IronFX - Market Analysis - page 58

IronFx 2015.09.14 05:30 #571

IronFX Daily Commentary | 14/09/15

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• Investors eyes on the FOMC meeting this week The much anticipated September FOMC meeting is only few days away. The outcome is highly uncertain with the market pricing in only a 30% chance of a hike. However, the analyst community is split more evenly. We believe that if they do hike, the dollar will rally. Even if they don’t, as long as they reiterate their commitment to hiking within the year, then USD is likely to rise. But if they appear to put it off indefinitely because of market volatility, then that is likely to be seen as a big negative and we would expect USD to weaken. Along with the statement, the Fed will release the updated summary of economic projections, which newly introduces the 2018 forecasts. We expect some downward revision to 2016 GDP growth, reflecting the impact of the stronger USD and international headwinds.

• Chinese data shows no significant improvement China released several indicators during the weekend that showed no significant improvement from the previous month. Retail sales and industrial production were both slightly higher in August, while the fixed asset investment declined in pace, despite various measures the government has been taking to shore up the economy. This underscores the limited impact that the measures so far have had and the difficulties the country will have in boosting growth. We believe that fiscal policy, along with the loose monetary policy is needed to stabilize slowdown of the economy.

• Today’s highlights: We have a very light calendar, with no major releases during the European day. The only noteworthy data we get is the European industrial production for July. Even though this is not a major market mover, the forecast of a rebound from the previous month could support EUR a bit.

• On Tuesday, the Reserve Bank of Australia releases the minutes of its September policy meeting. At that meeting, the Bank kept its benchmark rate unchanged at 2%, while Gov. Stevens’ comments following the meeting were almost unchanged from last month. He maintained his neutral bias and as for AUD, he simply repeated last month’s statement that “(t)he AUD is adjusting to the significant declines in key commodity prices.” The fact that they are not more concerned than they were last month despite the recent stock market volatility and China's developments, investors saw this as slightly bullish for AUD and the currency rallied somewhat. Nevertheless, the RBNZ rate cut on Wednesday could increase speculation for an RBA easing at its next meeting. Therefore, any comments in the minutes that put emphasis on the slowdown in non-mining business investment could put AUD under renewed selling pressure.

• In addition to the RBA meeting minutes, Bank of Japan holds its policy meeting. Market expectations – and ours -- are for no change in BoJ policy. The focus will most likely be on Gov. Kuroda’s press conference afterwards. There will be particular interest in anything he might say about his controversial upbeat view of the economy and in particular his view that the underlying trend of inflation is improving. He might also have a response to Kozo Yamamoto, a politician who has advised Prime Minister Shinzo Abe on economic policy, who recently said that the BoJ should increase the pace of its asset purchases in October and that reaching the 2% inflation target in first half of fiscal 2016 is “an absolute imperative”.

• As for indicators, the highlight will be the UK CPI data for August. Given the range of views among the Monetary Policy Committee (MPC) members about the risks of inflation, as some see continued upside risks to inflation relative to target, as argued in the latest meeting minutes, investors will watch closely this indicator for hints if other MPC members are getting close to vote for a rate rise.

• The German ZEW survey for September is also coming out. The survey for August showed a mixed picture for the bloc’s strongest economy. The expectations index declined once again from the previous month, while the current situation increased moderate. This time, both indices are forecast to decline, which could prove negative for EUR.

• On Wednesday, in the UK, we get the unemployment data for July. Another decline in the unemployment rate and acceleration in the growth of average weekly earnings could support Gov. Carney’s recent comment that UK’s interest rates could rise “at the turn of this year”.

• In the US, the headline and core CPI rates for August are coming out. Ahead of probably the most highly anticipated FOMC meeting since tapering began, this figure is going to get more attention than usual from investors to re-price their September rate hike expectations. The headline figure is expected to remain unchanged, while the core rate is forecast to rise from the month before. In such case, USD could gain across the board.

• On Thursday, besides the FOMC meeting, we get US housing starts and building permits both for August. Housing starts are forecast to decrease a bit, while building permits, the more forward-looking of the two indicators, are forecast to improve somewhat. Nevertheless, investors will most likely look through this data as the focus will be on the FOMC meeting later in the day.

• Finally on Friday, the Bank of Japan releases the minutes of its August policy meeting. As usual, these are not the minutes from the most recent meeting but rather from the previous one. Therefore, the impact on JPY could be limited at this event. Canada’s CPI for August is also coming out.

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Currency Titles:

EUR/USD breaks above 1.1315

GBP/USD could trade lower for a while

USD/JPY is headed for another test at 120.00

Gold could break a short-term downtrend line soon

WTI trades sideways

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Currencies Text:

• EUR/USD traded higher on Friday, breaking above the resistance (now turned into support) barrier of 1.1315 (S1). The advance was halted fractionally below the 1.1365 (R1) hurdle, where a break could prompt extensions towards the 1.1420 (R2) line. The price structure on the 4-hour chart suggests a short-term uptrend, while the positive momentum revealed by our short-term oscillators supports further near-term advances as well. The RSI edged higher and hit its 70 line, while the MACD lies above both its zero and trigger lines, and points north. Nevertheless, the RSI turned down after it hit 70, therefore, I would be careful of a minor pullback before the bulls take the reins again. As for the broader trend, given that EUR/USD is still trading below 1.1500 (R3), I would hold my neutral stance. I would like to see another move above 1.1500 (R3) before assuming that the overall outlook is back positive. On the downside, a break below the 1.0800 hurdle is the move that could shift the picture negative.

• Support: 1.1315 (S1), 1.1250 (S2), 1.1170 (S3)

• Resistance: 1.1365 (R1), 1.1420 (R2), 1.1500 (R3)

• GBP/USD traded higher after it found support at the 1.5400 (S1) hurdle, but the rebound was stopped by the 1.5460 (R1) resistance barrier. The pair is still trading above the uptrend line taken from the low of the 7th of September, and this keeps the short-term picture somewhat positive. However, taking a look at our oscillators, and having in mind the inability of the bulls to overcome the 1.5460 (R1) line, I would expect the forthcoming wave to be to the downside, perhaps for another test at the 1.5400 (S1) hurdle. The RSI turned down after it found resistance near its 70 line, while the MACD has topped and could fall below its trigger line any time soon. On the daily chart, Cable is still trading below the 80-day exponential moving average. The rate now looks ready to challenge that moving average as a resistance. The fact that the bears could take control near the moving average is another reason I believe that GBP/USD could trade lower for a while.

