Press review - page 240

Sergey Golubev
Moderator
113476
Sergey Golubev  

Trading the News: U.K. Gross Domestic Product (based on dailyfx article)

  • 3Q U.K. GDP of 0.7% Would Mark the Slowest Rate of Growth Since 4Q 2013.
  • Slower Economic Recovery Likely to Further Delay the BoE’s Normalization Cycle.

Trading the News: U.K. Gross Domestic Product (GDP)

The U.K.’s 3Q Gross Domestic Product (GDP) report may spur a lower-low in GBP/USD should the advance reading drag on interest rate expectations.

What’s Expected:



Why Is This Event Important:

A marked slowdown in the U.K. economy may continue to spur a 7-2 split within the Monetary Policy Committee (MPC) as Governor Mark Carney remains in no rush to normalize monetary policy, and the GBP/USD may face a further decline over the remainder of the year as the Fed prepares to exit it easing cycle.

Lower business outputs paired with the slowdown in private-sector consumption may dampen bets of seeing a stronger recovery in the U.K., and a dismal 3Q GDP print may trigger fresh monthly lows in the GBP/USD especially as the BoE retains a rather neutral tone for monetary policy.

Nevertheless, the expansion in building activity along with the ongoing improvement in the labor market may pave the way for a better-than-expected growth report, and a positive development may spur a larger dissent within the BoE as the fundamental outlook for the U.K. improves.

How To Trade This Event Risk

Bearish GBP Trade: U.K. GDP Slows to 0.7% or Lower

  • Need red, five-minute candle following the GDP print to consider a short British Pound trade
  • If market reaction favors bearish sterling trade, short GBP/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
Bullish GBP Trade: 3Q Growth Rate Exceeds Market Forecast
  • Need green, five-minute candle to favor a long GBP/USD trade
  • Implement same setup as the bearish British Pound trade, just in reverse
Potential Price Targets For The Release
GBP/USD Daily Chart


  • Despite the string of lower-highs, need a break of the bullish RSI momentum to favor fresh lows.
  • Interim Resistance: 1.6280 (38.2% retracement) to 1.6300 (50.0% retracement)
  • Interim Support: 1.5890 (61.8% retracement) to 1.5900 (50.0% expansion)
Impact that the U.K. GDP report has had on GBP during the last release

Period Data Released Estimate Actual Pips Change
(1 Hour post event )
Pips Change
(End of Day post event)
2Q 2014 07/25/2014 8:30 GMT 0.8% 0.8% -5 +1

As expected, the U.K. economy expanded another 0.8% in the second quarter of 2014 following the 0.8% rate of growth in the first three months of the year. The lackluster recovery in the U.K. may continue to drag on interest rate expectations as the Bank of England (BoE) remains in no rush to normalize monetary policy, and the British Pound may face additional headwinds over the rest of the year should the central bank scale back its willingness to raise the benchmark interest rate off of the record-low. The initial reaction was largely mixed as the GBP/USD quickly fell back from the 1.6990 region, and the pair continued to consolidate throughout the North American trade as it ended the day at 1.6974.
Sergey Golubev
Moderator
113476
Sergey Golubev  
Forex Weekly Outlook October 27-31

German Ifo Business Climate, US Core Durable Goods Orders, CB Consumer Confidence, FOMC Statement and rate decision, US and Canadian GDP data, US Unemployment Claims, Fed Chair Yellen’s speech. These are a few of the larger events on our calendar for this week. Follow along as we explore the Forex market movers.

Last week, US data continued to surprise with a better than expected headline CPI rising 1.7% on a yearly base and 0.1% monthly in September while core CPI remained unchanged. Furthermore US unemployment claims increased to 283K but remained below 300,000 for a sixth straight week and he four-week moving average declined to its lowest level since May 2000. Will the strong US data continue despite the global slowdown trend?

