Press review - page 245

[Sergey Golubev]

USD/CAD Bears Lose Confidence As A Doji Emerges (adapted from dailyfx article)

• Strategy: Flat, Long On Close > 1.1460
• Doji Suggests Indecision From Traders Near 1.1280
• Morning Star Formation Awaiting Confirmation

USD/CAD has posted a Doji on the daily, which signals reluctance from the bears to drag the pair lower. With a medium-term uptrend intact the latest pullback could prove transitory. Clearance of former support-turned-resistance at 1.1380 may open a retest of the recent peak at 1.1460. 

[Rodrigo Malacarne]

Interesting news about robots coming to the forex market ... :-) 

http://www.marketwatch.com/story/robots-are-coming-for-the-foreign-exchange-market-2014-11-12

[Sergey Golubev]

USD/CAD Technical Analysis: Treading Water Above 1.13 (based on dailyfx article)

Talking Points:

• USD/CAD Technical Strategy: Flat
• Support: 1.1311, 1.1262, 1.1215
• Resistance: 1.1435, 1.1531, 1.1608

The US Dollar is digesting losses above the 1.13 figure against its Canadian namesake having run into resistance below the 1.15 mark. Near-term support is at 1.1311, the 23.6% Fibonacci retracement, with a break below that on a daily closing basis exposing a rising trend line at 1.1262. Alternatively, a reversal above the 23.6% Fib expansion at 1.1435 clears the way for a test of the 38.2% threshold at 1.1531.

[Sergey Golubev]

Trading the News: Euro-Zone Gross Domestic Product (GDP) (adapted from dailyfx article)

• Euro-Zone Growth Rate to Rebound 0.1% in Third-Quarter.
• Will ECB Venture into QE as Weak Growth Raises Threat for Deflation?

The Euro-Zone’s 3Q Gross Domestic Product (GDP) report may generate a larger correction in EUR/USD as the monetary union is expected to return to growth after stagnating during the three-months through June.

What’s Expected:

Why Is This Event Important:

However, a rebound in the growth rate may do little to heighten the appeal of the single-currency as the European Central Bank (ECB) is widely expected to implement more non-standard measures in December, and the ongoing deviation in the policy outlook continues to foster a bearish outlook for EUR/USD as the Federal Reserve moves away from its easing cycle.

Nevertheless, high unemployment paired with the slowdown in private consumption may continue to drag on economic activity, and a dismal growth print may put increased pressure on the ECB to offer additional monetary support amid the growth threat for deflation.

How To Trade This Event Risk

Bullish EUR Trade: 3Q GDP Climbs 0.1% or Greater

• Need green, five-minute candle following a positive report to consider a long EUR/USD trade
• If market reaction favors a bullish Euro trade, buy EUR/USD with two separate position
• Set stop at the near-by swing low/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

Bearish EUR Trade: Euro-Zone Fails to Grow & Spurs Bets for More ECB Support

• Need red, five-minute candle to favor a short EUR/USD trade
• Implement same strategy as the bullish euro trade, just in reverse

Potential Price Targets For The Release
EUR/USD Daily

• Long-term EUR/USD outlook remains bearish as RSI retains downward trend, but will watch former support for new resistance as the exchange rate continues to come off of channel support.
• Interim Resistance: 1.2600 pivot to 1.2620 (61.8% expansion)
• Interim Support: 1.2280 (100% expansion) to 1.2300 pivot

Impact that Euro-Zone GDP has had on EUR/USD during the last quarter

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
2Q A 2014	08/14/2014 09:00 GMT	0.1%	0.0%	+18	+1

The euro-area economy failed to grow in the second quarter of 2014 following a 0.2% expansion during the first three-months of the year, raising the threat for deflation across the monetary union. The weaker-than-expected growth was mainly attributed to the economic contraction Germany, with Europe’s growth engine slowing for the first time since 1Q 2013. The lackluster recovery is likely to put increased pressure on the European Central Bank (ECB) to boost market liquidity especially as private-sector lending remains subdued. Despite missing market expectations, the EUR/USD climbed above the 1.3400 region during the European trade, but largely struggled to retain the gains as the pair closed at 1.3362.

[Sergey Golubev]

Audio - How Prepared Are You?? with Joel Greenberg

Since the 1980’s, the retirement industry has transformed. Shifting the retirement investment responsibility from your employer to you. Most have no clue how to achieve the rate of return needed to retire comfortably, and make those funds last 20+ years! Joel Greenberg joins Merlin and breaks down some of the considerations investors should be looking to make when planning their retirement.