• Support: 1.5400 (S1), 1.5330 (S2), 1.5290 (S3)

• Resistance: 1.5460 (R1), 1.5500 (R2), 1.5545 (R3)

• USD/JPY traded lower during the Asian morning Monday, after it found resistance at 120.85 (R1). The rate could now be headed for another test at the psychological barrier of 120.00 (S1), where a dip is likely to target the next support at 119.60 (S2). However, a break below the latter barrier is the move that could carry larger bearish extensions, perhaps towards the 118.90 (S3) zone. Our short-term momentum studies corroborate my view and magnify the case for further declines. The RSI moved lower and just crossed below 50, while the MACD, although positive, has topped and fallen below its trigger line. As for the broader trend, the plunge on the 24th of August signaled the completion of a possible double top formation, which keeps the overall outlook negative. As a result I would treat the recovery from the 116.00 zone as a corrective phase for now.

• Support: 120.00 (S1), 119.60 (S2), 118.90 (S3)

• Resistance: 120.85 (R1), 121.30 (R2), 121.75 (R3)

• Gold hit the key support zone of 1100 (S1) on Friday, and then rebounded. The metal is now headed towards the 1112 (R1) resistance line and the short-term downtrend line taken from the peak of the 24th of August. The price is below the trend line that keeps the short-term outlook to the downside. However, I see signs that gold could continue higher and perhaps break above the trend line. Our short-term momentum studies support the case as well. The RSI rebounded from slightly below its 30 line and could now be headed towards its 50 line, while the MACD has bottomed and poked its nose above its signal line. There is also positive divergence between both these indicators and the price action. As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance as far as the overall outlook is concerned.

• Support: 1100 (S1), 1095 (S2), 1090 (S3)

• Resistance: 1112 (R1), 1117 (R2), 1125 (R3)

• WTI has been trading in a sideways mode since the 4th of September and this keeps the short-term bias flat in my view. Today, during the Asian morning, WTI hit resistance at the psychological number of 45.00 (S1) and then slid somewhat. A break below 44.15 (S1) could carry further declines and perhaps target once again the 43.40 (S2) support. Nevertheless, a clear break below the latter level is needed to confirm the downside exit of the recent sideways range and turn the short-term bias back to the downside. The RSI, although below 50, has turned up again, but the MACD stands below both its zero and signal lines and points down. The mixed momentum signs support my choice to stay flat and wait for a move below 43.40 (S2) before getting more confident on the downside. On the daily chart, I still see a longer-term downtrend. As a result, I would treat the 26th – 31st of August advance as a corrective move of that major downside path.

• Support: 44.15 (S1), 43.40 (S2), 42.80 (S3)

• Resistance: 45.00 (R1) 45.45 (R2), 46.00 (R3)

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ForexYard's Commentaries ThirdBrainFx Market Commentary The Top Events/Releases for

IronFx 2015.09.15 05:50 #572

IronFX Daily Commentary | 15/09/15

Language English

• Bank of Japan stands pat The Bank of Japan kept monetary policy unchanged as was widely expected, but warned that the country’s exports and output are affected by the slowdown in EM. The focus now shifts on Gov. Kuroda’s press conference and any hints about his willingness to do more to reduce risks from weak domestic consumer spending and production given the slowdown in China. There will be particular interest in anything he might say about his controversial upbeat view of the economy and in particular his view that the underlying trend of inflation is improving. He might also have a response to Kozo Yamamoto, a politician who has advised Prime Minister Shinzo Abe on economic policy, who recently said that the BoJ should increase the pace of its asset purchases in October and that reaching the 2% inflation target in first half of fiscal 2016 is an absolute imperative.

• The Reserve Bank of Australia released the minutes of its September policy meeting At that meeting, the Bank kept its benchmark rate unchanged at 2%, while Gov. Stevens’ comments following the meeting were almost unchanged from last month. He maintained his neutral bias and as for AUD, he simply repeated last month’s statement that the AUD is adjusting to the significant declines in key commodity prices.The minutes of the meeting showed that the international economic developments had increased the downside risks to the domestic economic outlook, but it was too early to assess the extent to which this would materially affect Australia’s GDP growth. Similar to other major central banks recently like the Bank of England, they maintained their assessment of their economy, despite the weakening Chinese economic activity and the turmoil in the financial markets. The RBA officials said that so far this volatility had not impaired the functioning of other financial markets and funding remained readily available to creditworthy borrowers. AUD weakened a bit at the release of the minutes, but the Bank’s overall optimistic view kept the currency from falling further.

• Today’s highlights: During the European trading day, the highlight will be the UK CPI data for August. Given the range of views among the Monetary Policy Committee (MPC) members about the risks of inflation, as argued in the latest meeting minutes, investors will watch closely this indicator. Some MPC members see continued upside risks to inflation relative to target, therefore, any positive surprise could signal that other MPC members are getting close to vote for a lift-off. Coming on top of the hawkish comments from Kristin Forbes and Martin Weale over the last few days that interest rates would probably rise sooner than later, GBP could strengthen.

• The German ZEW survey for September is also coming out. The survey for August showed a mixed picture for Eurozone’s strongest economy. The expectations index declined once again from the previous month, while the current situation index increased moderately. This time, both indices are forecast to decline a bit, which could prove negative for EUR.

• In the US, retail sales for August are forecast to decelerate from the previous month, while industrial production, also for August, is forecast to have fallen. Few days ahead of the FOMC meeting, significant positive US data surprises are now required to keep confidence up and USD in a bullish trend. The Empire State manufacturing index is expected to show that business conditions for NY manufacturers have improved in September.

• As for the speakers, ECB's Governing Council member Ewald Nowotny speaks.