  1. Eurozone German Ifo Business Climate: Monday, 9:00. German business climate index, based on a monthly survey of about 7,000 responders, declined in September to 104.7 from 106.3 posted in August. Economists expected a higher reading of 105.9. Sentiment worsened across the board amid the prolonged crisis in Ukraine impacting more than 6,000 German firms and the weak recovery in the Eurozone economy. Nevertheless, the German Bundesbank forecasted a positive end to the year despite the recent slowdown. German business sentiment is expected to reach 104.6 this time.
  2. US Core Durable Goods Orders: Tuesday, 12:30. US durable goods orders plunged in August due to volatility in aircraft orders. Orders dropped 18.2% after a strong rise of 22.6% in July. However the overall growth trend remained strong. Meantime, Core orders excluding transportation advanced by 0.7% in August after a 0.8% decline in the previous month. Core orders reflect the true trend, rising 17.2% in the three months to August. The rise in orders is also reflected by the constant improvement in the US job market with fewer layoffs and increase hiring. Durable goods orders are projected to gain 0.4% , while Core durable goods orders are expected to increase by 0.5%.
  3. US CB Consumer Confidence: Tuesday, 14:00. U.S. consumer confidence worsened in September, falling to 86 from 93.4 in the prior month. Economists expected a milder decline to 92.2. The strong decline may be explained by less favorable assessments of the current job market condition. Consumers expected economic growth to stall in the following months ahead. The outlook index declined to 83.7 from a revised 93.1 reading, while the present conditions index fell to 89.4 from a revised 93.9.
  4. US FOMC Statement: Wednesday, 0:00. The Fed maintained interest rates and reduced its QE program by $10 billion as expected. The Federal Reserve made a hawkish statement that the period between the end of the QE program and the Fed’s first rate hike will take “Considerable time”. The Federal Reserve also released its latest Summary of Economic Projections, which shows stronger projections for rate hikes over the long run. Regarding the labor market, conditions have improved further. The Fed believes economic conditions are not sufficient for a rate hike.
  5. NZ rate decision: Wednesday, 20:00. The Reserve Bank of New Zealand kept the official cash rate at 3.5%. Governor Graeme Wheeler stated he won’t rush to raise rates as previously thought, since inflation remains contained. Wheeler also signaled a pause in the bank’s current tightening measures, indicating the bank needs to measure the impact of the four rate hikes this year. The policy statement projects slower inflation by the end of 2015. Rates are expected to remain unchanged at 3.5%.
  6. US GDP data: Thursday, 12:30. The third estimate of real gross domestic product release for the second quarter showed an annual rate expansion of 4.6%, following June’s estimate of 4.2%. The 4.6% growth in real GDP showed growing personal consumption, private inventory investment, exports, as well as local government spending. The gains were partially offset by a rise in imports, and a 0.9% decline in federal government expenditures. Personal consumption increased but the main growth force was fixed business investments expanding 9.7%. The BEA expected second quarter corporate profits increased $164.1 billion, compared to a $201.7 billion decrease in the first quarter. 3.1%
  7. US Unemployment Claims: Thursday, 12:30. The number of new claims for U.S. unemployment benefits rose by 17,000 last week to 283,000. Despite the rise, the number of claims remained below 300,000 for a sixth straight week, indicating the US job market continues to strengthen in spite of a global slowdown trend. The four-week moving average fell to its lowest level since May 2000. However, the slowdown trend in major countries is starting to impact the US manufacturing sector. The number of jobless claims is expected to decline to 277,000 this time.
  8. Janet Yellen speaks: Thursday, 13:00. Federal Reserve Chair Janet Yellen will speak in Washington DC. Yellen may address the rate hike issue amid continued U.S. economic growth and strengthening in the US labor market. Likewise the Fed Chair may discuss the global slowdown trend which may affect the US economy in the coming months.
  9. Japan rate decision: Friday. The Bank of Japan kept monetary policy unchanged at its October meeting. The Bank also unanimously decided to prolong its money market operations to raise the monetary base to an annual pace of between JPY 60 and 70 trillion and reach a 2.0% inflation rate. The central bank was more pessimistic regarding economic conditions, despite stating that the economy is continuing to recover moderately as a trend. Regarding global developments, the BOJ sees a downside risk in the pace of recovery in the US and the unclear state of the Eurozone economy.
  10. Canadian GDP: Friday, 12:30. Canada’s economy did now grow in July, from the previous month due to a slowdown in the mining, and oil and gas industries offset by a rise in manufacturing and the public sector. Mining, oil and gas industries contracted by 1.5% in July. Manufacturing expanded by 1% and the public sector by 0.5%. Economists expected a minor growth of 0.2%. This sluggish growth suggests the BOC will be on no hurry to raise rates anytime soon.
Sergey Golubev
Moderator
113476
Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video October 2014

