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FTSE Declines as HSBC Pulls Bank Stocks Lower
Leading UK shares dropped for the second day as HSBC Holdings Plc pulled an index of banks lower after posting reduced earnings, while the US insisted it would impose additional sanctions on Russia for its role in the tensions in Ukraine.
HSBC lost 1.5% after the biggest bank in Europe said its profit for the first three months of 2014 dropped 20%. Barclays Plc declined 1.4% after Citigroup Inc announced the bank may postpone a profitability target by a year.
J Sainsbury Plc slid 3.2% after Kantar Worldpanel said the supermarket operator lost market share in the past 12 weeks. Legal & General Group Plc gained 3% after posting earnings.
The FTSE 100 index reversed 11.16 points or 0.2% down to 6,787.4 as of 2:37 pm in London. The blue-chip gauge has soared for the past three weeks fueled by increased mergers-and-acquisitions activity, Bloomberg said.
The broader FTSE All-Share Index plunged 2%. ISEQ Index of Ireland lost 0.7%.
“Banks played a big role in the U.K.’s decline today, with HSBC and Barclays falling. “It only adds to the persistent fears about the situation in Ukraine, which could bring more volatility to the markets,” said John Plassard of Geneva-based Mirabaud Securities LLP.
US Secretary of State John Kerry reiterated late Tuesday America’s intention to slap Russia with further measures if it stands in the way of Ukraine’s presidential elections scheduled for May 25.
Experian took away 5% after reporting its full-year results. The company’s full-year earnings were above expectations, but investors paid more attention to comments from Chief Executive Don Robert, according to Reuters.
He said that the company’s growth in the first half would be hindered by the soccer’s World Cup in Brazil and alterations to its North American consumer venture. The soccer tournament would take away attention from Experian’s consumer services, the CEO added.
2014-05-08 01:30 GMT (or 03:30 MQ MT5 time) | [AUD - Employment Change]
if actual > forecast = good for currency (for AUD in our case)
==========
Australia April Unemployment Rate 5.8%
The unemployment rate in Australia was a seasonally adjusted 5.8 percent in April, the Australian Bureau of Statistics said on Thursday.
That was unchanged from the previous month and beating forecasts for 5.9 percent.
The Australian economy added 14,200 jobs to 11,572,900 in April. That topped expectations for 8,750 following the addition of 18,146 a month earlier.
Full-time employment increased 14,200 to 8,045,100 following the downwardly revised loss of 22,700 jobs in March.
Part-time employment was roughly unchanged following the upwardly revised gain of 44,600 jobs in the month prior.
Unemployment decreased 400 to 713,400. The number of unemployed persons looking for full-time work increased 8,700 to 519,500, while the number of unemployed persons looking for part-time work decreased 9,000 to 193,900.
The participation rate was 64.7 percent, unchanged and in line with expectations.
Aggregate monthly hours worked decreased 39.9 million hours (2.5 percent) to 1,572.6 million hours.
Upon the release of the data, the Australian dollar advanced against other major currencies, trading near 0.9356 against the greenback, 95.28 against the yen, 1.4865 against the euro and 1.0811 against the kiwi.
2014-05-08 02:19 GMT (or 04:19 MQ MT5 time) | [CNY - Trade Balance]
if actual > forecast = good for currency (for CNY in our case)
==========
China Has $18.5 Billion Trade Surplus In April
China saw a merchandise trade surplus of $18.5 billion in April, the Customs Office said on Thursday.
That topped forecasts for a surplus of $13.9 billion following the $7.7 billion surplus in March.
Exports were up 0.9 percent on year - also beating expectations for a decline of 1.7 percent following the 6.6 percent fall in the previous month.
Imports added an annual 0.8 percent versus expectations for a contraction of 2.3 percent after tumbling 11.3 percent a month earlier.
Trading the News: European Central Bank Interest Rate Decision (based on dailyfx article)
According to a Bloomberg News survey, 56 of the 58 economists polled anticipate the European Central Bank (ECB) to retain its current policy in May, but the EUR/USD may struggle to hold its ground should President Mario Draghi show a greater willingness to further embark on the easing cycle.
What’s Expected:
Why Is This Event Important:Indeed, the ECB is coming under increased pressure to implement more non-standard measures amid the persistent threat for deflation, and we may see the central bank lay the groundwork to ease policy further in the coming months as the Governing Council struggles to achieve its one and only mandate to preserve price stability.
