourly MACD stands below both its zero and signal lines. However, on the daily chart, I still see a positive medium term outlook. The break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. As a result, I would treat any short-term declines that stay limited above 55.00, as a corrective move before the next positive leg.
• Support: 58.30 (S1), 57.30 (S2), 56.50 (S3).
• Resistance: 59.10 (R1) 59.70 (R2), 60.00 (R3).
Benchmark Currency Rates:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/08May2015/Benchmark.JPG
Market Summary Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/08May2015/Table.JPG
currency tags:
EUR
More...
IronFX Daily Commentary | 11/05/15
Language English
• China cuts interest rates for the 3rd time in 6 months The People’s Bank of China (PBoC) cut the one year lending rate by 25bps to 5.1% from 5.35% and the one year deposit rate by the same amount to 2.25%. The move came to support the weakening economy, after recent indicators suggested a further slowdown in Q2. As the country’s growth continues to slow, we could see additional easing measures in the coming months to lower financing costs and create more momentum for the economy. Australia and New Zealand, whose economies are heavily dependent on exports to China, saw their currencies fall on the news, as the recent stimulus measures don’t support the real economy but instead, has benefited the stock market. I would expect the NZD to weaken more that AUD, following the recent shift towards an easing bias from the RBNZ and the high possibility of a rate cut at its next meeting.
• US nonfarm payrolls just missed expectations and rose 223k in April, but the downward revision of the March figure to 85k from 126k and the weaker-than-expected wage growth disappointed investors over the soft US momentum in early 2015. Nevertheless, the decline in the unemployment rate has kept the scenario for a rate hike in September alive, and if other economic indicators rebound and show that Q1 weakness was due to transitory factors, the dollar could regain its lost glamour.
• Eurozone finance ministers meet today and of course Greece will be on the agenda, as usual. Last week the ECB decided to raise the amount of Emergency Liquidity Assistance (ELA) funds it supplies to Greek banks but put off a decision on the discount, or “haircut,” on the collateral for those funds so it could see the result of this meeting. Unfortunately, we don’t expect any breakthroughs. Eurogroup chief Jeroen Dijsselbloem said "Still, lots of issues have to be solved…so there will be no agreements on Monday.” That implies when the ECB meets again on Wednesday, it may increase the haircut on the collateral Greek banks supply to secure the ELA funds. The Greek newspaper Kathimerini says the ECB will consider raising it from the current 23% to 44%, 65% or even 80%. If it does raise the haircut, then Greek banks will either have to come up with more collateral or they will receive less funds. In either case they would probably have to call in some loans. That would increase pressure considerably on the Greek government. Meanwhile, the market has already started turning the screws. According to Bloomberg, international securities firms are curtailing trading with major Greek banks -- pulling credit lines and restricting FX trading limits – out of fear that the country may institute capital controls or even default.
• Today’s highlights: The Bank of England meets to decide on its key policy rate. There’s little chance of a change, hence the impact on the market is likely to be minimal, as usual. The minutes of the meeting however should make interesting reading when they are released on 20th of May. As mentioned by the BoE’s formerly hawkish MPC member Ian McCafferty, the majority of wage settlements are agreed between January and April, therefore we could see some discussion of how the very low inflation has affected wage negotiations. Another key point probably will be the Bank’s view, if any, on the general election result and how it is going to affect the period ahead, although probably their forecasts about the election were as wrong as everyone else’s.
• In Norway, we get the CPI for April. Uniquely among the G10, their CPI is close to the Bank’s 2.5% target. Nevertheless, following the Norges Bank decision to keep its interest rates unchanged and mentioning that they may cut rates in June, NOK could weaken again if Bank officials act in their next policy meeting. On the other hand, the strong household demand and the recent higher oil prices are positive for the Norwegian economy and could keep NOK supported as long as Brent oil price rises.
• From Sweden, we get the PES unemployment rate for April. This could be an early hint of a possible improvement in the official unemployment rate coming out on the 20th of the month. A decline in the rate could prove SEK-positive.
• In the US, we get the labor market conditions index for April. This is a monthly index that draws on a range of data to produce a single measure to gauge whether the labor market is on the whole improving. Following the improving US employment report released on Friday, the LMCI index although not major market mover, is likely to show the broader US labor condition and if the Fed is on track to achieve its maximum employment mandate.
• As for the speakers, ECB Governing Council member Ewald Nowotny speaks.
• Rest of the week The highlight will be the Bank of England quarterly inflation report on Wednesday. BoE Gov. Mark Carney will present the quarterly inflation report with the economic assessment along with updates of the Bank’s GDP and inflation forecasts. If Gov. Carney repeats that inflation will reach 2% in the two-year forecast and the next move in rates will most likely be an increase, investors could bring forward their rate hike expectations and GBP could strengthen somewhat.
• On Tuesday, Sweden’s CPI and CPIF – the Riksbank’s favorite inflation measure -- are due to be released. On 29th of April, the Riksbank surprised the market and left its official cash rate unchanged while extending its QE program by a further SEK 40bn-50bn. Tuesday’s CPI numbers are likely to support SEK at least temporarily, and a possible decline in USD/SEK following the figures could provide renewed buying opportunities, because of the Swedish central bank’s preference for a weak currency.
• On Wednesday, besides the BoE quarterly inflation report, the UK unemployment rate for March is forecast to have ticked down to 5.5% from 5.6% in the preceding month, while average weekly earnings are expected to have risen at the same annual pace as previously (+1.7% yoy). Bearing in mind that the inflation rate declined to 0.0%, a steady increase in nominal wages implies an acceleration in real wages. This, accompanied by a decline in the unemployment rate, could support the pound.
• In Europe, the main data will be the preliminary Q1 GDP figures for France, Germany and the Eurozone as a whole. Eurozone’s preliminary GDP rate for Q1 is expected to have risen a bit from Q4, while figures released from Germany, Europe’s growth engine are likely to show that the economy slowed moderately from Q4.
• On Thursday, the only noteworthy indicator we get is the US PPI for April, while on Friday, we get US industrial production also for April.
Currency Titles:
EUR/USD continues its tumble
GBP/JPY pulls back after hitting 186.00
NZD/USD keeps falling
Gold remains trendless
WTI hits support near 58.30
Currencies Image Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/11May2015/EURUSD_11May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/11May2015/GBPJPY_11May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/11May2015/NZDUSD_11May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/11May2015/XAUUSD_11May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/11May2015/CLM5_11May2015.PNG
Currencies Text:
• EUR/USD continued declining on Friday, falling below the support (now turned into resistance) barrier of 1.1170 (R1). Although the possibility for a higher low still exist, I would prefer to take the sidelines now, and the reason is because I still see negative divergence between both our short-term oscillators and the price action. What is more, the RSI continued lower after falling below its 50 line, while the MACD, already below its trigger, appears ready to obtain a negative sign. As for the broader trend, the break above 1.1045 (S2) signaled the completion of a possible double bottom formation, something that could carry larger bullish implications. As a result, I would treat any further declines that stay limited above the 1.1045 (S2) barrier as a corrective move before buyers seize control again.
• Support: 1.1080 (S1), 1.1045 (S2), 1.1000 (S3)
• Resistance: 1.1170 (R1), 1.1260 (R2), 1.1375 (R3)
• GBP/JPY slid back below 185.00 (R1) on Friday after it hit resistance at 186.00 (R2). Although the pullback may continue for a while, Thursday’s rally following the UK elections confirmed a forthcoming higher high and kept the short-term picture positive. The likelihood for the continuation of the pullback is visible on our short-term oscillators. The RSI moved lower after exiting its overbought zone, while the MACD shows signs of topping and that it could fall below its trigger line in the near future. There is also negative divergence between both the indicators and the price action. As a result, the pullback may continue towards the 184.00 (S1) zone before buyers take control again. On the daily chart, the rate is trading well above both the 50- and the 200-day moving averages, and this supports the continuation of the short-term uptrend. What is mover, our daily momentum indicators detect strong upside speed. The 14-day RSI just poked its nose above its 70 line, while the daily MACD stands above both its zero and signal lines, and points north.
• Support: 184.00 (S1), 182.80 (S2), 181.45 (S3)
• Resistance: 185.00 (R1), 186.00 (R2), 187.25 (R3)
• NZD/USD continued to slide on Friday, breaking below the support (now turned into resistance) of 0.7420 (R1), but the decline was halted by the 0.7370 (S1) line. After the completion of a double top pattern on the 4-hour chart, the short-term bias has turned negative, in my view. A clear move below 0.7370 (S1) is likely to extend the decline towards our next hurdle of 0.7320 (S2). Our short-term oscillators corroborate my view and support the case that further declines could be in the works. The RSI tumbled after hitting resistance at its 50 line, while the MACD, already negative, fell again below its trigger line. On the daily chart, the failure of the pair to overcome the 0.7740 territory and the subsequent decline, make me switch my view on the overall path to neutral, at least for now.
• Support: 0.7370 (S1), 0.7320 (S2), 0.7275 (S3)
• Resistance: 0.7420 (R1), 0.7500 (R2), 0.7575 (R3)
• Gold traded higher on Friday, after finding support near the 1179 (S1) line. Subsequently, the metal found resistance slightly above 1192 (R1) and then retreated somewhat. I believe that the forthcoming wave is likely to be negative, perhaps for another test at the 1170 (S1) barrier. Nevertheless, although we may experience a negative move, I maintain my view that the outlook is neutral. On the daily chart, both our short-term oscillators gyrate around their equilibrium lines, confirming the trendless short-term picture. A clear close below 1170 (S2), could be the signal that the 17th of March – 6th of April advance was just a 50% retracement of the 22nd of January – 17th of March decline, and that the bias is back to the downside.
• Support: 1179 (S1), 1170 (S2), 1160 (S3)
• Resistance: 1192 (R1), 1200 (R2), 1215 (R3)
• WTI fell on Friday, but hit support marginally below 58.30 (S2) and subsequently rebounded to continue quietly above the 59.10 (S1) barrier. The quiet mode is also visible on our hourly momentum studies. Both the 14-hour RSI and the hourly MACD stand near their equilibrium lines. However, I believe that Thursday’s fall back below the 60.00 line shifted the short-term bias negative. A break below 59.10 (S1) is likely to pull the trigger for another test at the 58.30 (S2) territory. As for the broader trend though, on the daily chart, I see a positive medium term outlook. The break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. As a result, I would treat any short-term declines that stay limited above 55.00, as a corrective move before the next positive leg.
• Support: 59.10 (S1), 58.30 (S2), 57.30 (S3)
• Resistance: 59.80 (R1) 60.30 (R2), 61.25 (R3)
Benchmark Currency Rates:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/11May2015/Benchmark.JPG
Market Summary Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/11May2015/Table.JPG
currency tags:
EUR
More...