newdigital, 2014.10.25 16:56

Trading Video: EURUSD Traders Buckle Up for FOMC, ECB Stress Tests, Risk Trends 

  • Next week's economic docket will create an extremely treacherous trading environment
  • Top concern is Wednesday's FOMC rate decision which can shift the Dollar and 'risk' outlook
  • However, there is plenty more scheduled and a particularly perilous week for the Euro 
Was this past week's rise in capital markets and relief from volatility a false dawn? The recovery from a bad stumble through the first half of October drew limited participation and occurred during the lull of a changing landscape. Looking ahead, the bearings for sentiment, activity levels, positioning and established trends will be put to the test. In a docket that is overflowing with high-level releases, the FOMC rate decision will be the focal point. Not only will this tap a heavily disputed policy forecast for the Dollar's sake, but it could also carry the burden of defining the next 'risk' move for the financial system. Other key releases like the RBNZ and BoJ rate decisions should be accounted for, but the currency with the most persistent pressure will be the Euro - from week's beginning to end. We look at the risk and potential of the week ahead in this weekend Trading Video.

 

 


Sergey Golubev
Moderator
113476
Sergey Golubev  
EUR/USD forecast for the week of October 27, 2014, Technical Analysis

The EUR/USD pair initially tried to rally during the course of the week, but the 1.28 level offered enough resistance yet again to push the market back down and form a negative candle. That being the case, the market should continue to go much lower, perhaps testing the 1.25 level. That area, if we break through it will have a significant effect on this marketplace as it should push the Euro much lower. We have no interest in buying until we get above the 1.30 handle, as it would show a significant uptick in positive momentum.




Sergey Golubev
Moderator
113476
Sergey Golubev  
Forex - Weekly outlook: October 27 - 31

The euro pushed higher against the dollar on Friday after data showed that German consumer confidence improved, while upbeat U.K. third quarter growth data underpinned investor demand for the pound.

The euro found support after the forward looking Gfk index of German consumer climate ticked up to 8.5 for November from a revised 8.4 in October. The index had fallen sharply in the preceding two months as concerns over geopolitical risks and the ensuing economic slowdown weighed.

EUR/USD was up 0.17% to 1.2668 in late trade, holding below session highs of 1.2695.

Concerns over upcoming European bank stress test results, due for release on Sunday, along with a confirmed Ebola diagnosis in New York City bolstered safe haven demand for the yen and saw the dollar weaken slightly.

USD/JPY was down 0.12% to 108.14 late Friday, after falling as low as 107.77 earlier in the session. At the same time, USD/CHF was down 0.22% to 0.9518.

In the U.K., data on Friday showed that gross domestic product expanded by 0.7% in the third quarter, slowing from 0.9% in the three months to June, but in line with forecasts. Annual GDP was up 3%, also in line with forecasts.

The data underpinned expectations that the continuing economic recovery could prompt the Bank of England to hike interest rates in the second half of next year.

GBP/USD was at 1.6083 in late trade, 0.33% higher for the day.

The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was down 0.19% to 85.79 late Friday. The index still ended the week higher, stabilizing following a steep selloff in the previous week.

Fears that a slowdown in global economic growth could act as a drag on the U.S. economic recovery have prompted investors to push back expectations for an increase in interest rates by the Federal Reserve to the second half of 2015.

In the week ahead investors will be looking ahead to the outcome of Wednesday’s Federal Reserve meeting amid expectations that it will wind up its asset purchase program.

Investors will be scrutinizing the Fed statement for further indications on how soon interest rates could start to rise.

Friday’s report on euro zone consumer inflation will also be in focus, amid growing expectations that the European Central Bank will have to take additional easing steps to boost the flagging euro area economy.

