Press review - page 167

Sergey Golubev
Moderator
113476
Sergey Golubev  

Trading the News: Canada Gross Domestic Product (GDP) (based on dailyfx article)

  • Canada GDP to Slip Below 2% for First Time Since 4Q 2012.
  • 2013 4Q GDP of 2.9% Marked the Fastest Face of Growth Since 3Q 2011.

Canada’s 1Q GDP report may spur a meaningful rebound in the USD/CAD should we see a marked slowdown in the growth rate.

What’s Expected:



Why Is This Event Important:

A dismal GDP report may instill a bearish outlook for the Canadian dollar as Bank of Canada (BoC) Governor Stephen Poloz keeps the door open to further reduce the benchmark interest rate, and the central bank head may continue to endorse a dovish outlook for monetary policy amid the persistent slack in the real economy.

The slowdown in private sector consumption along with the ongoing weakness in the labor market may spur a lackluster GDP print, and a dismal development may spur a bullish breakout in the USD/CAD as it raises bets for a BoC rate cut.
Nevertheless, the ongoing expansion in the housing market paired with the rebound in building activity may produce another GDP reading above 2.0%, and a better-than-expected print may generate a further decline in the USD/CAD as the pair remains the bearish trend carried over from March.

How To Trade This Event Risk

Bearish CAD Trade: Growth Rate Slips Below 2.0%

  • Need green, five-minute candle following the GDP report to consider a long USD/CAD entry
  • If the market reaction favors a bearish Canadian dollar trade, establish long with two position
  • Set stop at the near-by swing low/reasonable distance from cost; use at least 1:1 risk-to-reward
  • Move stop to entry on remaining position once initial target is hit, set reasonable limit
Bullish CAD Trade: Canada 1Q GDP Exceeds Market Expectations
  • Need red, five-minute candle following the release to look at a short USD/CAD trade
  • Carry out the same setup as the bearish loonie trade, just in reverse
Potential Price Targets For The Release

USD/CAD Daily


  • Remains at Risk for Fresh Lows as Price & RSI Retain Bearish Trend
  • Interim Resistance: 1.1000 (1.618% expansion) to 1.1020 (23.6% retracement)
  • Interim Support: 1.0710 (100.0% expansion) to 1.0730 (78.6% retracement)

Impact that the Canada GDP report has had on CAD during the last quarter

Period Data Released Survey Actual Pips Change
(1 Hour post event )
Pips Change
(End of Day post event)
4Q
2013
02/28/2014 13:30 GMT 2.6% 2.9% -17 -47

4Q 2013 Canada GDP

USDCAD M5 : 46 pips price movement by CAD - GDP news event



The Canadian economy grew at a faster pace during the last three-months of 2013, with the growth rising another 2.9% following the 2.7% advance in the third-quarter, and the data print may encourage an improved outlook for the Canadian dollar as it raises the outlook for growth and inflation. The USD/CAD slipped back below the 1.1100 handle following the stronger-than-expected GDP print, with the pair ending the day at 1.1064

Sergey Golubev
Moderator
113476
Sergey Golubev  

2014-05-30 12:30 GMT (or 14:00 MQ MT5 time) | [USD - Personal Consumption Expenditure]

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

[USD - Personal Consumption Expenditure] = Change in the price of goods and services purchased by consumers, excluding food and energy

==========

U.S. Personal Spending Shows Unexpected Decrease In April

While the Commerce Department released a report on Friday showing that U.S. personal income rose in line with economist estimates in the month of April, the report also showed an unexpected drop in personal spending for the month.

The report showed that personal income rose by 0.3 percent in April following a 0.5 percent increase in March. The increase marked the fourth straight month of growth and matched expectations.

On the other hand, the Commerce Department said personal spending edged down by 0.1 percent in April after surging up by 1.0 percent in March. The modest decrease surprised economists, who had expected spending to rise by 0.2 percent.

