Press review - page 316

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Fading Global Growth View Doesn’t Faze Equities, Yen Crosses or EURUSD (based on dailyfx article)

  • The S&P 500 closed at a record high Thursday - extending a six-year 215 percent rally from March 2009
  • Much of the speculative rank is turning to 'tactical' trading, but there is still plenty of buy-and-hold
  • What is the 'risk-reward' scenario for US equities (and risk in general) to rise another 20%?

"Investors should be wary and opportunistic speculators on alert. We revisit the risk-reward evaluation of the global capital markets and sentiment in today's Strategy Video."


 
2015-05-22 13:30 GMT (or 15:30 MQ MT5 time) | [USD - Consumer Price Index]

if actual > forecast (or previous data) = good for currency (for USD in our case)

[USD - CPI] = Change in the price of goods and services purchased by consumers. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

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"The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in April on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index declined 0.2 percent before seasonal adjustment.

The index for all items less food and energy rose 0.3 percent in April and led to the slight increase in the seasonally adjusted all items index. The index for shelter rose, as did the indexes for medical care, household furnishings and operations, used cars and trucks, and new vehicles. In contrast, the indexes for apparel and airline fares declined in April."

 

AUDIO Pulling Back the Curtain with Gina Monetti

It took 5 years to happen, but we finally get Gina Monetti on the show! Gina is instrumental in student support, XLT, Mastermind, Clubhouse, ProPicks and much more at Online Trading Academy! Gina talks about her role and how it all revolves around student success. Later, Gina talks about her trading style and where she sees the market headed.


 

Holiday Conditions and Record Equities Remind of Bigger Liquidity Risks (based on dailyfx article)

If capital markets correct under risk aversion - inevitable over a long enough period - will the retreat be orderly or chaotic? There is usually at least a little panic in a bearish phase after a long build up, but conditions behind the current six-year bull trend suggest there may be more acute trouble when speculative appetites cool. Liquidity risks may have been fostered by the aggressive risk-taking and incredible policy intervention through these past years. We've seen how important liquidity is in the post-Lehman collapse and SNB's withdrawal of its exchange rate floor. But, what happens when the traditional outlets for safety are distorted? We consider the risks - and perhaps some opportunities - of liquidity issues in the unavoidable, next market bear wave in this weekend Strategy Video.


 

Forex Weekly Outlook May 25-29 (based on forexcrunch article)

The US dollar made a comeback and the greenback was a big loser in a week that saw trends change. And now, US Durable Goods Orders, Consumer Confidence as well as UK, Canadian and US GDP data stand out. These are the highlight events in Forex calendar. Here is an outlook on the main market-movers for this week.

The Federal Reserve released minutes from its April 28-29 policy meeting, revealing the planned rate hike will not take place in June. Despite growing confidence in the US economic recovery, the recent data suggest a temporary slowdown. Weaker consumer spending, slow growth and employment data led policy makers to postpone their decision on raising rates. Fed officials were also disappointed that falling oil prices did not spur growth as anticipated and that the recent dollar softness muted inflation. The Fed has reiterated it will not raise rates until it is “reasonably confident” that prices are moving toward its 2% target. Will the US economy rebound from its recent soft patch? In the euro-zone, talk about front-loading QE hit the euro in particular. The common currency reversed its previous gains. In the UK, inflation dipped below 0% and in Japan GDP came out better than expected.

  1. US Durable Goods Orders: Tuesday, 12:30. The U.S. manufacturing sector rebounded in March amid expansion in the transportation industry. New orders for long-lasting manufactured goods increased by 4.0%, to $240.2 billion, following a 1.4% decline in February. However, core durable goods orders, excluding the volatile transportation sector, declined 0.2% to $159.9 billion. The weak core figure followed seven months of negative readings, indicating the second quarter may not be as strong as forecast. A drop of 0.4% in orders and a gain of 0.5% in core orders is on the cards.
  2. US CB Consumer Confidence: Tuesday, 14:00. Consumer confidence fell unexpectedly in April to 95.2 from 101.4 in March amid weak job growth. While economists expected sentiment to rise to 102.5, sentiment plunged to the lowest level in 2015. Fuel prices continue to remain below last year’s prices contributing to growth but the soft patch in the US labor market overshadowed this positive development. 95.3 is expected now.
  3. Canadian rate decision: Wednesday, 14:00. The Bank of Canada kept its overnight rate unchanged at 0.75%. Governor Stephen Poloz forecast a positive outlook for the Canadian economy, despite the current weakness related to the collapse in oil prices. The central bank cut its original 1.5% growth forecast for the first quarter of 2015, to non- growth. However, Poloz insisted the economy would rebound in the second half of the year. Nonetheless, many economists believe the oil prices collapse will have a longer effect on Canadian growth.
  4. US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits increased by 10,000 claims last week, reaching 274,000. Analysts expected a smaller rise to 271,000. Despite last week’s increase, the number of claims remained below 300,000 indicating the labor market continues to strengthen for the 11th week. The four-week moving average fell 5,500 last week to 266,250, reaching the lowest level since April 2000. A similar level of 272K is estimated now.
  5. UK GDP: Thursday, 8:30. According to the preliminary release for Q1 2015, the economy expanded by only 0.3%. The figure will likely be upgraded to 0.4% this time. It’s important to note that this growth rate is lower than seen beforehand.
  6. Canadian GDP: Friday, 12:30. Canada’s economy stalled in February showing no-growth, after contracting 0.2% in January. The mild improvement in the service sector was offset by contraction in goods-producing industries. Both manufacturing and energy sectors shrank in February suggesting the energy sector is not the sole cause for Canada’s economic weakness, as implied by the Central Bank. Economists believe the BOC will have to cut rates later this year to spur growth. An advance of 0.2% is on the cards now.
  7. US GDP: Friday, 12:30. According to the first release for Q1, the economy grew at an annual rate of only 0.2%, below expectations. Things are expected to turn even lower, with a downgrade to contraction of around 0.9% this time . Fed Reserve chair, Janet Yellen also discussed the possibility of raising rates if the employment market will show substantial signs of growth.
 

