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EUR/USD Technical Analysis: Support Met Below 1.36 Mark
The Euro fell against the US Dollar as expected after the pair produced a bearish Evening Star candlestick pattern below the 1.37 figure. A daily close below support is at 1.3583, the 23.6% Fibonacci expansion, targets the 1.3502-12 area marked by the June 5 low and the 38.2% level. Alternatively, a turn above rising trend line support-turned-resistance at 1.3653 clears the way for a challenge of the 38.2% Fibonacci retracement at 1.3689.
Forum on trading, automated trading systems and testing trading strategies
Something Interesting in Financial Video July 2014
newdigital, 2014.07.09 08:45
Trading Video: Equities Threaten a Turn, Dollar Not Yet Impressed
Discontent is stirring amongst the contented speculators. Low volatility and an appetite for yield go hand-in-hand, but even die-hard bulls doubt its much longer lived. Given the breadth of opportunity, market participants are itching for the swell of trend and abundance of opportunity that comes along with a shift in speculative appetites. Yet, we have seen too many starts to be drawn in without confirmation. Global equities made the biggest contribution to a risk interest with heavy selling particularly in Europe. However, that is only the first level of a risk-derived move. Volatility measures, FX participation and fundamental moorings are necessary to alter such a remarkable trend. Will we finally find it? We discuss what to watch and what to trade in today's Trading Video.
2014-07-09 18:00 GMT (or 20:00 MQ MT5 time) | [USD - FOMC Meeting Minutes]
[USD - FOMC Meeting Minutes] = It's a detailed record of the FOMC's most recent meeting, providing in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.
Acro Expand : Federal Open Market Committee (FOMC).
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Fed’s Asset Purchase Could End In October – FOMC Minutes
Minutes of the Federal Open Market Committee's June meeting show that officials have decided to end their asset purchasing program in October if the economy continues to show economic growth.
“If the economy progresses about as the Committee expects, warranting reductions in the pace of purchases at each upcoming meeting, this final reduction would occur following the October meeting,” the minutes said.
However, the minutes also mentioned three times that the Federal Reserve’s quantitative easing program is not on a “preset course.”
The minutes showed that the committee remains optimistic that the U.S. economy will recover in the second half of the year, despite lowering its economic growth forecast at its June monetary policy meeting. According to projections released at the June meeting, committee members see 2014 growth between 2.1% to 2.3%, compared to their March forecast of 2.8% to 3.0%
“Members judged that the economy had sufficient underlying strength to support ongoing improvement in labor market conditions and a return of inflation toward the Committee's longer-run 2 percent objective,” the minutes said. “Most participants viewed the risks to the outlook for the economy, the labor market, and inflation as broadly balanced.”
2014-07-10 02:00 GMT (or 04:00 MQ MT5 time) | [CNY - Trade Balance]
if actual > forecast = good for currency (for AUD in our case)
[CNY - Trade Balance] = Difference in value between imported and exported goods during the previous month. Export demand and currency demand are directly linked because foreigners usually buy the domestic currency to pay for the nation's exports. Export demand also impacts production and prices at domestic manufacturers.
Acro Expand : Customs General Administration of China (CGAC).
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China trade gains momentum, but recovery patchyune exports grew 7.2% year-on-year, a touch above the 7% posted in May, but it fell short of the 10.4% that the market was hoping for. Imports rose 5.5%, improving from a dip of 1.6%, just slightly under the Bloomberg consensus forecast of 6%.
This led to China’s June trade surplus narrowing to $31.6 billion from $35.92 billion in May, and below consensus estimates of $36.9 billion.
On the news, AUD/USD dipped over 0.2% and found some support at the 0.9397 level.
There’s a bit of optimism with China’s customs office expecting exports growth to accelerate in the third quarter. Imports could also pick up based on improving signs of manufacturing and service activities over the past two months.
Still, there are concerns that the recovery has been patchy, particularly with the soft property sector and worries that the earnings season underway might turn out to be disappointing.
There is also some expectation that the government will have to do more to jumpstart the recovery with further stimulus measures to meet its 7.5% growth target. That argument got some backing when China’s June’s CPI was released yesterday, which came in at 2.3% year-on-year. This was down from 2.5% in the previous month and under the 2.4% market forecast.
China’s exports growth will also hinge on the recovery of other key economies especially the Euro Zone. The global outlook became a bit more uncertain after the International Monetary Fund warned earlier this week that global investment spending was still lacklustre.
We’ll get a better picture next week with the release of China’s Q2 GDP on Wednesday 16 July. This will perhaps be the clearest indication so far on how well China’s mini-stimulus measures have helped and how much more is needed since their roll-out back in April. The market consensus forecast for Q2 GDP is 7.4% growth, unchanged from Q1 which was the slowest in six quarters.
Indonesia will also be keenly watching China’s recovery story. Regardless who wins the election, the new president will take over a slowing economy with weakening fundamentals. With economic reforms a long term process, Indonesia’s outlook and policy decisions in the interim could hinge closely on China’s demand for commodities.
2014-07-08 01:30 GMT (or 03:30 MQ MT5 time) | [USD - Wholesale Inventories]
if actual < forecast = good for currency (for USD in our case)
[USD - Wholesale Inventories] = Change in the total value of goods held in inventory by wholesalers. It's a signal of future business spending because companies are more likely to purchase goods once they have depleted inventories.
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U.S. Wholesale Inventories Rise 0.5% In May, Slightly Less Than Expected
Wholesale inventories in the U.S. rose by slightly less than anticipated in the month of May, according to a report released by the Commerce Department on Thursday.
The report said wholesale inventories increased by 0.5 percent in May after jumping by a revised 1.0 percent in April.