Sergey Golubev
Moderator
113476
Sergey Golubev  

2014-05-30 13:45 GMT (or 15:45 MQ MT5 time) | [USD - Chicago PMI]

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

[USD - Chicago PMI] = Level of a diffusion index based on surveyed purchasing managers in the Chicago area

==========

Chicago Business Barometer Shows Unexpected Increases In May

With demand strengthening as the economy continued to recover from the weather-related slowdown, MNI Indicators released a report on Friday showing that its reading on Chicago-area business activity unexpectedly rose to a seven-month high in May.

MNI Indicators said its Chicago business barometer climbed to 65.5 in May from 63.0 in April, with a reading above 50 indicating an increase in activity. The increase surprised economists, who had expected the barometer to dip to 61.0.

Sergey Golubev
Moderator
113476
Sergey Golubev  

The Week Ahead: A Portfolio That Won't Ruin Your Summer


Investors came back from the long weekend ready to buy as the S&P 500 closed above the 1900 level in impressive fashion. Nevertheless, many analysts and TV pundits still point to the number of reasons why stocks should not be this high and can’t go higher.

The environment has also been difficult for individual investors as the choppy action in the S&P 500 and the wide swings in the Nasdaq 100 have made them difficult to trade. Clearly, the broad market has been in a non-trending mode, but it is still possible to find and buy stocks that are trending.

Picking Stocks in Non-Trending Markets
  • www.moneyshow.com
MoneyShow's Tom Aspray demonstrates how you can use a popular indicator to identify changes in a trend's momentum, which can help you identify opportunities and better manage your positions.
Sergey Golubev
Moderator
113476
Sergey Golubev  

IMF Approves $4.6 Bln Aid For Greece

The International Monetary Fund approved $4.64 billion bailout payment to Greece after the completion of fifth review.

Deputy Managing Director of IMF, Naoyuki Shinohara said the Greek authorities have made significant progress in consolidating the fiscal position and rebalancing the economy.

The disbursements were delayed for a year amid questions over whether Greece continue its structural reforms. The lender approved the authorities' request for rephasing three disbursements evenly over the remaining reviews in 2014.

The primary budget posted surplus ahead of schedule. However, the lender observed that several challenges remain to be overcome before stabilization is deemed complete and Greece is back on a sustainable, balanced growth path.

Public debt is projected to remain high well into the next decade, despite a targeted high primary surplus.

Shinohara said additional fiscal adjustment is necessary to ensure debt sustainability, through durable, high-quality measures, while strengthening the social safety net.

He urged Greece to continue to improve tax collection, combat evasion and strengthen expenditure control. The authorities are taking remedial actions to clear domestic arrears and expedite privatization.

Further measures are needed to remove regulatory barriers and to reform investment licensing, Shinohara said.

Sergey Golubev
Moderator
113476
Sergey Golubev  
Forex Weekly Fundamentals Outlook June 2-6

Currency movements were mixed in the last week of May, and now a very busy week awaits traders: rate decision in Australia, Canada, the UK and the Eurozone are due alongside top-tier US events culminating in the all-important NFP report on Friday are the market movers on FX calendar. Here is an outlook on the highlights of this week.