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Currency Titles:

EUR/USD pulls back

AUD/USD slides after the RBA meeting minutes

GBP/JPY trades lower ahead of the UK CPI data

Gold trades in a consolidative manner

DAX trades in a quiet mode

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Currencies Text:

• EUR/USD traded lower on Monday but the decline was halted slightly below 1.1300 (S1). In my view, the price structure on the 4-hour chart still suggests a short-term uptrend, but a break above 1.1365 (R1) is needed to signal its continuation. Such a break is likely to prompt extensions towards the 1.1420 (R2) line. Our momentum studies though support that further pullback could be looming before buyers take control again. The RSI edged lower after it hit its 70 line, while the MACD, although positive, has topped and fallen below its signal line. Today, we get the German ZEW survey for September and expectations are for both the current situation and expectations indices to decline a bit. This increases the risk for the extension of further pullback. As for the broader trend, given that EUR/USD is still trading below 1.1500 (R3), I would hold my neutral stance. I would like to see another move above 1.1500 (R3) before assuming that the overall outlook is back positive. On the downside, a break below the 1.0800 hurdle is the move that could shift the picture negative.

• Support: 1.1300 (S1), 1.1250 (S2), 1.1170 (S3)

• Resistance: 1.1365 (R1), 1.1420 (R2), 1.1500 (R3)

• AUD/USD traded somewhat lower during the Asian morning Tuesday, after the minutes from the September RBA policy meeting revealed that growth is expected to stay below average. The pair hit resistance at 0.7165 (R1) and as soon as the minutes were out, it retreated somewhat. Given that the pair is trading very close to the medium-term downtrend line taken from the peak of the 18th of June, and taking into account our short-term oscillators, I would expect sellers to take in charge any time soon. The RSI hit resistance slightly below 70 and turned down, while the MACD shows signs of topping and could fall below its trigger line soon. A dip below 0.7100 (S1) would confirm the case and could signal that the recovery from the 4th of September was just a corrective phase. As for the broader trend, I still see a long-term downtrend. Therefore, I would expect the rate to eventually trade lower and aim once again for the psychological round zone of 0.7000 (S3).

• Support: 0.7100 (S1), 0.7050 (S2), 0.7000 (S3)

• Resistance: 0.7165 (R1), 0.7200 (R2), 0.7250 (R3)

• GBP/JPY traded lower on Monday, but rebounded from 184.60 (S1) and hit resistance at 186.15 (R1). During the Asian morning Tuesday, the rate slid again. As long as the pair is trading below the downtrend line taken from the peak of the 10th of September, I would consider the short-term bias to be negative. I would expect another test at 184.60 (S1), where a break could trigger extensions towards 183.85 (S2). The catalyst for such a move could be the UK CPI data, where expectations are for the inflation rate to have fallen to 0.0% yoy in August. Our short-term oscillators support the notion as well. The RSI is now testing its 50 line and could fall below it soon, while the MACD, although positive, stands below its signal line and points south. On the daily chart, the completion of a double top formation has shifted the medium-term bias negative in my view. Therefore, I would treat the 4th - 10th of September recovery as a corrective phase.

• Support: 184.60 (S1), 183.35 (S2), 182.85 (S3)

• Resistance: 186.15 (R1), 187.00 (R2), 188.00 (R3)

• Gold traded quietly on Monday, staying between the psychological support of 1100 (S1) and the resistance of 1112 (R1). The metal is still trading below the trend line taken from the peak of the 24th of August and this keeps the short-term picture somewhat negative. However, the metal is getting closer to that trend line, and taking into account our momentum signs, I believe that it could continue higher and perhaps break above the trend line. The RSI continued higher and could challenge its 50 line soon, while the MACD has bottomed and crossed above its signal line. There is also positive divergence between both these indicators and the price action. As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance as far as the overall outlook is concerned.

• Support: 1100 (S1), 1095 (S2), 1090 (S3)

• Resistance: 1112 (R1), 1117 (R2), 1125 (R3)

• DAX traded in a quiet mode on Monday, staying between the support of 10070 (S1) and the resistance of 10225 (R1). A break below the black short-term uptrend line and the support of 10070 (S1) is the move that could shift the short-term bias to the downside in my view. A decline in the German ZEW indices today could encourage the bears for such a dip, something that is likely to initially target the 9950 (S2) line. Our short-term oscillators detect negative momentum and amplify the case that sellers could push the index lower for a while. The RSI remains below its 50 line, while the MACD, already below its trigger line, has obtained a negative sign. On the daily chart, the break below 10670 on the 20th of August has shifted the medium-term outlook to the downside, in my view. Therefore, I would treat the recovery from near the 9300 area as a corrective phase.

• Support: 10070 (S1), 9950 (S2), 9780 (S3)

• Resistance: 10225 (R1) 10345 (R2), 10500 (R3)

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ForexYard's Commentaries Press review USDCAD Technical Analysis 2014,

IronFx 2015.09.16 05:30 #573

IronFX Daily Commentary | 16/09/15

Language English

• US data did little to change expectations of a rate hike US economic data released on Tuesday didn’t helped investors to re-price their September rate hike expectations. Retail sales rose 0.2% mom in August, at a slower pace from an upwardly revised +0.7% mom in July and below forecasts of +0.3% mom. June’s figure was revised up as well. In the meantime, industrial production fell more than expected in August but July’s figure was revised up. The mixed outcome, with August figures missing market consensus and the prior readings being revised up, kept USD supported on balance.

• With a September lift-off priced around 32% up from 28% on Monday, investors will focus today on the US headline and core CPI rates for August. Ahead of probably the most highly anticipated FOMC meeting since tapering began, this figure is going to get more attention than usual from investors, since they could re-price their September rate hike expectations. The headline figure is expected to remain unchanged, while the core rate is forecast to rise from the month before. In such case, USD could gain across the board.

• Today’s highlights: During the European day, Eurozone’s final CPI for August is coming out. The final figure is expected to confirm the preliminary reading, thus the market reaction could be limited at the release.

• In the UK, we get the employment data for July. Another decline in the unemployment rate and accelerated growth in average weekly earnings could support Gov. Carney’s and other MPC members’ recent comments that UK’s interest rates could rise at the turn of this year. With the UK inflation rate around zero and expected to remain muted for some time given the recent drop in oil prices again, market participants will be closely watching the labor data for signs of demand-pull inflation. Therefore, another strong wage growth is likely to strengthen GBP.

• In Sweden, Riksbank releases the minutes from its September monetary policy meeting. At that meeting, the Bank maintained its benchmark interest rate unchanged and the monthly pace of bond purchases intact until the end of the year. However, it maintained its willingness to act again if necessary, even between the ordinary meetings. Although SEK may remain supported in the near term, given that the Bank remains willing to act, I would treat any short-term strength as a correction of the krona’s longer-term downtrend.