IronFX Daily Commentary | 12/05/15
Language English
Greece: Another meeting...and again no agreement Greece has been in talks with its international creditors for months trying to secure a favourable deal on its debt repayment and to unlock 7.2bn euros in further financial aid. The statement following the end of Monday’s meeting recognized the progress that has been achieved so far and reiterated that the statement of the 20th of February remains the valid framework for the discussions. Eurogroup President Jeroen Dijsselbloem said that the talks with the new team were “more efficient, more positive, more constructive” and that “we are making fast progress but more time is needed to bridge the remaining gaps”. The improvement in the negotiations came after Greece eased fears that it may default on its payment to the International Monetary Fund (IMF), as it announced that a transfer order was already put to pay the 750bn euros debt interest. Following the positive talks, it is most likely that when the ECB meets on Wednesday to reassess the ELA funds it provides to Greek banks to keep them afloat, it may keep the haircut on the collateral received unchanged.
San Francisco Fed President John Williams reassured the market that the US economy could rebound in Q2 and that the Q1 weakness in GDP was “a big anomaly”. Williams who is a voting member of the FOMC this year, said that he expects the unemployment rate to decline to 5% or even lower than that by the end of the year. He also reiterated the fact that a rate hike is on the table at every Fed meeting, a decision that will solely depend on the economic data. A key point was that the Fed officials are unlikely to provide much warning ahead of an increase in rates because as he said “you don’t want to make a decision two or three months in advance when you really have more time to collect data and make the most informed decision you can”. Despite the recent batch of soft economic data, the Fed is still on track to raise rates this year and the USD is likely to regain its lost glamour as the alternatives within the G10 become less attractive.
Overnight Australia’s home loans rose 1.6% mom in March from +1.1% mom in the previous month, well above expectations of +1.0% mom. The biggest part of the lending growth came from housing investment, which suggests that despite efforts from Australian authorities to cool down the housing market, it keeps overheating. AUD/USD didn’t react sharply on the news, but moved higher to break above 0.7900 again. The move up was also supported by the advance in iron ore prices, Australia’s main export product. Aussie could continue to gyrate around 0.8000 against the dollar, as long as iron ore prices are moving higher, but it could move higher against NZD amid expectations for a rate cut by the RBNZ.
Today’s highlights: During the European day, Sweden’s CPI and CPIF –the Riksbank’s favorite inflation measure, which assumes fixed interest rate and is no directly affected by a change in mortgage rates -are due to be released. The minutes of the Riksbank’s April policy meeting are also coming out. At that meeting, the Bank surprised the market and left its official cash rate unchanged and admitted that the expansionary monetary policy is having a positive impact on the Swedish economy. However, to support the positive development and ensure that inflation rises sufficiently quickly, the Bank decided to extend its QE program by a further SEK 40-50 bn.
A slightly positive tone in the minutes and a strong CPI are likely to support SEK at least temporarily. Nevertheless, a possible decline in USD/SEK following the figures could provide renewed buying opportunities. This is because of the Sweden’s central bank preference of a weak currency, as it has led to higher import and good prices and put upward pressure on CPI, as well as the Bank’s readiness to make monetary policy even more expansionary if necessary that could put SEK under selling pressure.
In the UK, industrial production for March is coming out. A strong industrial production is needed for the final Q1 GDP to accelerate and keep the UK on a recovery path. A positive surprise could strengthen GBP.
In the US, only data of secondary importance are coming out. The NFIB small business optimism for April is expected to have increased a bit, staying fractionally below its December 7-year high. While this indicator is not particularly market-affecting, it’s well worth watching because of the Fed’s emphasis on employment. Small businesses employ the majority of people in the US. The Job Opening and Labor Turnover Survey (JOLTS) report for March is forecast to show that the number of job openings has increased marginally. We will also be watching the “quit rate,” which acts as a barometer of worker confidence in labor market opportunities as once highlighted by Fed Chair Janet Yellen.
As for the speakers, Riksbank Deputy Governor Per Jansson and San Francisco Fed President John Williams speak (again).
Currency Titles:
EUR/USD trades in a consolidative manner below 1.1175
GBP/USD shoots up
USD/CAD hits support near 1.2060
Gold remains trendless
WTI traded in a sideways mode
Currencies Image Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/12May2015/EURUSD_12May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/12May2015/GBPUSD_12May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/12May2015/USDCAD_12May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/12May2015/XAUUSD_12May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/12May2015/CLM5_12May2015.PNG
Currencies Text:
EUR/USD traded in a consolidative manner on Monday, staying below the resistance barrier of 1.1175 (R1). Although the possibility for a higher low still exist, I would prefer to stay on the sidelines for now, and the reason is because there is still negative divergence between both our short-term oscillators and the price action. What is more, both these indicators lie within their bearish territories. As for the broader trend, the break above 1.1045 (S2) signaled the completion of a possible double bottom formation, something that could carry larger bullish implications. As a result, I would treat any further declines that stay limited above the 1.1045 (S2) barrier as a corrective move before buyers seize control again.
• Support: 1.1080 (S1), 1.1045 (S2), 1.1000 (S3).
• Resistance: 1.1175 (R1), 1.1290 (R2), 1.1375 (R3).
GBP/USD surged on Monday after hitting support at 1.5400 (S2), and subsequently broke above the resistance (now turned into support) barrier of 1.5520 (S1). However, the rally was halted at 1.5615 (R1). The price structure suggests a positive short-term picture, therefore I believe that a break above 1.5615 (R1) could curry larger bullish implications and perhaps target the 1.5685 (R2) line, defined by the peak of the 19th of December. Nevertheless, taking a look at our momentum indicators, I see the possibility that a minor pullback could be on the cards before the next positive leg. The RSI looks willing to exit its overbought territory, while the MACD, shows signs that it could start topping. Moreover, there is negative divergence between the RSI and the price action. On the daily chart, the rate is trading well above the 80-day exponential moving average. As a result, I would see a positive medium-term outlook as well.
• Support: 1.5520 (S1), 1.5400 (S2), 1.5300 (S3).
• Resistance: 1.5615 (R1), 1.5685 (R2), 1.5760 (R3).
USD/CAD traded somewhat lower yesterday and hit support near the 1.2060 (S1) line. However, I would expect the rate to trade higher in the near future. The reasons are: 1) the rate found twice solid support at 1.1940 (S3), 2) the rate is trading very close to the longer-term uptrend line taken from the low of the 11th of July 2014, 3) there is positive divergence between our short-term oscillators and the price action. A break above 1.2200 (R2) is the move that could shift the short-term bias to the upside and perhaps open the way for the next resistance at 1.2270 (R3). On the downside, only a clear close below the aforementioned uptrend line and the 1.1940 (S3) hurdle would make me again confident on the downside. Such a move could curry larger bearish extensions and perhaps pull the trigger for the 1.1800 zone.
• Support: 1.2060 (S1), 1.2000 (S2), 1.1940 (S3).
• Resistance: 1.2155 (R1), 1.2200 (R2), 1.2270 (R3).
Gold traded lower on Monday to challenge again the 1179 (S1) support line. Subsequently, the metal rebounded somewhat. Since the 6th of the month, the metal has been oscillating between that support line and the resistance of 1192 (R1). Therefore, I maintain my view that the short-term outlook is neutral. On the daily chart, both our short-term oscillators gyrate around their equilibrium lines, confirming the trendless short-term picture. A clear close below 1170 (S2), could be the signal that the 17th of March – 6th of April advance was just a 50% retracement of the 22nd of January – 17th of March decline, and that the bias is back to the downside.
• Support: 1179 (S1), 1170 (S2), 1160 (S3).
• Resistance: 1192 (R1), 1200 (R2), 1215 (R3).
WTI moved in a sideways mode on Monday, staying between the support barrier of 58.85 (S1) and the resistance of 59.80 (R1). The sideways mode is also visible on our hourly momentum studies. Both the 14-hour RSI and the hourly MACD lie near their equilibrium lines and they point east. However, I believe that last week’s fall back below the 60.00 line shifted the short-term bias negative. A break below 58.85 (S1) is likely to pull the trigger for another test at the 58.30 (S2) territory. As for the broader trend though, on the daily chart, I see a positive medium term outlook. The break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. As a result, I would treat any short-term declines that stay limited above 55.00, as a corrective move before the next positive leg.
• Support: 58.85 (S1), 58.30 (S2), 57.30 (S3).
• Resistance: 59.80 (R1) 60.30 (R2), 61.25 (R3).
Benchmark Currency Rates:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/12May2015/Benchmark.JPG
Market Summary Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/12May2015/Table.JPG
currency tags:
EUR
More...
IronFX Daily Commentary | 13/05/15
Language English
• Chaos in the bond market Bond yields gyrated around the world yesterday after NY Fed President Dudley’s speech, which talked about a “regime shift” in monetary policy. In a speech, “The Global Implications of Diverging Monetary Policy Settings in Advanced Economies,” he said, “…I think it would be naïve not to expect some impact [from the Fed’s first rate hike]. After more than six years at the zero lower bound, lift-off will signal a regime shift even though policy would only be slightly less accommodative after lift-off than it is before. I expect that this will have implications for global capital flows, foreign exchange valuation and financial asset prices even if it is mostly anticipated when it occurs.” The point is that even 0.25 is infinitely larger (as a percent) than zero, so what looks like a small increase is actually a huge change: something vs nothing. Meanwhile, San Francisco Fed President Williams added to the chaos when he said that a “gradual increase” in the Fed funds rate over time would be the safe way to raise rates and therefore “that calls for starting a bit earlier,” even as soon as the June meeting. The comments caused chaos in the bond markets, with US 10-year yields soaring from 2.27% to 2.36% and then back down all the way to 2.24%. But after all that, the 10-year yield finished the day down around 3 bps, while Fed funds futures were largely unchanged and stocks regained much (but not all) of their early losses. While the speech affected yields all around the world, ultimately US policy is likely to affect US bond yields the most and therefore should be bullish for USD. Dudley’s speech is at https://www.newyorkfed.org/newsevents/speeches/2015/dud150512.html
• JOLTS data supports US rate hike In fact I was surprised that the dollar was so weak after the supportive US Job Opening and Labor Turnover Survey (JOLTS) report. Job openings were down slightly, but still were the third-highest ever in the series (starting Dec. 2000). Meanwhile the hiring rate continued at a relatively high 3.6% and the quit rate rose 10 bps to 2.0%. Fed Chair Yellen frequently refers to the JOLTS data as a good indicator of the level of slack in the labor market. The quits rate – the percent of the workforce that voluntarily quit their job each month -- is a particularly effective leading indicator of labor market conditions, because people usually don’t quit their job unless they either have another one lined up or feel confident they can get one. The quits rate is now up to 2%, which as the graph shows, implies a continued rise in the employment cost index (ECI), which rose to 2.6% yoy in March. The ECI is the Fed’s favorite measure of wage inflation. If it continues to rise this year, as the JOLTS data suggests, then it should average 2.6% over the year to September. The Fed hiked rates in 2004 with the ECI averaging around that level.