[Sergey Golubev]

Weekly Outlook: 2014, November 16 - 23

Mario Draghi’s speeches, UK inflation data, German ZEW Economic Sentiment, Rate decision in Japan, US Building Permits and FOMC Meeting Minutes, as wee as inflation and employment data. These are the major events on FX calendar. Here is an outlook on the highlights of this week.

Last week, U.S. retail sales edged up 0.3% in October, indicating stronger spending boosting domestic economy. The increase was higher than forecasted. Analysts expect the U.S. economy will expand around 3% next year, the strongest growth rate since the 2007-09 recession. Core sales excluding automobiles also gained 0.3%, beating expectations for a 0.2% gain. Will this trend continue?

1. Mario Draghi speaks: Monday, 14:00 & Friday, 8:00. ECB President Mario Dragh is expected to testify before the Committee on Economic and Monetary Affairs, in Brussels and speak in Frankfurt. Market volatility is expected.
2. UK inflation data: Tuesday, 8:30. UK inflation dropped to a five-year low of 1.2% in September following 1.5% the prior month. The main price decline occurred in the energy and food sectors. Despite the strong growth in the UK economy, inflationary pressures remain subdued; it is unlikely that the BoE will raise rates before 2015. UK inflation is expected to remain at 1.2%.
3. Eurozone German ZEW Economic Sentiment: Tuesday 9:00. Investors’ sentiment plunged in October to its lowest level since November 2012, reaching minus 3.6 points. The ZEW index fell by 10.5 points negative territory, for the first time. Economists expect confidence to remain low over the medium term. Recent disappointing data such as factory orders, industrial production, and foreign trade have contributed to the sharp decline. German economic sentiment is expected to reach 0.9 points this time.
4. US PPI: Tuesday, 12:30. Producer prices for finished goods declined in September by 0.1% following an unchanged reading in the previous month. Economists expected a price rise of 0.1%. Meanwhile, core PPI excluding the volatile food and energy sectors came out flat. Unadjusted, the producer price index for final demand rose 1.6% for the 12 months that ended in September. Producer prices are expected to drop again by 0.1%.
5. Japan rate decision: Wednesday. The Bank of Japan surprised markets in October while deciding to expand its massive stimulus spending, admitting that economic growth and inflation have not picked up as expected following a sales tax hike in April. BOJ Governor Haruhiko Kuroda announced that the expansion was done to ensure the early achievement of the 2% inflation target and end deflation. Analysts were not expecting further easing measures in such short period.
6. US Building Permits: Wednesday, 12:30. US Building permits increased in September 1.5% to an annualized rate of 1.02 million, suggesting the U.S. economy continues to strengthen despite the global slowdown. Building of multifamily projects such as condominiums and townhomes jumped 16.7 percent to an annual rate of 371,000. Work on single-family properties rose 1.1 percent to a 646,000 rate in September from 639,000 the prior month. The positive trend is also evident in factory production and the job market, posting the lowest level of jobless claims in 14 years. US Building permits are predicted to reach 1.04 million.
7. FOMC Meeting Minutes: Wednesday, 18:00. The Fed FOMC minutes from the September meeting were mostly dovish. The minutes stressed that the Fed will be lenient in its exit strategy. The focus now is on exit strategy for pulling down the Fed’s balance sheet. Regarding the outlook for the fed funds rate, some noted that markets’ outlook is below FOMC forecasts. Several participants see inflation running below Fed goal for quite some time.
8. US Inflation data: Thursday, 12:30. U.S. consumer prices increased mildly in September, showing weak inflation pressures, providing the Federal Reserve ample room to keep interest rates low for an extended period. CPI increased by 0.1% after a 0.2% fall in the previous month. Economists expected a flat reading in September. Sluggish wage growth helped to keep prices nearly unchanged. Meanwhile core CPI excluding food and energy prices, gained 0.1% in September, while the year-on-year change held steady at 1.7%. CPI is expected to drop 0.1% while core CPI is predicted to gain 0.2%.
9. US Unemployment Claims: Thursday, 12:30. The Labor Department release showed a rise of 12,000 in initial claims last week, reaching 290K. The increase was larger than expected, but remained below 300,000 for ninth straight week indicating the US job market is stronger than ever. Another good sign was a rise in the number of Americans quitting their jobs under their own volition, suggesting stronger confidence in the labor market condition. The number of jobless claims is expected to decline to 286K.
10. US Philly Fed Manufacturing Index: Thursday, 14:00. The manufacturing sector in the Philadelphia region continued to weaken in October, falling to 20.7, after September’s reading of 22.5. However despite the modest decline, Philadelphia manufacturing still shows growth. New orders edged up to 17.3, compared to September’s reading of 15.5; the employment index declined to 12.1, following 21.2 in September; and the six-month outlook dropped to 54.5, compared the precious reading of 56.0. The manufacturing sector in Philadelphia us expected to reach 18.9 this time.

