Two reasons to worry if you’re short EUR/USD (adapted from forexlive article)
Not many people out there are recommending euro longs but BAML is out with a couple of reasons to be worried if you’re short.
1) They note that last week’s inflows into European equities were the
largest since June and included both the core and periphery. “We have
argued that open-ended QE is negative for the Euro, but persistent
equity inflows could slow and eventually even reverse the downward EUR
trend,” they say.
2) Economic surprises are reversing. “US data surprises went into
negative territory last week for the first time since August, whilst EZ
data surprises are back in positive territory for the first time March
2014,” BAML says.
Gold Miners Are Off To A Hot Start In 2015 -- But That's Just The Beginning (based on forbes article)
The story has a lot less to do with the printing of money and money
supply that traditionally drives gold and gold miners and more with the
fact that the mineral in and of itself has not been found despite all
the billions of dollars that have been put into discovery of gold over
the last ten years.
In fact, the number of working mines is down to almost zero from 20
to 25 in 1995. So the real story is the fact that you’re not finding any
new supply. Cash costs are high now, because you’re trying to extract
the greatest grades. The industry in and of itself has done an
extraordinarily poor job of asset allocation over the years with
misallocation of capital and losing money on mines.
They seem to buy high, sell low and dilute their shareholders. They
hedge at the wrong times. For all those reasons, these companies have
been put at massive discounts to what I think is any kind of rational
value. So the net sum of those dynamics that I just described leads me
to believe that the question an investor needs to ask is, “How is a gold
miner going to replenish their reserves?”
Teaching a Forex class this week, Mike McMahon joins Merlin
for a look at what he and his students have been analyzing. Mike and
merlin look at The Euro, Dollar, Swiss Franc, Oil, Gold and much more.
Mike also offers his outlook on Oil, which he called to bounce on last
week’s show. 24% bounce in 6 days isn’t bad! Where is it going next?
Tune in and find out!
if actual > forecast (or previous data) = good for currency (for USD in our case)
[USD - ISM Non-Manufacturing PMI] = Level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry. It's a leading indicator of economic health - businesses react quickly
to market conditions, and their purchasing managers hold perhaps the
most current and relevant insight into the company's view of the economy.
"The report was issued today by Anthony Nieves, CPSM, C.P.M., CFPM, chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee. "The NMI®
registered 56.7 percent in January, 0.2 percentage point higher than
the December reading of 56.5 percent. This represents continued growth
in the non-manufacturing sector. The Non-Manufacturing Business Activity
Index increased to 61.5 percent, which is 2.9 percentage points higher
than the December reading of 58.6 percent, reflecting growth for the
66th consecutive month at a faster rate. The New Orders Index registered
59.5 percent, 0.3 percentage point higher than the reading of 59.2
percent registered in December. The Employment Index decreased 4.1
percentage points to 51.6 percent from the December reading of 55.7
percent and indicates growth for the eleventh consecutive month. The
Prices Index decreased 4.3 percentage points from the December reading
of 49.8 percent to 45.5 percent, indicating prices contracted in January
when compared to December. According to the NMI®, eight
non-manufacturing industries reported growth in January. Comments from
respondents vary by industry and company; however, they are mostly
positive and/or reflect stability about business conditions."
EUR/USD Drops Below 1.1350 on Renewed Greece Worries (based on marketpulse article)
The euro took a spill early on Thursday after the European Central
Bank said it will no longer accept Greek bonds as collateral for its
liquidity operations, dealing a blow to Athens which is seeking debt
relief from euro zone lenders.
The common currency last traded at $1.1331, having fallen as far as
$1.1315. It has completely reversed a short-covering rally that lifted
it to $1.1534 on Tuesday.
It shed a full cent after the ECB surprised markets late on Wednesday
by announcing it would reimpose minimum credit rating requirements for
Greek bonds, effectively shifting the burden on to the Greek central
bank to finance its lenders.
Gold Price Today Sees Modest Gains – Higher Move on the Horizon (based on moneymorning article)
The gold price
jumped $10, or 0.80% to $1,271 an ounce in morning trading. The gains
came despite typical headwinds for the yellow metal: a stronger dollar
and slipping oil prices.
The yellow metal gave back some of those gains in the afternoon
session. Just before 1 p.m., gold was hanging on to a $2.70 rise at
This follows gold's sharp decline on Tuesday. Gold slumped $18.80, or
1.3%, yesterday as investors' appetite for riskier assets, including
stocks, increased. The Dow Jones Industrial Average added $305.36, or 1.8%, Tuesday as oil continued to march over $50 a barrel
There were three factors boosting gold prices:
if actual > forecast (or previous data) = good for currency (for AUD in our case)
[AUD - Retail Sales] = Change in the total value of sales at the retail level. It's the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
AUDIO - Facing the Future with Steve Bobbitt
Oil continued its roller coaster ride Wednesday, giving back much of its gains from the last 3 trading sessions. Trader, Steve Bobbitt joins Merlin
to offer his insights into why this extreme volatility is happening and
why it will persist. Steve also offers a forecast for the bottom in
oil! The duo also look at the Euro, and the US equity market position
EUR/USD Technical Analysis: Further Euro Gains Expected (based on dailyfx article)
The Euro pulled back after rebounding against the US Dollar as expected
following the formation of a bullish Morning Star candlestick pattern.
Near-term support is at 1.1318, the 14.6% Fibonacci expansion, with a
break below that on a daily closing basis exposing the 23.6% level at
1.1185. Alternatively, a push below the February 3 high at 1.1533 clears
the way for a test of the 38.2% Fib retracement at 1.1659.
Trading News Events: U.S. Non-Farm Payrolls (based on dailyfx article)
A 230K rise in U.S. Non-Farm Payrolls (NFP) accompanied by faster wage
growth may heighten the appeal of the greenback and spur a short-term
selloff in EUR/USD as it boosts expectations of seeing the Federal Open
Market Committee (FOMC) normalize monetary policy in mid-2015.
Why Is This Event Important:
Indeed, a further improvement in labor dynamics may put increased
pressure on the Fed to raise the benchmark interest rate
sooner-rather-than-later, but the subdued outlook for inflation may
prompt the central bank to further delay its normalization cycle as
price/wage growth remains weak.However, the rise in planned job-cuts paired with the slowdown in
private-sector consumption may generate a weaker-than-expected NFP
print, and a dismal employment report may generate a larger correction
in EUR/USD as it drags on interest rate expectations.
How To Trade This Event Risk
Bullish USD Trade: Job/Wage Growth Exceeds Market Expectations
EURUSD M5: 46 pips price movement by USD - Non-Farm Employment Change news event :
U.S. Non-Farm Payrolls (NFPs) beat market forecasts as the economy added
252K jobs in December following an upwardly revised 353K expansion the
month prior. At the same time, the unemployment rate narrowed
more-than-expected to an annualized 5.6% to mark the lowest reading
since August 2008. However, Average Hourly Earnings unexpectedly slowed
to 1.7% during the same period amid forecasts for a 2.2% print, and the
weakening outlook for inflation may push the Fed to further delay its
normalization cycle as it struggles to achieve the 2% target for price
growth. Nevertheless, the initial bullish reaction in the greenback was
short-lived as EUR/USD worked its way back above the 1.1800 handle, with
the pair ending the day at 1.1839.