• From the US, besides the CPI data, the NAHB housing market index is for September is also coming out.

Currency Titles:

EUR/USD hits support slightly above 1.1250

EUR/JPY rebounds from the 135.00 psychological barrier

GBP/USD trades lower ahead of the UK employment data

Gold challenges a short-term downtrend line

WTI continues sideways

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Currencies Text:

•EUR/USD continued trading lower on Tuesday, but hit support slightly above the 1.1250 (S1) hurdle and today during the Asian morning, it rebounded somewhat. Although the rebound may continue for a while, I prefer to see a clear move above 1.1365 (R2) before shifting my attention to the upside again. Something like that would confirm a forthcoming higher high and perhaps open the way for the 1.1420 (R3) barrier. On the downside, a break below 1.1250 (S1) is needed to trigger bearish extensions, probably towards the 1.1170 (S2) zone. The trigger for such a move could be a positive surprise in the US CPI data for August coming out later in the day. As for the broader trend, given that EUR/USD is still trading below 1.1500, I would hold my neutral stance. I would like to see another move above 1.1500 before assuming that the overall outlook is back positive. On the downside, a break below the 1.0800 hurdle is the move that could shift the picture negative.

• Support: 1.1250 (S1), 1.1170 (S2), 1.1130 (S3)

• Resistance: 1.1320 (R1), 1.1365 (R2), 1.1420 (R3)

•EUR/JPY traded higher on Tuesday, after it hit support at the psychological obstacle of 135.00 (S1). Nevertheless, the advance was stopped at 135.90 (R1). The price structure on the 4-hour chart suggests a short-term downtrend and therefore, I would expect the forthcoming wave to be negative, perhaps for another test at 135.00 (S1). Our short-term oscillators amplify the case that EUR/JPY could trade lower, at least for a while. The RSI stands slightly above its 50 line, but could fall back below it, while the MACD, although positive, lies below its trigger line and points south. Plotting the daily chart, I see that the 137.00 (R3) obstacle is also the neckline of a double top formation competed back on the 25th of August. The fact that the rate turned down after it hit that neckline is another reason I believe that the short-term downtrend is likely to continue.

•Support: 135.00 (S1), 134.30 (S2), 133.75 (S3)

•Resistance: 135.90 (R1), 136.40 (R2), 137.00 (R3)

•GBP/USD traded lower on Tuesday, breaking below the support (now turned into resistance) of 1.5400 (R1). However the decline was halted by the next hurdle at 1.5330 (S1). In my opinion, the break below 1.5400 (R1) has turned the short-term bias somewhat negative, but I see the possibility that the next wave is likely to be an upside correction, perhaps to test the 1.5400 (R1) line as a resistance this time. Today, we get the UK employment data for July. A decline in the unemployment rate and accelerated growth in average weekly earnings could encourage buyers for such a move. Our short-term oscillators support the notion as well. The RSI, although negative, has bottomed and is now pointing up, while the MACD shows signs of bottoming slightly below its zero line. Switching to the daily chart, I see that Cable slid after finding resistance near the 80-day exponential moving average. This is another reason I believe that the short-term picture is negative and that any positive moves are likely to be short-lived.

•Support: 1.5330 (S1), 1.5290 (S2) 1.5245 (S3)

•Resistance: 1.5400 (R1), 1.5460 (R2), 1.5500 (R3)

• Gold continued trading quietly on Tuesday, staying between the psychological support of 1100 (S1) and the resistance of 1112 (R1). The metal reached the trend line taken from the peak of the 24th of August, but remained below it. Technically, this keeps the short-term picture somewhat negative. However, taking into account our momentum signs, I believe that gold could trade higher and perhaps break above the trend line. The RSI turned up again and could be headed towards its 50 line, while the MACD, although negative, stands above its trigger line. There is also positive divergence between both these indicators and the price action. As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance as far as the overall outlook is concerned.

• Support: 1100 (S1), 1095 (S2), 1090 (S3)

• Resistance: 1112 (R1), 1117 (R2), 1125 (R3)

• WTI has been trading in a sideways mode since the 4th of September and this keeps the short-term bias flat in my view. On Tuesday, WTI rebounded from near 44.00 (S1) and today, during the Asian morning, it hit resistance at 45.15 (R1). Although the trend is flat, taking a look at our short-term oscillators, I see the possibility for a negative wave within the range, at least for another test at the 44.00 (S1) barrier. The RSI has turned down again and could be headed towards its 50 line, while the MACD, slightly above zero, has topped and could fall below its signal line any time soon. On the daily chart, I still see a longer-term downtrend. As a result, I would treat the 26th – 31st of August advance as a corrective move of that major downside path.

• Support: 44.00 (S1), 43.40 (S2), 42.80 (S3)

• Resistance: 45.15 (R1) 45.45 (R2), 46.00 (R3)

Benchmark Currency Rates:

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Press review EURUSD Technical Analysis 2015, Eur/usd

IronFx 2015.09.17 04:50 #574

IronFX Daily Commentary | 17/09/15

Language English

• What might they do? The focus today will of course be on the much-anticipated September FOMC meeting. The outcome is highly uncertain. The market is pricing in only a 30% chance of a hike, but the analyst community is split more evenly. The comments from Fed officials have not been decisive either way. Several Fed officials who spoke the last few weeks shared the view that economic developments, especially in the labor market, have been encouraging. However, they highlighted that other developments, such as the appreciation of the dollar, the devaluation of the Chinese yuan, the market turmoil and the further decline in oil prices, made the decision to begin the process of normalizing rates less compelling than it was before. Their comments have neither signaled that a rise is imminent but neither have they unequivocally ruled it out. In other words, the FOMC members don’t seem to agree on what to do, either. I guess that’s why they’re holding a meeting.

• Along with the statement, the Fed will release the updated summary of economic projections, including the first forecasts for 2018. We expect some downward revision to 2016 GDP growth, reflecting the impact of the stronger USD and international headwinds. Also the “dot plot” of FOMC members’ forecasts for the Fed funds rate at the end of each year could show a lower longer-run fed funds target rate, which, combined with a dovish statement may suggest a weaker USD. But will it still show rates rising by the end of this year?