Economists had expected inventories to climb by about 0.6 percent compared to the 1.1 percent increase originally reported for the previous month.
While inventories of durable goods surged up by 1.0 percent in May, the increase was partly offset by a 0.3 percent drop in inventories of non-durable goods.
Meanwhile, the Commerce Department said wholesale sales rose by 0.7 percent in May after soaring by 1.3 percent in the previous month.
The report said sales of durable goods edged up by 0.2 percent, while sales of non-durable goods jumped by 1.1 percent.
With inventories and sales both rising, the inventories/sales ratio for merchant wholesalers was unchanged compared to the previous month at 1.18.
The Commerce Department noted that wholesale inventories in May were up by 7.9 percent compared to the same month a year ago, while wholesale sale were up by 6.6 percent year-over-year.
USD Continues to Carve Lower-Highs; Broader EUR/USD Range in Focus
EUR/USD:
AUD/USD:
Reserve Bank of Australia (RBA) Minutes, which are due out next week, may trigger another decline in the AUD/USD should the central bank continue to toughen its verbal intervention.
Trading the News: Canada Net Change in Employment
Another 20.0K rise in Canada employment may trigger fresh monthly lows in the USD/CAD as it limit’s the risk of seeing the Bank of Canada (BoC) further embark on its easing cycle.
What’s Expected:
Why Is This Event Important:
An upbeat job report may spur a material shift in the policy outlook as BoC Governor Stephen Poloz scales back his willingness to deliver another rate cut, and the central bank may adopt a more neutral tone for monetary policy as the rise in employment highlights an improved outlook for growth and inflation.
The pickup in household spending along with the expansion in building activity may pave the way for a positive employment print, and a pickup in job growth may heighten the appeal of the Canadian dollar as it raises the BoC’s scope to normalize monetary policy sooner rather than later.
However, the data print may fall short of market expectations as businesses confidence wanes, and a dismal jobs report may generate a larger correction in the USD/CAD as it drags on interest rate expectations.
How To Trade This Event Risk
Bullish CAD Trade: Core Inflation Rises 1.5% or Greater
- Need red, five-minute candle following the CPI report to consider short USD/CAD entry
- If the market reaction favors a bullish Canadian dollar trade, establish short with two position
- Set stop at the near-by swing high/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
Bearish CAD Trade: Canada Price Growth Disappoints- Need green, five-minute candle following the release to look at a long USD/CAD trade
- Carry out the same setup as the bullish loonie trade, just in the opposite direction
Potential Price Targets For The ReleaseUSD/CAD Daily
- Fails to Retain Bullish Trend from 2013; Bearish RSI Momentum Favors Lower Highs & Lows
- Interim Resistance: 1.0820 (61.8% retracement) to 1.0830 (61.8% retracement)
- Interim Support: 1.0580 (61.8% retracement) to 1.0610 (78.6% expansion)
Impact that the Canada CPI report has had on CAD during the last month(1 Hour post event )
(End of Day post event)
2014
May 2014 Canada Consumer Price Index (CPI)
USDCAD M5 : 39 pips price movement by USD - Non-Farm Employment Change news event
Employment increased 25.8K in May after the Canadian economy shed 28.9K jobs the month prior, while the jobless rate unexpectedly up ticked to an annualized 7.0% from 6.9% in April. Despite the better-than-expected print, the U.S. Non-Farm Payrolls (NFP) played a greater role in driving the USD/CAD as the exchange rate climbed to a daily high of 1.0947, but we saw the dollar-loonie consolidate ahead of the weekend as the pair closed at 1.0925.
Forex: Daily EUR/JPY, EUR/USD Stochs, MACD Point to Sells: Friday, July 11, 2014
2014-07-11 12:30 GMT (or 14:30 MQ MT5 time) | [CAD - Employment Change]
if actual > forecast = good for currency (for CAD in our case)
[CAD - Employment Change] = Change in the number of employed people during the previous month. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.
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U.K. CB Leading Index Rises At Stable Rate In May
U.K 's leading index, a measure of perceptions on future economic conditions, increased at a stable rate in May, results of a survey by the Conference Board showed Friday.
The Conference Board leading economic index rose 0.5 percent month-on-month in May, the same as in April. The index came in at 111.0 in May.
Six among the seven sub-indices contributed positively to the rise in the overall index.
The Conference Board Coincident Economic Index, measuring the current economic activity, came in at 106.9 and was unchanged month-on-month in May. This follows the 0.3 percent increase in April and March.
"The six-month growth rate of the Leading Economic Index for the U.K has decelerated in each of the last five months, pointing to slower growth performance for the second half of 2014 compared to the first," Bert Colijn, senior economist at The Conference Board, said.
"The slowing growth outlook is partially exacerbated by concerns about the short-term weakness in growth in emerging markets and the Euro Area."
The yen managed to gain some ground in a week that saw some fear return to the markets. What’s next for currencies? Public appearances from Yellen, Draghi and Carney, rate decisions in Japan and Canada and plenty of important US figures are the highlights of a busy week. Market movers on our calendar for this week. Here is an outlook on the major events to change Forex trading.
Last week FOMC Meeting Minutes release showed that the Fed is finally moving towards preparing the markets for monetary normalization. The Fed is on course to end QE in October 2014, with a larger tapering of $15 billion. However there wasn’t any clear indication regarding the possible timeline for a rate hike. In the euro-zone, we had a flashback from the dark days of the debt crisis, with fresh worries from Portugal. The pound was capped amid some weak UK data. And both in Australia and in Canada, employment data weighed on the local currencies. Let’s start:
Updates: