Morgan Stanley: Outlooks For USD, EUR, JPY, GBP and AUD (based on efxnews article)
"We remain medium-term USD bulls, but we continue to believe USD will
struggle in the near term. We believe inflation readings
will have more importance with employment bouncing back but core
inflation remaining low. Should inflation start materially surprising to
the upside, the Fed may need to reconsider its plan for a very muted
"We remain bearish EUR over the medium term, but see scope for near term
support. Should European equities sell off as concerns about Greece
rise, European investors would need to buy back their short EUR currency
hedges. That said, Greece remains a major risk and tensions are
escalating, which could drive markets to increase the risk premia in the
price of EUR, weighing on the currency."
"We believe JPY is likely to be one of the outperformers over the next
few weeks, due to a few factors."
"GBPUSD is being mainly driven by rate expectations. The strong wage
data this week should bring forward the first rate hike in the UK and
keep GBP supported. We particularly like buying against more vulnerable
"We remain bearish on AUD as we expect risk appetite to soften amidst
rising volatility and tighter liquidity, removing support for carry
currencies. What’s more, the RBA suggested there is scope for further
rate cuts, and specified the need for further currency depreciation
going forward. With external and domestic factors both suggesting AUD
should be lower, we remain bearish."
Forum on trading, automated trading systems and testing trading strategies
Sergey Golubev, 2014.01.17 15:52
How Forex News Traders Use ISM Numbers (adapted from dailyfx article)
NZDUSD M5 : 17 pips prrice movement by USD ISM Manufacturing PMI :
What is ISM?
A country’s economy is as strong as its supply chain. The Institute for
Supply Management (ISM) measures the economic activity from both the
manufacturing side as well as the service side. Formed in 1915, ISM is
the first management institute in the world with over 40,000 members in
90 countries. Since it can draw from information gathered from the
surveying its large membership of purchasing managers, the ISM economic
news releases are carefully watched by Forex traders around the world as
a reliable guide to economic activity.
ISM publishes three surveys; manufacturing, construction, and services.
Published on the first business day of the month, the ISM Purchasing
Managers Index (PMI) is compiled from surveys of 400 manufacturing
purchasing managers. These purchasing managers from different sectors
represent five different fields; inventories and employment, speed of
supplier deliveries, production level, and new orders from customers.
XAUUSD M5 : 3345 pips price movement by USD - ISM Non-Manufacturing PMI news event :
In addition, ISM construction PMI is released on the second business day
of the month, followed by services on the third business day. Forex
traders will look to these releases to determine the risks at any given
time in the market.
EURUSD M5 : 37 pips price movement by USD - ISM Non-Manufacturing PMI news event :
Forex Market Impact
The Manufacturing and Non-manufacturing PMI’s are big market movers.
When these reports come out at 10:30 AM ET, currencies can become very
volatile. Since these economic releases are based on the previous
month’s historical data gathered directly from industry professionals,
Forex traders can determine if the US economy is expanding or
Forex traders will compare the previous month’s number with the
forecasted number that economists have published. If the released PMI
number is better than the previous number and higher than the forecasted
number, the US dollar tends to rally. This is where fundamental and
technical analysis comes together to create a trade setup.
AUDUSD M5 : 21 pips price movement by USD - ISM Non-Manufacturing PMI news event :
In the example above, notice how the better than expected PMI number
triggered a US dollar rally against the Euro. As seen in the chart above
of the EURUSD, the ISM Non-Manufacturing was not only above 50 but at
55.4, beat the forecasts calling for a drop from 54.4 to 54.0.
When an economic release beats expectations, like in the example above,
sharp fast moves can result. In this case, EURUSD dropped 22 pips in 15
minutes. Traders often choose the Euro as the “anti-dollar” to take
advantage of capital flows between two of the largest economies.
The Euro zone has a large liquid capital markets which can absorb the
huge waves of capital seeking refuge from the U.S. So a weak US ISM
Non-Manufacturing number usually leads to a dollar sell-off and a rise
in the Euro. Another scenario is when the number released is in line
with forecasts and/or unchanged from the previous month, then the US
dollar may not react at all to the number.
AUDUSD M5 : 32 pips price movement by USD - ISM Manufacturing PMI :
Overall, an ISM PMI number above 50 indicates that the economy is
expanding and is healthy. However, a number below 50 indicates that the
economy is weak and contracting. This number is so important that if the
PMI is below 50 for two consecutive months, an economy is considered in
PMI’s are also compiled for Euro zone countries by the Markit Group
while US regional and national PMIs are compiled by ISM. As you can see,
traders have good reason to pay special attention to the important
releases from the Institute of Supply Management.
Societe Generale: Greece is not the biggest EUR/USD driver (based on efxnews article)
"You could be forgiven for thinking that the biggest driver of
the EUR/USD rate is not Greek debt talks, but the pricing of the
December 2016 Fed Funds futures contract. This closed on Friday at 1.02%, the lowest level since mid-May."
"Neither is high profile enough to change market thinking about Fed policy, which prices a 1% rise in rates over 18 months. All of which just suggests we will get a stronger dollar once a
faster pace of fed rate hikes is priced in, but this needs a catalyst
that today’s data won’t provide. In the meantime, we watch the
combination of (super-low) Fed pricing and hope of a Greek deal boost
risk sentiment and undermine the dollar for the start of the week."
Deutsche Bank - Durable Goods Orders and PCE are the next big data (based on efxnews article)
EUR/USD continues to grind higher as Greece continues to dominate the headlines.
"The main focus was the June Fed meeting where early year expectations
of a hike this month now feel a long time ago. There was speculation
that Yellen shifted her 2015 dot lower, although as our US economist
noted it is hard to tell. With the Fed still in data-dependent mode,
more convincing evidence of a Q2 growth pick-up is needed. This week’s
May durable goods orders and PCE are the next big data," DB argues.