• What might the results be? There are four major possible scenarios for the Fed statement. The market’s reaction to two of them is by no means certain. They are:

• A hawkish rate hike It’s possible that they not only start the rate normalization process, but also suggest that rates will continue to move steadily higher. This would be unambiguously USD-positive.

• A dovish rate hike Or they could hike rates but emphasize that the normalization process will be slow and gradual and that the terminal level of rates – that is, the level at which they will stop raising rates – is likely to be much lower than it has been in the past. (Their forecast in June for the long-run level of Fed funds was 3.65%, well below the 5.64% monthly average from the start of the Fed funds rate in 1954 until the global financial crisis in 2008.) In this case, I believe the dollar would be likely to rise, as a rate hike is not expected at this meeting, but it is by no means certain how far it would go. The market does expect rates to rise over the next few years already so this would not be too far off what the market has already discounted.

• A hawkish hold They could keep rates on hold but emphasize that this was a finely balanced decision. The dot plot and Chair Yellen’s comments following the meeting might show that they remain determined to hike within this year, perhaps reiterating that a hike in October is possible even though no press conference is scheduled for after that meeting. In that case, is the news already in the market – in which case the dollar might fall – or is that confirming the hawkish view, in which case the dollar might rise? It’s not clear. Note that this is probably the market consensus at this time. I think USD would weaken on a hawkish hold, for several reasons. First off, since it is the consensus, a “buy the rumor, sell the fact” reaction is likely. Secondly, the “hold” message is likely to come out before the “hawkish” message, because the former will be immediately clear from the statement while the latter will only become clear through Yellen’s comments in the press conference. And overall, the market is confused about the Fed’s intentions and the possible timing of the first rate hike, but this decision would do nothing to clear up the uncertainty. In this case, USD would look particularly vulnerable against AUD, which has been one of the favorite shorts recently.

• A dovish hold On the other hand, the Committee could decide to remain on hold and even caution that they are no longer confident that they will start the normalization process this year. They might warn about the low level of inflation, heightened market volatility or “global headwinds,” as the Bank of England put it, and make no mention of the possibility of hiking rates in October. This would be unambiguously negative for the dollar, as it would increase the uncertainty around Fed policy.

• Of course, there are numerous other possibilities. “Hawkish” and “dovish” might not be so clear; they might be confident about the strength labor market but express concern about too-low inflation, or confident that inflation is returning to their target level but worried about market volatility…The market is looking for some clarity about Fed policy, but unfortunately there are many opportunities for ambiguity to sneak into the statement. Thus I expect considerable volatility when the statement comes out and also during Yellen’s press conference as investors are likely to disagree on the relative importance of various statements.

• New Zealand’s GDP for Q2 misses expectations New Zealand’s Q2 GDP came in at +0.4% qoq, better than +0.2% in Q1 but missing expectations of +0.6%.

• Today’s highlights: In addition to the FOMC meeting, the Swiss National Bank holds its policy meeting. Market and our expectations are for the Bank to keep its monetary policy stance unchanged, despite inflation falling further into negative territory. Nonetheless, we believe that the SNB will highlight the rising external risks and that it stands ready to take further easing measures should this become necessary.

• As for indicators, UK’s retail sales for August are forecast to decelerate a bit. Following the strong employment report released on Wednesday, another positive surprise could keep confidence up and GBP supported.

• In the US, besides the FOMC meeting, we get housing starts and building permits, both for August. Housing starts are forecast to decrease a bit, while building permits, the more forward-looking of the two indicators, are forecast to improve somewhat. Nevertheless, investors will most likely look through this data as the focus will be on the FOMC meeting later in the day. Initial jobless claims for the week ended Sep. 12 and the Philadelphia Fed Business activity index for September are also coming out.

Currency Titles:

EUR/USD rebounds from 1.1210 ahead of the FOMC meeting

GBP/USD flies after the UK employment data

USD/JPY trades in a triangle pattern

Gold surges and breaks above a downtrend line

DAX futures trade somewhat higher

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• EUR/USD traded lower on Wednesday, after Eurozone’s final CPI came out below the initial estimate. However, the rate hit support at 1.1210 (S1) and rebounded to challenge once again the resistance zone of 1.1320 (R1). Although the rebound may continue for a while, I prefer to see a clear move above 1.1365 (R2) before shifting my attention to the upside again. Something like that would confirm a forthcoming higher high and perhaps open the way for the 1.1420 (R3) barrier. On the downside, a break below 1.1210 (S2) would confirm a forthcoming lower low and could initially challenge the 1.1170 (S3) zone. Today’s directional movement will depend on whether the Fed decides to hike rates today, the stance of the committee, and the new economic projections. As for the broader trend, given that EUR/USD is still trading below 1.1500, I would hold my neutral stance. I would like to see another move above 1.1500 before assuming that the overall outlook is back positive. On the downside, a break below the 1.0800 hurdle is the move that could shift the picture negative.

• Support: 1.1250 (S1), 1.1210 (S2), 1.1170 (S3)

• Resistance: 1.1320 (R1), 1.1365 (R2), 1.1420 (R3)

• GBP/USD surged yesterday following the decline in the UK unemployment rate and the accelerated growth in average weekly earnings. The pair rebounded from the 1.5330 (S3) zone, crashed two resistance barriers in a row, and stopped near the 1.5520 (R1) level. The rate is back above the key barrier of 1.5460 (S1), and this makes me believe that further upside is possible, at least in the very short term. A move above 1.5520 (R1) could extend the rally, perhaps towards the 1.5560 (R2) line, marked by the inside swing low of the 18th of August. Our short-term oscillators though show signs that a setback could be in the works before the bulls shoot again. The RSI found resistance slightly below 70 and looks ready to turn down soon, while the MACD, although positive, shows signs that it could start topping. Switching to the daily chart, I see that Cable has moved slightly above the 80-day exponential moving average. As a result, I would switch my stance to neutral as far as the overall outlook is concerned.

