Press review - page 301

Sergey Golubev
Moderator
113479
Sergey Golubev  

NFP Expectations for April (based on dailyfx article)

  • NFP is historically a volatile event
  • Last month’s miss caused the EURUSD to decline over 118 pips
  • Expectations for this Friday sit at 248k
NFP (Non-Farm Payrolls) figures are released monthly and is one of the markets most highly anticipated events. This event tracks monthly changes in employment in the United States, and gives traders a glimpse into the health of the economy. Also, it should not be overlooked that the FED (Federal Reserve) looks to these employment numbers to influence their decisions regarding monetary policy.

Below we can see a series of the 12 previous NFP totals graphically displayed. While these numbers have been mixed, it is important to see what effects they can have on the Forex market. So how can NFP affect the market, and what are the expectations for Friday’s event?


The previous NFP event transpired last month on March 6th. To review, expectations were set at 235k, but on release the figures surprised the market. As seen in the graph above, the total amount of new jobs outside of the agricultural sector came in at 293k. This beat of expectations quickly drove traders to accumulate the US Dollar against the majority of major currencies.

Below we can see the price action for the EURUSD during the March NFP event using a 30 minute chart. Immediately after the announcement, prices formed a new lower high for the week at 1.0988. This rise in price only lasted seconds, as traders began to accumulate US Dollars on the news. This caused prices to drop as much as 118 pips over the next 30 minutes. Not only did the EURUSD decline for the day, this event caused the EURUSD to continue its trend and form a new monthly low in the following trading week.
So what can we expect for Fridays trading?


The next NFP event is set for this Friday April, 3rd at 8:30 am New York time. After reviewing last month’s release, it makes sense for traders to be on their guard for unexpected volatility at this time. Currently expectations are set for 248k. Traders should primarily focus on whether or not NFP beats or misses expectations. By using last month as a model, a beat above expectations could cause another major US Dollar rally. Conversely, if prices miss expectations, it could signal a sell off for the US Dollar against other Major G8 currencies.

MetaTrader Trading Platform Screenshots

EURUSD, M5, 2015.04.03

MetaQuotes Software Corp., MetaTrader 5

EURUSD M5: 143 pips price movement by USD - Non-Farm Employment Change news event

EURUSD, M5, 2015.04.03, MetaQuotes Software Corp., MetaTrader 5, Demo

MetaTrader Trading Platform Screenshots

GBPUSD, M5, 2015.04.03

MetaQuotes Software Corp., MetaTrader 5

GBPUSD M5: 112 pips price movement by USD - Non-Farm Employment Change news event

GBPUSD, M5, 2015.04.03, MetaQuotes Software Corp., MetaTrader 5, Demo

MetaTrader Trading Platform Screenshots

USDJPY, M5, 2015.04.03

MetaQuotes Software Corp., MetaTrader 5

USDJPY M5: 119 pips price movement by USD - Non-Farm Employment Change news event

USDJPY, M5, 2015.04.03, MetaQuotes Software Corp., MetaTrader 5, Demo


MetaTrader Trading Platform Screenshots

USDCHF, M5, 2015.04.03

MetaQuotes Software Corp., MetaTrader 5

USDCHF M5: 107 pips price movement by USD - Non-Farm Employment Change news event

USDCHF, M5, 2015.04.03, MetaQuotes Software Corp., MetaTrader 5, Demo




Sergey Golubev
Moderator
113479
Sergey Golubev  

EURUSD falls on better US data but finds support (based on forexlive article)

The EURUSD is down testing the 100 hour moving average (at 1.0802) after the better-than-expected US trade data and weekly initial jobless claims.


The pair is nevertheless finding support buyers against the 100 hour moving average (blue line in the chart above at 1.0802).   
In the earlier rally today, the pair held resistance against the 38.2% retracement of the move down from the January 25 high to the low reached on Tuesday. That level comes in at 1.0843 and that was the high price for trading today.
With the pair trading between support and resistance from a technical perspective, I would expect that the market will simply lean against the level with stops on breaks.  On a move higher the next target will look toward the 200 hour MA ( green line in the chart above). That level comes in at 1.08654 currently.
On a move lower, the 1.0759 – 68 area will be eyed. The 1.0768 level was the spring low going back to March 23. The 1.0759 level was the low going way back to September 2003 (a blast from the past).
Sergey Golubev
Moderator
113479
Sergey Golubev  
AUDIO - European Downfall with Patrick Barron

Long time banking professor and Austrian economist, Patrick Barron joins Merlin Rothfeld and John O’Donnell for a look at the deterioration situation going on in Europe. Professor Barron sees some radical changes facing the EU, some which he is all but guaranteeing will happen over time! What does this mean for your long term holdings? Tune in and find out.

