Press review - page 365

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Forex Weekly Outlook January 18-22 (based on the article)

The fall in Chinese stock markets and the yuan devaluation intertwined with the crash in oil prices and currencies certainly felt it. AUD, CAD and GBP reached new multi-year lows against the dollar while the latter fell against the safe haven euro and yen. US data was not convincing and the chances of another rate hike coming in March have fallen. Yen and euro crosses have made big moves.
  1. UK Inflation data: Tuesday, 9:30. The UK’s inflation rate turned positive for the first time in four months, rising 0.1% in November. The main increase occurred in transport costs, alcohol and tobacco prices while clothing prices declined. Analysts expected CPI to remain flat after declining 0.1% in October. Falling oil prices continued to reduce manufacturer’s costs, keeping prices intact while core inflation, excluding food and energy increased to 1.2%. Another 0.1% rise is expected this time.
  2. Chinese GDP: Tuesday, 2:00. The world’s second largest economy has been the center of attention with the recent weak data, fall in stocks and devaluation of the yuan that expose weakness and an inability to transition from manufacturing and investment to  services and consumption. After serving as the engine of growth for the world, especially after the financial crisis, China could be a reason for another crash. GDP is expected to show an annualized growth rate of 6.9% in Q4, exactly like in Q3. And while many doubt the official data, the publication still has an impact. A positive number can boost risk, supporting AUD and also other commodity currencies and the pound, while hurting the euro and yen. All this could be limited. And in case of a weak figure, it’s the other way around. China also publishes industrial output at the same time, and this is expected to stand at 6% y/y after 6.2% beforehand. Fixed Asset Investment carries expectations of 10.2% y/y.
  3. German ZEW Economic Sentiment: Tuesday, 10:00. Economic Sentiment according to the ZEW report edged up 5.7 points in December reaching 16.1 points. The reading was higher than the estimate of 15.2 points. The current condition index posted 55 rising 0.6% points from the 0.8% fall in November. Although  economic sentiment improved in December, it’s still lower than the long-term average of 24.8 points. However, a recent uptick in export orders may provide a breather to the German economy. Economic Sentiment is expected to decline to 8.2 in January.
  4. NZ Inflation data: Tuesday, 21:45 New Zealand’s inflation was slightly higher than forecasted in the third quarter, rising 0.3% following a 0.4% increase in the June quarter. The main rise occurred in housing prices increasing 1.2%. Analysts expected the third quarter CPI to reach 0.2%. Inflation is predicted to decline by 0.2% in the fourth quarter of 2015.
  5. UK Employment data: Wednesday, 9:30. The number of people claiming unemployment allowance increased more than expected in November, rising 3,900, while the previous month’s claimant count change was revised down to only 200 people. However, despite the rise, the UK jobless rate declined to 5.2% in the three months to October, down from 5.3%. Wage growth continues to weaken with regular pay slowing to a rise of 2% in the three months to October, down from a revised 2.4% a month before. Total pay, including bonus payments, decelerated to 2.4% from 3%. The number of jobless claims is expected to rise by 4,100 this time.
  6. US Building Permits: Wednesday, 13:30. Building permits surged 11% in November, reaching 1.29 million-unit rate, the highest level since June. The number of permits is a good indicator for housing starts, indicating the housing market is on a growth trend. Permits for the construction of single-family homes increased 1.1%, the highest level since December 2007. Multi-family building permits soared 26.9%. US building permits is expected to reach 1.2 million in December.
  7. US Inflation data: Wednesday, 13:30. The weakness in gasoline prices kept CPI flat in November while underlying inflation pressures increased with a 0.2% rise in core Consumer Prices. Core CPI increased for the third month in November. In the 12 months through November, the core CPI edged up 2.0%, the largest gain since May 2014, after rising 1.9% in October. The continuous rise in rents, airline fares, automobiles and medical care indicate rising inflationary pressures. The headline inflation is expected to remain flat again as core inflation is forecasted to rise 0.2% in December.
  8. Canadian rate decision: Wednesday, 15:00. The Bank of Canada kept its key rate at 0.50% in line with market forecast amid the effects of low oil prices and other pressures. Total inflation remains near the bottom of its one- to three-per-cent target range, due to low energy prices. Furthermore, business investment continues to be weighed down by spending cuts at resource companies. The central bank remains concerned about consumer debt levels. BOC Governor Poloz stated that even as the Fed hikes, Canadian rates would stay steady. The Bank of Canada  is expected to cut rates from 0.50% to 0.25% this time.
  9. Eurozone Rate decision: Thursday, 12:45, press conference at 13:30. In the previous meeting of the ECB, expectations were sky high for more monetary stimulus, and the results fell a bit short. A cut of the deposit rate to -0.30% and an announcement of extending QE to March 2017 + reinvesting proceeds were not enough. EUR/USD shot higher and Draghi made his best effort at damage control. No change is expected this time, but we could get a hint about what the Bank could do in March, when new staff forecasts are published. Draghi and some of colleagues are open to do more, while the hawks, most notably his German colleagues, say they have done more than enough. A promise to do more, as inflation looks weak, could hit the euro, while a relaxed stance, given the improvement in the euro-zone, could lift the common currency.
  10. US Philly Fed Manufacturing Index: Thursday, 13:30. Manufacturing activity in the Philadelphia area plunged to -5.9 in December, its third negative reading in four months. This unexpected decline followed a 1.9 points reading in the previous month. Analysts expected the index to show 2.1 points. The new orders section remained negative and fell 6 points, to -9.5. However, companies reported higher shipments, as the current shipments index increased 6 points to a reading of 3.7. Furthermore, the 6-month outlook plunged more than 20 points to 23.0. Overall, the report suggests weak global demand. Manufacturing activity in the Philadelphia area is expected to reach -3.1 in January.
  11. US Unemployment claims: Thursday, 13:30. The number of new jobless claims increased unexpectedly last week, but remained below the 300,000 line. Initial claims for unemployment benefits rose 7,000 to a seasonally adjusted 284,000 worse than the 275,000 forecasted by analysts. However, the rise could be attributed to seasonal volatility rather than a change in labor market conditions. The four-week moving average of claims, rose 3,000 to 278,750 last week and the four-week moving average of continuing claims increased 5,250 to 2.22 million. Jobless claims is expected to reach 281,000 this week.
 

