Press review - page 256
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AUD/USD weekly outlook: December 15 - 19
The Australian dollar ended close to the lowest level in more than four years against its U.S. counterpart on Friday, amid indications a strengthening U.S. economic recovery will force the Federal Reserve to start raising interest rates sooner and faster than previously thought.
AUD/USD fell to 0.8213 on Thursday, the pair's lowest since June 2010, before subsequently consolidating at 0.8246 by close of trade on Friday, down 0.28% for the day and 0.78% lower for the week.
The pair is likely to find support at 0.8213, the low from December 11, and resistance at 0.8374, the high from December 11.
The preliminary reading of the University of Michigan's consumer sentiment index released Friday rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7.
Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices.
The data underpinned expectations for a hike in U.S. interest rates by the Federal Reserve next year.
Economic reports pointing to a slowdown in China also fuelled risk aversion.
Official data released Friday showed that industrial production in China rose 7.2% in November, missing expectations for an increase of 7.5% and slowing from a 7.7% gain in October.
The disappointing data added to fears that China will miss its annual growth target of 7.5% and boosted speculation that the government will need to roll out fresh stimulus measures to avert a sharper slowdown.
The Asian nation is Australia's largest trade partner.
Meanwhile, in Australia, data published Thursday showed that the number of employed people increased by 42,700 last month, beating expectations for a 12,400 rise.
The report also showed that Australia's unemployment rate ticked up to 6.3% in November from 6.2% the previous month, in line with expectations.
In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting amid speculation that policymakers could drop an assurance that interest rates will stay low for a "considerable time".
Monday, December 15
- The U.S. is to release reports on manufacturing activity in the New York region and industrial production.
Tuesday, December 16- 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.
- China is to publish the preliminary reading of its HSBC manufacturing index.
- The U.S. is to publish reports on building permits and housing starts.
Wednesday, December 17- The U.S. is to release data on consumer inflation and
the current account. Later Wednesday, the Federal Reserve is to publish
its rate statement and economic projections for the next two years. Fed
Chair Janet Yellen is to hold what will be a closely watched press
conference.
Thursday, December 18EUR/USD weekly outlook: December 15 - 19
The euro gained ground against the dollar on Friday, but gains were held in check following a strong report on U.S. consumer sentiment, while falling oil prices and fears over political uncertainty in Greece continued to fuel risk aversion.
EUR/USD was up 0.44% to 1.2461 in late trade, extending its pullback from the two-year trough of 1.2246 struck on Monday.
The dollar found support after data showing U.S. consumer sentiment rose to an almost eight-year high in December.
The preliminary reading of the University of Michigan's consumer sentiment index rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7.
Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices. The data underlined expectations for a hike in U.S. interest rates by the Federal Reserve next year.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, recovered from session lows of 88.12 following the report to settle at 88.34, still off 0.26% for the day. On Monday the index rose to a five year high of 89.53.
Investors remained wary in the wake of a surprise decision by the Greek government to bring forward a parliamentary vote for president to next week from February.
The move raised the prospect of snap elections if Prime Minister Antonis Samaras’ candidate is not approved by parliament, which could see the anti-bailout Syriza party take power.
Economic reports pointing to a slowdown in China and the ongoing decline in oil prices also fuelled risk aversion.
Oil prices hit lows not seen since 2009 on Friday, with Brent below $62 per barrel and US crude down to $57 a barrel after the International Energy Agency cut its forecast for global oil demand for the fifth time in six months.
In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting for further clarification on when interest rates might start to rise. The euro zone is to produce what will be closely watched reports on private sector activity.
Monday, December 15
- In the euro zone, Germany’s Bundesbank is to publish its monthly report.
- Later Monday, the U.S. is to release reports on manufacturing activity in the New York region and industrial production.
Tuesday, December 16- 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 ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
- The U.S. is to publish reports on building permits and housing starts.
Wednesday, December 17- The euro zone is to produce revised data on consumer price inflation.
- The
U.S. is to release data on consumer inflation and the current account.
Later Wednesday, the Federal Reserve is to publish its rate statement
and economic projections for the next two years. Fed Chair Janet Yellen
is to hold what will be a closely watched press conference.
Thursday, December 18- The Ifo Institute is to release a report on German business climate.
- The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.
Friday, December 19EUR/USD Technical Analysis: Buyers Targeting 1.25 Figure (based on dailyfx article)
The Euro advanced against the US Dollar as expected having completed a bullish Morning Star candlestick pattern. Near-term resistance is at 1.2501, the 14.6% Fibonacci retracement, with a break above that on a daily closing basis exposing the 23.6% level at 1.2658. Alternatively, a reversal below wedge top resistance-turned-support at 1.2373 clears the way for a test of the December 8 low at 1.2246.
Prices are too close to resistance to justify entering long from a risk/reward perspective. On the other hand, the absence of a defined bearish reversal signal suggests that taking up the short side is premature. With that in mind, we will remain flat for now.
