Press review - page 129

[Sergey Golubev]

XAUUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Gold: Bearish

• Crude Oil Retreats To $103, Gold At A Crossroads Ahead of US Data
• Gold Recovery Continues, SPX 500 Vulnerable to Deeper Losses

[Sergey Golubev]

USDJPY Fundamentals (based on dailyfx article)

Fundamental Forecast for Japanese Yen: Bullish

• Bank of Japan sends Japanese Nikkei 225 sharply lower, Yen higher
• Forex sentiment grows very one-sided, sounds warning for JPY pairs
• Technical forecasts suggest the USDJPY could fall to fresh lows

[Sergey Golubev]

GBPUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Pound: Bullish

• GBP/USD Reverses After Making New Multi-Year High
• British Pound Soars, U.K. Factory-Production Data Better-Than-Expected

The British Pound struggled to hold above the 1.6800 handle after failing to clear the February high (1.6821), but the fundamental developments coming out next week may generate fresh highs in the GBP/USD as the economic recovery in the U.K. gathers pace.

Even though the International Monetary Fund (IMF) lowered its global growth forecast for 2014, the group sees the U.K. outpacing the other advanced economies as the region is now expected to grow an annualized 2.9% this year, and the Bank of England (BoE) may come under increased pressure to normalize monetary policy sooner rather than later as U.K. Jobless Claims are projected to contract another 30.0K in March, while wage growth is anticipated to pick-up for the third consecutive month in February.

With that said, the U.K. Core Consumer Price Index may continue to highlight sticky inflation in the U.K. amid the ongoing pickup in economic activity, and Governor Mark Carney may do little to halt the ongoing appreciation in the British Pound as it helps the Monetary Policy Committee (MPC) to achieve the 2% target for price growth.

In turn, the BoE Minutes due out on April 23 may sound more hawkish this time around, and a further shift in the policy outlook may heighten the bullish sentiment surrounding the sterling as the central bank moves away from its easing cycle. As a result, we will continue to look for opportunities to ‘buy dips’ in the British Pound, and the GBP/USD may continue to carve a series of higher highs & higher lows this year as it retains the bullish trend carried over from 2013. The next topside objective for the GBP/USD comes in around 1.6850-60, the 78.6% Fibonacci expansion from the October advance, and we will continue look for a higher high as it carves a higher low earlier this month.

[Sergey Golubev]

AUDUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Australian Dollar: Neutral

• Australian Dollar Hits Five Month High on Firming RBA Policy Bets
• Soft Chinese Economic Data May Undermine Aussie in the Week Ahead

[Sergey Golubev]

Forex Weekly Outlook Apr. 14-18

The US dollar had a terrible week, falling across the board. Can it stabilize now, or will the sell off continue? US retail sales, German ZEW Economic Sentiment, US Inflation data, Janet Yellen and US Haruhiko Kuroda speeches, Unemployment Claims and the Philly Fed Manufacturing Index are the highlights of this week. Here is an outlook on the main market movers coming our way.

The greenback took a big hit following the relatively dovish FOMC minutes release where forward guidance was forsaken for a promise of low rates after the bond buying program ends. Fed Chair Yellen also surprised markets by saying that bond buying will finish in 6 months. However, later that week, the Jobless claims release was a positive surprise, plunging 32,000 to 300,000 claims, the lowest level since December 2013, indicating the US job market is on a solid growth trend. Will the US economy continue its growth trend after the QE is over? In the euro-zone, weak inflation data from France was dismissed. Strong industrial data from the UK boosted the pound, upbeat Australian data energized the Aussie and the lack of action from the BOJ fueled the yen.

