Press review - page 307

Sergey Golubev
Moderator
113440
Sergey Golubev  

USDJPY Fundamentals (based on dailyfx article)

Fundamental Forecast for Yen: Neutral

  • The Weekly Volume Report: Dollar Trying To Turn?
  • Build in US Dollar Buying Points to USDJPY Declines


The fundamental event risks lined up for the final full-week of April may heighten the appeal of the Yen and spark a further decline in USD/JPY as the Japanese economy gets on a firmer footing.

With Japan expected to post a trade surplus for the first time since June 2012, prospects for a stronger recovery in 2015 may encourage the Bank of Japan (BoJ) to retain a wait-and-see approach at the April 30 interest rate decision as Governor Haruhiko Kuroda remains confident in achieving the 2% inflation target over the policy horizon. In turn, Japanese officials may continue scale back their verbal intervention on the local currency, and the bearish sentiment surrounding the Yen may continue to diminish over the near to medium-term as the central bank turns increasingly upbeat on the economy.

In contrast, the recent weakness in the U.S. may further dent expectations for a Fed rate hike in June, and another series of weaker-than-expected data prints may spark a larger correction in the greenback as interest rate expectations get pushed back. Despite expectations for a 0.6% rebound in U.S. Durable Goods, it seems as though lower energy prices are failing to drive private-sector consumption amid the ongoing weakness in retail spending, and another unexpected decline in demand for large-ticket items may trigger a larger correction in the greenback as it drags on the outlook for growth and inflation. In turn, we may see a growing number of Fed officials show a greater willingness to retain the zero-interest rate policy beyond mid-2015 at the April 29 meeting.

With that said, the improving terms of trade for Japan paired with the ongoing slack in the U.S. economy may prompt a further decline in USD/JPY, and the pair may continue to give back the rebound from March (118.32) amid the shift in the policy outlook.

Sergey Golubev
Moderator
113440
Sergey Golubev  

GBPUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for British Pound: Bullish

  • Aggressive shift in forex crowd sentiment favors further British Pound strength
  • A sharp build in volumes suggests GBP reactions near $1.5150 may prove pivotal


Impressive UK employment data helped push the British Pound sharply higher versus the US Dollar and other major counterparts, and the recent reversal in fortunes leaves us in favor of continued GBP gains through the foreseeable future.

The FX market is a question of relative performance, and the fact that US economic data and interest rate expectations have been notably better than their UK equivalents helps explain why the British Pound/US Dollar exchange rate recently fell to five-year lows. Yet things have turned for the US currency as a recent tumble in domestic yields have left it at a lesser advantage versus the British Pound and others. The difference between UK and US 2-year government bond yields now stands near its smallest since November, 2014, and the GBP/USD exchange rate has moved higher in kind.

Traders will look to upcoming Bank of England Monetary Policy Committee minutes to drive moves in UK interest rates, while a relatively empty US economic calendar suggests broader market volatility may slow through the coming week. The key question is whether recent improvements in UK economic data will be enough to force the Bank of England into action sooner than currently expected.

Headline UK Consumer Price Index inflation printed at exactly 0.0 percent through March—well-below the BoE target of 2.0 percent. This fact in itself suggests the central bank will be in no rush to raise rates through the foreseeable future. And yet recent employment numbers show domestic unemployment has fallen to seven-year lows, while broader consumption and economic activity data points to strong growth through 2015. All else remaining equal, the improvement in the data should have been enough to send the British Pound even higher.

The critical point remains that political uncertainty surrounding UK elections on May 7 have hurt the British Pound against major counterparts. Derivatives markets show that GBP/USD volatility prices/expectations trade near multi-year highs given clear indecision in UK electoral poll figures. Ultimately, however, fears over post-election political disarray may be overdone. And indeed further improvements in economic data and interest rate expectations could fuel a larger British Pound recovery versus the US Dollar and other major FX counterparts.

Sergey Golubev
Moderator
113440
Sergey Golubev  

AUDUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Australian Dollar: Neutral

  • Australian Dollar Looks to Core CPI Data to Drive RBA Policy Speculation
  • Soft Chinese PMI Figures May Cap Aussie Gains Amid Spillover Concerns


The Australian Dollar is on pace to produce the first series of back-to-back weekly gains in three months. The currency shrugged off losses sustained early in the week on the back of disappointing Chinese trade figures following an impressively strong March jobs report. The decidedly upbeat outcome weighed against RBA interest rate cut speculation. Traders now price in a 58 percent probability of a 25bps cut at next month’s central bank policy meeting, down from 78 percent at the start of the week.