• ECB continues aid to Greece The ECB held its weekly non-monetary meeting yesterday and apparently agreed to raise the amount of Emergency Lending Assistance (ELA) funds to Greek banks by EUR 1.1bn while keeping the haircut on collateral unchanged. Apparently they are either being rewarded for the small progress being made or at least the ECB is not yet penalizing them. On the other hand, the Greek government did not win the increase in T-bill issuance that it had hoped for, so the overall implication was probably neutral. In any event, sudden death is delayed for another week at least but this is not yet the end of the story by any means.
• China data disappoints (again): China released its retail sales, industrial production and fixed assets investment data for April. The yoy rate of growth in retail sales was down slightly from March, although industrial production was slightly higher (although below estimates). The big change was that fixed asset investment fell sharply. This is exactly what the government is aiming for; they want to change the country’s growth model from investment-driven to consumption-driven. However the change inevitably means a slowdown in growth, as we are seeing. The news should be negative for AUD today.
• Today’s highlights: The main data was out early today: the preliminary Q1 GDP figures for France, Germany and the Eurozone as a whole. France’s GDP was better than expected, but Germany’s was notably lower. The market focused on that and EUR/USD fell slightly. The preliminary figure for the Eurozone as a whole is due out later today. German final CPI and French CPI for April are also coming out.
• In the UK, the main event will be the Bank of England quarterly inflation report. BoE Gov. Mark Carney will present the quarterly inflation report with the economic assessment along with updates of the Bank’s GDP and inflation forecasts. If Gov. Carney repeats that inflation will reach 2% in the two-year forecast and the next move in rates will most likely be an increase, investors could bring forward their rate hike expectations and GBP could strengthen somewhat.
• As for the indicators, the UK unemployment rate for March is forecast to have declined to 5.5% from 5.6% in the month before, while average weekly earnings are expected to have risen at the same annual pace as previously (+1.7% yoy). This, accompanied by a decline in the unemployment rate and a hawkish tone in the inflation report could support the pound.
• In the US, retail sales for April are due out. Headline retail sales are forecast to have risen +0.2% mom in April, a slowdown from +0.9% mom in March. The core rate (excluding the volatile items of auto and gasoline) is expected to accelerate to +0.6% mom from +0.5% mom. A positive figure would support the theory that the weakness in Q1 was mainly due to the harsh weather, and could add to the USD strength
Currency Titles:
EUR/USD rebounds from 1.1130
GBP/JPY continues its rally
AUD/USD rebounds from 0.7885
Gold still trendless
WTI shoots up
Currencies Image Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/13May2015/EURUSD_13May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/13May2015/GBPJPY_13May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/13May2015/AUDUSD_13May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/13May2015/XAUUSD_13May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/13May2015/CLM5_13May2015.PNG
Currencies Text:
• EUR/USD traded higher on Tuesday, after hitting support at 1.1130 (S2). However, the rally remained limited below our resistance line of 1.1290 (R1). The rebound confirmed a forthcoming higher low on the 4-hour chart, but given that there is still positive divergence between our short-term oscillators and the price action, I would prefer to stay on hold for now. A clear move above 1.1290 (R1) is needed to trigger further upside extensions, perhaps for another test at the 1.1375 (R2) territory. . As for the broader trend, the break above 1.1045 signaled the completion of a possible double bottom formation, something that could carry larger bullish implications. As a result, I would treat any declines that stay limited above the 1.1045 barrier as a corrective move before buyers seize control again.
• Support: 1.1260 (S1), 1.1130 (S2), 1.1080 (S3)
• Resistance: 1.1290 (R1), 1.1375 (R2), 1.1445 (R3)
• GBP/JPY continued to trade higher, breaking above the resistance (turned into support) barrier of 187.25 (S1) and reaching the 188.35 (R1) line. The short-term trend remains positive and as a result I would expect a clear break above 188.35 (R1) to open the way for the next obstacle of 189.20 (R2), defined by the peak of the 9th of December. However, our short-term oscillators give evidence that a retreat could be on the cards before the bulls seize control again. There is negative divergence between the RSI and the price action, while the MACD has topped and could move below its trigger soon. On the daily chart, the rate is trading well above both the 50- and the 200-day moving averages, and this supports the continuation of the short-term uptrend. What is more, our daily momentum indicators detect strong upside speed. The 14-day RSI just poked its nose above its 70 line, while the daily MACD stands above both its zero and signal lines and points north.
• Support: 187.25 (S1), 186.00 (S2), 184.45 (S3)
• Resistance: 188.35 (R1), 189.20 (R2), 189.80 (R3)
• AUD/USD rebounded from near 0.7885 (S2), broke above 0.7945 (S1), but the advance remained limited below our resistance line of 0.8025 (R1). The rebound confirmed a higher low on the 4-hour chart, therefore I still see a somewhat positive near-term picture. A break above 0.8025 (R1) is likely to target again the 0.8065 (R2) area, defined by the peaks of the peak of the 29th of April. Our oscillators detect positive momentum and amplify the case that AUD/USD could trade higher in the near-term. The RSI stands above its 50 line, while the MACD lies above both its zero and signal lines. However, the RSI has topped and turned down, hence a pullback could be on the works before buyers take control again. In the bigger picture, the pair is still trading above the uptrend line taken from back the low of the 14th of April, and this keeps the medium term picture positive as well.
• Support: 0.7920 (S1), 0.7860 (S2), 0.7800 (S3)
• Resistance: 0.8025 (R1), 0.8065 (R2), 0.8135 (R3)
• Gold traded higher on Tuesday but the advance stayed limited below the 1200 (R1) barrier. Subsequently, the metal pulled back to settle slightly above 1190 (S1). I still don’t see a clear trending structure on the 4-hour chart, therefore I maintain my view that the short-term outlook is neutral. On the daily chart, both of our short-term oscillators gyrate around their equilibrium lines, confirming the trendless short-term picture. A clear close below 1170 (S3) could be the signal that the 17th of March – 6th of April advance was just a 50% retracement of the 22nd of January – 17th of March decline and that the bias is back to the downside.
• Support: 1190 (S1), 1179 (S2), 1170 (S3)
• Resistance: 1200 (R1), 1215 (R2), 1223 (R3)
• WTI surged yesterday to trade back above 60.00 until it hit resistance slightly above the 61.30 (R1) line. This shifted the short-term bias back to the upside in my view. A clear break above 61.30 (R1) is likely to open the way for the next resistance at 62.10 (R2). Nevertheless, looking at our short-term oscillators I would be careful that a minor pullback could be looming before the next positive leg. The RSI hit resistance near its 70 line and turned somewhat down, while the MACD has topped and could move below its trigger line soon. Moreover, there is negative divergence between the RSI and the price action. As for the broader trend, on the daily chart, I see a positive medium term outlook as well. The break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future.
• Support: 60.15 (S1), 59.60 (S2), 58.85 (S3)
• Resistance: 61.30 (R1) 62.10 (R2), 62.55 (R3)
Benchmark Currency Rates:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/13May2015/Benchmark.JPG
Market Summary Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/13May2015/Table.JPG
currency tags:
EUR
More...
IronFX Daily Commentary | 14/05/15
Language English
Bond sell-off continues despite weak US data Sometimes things just don’t add up. The main data points yesterday were a disappointing decline in the rate of growth in Q1 from Germany and no growth at all in retail sales in the US in April. So why did German 10-year bond yields rise 5 bps and US yields 4 bps? Especially when oil prices were lower. And why did US yields rise when Fed funds rate expectations fell by 3 or 4 bps? The near-term Fed funds futures are now showing the least expected rise in rates that they’ve ever shown. Yet yield curves in both the US and Germany are steepening, an indication that the market believes growth (or inflation) will rise in the long term. The only consistent explanation I can find is that investors expect growth to remain weak in the short term and therefore expect monetary policy to remain loose for longer, which means low rates will continue for some time but the longer-term prospects are improved. That may be the explanation – deflationary pressures continue to subside in Germany, Portugal has now pulled out of deflation, and the ECB’s favorite indication of inflation expectations, the 5yr/5yr forward inflation swap, has risen to the highest level since last November.
USD continues to weaken Despite the weaker German GDP data, Eurozone Q1 GDP came in in line with estimates (and was notably higher than US Q1 GDP, which many economists expected to be revised down to show a decline). On the other hand, as mentioned, US data continues to disappoint and Fed funds rate expectations are being revised down. The combination led to yet another down day for the dollar as it fell against all the G10 currencies and most of the EM currencies that we track.
NZ retail sales beat estimates New Zealand’s retail sales beat estimates handily in Q1, rising 2.7% qoq by volume, up from 1.7% qoq in Q4 2014. This was faster than any economist polled by Bloomberg had forecast and was the first time since 2006 that volumes rose in all 15 retail categories. NZD/USD jumped at the news, but lost most of the gains within the next hour. The manufacturing PMI fell to 51.8 in April from 54.5, but that had little impact on the currency (it was released 15 minutes before the retail sales figure). Reserve Bank of New Zealand (RBNZ) Gov. Wheeler, who said Wednesday that the central bank would “like to see more movement downwards in the exchange rate,” must be rather disappointed in the FX market’s reaction, but until there are signs of weaker growth in NZ or, preferably, stronger growth in the US, it seems that NZD is likely to remain firmer than the RBNZ would like.
Today’s highlights: On Thursday, we have a very quiet day as far as economic data are concerned. We have no major releases during the European day.
In the US, we get the PPI for April and initial jobless claims for the week ended May 9.
As for the speakers, ECB President Mario Draghi gives a lecture at IMF and Bank of Canada Deputy Governor Lynn Patterson speaks during the end of the US session.
Currency Titles:
EUR/USD surges after the disappointing US retail sales
EUR/JPY headed towards 136.00
NZD/USD climbs higher after hitting 0.7320
Gold rallies above 1200
WTI slides and hit support near 60.00
Currencies Image Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/14May2015/EURUSD_14May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/14May2015/EURJPY_14May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/14May2015/NZDUSD_14May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/14May2015/XAUUSD_14May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/14May2015/CLM5_14May2015.PNG
Currencies Text:
EUR/USD rallied on Wednesday, broke above our resistance (now turned into support) line of 1.1290 (S1) and reached once again the key resistance zone of 1.1375 (R1). A break above that hurdle would confirm a forthcoming higher high on the 4-hour chart and perhaps reinforce the short-term uptrend. Such a break is likely to see scope for extensions towards our next resistance at 1.1445 (R2) defined by the peaks of the 13th, 17th and 19th of February. Our momentum studies support the case that EUR/USD could trade higher. The RSI, already above its 50 line, has turned up, while the MACD stands above both its signal and zero lines. What is more, both the indicators emerged above their downside resistance lines. As for the broader trend, the break above 1.1045 signaled the completion of a possible double bottom formation, something that could carry larger bullish implications.