Forecast for the Week - levels for EUR/USD (adapted from the article)

EUR/USD: ranging below 200 day SMA. Daily price is on bearish market condition for the ranging near and below 200 SMA/100 SMA within Fibo support level at 1.0710 and Fibo resistance level at 1.0985. "EUR/USD has been holding its long term trendline support since March 2015 (even the January low is right on the line). November and December trade produced a tweezer bottom (reversal candlestick pattern…bullish in this case) as well. 2 scenarios seem most likely from the current juncture; a continued range (with roughly 1.15 resistance) or a bullish base that leads to an eventual breakout into the 1.20s. Both point higher from current levels."


  • if the price breaks Fibo resistance level at 1.0985 so the reversal of the price movement from the primary bearish to the primary bullish market condition will be started;
  • if the price breaks Fibo support level at 1.0710 so the primary bearish will be continuing without ranging up to the new 'bottom' to be forming;
  • if not so the price will be moved within the channel.
Resistance
Support
1.09851.0710
N/A
1.0522
 

Forecast for the Week - levels for GBP/USD (adapted from the article)

GBP/USD: bearish breakdown. Daily price for this pair is located far below 200 day SMA for the bearish market condition: the price broke support levels to below for the good bearish breakdown and stopped near Fibo support level at 1.4250. "Unlike EUR/USD, GBP/USD has failed to hold its trendline that originates at the 1985 low (this is the case as of noon in NY Friday…the line is at about 1.4390). The cross is on the verge of taking out the 2010 low at 1.4229, which would put GBP/USD at its lowest level since March 2009. The next market level that might stem the freefall is the 1.40…in part due to the psychological aspect of the figure but also because of the presence of a parallel (parallel to line that extends off of the 1992 and 2007 highs)."


  • if the price breaks 50.0% Fibo resistance level at 1.4747 so the local uptrend as the bear market rally will be started;
  • if the price breaks Fibo resistance level at 1.5237 so we may see the reversal of the price movement from the primary bearish to the primary bullish market condition;
  • if the price breaks Fibo support level at 1.4250 so the primary bearish will be continuing without ranging up to the new 'bottom' to be forming;
  • if not so the price will be moved within the channel.
Resistance
Support
1.47471.4250
1.5237N/A
 

GBP/USD Intra-Day Fundamentals: China Gross Domestic Product and 16 pips price movement

2016-01-19 02:00 GMT | [CNY - GDP]

if actual > forecast (or previous one) = good for currency (for CNY in our case)

[CNY - GDP] = Change in the inflation-adjusted value of all goods and services produced by the economy.

==========

GBPUSD M5: 16 pips price movement by CNY - GDP news event :


 

USD/JPY Intra-Day Fundamentals: China Gross Domestic Product and 27 pips range price movement

2016-01-19 02:00 GMT | [CNY - GDP]

if actual > forecast (or previous one) = good for currency (for CNY in our case)

[CNY - GDP] = Change in the inflation-adjusted value of all goods and services produced by the economy.

==========

USDJPY M5: 27 pips range price movement by CNY - GDP news event :


 

NZD/USD Intra-Day Fundamentals: Consumer Price Index and 74 pips price movement

2016-01-19 02:00 GMT | [NZD - CPI]

if actual > forecast (or previous one) = good for currency (for NZD in our case)

[NZD - CPI] = Change in the price of goods and services purchased by consumers.

==========

"In the December 2015 quarter compared with the September 2015 quarter:

  • The consumers price index (CPI) fell 0.5 percent to a level of 1198.
  • Petrol prices fell (down 7.0 percent), making the largest downward contribution. 
  • Seasonally lower vegetable prices (down 17 percent) also fell.
  • International airfares (up 5.5 percent), prices for newly built houses excluding land (up 1.2 percent), and rentals for housing (up 0.6 percent) rose.
  • Prices for tradable goods and services fell 1.8 percent, while prices for non-tradable goods and services rose 0.5 percent.
  • After seasonal adjustment, the CPI fell 0.2 percent."