Sergey Golubev
Moderator
113479
Sergey Golubev  

Forex Weekly Outlook April 6-10 (based on forexcrunch article)

The US dollar had a rough week, making gains in Q1 but erasing them in the wake of Q2, especially towards the end. US ISM Non-Manufacturing PMI, rate decision in Australia, Japan and the UK, FOMC Meeting Minutes, US unemployment claims, Canadian employment data are the major market movers on Forex calendar. Here is an outlook on the highlights of this week.

Initial good figures and end-of-quarter adjustments helped the greenback. However, the US Non-Farm Payrolls missed expectations with a smaller than expected job addition of 126,000 in March, much worse than expected and coupled with downwards revisions. The rise in wages and the drop in the “real unemployment rate” didn’t compensate. While some blame the weather and say it is a one-off, others see the weak economy finally hitting jobs. In the euro-zone, the Greek issues still weigh, while politics also impact the pound. The fall in commodity prices hit the Aussie but the loonie was resilient in the face of the deal with Iran, which could hurt oil prices. What’s next after Easter?

  1. US ISM Non-Manufacturing PMI: Monday, 14:00. The US service sector expanded more than expected in February, rising to 56.9 from 56.5 in February. Economists expected a lower reading of 56.5 in February. The New Orders Index posted 56.7, 2.8 points less than January’s 59.5. The Employment Index edged up 4.8 points to 56.4 from 51.6 in January, rising for the 12th consecutive month. The Prices Index increased 4.2 points from the January reading of 45.5 to 49.7. The elevated figures indicate economic conditions are improving. US service sector PMI is expected to reach 56.6 this time.
  2. Australian rate decision: Tuesday, 4:30. Australia’s central bank maintained its cash rate despite calls for another rate cut. However, implied further easing measures may be introduced in the next policy meeting. The RBA preferred to assess the impact of February’s cut before lowering rates once again. Australian cash rate is predicted to remain at 2.25%, but a cut could also come on the background of falling commodity prices. This is a critical event.
  3. Japan rate decision: Wednesday. The BOJ maintained its monetary policy in March and continue with its plan to raise monetary base to an annual pace of JPY 80 trillion reaching the Bank’s 2% inflation target. However Haruhiko Kuroda, Bank of Japan governor, admitted for the first time, he could not rule out deflation in the coming months, due to the oil price crush, but assured it won’t necessarily affect the underlying trend in inflation in the long term. The BoJ expects a gradual rise in demand will boost inflation forecasting price rises of 1% in the fiscal year ending in March 2016 and 2.2% for 2017. The BOJ is expected to keep its monetary policy unchanged, but pressure is mounting.
  4. US FOMC Meeting Minutes: Wednesday, 18:00. In the last meeting, the Fed removed the “patience” wording regarding interest rates and also left some dovish hints, especially with the dot plot. The latter showed slower rate hikes this year. We will now see what members were thinking. A dovish look will enhance the NFP impact, while a hawkish one could leave markets puzzled.
  5. UK rate decision: Thursday, 11:00. The Bank of England kept its benchmark rate at 0.50% in its March meeting. BoE’s Governor Mark Carney, noted that the next move will be up despite current deflationary pressures. Low inflation may be a blessing in disguise for the UK economy, providing households with greater spending power, in times of sluggish wage growth. Furthermore, cheap imports are also positive for consumers boosting spending and economic growth. The BOE is expected to maintain rates at 0.50%.
  6. US Unemployment Claims: Thursday, 12:30. The number of new claims filed for unemployment benefits in the US declined considerably last week to 268,000 from 286,000 in the week before. The 20,000 fall reasserts the positive trend in the US labor market. Analysts expected only a minor drop in the number of claims. The number of people continuing to receive jobless benefits declined by 88,000 to 2.33 million. The number of claims is expected to reach 271,000 this week.
  7. Canadian employment data: Friday, 12:30. Canada’s job market showed signs of weakness amid the global oil slump. Job contraction occurs in crude-rich provinces affecting the overall unemployment rate. The labor market shed 1,000 jobs in February, increasing the jobless rate to 6.8% from 6.6% in January. Analysts expected a job loss of 3,500, but predicted a slower rise of 0.1% in the unemployment rate. The major decline in oil prices also lead the BOC’s decision to cut interest rates in January. Canadian job market is expected to rise by 0.1% while the unemployment rate is forecast to remain at 6.8%.
Sergey Golubev
Moderator
113479
Sergey Golubev  