• Support: 1.1290 (S1), 1.1200 (S2), 1.1130 (S3).
• Resistance: 1.1375 (R1), 1.1445 (R2), 1.1540 (R3).
EUR/JPY traded higher yesterday after it found support at 134.30 (S1). I would now expect the rate to challenge again the resistance line of 136.00 (R1). A break above that resistance zone is likely to confirm the continuation of the short-term uptrend and perhaps pull the trigger for our next resistance of 136.75 (R2), defined by the highs of 11th and 12th of February. Our short-term oscillators detect positive momentum and support the case for further near-term advances. The RSI edged higher after hitting support at its 50 line, while the MACD stands above both its zero and signal lines, pointing somewhat up. On the daily chart, the break above 131.40 on the 29th of April signal a medium-term trend reversal and shifted the outlook positive.
• Support: 134.30 (S1), 133.50 (S2), 132.50 (S3).
• Resistance: 136.00 (R1), 136.75 (R2), 137.35 (R3).
NZD/USD started climbing higher after it hit our support barrier of 0.7320. Yesterday, the pair managed to overcome the short-term downtrend line and to move above the psychological zone of 0.7500 (S1). This has turned the short-term bias positive in my view, therefore I would expect a move above 0.7575 (R1) to open the way for the next resistance at 0.7625 (R2). However, given that yesterday’s rally was too steep, I would be careful of a possible pullback before the next positive leg, perhaps to challenge the 0.7500 (S1) line as a support this time. On the daily chart, the failure of the pair to overcome the 0.7740 territory and the subsequent decline make me hold a neutral stance with regards to the broader trend.
• Support: 0.7500 (S1), 0.7420 (S2), 0.7370 (S3).
• Resistance: 0.7575 (R1), 0.7625 (R2), 0.7685 (R3).
Gold shot up yesterday, breaking above the psychological barrier of 1200 (S1), and hitting resistance slightly above our next hurdle of 1215 (R1). A break above that barrier is likely to target the next resistance at 1223 (R2), defined by the peaks of the 2nd of March and the 6th of April. However, taking a look at our oscillators and bearing in mind that the rally was too steep, I would expect a minor short-term retreat. The RSI has turned down within its above-70 territory, while the MACD shows signs that it could start topping. On the daily chart, a break above the 50% retracement of the 22nd of January – 17th of March decline is needed to turn the medium-term bias to the upside. For now, I will maintain my neutral stance as far as the longer-term trend is concerned.
• Support: 1200 (S1), 1190 (S2), 1179 (S3).
• Resistance: 1215 (R1), 1223 (R2), 1234 (R3).
WTI tumbled on Wednesday after hitting resistance slightly above the 61.65 (R2) barrier. The fall was halted by the psychological area of 60.00 (S1), where a rebound would confirm a higher low and perhaps keep the short-term trend positive. A break above 60.60 (R1) would confirm that and perhaps open the way for another test at the 61.65 (R2) territory. The RSI, although below 50, has turned somewhat up, while the MACD, already negative, shows signs that it could bottom. These momentum signs add to the likelihood that a rebound may occur around 60.00 (S1). On the daily chart, I see a positive medium term outlook. The break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. However, I see negative divergence between both our daily oscillators and the price action, giving evidence that a corrective move may be looming.
• Support: 60.00 (S1), 59.60 (S2), 58.85 (S3).
• Resistance: 60.60 (R1) 61.65 (R2), 62.10 (R3).
Benchmark Currency Rates:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/14May2015/Benchmark.JPG
Market Summary Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/14May2015/Table.JPG
currency tags:
EUR
More...
IronFX Daily Commentary | 15/05/15
Language English
Dollar mixed as soft PPI outweighs falling jobless claims The lowest jobless claims in 15 years failed to have much of an impact on the dollar as a soft producer price index (PPI) for April and continued downgrading of Q2 growth expectations continued to exert pressure on the short end of the US yield curve. The Fed funds rate expectations are gradually shifting to price in a rate hike in December rather than September, even though the most recent FOMC forecasts (made back in March) were for three rate hikes this year – a huge difference of opinion!
Euro’s rate disadvantage narrows With Treasuries rallying in the short end and Bunds continuing to sell off, the 2-year spread between Treasuries and Bunds narrowed (as did the spread vs gilts and Japanese Government Bonds, too). This is going to further reduce the pressure on the euro for the time being. With the market still being extremely short EUR (according to the Commitment of Traders report – watch for the new one coming out tonight), we could see further position-closing and gains in EUR.
Nonetheless, I see the continued improvement in the labor market as being more important than the soft economic growth. Growth is not the Fed’s mandate – employment and inflation are. Yesterday’s jobless claims are consistent with a 271k rise in nonfarm payrolls, based on the relationship between the two variables over the last five years. (Admittedly, the margin for error in this forecast is considerable.) Meanwhile, the recent Job Offers and Labor Turnover Survey (JOLTS) report showed yet another rise in the “quits” rate, the rate at which people voluntarily leave their jobs. This implies further gains in the employment cost index and a rise in inflation over the next six to 12 months, according to Fed research. At the same time, the Fed’s forecast of oil prices providing only a temporary dampening effect to inflation seems to be coming true as retail gasoline prices are up over 30% from their lows in January. I still think a September hike is a possibility. That would be a big surprise for the market and would probably turn the dollar around sharply, particularly as ECB President Draghi continues to assure us that the ECB will “implement in full” its QE program and possibly even extend it if inflation doesn’t recover.
NZD, AUD weak on local commodity news The biggest losers of the last 24 hours were NZD and AUD. NZD fell after Fonterra Cooperative Group, the country’s main milk exporter, cut its forecast of whole milk powder volume for the coming 12 months, while AUD weakened after a mining company said it would resume production of iron ore now that the price had rallied. I expect Chinese growth to slow further and for these two currencies to remain vulnerable, particularly AUD.
Japan’s PPI goes negative again After two years of positive year-on-year growth, Japan’s PPI plunged solidly into negative territory in April as the consumption tax hike last April fell out of the comparison. Clearly, deflation is not defeated by any means in Japan (although as the graph shows, the PPI is much more volatile than the CPI). It’s likely that the Bank of Japan will have to increase its stimulus later this year. October is the market’s favoured month. But notice how central bank actions are having less and less impact. The euro is back to where it was before the ECB began its quantitative easing back in January, while AUD/USD is higher than it was before the Reserve Bank of Australia cut interest rates twice. Will buying even more stocks and bonds do anything for the yen? The marginal impact of central bank action is lessening.
Wheat prices jump In the commodities market, wheat prices had the biggest jump in four years on bad weather, the weaker dollar and short-covering.
Today’s highlights: On Friday, we have another relatively light calendar day. There are no major releases during the European day.
In the US, the Empire State index is expected to show that business conditions for NY manufacturers have improved in May, while the US industrial production for April is expected to have remained unchanged after falling March. A rebound in industrial production is needed for the dollar to strengthen. The preliminary University of Michigan consumer sentiment index for May is expected to tick up a bit from the previous month. The surveys of 1-year and 5-to-10 year inflation expectation outlook are also coming out.
Currency Titles:
EUR/USD hits 1.1445
USD/JPY rebounds from 118.90
EUR/GBP trades above 0.7200
Gold finds resistance around 1225
WTI falls below 60.00
Currencies Image Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/15May2015/EURUSD_15May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/15May2015/USDJPY_15May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/15May2015/EURGBP_15May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/15May2015/XAUUSD_15May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/15May2015/CLM5_15May2015.PNG
Currencies Text:
EUR/USD traded higher on Thursday, breaking above the 1.1375 (S1) resistance hurdle and hitting our next barrier at 1.1445 (R1), defined by the peaks of the 13th, 17th and 19th of February. That move confirmed a forthcoming higher high on the 4-hour chart and kept the near-term uptrend intact. I believe that a clear move above 1.1445 (R1) is likely to pave the way for the psychological zone of 1.1500 (R2). However, looking at our short-term oscillators, I see signs that a pullback could be on the cards before the next bullish leg. The RSI hits resistance at its 70 line and turned down, while the MACD has topped and could move below its trigger line any time soon. As for the broader trend, the break above 1.1045 signaled the completion of a possible double bottom formation, something that could carry larger bullish implications.
• Support: 1.1375 (S1), 1.1290 (S2), 1.1200 (S3).
• Resistance: 1.1445 (R1), 1.1500 (R2), 1.1540 (R3).
USD/JPY hit support around 118.90 yesterday and rebounded to trade slightly below our resistance line of 119.60 (R1). A break above that resistance is likely to challenge again the psychological area of 120.00 (R2). Our momentum studies support the notion. The RSI rebounded from its 30 line and turned up, while the MACD has bottomed and could move above its trigger line. However, although we may experience the continuation of the rebound, I would consider the outlook of this pair to be neutral. The rate has been oscillating within a possible triangle formation since the 20th of March. On the daily chart, USD/JPY is trading near the 50-day moving average and well above the 200-one. This keeps the prevailing uptrend somewhat intact, but there is still negative divergence between the daily oscillators and the price action, which gives me another reason to stay on the sidelines.
• Support: 118.90 (S1), 118.50 (S2), 118.00 (S3).
• Resistance: 119.60 (R1), 120.00 (R2), 120.30 (R3).
EUR/GBP traded in a consolidative manner yesterday, staying above the support barrier of 0.7200 (S1), but below the resistance of 0.7260 (R1), which currently coincides with the 200-period moving average. A break above that obstacle is needed to trigger further upside extensions and perhaps pave the way for a test at the 0.7300 (R2) area. The RSI stands above its 50 line, but points sideways, while the MACD stands above its trigger and is headed towards its zero line. These momentum signs support somewhat that EUR/GBP could trade higher in the near term. On the daily chart, the recent declines brought into question the completion of a failure swing bottom pattern. Therefore, I prefer to maintain my flat stance as far as the overall path of EUR/GBP is concerned.
• Support: 0.7200 (S1), 0.7150 (S2), 0.7115 (S3).
• Resistance: 0.7260 (R1), 0.7300 (R2), 0.7330 (R3).