[Sergey Golubev]

GBPUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Pound: Bearish

• GBP/USD Continuation, EUR/GBP ST Triangle in Play after BoE Inflation Report
• Cable at New Lows for 2014, but Key Support Awaits

The Bank of England (BoE) Minutes are widely expected to show another 7-2 split within the Monetary Policy Committee (MPC) as the majority retains a wait-and-see approach, and the policy meeting minutes may do little to increase the appeal of the British Pound as the central bank curbs its growth and inflation forecast.

Even though the BoE remains on course to raise the benchmark interest rate in 2015, the downward revisions delivered in the quarterly inflation report favors a bearish outlook for GBP/USD as Governor Mark Carney adopts a more dovish tone for monetary policy and warns of the ‘large disinflation pressures’ coming from abroad. With that said, easing interest rate expectations is likely produce further headwinds for the sterling, but positive data prints coming out of the U.K. may generate a near-term correction in GBP/USD as the central bank sees the economy returning to normal.

As a result, a rebound in the U.K’s core Consumer Price Index (CPI) along with a marked pickup in Retail Sales may spur a bullish reaction in GBP/USD, but we will for an extension of the series of lower highs & lows in the exchange rate as it retains the bearish trend dating back to July.

In turn, we will retain the approach to sell-bounces in GBP/USD and watch former support around the 1.5890-1.5900 for new resistance, with the next downside region of interest coming in around 1.5540-50, the 78.6% Fibonacci retracement from the August 2013 low.

[Sergey Golubev]

AUDUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Australian Dollar: Bearish

• AUD/USD Demonstrates Surprising Resilience On Positive Risk Sentiment
• Scope For Gains Questionable As Elevated Volatility Caps Carry Demand
• Downside Risks Centered On Recent Lows Near The 0.8540 Mark

The Australian Dollar has witnessed some surprising resilience over the past week with it posting modest gains against most of its peers. The driving force behind the small advance may have been a general drive to yield, given similar gains were witnessed for risk sentiment proxies (S&P 500). Meanwhile, regional economic data once again proved uneventful for the commodity currency.

The coming week brings the release of the RBA’s November Meeting Minutes. The decision itself proved a non-event for the AUD and given the fairly well broadcast views from the Board, the Minutes are unlikely to deliver anyrevelations for traders. Similarly, upcoming Chinese data may see another muted response from the currency since it would likely take a significant deterioration over an extended period to generate a response from RBA officials. This could leave the AUD to continue to seek guidance from sources outside of domestic monetary policy expectations.

The potential for general positive risk sentiment to act as a sustainable fuel source for the Aussie may be limited. This is given implied volatility levels are near their 2014 highs, suggesting traders are anticipating some strong swings amongst the major currency pairs. This in turn may detract from the carry appeal of the Aussie and could limit the scope for further gains.
Speculative trader positioning (reflected in the latest COT report) reveals short positions are still some distance away from the extremes witnessed early last year. In turn this suggests the short AUD trade remains ‘uncrowded’.

[Sergey Golubev]

Weekly outlook: November 17 - 21

The dollar was lower against the euro late Friday after data showed that U.S. inflation expectations fell in an otherwise upbeat report on consumer confidence for this month.

The preliminary reading of the University of Michigan’s consumer sentiment index rose to a seven year high of 89.4, better than forecasts of 87.5 and up from October’s reading of 86.9.

However the report also showed that consumers expected annual inflation of 2.6% this year, down from expectations for inflation of 2.9% in October.

The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was down 0.25% to 87.61 in late trade, off the four-and-a-half year highs of 88.36 hit earlier in the session.

EUR/USD was up 0.40% to 1.2526 in late trade, after falling to lows of 1.2399 earlier in the session after data showed that U.S. retail sales rose 0.3% in October, ahead of forecasts for a 0.2% increase.

USD/JPY was up 0.44% to 116.28 late Friday, off the seven year highs of 116.82 struck immediately following the release of the U.S. retail sales data.

The euro rose to six year highs against the broadly weaker yen on Friday, with EUR/JPY advancing 0.86% to 145.67 in late trade.

In the euro zone, data on Friday showed that the economy expanded 0.2% in the three months to September and grew 0.6% from the same period a year earlier.