Subdued price growth paired with the ongoing contraction in private sector lending may prompt the ECB to adopt a more dovish outlook for monetary policy, and we may see the EUR/USD give back the advance from the beginning of the month should the fresh batch of central bank rhetoric drag on interest rate expectations.
However, the ECB may stick to the sidelines amid the positive developments coming out of the monetary union, and the EUR/USD may continue to carve higher highs & higher lows in May should the central bank remain reluctant to implement more non-standard measures.
How To Trade This Event Risk
Trading the ECB interest rate decision may not be as clear cut as some of our other trade setups as the press conference with President Draghi ends with a Q&A session
Bearish EUR Trade: ECB Ramps Up Dovish Tone/Sets Expectations for More Easing
- Need red, five-minute candle following the decision/statement to consider a short Euro trade
- If market reaction favors a short trade, sell EUR/USD with two separate position
- Set stop at the near-by swing high/reasonable distance from cost; at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is met, set reasonable limit
Bullish EUR Trade: Governing Council Retains Wait-and-See Approach- Need green, five-minute candle to favor a long EUR/USD trade
- Implement same strategy as the bearish euro trade, just in the opposite direction
Potential Price Targets For The Rate DecisionEUR/USD Daily
April 2014 European Central Bank Interest Rate Decision
EURUSD M5 : 32 pips price movement by EUR - Interest Rate news event
The ECB kept rates on hold once more in April and stated that the central bank was not excluding the use of unconventional tools if needed. Although the rate decision sent the Euro higher, when Draghi took the stage and said that the use of unconventional tools was a possibility, we saw Euro weakness across the board. Volatility was relatively weak as has been the case over the last few weeks. Market participants will note Draghi’s language in regards to the Euro as he has become more comfortable in using his position to talk down the Euro.
U.S. Dollar Ends Losing Streak on Yellen Comments, Colombian Peso Rallies
The U.S. dollar advanced against its peers after Federal Reserve Chair Janet Yellen expressed confidence that the U.S. economy is set to grow.
The euro plunged 0.1 percent to trade at $1.3914, after earlier touching $1.3951, its strongest level since March 13. The 18-nation currency remained slightly unchanged at 141.61 yen. The U.S. dollar rose 0.1 percent to trade at 101.78 yen, a strong showing after earlier tumbling to its lowest level in three weeks.
The Bloomberg Dollar Spot Index, which tracks the dollar against 10 major counterparts, advanced 0.1 percent to 1,002.02, its weakest mark since October 29. The euro tumbled from its strongest level in seven weeks over speculation that the European Central Bank will not announce any additional monetary stimulus in its Thursday meeting.
“Although the dollar is marginally stronger, I do still think the downtrend for the dollar is intact,” Lennon Sweeting, a San Francisco-based dealer with USForex Inc. told Bloomberg. “We’re on a slow boat to seeing normalized rates.”
The Colombian peso surged 0.4 percent to 1,910.41 a U.S. dollar, its strongest in six months, as the market speculated that foreign investment into the country’s bond market.
The price of Colombia’s key peso bonds that expire in 2024 surged 0.26 centavo to 127.25 centavos per peso. The bond’s yields declined 0.03 percentage point, or three basis points, to 6.30 percent.
The peso has increased 6.3 percent since March 18, just before JPMorgan Chase & Co announced it would bolster the weighting of the peso notes, called TES more than two times in two indexes beginning May 30. JPMorgan predicts that foreign funds will invest roughly $9.4 billion owing to the increase.
USD/JPY Bears In Control Sub 102.00 With Reversal Signal Lacking
USD/JPY remains below the psychologically-significant 102.00 handle with the absence of a bullish reversal signal making a bounce look unlikely at this stage. Further declines may be met by buying support at the 101.20 mark.
USD/JPY: Open To Further Declines With Bullish Candlestick Missing :
Examining the four hour chart; the Doji near 102.00 signaled a lack of conviction amongst the bulls near the key resistance level. With a bullish reversal pattern also absent in intraday trade, the potential for a bounce may be limited.
USD/JPY: Bulls Lose Steam On Retest Of 102.00 :
2014-05-08 11:00 GMT (or 13:00 MQ MT5 time) | [GBP - Official Bank Rate]
if actual > forecast = good for currency (for GBP in our case)
==========
Bank Of England Maintains Key Rate; QE At GBP 375 Bln
The Bank of England retained its interest rate at a historic-low and the size of quantitative easing at GBP 375 billion as widely expected.