Gold continued to trade higher on Thursday. It broke above the resistance (now turned into support) hurdle of 1215 (S1), but hit resistance slightly above 1225 (R1) and then retreated somewhat. A clear break above 1225 (R1) is likely to extend the positive move and perhaps target the next resistance at 1234 (R2), defined by the peak of the 17th of February. Nevertheless, our momentum indicators give evidence that the retreat may continue before the bulls take the reins again. The RSI has topped within its overbought zone and now looks ready to fall below 70, while the MACD has topped and could move below its signal line soon. On the daily chart, a clear close above 1225 (R1), which happens to be the 50% retracement of the 22nd of January – 17th of March decline is needed to turn the medium-term bias to the upside. For now, I will maintain my neutral stance as far as the longer-term trend is concerned.
• Support: 1215 (S1), 1207 (S2), 1200 (S3).
• Resistance: 1225 (R1), 1234 (R2), 1245 (R3).
WTI continued its tumble on Thursday, falling below the psychological round figure of 60.00 (R1). The move below that key level shifts the short-term outlook negative in my view. Therefore, I would expect a move below the support of 59.40 (S1) to open the way for the next one at 58.85 (S2). Both our hourly momentum studies stand within their bearish territories, indicating negative momentum. Nonetheless, they both point sideways, thus we may experience some consolidation before the next decline. On the daily chart though, I still see a positive medium term outlook. The break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. However, I see negative divergence between both our daily oscillators and the price action, giving evidence that a corrective move may be looming.
• Support: 59.40 (S1), 58.85 (S2), 58.30 (S3).
• Resistance: 60.00 (R1) 60.75 (R2), 61.65 (R3).
Benchmark Currency Rates:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/15May2015/Benchmark.JPG
Market Summary Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/15May2015/Table.JPG
currency tags:
EUR
More...
IronFX Daily Commentary | 18/05/15
Language English
• Greece: the endgame approaches It seems that Greece is rapidly approaching the day of reckoning. The country must find EUR 1.5bn in the first three weeks of next month in order to avoid default. But it is rapidly running out of money and the IMF reportedly said that there was “no possibility for the Greek authorities to repay” more than EUR 11bn in obligations due over the next three months without a release of emergency cash, according to the Telegraph newspaper. Most of the local authorities that were required to turn their spare cash over to the central government have refused to do so. According to the Greek newspaper Kathimerini, the Greek government is hoping that it will be able to reach a technical agreement with lenders this week, which would pave the way for it to receive the funds that would allow it to continue meeting its obligations. However, all reports say that the two sides remain far apart on several important items and indeed that Greece has begun reversing some of the reforms implemented in previous years, especially as concerns the labor market. “We are in an end game,” ECB Executive Board member Yves Mersch said Saturday. “There has been an accord between Europe and Greece to go through a program. This hasn’t been the case since December last year, because the new government said it doesn’t want to have anything to do with the program. But then they can’t demand money that was attached to that program either.” Greek PM Tsipras will reportedly address the issue on the sidelines of a meeting of EU leaders on Thursday and Friday. But it remains to be seen whether an agreement can be reached. Greece may appear as a risk factor for EUR this week.
• Australia retains scope to lower rates Reserve Bank of Australia (RBA) Deputy Gov. Philip Lowe Monday said that the central bank retains scope to lower interest rates further if necessary. He said that “nothing has changed” despite the central bank’s removal of its forward guidance at the end of the statement following its most recent meeting. AUD was notably weaker this morning and is likely to decline further, in my view. We will get more details on the RBA’s thinking tomorrow, when they release the minutes from their recent meeting (see below).
• Investors trim USD longs/currency shorts This week’s Commitment of Traders (COT) report showed that investors generally trimmed their long positions in the dollar or short positions in other currencies. EUR shorts declined somewhat as did DXY longs, although both remain elevated. The exception was GBP shorts, which increased – surprising that these were not closed out immediately after the election on the 7th. This suggests positioning remains favorable for GBP to move higher. The speculative community also remains very long of oil, which could present a threat as oil seems to have peaked for now.
• Today’s highlights: Another light day for indicators today. We have no major releases during the European day.
• In the US, the only indicator we get is the NAHB housing market index for May.
• We have several speakers on Monday’s agenda. RBA Deputy Governor Philip Lowe and BoJ Monetary Policy Board Member Maeda have already made speeches this morning. Chicago Fed President Charles Evans, Riksbank Governor Stefan Ingves and ECB Executive Board Member Yves Mersch all speak at the Swedbank Global Seminar in Stockholm.
• As for the rest of the week: The only G10 central bank meeting is in Japan, which holds a meeting Thursday and Friday, followed as usual by a press conference by BoJ Gov. Kuroda. BoJ meetings tend to be non-events for the FX market as policy is on hold, so as usual the focus will be on Gov. Kuroda’s press conference. Among EM countries with widely traded currencies, Turkey has a central bank meeting on Wednesday and South Africa on Friday. Minutes will be published for the latest meetings of the RBA (Tuesday), Bank of England (Wednesday), ECB and Fed (Thursday). Central bank speakers include Bank of Canada Gov. Poloz (Wednesday) and Fed Chair Yellen and Bank of England Gov. Carney (Friday), among others.
• Tuesday: As mentioned above, the RBA releases the minutes of its May policy meeting. At that meeting, the Bank cut its rates by 25bps as expected but removed the easing bias it had had in the previous statements. The minutes will probably show the easing bias that was missing from the statement, as well as further explanation of why a weaker currency is justified. That could weaken AUD.
• In New Zealand, the 2-year inflation expectation for Q2 is coming out. Given the Q1 CPI stands far below the 1% lower boundary of the RBNZ target range, the possibility for the Q2 expectations to suggest that the country may fall into deflation are high. This could add to the building expectations of a rate cut towards the end of the year and weigh on NZD.
• The UK publishes the CPI for April and Germany will release the ZEW survey for May.
• On Wednesday, the main event will be the release of the minutes of the May Bank of England meeting and the April FOMC meeting. The BoE minutes could resemble the tone of the recent inflation report and reiterate the MPC members view that “the next rate move more likely than not to be an increase”. It will be interesting to see if any of the members who previously voted to hike rates are likely to resume pushing for a tightening any time soon. As for the Fed, the minutes will probably show that FOMC members are still on track to vote for a rate hike at some point this year, as long as there is improvement in the labor market and they are confident that inflation will move back to its 2% objective over the medium term. A hawkish tone like that could help the dollar to recover some of its recent losses.
• Thursday is PMI day. The day begins with the release of China’s preliminary HSBC manufacturing PMI for May, and rolls into the European session with the preliminary manufacturing and service-sector PMI data for May from several European countries and the Eurozone as a whole. The expectations are for the manufacturing PMIs to decrease a bit, in contrast to the recent positive signs that the Eurozone economies are gathering steam. This could prove somewhat EUR-negative. In the UK, retail sales for April are due to be released. A strong figure could add to sterling’s gains.
• On Friday, in addition to the Bank of Japan meeting, we get the German Ifo survey and the CPI for April from both the US and Canada.
Currency Titles:
EUR/USD finds resistance at 1.1465
AUD/USD finds support at 0.8000
EUR/GBP rebounds from slightly above 0.7200
Gold hits again resistance near 1225
WTI rebounds from slightly above 58.30
Currencies Image Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/18May2015/EURUSD_18May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/18May2015/AUDUSD_18May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/18May2015/EURGBP_18May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/18May2015/XAUUSD_18May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/18May2015/CLM5_18May2015.PNG
Currencies Text:
• EUR/USD retreated on Friday but found support at 1.1320 (S1) and rebounded to hit 1.1465 (R1). I still believe that the near-term outlook is positive and that we are likely to see the rate challenging the 1.1500 (R2) barrier in the foreseeable future. Nevertheless, our short-term oscillators give evidence that a corrective retreat could be on the cards before the next positive leg. The RSI hit resistance slightly below its 70 line and turned down, while the MACD has topped and looks ready to fall below its trigger. There is also negative divergence between both these indicators and the price action. As for the broader trend, the break above 1.1045 signaled the completion of a possible double bottom formation, something that could carry larger bullish implications.
• Support: 1.1320 (S1), 1.1280 (S2), 1.1200 (S3)
• Resistance: 1.1465 (R1), 1.1500 (R2), 1.1540 (R3)
• AUD/USD tumbled on Friday, but the decline stayed limited near the support hurdle of 0.8000 (S1). Since the possibility for a higher low around that psychological area still exists, I will maintain the view that the short-term picture is somewhat positive. A break above 0.8060 (R1) will confirm the rebound and perhaps pull the trigger for another test at 0.8160 (R2), a hurdle marked by the peak of the 14th of the month. In the bigger picture, the pair is still trading above the uptrend line taken from back the low of the 14th of April, and this keeps the medium term picture positive as well. However, there is positive divergence between the 14-day RSI and the price action, while the daily MACD shows signs of topping. These signs show decelerating upside momentum and make me wait for a move above 0.8160 (R2) before I get confident again on the continuation of the medium-term uptrend.
• Support: 0.8000 (S1), 0.7945 (S2), 0.7885 (S3)
• Resistance: 0.8060 (R1), 0.8160 (R2), 0.8240 (R3)
• EUR/GBP raced higher on Friday after hitting support fractionally above our support barrier of 0.7200 (S2). The pair violated the resistance (now turned into support) of 0.7250 (S1) and I would now expect it to challenge the next obstacle of 0.7300 (R1). A break through that could target the 0.7330 (R2) line. Our short-term oscillators detect positive momentum and magnify the case for the continuation of the positive waver. The RSI rebounded from slightly below its 50 line, while the MACD, already above its trigger line, has obtained a positive sign. Switching to the daily chart, the 7th – 13th of May decline brought into question the completion of a failure swing bottom pattern. Therefore, I prefer to maintain my flat stance as far as the overall path of EUR/GBP is concerned.
• Support: 0.7250 (S1), 0.7200 (S2), 0.7150 (S3)
• Resistance: 0.7300 (R1), 0.7330 (R2), 0.7380 (R3)
• Gold pulled back on Friday, hit support near 1212 (S1) and then rebounded to find again resistance near 1225 (R1). A clear break above 1225 (R1) is likely to extend the positive move and perhaps target the next resistance at 1234 (R2), defined by the peak of the 17th of February. Nevertheless, our momentum indicators give evidence that another pullback may be looming before the bulls take the reins again. The RSI has topped within its overbought territory and then fell below 70, while the MACD has also topped and fell below its signal line. On the daily chart, a clear close above 1225 (R1), which happens to be the 50% retracement of the 22nd of January – 17th of March decline is needed to turn the medium-term bias to the upside. For now, I will maintain my neutral stance as far as the longer-term trend is concerned.
