Press review - page 393

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Christine Lagarde Interview:

Q&A With Christine Lagarde: Finance's Firefighter Wants to Be Its Architect

  • "Greece cannot just continuously tag along and expect that things will be sorted out"
  • "I actually don’t think there’s such a thing as the emerging-market economies anymore"
  • "We need to make courageous decisions"

read the interview here

Q&A With Christine Lagarde: Finance's Firefighter Wants to Be Its Architect
Q&A With Christine Lagarde: Finance's Firefighter Wants to Be Its Architect
  • www.bloomberg.com
The IMF’s managing director on her five-year plan, our mediocre world economy, the broken banking model, Donald Trump, and those pesky Greeks.
 

China forex regulator eases restrictions on bank FX positions (based on the article)

  • "China's foreign exchange regulator said on Friday it will allow banks to issue more FX-related products for risk-hedging purposes. That includes allowing banks to hold bigger short-dollar positions at the end of the day, the State Administration of Foreign Exchange (SAFE) said in a statement on its website. The regulator said the change would help maintain onshore liquidity of foreign currency and help reduce exchange rate risk."
  • "The adjustment comes as the yuan remains under depreciation pressure as Beijing remains in a monetary easing stance while the U.S. Fed contemplates raising rates, which would further support the dollar. That provides policy space for SAFE to allow banks more latitude shorting the dollar. China will further step up monitoring of trade-related investment, the regulator also said."


 

EUR/USD: 1.1495 resistance level tested; AUD/USD: daily correction with symetric triangle pattern to be broken to below (based on the article)

EUR/USD

  • "For now, our bias is for price and retracement resistance at 1.1495 to ideally cap – the October 2015 and April 2016 highs and 78.6% retracement of the August/December decline – with a break below 1.1144/06 needed to mark a fresh top in the range, for a slide back to 1.0883/22 initially."
  • "Above 1.1495 would suggest strength can extend back to the 1.1714 August 2015 high, and more likely 1.1808 – the 38.2% retracement of the 2014/2015 collapse."
  • "With a multi-year top in place we remain of the view this range will eventually be resolved to the downside, for a move to our parity target, but there is a clear risk we could yet see further lengthy ranging first, even a deeper recovery."


AUD/USD

  • "Support shows at .7594, followed by .7548. Beneath the latter is needed to aim at trendline, 55-day average and price support at .7530/.7500. We would expect fresh buying to show here but below it can see weakness extend for .7477, ahead of .7415/10."
  • "Immediate resistance moves to .7691 which needs to cap to maintain the immediate downside bias. Above can ease the downside risk for a move back towards .7767/75."
  • "In line with this view, CS maintains a short AUD/USD position from .7660, with a stop at .7695, and a target at .7520."


 

EUR/USD Intra-Day Fundamentals: USD Fed's Lockhart Remarks and 21 pips price movement

2016-05-02 12:50 GMT | [USD - Fed's Lockhart Remarks]

  • past data is n/a
  • forecast data is n/a
  • actual data is n/a according to the latest press release

[USD - Fed's Lockhart Remarks] = USD Fed's Lockhart Makes Introductory Remarks in Florida.

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EUR/USD M5: 21 pips price movement by USD Fed's Lockhart Remarks news event :


 

EUR/USD Intra-Day Fundamentals: ECB President Draghi Speech and 33 pips price movement

2016-05-02 14:00 GMT | [EUR - ECB President Draghi Speaks]

[EUR - ECB President Draghi Speaks] = The speech at the Asian Development Bank's 49th Annual Meeting, in Frankfurt.

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"The global low interest rate environment is a symptom of challenges in the world economy, not its cause. If interest rates are to rise again to sustainably higher levels, it is those underlying causes that need to be addressed. This is true at a global level, and it is true in the euro area."

"In the euro area, we need expansionary macroeconomic stabilisation policy to support demand, starting of course with monetary policy. That will allow inflation to return to our objective and, in time, for policy interest rates to rise back to their long-term levels."

"But monetary policy cannot raise long-term real rates. That can only be achieved by structural reforms that elicit a structural rebalancing of saving and investment. Higher real returns on savings must come through decisive action on the supply side."

"In this context, there is also a third type of policy that would support both demand in the short-term and supply in the medium-term, and which is unique to Europe. That is committed reform of euro area governance that can remove lingering doubts about its future."

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EUR/USD M5: 33 pips price movement by ECB President Draghi Speech news event :


Addressing the causes of low interest rates
Addressing the causes of low interest rates
  • European Central Bank
  • www.ecb.europa.eu
The mandate of each central bank is phrased in strictly domestic terms. But in an open and integrated international economy, the challenges we face are often fairly similar across jurisdictions. Over the past few years, one particular challenge has arisen across a large part of the world. That is the extremely low level of nominal interest...
 

