Press review - page 329

Sergey Golubev
Moderator
112855
Sergey Golubev  

Trading News Events: U.S. Gross Domestic Product (GDP) (based on dailyfx article)

What’s Expected:


Why Is This Event Important:

Even though the Fed remains on course to raise the benchmark interest rate in 2015, signs of a slower recovery raises the risk for a further delay in the normalization cycle as the central bank remains in no rush to switch gears.

However, slowing outputs along with the ongoing weakness in business investments may continue to drag on the real economy, and a dismal print may drag on the greenback as it dampens the likelihood for the Fed liftoff at the September 17 meeting.

How To Trade This Event Risk

Bullish USD Trade: U.S. Economy Contracts 0.2% or Less

  • Need to see red, five-minute candle following the GDP report to consider a short trade on EURUSD.
  • If market reaction favors a long dollar trade, sell EURUSD with two separate position.
  • Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
  • Move stop to entry on remaining position once initial target is hit; set reasonable limit.
Bearish USD Trade: GDP Report Falls Short of Market Expectations
  • Need green, five-minute candle to favor a long EURUSD trade.
  • Implement same setup as the bullish dollar trade, just in reverse.
Potential Price Targets For The Release
EURUSD Daily



  • Lack of momentum to test the May high (1.1465) may highlight a lower-high in EUR/USD; break of the bullish RSI formation to provide conviction/confirmation for a further decline in the exchange rate.
  • Interim Resistance: 1.1510 (61.8% expansion) to 1.1532 (February high)
  • Interim Support: 1.0970 (38.2% expansion) to 1.1000 (50% retracement)
Impact that the U.S. GDP report has had on EUR/USD during the last release
PeriodData ReleasedEstimateActualPips Change
(1 Hour post event )
Pips Change
(End of Day post event)
4Q F
2014
03/27/2015 12:30 GMT 2.4% 2.2% +15 +24

MetaTrader Trading Platform Screenshots

EURUSD, M5, 2015.06.24

MetaQuotes Software Corp., MetaTrader 5

EURUSD M5: 21 pips price movement by USD - GDP news event

EURUSD, M5, 2015.06.24, MetaQuotes Software Corp., MetaTrader 5, Demo

MetaTrader Trading Platform Screenshots

USDJPY, M5, 2015.06.24

MetaQuotes Software Corp., MetaTrader 5

USDJPY M5: 19 pips price movement by USD - GDP news event

USDJPY, M5, 2015.06.24, MetaQuotes Software Corp., MetaTrader 5, Demo

MetaTrader Trading Platform Screenshots

AUDJPY, M5, 2015.06.24

MetaQuotes Software Corp., MetaTrader 5

AUDJPY M5: 19 pips price movement by USD - GDP news event

AUDJPY, M5, 2015.06.24, MetaQuotes Software Corp., MetaTrader 5, Demo




Sergey Golubev
Moderator
112855
Sergey Golubev  

Greece Stand Off Enters Final Days, Seek More Productive Options Than Euro (based on dailyfx article)

  • The ultimate resolution to Greece's financial impasse can generate major Euro swings - bullish or bearish
  • However, in the negotiation phase, the Euro will struggle for clear direction and momentum
  • There are more productive options arising in GBP and NZD pairs, while USD and JPY may soon join the fray

When Greece and its creditors choose either default or debt forgiveness, the response from the Euro can be dramatic. Trading potential on such a provocative fundamental development will be substantial and certainly something we plan for ahead of time. That said, in the messy period of negotiating preceding this clear outcome, the currency is going to be erratic and difficult trading. Patience is warranted, but that doesn't mean we have to sit staring with bated breath. There are developing technical and fundamental themes in other corners of the market.

We look at the big setups and the active movers in today's Trading Video.


Sergey Golubev
Moderator
112855
Sergey Golubev  

Key FX Strategy & Themes - ANZ (based on efxnews article)


"OVERVIEW AND STRATEGY: The USD depreciated through June, though overall it remained relatively well supported. The Fed eased market fears once again by emphasising that any tightening path will be gradual, while at the same time firming expectations that the first hike would occur in 2015. However, this reprieve does not present an attractive opportunity to reload carry trades, and the distribution of outcomes remains disproportionately skewed to a stronger USD. In the interim, domestic fundamentals remain in focus and idiosyncratic events will continue to be the primary driver of currency performance."

"THEMES: The euro area is still in need of very loose financial conditions, and a soft EUR is a part of that mix. In this environment, further strength remains constrained, and risks remain to the downside. Conversely, in the UK, signs of a broadening of growth will continue to underpin expectations of policy normalisation and support the GBP. Thematically our view on the AUD and NZD remains unchanged. The outlook for the AUD is looking more balanced, while the NZD remains an underperformer story. In Asia, economic data continues to disappoint and further policy easing is likely forthcoming. Here our bias remains to buy USD/Asia on dips."

