Press review - page 342

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BNP Paribas: 2 Things To Look For At FOMC Minutes (based on efxnews article)


  • "The key message will probably be that ‘lift-off’ is approaching and that we moved a step closer in July. A majority of FOMC participants probably still expected ‘lift-off’ to be appropriate sometime this year. As markets are already pricing this in, the minutes should present few surprises."
  • "Two things to look for: (1) what “some” further labor-market improvement means and (2) why there was no progress report on being “reasonably confident” in the inflation outlook."
 
The Royal Bank of Scotland - FOMC Meeting Minutes and Consumer Price Index (CPI) (based on efxnews article)

Chair Yellen is not speaking at the Jackson Hole Symposium this year:

  • "While our economist Michelle Girard thinks the Fed may disappoint on giving a “firm” signal, which would fit with their data dependent outlook, she sees a risk that the FOMC minutes begin to put a greater emphasis on the pace of hikes being gradual. A clear discussion along those lines may be a “soft signal” that an earlier start to rate hikes, giving more assurance that a gradual pace can be taken, is the preferred path of the FOMC’s majority."
  • "Because the meeting took place before China’s devaluation, that discussion should not come up in the FOMC July minutes."
  • "It’s also too early for that impact to be seen in the July CPI, which is the key data release tomorrow in the US ahead of the FOMC minutes. Our economists see the risks to the y/y rate as slightly on the upside – a “high” 0.2% m/m edge up in the core CPI index could push the y/y rate up from 1.8% to 1.9% y/y."
 

Time To Turn Bullish On EUR - Credit Suisse (based on efxnews article)

EUR will be on bullish, and the main reason for CS to decide it is the still-high risk that the ECB may have to re-enter the easing fray down the line:

"For example, as Exhibit 2 shows, European inflation breakevens have also been falling recently. With the ECB's credibility is on the line as it proceeds with its QE program, it is hard to imagine it standing pat for long and allowing sustained EUR strength to provide a fresh reason for these indicators to push still lower."

By the way - EUR/USD was already turned to bullish in intra-day basis:


 

Technical Forecast For EUR/USD and NZD/USD by UBS Group (based on efxnews article)

UBS Group AG made technical forecast for EUR/USD, USD/CHF and NZD/USD. This technical forecast may be valid for today and tomorrow and related to the trading strategies which aee using UBS itself for example.

EUR/USD: "We recommend playing a cautious long for a test of the higher end of recent range of 1.0800-1.1200." As we see from the chart - this long is already going on with 1.1461 as a final bullish target for the end of the week. By the way, the more real intra-day target is 1.1213 which is intermediate resistance on the way to the bullish breakout for example.



NZD/USD: "Look to establish fresh shorts between 0.6640 and 0.6750, with a stop above 0.6825, targeting a test of the low from earlier this month." To say it shorter - UBS are waiting for the price to be between 0.6640 and 0.6750 to open sell trade with stop loss above 0.6825. The real targets in this case may be the following: 0.6496 and 0.6466. By the way, this NZD/USD forecasting is more intra-day one than daily technicals: as we see from the chart - the price is breaking symmetric triangle pattern from below to above to go to 0.6648 where we can place a sell order from.


 

The Case For Tactical EUR Rally; Where To Target? - Morgan Stanley (based on efxnews article)

Ongoing EUR rally projecting its potential target in the near-term along with its year-end target for the pair:

  1. "Strong investment outflows from the eurozone since the beginning of the year, and the use of EUR as a global funding currency, not just for portfolio investment but also for longerterm business investment, were major contributing factors to the EUR’s steep decline earlier in the year. Without these investment and funding outflows the structural commercial inflows to the eurozone, resulting from the regions’ current account surplus, have the potential to push the EUR higher."
  2. "When a dovish Fed fails to spur markets to take on more risk, then it is time to take a cautious approach. Sharply falling commodity prices tell the same story, suggesting non-commodity currencies that either run current account surpluses or positive net foreign asset positions will rally. Hence, USD markets will likely stay split - USD benefiting from EM repatriation flows, while staying offered against surplus currencies. We expect the EUR and the SEK to benefit most from declining cross border investment flows and rising cross border liquidation flows."
  3. "European banks overseas lending data, another indicator of the use of the EUR for foreign funding, also showed a setback in the pace of gains in the second quarter of the year...While foreign investor portfolio inflows to European assets have been currency hedged, suggesting little in the way of direct currency impact from foreign inflows or outflows, the subsequent hedging activity is a significant EUR driver."
  4. "We believe there is scope for a EURUSD rebound to 1.15, with the EUR also outperforming on many of the crosses, especially against EM and commodity-related currencies...However, we reiterate our longer term bearish EURUSD view with 1.05 projected for year-end."
 