The ECB kept the pressure on the euro with comments pointing to action. Also the data weighed on the common currency. In the US, the theory of a terrible first quarter and an improvement afterwards was reinforced by the news of contraction in Q1, while fresh jobless claims were encouraging. Apart from that, the pound was pounded and the Aussie recovered. And now, we have the top tier indicators in the first week of the month. Let’s start,
  1. US ISM Manufacturing PMI: Monday, 14:00.US manufacturing sector activity edged up in April to 54.9 from 53.7 in March, beating forecast of a 54.3 reading. According to the report, new orders remained unchanged at 55.1, while employment climbed to 54.7 from 51.1 in the previous month. Most responders were positive mainly due to strong demand out of China. US manufacturing activity is expected to advance to 55.7 this time.
  2. Australian rate decision: Tuesday, 14:00. The Reserve Bank of Australia signaled it would maintain low interest rates in the coming months as inflation is contained and the economy adjusts to fewer resource projects. Growth is expected to slow down after mining investment sharply plunged. Therefore, the 2.5% rate and the accommodative monetary policy are expected to stay for the rest of the year. No change in rates s expected now.
  3. Australian GDP: Wednesday, 1:30. The Australian economy expanded faster than expected last quarter, despite a decline in business investment. GDP edged up 0.8% in the last quarter of 2013, beating expectations for a 0.7% rise. Consumer spending picked-up as well as exports and housing transactions. Low interest rates and a recent decline in the exchange rate had a significant positive impact on growth. GDP growth in the first quarter of 2014 is expected to advance by 0.9%.
  4. US ADP Non-Farm Employment Change: Wednesday, 12:15. Private sector employment in the US expanded by 220,000 jobs in April following 209,000 in the prior month. The majority of new positions were created in the construction industry gaining 19,000 jobs over the month, compared to 21,000 in March. Manufacturing remained slow adding 1,000 jobs in April, down from 4,000 in March. Analysts expected a lower job addition of 203,000. The impressive gain was well above the twelve-month average, indicating the US job market is improving. Private sector employment is expected to show a 217,000 jobs addition in May.
  5. US Trade Balance: Wednesday, 12:30. The U.S. trade deficit contracted in March to $40.4 billion from $49.8 billion in February thanks to a rise in exports but the small improvement did not help GDP in the first quarter, plunging into negative territory posting the first contraction in three years. U.S. trade deficit is expected to widen to $40.8 billion.
  6. Canadian rate decision: Wednesday, 14:00. The Bank of Canada maintained its overnight interest rate at 1%, keeping it unchanged for the last 29 policy meetings. However, the bank left the door open for a rate cut. Bank of Canada governor Stephen Poloz was less concerned with low inflation, high house prices and household debt, claiming recovery is consistent and will improve amid stronger US demand. Rates are expected to remain unchanged at 1%. Canadian GDP slightly disappointed.
  7. US ISM Non-Manufacturing PMI: Wednesday, 14:00. The U.S. service sector continued to advance in April, expanding to 55.2 from 53.1 in March. Analysts expected a lower reading of 54.3% in March. Responders were positive about business conditions and the current state of the US economy. The strong release indicates that the US economy is advancing and strengthening in Q2. Manufacturing activity in the US private sector is expected to gain further momentum and reach 55.6.
  8. UK rate decision: Thursday, 11:00. Stronger voices calling to raise rates were heard in the last BoE meeting in May. BoE Governor Mark Carney, who has supported the low rate policy, said that the Bank is getting close to raise borrowing costs. However the estimates suggest a hike may come in a year’s time while other analysts believe a higher rate will executed in the first three months of 2015. Rates are expected to remain unchanged at 0.50%.
  9. Eurozone rate decision: Thursday, 11:45, press conference at 12:30. The ECB is likely to act as promised and to keep the pressure on the euro. While the euro dropped throughout May due to Draghi’s comment last time, the exchange rate is probably still too high. This keeps inflation low. In addition, money supply is squeezing. A cut of 10 to 15 basis points is likely in both the main lending rate and the deposit rate. In addition, the ECB could accompany this move with some new kind of LTRO. While the governing council is likely to keep the QE powder dry, Draghi could certainly provide some more details about such a potential program, making it clear that the option is on the table. A negative rate by such a major central bank is uncharted territory. In addition and despite all the preparations, Draghi’s action and words are not fully priced in. Draghi could drag the euro down once again.
  10. US Unemployment Claims: Thursday, 12:30. The number of initial jobless claims dropped drastically last week to nearly the lowest level in seven years reaching 300,000 claims. The 27,000 drop was far better than the 321,000 forecasted by analysts, indicating hiring is picking up despite the GDP contraction posted in the first quarter. Employers are confident enough to keep staff reducing the number of layoffs. Unemployment claims is expected to reach 314,000 this time.
  11. Canadian employment data: Friday, 12:30. Canada’s unemployment rate remained unchanged in April at 6.9%, despite a loss of 29,000 jobs compared to March. Employment worsened in the provinces of Quebec, New Brunswick, Newfoundland and Labrador and in Prince Edward Island, while it increased in Saskatchewan. The unemployment rate remained the same because labor force participation fell 0.2% to just over 66%.Canada’s labor market is expected to increase by 12,300 jobs with no change in the unemployment rate.
  12. US Non-Farm Employment Change and Unemployment rate: Friday, 12:30. The US labor market created 288,000 jobs in April, well above the consensus forecast of 215,000 new positions, posting the best reading since January of 2012. The surprising addition pushes the unemployment rate down to 6.3% from 6.7% in March, much better than the 6.6% estimated by analysts. Private sector job creation strengthened and the government started hiring again after many months of layoffs. Overall, the US job market is stronger and consumer spending also improves boosting economic activity. US economy is expected to show a 219,000 jobs addition in May, while the unemployment rate is predicted to rise to 6.4%.
Sergey Golubev
Moderator
113476
Sergey Golubev  

EURUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Euro: Bearish
  • Euro and Gold prices seem near critical turning points versus the US Dollar
  • Watch critical European Central Bank decision and other event risk via Economic Calendar


The Euro showed signs of life as it bounced off of fresh multi-month lows and ended a three-week losing streak. Yet traders await a critical European Central Bank interest rate decision to drive volatility in the week ahead.

Recent futures data showed large speculators headed into the week at their most short Euro since it bottomed in July of last year. Traders were likely increasing their bets on Euro weakness as the ECB is widely expected to cut interest rates in their coming meeting. Expectations often beget disappointments, however, and a rush towards Euro selling warns that the single currency may bounce on any ECB surprises.

All eyes turn to central bank President Mario Draghi as he said the ECB was “ready to act” at its next meeting. A Bloomberg News survey shows the majority of economists polled believe the bank will cut its Main Refinancing Rate to further record-lows and push its Deposit rate into negative territory. If the ECB fails to cut either rate it seems obvious that the Euro might rally. Beyond that, however, likely outcomes seem much less clear.

Derivatives traders have pushed forex volatility prices near record-lows across the majority of US Dollar and Japanese Yen pairs. And yet EURUSD 1-week prices have spiked near their highest levels of the year.

Any unexpected results from the European Central Bank would likely be the catalyst for important Euro moves, while end-of-week US Nonfarm Payrolls data could likewise spark significant EURUSD swings.

Sergey Golubev
Moderator
113476
Sergey Golubev  

GBPUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Pound: Bullish
  • GBPUSD Scalps Selling Rallies into May Range Lows- Key Support 1.6750
  • British Pound Forecast Favors Further Declines


The GBP/USD looks poised to resume the bullish trend carried over from the previous year as the Bank of England (BoE) shows a greater willingness to normalize monetary policy sooner rather than later.

Indeed, the BoE policy meeting highlights the biggest event risk for the British Pound as there appears to be a growing rift within the Monetary Policy Committee (MPC), but the sterling remains vulnerable ahead of the June 5 interest rate decision as U.K. Mortgage Applications are expected to slow further in April.

Nevertheless, it seems as though BoE board member Martin Weale may make a greater push to raise the benchmark interest rate ‘sooner rather than later’ as he sees borrowing costs increasing by a full percentage-point over the next 12-months, while Mr. Charles Bean appears to be turning increasingly hawkish as the Deputy Governor anticipates real wage growth to ‘gradually’ increase in the second-half of the year.

With that said, the BoE Minutes due out on June 18 may reveal a growing dissent with the central bank as Governor Mark Carney remains in no rush to normalize monetary policy, but the rate decision may have a limited impact in driving near-term price action for the GBP/USD should the central bank once again refrain from releasing a policy statement.

As a result, a further shift in the BoE policy outlook should heighten the appeal of the British Pound, and the GBP/USD appears to be on course for a higher-high as the Federal Reserve remains reluctant to move away from its zero-interest rate policy (ZIRP).

Sergey Golubev
Moderator
113476
Sergey Golubev  

"For The First Time In Forever," The Dow Will Hit The Magic 18,000 Zone

The basic factors that sustain a bull market is intact and will lke drive the Dow and S&P 500 to new all-time highs.