==========

NZDUSD M5: 74 pips price movement by NZD - CPI news event :


Consumers Price Index
  • www.stats.govt.nz
These releases provide information on the price change of goods and services purchased by private New Zealand households. Latest releases The latest releases contain tables on: tradables, non-tradables, and all groups – index numbers and percentage changes groups and subgroups – index numbers and percentage changes selected groupings – index...
 

Trading News Events: GBP Jobless Claims Change (based from the article)

What’s Expected:



Why Is This Event Important:

The recent comments from BoE Governor Mark Carney suggests that the Monetary Policy Committee (MPC) is in no rush to lift the benchmark interest rate off of the record-low, and the board may continue to endorse a wait-and-see approach at the next policy meeting on February 4 as the central bank head looks for signs of stronger inflation.

Nevertheless, the pickup in private-sector lending along with the rise in household spending may encourage U.K. firms to expand their labor force, and a positive development may spur a greater dissent within the BoE as central bank officials see a ‘solid’ recovery in the region.

How To Trade This Event Risk

Bearish GBP Trade: Jobless Claims Increase, Household Earnings Slide

  • Need red, five-minute candle following the print to consider a short GBP/USD trade.
  • If market reaction favors selling sterling, short GBP/USD 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.
Bullish GBP Trade: U.K. Job/Wage Growth Beat Market Expectations
  • Need green, five-minute candle to favor a long GBP/USD trade.
  • Implement same setup as the bearish British Pound trade, just in reverse.
Potential Price Targets For The Release

GBPUSD Daily


  • Longer-term outlook for GBP/USD remains tilted to the downside as price & the Relative Strength Index (RSI) retain the bearish formations carried over from the previous year; will continue to watch the downside especially as the oscillator pushes deeper into oversold territory and approaches the lowest level since September 2009.
  • Interim Resistance: 1.4860 (78.6% retracement) to 1.4910 (61.8% retracement)
  • Interim Support: 1.3870 (78.6% expansion) and 1.4000 pivot

Forum on trading, automated trading systems and testing trading strategies

Forecast for Q1'16 - levels for GBP/USD

Sergey Golubev, 2016.01.20 09:44

GBPUSD M5: 40 pips price movement by GBP Jobless Claims Change news event:



 

EUR/USD Intra-Day Fundamentals: US Core CPI and 37 pips price movement

2016-01-20 13:30 GMT | [USD - Core CPI]

if actual > forecast (or previous one) = good for currency (for USD in our case)

[USD - Core CPI] = Change in the price of goods and services purchased by consumers, excluding food and energy.

==========

"The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent in December on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.7 percent before seasonal adjustment.

The indexes for energy and food both declined for the second month in a row, leading to the decline in the seasonally adjusted all items index. The energy index fell 2.4 percent as all major component energy indexes declined. The food index fell 0.2 percent as the index for food at home decreased 0.5 percent, led by a sharp decline in the index for meats, poultry, fish, and eggs."

==========

EURUSD M5: 37 pips price movement by USD - Core CPI news event :


 

USD/CAD Intra-Day Fundamentals: BOC Overnight Rate and 133 pips price movement

2016-01-20 15:00 GMT | [CAD - Overnight Rate]

if actual > forecast (or previous one) = good for currency (for CAD in our case)

[CAD - Overnight Rate] = Interest rate at which major financial institutions borrow and lend overnight funds between themselves.

==========

"The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.

Inflation in Canada is evolving broadly as expected. Total CPI inflation remains near the bottom of the Bank’s target range as the disinflationary effects of economic slack and low consumer energy prices are only partially offset by the inflationary impact of the lower Canadian dollar on the prices of imported goods. As all of these factors dissipate, the Bank expects inflation will rise to about 2 per cent by early 2017. Measures of core inflation should remain close to 2 per cent."

==========

USDCAD M5: 133 pips price movement by BOC Overnight Rate news event :


 

The Stocks are cheap: 10 Reasons To Buy Stocks now (based on the article)



1. Low oil prices are a transfer of wealth
2. U.S. consumers will benefit
3. The crash in oil is due to speculation and deregulation
4. The end of austerity in the U.S.
5. The budget deficit is set to grow
6. U.S. household debt service is at historic low
7. Housing starts still below average
8. Stocks are cheap – S&P 500 forward P/E is below average
9. China isn’t as important as people think
10. Even if I’m wrong, I’m probably right



S&P 500 is on bearish breakdown for the breaking 1857 support to below for the breakdown to be continuing. Weekly price is located to be below 100 period SMA and abovr 200 period SMA in the ranging area of the chart, and if the price breaks 1752 support to below so the bearish trend will be continuing without secondary ranging.

The Strategy: buy above 1752 with 2134 target to re-enter.

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