• Support: 1.5460 (S1), 1.5400 (S2), 1.5330 (S3)

• Resistance: 1.5520 (R1), 1.5560 (R2), 1.5600 (R3)

• USD/JPY seems to have been oscillating within a triangle since the 25th of August. As a result, I would consider the short-term outlook of the pair to be flat. The RSI stands near its 50 line and points sideways, while the MACD lies marginally above zero, but points east as well. These neutral momentum signs support my view to take to the sidelines for now. The outcome of the FOMC meeting today could trigger a break above 120.75 (R1) and signal the upside exit of the formation, or it could cause the next negative, perhaps towards the lower bound of the pattern. As for the broader trend, the plunge on the 24th of August signaled the completion of a possible double top formation, which turned the medium-term outlook somewhat negative. As a result I would treat the recovery from the 116.00 zone as a corrective phase for now.

• Support: 120.00 (S1), 119.50 (S2), 118.90 (S3)

• Resistance: 120.85 (R1), 121.30 (R2), 121.75 (R3)

• Gold rallied on Wednesday, breaking above the short-term downtrend line taken from the peak of the 24th of August. The rally was halted fractionally below the 1125 (R1) obstacle. I believe that the move above the trend line has turned the short-term outlook positive and therefore, a clear move above 1125 (R1) could open the way for the next resistance at 1132 (R2). Nevertheless, taking a look at our short-term oscillators, I see signs that a pullback could be on the cards. The RSI hit resistance marginally below 70 and looks ready to turn down, while the MACD shows signs of topping slightly above its zero line. A break below 1117 (S1) is likely to confirm the case of a retreat, perhaps towards 1110 (S2). As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance as far as the overall outlook is concerned.

• Support: 1117 (S1), 1110 (S2), 1103 (S3)

• Resistance: 1125 (R1), 1132 (R2), 1140 (R3)

• DAX traded somewhat higher yesterday, staying above the black short-term uptrend line. A break above the resistance of 10345 (R1) is likely to extend the rebound and perhaps target the psychological zone of 10500 (R2), also defined by the peak of the 9th of September. Our short-term oscillators support somewhat the notion. The RSI rebounded from near its 50 line and in now pointing up, while the MACD stands above both its zero and signal lines. On the daily chart, the break below 10670 on the 20th of August has shifted the medium-term outlook to the downside, in my view. Therefore, I would treat the recovery from near the 9300 area as a corrective phase.

• Support: 10185 (S1), 10070 (S2), 9950 (S3)

• Resistance: 10345 (R1) 10500 (R2), 10670 (R3)

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Trading the FOMC 20 ways to trade June FOMC Preview: A

IronFx 2015.09.18 05:50 #575

IronFX Daily Commentary | 18/09/15

Language English

• Fed goes with a dovish holdThe FOMC remained on hold, as the market had anticipated, but surprised investors by presenting a more dovish outlook than expected. Although 15 of the 17 members still expect to raise rates this year, they lowered their inflation forecasts and lowered their median forecasts for end-year Fed funds by 25 bps for end-2015, 2016 and 2017. Moreover, they do not see core inflation moving back up to their 2% target until 2018, which means probably that even when they do start hiking rates, they will only hike slowly and perhaps stop at a lower rate than expected. Their median forecast of the long-term level of Fed funds also fell 25 bps to 3.5% (as compared to the average 5.64% rate from the start of Fed funds in 1954 to the financial crisis of 2008).

• They refrained from hiking because of global factors, not domestic factors Apparently the Committee did discuss the idea of hiking rates at this meeting, but decided not to because of global factors (as opposed to domestic factors.) In the press conference, Chair Yellen said that the recovery had progressed enough and domestic spending was strong enough that an argument can be made for a rise in interest rates at this time. However, she emphasized the fall in commodity prices and oil prices and the impact that that would have inflation. She also mentioned the impact of lower commodity prices on EM countries and the fact that capital was leaving those countries as a result. The statement said, Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term. Yellen said that in light of the heightened uncertainties abroad and a slightly softer expected path of inflation, the Committee judged it appropriate to wait for more evidence… This implies that they are taking global economic conditions into account, not just the domestic US economy, which is a significant change in the way that the Fed does business. Indeed, Yellen noted that given the significant economic and financial interconnections between the United States and the rest of the world, the situation abroad bears close watching.

• However, the Fed was more hawkish in two respects: they firmed up the comments on the strength of the labor market and dropped references to the decline in business investment, which they now see as having increased moderately. Against this however they expect inflation to be lower than they did before. The situation is much like that the UK, where the Bank of England sees a strong domestic picture contrasting with external risks. It also means that if the global environment calms down, they can start hiking this year.

• US interest rates fell, with 2-year yields down 13 bps and 10 years down 10 bps. Fed fund rate expectations for end-2016 fell 11 bps and end-2017 were off 12 bps. While this decline is less than the fall in the Committee’s forecasts, the two are still far apart. The FOMC’s weighted average forecast for the end-2016 Fed funds rate is 1.48%, double the 0.72% forecast embedded in the Fed funds futures. Similarly, the FOMC’s end-2017 forecast of 2.64% is double the market’s 1.31%. Clearly, the market does not yet believe the Fed. That implies there is still a lot of room left for the market to be surprised if the FOMC does tighten as its members expect. I therefore remain bullish on the dollar, even though at this point the likelihood is that it is in for a temporary bout of weakness.

• What are other central banks thinking? Other central banks have alluded to the problems buffeting the international economy, such as the slowdown in China, but nobody has yet said that it was causing them to alter their monetary policy. The RBA’s minutes start with a discussion of the renminbi, for example. The Bank of Japan’s minutes mention “the slowdown in emerging economies” three times in the first three sentences. The Bank of England pointed to “the risks to prospects in China, as well as to other emerging economies,” but said that “Global developments do not as yet appear sufficient to alter materially” their view that inflation will return towards target and it will be appropriate to consider raising rates around the turn of the year. Only the ECB has so far made any policy changes, after it said the economic recovery was somewhat weaker than expected “reflecting in particular the slowdown in emerging market economies.” So we have a widespread consensus that the slowdown in China, which is causing other EM economies to slow as well, is a major risk factor for monetary policy. So far only one central bank has thought it was enough to require any policy action, and that was in the most fragile of the major economies. On the other hand, it looks like it could be enough to keep authorities from raising rates for some time.

• Today’s highlights: On Friday, we have a very light calendar. The most significant event is Canada’s CPI for August. The forecast is for the headline figure to remain unchanged in pace, while the core CPI is expected to decelerate. Given the lower global oil prices recently, if the core rate misses expectations and decelerates more, this could prove CAD-negative.