EURUSD Technical Analysis (based on dailyfx article)


  • “There is a long term level to be aware of. The line that extends off of the 2008 and 2010 lows is at about 1.0545 this week. The March 2003 low is at 1.0499.”
  • “EURUSD finished the week above 1.08, indicating potential for a period of sideways trading in the coming months. The first important resistance stems from former slope support just below 1.13 over the next several weeks.”
  • EURUSD is nearing the first 20 day high (1.1052) since 7/1/2014. In fact, it’s been 196 days since the last 20 day high. A new 20 day high would signal a major behavior change in EURUSD (from down to sideways).
Sergey Golubev
Moderator
113479
Sergey Golubev  

AUDUSD Technical Analysis (based on dailyfx article)


  • AUDUSD continues to trade between well-defined slope lines but beware of a possible broadening bottom (very difficult pattern to trade).
  • Trade outside of the bearish upper parallel that has contained strength since late October would shift focus to a former support line (turned resistance in January) near .8180.
Sergey Golubev
Moderator
113479
Sergey Golubev  

GBPUSD Technical Analysis (based on dailyfx article)


  • “A breakdown towards 1.4250-1.4350 may be underway.” The weekly reversal casts doubt on the call for 1.4350. Slope resistance that caught the February high near 1.55 could act as a magnet now. Daily and weekly divergence with momentum at price lows indicate the possibility for a turn higher.
Sergey Golubev
Moderator
113479
Sergey Golubev  

US Dollar Fundamentals (based on dailyfx article)

Fundamental Forecast for Dollar: Bearish

  • Holiday liquidity may have curbed the impact of a wide miss in last week’s NFPs
  • An intensified sensitivity to FOMC timing will gnaw at speculative long Dollar exposure


There is little doubt that the US Dollar maintains a fundamental advantage over most of its counterparts. However, that doesn’t make the currency immune to periodic speculative rebalancing. Following a record, nine consecutive months of advance (by the ICE Dollar Index’s and EURUSD’s ccount); the currency has stumbled for three straight weeks. Consolidation itself wouldn’t pose a serious concern as periods of respite are common as larger trends unfold. Yet, the market’s speculative appetite for the curency’s run may have over-reached the more modest fundamental means. With the market’s interest in FOMC timing intensified and the broader market pulling back on over-leveraged positions, the Greenback is at increased risk of a meaningful correction.

If we were to rank the fundamental themes that have proven the most influential for establishing direction and feeding momentum in the currency market, relative monetary policy would lead the pack by a wide margin. With the Fed closing the tap on its QE efforts – now just reinvesting capital from maturing assets – and weighing a time frame for a first rate hike, the Dollar is heading in the opposite direction to some of its most liquid counterparts. Whether the eventual rate hike is June, September or December; the US central bank remains on course to tighten where most others are easing. That said, throttling back on the hawkish march may still require the bullish crowd to pull back on their exposure.

This past week, the economic docket delivered the perfect mix of labor data to mirror a view of a Dollar supported by an underlying trend but perhaps stretched by speculation. In the Bureau of Labor Statistics’ March report, the principal statistics supported the trend of improvement these past years. The unemployment rate held at its 7-year low 5.5 percent and wage growth firmed modestly to a 2.1 percent clip. Yet, the statistic that stands out was the 126,000-payroll figure that was nearly half the forecast. While a miss – even of that magnitude – will not change the fundamental trend of employment, it does temper its tempo.

Given a heightened sensitivity to the timing of the first rate hike after the FOMC withdrew its verbal buffer on discussing the shift (the market associated the term ‘patient’ as a 3 month freeze on tightening), this miss has not gone unnoticed. While the Dollar dropped in wake of the news, the critical levels (the USDollar’s trend channel, 1.1000 for EURUSD, 1.5000 for GBPUSD, etc) still stood. Holiday liquidity conditions likely contributed to that hold, but the unfavorable turn will not be forgotten over the weekend. When the speculative pool fills back out next week, investors will reevaluate their valuation for the Greenback.