ECB's Draghi Says Low Interest Rates Reflect Weak Investment Demand (based on the article)

  • "There is a temptation to conclude that since very low rates generate these challenges, they are the problem. But they are not the problem."
  • "They are the symptom of an underlying problem, which is insufficient investment demand, across the world, to absorb all the savings available in the economy."
  • "This is why structural reforms are so important today," the ECB Chief said. "They are key to raise productivity growth and hence make investment more attractive."
  • "If interest rates are to rise again to sustainably higher levels, it is those underlying causes that need to be addressed," Draghi said. "This is true at a global level, and it is true in the euro area."
ECB's Draghi Says Low Interest Rates Reflect Weak Investment Demand
ECB's Draghi Says Low Interest Rates Reflect Weak Investment Demand
  • www.rttnews.com
Low interest rates are not a problem themselves, but they mirror the underlying problem of weak investment demand, European Central Bank President Mario Draghi said Monday. "There is a temptation to conclude that since very low rates generate these challenges, they are the problem. But they are not the problem," Draghi said in a speech in...
 

Intra-Day Fundamentals - Reserve Bank of Australia Cash Rate: 79 pips for USD/CNH and 141 pips for AUD/USD

2016-05-03 04:30 GMT | [AUD - RBA Cash Rate]

if actual > forecast (or previous one) = good for currency (for AUD in our case)

[AUD - RBA Cash Rate] = Interest rate charged on overnight loans between financial intermediaries.

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  • "At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.75 per cent, effective 4 May 2016. This follows information showing inflationary pressures are lower than expected."
  • "The global economy is continuing to grow, though at a slightly lower pace than earlier expected, with forecasts having been revised down a little further recently. While several advanced economies have recorded improved conditions over the past year, conditions have become more difficult for a number of emerging market economies. China's growth rate moderated further in the first part of the year, though recent actions by Chinese policymakers are supporting the near-term outlook."
  • "Commodity prices have firmed noticeably from recent lows, but this follows very substantial declines over the past couple of years. Australia's terms of trade remain much lower than they had been in recent years."
  • "Sentiment in financial markets has improved, after a period of heightened volatility early in the year. However, uncertainty about the global economic outlook and policy settings among the major jurisdictions continues. Funding costs for high-quality borrowers remain very low and, globally, monetary policy remains remarkably accommodative."
  • "Taking all these considerations into account, the Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting."

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AUD/USD M5: 141 pips price movement by RBA Cash Rate news event :


USD/CNH M5: 79 pips price movement by RBA Cash Rate news event :


 

GBP/USD Intra-Day Fundamentals: U.K. Manufacturing PMI and 33 pips price movement

2016-05-03 08:30 GMT | [GBP - Manufacturing PMI]

if actual > forecast (or previous one) = good for currency (for GBP in our case)

[GBP - Manufacturing PMI] = Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry.

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  • "April saw the seasonally adjusted Markit/CIPS Purchasing Managers’ Index® (PMI®) fall below the criticalno-change mark of 50.0 for the first time since March 2013. At 49.2, from a downwardly revised reading of 50.7 in March, the headline index was dragged lower by  lacklustre trends in production and new orders and declines in both employment and stocks of purchases."     
  • "The weakening performance of the manufacturing economy was mainly felt in the consumer and investment goods sectors, with both registering declines in production and new work received. Although the intermediate goods sector managed to sustain growth of output and new order inflows, rates of expansion were weaker than in the prior month."

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GBP/USD M5: 33 pips price movement by U.K. Manufacturing PMI news event :


 

NZD/USD Intra-Day Fundamentals: NZ Unemployment Rate and 36 pips price movement

2016-05-03 22:45 GMT | [NZD - Unemployment Rate]

if actual < forecast (or previous one) = good for currency (for NZD in our case)

[NZD - Unemployment Rate] = Percentage of total work force that is unemployed and actively seeking employment during the previous quarter.

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  • New Zealand’s labour force grows 1.5 percent, the largest quarterly growth since December 2004.
  • Employment growth exceeds population growth over the quarter.
  • The unemployment rate increased to 5.7 percent, from a revised rate of 5.4 percent last quarter.
  • Wage inflation remains subdued.

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NZD/USD M5: 36 pips price movement by NZ Unemployment Rate news event :


 
Trading the News: ISM Non-Manufacturing (based on the article)

What’s Expected:



Why Is This Event Important:

Despite the ongoing 9 to1 split within the Federal Open Market Committee, Chair Janet Yellen and Co. may come under increased pressure to further normalize monetary policy at the next quarterly meeting June especially as the U.S. economy approaches ‘full-employment.’

How To Trade This Event Risk

Bullish USD Trade: ISM Non-Manufacturing Survey Climbs to 54.8 or Higher
  • Need red, five-minute candle following the print to consider a short trade on EUR/USD.
  • If market reaction favors a bullish dollar trade, sell EUR/USD with two separate position.
  • Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
  • Move stop to entry on remaining position once initial target is hit; set reasonable limit.
Bearish USD Trade: Gauge for Service-Based Activity Disappoints
  • Need green, five-minute candle to favor a long EUR/USD trade.
  • Implement same setup as the bullish dollar trade, just in the opposite direction.
Potential Price Targets For The Release
EURUSD Daily


  • EUR/USD may make a more meaningful run at the August high (1.1713) as it breaks out of the triangle/wedge formation in April, but the pair stands at risk for a near-term pullback as the Relative Strength Index (RSI) struggles to push above 70 and appears to be turning around ahead of overbought territory.
  • Interim Resistance: 1.1760 (61.8% retracement) to 1.1810 (38.2% retracement)
  • Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)
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