Germany avoided a recession, posting growth of 0.1% in the last quarter, while France grew by a slightly stronger than expected 0.3%. Greece exited a six-year recession, but Italy fell back into recession, posting a contraction of 0.1%.

The weak growth figures did little to alter expectations for more easing measures from the European Central Bank.

Elsewhere, the Swiss franc rose to 26-month highs against the euro on Friday, with EUR/CHF at 1.2012 in late trade, not far from the Swiss National Bank’s 1.20 exchange rate cap against the single currency.

The Swiss franc has strengthened against the euro in recent sessions ahead of a vote later this month which could force the central bank to increase its gold holdings, a move which could restrict its ability to cap the value of the franc against the euro.

In the week ahead, investors will be focusing on Wednesday’s minutes of the Federal Reserve’s October meeting and Thursday’s report on the U.S. consumer price index. A report on U.K. inflation and euro zone data on private sector activity will also be closely watched.

Monday, November 17

• Japan is to publish preliminary data on third quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.
• In the euro zone, Germany’s Bundesbank is to publish its monthly report. Meanwhile, ECB President Mario Draghi is to testify on monetary policy in the European Parliament in Brussels.
• Canada is to release data on foreign securities purchases.
• The U.S. is to release a report on manufacturing activity in the New York region, as well as data on industrial production.

Tuesday, November 18

• The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
• Separately, RBA Governor Glenn Stevens is to speak at an event in Melbourne; his comments will be closely watched.
• The U.K. is to release data on consumer price inflation, which accounts for the majority of overall inflation.
• The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
• The U.S. is to release data on producer price inflation.

Wednesday, November 19

• The Bank of Japan is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The bank will hold a press conference following the announcement.
• The Bank of England is to publish the minutes of its latest policy meeting.
• The U.S. is to release data on building permits and housing starts.
• Later Wednesday, the Federal Reserve is to publish the minutes of its October meeting.

Thursday, November 20

• Japan is to publish data on the trade balance, the difference in value between imports and exports.
• China is to publish the preliminary reading of its HSBC manufacturing index.
• Switzerland is to report on its trade balance.
• The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth.
• The U.K. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.K. is also to release private sector data on industrial order expectations.
• Canada is to release data on wholesale sales.
• The U.S. is to release data on initial jobless claims, consumer prices, existing homes sales and manufacturing activity in the Philadelphia region.

Friday, November 21

• ECB President Mario Draghi is to speak at an event in Frankfurt; his comments will be closely watched.
• The U.K. is to release data on public sector borrowing.
• Canada is to round up the week with data on consumer price inflation.

[Sergey Golubev]

AUD/USD weekly outlook: November 17 - 21

The Australian dollar bounced back from earlier losses to settle at a two-week high against its U.S. counterpart on Friday, as a round of profit-taking sent the greenback sliding.

AUD/USD hit a daily low of 0.8649 on Friday, before turning 0.48% higher to subsequently consolidate at 0.8759 by close of trade, the highest since October 31. The pair rose 1.43% on the week.

The pair is likely to find support at 0.8649, Friday's low, and resistance at 0.8843, the high from October 31.

The U.S. dollar was boosted after the Commerce Department reported that U.S. retail sales rose 0.3% in October, ahead of forecasts for a 0.2% increase.

The greenback trimmed gains after separate data showed that U.S. inflation expectations fell in an otherwise upbeat report on consumer confidence for this month.

The preliminary reading of the University of Michigan’s consumer sentiment index rose to a seven year high of 89.4, better than forecasts of 87.5 and up from October’s reading of 86.9.

However, the report also showed that consumers expected annual inflation of 2.6% this year, down from expectations for inflation of 2.9% in October.

The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was down 0.25% to 87.61 in late trade, not far from the more than four-year highs of 88.36 hit earlier in the session.

In the week ahead, investors will be focusing on Wednesday’s minutes of the Federal Reserve’s October meeting and Thursday’s report on the U.S. consumer price index.

Monday, November 17

• The U.S. is to release a report on manufacturing activity in the New York region, as well as data on industrial production.
  

Tuesday, November 18

• The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
• Separately, RBA Governor Glenn Stevens is to speak at an event in Melbourne; his comments will be closely watched.
• The U.S. is to release data on producer price inflation.
  

Wednesday, November 19

• The U.S. is to release data on building permits and housing starts.
• Later Wednesday, the Federal Reserve is to publish the minutes of its October meeting.
  

Thursday, November 20

• The U.S. is to release data on initial jobless claims, consumer prices, existing homes sales and manufacturing activity in the Philadelphia region.