Looking ahead, first-quarter CPI figures will continue to inform investors’ RBA outlook. The benchmark year-on-year inflation rate is expected to decline to 1.3 percent, the lowest in almost three years. As with many of its G10 counterparts however, the RBA has been reluctant to fight short-term price growth weakness. Policymakers have argued that downside pressure will dissipate with rebasing as the impact of last year’s sharp drop in energy costs is unwound, leaving medium-term trends targeted by central banks intact.

With that in mind, traders will probably focus on the “trimmed mean” CPI measure, a metric that aims to strip out up- and down-side price growth volatility extremes to get at the core inflation trend. This is expected to hold at 2.2 percent, unchanged from the fourth quarter. That would mark a break from disinflation seen in the second half of 2014, which may further reinforce perceptions that the RBA is in no hurry to top up stimulus and boost the Australian unit.

Chinese news-flow represents another significant inflection point. The Aussie overlooked dismal industrial production figures from the East Asian giant last week, with the release seemingly overshadowed by a concurrently published first-quarter GDP report that printed in line with forecasts. The week ahead will bring a timelier measure of the business cycle in Australia’s top export market via the flash estimate of April’s HSBC Manufacturing PMI measure. Accelerated contraction in factory-sector activity is expected, which may cap the Aussie’s upside potential.

Sergey Golubev
Moderator
113440
Sergey Golubev  

GOLD Fundamentals (based on dailyfx article)

Fundamental Forecast for Gold: Neutral

  • Gold In No-Man’s Land
  • Gold Attempts a Recovery, SPX 500 Eyeing February Peak


Gold prices are softer for a second consecutive week with the precious metal off nearly 0.27% to trade at $1204 ahead of the New York close on Friday. Price action has been uninspiring over the past few sessions despite broader volatility in equity markets, with S&P posting its largest single-day decline since March 25th.

The March US Consumer Price Index (CPI) released on Friday was mixed with the headline year-on-year print showing a contraction of 0.1% while the core rate increased from 1.7& to 1.8% y/y. The data offered little assistance to the battered greenback with the dollar trading heavier against all of its major counterparts heading into the close of the week. Gold looks to close the week within the initial weekly opening range with prices continuing to contract after failing to breach above the March highs earlier in the month.

Economic data will be light next week with US Durable Goods Orders on Friday highlighting the docket. The broader picture for gold remains bearish as expectations for a Fed interest rate hike this year continue to weigh on demand for non-yielding assets. However, the Fed now runs the risk of further delaying its first interest rate hike in nearly a decade as growing geopolitical concerns, strength in the dollar and soft inflation continue to limit the central bank’s scope to begin the normalization cycle. As such gold may continue to see a reprieve with the momentum profile suggesting more upside may be on the cards before the resumption of the broader down trend.

From a technical standpoint, the near-term outlook remains clouded as the monthly range continues to compress. Key support rests at 1173/77 and we will reserve this threshold as our medium-term bullish invalidation level. Interim resistance is eyed at 1214 (April high day close) backed by the 50% retracement of the 2014 range / 200-day moving average at 1225/29. Key resistance stands at 1245/48 with a breach above targeting objectives into 1300. That said, we’ll be looking for a break of the monthly opening range to validate our near-term bias with the broader outlook weighted to the topside while above 1173.

Sergey Golubev
Moderator
113440
Sergey Golubev  

EUR/USD Weekly Fundamental Analysis, April 19 – 24, 2015 – Forecast (based on fxempire article)

The EUR/USD soared to a near term high at 1.0808 after the release of inflation data and strong comments from Mario Draghi on Thursday.  USD outlook has become more balanced which is likely to drive near‐term USD weakness but over the medium term the USD should still be supported. The DXY USD index is flirting with a break below its 50‐day MA, a level it hasn’t traded through since July, accordingly technically the USD index is shifting and a close below here today would be important. The fundamental side has likely caught up to the data surprises, which have continued to be disappointing for the US.


The euro is stronger, having rallied back above 1.08 and moving towards its 50‐day MA. Fundamental data was essentially as expected with inflation in line with the flash estimate. Greece continues to be a core focus, with April 24th’s Euro‐Area meetings particularly important. German and French yields continue to fall, driving an increased focus on the risks around bond scarcity for the ECB QE program.

Data released this week showed the Eurozone is fighting its way out of deflation, as prices rose for the second month straight, easing fears it could enter into a prolonged period of price falls. The single currency area’s annual inflation rate rose to -0.1 per cent in March, up from -0.3 per cent a month earlier, according to its official statistics agency. This was in line with analysts’ expectations.