When weighing the Dollar’s fundamental advantage, we should consider the surveys and assets that establish expectations. The FOMC did lower their year-end forecast for interest rates last month, but that outlook still stood at a premium to the market’s expectations. After the NFPs release, the December Fed Fund futures contract (an instrument used to hedge interest rate changes) dropped to its lowest closing basis in the contract’s life – and tipping the market’s confidence below a certainty that at least once hike will be realized in 2015. At the same time, two-year Tresaury yields dropped 11.7 percent.

It is difficult to establish at what level the Dollar’s rally has over-reached its fair value as the Fed’s timetable contrasts its ECB and BoJ peers so definitively. However, there are speculative measures that may offer scale to the market’s appetite to exploit a consistent trend rather than follow due diligence on fundamental value. We have seen the US Dollar’s net speculative futures positions measured by the CFTC’s COT report soar these past 9 months. Having seen the Greenback position level out and some major counterparts (like Yen and Aussie dollar) rebound, we are seeing early stages of rebalancing. This is not unique to the Dollar nor just the FX market. Speculative excess is seen in most markets; and if deleveraging takes traction, the Dollar could suffer as well…until we hit panic levels.

Sergey Golubev
Moderator
113479
Sergey Golubev  

USDJPY Fundamentals (based on dailyfx article)

Fundamental Forecast for Japanese YenNeutral

  • USD/JPY 118.20 Support in Focus Going Into BoJ Interest Rate Decision
  • USD/JPY At Important Technical Juncture


The Bank of Japan (BoJ) interest rate decision may heighten the appeal of the Japanese Yen and spur a further decline in USD/JPY should Governor Haruhiko Kuroda continue to endorse a wait-and-see approach following the April 8 meeting.

It seems as though the BoJ will preserve its current policy stance throughout the first-half of 2015 in light of the recent rhetoric from Mr. Kuroda, and the central bank head may largely retain his pledge to achieve the 2% inflation target over the policy horizon especially as the committee sees the downward pressures from the sales-tax hike dissipating.

However, the BoJ appears to be under increased pressure to further embark on its easing cycle as Kozo Yamamoto, an advisor to Prime Minister Shinzo Abe, argues that ‘further monetary easing is absolutely essential’ to combat the downside risks surrounding the Japanese economy and insists that the central bank should offer additional monetary support at the April 30 meeting. As a result, a material shift in the forward-guidance for monetary policy may highlight a growing dissent within the central bank and dampen bets for a further decline in the exchange rate as its U.S. counterpart, the Federal Reserve, remains on course to normalize monetary policy in 2015.

In turn, more of the same from the BoJ may generate a larger correction in USD/JPY and the pullback from 120.35 may open the door for a test of the March Low (118.32) into the 61.8% Fibonacci retracement (118.20) as the pair carves a series of lower-highs in March. At the same time, we will also keep a close eye on the monthly opening range going into the first full week of April as full market participation returns on Tuesday following the extended holiday weekend, and the recent wave of U.S. dollar weakness may continue to take shape next week as the dismal data prints dampens bets for a mid-2015 Fed rate hike.

Sergey Golubev
Moderator
113479
Sergey Golubev  

GBPUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for British PoundBearish

  • British Pound has historically outperformed through month of April
  • Sterling marks time ahead of key events


The British Pound finished the week almost exactly where it began, first falling versus the US Dollar until a sharp USD sell-off sent the GBP/USD through key levels. A relatively quiet week ahead may produce much of the same absent a surprise from a Bank of England policy meeting.

Traders look to an upcoming Bank of England Monetary Policy Committee meeting for any surprises, but low FX volatility prices suggest few expect officials will make changes to policy or release a post-meeting statement. Economic releases will be limited to UK Markit PMI figures, Trade Balance data, and Industrial Production growth reports. It would take a material surprises out of any of these reports to force a meaningful reaction across GBP pairs.

Markets remain indecisive as we’re now just a month away from the UK General Election, and current polling shows no single party is likely to take an overall majority following the May 7 vote. In effect, the United Kingdom could remain without an effective government for six weeks. The British Pound is likely to suffer amidst such uncertainty.

Derivatives show that FX options traders are paying a substantial premium for bets on/hedges against GBP/USD weakness in two months’ time—the exact timeframe for the post-election uncertainty. And indeed, risks seem weighed to the downside for the British Pound through the foreseeable future. A recent US Dollar sell-off has kept the GBP/USD above key support, but the UK currency may continue to underperform against broader G10 counterparts.