Gold forecast for the week of May 25, 2015, Technical Analysis (based on fxempire article)

Gold markets fell during the course of the week, testing the $1200 level again. Because of this, we feel that the markets probably going to grind around in this area, and we are not ready to make any longer-term trades as a result. We believe that short-term traders will continue to pushes market around, and as a result it is probably best left to those who play short-term charts. Ultimately though, we do think the gold will offer value, so picking up some physical metal might not be a bad move.


 

USD/JPY forecast for the week of May 25, 2015, Technical Analysis  (based on fxempire article)

The USD/JPY pair broke higher during the course of the week, as we closed out the 121.50 area. That being the case, it now looks as if we are ready to break out above the potential ascending triangle that it appears on the weekly chart. That of course would be a very bullish sign, as the height of the triangle measures roughly 650 pips. Because of this, we believe that the USD/JPY pair will be very bullish soon, and a break above the 122 level is enough to get us to start buying again. We believe at that point in time that the market should head to roughly 128 given enough time.

Needless to say, the market should have a bit of resistance at the 125 level though, and we don’t necessarily think that it will be the easiest move. However, by the end of the week we started to see US dollar strength just about everywhere, and as a result it seems as if the market is suddenly in favor the US dollar overall again. The US Dollar Index broke above the 96 handle, which of course is very bullish, and the EUR/USD pair suddenly testing the 1.10 level, an area that is indeed important. Ultimately, we have to wait to see what happens on a daily close, but it certainly looks as if the USD/JPY is ready to continue the longer-term uptrend.

Even if we fell from here, we believe that there is enough support below to keep this market going higher, and as a result we look at pullbacks as potential buying opportunities. We think that the absolute “floor” in this market is somewhere near the 115 handle, and with that we have no intentions of selling this pair anytime soon. In fact, we believe that a lot of traders are starting to think longer-term “buy-and-hold” type of thoughts when it comes to this currency pair. Ultimately, the market should continue to find itself well supported, especially considering that the Bank of Japan is so dovish at the moment.


 

USD/CHF forecast for the week of May 25, 2015, Technical Analysis (based on fxempire article)

The USD/CHF pair broke higher during the course of the week, bouncing off of the 0.92 level. However, we have the vital 0.95 level just above, and we believe that will be somewhat resistive. With that being the case, we believe that longer-term traders can have to wait until we get a nice close on the daily chart above the 0.95 level in order to start going long. As far selling is concerned, we have no interest whatsoever in going so at the moment, especially considering that the US dollar is so strong all of a sudden.


 

USD/CAD forecast for the week of May 25, 2015, Technical Analysis (based on fxempire article)

The USD/CAD pair broke higher during the course of the week, clearing the top of the three hammers that we have recently formed. We crashed into the 1.23 level, which we see as the beginning of a significant barrier to the upside, and as a result we need to get back above the range for the week in order to consider buying. If we do, we feel that the market will probably head back towards the 1.28 level. It will be interesting see how this plays out though, because the oil markets don’t look like they agree.


 

NZD/USD forecast for the week of May 25, 2015, Technical Analysis (based on fxempire article)

The New Zealand dollar fell during the course of the week, testing the 0.73 level. We believe that there is a significant amount of support below though, so quite frankly we are not comfortable selling at this point. We certainly can’t buy this market though, because it is far too bearish. With that being the case, we are simply sitting on the sidelines as far as longer-term trades are concerned. However, shorter-term selling opportunities should continue to be the case going forward, so we suggest shorter time frames.


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