Monday, October 27
  • The Ifo Institute is to release its report on German business climate. The euro zone is to release data on M3 money supply and private loans.
  • The U.K. is to release private sector data on retail sales.
  • The U.S. is to publish an industry report on pending home sales.
Tuesday, October 28
  • Japan is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
  • The U.S. is to release data on durable goods orders and a report by the Conference Board on consumer confidence.
Wednesday, October 29
  • Japan is to publish preliminary data on industrial production.
  • New Zealand is to release private sector data on business confidence.
  • The U.K. is to report on net lending to individuals.
  • Canada is to produce data on raw material price inflation.
  • The Federal Reserve is to announce its federal funds rate and publish its rate statement.
  • Later Wednesday, the Reserve Bank of New Zealand is to announce its official cash rate and publish its rate statement.
Thursday, October 30
  • Australia is to release a report on import prices.
  • The U.K. is to publish private sector data on house price inflation.
  • In the euro zone, Germany is to produce preliminary data on the consumer price index, which accounts for the majority of overall inflation. The country is also to release a report on the change in the number of people unemployed.
  • Elsewhere in the euro area, Spain is to release preliminary data on consumer inflation and third quarter GDP.
  • Switzerland is to publish its KOF economic barometer.
  • The U.S. is to publish revised data on third quarter GDP, as well as the weekly report on initial jobless claims. Later in the day, Fed Chair Janet Yellen is to speak at an event in Washington; her comments will be closely watched.
Friday, October 31
  • New Zealand is to release data on building consents.
  • Japan is to release reports on household spending and the consumer price index. Meanwhile, the Bank of Japan is to announce its monetary policy decision and publish its rate statement. The bank is also to hold a post-policy meeting press conference.
  • The euro zone is to release what will be closely watched preliminary data on consumer inflation, as well as a report on the unemployment rate. In addition, Germany is to report on retail sales, while France is to publish data on consumer spending.
  • Canada is to publish its monthly report on GDP growth.
  • The U.S. is to round up the week with data on personal income and expenditure as well as revised data on consumer sentiment and a report on business activity in the Chicago region.
Sergey Golubev
Moderator
113476
Sergey Golubev  
EUR/USD weekly outlook: October 27 - 31

The euro edged higher against the dollar on Friday as an improvement in German consumer confidence buoyed up the single currency.

EUR/USD was up 0.17% to 1.2668 in late trade, after rising to session highs of 1.2695. For the week, the pair was down 0.62%.

The euro found support after the forward looking Gfk index of German consumer climate ticked up to 8.5 for November from a revised 8.4 in October.

The index had fallen sharply in the preceding two months as concerns over geopolitical risks and the ensuing economic slowdown weighed.

Concerns over European bank stress test results along with a confirmed Ebola diagnosis in New York City bolstered safe haven demand for the yen and saw the dollar weaken slightly.

The dollar slid against the yen after a doctor in New York tested positive for the Ebola virus after returning from Guinea. The news fuelled concerns that a widespread outbreak of the virus could derail global economic growth.

The dollar later pulled away from session lows against the euro and the yen after data showed that U.S. new home sales rose 0.2% from a month earlier to hit a six year high of 467,000 in September.

The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was down 0.19% to 85.79 late Friday. The index still ended the week higher, stabilizing following a steep selloff in the previous week.

Fears that a slowdown in global economic growth could act as a drag on the U.S. economic recovery have prompted investors to push back expectations for an increase in interest rates by the Federal Reserve to the second half of 2015.

In contrast, the European Central Bank has cut interest rates to record lows in recent months and announced monetary stimulus measures in a bid to spur growth in the euro area.

The single currency weakened across the board earlier in the week after Reuters reported that the ECB is examining plans to widen its asset purchasing stimulus program to include corporate debt.

In the week ahead investors will be looking ahead to the outcome of Wednesday’s Federal Reserve meeting amid expectations that it will wind up its asset purchase program. Investors will be scrutinizing the Fed statement for further indications on how soon interest rates could start to rise.

Friday’s report on euro zone consumer inflation will also be in focus, amid growing expectations that the ECB will have to take additional easing steps to boost the flagging euro area economy.

