Technical and Market Analysis by Vistabrokers - page 22
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Vista Brokers: New Zealand DollarReacted to Global Dairy Trade Price IndexDecline
On Wednesday, the kiwi fell slightly against the US dollar, having taken a lead from yesterday's weak data on the globaldairytradepriceindex. Vista Brokers analysts note that diary prices dynamics have a strong impact on the New Zealand dollar, as these products are the main export items for the country.
However, the fall of the currency was limited prior to the FOMC meeting, which will be held tonight. Thus, NZD/USD has fallen to 0.7305 from 0.7377 on Tuesday.
Note that the global price index for dairy products, which is calculated on the results of GlobalDairyTrade auctions, has decreased by 8.8% compared with the previous auction on March 3.
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GOLD. RhetoricDetermines Trend
On the eve bears have "knocked in" a nearest support level (1142). Here they were met, but not banished away. It is likely that today, this level will be crucial in the context of the future dynamics determining. Though it will be after the Fed confirms or confutes ideas that market participants and relevant experts think it should announce today. Now all of them are practicing in predicting of the FOMC accompanying statement text, excluding or adding words, but only the Fed itself will set the record straight. It is likely that it will happen not at once, but during the press conference with Janet Yellen.
A main market strategy as for gold is to analyze the Fed's rhetoric, and if it would indicate impending steps aimed at monetary policy tightening, it makes sense to sell the yellow metal with the first target at 1131.77 (five years minimum). If it will not happen, then the above-mentioned level may become a foothold for a counter-offensive of bulls.
USD / CAD. BullsDemonstrateSeriousness oftheir Intentions
As judged by a current pair dynamics, buyers remain at a crouch start before the Fed meeting. It is telling that at the same time, trading run within an upward channel, close to six-year highs. However, as they say, everything can change, so we should not act actively prior to said events (or better, also for some time after them).
One of logical decisions in this situation would be to put a pending order to buy at 1.2822 with a target of 1.3063. Looking ahead, we note that in the case of its achievements and the subsequent passage, a target value will be a 61.8% Fibonacci retracement (1.3450) of the total decrease in 2002-2007.
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Vista Brokers: After Temporary Decline Dollar Returned to Growth
On Thursday, the dollar regained positions after having decline against its major counterparts on Wednesday after the Fed meeting. Vista Brokers analysts remind that the FOMC accompanying statement was more dovish than market participants have expected, and this led to a maximum daily decline of the dollar for the last 6 years. The Fed has removed the word "patience" in respect of the rate hike, but has lowered the outlook for economic growth and inflation. This has pushed growth rates expectations from June closer to September.
However, the dollar has recovered its positions quickly enough and it argues that "bullish" trend for the US currency is based not only on speculation regarding the Fed's actions. Many experts still believe that against the dollar the euro, which has seriously weakened amid the ECB quantitative easing program launching and problems of Greece, will soon reach parity.
It is worth noting that on Thursday came out weekly data on unemployment claims in the US, which showed an increase in the number of applications by 1000 compared to the previous reporting week (291 0000 vs 290 000). Analysts expected that the number of new applications will be 295 000, so that the data was better than expected once again. The labor market is still one of the main benchmarks for the Fed, and on Wednesday the head of the Fed once again confirmed this, so that the market recovery will continue to provide support for the dollar. Note that at the moment the US unemployment rate is the lowest since May 2008 – 5.5%.
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Vista Brokers: OilRises while Dollar Weakens
On Friday, oil prices in the world market rise after one of the lowest close of the year on Thursday. Vista Brokers analysts point out that yesterday traders have feared regarding record volumes of oil inventories in the United States, but today the situation changed due to the weakening of the dollar against other major currencies.
By the end of trading on Thursday on the New York Stock Exchange WTI crude oil for April delivery closed at $ 43.96 a barrel, losing 1.6% during the day. May Brent crude oil on London's ICE Futures Exchange fell by 2.7%, to $ 54.43 a barrel.
Recall that on Thursday the dollar was mainly declining against most major currencies after the US Federal Reserve meeting on the previous day, which has given no clear signals regarding the rates increasing. However, oil prices remained under pressure due to inventories increase in the United States. According to the Energy Information Administration, last week oil inventories in the country increased by 9.6 million barrels to 458.5 million barrels, exceeding forecasts. In Cushing, Oklahoma, oil reserves rose by 2.9 million barrels, and it is almost full occupancy of the hub.
The additional pressure on oil prices put Kuwaiti Oil Minister Ali al-Omaira, who has said on Thursday that although the country is concerned about the influence of cheap oil on a budget, Kuwait will not reduce production because they afraid to loose market share.