Gold Climbs to Six-And-A-Half-Week High (based on wsj article)

"An unexpected rally in gold prices that was sparked by yuan’s devaluation last week gathered pace, propelling the precious metal to a six-and-a-half week-high on Friday. Gold breached the near-term resistance level of $1,150 per troy ounce, showing the price rally has taken a firmer hold of markets than was being earlier anticipated. Spot gold rose 1.25% from the opening price to an intra-day high of $1,168.32/oz, the highest level since July 3. It is currently trading at $1,164.3/oz."

 

Forex Weekly Outlook August 24-28 (based on forexcrunch article)

The US dollar suffered in a week that saw doom and gloom in global markets. Will this continue? German Ifo Business Climate, US CB Consumer Confidence,  US Durable Goods Orders and GDP data from the US  and the UK are the main highlights in Forex calendar. Join us as we explore the market-movers for this week.

The Federal Reserve released its July meeting minutes, revealing a dispute over the rate hike timing. Despite clear signals from some Fed officials calling for a rate rise in September, many policy makers still believe such a move is premature. In her capacity as the chair and the leader, Janet Yellen will be the driving force behind September’s decision. Will we see a rate hike in September? The chances look more slim with growing worries about China and fresh political uncertainty about Greece. The euro is clearly positioned as a safe haven currency and enjoys the crisis, alongside the yen. Dollar longs are on the other end.

  1. German Ifo Business Climate: Tuesday, 8:00. Business sentiment improved unexpectedly in July following two monthly declines upon an agreement between Greece and its creditors. The Ifo business climate index edged up to 108.0 from a revised 107.5 in June, beating expectations fora 107.6 reading. The Greek crisis resolution and the nuclear deal with Iran boosted sentiment. The survey showed brighter expectations, as well as better current conditions. Business sentiment is forecasted to reach 107.6 in August.
  2. US CB Consumer Confidence: Wednesday, 12:30. U.S. consumers were less optimistic in July. The Conference Board’s Consumer Confidence Index declined to 90.9 in July from 99.8 in the prior month, missing forecasts for 100.1. The reading registered its lowest level since September 2014. Current conditions remain positive, but the short-term expectations deteriorated, amid uncertainty concerning the labor market, and volatility in financial markets prompted by the situation in Greece and China. U.S. consumers are expected to be more positive in August. The index is expected to rise to 93.1.
  3. US Durable Goods Orders: Wednesday, 12:30. Businesses rebounded after a slow start. Orders for long lasting manufactured goods edged up 3.4% in June after a 1.8% fall in May. Economists forecasted a 3.2% gain. Business investments in manufacturing equipment and software also suggests a pickup in manufacturing in the coming months. However, uncertainty remains since the Durable-goods can be volatile. Meanwhile, orders excluding transportation gained 0.8%, the largest increase since August 2014. Overall, new orders in the first half of 2015 remain weak, down 2% from the same period in 2014. Orders for durable goods are expected to decline 0.5%, while core orders are forecast to gain 0.3%.
  4. Jackson Hole Symposium: Thursday, Friday and Saturday. Quite a few central bankers will be making their way to Jackson Hole Wymong for the annual conference. While Fed Chair Janet Yellen will not be attending, some other important figures will be speaking and rubbing shoulders in the corridors. This includes Vice Chair Stanley Fischer, BOE Governor Mark Carney and others. Remarks about the Chinese slowdown ,the euro-zone recovery and of course a potential US Fed hike from the people that matter most will all stir markets.
  5. US GDP data: Thursday, 12:30. According to the initial estimate, the US economy grew by 2.6% in Q2, a bounce back from an upwards revised 0.6% in Q1 but certainly not convincing enough. In the second estimate, an upgrade to 3.2% is on the cards. Will a significant upwards revision improve the mood? Ir it the gloom of Q3 here to stay?
  6. US Unemployment claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment aid increased mildly last week, reaching 277,000. The 4,000 climb is still consistent with a solid job market. The four-week average increased 5,500 to 271,500. The average number of claims remain near a 15-year low, indicating the US labor market continues to strengthen. However, wage growth has yet to improve. Average hourly pay increased a mere 2.1% from 12 months earlier, far less the 3.5% to 4% gains viewed in healthy economies. The number of jobless claims are expected to reach 275,000 this week.
  7. UK GDP data: Friday, 8:30. The UK economy returned to stronger growth in Q2: 0.7% according to the initial read. This was as expected and stronger than +0.3% seen in Q1. A confirmation of this number is on the cards for the first revision.
  8. US Goods Trade Balance: Friday, 12:30.  This new report from the U.S. Commerce Department was released in July. The event is issued four to seven days prior to the existing report on International Trade in Goods and Services, excluding services or trade in goods on a balance of payments basis. This data is included in the GDP report aimed to improve the accuracy of the first estimate. The Goods Trade Balance for June showed a trade deficit at $62.26 billion.
  9. Mark Carney speaks: Saturday, 2:25. BOE Governor Mark Carney is scheduled to speak about inflation Dynamics and Monetary Policy at Jackson Hole Symposium. He may talk about the low inflation trend in the UK and his concerns that inflation might fall below zero again postponing any rate hike initiatives this year.
 