The nine-member Monetary Policy Committee led by Mark Carney voted to keep the key bank rate unchanged at 0.50 percent. The rate has been at the current 0.50 percent since March 2009.
The panel also decided to maintain the asset purchase programme at GBP 375 billion. The previous change in asset purchases was in July 2012, when it was raised by GBP 50 billion.
The bank first launched quantitative easing in March 2009 with an initial value of GBP 75 billion.
In August last year, the bank pledged not to hike the interest rate until the unemployment rate falls to 7 percent. The jobless rate slid to 6.9 percent in three months to February to a five-year low.
As the unemployment started falling faster than estimated, the BoE widened the scope of its forward guidance this February, and assured markets that interest rates will not be raised before the second quarter of 2015.
2014-05-08 12:30 GMT (or 14:30 MQ MT5 time) | [USD - Unemployment Claims]
if actual < forecast = good for currency (for USD in our case)
==========
U.S. Weekly Jobless Claims Pull Back More Than Expected
After reporting an unexpected increase in first-time claims for U.S. unemployment benefits in the previous week, the Labor Department released a report on Thursday showing that initial jobless claims pulled back by more than expected in the week ended May 3rd.
The Labor Department said initial jobless claims fell to 319,000, a decrease of 26,000 from the previous week's revised level of 345,000. Economists had expected jobless claims to drop to 325,000 from the 344,000 originally reported for the previous week.
GBP/USD holds steady after U.S. data
The pound held steady against the U.S. dollar on Thursday, hovering near five-year highs after the release of upbeat U.S. jobless claims data and as the Bank of England kept monetary policy on hold.
GBP/USD hit 1.6974 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.6955, easing up 0.01%.
Cable was likely to find support at 1.6866, the low of May 6 and resistance at 1.6996, the high of May 6 and an almost five-year high.
The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending May 3 fell by 26,000 to 319,000 from the previous week’s revised total of 345,000. Analysts had expected jobless claims to fall by 20,000 to 325,000 last week.
Earlier Thursday, The BoE’s Monetary Policy Committee voted to keep interest rates on hold at their current record low of 0.5%. The bank also made no change in its quantitative easing program, which remains at £375 billion.
The BoE will publish the minutes of this month’s meeting on Wednesday, May 21.
Expectations for a U.K. rate hike in the early part of next year have propelled sterling to multi-year highs against the dollar, after a recent string of strong economic reports indicated that the recovery is deepening.
Early last week BoE Governor Mark Carney said the U.K. recovery is starting to broaden, but added that the bank still sees plenty of slack in the labor market.
Data released earlier Thursday showed that U.K. house prices fell 0.2% last month, mortgage lender Halifax reported, and rose 8.5% in the three months to April, compared to the same period a year earlier, slowing from an increase of 8.5% in the three months to March.
Sterling was higher against the euro, with EUR/GBP shedding 0.40% to 0.8172.
Also Thursday, the European Central Bank held its benchmark interest rate at a record low 0.25%, in line with expectations.
Speaking at the ECB’s post-policy meeting press conference, Mario Draghi said that the central bank will continue to monitor developments closely and will consider all instruments available to support growth. He added that ECB is ready to act swiftly if further easing is needed.
AUD/USD’s steam dissipating ahead of 0.9400
AUD/USD is trading at 0.9384, up 0.61% on the day, having posted a daily high at 0.9397 and low at 0.9318.
AUD/USD is held up ahead of the 0.94 handle after a positive trading session overnight in Asia. AUD/USD attracted bids after better labour markets in April and much better that expected trade numbers from China. Jane Foley, Senior Currency Strategist at Rabobank explained that the strong Australian employment release provides further support for the opinion that the next policy move from the RBA will be a hike.
AUD/USD Levels
With spot trading at 0.9385, we can see next resistance ahead at 0.9391 (Daily Classic R3), 0.9397 (Daily High), 0.9424 (Monthly High), 0.9424 (YTD High) and 0.9448 (Weekly Classic R3). Support below can be found at 0.9384 (Weekly Classic R2), 0.9374 (Daily Classic R2), 0.9371 (Hourly 20 EMA), 0.9357 (Yesterday's High) and 0.9351 (Daily Classic R1).
AUD/USD chart formations
Looking to candlestick patterns, we can see a Doji formation on the 4-hour chart.