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How now Dow Jones? Once again, the tenacity and resolve of the bull market are being questioned by skeptics simply because it has been steadily driving up with little interruption. The bull is losing steam, they claim, as the slowed economy is pulling it back . And the bears continue to insist the bull is totally tired by now.

Well, here’s a loud hello! to the doomsayers who, predictably, are expected to belt a chorus of dire warnings that calamity will surely follow the double whammy that walloped the bears on Friday, May 30, 2014. Both the S&P 500-stock index and the Dow Jones industrial average surprised investors as they closed at new all-time highs (again) — despite disappointing first-quarter GDP numbers and lack of any glowing positive news.

The S&P 500 has been on a tear in recent months, rising 3.54 points, to 1,923.57 on Friday — its four-month consecutive advance this year. And the Dow industrials jumped 18.43 points, to a new record of 16,717.17 – its fifth highest close in history. No doubt this high road they traversing is rarefied territory for both the S&P 500 and the Dow which, indeed, may prove acrophobic to some investors who can’t take the market’s relentless rise.

So it’s understandable that the professional bears and the uninitiated among market players are seriously warning that the end of the bull market is in sight and should be losing strength at this point, and very much overdue for a 10% correction. And it wouldn’t be surprising if the market’s Nervous Nellies disengage from the market, if only temporarily, and count their profits so far.

But don’t fret, the 30-stock Dow may hesitate or stumble at this point but it should do what it has been doing all these years –come financial meltdown or the greatest recession ever. The markt continues to move higher on both fundamental and technical reasons. So don’t count on this bull market to give up the huge advance it has achieved the past many years.

But here’s the zinger: Some savvy bulls are confident the widely followed Dow Jones industrial average will rocket to the never-before touched 18,000 zone over the next 9 to 18 months, and the incredibly strong S&P 500 reaching the high 2,100 area. That’s a great distance from where the Dow and S&P 500 closed on Friday.

Sounds impossible? Far from it, really, as the record shows that this bull market has enough stamina and strength in reserve to keep on going. And part of its strength lies in the fact that most market players don’t believe it can go any higher since the Dow hit 16,000.

But for the doubters who would brand such a prediction hogwash or worse, let me review my past market predictions since 2011, at least. They all hit their mark. Apart from benefiting my 3o-year experiencing covering Wall Street and the market, my column and forecasts have been aided and abetted – and astutely guided – by the market strategies and thinking of outstanding market mavens, including Mario Gabelli, Carl Icahn, Warren Buffett, Lazlo Birinyi, Jeffrey Kleintop, and Sam Stovall.

On Feb. 20, 2012, this is how I headlined my column in this space: “Forget The Dow At 13,000: Buy The Dips As The Market Heads Toward New High At 15,000.” The Dow was then trading at 12,949.87. Here’s how I explained it: “The market in its infinite wisdom is signaling what is becoming more evident: The economy is showing signs of strength and fundamentally that is terrific positive news for a sustained upswing in the equity markets.”

And, of course, the Dow hit 13,000 – and then kept going, to 15,000 and later on to 16,000. At the time, many market technicians loudly warned of a huge correction of 10% of worse when the Dow was getting close to reaching 13,000.

But let me go back to several of my earlier market forecasts: On June 7, 2011, the Dow had tumbled to 12,151.26, causing plenty of investors to panic and ready to bail out. So I headlined my column: “How Now Dow Jones: With Almost Everyone Turning Negative On The Market, Is It Time To Buy?” Of course it was, and I definitely said so even when both technical and professional market watchers who focus on fundamentals – the GDP, jobless figures, and housing starts – have concluded that the market was in a horrible jam, caught in a downspin that indicated the bear market was back.

Again, the market accommodated the bulls, crossing the 13,000 level on Feb. 28, 2012, closing that day at 13,005. And then on Aug. 16, 2012, I advised investors “not to be late for the big party,” predicting another new high closing for the Dow and the S&P. My column’s headline blared: “Dow Industrial and S&P 500 Indices Seen Heading To New Record Highs.” Less than a year later, on Feb. 22, 2013, the Dow crossed 14,000 for the first time, closing that day at 14,000.17.