Monday, October 27
  • The Ifo Institute is to release its report on German business climate. The euro zone is to release data on M3 money supply and private loans.
  • The U.S. is to publish an industry report on pending home sales.
Tuesday, October 28
  • The U.S. is to release data on durable goods orders and a report by the Conference Board on consumer confidence.
Wednesday, October 29
  • The Federal Reserve is to announce its federal funds rate and publish its rate statement.
Thursday, October 30
  • In the euro zone, Germany is to produce preliminary data on the consumer price index, which accounts for the majority of overall inflation. The country is also to release a report on the change in the number of people unemployed.
  • Elsewhere in the euro area, Spain is to release preliminary data on consumer inflation and third quarter GDP.
  • The U.S. is to publish revised data on third quarter GDP, as well as the weekly report on initial jobless claims. Later in the day, Fed Chair Janet Yellen is to speak at an event in Washington; her comments will be closely watched.
Friday, October 31
  • The euro zone is to release what will be closely watched preliminary data on consumer inflation, as well as a report on the unemployment rate. In addition, Germany is to report on retail sales, while France is to publish data on consumer spending.
  • The U.S. is to round up the week with data on personal income and expenditure as well as revised data on consumer sentiment and a report on business activity in the Chicago region.
Sergey Golubev
Moderator
113476
Sergey Golubev  

EUR/USD Politics and Growth :

"Full-on quantitative easing of the sort the Fed is now winding up remains politically difficult to countenance.

On Monday the ECB will announce how many covered bonds, which are backed by high-quality assets so holders may be reluctant to give them up, it bought in its first week in the market."

FX News: EUR/USD Politics and Growth - Live Trading News
FX News: EUR/USD Politics and Growth - Live Trading News
  • www.livetradingnews.com
FX News: EUR/USD Politics and Growth The ECB’s three-pronged plan to push money into the faltering economy involves offering banks new cheap long-term money on the condition that they lend it on, coupled with purchases of covered bonds and asset-backed securities. Reuters exclusively reported last week that the ECB may also buy corporate...
Sergey Golubev
Moderator
113476
Sergey Golubev  

Weekend Edition with John O'Donnell

Great bullish move to the upside for all 4 major indices this week, yet fear still has not abated. John and Merlin take a look at the market and offer insights as to what’s driving it, and how we should approach it. They also talk about the trading industry as a profession and the best way to get involved with the financial markets. Finally, John tips the scales for his weekly weigh in!


Sergey Golubev
Moderator
113476
Sergey Golubev  
2014-10-27 14:00 GMT (or 15:00 MQ MT5 time) | [USD - Pending Home Sales]

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

[USD - Pending Home Sales] = Change in the number of homes under contract to be sold but still awaiting the closing transaction, excluding new construction.

==========

U.S. Pending Home Sales Show Modest Rebound In September

After reporting a notable pullback in U.S. pending home sales in the previous month, the National Association of Realtors released a report on Monday showing a modest rebound in pending sales in the month of September.

NAR said its pending home sales index inched up by 0.3 percent to 105.0 in September after falling by 1.0 percent to 104.7 in August. Economists had been expecting pending home sales to increase by about 0.5 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

With the modest monthly increase, the pending home sales index is up by 1.0 percent compared to September of 2013, reflecting the first year-over-year increase in eleven months.

Lawrence Yun, NAR chief economist, said moderating price growth and sustained inventory levels are keeping conditions favorable for buyers.

"Housing supply for existing homes was up in September 6 percent from a year ago, which is preventing prices from rising at the accelerated clip seen earlier this year," Yun said. "Additionally, the current spectacularly low mortgage rates should help more buyers reach the market."

Sergey Golubev
Moderator
113476
Sergey Golubev  

Strategy Video: Volatility Underpricing FOMC Risk Suggests Explosive Markets Ahead

  • Implied (expected) volatility traditionally builds into high profile events
  • Volatility measures for equities and FX are surprisingly tepid heading into the Oct 30 FOMC meeting
  • Considering risk trends have been unseated and market forecasts are so dovish, the market looks unprepared

Heading into major event risk, we typically see expectations for volatility and the cost of hedges rise. Yet, as we close in on Wednesday's FOMC decision; we find the anticipation for market reaction is surprisingly stoic. Not only are activity levels generally higher now than they have been in past months; but the forecasts for the central bank's bearings have grown increasingly extreme towards the dovish view - at the same time the market grows increasingly aware of its dependency on temporary global stimulus. This disparity in impending event and the market's position reflects a similar type of mispricing to traditional scenario analysis. Yet, here, the result is greater volatility.