Considering all these factors, analysts believe that the growth of oil will be short-lived. On Friday morning, May futures for Brent rose by 0.46% - up to 54.68 dollars per barrel. April futures for WTI fell by 0.11 percent - to 43.91 dollars per barrel.
Some experts believe that the main reason for the oil growth is the weakening of the US dollar after the Fed meeting. Market participants expected from the US central bank more hawkish clear signals to make clarity to the situation with the rates increase, but such signals have not been received. However, there are a lot of signals of the US economic, and in particular the labor market, recovery, so the dollar retains its potential for growth.
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Market Pulse 20.03
On Friday, a lot of important data will be published in Canada. Meanwhile, the RBA Governor Glenn Stevens has already spoken, and in Brussels the EU summit is continued. Here will be discussed military conflict in Ukraine, extension of sanctions for Russia and the bailout for Greece.
9:30 ** Public Sector Net Borrowing - February (UK)
Moderate impact on the market (GPB). Public sector net borrowing is the difference between revenue and expenditure of the central and local governments and government agencies. Growth is negative for the currency.
12:30 *** Consumer Price Index - February (Canada)
12:30 *** Core CPI - February (Canada)
12:30 *** Retail Sales - February (Canada)
12:30 *** Core Retail Sales - February (Canada)
Strong impact on the market (CAD). Forecasts for all indicators are relatively optimistic. Analysts expect that the consumer price index rose after a small decline in January, as well as core retail sales did. Retail sales are expected to fell, but not as much as in January. This statistics is important and can have a significant impact on the Canadian dollar.
14:20 ** FOMC members Dennis LockhartSpeaks- March (USA)
Moderate impact on the market (USD). Dennis Lockhart is the head of the Federal Reserve Bank of Atlanta and a voting member of the FOMC, so his opinion affects the monetary policy committee, and Lockhart comments may affect the dollar.
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EUR / USD.We Prefer to Stay out of the Market
A major currency pair is showing signs of stabilization after amplitude fluctuations that followed the Fed meeting results announcement. Note that dollar sales had stopped at a correctional Fibonacci level 61.8% near 1.1040, and after it quots have already come down by about 400 points. Now the market is at a crossroads, as there are reasoned arguments, both for purchases and for sales. So, on the one hand, we have a difference in monetary policies of the ECB and the Fed, the first of which only begins a long journey called "quantitative easing", while second is going to increase interest rates soon (as the market expects). On the other hand, the euro was declining for the last 9 months, and it is likely, that the currency has already offsetting the value of the abovesaid factors.
It is recommended to stay out of the market until we will get important trading signals.
USD / CAD.Marketis Quiet prior to Canadian DataRelease
Last days fluctuations, when the pair has firstly fallen by three and a half figures, and then bulls won back most of lost positions, make us to think seriously about the risks. However, it should be noted that fluctuations still occur within the previously formed trading channel and only its frames overcoming will mark the beginning of a new trend. Today, during the US trading session (12.30 GMT) we expect quite important statistical publications in Canada, which will give an opportunity to predict the future dynamics of the pair. As expected, retail sales in January fell by 0.7%, while the February consumer price index increased by the same 0.7%.
We should not underestimate the potential market reaction to these publications. In the case of positive data bears can once again be proactive, leading quotes to a repeatedly tested line of support in the area of 1.2450. On the other hand, if data will be weak, then we can expect the pair to achieve a six-year high at 1.2833.
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GOLD. Quotesare leavingDownward Channel Boundaries
Gold price has overcome an important resistance level (1177.92), we had mentioned in one of our previous reviews, and also a trend line of the last 2 month downward channel. Apparently, bears are not ready to assault a 61.8% Fibo level of growth in 2008-2011, and it is recommended to take profits on short positions "until the circumstances are clarified" amid general deterioration regards the dollar, while a rhetoric of the US Federal Reserve in respect of interest rate policy is more cautious than markets expect. This gives reason to work on counterbalance.
Thus, it is advisable to hold long positions with a primary target at 1205 (38.2% correctional Fibo level of the whole decline wave in January-March). If the price returns to the abandoned channel boundaries we should consider the position closing and wait for new signals.
USD / CADProvides New OpportunitiesforBuyers
Friday economic data (which caused a surge in volatility) on Canada remained behind, leaving USD / CAD with significant losses. Thus, despite quite optimistic consumer price index data (0.9% instead of the expected 0.7%), core retail sales (excluding car sales) completely failed. Thus, this index has decreased by 1.8% in January after the previous level of -2.0%. So, a rebound from a support line, where quotes have appeared firstly after the Fed meeting results, was corrected to 61.8%, where the price currently has an intermediate support.
At the moment, we have almost formed conditions for purchases. An ascending wave formation with subsequent moving averages overcoming may be a proof of it. In this case, a protective stop should be placed under a local minimum (1.2540). A target of long positions will be a multi-year high at 1.2830.
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Vista Brokers:GreekOptimismSupported Euro
On Friday, the single currency was rising against the US dollar. Vista Brokers analysts point out that the last trading day markets have renewed a subject of Greece, and the fact that negotiations with creditors may come to an end, has supported the euro. As a result, EUR / USD finished the day at around 1.08213.
A question of financial bailout for Greece was taken up during a two-day EU summit in Brussels. Here a President of a European Commission Jean-Claude Juncker said, among other things, that Athens can get extra 2 billion euros from own funds of the EU. Most of these funds will be directed to youth unemployment control, relief aid and small and medium-sized businesses development.
German Chancellor Angela Merkel during communication with the press at the summit said that Greece has promised to provide a revised reform plan as soon as possible. Markets are hoping that the "as soon as possible" will be today, as in the evening Merkel will meet with Greek Prime Minister Tsipras in Berlin. Hopes for a favorable outcome of negotiations was fueling the demand for the euro. But analysts warn that if a compromise between Germany and Greece is not reached, the single currency will quickly return to the downward trend. After all, time is running out - experts say that the money in a Greek treasury will end in early April.
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Vista Brokers: Saudi Arabia is not Going to Cut Oil Output
So has said on this weekend Saudi oil minister Ali al-Naimi, whose country is one of the largest miners and exporters of "black gold" in the world. The minister said that Saudi Arabia is not going to unilaterally cut its output to defend prices. Also he believes that it is unfair that the output should be cut only by OPEC countries, which have only 30% of the market. Vista Brokers analysts point out that al-Naimi speech has led to oil decline on Monday, during the Asian session.
Recall that in June 2014 when oil prices began to fall rapidly, markets expected that the Organization of Petroleum Exporting Countries will decide on the output reduction, and it will help to reduce pressure on oil prices. However, OPEC refuses to do so, as it is afraid to lose its market share, allowing non-OPEC exporting countries to open up new horizons. These countries are, for example, Russia and the United States. Many believe that it is the United States with its shale oil boom to blame for what is happening with oil. Speaking about non-OPEC countries, which should also accept the output cutting, Ali al-Naimi implied that both Russia and the United States and all other countries with a global market share should come to a common decision. But such an outcome is currently considered unlikely.
Therefore, on Monday morning oil declined. Brent futures were down by 53 cents to $ 54.79 a barrel, compared with Friday evening. WTI lost 58 cents, dropping to $ 45.99 per barrel.
Over the weekend in the Saudi capital Riyadh was held a conference, where several representatives of the country in OPEC have spoken. So, Mohammed Al-Mady expressed the opinion that oil prices will never go back to around $ 100 a barrel as it will be not profitable for main exporters. According to him, in this case sellers of more expensive energy sources, such as shale oil, will return to the market.
Another Saudi representative in OPEC Nasser al-Dossari announced its forecast that in the next 15 years the demand for oil will rise and output will exceed 111 million barrels per day.
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Market Pulse 23.03
Monday's economic calendar is almost empty. Attention of market participants will be attracted by a speech of ECB President Mario Draghi, as well as by a new round of talks on Greece. Today, German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras will meet in Berlin to discuss terms of the agreement.
11:00 **CBI Industrial Order Expectations- March (UK)
Moderate impact on the market (GPB). The industrial orders expectations index from the British Confederation of Industrialists is a leading indicator for the economy. Increase in the index is favorable for the currency.
14:00 ** Existing Home Sales - February (USA)
Moderate impact on the market (USD). An important indicator of the US housing market health, which may affect the market. Analysts expect the index increase in February after the previous month declining.
14:00 *** ECB President Mario DraghiSpeaks- March (euro zone)
Strong impact on the market (EUR). Comments of the ECB President Mario Draghi may have a significant impact on the market, especially at the period when the central bank takes such non-standard measures to stimulate the economy, as a recently launched large-scale program of quantitative easing.
15:00 ** Flash Consumer Confidence - March (euro zone)
Moderate impact on the market (EUR). This index is based on a survey of households on the level of confidence in the current state of the economy and its future development. Analysts expect a decline in consumer confidence, although not as significant as it was in February.
16:20 ** Vice Chairman of the Federal Reserve Stanley Fischer Speaks - March (USA)
Moderate impact on the market (USD). Markets pay attention to Fisher's comments, because they can give the game of FOMC away. During his last speech the Vice Chairman said that the probability of this year rates hike is high.
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