AUDIO - Weekend Edition with John O’Donnell
A decent down day on Friday couldn’t derail the strong weekly results for the markets! John O’Donnell joins Merlin for a look at interest rates, the Fed, inflation, gold and other factors influencing current market dynamics.
EUR/USD Double Top or About to Breakout? (based on dailyfx article)
'EUR/USD recorded a new month-to-date high late last weekand actually
came within a few pips of testing the quarter-to-date closing high at
1.1442 before stalling out. Is the euro
undergoing a double top backtest before turning lower or is it about to
break out and extend the multi-month advance? The next 24-28 hours
should prove key in determining which path the euro will take as
near-term cyclical analysis suggests we have reached an inflection point
of sorts. If the broader downtrend is going to re-assert itself here
then EUR/USD shouldn’t really rally past last week’s 1.1435 high.
Traction above this level would be a strong sign that multi-month
correction in the single currency is nowhere near finished. A failure,
on the other hand, at or around current levels followed by a break of
median-line channel support at 1.1230 over the next few sessions would
confirm a change in behavior and re-focus attention lower in the single
Video: Euro Tempts with Greece Progress, Equities Rally Bolsters Risk (based on dailyfx article)
The skirmish line between Greece and its creditors seems to have moved
to start the week and the market is responding. Global equities took
reports of progress to heart with a universal rally led by the biggest
DAX (Germany's benchmark equity index) in years. Yet, the same
optimistic response was not realized with the Euro. EURUSD
held to its coiled wedge below 1.1500 as FX traders think 'we've been
here before'. Skepticism and caution remains for an 'easy' solution to
Greece - whether positive or negative - and the markets are unwilling to
commit until the air is clear. That is as true for the limited risk
response in equities as it is the cool Euro view. It is better wait for
commitment from the speculative ranks before jumping in and sacrifice an
early entry than jumping in on the wrong direction of a dramatic market
move. We review the Euro, Dollar, global equities and unusual pairs
like NZDJPY in today's Trading Video.
Trading News Events: U.S. Durable Goods Orders (based on dailyfx article)
Another 1.0% contract in demand U.S. Durable Goods may dampen the appeal
of the greenback and generate a near-term advance in EUR/USD as ongoing
slack in the real economy raises the risk for a further delay in the
Why Is This Event Important:
Fears of a slower recovery may encourage a growing number of Fed
officials to adopt a more dovish tone for monetary policy, and we may
see the Federal Open Market Committee (FOMC) retain the zero-interest
rate policy (ZIRP) throughout 2015 in order to mitigate the downside
risks for growth and inflation.
On the other hand, discounted prices paired with the pickup in
private-sector wages may foster greater demand for U.S. Durable Goods,
and a positive development may keep the Fed on course to raise the
benchmark interest rate later this year as the central bank remains
confident in achieving its dual mandate for full-employment and price
How To Trade This Event Risk
Bearish USD Trade: Orders Contract Another 1.0% or Greater
MetaTrader Trading Platform Screenshots
EURUSD, M5, 2015.06.23
MetaQuotes Software Corp., MetaTrader 5
EURUSD M5: 54 pips price movement by USD - Durable Goods Orders news event
USDJPY, M5, 2015.06.23
USDJPY M5: 36 pips price movement by USD - Durable Goods Orders news event
Barclays - Trading Setups For EUR/USD, USD/JPY, GBP/USD and AUD/USD (based on efxnews article)
EUR/USD: A succession of “doji” topping candles adds
to our bearish conviction. We are looking for a move lower towards the
1.1050 area after reaching our initial downside targets near 1.1150.
Beyond there we look for a move towards 1.0815 and then the 1.0460
year-to-date lows. The 1.1470 highs provide selling interest.
USD/JPY: Monday’s engulfing candle endorses our
bullish view. We are looking for a move higher towards initial targets
near 124.45 and then 125.85. Further out we are targeting the 132.20
GBP/USD: We have turned neutral in the short term.
Monday’s low close confirms the prior topping candle and signals a move
lower in range as investors lock in profits from the June rally. Risk is
seen towards 1.5640, possibly 1.5550, before a base can form. Overall
we are bullish towards 1.6000 and then targets near 1.6200.
AUD/USD: We are bearish against the 0.7850 recent
highs and look for a move lower towards targets near 0.7600 and then the
0.7530 year-to-date lows. Further out, we are targeting the 0.7100
Credit Agricole: Is It Time To Sell EUR/USD Again? (based on efxnews article)
"This could be due to lingering uncertainty about the deal.
Indeed, various media reports have highlighted creditors' concerns that
the new proposal is putting too much emphasis on new taxes (on both
businesses and households) to balance the books. Excessive taxation
could hamper the Greek economic recovery and make the proposal less
"In addition, there are concerns that the proposed VAT
and pension reform could erode the support from Syriza's main coalition
partners - the Greek Nationalist - when the measures are put for a vote
in the Greek parliament."
"While investors' cautiousness could explain some of the recent
EURunderperformance, the contrasting response of the FX and the European
stock and peripheral bond markets may also indicate that investors have
moved away from Greece to re-focus on the lingering policy divergence
between the increasingly hawkish Fed and persistently dovish ECB. Indeed, a Greek resolution will arguably make it easier for the FOMC to hike rates as soon as September."
"At the same time, the ECB remains very committed to QE and this should continue the make the EUR an attractive funding currency."
"In addition, we suspect that renewed inflows into the
Eurozone stocks and bondd could lead to renewed selling pressure on EUR
in the forward markets."
"The above could suggest that EUR/USD could be offering attractive selling opportunity at current levels."