• Support: 1212 (S1), 1207 (S2), 1200 (S3)
• Resistance: 1225 (R1), 1234 (R2), 1245 (R3)
• WTI slid on Friday, but triggered some buy orders slightly above the support line of 58.30 (S2) and rebounded to pause fractionally below the psychological round figure of 60.00 (R1). With no clear trending structure on the 1-hour chart, I would adopt a flat stance as far as the near term is concerned. Our technical studies corroborate my view. Both the 50- and the 200-hour moving averages point sideways, while both the 14-hour RSI and the hourly MACD stand close to their equilibrium lines. As for the broader trend, I still see a positive medium-term outlook. The break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. Nonetheless, there is still negative divergence between both our daily oscillators and the price action, suggesting that a downside corrective move may be looming.
• Support: 59.20 (S1), 58.30 (S2), 57.80 (S3)
• Resistance: 60.00 (R1) 60.75 (R2), 61.65 (R3)
Benchmark Currency Rates:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/18May2015/Benchmark.JPG
Market Summary Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/18May2015/Table.JPG
currency tags:
EUR
More...
IronFX Daily Commentary | 19/05/15
Language English
• What is the end game for Greece? I wrote yesterday that this was the endgame for Greece. How is it likely to play out?
• The big fear in the markets – the “nuclear option,” as it were – is that Greece defaults on its debt, abandons the euro and reinstates the drachma. This would of course cause chaos in Greece and huge losses among the other European countries that own Greek debt, directly or indirectly (through the ECB, etc.). To make matters worse, citizens in Spain, Portugal and maybe even Italy might worry that their country is next and send their savings en masse to Germany. That would be the biggest bank run in history and could cause the banking systems in those countries to collapse. Moreover, investors in other European countries holding stocks or bonds of those countries would suddenly have to hedge the currency risk. That could cause a huge flood of money out of the euro. The combination of the internal and external pressures could cause the euro to break up.
• Greek officials have been fanning the fears of the nuclear option. They reason that if it’s a choice between the nuclear option and a bail-out, the EU will go with the cheaper and safer option and come up with the money if they are scared enough.
• However, the EU seems to have a third possibility in mind. They seem to be slowly starving Greece of money by withholding funds and limiting the amount of Emergency Liquidity Assistance (ELA) that the ECB supplies to the banks until it finally capitulates and agrees to the EU’s demands. The next step may be to increase the haircut on the collateral that Greek banks have to put up for ELA funds, thereby further squeezing the banking system and the Greek economy.
• So what’s to prevent Greece from defaulting, leaving the Eurozone, reinstating the drachma, and carrying on with a clean slate and no debt? Several things:
1) Legally, Greece can’t leave the Eurozone without leaving the EU. That is the only way that a country can legally leave the euro. However, the government does not have a mandate to leave the EU. If they try, they may be voted out of office.
2) As long as they remain in the Eurozone, then European law only allows the euro as legal tender. The government would have to pay all wages, debts, pensions and bank deposits in euros.
3) Unfortunately, the country doesn’t have the money to do that. In 2014 Greece ran a small primary budget surplus (that is, revenues minus expenses not including interest payments) of 0.4% of GDP. When they started negotiating with the EU earlier this year, they expected a much larger primary surplus for 2015 of 4% of GDP. In that case, Greece could afford to default and alienate the markets, because it wouldn’t need to borrow any money so long as it didn’t have to pay any interest. However, the economy has slowed considerably since then and tax revenues have fallen, pushing the budget back into a primary deficit.
4) With a primary budget deficit, default and an exit from the euro would be worse for the Greeks than the hated austerity program. The government would not have the money to meet its campaign promises and would have to default to its own citizens, cutting pensions and public services while probably redenominating bank deposits into a much weaker currency.
• If either or both of those events happened, no doubt support for the government would collapse and the government would be voted out. I expect that once PM Tsipras and his colleagues realize that, then they will reluctantly agree to whatever demands their creditors make. My guess is that this will involve a referendum so that they can get public approval to renege on their campaign promises. At which point the party may split up and a new government form that in fact will have policies much like the previous one, after all is said and done.
• RBA confirms it retains the option to ease The Reserve Bank of Australia (RBA) released the minutes of its May policy meeting. At that meeting, the Bank cut its Cash Rate (CR) by 25bps as expected but removed the easing bias that it had in the previous statements, causing some investors to speculate that it had reached the end of its easing cycle. The minutes confirmed that the decision to remove forward guidance had been deliberate, but does not limit the board’s scope for easing further at future meetings. In other words, the RBA retains a sort of a soft or unstated easing bias as they see the risks to the economy and inflation largely on the downside. AUD weakened sharply on the report, but quickly bounced back to trade unchanged a few hours later. I remain bearish however as I believe the gradual rebalancing of China’s economy will work to Australia’s detriment.
• New Zealand inflation expectations rise The average inflation expectations of private-sector analysts and businesses two years ahead for New Zealand rose slightly in Q2 to 1.85% from 1.80%, according to the Reserve Bank of New Zealand. Reserve Bank of New Zealand (RBNZ) Gov. Wheeler has said he would consider cutting the benchmark Official Cash Rate (OCR) if near-zero headline inflation starts to weigh on the outlook and change price-setting behaviour, but today’s data shows that this is not the case. Expectations of a rate cut in June fell as a result and NZD moved sharply higher vs both USD and AUD. The interest rate outlook now favors NZD relative to AUD.
• Today’s highlights: During the European day, the German ZEW survey for May is coming out. The survey for April was mixed with the current situation index improving for the sixth consecutive month, but the expectation index declined a bit after five monthly gains. Following the latest round of weak German data, a strong survey is needed to confirm that the country is still gaining momentum. However, the market expects both figures to be below their April level, which could prove negative for EUR today.
• In the UK, we get the CPI for April. As mentioned in the Bank of England’s quarterly inflation report, inflation could temporarily turn negative in the near term. Nevertheless, it is expected to pick up notably towards the end of the year as the past falls in prices, especially of oil, drop out of the annual comparison. Expectations are that the yoy rate of change will remain the same at zero, which would probably be neutral for GBP.
• In the US, housing starts and building permits for April are to be released. Housing starts are forecast to return to above 1mn, indicating that March’s moderate increase was probably due to the harsh winter. Building permits, the more forward-looking of the two indicators, are forecast have increased a bit, keeping the overall trend consistent with an improving housing market. The strength in the housing sector supports the view that growth in Q2 could rebound somewhat and this could strengthen the greenback a bit.
• As for the speakers, Riksbank Governor Stefan Ingves and Bank of Canada Governor Stephen Poloz speak. Ingves said Monday that it’s important to ensure that SEK stays roughly where it is vs EUR and that he sees a weak krona “for some time to come” to support CPI. EUR/SEK declined 0.54% on the day nonetheless. I would expect him to reassert his “weak krona” comments Tuesday in order to reverse this move.
Currency Titles:
EUR/USD pulls back
GBP/JPY trades in a consolidative manner
NZD/USD gains on higher inflation expectations
DAX futures rebound from 11420
Gold hits resistance around 1232 and pulls back
Currencies Image Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/19May2015/EURUSD_19May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/19May2015/GBPJPY_19May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/19May2015/NZDUSD_19May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/19May2015/DAX_19May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/19May2015/XAUUSD_19May2015.PNG
Currencies Text:
• EUR/USD tumbled on Monday, fell below the support (turned into resistance) barrier of 1.1330 (R1), and is testing the support line of 1.1280 (S1) during the European morning Tuesday. Although the short-term outlook stays somewhat positive, I believe that the corrective move is likely to continue for a while. A break below 1.1280 (S1) could confirm that and perhaps pave the way for the next support at 1.1200 (S2). Our oscillators detect negative momentum and support the case for further retracement. The RSI continued lower and fell below its 50 line, while the MACD, although positive, stands below its trigger line and points north. There is also negative divergence between both the indicators and the price action. As for the broader trend, the break above 1.1045 signaled the completion of a possible double bottom formation, something that could carry larger bullish implications. I would treat any possible downside extensions as a corrective move, at least for now.
• Support: 1.1280 (S1), 1.1200 (S2), 1.1130 (S3)
• Resistance: 1.1330 (R1), 1.1465 (R2), 1.1500 (R3)
• GBP/JPY has been trading in a consolidative manner for a week now, between the support barrier of 187.25 (S1) and the resistance of 188.60 (R1). The short-term trend remains positive, but I believe that a downside corrective move could be on the cards before the bulls pull the trigger again. A break below 187.25 (S1) is likely to trigger the corrective move and perhaps challenge the 186.00 (S2) area. Our momentum indicators detect slowing momentum and support the case that we are likely to see GBP/JPY correcting lower. The RSI slid and now lies near its 50 line, while the MACD, although positive, has been standing below its trigger and points down. On the daily chart, the rate is trading well above both the 50- and the 200-day moving averages, and this supports the continuation of the short-term uptrend. However, our daily momentum indicators give evidence of a possible correction as well. The 14-day RSI turned down within its overbought territory, while the daily MACD shows signs of topping.
• Support: 187.25 (S1), 186.00 (S2), 184.45 (S3)
• Resistance: 188.60 (R1), 189.20 (R2), 189.80 (R3)
• NZD/USD rallied during the Asian morning Tuesday after the RBNZ reported higher inflation expectations. The pair rebounded from 0.7360 (S1) and is now testing the resistance of 0.7430 (R1). Even though the rebound may continue for a while, the short-term picture remains negative in my view. I would expect the bears to eventually take control and go for another test at the 0.7360 (S1) line. A break through that could target the 0.7320 (S2) hurdle. On the daily chart, Thursday’s candle looks like a shooting star formation, which supports further declines. However, I would like to see a clear close below the 0.7200 area before I start discussing the resumption of the prior longer-term downtrend.
• Support: 0.7360 (S1), 0.7320 (S2), 0.7275 (S3)
• Resistance: 0.7430 (R1), 0.7500 (R2), 0.7575 (R3)
• DAX futures traded higher on Monday after finding support at 11420 (S1). A move above 11740 (R1) will probably confirm that the down move started on the 10th of April was just a corrective move and that the larger trend is back in force. Such a move is likely to initially challenge our next resistance at 11920 (R2). Our short-term oscillators reveal positive momentum and amplify the case for further advances. The RSI is back above its 50 line, while the MACD stands above both its signal and zero lines, pointing somewhat north. On the daily chart, the index shows signs that it could rebound from the long-term uptrend line taken from back at the low of the 16th of October. This keeps the longer-term path of the index to the upside in my view.