EUR - Fundamental Outlook for the Current Week by Morgan Stanley (based on efxnews article)

Morgan Stanley is considering the this is a good time to be with EUR forecasting bullish for the next few weeks:

"We believe EUR is likely to outperform over the next few weeks. The risk-off environment is likely to drive repatriation flows, which should be EUR supportive. In addition, many risky holdings were funded in EUR, and the unwind of these positions should support EUR. With EUR not being used as funder in the near term, it should receive support from its current account surplus."


Let's evaluate this situation with technical points of vew:

  • Weekly price is still on bearish arket condition for trying to cross 1.1466 resistance for the bear market rally to be started. The reversal level is 1.2568, and if weekly price will break this reversal level from below to above so it will be the global reversal of the price movement to the primary bullish market condition.
  • Daily price is on reversal to the bullish with 1.1466 as the nearest resistance level located in the bullish area of the chart. The price is breaking 200 day SMA, and if 1.1466 resistance will be broken so the price will be reversed to the bullish market condition.


Anyway, Morgan Stanley believes in bullish dollar so we will get the bearish EUR/USD at year-end anyway.
 

EURUSD Forecasts by Danske Bank (based on efxnews article)

Danske Bank is forecasting the ranging market condition for EUR/USD up to August 2016: the price will be ranging between 100 day SMA and 200 day SMA within 1.10/1.13 support/resistance channel:


Pair
Q3
September'15
 Q4
November'15		Q1
February'16
Q3
August'16
EUR/USD
1.130
1.100
1.100
1.150

Thus, according to the Danske Bank - we should expect the bullish for daily EUR/USD only in the middle of the next year by the price to be turned to 1.15 which is located on the bullish area of daily chart.



Concerning weekly price for this pair so the price will be in total ranging condition within the primary bearish: all support/resistance levels (incl 1.25 'reversal' resistance level which is on the border between bearish and bullish on the weekly chart) are located on the bearish zone. So, Danske Bank expects for the EUR/USd to be in bearish market condition in long term situation for example.

 

FOMC will raise rates in March 2016 - Barclays (based on efxnews article)

Barclays Capital made a conclusion that Fed rate hike will be March 2016. Barclays explained that FOMC can raise rates in December 2015 but FOMC FOMC may push rate hike in Mrach because of volatility of the market.

  • "Given the uncertainty around the current global outlook, the timing of the rate hike seems more uncertain than usual. Should this episode of financial market volatility prove transitory, the FOMC could raise rates in December. On the other hand, if the volatility proves durable or reveals greater than expected weakness in global activity, the FOMC may push the first rate hike beyond March."
  • "We see a delay past mid-2016 as a relatively low probability at this point given our views on US labor markets. The US has proven durable to shocks emanating from emerging markets in the past, and we believe the current bout of uncertainty to be less pronounced than the successive shocks from developed economies that rocked global markets in 2008, 2010, and 2010."
By the way, some analytics note that changing the date for Fed rate hike will increase the market uncertainty and volatility will be increased.
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