Several months later, on Nov. 19, 2013, with the Dow again blasting higher, my column’s headline read: “Investors Should Continue To Embrace Market’s Robust Advance For More Opportunities.” The Dow by then had crossed 15,000 and I predicted it was likely to spark higher and rise to 16,000 sooner than later. True enough, on Nov. 21, 2013, the Dow closed at 16,009.94.

By 2014, the market was really smoking hot, rising to yet another closing high, to 16,715.44 by May 13, 2014. And again on May 30, 2014, the Dow sprang again to a new all-time, to 16,717, 17. And that’s where another divergence of opinion will nag the market.

But one veteran market watcher who has been also very accurate and on-target in his forecasts, Lazlo Birinyi, president of Birinyi Associates, isn’t at all concerned about the market’s stamina to go even higher. He thinks every time investor gloom pervades the market, it is a time to look for opportunities to buy stocks. In an interview with the New York Times, Birinyi said the long market rally that started in 2009 isn’t likely to end until the market becomes dangerously wild. And so far, there is little evidence of that.

Birinyi believes, and rightly so, thast most of what passes for news about the market “is really noise.” His advice: “You need to stop and think and do the research. When you look deeper, you see a different picture,” says Birinyi.

The conditions that sustain a bull market is intact, according to Birinyi, and “we are in the last stage of a great bull market.” But this last stage of this bull market could well be taking another longt joyride towards another new all-time record high. The economy, if viewed objectively, has been doing well despite the meager GDP rise. Interest rates aren’t likely to flare up, contrary to what the bears predict, and inflation is still well under control. Of course, it isn’t hard to find sources of problems to justify a bearish stance towards the stock market.

But realistically, the market has been doing very well in predicting the outcome of things to come six to 12 months ahead of time. The fact that it is doing well against many odds is a good forward indicator of things to come in the economy and the health of the financial system.

So 18,000 for the Dow and 2,100 for the S&P over the next 9 to 18 months? Don’t be late for the big party. And be an opportunistic buyer.

Sergey Golubev
Moderator
113476
Sergey Golubev  

AUDUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Australian Dollar: Bearish
  • RBA Announcement, Key Data to Support Status-Quo Policy Outlook
  • Aussie Dollar at Risk as US News-Flow Boosts Fed Normalization Bets


On the domestic front, the spotlight is on a policy announcement from the Reserve Bank of Australia. The central bank is expected to keep the benchmark lending rate unchanged at 2.50 percent. That will put the focus on the statement released following the sit-down.
A dovish tone in minutes from May’s meeting undermined speculation about forthcoming interest rate hikes, sending the currency lower. Australian economic data has increasingly underperformed relative to market expectations since then, suggesting Glenn Stevens and company will be in no hurry to change their tune.

Meanwhile, GDP figures are set to show the pace of output growth accelerated in the first quarter and China’s PMI data is expected to reveal a pickup in the pace of factory-sector activity in May. That is likely to keep stimulus expansion bets at bay, helping to cement the status quo wait-and-see setting of monetary policy both in practice and in the minds of investors.

Sizing up the macro landscape, a critical mass of high-profile event risk informing the outlook on Federal Reserve policy looms ahead. As we’ve discussed previously, the fate of the FOMC’s effort to “taper” QE asset purchases with an eye to end the program this year – paving the way for interest rate hikes – has been a formative catalyst for the markets this year.

While last week’s US GDP data revealed more dismal first-quarter performance than was previously expected, Janet Yellen and her colleagues on the policy-setting FOMC committee have regularly dismissed the first three months of the year as a temporary soft patch. US economic data began to steadily improve relative to consensus forecasts in early April, seemingly supporting the central bank’s position.

Manufacturing- and service-sector ISM figures, the Fed’s Beige Book survey of regional economic conditions and the obsessively monitored Nonfarm Payrolls report are all due to cross the wires in the coming days. Continuation of the supportive trend in US news-flow may help scatter any lingering doubts about the approaching end of asset purchases and subsequent tightening. That may narrow the Aussie’s perceived yield advantage and drive broader risk aversion, all of which bodes ill for the currency.