• Eurozone’s current account surplus for July is also coming out.

• In the US, Conference Board leading index for August is expected to rise, a turnaround from the previous month.

• As for the speakers, BoE Chief Economist Andy Haldane speaks.

Currency Titles:

EUR/USD surges above 1.1365 post FOMC decision

GBP/JPY pulls back after hitting resistance near the 188.00 barrier

EUR/GBP rebounds from 0.7275

Gold continues its rally

WTI breaks above the upper bound of a sideways range

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Currencies Text:

• EUR/USD surged on Thursday after Fed officials refrained from hiking rates and lowered their inflation and growth forecasts. The pair surged above the resistance (now turned into support) barrier of 1.1365 (S1) and was stopped at around 1.1440 (R1). The break above 1.1365 (S1) confirmed a forthcoming higher high on the 4-hour chart and turned the short-term picture back to the upside, in my view. A clear break above 1.1440 (R1) is likely to open the way for the psychological barrier of 1.1500 (R2). However, looking at our short-term oscillators, I see signs that a setback could take place before the bulls take in charge again. The RSI hit resistance at its 70 line and turned down, while the MACD, although positive, shows signs that it could start topping. As for the broader trend, given that EUR/USD is still trading below 1.1500, I would hold my neutral stance. I would like to see another move above 1.1500 before assuming that the overall outlook is back positive. On the downside, a break below the 1.0800 hurdle is the move that could shift the picture negative.

• Support: 1.1365 (S1), 1.1300 (S2), 1.1210 (S3)

• Resistance: 1.1440 (R1), 1.1500 (R2), 1.1560 (R3)

• GBP/JPY traded lower on Thursday, after it hit resistance slightly above the key resistance hurdle of 188.00 (R1). However, the decline was halted marginally above the 186.00 (S1) support and above the short-term uptrend line taken from the low of the 4th of September. This keeps the short-term picture cautiously positive in my opinion. A rebound near the 186.00 (S1) zone is likely to encourage the bulls to aim for another test at the 188.00 (R1) zone. Taking a look at our momentum studies though, I see that the RSI slid after hitting resistance near its 70 line, while the MACD has topped and could fall below its trigger line soon. What is more, there is negative divergence between the MACD and the price action. Having in mind these signs of weak momentum, I prefer to wait for a move above 188.00 (R1) before I trust the short-term uptrend again. On the daily chart, given the completion of a double top pattern on the 24th of August, I would consider the medium-term path to be cautiously negative. I would still treat the recovery from around 180.30 as a corrective phase.

• Support: 186.00 (S1), 185.00 (S2), 184.15 (S3)

• Resistance: 188.00 (R1), 190.00 (R2), 191.00 (R3)

• EUR/GBP traded higher on Thursday, breaking above the resistance (now turned into support) barrier of 0.7310 (S1). However, the advance fell short of reaching the 0.7355 (R1) resistance and the rate retreated somewhat. Although the retreat may continue for a while, perhaps back below 0.7310 (S1), I would still consider the short-term path of the pair to be to the sideways. EUR/GBP has been trading in a choppy range since the 21st of August, between the support barrier of 0.7240 (S3) and the resistance zone of 0.7400 (R3). As for the broader trend, the move above 0.7170 on the 21st of August has turned the medium-term outlook positive. Nevertheless, a break above the 0.7400 zone is needed to confirm a forthcoming higher high on the daily chart and make me trust that medium-term path again.

• Support: 0.7310 (S1), 0.7275 (S2), 0.7240 (S3)

• Resistance: 0.7355 (R1), 0.7375 (R2), 0.7400 (R3)

• Gold continued its rally on Thursday after the Fed’s decision to keep rates unchanged. The metal emerged above the resistance (now turned into support) barrier of 1125 (S1) and was stopped slightly above 1132 (R1). Then, gold retreated back below 1132 (R1). The short-term bias remains positive in my view and therefore, I would expect another attempt above 1132 (R1) to target the 1140 (R2) obstacle. The MACD stands above both its zero and signal lines, confirming the positive momentum and supporting further advances. However, the RSI has topped within its overbought territory and has just fell below 70. This gives evidence that a minor pullback is possible before the next positive leg. As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance as far as the overall outlook is concerned.

• Support: 1125 (S1), 1117 (S2), 1110 (S3)

• Resistance: 1132 (R1), 1140 (R2), 1148 (R3)

• WTI traded higher on Wednesday and broke above the upper bound of the sideways range it’s been trading since the 4th of September. However, the advance was stopped near 47.55 (R1) and subsequently, the price traded in a consolidative manner below that hurdle. A break above 47.55 (R1) is now needed to confirm a forthcoming higher high on the 1-hour chart and to keep the short-term bias positive. Such a break is likely to set the stage for extensions towards the next resistance at 48.25 (R2). The RSI stands near its 50 line and points sideways, while the MACD lies near zero, pointing somewhat east as well. These neutral momentum signs support my choice to wait for a move above 47.55 (R1) before getting more confident on the upside. In the bigger picture, the rebound from near 43.40 printed a higher low on the daily chart. Thus, I would switch my stance to neutral as far as the overall outlook is concerned. A clear close above the psychological zone of 50 is needed to confirm a higher high and signal a possible trend reversal.

• Support: 46.35 (S1), 46.00 (S2), 45.60 (S3)

• Resistance: 47.55 (R1) 48.25 (R2), 48.85 (R3)

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Trading the FOMC 20 ways to trade What To Expect From

IronFx 2015.09.21 05:10 #576

IronFX Daily Commentary | 21/09/15

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•"Dollar higher on banks' end-quarter demand"The dollar has rallied against most G10 currencies despite further declines in Fed fund rate expectations on Friday. It seems that there has been strong demand from banks for dollars heading into the end of the quarter, probably due to constraints on their balance sheets due to stricter regulations. This micro-economic factor could partially outweigh the macro-economic factor, namely the Fed’s dovish stance and the new questions about when they will start tightening rates, and help to support the dollar at least until the end of the quarter, if not longer.