Technical analysis for EURUSD and AUDUSD (based on dailyfx article)
- EUR/USD has moved steadily higher since finding support
early last week ahead of the 15th square root relationship of the
year’s high in the 1.2250 area
- A daily close over the 2nd square root relationship of the year’s low at 1.2470 will turn us positive on the exchange rate
- Weakness below 1.2360 is needed to reinstill downside momentum in the euro
- A very minor turn window is eyed on tomorrow/Wednesday
EUR/USD Strategy: Flat. Aggressive traders could look to buy on weakness into Wednesday.- AUD/USD fell to a new low for the year on Monday before rebounding again off a median line related to the 2013 high
- Our near-term trend bias is lower in the Aussie while below .8405
- A close under .8205 is needed to set off a new leg lower in the rate
- A turn window of some importance is eyed right here
- A close above .8405 would turn us positive on AUD/USD
AUD/USD Strategy: Like holding only a reduced short position until after this turn window.Russian Ruble Plummets and Here’s How We Might Trade the Clear Trend (based on dailyfx article)
If the Central Bank of Russia is unable to stop further USDRUB rallies via interest rate hikes and interventions, we believe that the Russian government will effectively halt speculation on the domestic currency. This may admittedly seem hyperbolic and sensationalist, but already we’ve seen the CBR hike interest rates by 100bps at a time to a massive 10.5 percent and most recently to 17 percent. Near-zero short-term interest rates in the US Dollar and other major currencies should make investors more than happy to receive 10 percent yields. And yet the Ruble rout continues; it will be critical to see how markets react to the massive, unexpected interest rate hike.
We believe the Euro seems especially at risk on further turmoil given economic links and geographical proximity to Russia—particularly as Western Europe and its allies leave Russia politically isolated. The Russian Crisis of 1998 was at the time the world’s largest sovereign credit default and its effects across broader markets were substantial.
EUR/USD pushes higher on strong ZEW report (based on nasdaq article)
The euro pushed higher against the U.S. dollar on Tuesday, after data showed that German economic sentiment improved for a second successive month in December, easing concerns over a slowdown in the euro zone's largest economy.
EUR/USD hit 1.2526 during European late morning trade, the pair's highest since November 26; the pair subsequently consolidated at 1.2495, advancing 0.47%.
EUR/USD Technical Analysis: Euro Pops to One-Month High (based on dailyfx article)
The Euro advanced against the US Dollar as expected having completed a bullish Morning Star candlestick pattern. Near-term resistance is at 1.2566, the 50% Fibonacci retracement, with a break above that on a daily closing basis exposing the 61.8% level at 1.2642. Alternatively, a reversal below the 38.2% Fib at 1.2491 clears the way for a test of the 23.6% retracement at 1.2397.
Our long-term outlook calls for a broadly stronger US Dollar against its key counterparts. With that in mind, we will treat the ongoing EURUSD bounce as a chance to get short at more attractive levels once a clear-cut trade setup presents itself rather than a buying opportunity.
More hawkish than expected = Good for currency (for GBP in our case)
[GBP - BoE Minutes] = The BOE's MPC meeting minutes contain the interest rate vote for each MPC member during the most recent meeting. The breakdown of votes provides insight into which members are changing their stance on interest rates and how close the committee is to enacting a rate change in the future.
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The Governor invited the Committee to vote on the propositions that:
if actual > forecast (or actual data) = good for currency (for USD in our case)
[USD - CPI] = Change in the price of goods and services purchased by consumers. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
==========The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.3 percent in November on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.3 percent before seasonal adjustment.
The gasoline index posted its sharpest decline since December 2008 and was the main cause of the decrease in the seasonally adjusted all items index. The indexes for fuel oil and natural gas also declined, and the energy index fell 3.8 percent. The food index rose 0.2 percent with major grocery store food groups mixed.
The index for all items less food and energy increased 0.1 percent in November. The shelter index rose 0.3 percent, and the indexes for medical care, airline fares, and alcoholic beverages also rose. In contrast, the indexes for apparel, used cars and trucks, recreation, household furnishings and operations, personal care, and new vehicles all declined in November.
The all items index increased 1.3 percent over the last 12 months, a notable decline from the 1.7 percent figure from the 12 months ending October. The index for all items less food and energy has increased 1.7 percent over the last 12 months, compared to 1.8 percent for the 12 months ending October. The food index has risen 3.2 percent over the span. However the energy index has declined 4.8 percent over the past 12 months, with the gasoline and fuel oil indexes both falling over 10 percent.[USD - FOMC Press Conference] = It's among the primary methods the Fed uses to communicate with investors regarding monetary policy. It covers in detail the factors that affected the most recent interest rate and other policy decisions, along with commentary about economic conditions such as the future growth outlook and inflation. Most importantly, it provides clues regarding future monetary policy.
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The Fed is unlikely to start its rate hike process for "at least the next couple of meetings," Fed Chair Janet Yellen said.
The Fed surprised some Wednesday by leaving the phrase "considerable time" in its statement, but as a reference to the timing of rate hikes rather than a policy.
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