Sergey Golubev
Moderator
112855
Sergey Golubev  

Deutsche Bank - 4 Reasons To Stay Long USD/JPY Targeting 128 (based on efxnews article)


Deutsche Bank advises clients to stay long USD/JPY reiterating its view that USD/JPY should gradually trade up to 128 over the course of Q3. DB outlines the following 4 reasons behind this view.

1- "Japanese institutional investors continue to buy foreign assets, and not only on dips. Lifers in particular have ramped up purchases with limited sensitivity to the exchange rate. We think pensions, albeit more sensitive, have lifted their trailing dip-buying level closer to ¥122," DB argues.

2- "The trade surplus posted in March—the first in four years—proved shortlived, as the trade balance has shifted back into deficit. We expect recent deficits of ¥200bn to narrow only slowly," DB notes.

3- "Although speculative short positions in JPY remain heavier than before the recent move up to ¥125, a fresh widening of the rate differential should help break that level," DB adds,

4- "This is likely to be driven by US monetary policy expectations, but the Japanese leg could also help. Our baseline is that inflation well below the 2% target will induce the BoJ to maintain QQE at the current rate well beyond 2015," DB projects.

Sergey Golubev
Moderator
112855
Sergey Golubev  

Trading Video: Preparing for Euro and Dollar Moves (based on dailyfx article)

  • Greece is on the top of all - not just Euro - traders' minds, and anticipation will disrupt trend
  • The Dollar is similarly focused on upcoming conditions between next week's NFPs and holiday conditions
  • Crosses further away from such prominent fundamental risks still offer better technical opportunity

Markets will soon face a reckoning after this extended period of quiet complacency. On the risk front, officials are running out of time and liquidity to find an acceptable compromise over Greece's strained financial health. After Thursday's failed talks, all parties will reconvene on Saturday and try to push through a solution before a IMF payment and the official expiration of the country's rescue program on Tuesday. For a monetary policy focus - the most productive fundamental theme over the past year - US rate expectations will be charged by June NFPs, but the lead in will be particularly interesting between anticipation and expected holiday trading conditions. Meanwhile, it is worthwhile looking outside of the Euro, Dollar and Yen (the most risk-sensitive) for less restrained opportunities. We look at the potential building up and playing out in today's Trading Video.


Sergey Golubev
Moderator
112855
Sergey Golubev  

Australia and New Zealand Banking Group - 'We continue to advise selling rallies in EUR/USD' (based on efxnews article)


"A resolution to Greek debt negotiations may reduce downside risks, but a weak currency is needed to underpin the recovery...If anything, the risks to monetary policy are for additional QE as the current ECB forecasts are based on a full implementation of the existing program," ANZ argues.

"We therefore continue to see downside risks for the euro against the USD, especially as US growth is firming again and the FOMC seems closer to starting the interest rate normalisation process. We continue to advise selling rallies in EUR/USD," ANZ advises.

Sergey Golubev
Moderator
112855
Sergey Golubev  

UBS for EUR/USD: Sell Into 1.1250 (based on efxnews article)

EUR/USD: "Should hold the recent range today. Greek negotiations will continue Saturday morning and the 'final deadline' is now set for early next week. It's obvious that everyone involved is trying really hard to find a solution but it's also very clear that there are plenty of difficulties. Keep it tight but favour shorts, selling rallies toward 1.1250 with stops at 1.1310."

GBP/USD: "With the Greek uncertainty continuing and no UK data out today, we would expect the pair to trade between 1.57 and 1.58. Play the range with close stops on either side."

Sergey Golubev
Moderator
112855
Sergey Golubev  

EURUSD Continues Trading in Range (based on dailyfx article)

  • EURUSD opens in a 40 pip range
  • S4 breakouts begin at 1.1160
  • Range resistance sits at 1.1220


The EURUSD has started Fridays trading ranging between values of support and resistance. Price is currently retesting support at the bottom of today’s trading range found at the S3 camarilla pivot at a price of 1.1180. It should be noted that price has already moved through today’s 40 pip trading range twice at this point in time. In the event that values of support hold, it raises the possibility of prices returning to values of resistance, including the R3 pivot found at 1.1220. If prices continue to range, this would mark the third straight day of consolidation for the pair.


Alternatively, if prices continue to fall below the S3 support pivot, traders will begin looking for a breakout under the S4 pivot point at 1.1160.Price has already attempted to breakout once this morning, and abearish breakout would signal an end to current range bound market conditions. In this scenario traders can begin looking for new trend based positions on the creation of new lower lows.

Sergey Golubev
Moderator
112855
Sergey Golubev  

Tech Setups For EUR/USD, GBP/USD, AUD/USD, USD/CAD - Barclays (based on efxnews article)

EUR/USD: No change. We are bearish and prefer to fade upticks against resistance in the 1.1300 area. A move below 1.1135 would signal lower towards our targets near the 1.1050 area and then the 1.0815 May lows. Our greater downside targets are at the 1.0460 year-to-date lows. 

GBP/USD: Thursday’s bullish engulfing candle has encouraged us to re-instate our bullish view. We are looking for a move back towards the 1.5930 range highs. Above there would confirm upside towards our greater targets near 1.6000 and then 1.6200. 