Sergey Golubev
Moderator
113440
Sergey Golubev  

Weekly outlook: April 20 - 24 (based on investing.com article)

The dollar ended the week lower against a basket of other major currencies on Friday as investors pushed back expectations for higher U.S. interest rates after a recent run of soft economic data dampened optimism on the recovery.

The dollar shrugged off data on Friday showing that U.S. consumer prices were higher for a second successive month in March.

The Labor Department reported that the consumer price index edged up 0.2% last month, matching a similar gain in February. On a year-over-year basis, consumer prices dipped 0.1% in March after remaining flat in February.

Core consumer prices, which exclude food and energy costs increased 0.2% in March for an annual increase of 1.8%, the largest since October.

The report came after data earlier in the week showed that U.S. retail sales for March came in below expectations. Another report, showing a larger-than-forecast drop in industrial output pointed to a slowdown the first quarter.

The dollar was lower against the yen for a sixth straight session on Friday, with USD/JPY at 118.93 in late trade. The pair ended the week down 1.06%.

The dollar fell to two-week lows against the Swiss franc, with USD/CHF sliding 0.43% to 0.9519.

The euro was up 0.43% to 1.0808 late Friday, bringing the week’s gains to 1.89%.

The single currency strengthened in spite of concerns that Athens is no closer to reaching an agreement on economic reforms for bailout funds with its creditors, fuelling fears that Greece could be forced out of the euro zone.

The pound also gained ground against the dollar, with GBP/USD hitting one-month highs of 1.5054 on Friday, before pulling back to 1.4958 in late trade.

Sterling’s gains were held in check amid uncertainty over the outcome of parliamentary elections due to take place on May 7.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last down to 97.62 late Friday. The index ended the week down 1.9%.

In the week ahead, investors will be looking ahead to reports on the U.S. housing sector and data on durable goods orders for further indications on the strength of the recovery.

In the euro zone, Tuesday’s ZEW report on German economic sentiment and Thursday’s reports on private sector activity will be in focus.

Monday, April 20

  • New Zealand is to release data on consumer price inflation.
  • Reserve Bank of Australia Governor Glenn Stevens is to speak at an event in New York.

Tuesday, April 21

  • The RBA is to publish the minutes of its latest policy meeting, giving investors insight into how officials view the economy and their policy options.
  • In the euro zone, the ZEW Institute is to report on German economic sentiment.
  • Canada is to publish a report on wholesale sales.

Wednesday, April 22

  • Japan is to publish data on the trade balance.
  • Australia is to publish data on consumer price inflation.
  • The Bank of England is to publish the minutes of its latest meeting.
  • Later in the day, the U.S. is to release data on existing home sales.

Thursday, April 23

  • Australia is to release private sector data on business confidence.
  • China is to release private sector data on manufacturing activity.
  • Switzerland is to publish data on the trade balance.
  • The euro zone is to release survey data on private sector economic activity, while Spain is to release its employment report.
  • The U.K. is to release reports on retail sales and public sector borrowing.
  • Later Thursday, the U.S. is to report in initial jobless claims and new home sales.

Friday, April 24

  • In the euro zone, the Ifo Institute is to report on German business climate.
  • The U.S. is to round up the week with a report on durable goods orders.
Sergey Golubev
Moderator
113440
Sergey Golubev  

EUR/USD weekly outlook: April 20 - 24 (based on investing.com article)

The dollar was lower against the euro for a fourth consecutive session on Friday as expectations for higher U.S. interest rates waned, despite data showing an uptick in inflation in March.

EUR/USD was up 0.43% to 1.0807 in late trade and ended the week with gains of 1.89%.

The dollar shrugged off data on Friday showing that U.S. consumer prices were higher for a second successive month in March.

The Labor Department reported that the consumer price index edged up 0.2% last month, matching a similar gain in February. On a year-over-year basis, consumer prices dipped 0.1% in March after remaining flat in February.

Core consumer prices, which exclude food and energy costs increased 0.2% in March for an annual increase of 1.8%, the largest since October.

The report came after data earlier in the week showed that U.S. retail sales for March came in below expectations. Another report, showing a larger-than-forecast drop in industrial output pointed to a slowdown the first quarter.

The string of weak data added to the view that the Federal Reserve could push back hiking interest rates until late 2015 from midyear.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last down to 97.62 late Friday. The index ended the week down 1.9%.

The single currency gained in spite of concerns that Athens is no closer to reaching an agreement on economic reforms for bailout funds with its creditors, fuelling fears that Greece could be forced out of the euro zone.