• Support: 11420 (S1), 11200 (S2), 11000 (S3)
• Resistance: 11740 (R1) 11920 (R2), 12100 (R3)
• Gold raced higher on Monday, but the advance was halted near the 1232 (R2) level. Subsequently, the metal pulled back and is now trading back below 1226 (R1). Taking a look at our short-term oscillators, I see signs that the pullback could continue, perhaps for a test at the 1212 (S1) territory. The RSI tumbled after exiting its above-70 territory, while the MACD has topped and fallen below its trigger line. On the daily chart, Monday failed to close above 1226 (R1). I believe that a decisive close above that barrier is needed to turn the medium-term bias to the upside. For now, I will maintain my neutral stance as far as the longer-term trend is concerned.
• Support: 1212 (S1), 1207 (S2), 1200 (S3)
• Resistance: 1226 (R1), 1232 (R2), 1245 (R3)
Benchmark Currency Rates:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/19May2015/Benchmark.JPG
Market Summary Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/19May2015/Table.JPG
currency tags:
EUR
More...
IronFX Daily Commentary | 20/05/15
Language English
• Dollar continues to gain The dollar continued to gain ahead of today’s FOMC minutes (see below). Yesterday’s better-than-expected US building permits and housing starts for April adds to a few other better-than-expected data points recently to suggest that perhaps the US economy was just held down during Q1 by the bad weather and the port strike. Fed funds rate expectations rose as much as 6 bps yesterday and the day before. Meanwhile, European data has been surprising less and less on the upside, giving less and less upward impetus to the euro. Plus comments by ECB Board member Benoit Coeure that the ECB is likely to speed up its bond purchases ahead of the summer pushed Bund yields down and widened the advantage of US bonds over European bonds. Sentiment for the USD now seems to be turning around – again.
• Distortions in Q1 The market talk recently is about the distortions in the economy that caused the slow growth. The Wall Street Journal carried a widely quoted story noting that March was perhaps the worst month since the 2008/09 financial crisis, but attributing it to the resolution of the West Coast port strike, which caused a surge of imports and therefore a sharp drop in net exports. Subsequently, the San Francisco Fed published a study saying that issues with seasonal adjustment are depressing GDP data for Q1. They applied a “second round of seasonal adjustment.” “After this correction, aggregate output grew much faster in the first quarter than reported,” they concluded. According to their calculations, the economy grew by 1.8% qoq SAAR in Q1, rather than the initial estimate of 0.2%. (Their paper is available on the web at http://www.frbsf.org/economic-research/publications/economic-letter/2015 ) Of course, this study contradicts another one published a four days earlier by the Fed’s Board of Governors, which said it “does not find convincing evidence” of any problems with the seasonal adjustment (http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/residual ) Nonetheless, the fact that this debate is heating up gives ammunition to those who are looking for last year’s pattern to repeat itself and therefore supports those on the FOMC who are looking for any excuse to hike rates. It is therefore USD-bullish. The revised figure for 1Q GDP is due out on May 29th.
• Meanwhile, the Atlanta Fed’s “GDPNow” estimate of Q2 US GDP is 0.7% qoq SAAR, far below the market consensus of +2.7%. But that won’t be released until July 30th, by which time the debate will have moved on.
• Greek deal by end-May? German Chancellor Merkel and French President Hollande yesterday said talks with Greece must be accelerated to produce an agreement by the end of May, because of the country’s financial needs. EC President Juncker said he expected a deal by late May or early June. However, a threat has appeared from a different source: as many as 100 of Merkel’s 311 Christian Democratic party members of the German lower house (Bundestag) are apparently objecting to further aid for Greece. The Bundestag would have to approve any substantial changes to the conditions for Greece’s aid program. A deal for Greece would remove a big risk factor from the euro and be EUR-positive. Failure on the other hand could be disastrous.
• Japan growth exceeds estimates Japan’s GDP grew by 2.4% qoq SAAR in Q1, rising from Q4’s 1.5% pace and beating estimates of 1.6%. It wasn’t just because of deflation, either; nominal growth also rose briskly. Capital investment rose for the first time in four quarters while inventories also rose, showing that companies are getting more optimistic. On the other hand, it’s possible that the inventory accumulation could be reversed in coming quarters and growth slow as a result. Nonetheless, Tokyo stocks opened higher as a result and USD/JPY rose along with them, showing the usual positive correlation.
• Today’s highlights: The main event today will be the minutes of the April FOMC meeting. The minutes will probably show that FOMC members are still on track to vote for a rate hike at some point this year, as was mentioned several times from Fed speakers recently. The focus will be on how Fed officials see the recent weak growth data affecting their decision on when – or whether – to hike rates. How much of the slow economic growth in Q1 do they attribute to the bad weather conditions and the port strike? Investors will also be looking for any mention of how the strength of dollar is affecting the US economy. Of course their view on inflation will also be closely analyzed. If the minutes sound a bit hawkish and show optimism about the future, the dollar is likely to gain against its major peers.
• Besides the FOMC minutes, the Bank of England releases the minutes of its May meeting. We expect the minutes to resemble the tone of the recent inflation report and reiterate the MPC members view that “the next rate move more likely than not to be an increase”. We will be watching if there are still two members who see the risks as finely balanced and if any of the members who previously voted to hike rates are likely to resume pushing for a tightening any time soon. Another key point to watch will be any discussion of how the very low inflation rate has affected wage negotiations. There seem to be two camps on the MPC: those who think low inflation means wage demands will remain low, and those who think rising wage demands are likely to start pushing inflation higher.
• As for the indicators, During the European day, Norway Q1 GDP is expected to rise at a slower pace from the previous quarter. Following the below-expectations inflation rate last week, this may add further pressure on the Norges Bank to cut rates at its June meeting. This could prove NOK-negative.
• In Sweden, the official unemployment rate for April is expected to rise a bit. This could weaken SEK somewhat.
• Chicago Fed President Charles Evans speaks today.
Currency Titles:
EUR/USD collapses following Coeure’s comments
GBP/USD falls after data showed that the UK fell into deflation in April
EUR/JPY rebounds from an uptrend line
WTI dives amid increased output by Saudi Arabia
Gold tumbles and hits support around 1207
Currencies Image Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/20May2015/EURUSD_20May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/20May2015/GBPUSD_20May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/20May2015/EURJPY_20May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/20May2015/CLM5_20May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/20May2015/XAUUSD_20May2015.PNG
Currencies Text:
• EUR/USD collapsed on Tuesday, after ECB’s Coeure’s said that the Bank will “frontload” its QE program in May and June to avoid disrupting the market during the summer months. The rate plunged, violating two support (now turned into resistance) barriers in a row, and finding support around 1.1120 (S1). A break below that support would confirm a forthcoming lower low on the 4-hour chart and perhaps challenge the critical barrier of 1.1045 (S2) as a support this time. However, bearing in mind that the RSI hit support at its 30 line and could rebound from there, I would be careful of a possible upside bounce before the bears prevail again. As for the broader trend, the break above 1.1045 (S2) signaled the completion of a possible double bottom formation, something that could carry larger bullish implications. I would still treat any possible downside extensions that stay limited above 1.1045 (S2) as a corrective phase, at least for now.
• Support: 1.1120 (S1), 1.1045 (S2), 1.1000 (S3)
• Resistance: 1.1200 (R1), 1.1280 (R2), 1.1330 (R3)
• GBP/USD tumbled on Tuesday after the UK inflation rate for April turned negative for the first time since 1960. Cable fell below 1.5630 (R2), and the decline was halted below the 1.5520 (R1) barrier, slightly above the uptrend line taken from the low of the 13th of April. Given that Cable is trading above that trend line, the short-term picture is somewhat positive, in my view. A rebound near the trend line and a move back above 1.5520 (R1) is likely to confirm that and perhaps challenge again the 1.5630 (R2) line. Our momentum studies corroborate my view. The RSI rebounded from its 30 line and is now pointing up, while the MACD shows signs that it could start bottoming. On the daily chart, the rate is trading well above the 80-day exponential moving average. As a result, I would see a positive medium-term outlook as well.
• Support: 1.5400 (S1), 1.5300 (S2), 1.5160 (S3)
• Resistance: 1.5520 (R1), 1.5630 (R2), 1.5800 (R3)
• EUR/JPY also tumbled on Coeure’s comments. It hit support at 134.00 (S1) and the uptrend line taken from back the low of the 15th of April. Nonetheless the short-term outlook remains positive in my view. A rebound above 135.75 (R2) would confirm the resumption of the uptrend and perhaps challenge again Monday’s highs, at around 136.90 (R3). Our short-term momentum studies support the notion. The RSI rebounded from slightly above its 30 line and is pointing up, while the MACD shows signs that it could start bottoming. On the daily chart, the break above 131.40 on the 29th of April signaled a possible trend reversal in my view. This keeps the medium-term picture positive as well. As a result I would treat any possible declines that stay limited above 131.40 as corrective moves.
• Support: 134.00 (S1), 133.50 (S2), 132.50 (S3)
• Resistance: 135.20 (R1), 135.75 (R2), 136.90 (R3)
• WTI plunged after Saudi Arabian oil minister Al-Naimi said that the country had been pumping 10.3mn barrels per day in March. Crude oil violated three support barriers in a row on Tuesday, and during the European morning Wednesday it is trading slightly above the 57.00 (S1) barrier. The short-term bias is negative in my view, therefore, I would expect a dip below 57.00 (S1) to initially challenge our next support at 56.50 (S2), defined by the low of the 29th of April. Our daily momentum studies support the case for further declines. The 14-day RSI just fell below its 50 line, while the daily MACD has topped and fallen below its signal line. As for the broader trend, the break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. As a result, I would treat yesterday’s fall and any future extensions of it that stay limited above 55.00 as a corrective phase.
• Support: 57.00 (S1), 56.50 (S2), 56.10 (S3)
• Resistance: 57.80 (R1) 58.30 (R2), 58.70 (R3)
• WTI plunged after Saudi Arabian oil minister Al-Naimi said that the country had been pumping 10.3mn barrels per day in March. Crude oil violated three support barriers in a row on Tuesday, and during the European morning Wednesday it is trading slightly above the 57.00 (S1) barrier. The short-term bias is negative in my view, therefore, I would expect a dip below 57.00 (S1) to initially challenge our next support at 56.50 (S2), defined by the low of the 29th of April. Our daily momentum studies support the case for further declines. The 14-day RSI just fell below its 50 line, while the daily MACD has topped and fallen below its signal line. As for the broader trend, the break above 55.00 on the 14th of April signalled the completion of a double bottom formation, something that could carry larger bullish implications in the not-too-distant future. As a result, I would treat yesterday’s fall and any future extensions of it that stay limited above 55.00 as a corrective phase.
• Support: 57.00 (S1), 56.50 (S2), 56.10 (S3)
• Resistance: 57.80 (R1) 58.30 (R2), 58.70 (R3)
Benchmark Currency Rates:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/20May2015/Benchmark.JPG
Market Summary Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/20May2015/Table.JPG
currency tags:
EUR
More...