AUD/USD: No change. 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 area.

USD/CAD: Our bullish view would be encouraged by a break above 1.2425. Our initial targets are towards the 1.2565 June highs and then the 1.2835 year-to-date highs.

Sergey Golubev
Moderator
112855
Sergey Golubev  

Crédit Agricole for US Week Ahead: NFP, ISM, Factory Orders, Cons Conf, Housing (based on efxnews article)

We look for continued growth in May pending home sales, albeit at a slower pace of 0.6%. Pending sales of existing homes likely maintained its upward trajectory in May, albeit at a slower pace of 0.6%. As of April, pending sales, or signed contracts that have not closed, are up almost 10% so far this year. That pace is likely not sustainable although we do not expect a sharp retracement yet. Mortgage applications for purchase stabilized in May following sharp jumps in the prior two months, suggesting a slower pace of pending sales growth in May. Our projection for continued sales growth points to another rise in existing home sales (closings) in June. 

June consumer confidence likely edged higher to 98.0 from 95.4. The Conference Board consumer confidence index is expected to edge higher in June to 98.0 from 95.4. In the past four months the index has retreated from its post-recession high of 103.8 in January, hitting a low of 94.3 in April. Yet the slightly higher May index of 95.4 still stands close to pre-crisis averages. In line with our view that the unemployment rate will continue to fall this year with a steady pace of job growth, we expect confidence to revert back on its upward course. A recovery in consumer spirits has already been captured by the University of Michigan survey, which rose over 5 points in June. One risk to our scenario is sluggish wage gains, but so far we are seeing signs of a pickup in the near term. 

Construction spending likely slowed to a 0.4% increase in May following a 2.2% pop in April. May construction spending likely softened to a 0.4% rise after a 2.2% jump in April. The strength in the prior month reflected robust growth across private residential and non-residential as well as public construction. In May we expect residential spending (excluding improvements) to posted a softer increase given the reversal in housing starts. Private non-residential spending, which saw strong growth in March and April, likely moderated. Despite slower expected growth in May, our estimates are consistent with stronger residential investment and an improvement in structures spending in Q2. 

The ISM manufacturing PMI likely saw modest improvement in June, rising to 53.0 from 52.8. We look for a modest increase in the June ISM Manufacturing PMI of 0.2 percentage points to 53.0. The index bounced back smartly in May after running at a low of 51.5 for two straight months. Regional Fed surveys suggest only a small improvement this month. The June Philly Fed index, after adjustment to ISM weighting, firmed almost 2 points to a 6-month high, while the adjusted Empire State index slipped a touch but remained above its March/April lows. Our June projection of 53.0 would put the ISM index slightly above its Q1 average, indicating a small recovery in manufacturing activity in the second quarter.

June vehicle sales likely slowed roughly 2% to a 17.4 million unit rate after hitting 17.7 million units in May. We expect a modest slowing in June vehicle sales to a 17.4 million unit rate. Sales surged over 7% last month to 17.7 million units, so the June projection reflects a slight retracement. With gasoline prices on average remaining cheap compared to last June, the surge in popularity for utility and truck models is expected to hold. While the reversal suggests a more modest gain in June retail sales, it remains consistent with an acceleration in Q2 consumer spending to at least a 2.8% pace, up from 2.1% in the first quarter. 

We expect a 230K gain in June nonfarm payrolls with the unemployment rate falling back to 5.4%. We believe the labor market as a whole remained on a robust path of recovery in June. June nonfarm payrolls are expected to rise by 230K after rising a strong 280K in May. Jobless claims edged lower to 267K in the reporting week down from 273K in May, consistent with a solid payroll print and falling unemployment. The softer expected gain in June reflects slower growth in private service-sector jobs, which previously jumped 256K—the third sharpest increase in the post-crisis period. By contrast we look for some improvement in goods-producing payrolls, led by a robust rise in construction jobs. Manufacturing employment, which grew by 7K in May, likely saw a similar rise in June as regional Fed employment indicators indicated continued growth but no signal of a significant acceleration. Employment in the mining industries likely continued to contract though the stabilization in the oil and gas rig count decline suggests a slightly more modest drop than in May. To note, our June NFP projection relies on limited data at hand as we await the June ISM manufacturing, ADP employment and Conference Board confidence releases. We expect the unemployment rate to fall back to 5.4% in line with the declining trend in initial claims among other survey indicators. The labor force participation rate likely slipped back to 62.8%. Following a 0.3% pickup in May, average hourly earnings likely rose 0.2% which may push on-year growth down to +2.2% YoY. Finally, the average workweek is expected to be unchanged at 34.5 hours. 

Factory orders likely slipped 0.2% in May on a drop in durable goods orders. May factory orders are expected to fall 0.2% reflecting a 1.8% reported drop in durable goods orders. The May decline was driven by a plunge in aircraft orders; orders outside of transportation rose 0.5%. Orders for nondurables, the new data in the release, likely saw an increase in May in line with higher crude oil and commodity prices.