Earlier in the week European Central Bank President Mario Draghi said the bank expects to fully implement its trillion-euro quantitative easing program. He also played down concerns that the asset purchase program will struggle to find enough euro zone bonds to buy.

In the week ahead, investors will be looking ahead to reports on the U.S. housing sector and data on durable goods orders for further indications on the strength of the recovery.

In the euro zone, Tuesday’s ZEW report on German economic sentiment and Thursday’s reports on private sector activity will be in focus.

Tuesday, April 21

  • In the euro zone, the ZEW Institute is to report on German economic sentiment.

Wednesday, April 22

  • The U.S. is to release data on existing home sales.

Thursday, April 23

  • The euro zone is to release survey data on private sector economic activity, while Spain is to release its employment report.
  • Later Thursday, the U.S. is to report in initial jobless claims and new home sales.

Friday, April 24

  • In the euro zone, the Ifo Institute is to report on German business climate.
  • The U.S. is to round up the week with a report on durable goods orders.
Sergey Golubev
Moderator
113440
Sergey Golubev  

EURUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Euro: Neutral

  • The ECB press conference initially invited limited volatility, but EURUSD eventually settled higher.
  • The bearish technical formation in the USDOLLAR Index portends to a stronger EURUSD.


The Euro treaded water last week, losing ground against half of its major counterparts and gaining a bit more against the other three. The worst performance came against the Swiss Franc (EURCHF -0.91%), while the best performance came against the US Dollar (EURUSD +1.87%). In a week ripe with strife – be it on the political front, with more debt bantering with Greece, or on the monetary front, in the form of the European Central Bank’s third policy meeting of the year – the Euro fared reasonably well, all things considered.

With respect to the ECB meeting, President Mario Draghi has made it quite clear that market-borne talk of the QE program being tapered ahead of its projected September 2016 finale are premature at best, and misguided at worst. Before asset purchases cease, the ECB needs to see a stabilization in both actualized and expected inflation, which haven’t happened yet: core inflation resides at a mere +0.6% y/y; and the 5y5y inflation swaps closed the week at 1.693%, right at the four-week/20-day average of 1.678%. ‘Taper talk’ probably becomes more realistic once core inflation crosses the +1.2% y/y threshold, or if the 5y5y inflation swaps move above 1.800%.

For now, the Euro remains a weak buy against a basket of its major counterparts due to its deflating yield appeal and further crystallization as a funding currency. The Euro has lost and continues to lose its appeal as a growth currency as the differential between the short-end and the long-end of the yield curve (in Germany the 2s10s spread fell to 0.347% on Friday from 0.638% on January 1) decreases; and its appeal as a funding currency increases as rates towards the long-end drop into negative territory (German yields out to 9-years are negative).

The drop in sovereign yields decreases the demand for Euros. With nominal yields falling and inflation expectations holding stable (and even slightly rising), real returns on fixed income investments are decreasing; in turn, this fuels demand for higher yielding/riskier EUR-denominated assets like equities; or forces Euro-Zone-based investors to look outside the region for opportunity – which means capital needs to be converted from Euros into foreign currencies. This is the “portfolio balancing channel” effect that ECB President Mario Draghi has been discussing since the beginning of the year.

The Euro’s appeal, therefore, is rooted in the oversized short position currently in the market, which at least in context of EURUSD, could help propel covering in the very near-term (as was seen again this past week). As of March 14, there were 212.3K net-short contracts held by speculators in the futures market, off from 215.3K a week earlier (and down from the 226.6K seen during the week ended March 31, 2015). Otherwise, market participants are viewing the drop in Euro-Zone yields as a sign that the ECB will keep rates for an extended period of time, well-beyond the projected September 2016 finsih for its QE program: the Morgan Stanley ‘months to first rate hike’ index currently resides at 56.5, suggesting a December 2019 or January 2020 rate hike at the earliest.
Sergey Golubev
Moderator
113440
Sergey Golubev  

Forex technical analysis (VIDEO): EURUSD starts the week more bearish. Can it continue? (based on forexlive article)

The EURUSD started the day at the highs and wandered lower in trading as the week got started. Will the bearishness continue this week? What levels will keep the bears in control.


Sergey Golubev
Moderator
113440
Sergey Golubev  

Weekend Edition with John O'Donnell (based on fxstreet article)

4 days worth of market gains erased with one single day! What caused it? Europe? China? Earnings? John O’Donnell joins Merlin Rothfeld for a look at how they perceived this week’s trading opportunities. The duo looks at Gold, equity markets, the new rule changes in China, and the serious issues facing retirees in America!