1. US Retail sales: Monday, 13:30. U.S. retail sales expanded more than expected in February, after harsh weather conditions slowed activity in recent months. Retail sales edged up 0.3%, following a revised 0.6% decline in January. The reading was higher than the 0.2% rise anticipated. Meanwhile Core sales, excluding automobiles, gasoline, building materials and food services increased 0.3% after a 0.3% decline in the previous month. Analysts anticipate retail sales would improve further in the coming months. U.S. retail sales are expected to rise 0.8%, while core sales are predicted to gain 0.5%.
2. UK inflation data: Tuesday, 9:30. The UK inflation rate fell to a four-year low of 1.7% in February, amid a sharp decline of 0.8% in petrol prices. This was the second consecutive reading falling below the BOE’s 2% inflation target. Prime Minister David Cameron noted that the figures support the government’s economic strategy to provide stability and security for hard-working people. But Labour’s Shadow Treasury Minister Catherine McKinnell said prices are still rising faster than wages badly affecting household consumption. CPI is expected to rise 1.6%.
3. German ZEW Economic Sentiment: Tuesday, 10:00. Investor sentiment in Germany continued to decline in March, falling for the third consecutive month to 46.6 points, from 55.7 in February. The release came in below forecasts of a 52.8 points reading. The possible reasons for this weak reading could be, a softer outlook for emerging market activity, a strong euro and mounting deflation risks and tensions in the Ukraine. Investor climate is expected to reach 46.3.
4. US Inflation data: Tuesday, 13:30. U.S. inflation stayed mild in February. Consumer Price Index inched 0.1% for the second month consecutive month after a drop in gasoline prices offset the largest rise in the cost of food in nearly 2-1/2 years. On a yearly base, consumer prices increased only 1.1%, weaker than the 1.6% rise in January. Meanwhile Core prices, excluding volatile energy and food components increased 0.1% for a third straight month and remained steady at 1.6% on a yearly base. However, the stable state of inflation is positive for business planning for hiring and capital spending. Both CPI and Core CPI are expected to gain 0.1%.
5. Janet Yellen speaks: Tuesday, 13:45, Wednesday 17:15. Federal Reserve Chair Janet Yellen will speak in Stone Mountain and in New York. Yellen may speak about the recent improvement in the US job market as well as the ongoing tapering process, its duration and its effects on the US economy. Volatility is expected, especially after her previous important comment triggered a big USD rally.
6. UK employment data: Wednesday, 9:30. The UK’ unemployment rate remained stable at 7.2% for the third consecutive month, however, the number of people claiming unemployment benefits declined more than expected, reaching 34,600, indicating the labor market continues to improve. The BoE revised its forward guidance policy, which linked interest rate decisions to the unemployment rate, since the rate fell unexpectedly towards the 7%, marking the start of rate hikes. The Bank hinted that the first rate hike will occur in the second quarter of 2015. UK number of unemployed is expected to decline by 30,200, while the unemployment rate is expected to remain 7.2%.
7. US Building Permits: Wednesday, 13:30. The number of building permits surged in February to 1.018 million units from January’s total of 945,000. These four-month high topped analysts’ predictions for 970,000 units. Contrary to this release, U.S. housing starts declined by 0.2% in February a seasonally adjusted 907,000 units from January’s total of 909,000, disappointing expectations for an increase of 3.4% to 910,000 units. Nevertheless the rise in the number of permits ensures the continuation of growth in the housing industry. The number of building permits is expected to reach 1 million.
8. Canadian rate decision: Wednesday, 15:00. The Bank of Canada was concerned about the soft inflation rate on its last meeting in March, despite the rise in consumer prices occurred in January. The bank noted that a rate change is possible in the next policy meeting however analysts do not expect a rate change until the third quarter of 2015. The rate report was nearly unchanged from January when Governor Stephen Poloz said the door was “slightly more open to a rate cut. Meanwhile, the Canadian dollar, dipped in value against its U.S. counterpart in recent months which may help to boost exports, business confidence and investment. Interest rates are expected to remain unchanged at 1.00%.
9. Canadian inflation data: Thursday, 13:30. Canadian consumer prices edged up 0.8% in February, following a 0.3% rise in the previous month. The rise was better than the 0.6% predicted by analysts. However, on a yearly base, the index dropped to 1.1% from 1.5% in January. Canadian Core prices rose 0.7% while expected to reach 0.5%. The year-over-year core rate moderated to 1.2% from 1.4% in January. The sharp rise indicates that seasonal factors were involved. However, despite the recent increase, inflation remains rather tame. CPI is expected to edge up 0.4% and Core CPi is expected to increase by 0.3%.
10. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits dropped sharply last week to the lowest level since December 2013, reaching 300,000, signaling a pick-up in the US job market. Positive weather and stronger growth boosted the labor market causing the 32,000 drop. This stronger than expected release will also contribute to the second quarter growth rate. Unemployment claims are expected to increase to 316,000.
11. US Philly Fed Manufacturing Index: Thursday, 15:00. Manufacturing activity in the Philadelphia-region soared in March, reaching 9 points after posting minus 6.3 in February, easing concerns over the U.S. economic outlook. Analysts had forecasted the index to rise to 4.2 in March. The survey’s showed new orders, and shipments increased and recorded positive readings indicating growth trend is returning following weather-related weakness in February. Manufacturing activity is expected to improve further to 9.6 points.

[Sergey Golubev]

Nikkei forecast for the week of April 14, 2014, Technical Analysis

The Nikkei as you can see fell during the totality of the week, closing below the ¥14,000 level. However, there is a significant amount of support below this level as well, and therefore we are not quite ready to start selling. This area could produce a supportive candle, and we would be willing to take a supportive candle on either the daily or weekly chart, as we believe ultimately this market will test the ¥16,000 level yet again as the uptrend should continue. Selling is not an option at this moment.

[Sergey Golubev]

DAX forecast for the week of April 14, 2014, Technical Analysis

The DAX as you can see fell hard during the week, closing near the €9300 level. This of course is a very bearish candle and we believe that the market may very well continue lower from here, especially considering that there was a gap on Friday. The €9000 level has been very supportive in the past, and because of that we think that a supportive candle in that general region would be perfect for a buy signal. It doesn’t have to be on the weekly chart, it can be on the daily chart as well, but either way we would be very interested in buying in that area.

[Sergey Golubev]

NASDAQ Forecast April 14, 2014, Technical Analysis

The NASDAQ as you can see initially try to rally during the week, but found enough resistance at the 4200 level, sending the market much lower. We found the 4000 level supportive though, as one would expect. The end of the day on Friday saw the market stopped, and as a result we think that this market will more than likely find a supportive candle in this region. We are more than willing to buy a supportive candle in this region, but recognize that closing at the bottom of the range suggests that we probably have a little bit of selling to do still.

[Sergey Golubev]

S&P 500 forecast for the week of April 14, 2014, Technical Analysis

The S&P 500 fell during the course of the week, breaking the bottom of the shooting star from the previous week. This of course is a very negative sign, but as you can see the market has plenty of support down near the 1780 area. Down in that general vicinity we would expect to see support, and then would start buying on that type of candle in that particular area. This signal could come on the daily chart though, but at the end of the day we believe that ultimately this market should continue to go higher

[Sergey Golubev]

Dow Jones 30 forecast for the week of April 14, 2014, Technical Analysis

The Dow Jones 30 as you can see fell hard during the week, slamming into the 16,000 region. We are still well within consolidation though, and as a result we think that there’s plenty of support just below in order to keep this market higher. We would not sell this market right now, and as a result we are looking for some type of supportive candle in order to start buying. Ultimately, we think that this market continues higher and breaking above the recent high would of course be given the next leg up.