IronFX Daily Commentary | 21/05/15
Language English
• FOMC minutes show Fed still on track to tighten, but not so soon The minutes of the April FOMC meeting contained no significant surprises for the market. They showed that the Committee viewed the weakness in Q1 growth as largely due to the exceptional weather and the port strike and expect it to be followed by stronger growth in the future. However, the Committee will want to see that confirmed by the data in coming months, so a June rate hike is effectively off the table and whether they hike in September depends on whether the data justifies such a move by that point. (In theory they could hike in July too, but there is no press conference scheduled after that meeting so the market assumes it’s less likely.) There was nothing notably new on the outlook for inflation.
• Given the market’s doubts about the strength of growth, this was interpreted as making no change in the likelihood of a rate hike this year and Fed funds rate expectations were unchanged out to November. The dollar strengthened against most of the G10 currencies, the exception being CHF, GBP, CAD and SEK, which rose slightly vs USD. This may have been due to confirmation that the Committee remains determined to tighten. Apparently though the view was that degree of tightening over the longer term would be less and expectations at the long end of the Fed funds futures retreated modestly, down 3.5 bps. This boosted EM currencies, which mostly gained, and those gaining the most included some of the most troubled countries, such as TRY, BRL and ZAR. The reason is probably that a slower rise in US rates would cause less disruption to EM economies.
• The market still has very, very different expectations than the FOMC does. October Fed funds were unchanged yesterday at 0.235%, at which level they are pricing in about a 45% chance or a rate hike by September. Dec 2017 is at 1.71%, which implies even chances that the Fed funds target range is either 1.50%-1.70% or 1.75%-2.00%. This compares with the median FOMC estimate of 3.63% and weighted average of 3.18% for the same time. Fed Chair Yellen (and the minutes) have emphasized the high level of uncertainty about the outlook for the neutral real rate moving higher over the next several years, so perhaps the Committee’s expectations for a rapid rise are somewhat overdone. Nonetheless their expectations seem likely to remain well above the what the market is pricing in, which seems more consistent with a much lower sustained neutral rate estimate and even the risk that the Fed has to return toward zero interest rates at some point. Now it’s true that the Fed has a surprisingly poor record of economic forecasting. Nonetheless, I believe the market is being overly pessimistic here. So long as the economy continues to expand, which seems likely, I believe they are determined to gradually bring interest rates back to a more normal level. That implies an adjustment to market expectations and a stronger dollar over time.
• China PMI rises but below expectations; Japan does better China and Japan launched today’s round of May manufacturing purchasing manufacturers’ indices (PMIs) with mixed results. In China, the closely watched HSBC China Manufacturing PMI rose to 49.1 from 48.9. While this was an improvement, it was a bit below expectations of 49.3 and still shows that manufacturing is slowing. Moreover, the comments by Markit’s economist were rather shocking: after discussing the “further deterioration in operating conditions,” “softer client demand” and “further job cuts,” she turned to what she said was the good news:
On a positive note, deflationary pressures remained relatively strong, with both input and output prices continuing to decline, leaving plenty of scope for the authorities to implement further stimulus measures if required.
• The “positive note” is that “deflationary pressures remained relatively strong”! Yet Shanghai stocks were up 1.3%, presumably on expectations that the authorities would come riding to the rescue eventually. I believe this expectation is overblown and Chinese investors are likely to be disappointed at some point. With deflationary pressures likely to depress commodity prices further, I remain bearish on AUD.
• In contrast, the Japan Markit/JMMA manufacturing PMI rose to 50.9 from 49.9, moving into expansionary territory and beating expectations of 50.3. This was good news for Japan following yesterday’s so-so Q1 GDP data, which showed an economic expansion based largely on an unsustainable rise in inventories.
• Today’s highlights: Thursday is a PMI day. Following China and Japan, we get the preliminary manufacturing and service-sector PMI data for May from several European countries and the Eurozone as a whole. The expectations are for the manufacturing PMIs to decrease a bit, in contrast to the recent positive signs that the Eurozone economies are gathering steam. This could prove EUR-negative somewhat. EU consumer confidence will also be released in the afternoon.
• The ECB releases the minutes of its April 15 policy meeting. As the Council left rates unchanged and are not expected to change policy for some time, these minutes are not likely to attract as much attention as the Fed’s or Bank of England’s have.
• In the UK, retail sales for April are due to be released. A strong figure could add to sterling’s gains.
• In the US, the Markit PMI is expected to show manufacturing expanding at an accelerating pace. Initial jobless claims for the week ended May 16 are expected to rise a bit but the overall trend is expected to remain consistent with an improving labor market. The Philadelphia Fed business activity index for May is forecast to increase a bit, while Conference Board leading index for April is expected to accelerate from the previous month. Existing home sales for April are expected to rise, in line with the good housing starts and building permits released Tuesday. All told, if the indicators all come out largely as expected, they should go some way to confirming that the weakness in Q1 is coming to an end and that activity did indeed pick up in Q2. That should be supportive for the dollar.
• As for the speakers, BoE MPC member Martin Weale and Fed Vice Chair Stanley Fischer speak. BoE’s Weale is one of the two members who used to vote for a rate hike. It will be interesting to find out if he is likely to resume pushing for a tightening any time soon. That could be supportive for GBP. Separately, Fischer speaks at an ECB Conference in Portugal.
Currency Titles:
EUR/USD hits support slightly above 1.1045
NZD/USD finds support near 0.7275
GBP/JPY testing again the key resistance of 188.60
DAX futures headed towards 11920
Gold rebounds from slightly above 1200
Currencies Image Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/21May2015/EURUSD_21May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/21May2015/NZDUSD_21May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/21May2015/GBPJPY_21May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/21May2015/DAX_21May2015.PNG
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/21May2015/XAUUSD_21May2015.PNG
Currencies Text:
• EUR/USD traded lower on Wednesday and hit support near the 200-period moving average, slightly above the 1.1045 (S1) key hurdle. Although that move confirmed a lower low on the 4-hour chart, taking a look at our oscillators, I would expect the forthcoming wave to be positive. The RSI rebounded from near its 30 line, while the MACD has bottomed and could move above its trigger line soon. A break above 1.1145 (R1) would confirm that and perhaps challenge initially our next resistance of 1.1200 (R2). As for the broader trend, the break above 1.1045 (S1) on the 29th of April signaled the completion of a possible double bottom formation, something that could carry larger bullish implications. I would treat the 15th – 20th of May decline as corrective move, at least for now. I would talk about the resumption of the prior downtrend if I see a clear close below the psychological figure of 1.1000 (S2).
• Support: 1.1045 (S1), 1.1000 (S2), 1.0925 (S3)
• Resistance: 1.1145 (R1), 1.1200 (R2), 1.1280 (R3)
• NZD/USD traded lower on Wednesday, but rebounded after hitting support fractionally above the 0.7275 (S1) barrier, a support defined by the low of the 18th of March. Today, during the early European morning, the rate is testing the 0.7330 (R1) line, where an upside break is likely to signal the continuation of the rebound and perhaps target the 0.7375 (R2) hurdle. Even though the rebound may continue for a while, the short-term picture stays negative in my view. As a result, I would treat the current rebound or any extensions of it as a corrective bounce before the bears pull the trigger again. Our short-term oscillators support further correction for now. The RSI rebounded from slightly above its 30 line, while the MACD has bottomed and could move above its trigger soon. On the daily chart, the declines of the last four days confirmed the shooting star formed last Thursday. However, I would like to see a clear close below the 0.7200 area before I start discussing the resumption of the prior longer-term downtrend.
• Support: 0.7275 (S1), 0.7200 (S2), 0.7120 (S3)
• Resistance: 0.7330 (R1), 0.7375 (R2), 0.7430 (R3)
• GBP/JPY traded higher after correcting lower and finding support at 186.00 (S2), and now is testing the key hurdle of 188.60 (R1). That move confirmed that the short-term trend remains positive, and that the decline towards 186.00 (S2) was just a pullback. A break above 188.60 (R1) would confirm a forthcoming higher high and perhaps challenge our next resistance at 189.80 (R2), defined by the peaks of the 5th and 8th of December. Our momentum indicators detect upside momentum and support the case that we are likely to see GBP/JPY trading higher. The RSI turned up again, while the MACD rebounded from near its zero line and crossed above its trigger line. On the daily chart, the rate is trading well above both the 50- and the 200-day moving averages, and this supports the continuation of the short-term uptrend. However, our daily momentum indicators give evidence of a possible correction as well. The 14-day RSI turned down within its overbought territory, while the daily MACD shows signs of topping.
• Support: 187.25 (S1), 186.00 (S2), 184.45 (S3)
• Resistance: 188.60 (R1), 189.80 (R2), 192.80 (R3)
• DAX futures surged on Tuesday and managed to overcome the resistance (turned into support) barrier of 11740 (S1). In my opinion, that move confirmed that the decline started on the 10th of April was just a corrective move and that the larger trend is back in force. On Wednesday, the index traded quietly, staying slightly below the resistance hurdle of 11920 (R1). A break through that is likely to target the next resistance obstacle at 12100 (R2). Our short-term oscillators reveal positive momentum and amplify the case for further advances. The RSI raced higher after crossing above its 50 line. It could move above 70 soon, while the MACD stands above both its zero and signal lines and points north. On the daily chart, the index rebounded from the long-term uptrend line taken from back at the low of the 16th of October. This keeps the longer-term path to the upside in my view.
• Support: 11740 (S1), 11420 (S2), 11200 (S3)
• Resistance: 11920 (R1) 12100 (R2), 12280 (R3)
• Gold rebounded somewhat on Wednesday after it hit support slightly above the psychological figure of 1200 (S2). Now, the metal is trading fractionally below the resistance line of 1212 (R1), where a break is likely to signal the continuation of the rebound and perhaps challenge the next obstacle at 1220 (R2). Our momentum studies support the notion. The RSI turned up again and could move above its 50 line soon, while the MACD, just below its zero line, started bottoming. On the daily chart, Monday failed to close above 1226 (R3). I believe that a decisive close above that barrier is needed to turn the medium-term bias to the upside. For now, I will maintain my neutral stance as far as the overall picture of the yellow metal concerned.
• Support: 1205 (S1), 1200 (S2), 1195 (S3)
• Resistance: 1212 (R1), 1220 (R2), 1226 (R3)
Benchmark Currency Rates:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/21May2015/Benchmark.JPG
Market Summary Url:
http://shared.ironfx.co.uk/Morning_Pictures_2015/May2015/21May2015/Table.JPG
currency tags:
EUR
More...