• Greek election signals fewer problems with European politics The European political calendar, which earlier this year looked like it was going to cause a lot of volatility for the markets, seems to be calming down. Yesterday the Greek voters gave former PM Tsipras another chance to run the government, confounding the polls, which had shown his party running neck-and-neck with the centre-left New Democracy. SYRIZA will rule in coalition with the Independent Greeks party, the same party that it was in coalition with previously. The vote was a resounding endorsement of EMU membership, albeit within the context of record-low voter turnover. SYRIZA’s share of the vote was little changed from the first vote that brought it to power, showing that voters have forgiven it for caving in to the Troika’s demands. On the other hand, the more extreme members of SYRIZA broke off to form a new party that pledged to leave the euro, but it got roundly defeated and will not get any seats in Parliament. Thus the election should bring some stability to the country as it has pretty much settled the question of euro membership and co-operation with lenders’ demands, at least for the time being.

• Next Sunday we have regional elections in Catalonia. The two major nationalist parties have joined forces to turn the vote into an indirect referendum on independence from Spain. However, polls suggest that they will get only 40% of the vote, meaning they would still be a few seats short of a majority in the Catalan regional parliament. There is likely to be increased press coverage and hence more attention paid to the Catalan issue as the voting approaches, but at this point I don’t expect any major change to the outlook for Spain.

• Finally, the new leader of the UK Labour Party has reassured voters that he is in favor of remaining in the Eurozone, thus reducing the threat of a “Brexit” – although the possibility is likely to overhang the pound in the run-up to the referendum on UK membership in the EU, tentatively scheduled for sometime in the autumn of 2016.

• Portugal holds elections on 4 October, while Spain has to hold a general election sometime before the end of the year. It looks like these elections may give fairly conventional results, especially since these two countries’ economies are improving and they are not so much affected by the refugee crisis -- the new threat to the Eurozone. Consumer confidence in the two countries is as high or higher than it was at the peak of the pre-crisis period, which suggests that the voters are not all that dissatisfied with their lives.

• Today’s highlights: Today we have a relatively light day. The only important indicator is US existing home sales for August. The housing starts and building permits data released last week were consistent with an improving housing market. Therefore, another strong housing figure could strengthen USD.

• We have several speakers on Monday’s agenda. ECB Executive Board member Benoit Coeure, ECB Governing Council member Ewald Nowotny, ECB Executive Board member Peter Praet and Atlanta Fed President Dennis Lockhart speak,

• This week is “Silver Week” in Japan. Markets are closed Monday, Tuesday and Wednesday. This may mean less liquidity in JPY and therefore more volatility.

• On Tuesday, we have no major releases on the schedule.

• Wednesday is a PMI day! During the Asian session, China’s preliminary Caixin/Markit manufacturing PMI for September is expected to increase a bit but to remain below 50, the threshold dividing expansion from contraction. That may not do too much to reassure the markets about Chinese growth and so is not likely to boost AUD or NZD.

• During the European trading day, we get the preliminary manufacturing and service-sector PMI data for September from several European countries and the Eurozone as a whole. The expectations are for both to decline somewhat. This could weaken EUR a bit. The final GDP figure for Q2 for France is also coming out. The final data is expected to confirm the preliminary figure and show that the French economy fell back to stagnation. Therefore, the market reaction could be limited at this release.

• In the US, the preliminary Markit manufacturing PMI for September is expected to increase slightly from August. The market pays more attention to the ISM figure. As such, the reaction on this release could be limited.

• On Thursday, the main event will be the Norges Bank rate decision. The current market expectations are for the Bank to keep the rates unchanged. Although Norway’s CPI is still close to the Bank’s 2.5% target, negative developments since the last meeting, including lower oil prices, soft industrial production and weak manufacturing PMI, increase the risk of another cut pushing NOK to fresh lows.

• From Germany, we get the Ifo survey for September. The German ZEW survey showed a mixed picture for the bloc’s strongest economy: the expectations index declined once again from the previous month, while the moderate increase in the current situation index was not enough to reverse investors’ concerns about Germany’s weak recovery. We expect the Ifo to nudge down further this month, adding to evidence that the German recovery is petering out.

• From the US, we get the durable goods orders for August. The headline figure is expected to fall, a turnaround from the month before, while durable goods excluding transportation equipment are estimated to decelerate somewhat. The focus is usually on the core figure where a positive surprise could suggest the possible start of a turnaround in business investment and could support dollar. On the other hand, another dissapointment is likely to put USD under selling pressure.

• Finally on Friday, we have the usual end-of-month data dump from Japan. The focus will be on the National CPI rate for August and the Tokyo CPI rate for September. The forecast is for the national CPI excluding fresh food and energy, the Bank’s favorite inflation measure. It’s expected to rise. On the other hand, the national CPI ex-fresh foods is expected to fall into negative territory. The Bank’s favorite inflation measure is likely to support Gov. Kuroda’s view that the underlying trend of inflation is improving. In such case, JPY might strengthen.

Currency Titles:

EUR/USD tumbles and hits support at 1.1265

GBP/USD slides after finding resistance at 1.5660

USD/JPY still trades within a triangle

Gold continues north

DAX futures falls below 10000

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Currencies Text:

• EUR/USD tumbled on Friday after it hit resistance at 1.1460 (R3). However, the declined was halted at 1.1265 (S1), above the uptrend line taken from the low of the 4th of September. The fact that the rate is still above that trend line keeps the short-term picture somewhat positive. Nevertheless, our momentum studies detect downside momentum and as a result, I prefer to adopt a flat stance for now. The RSI fell below its 50 line, while the MACD, although positive, has topped and fallen below its trigger line. As for the broader trend, given that EUR/USD is still trading below 1.1500, I would hold a neutral stance as far as the overall picture is concerned as well. I would like to see another move above 1.1500 before assuming that the overall outlook is back to positive. On the downside, a break below the 1.0800 hurdle is the move that could shift the picture negative.

• Support: 1.1265 (S1), 1.1210 (S2), 1.1130 (S3)

• Resistance: 1.1335 (R1), 1.1385 (R2), 1.1460 (R3)

• GBP/USD slid on Friday after it hit resistance at 1.5660 (R2), and found support at 1.5515 (S1). The price structure on the 4-hour chart still suggests a short-term uptrend, and therefore, I would treat Friday’s decline or any extensions of it as corrective move of that near-term trend. I would expect the bulls to eventually take control and drive the battle above the 1.5560 (R1) hurdle. Something like that could pull the trigger for another test at the 1.5660 (R2) resistance. Nevertheless, our short-term oscillators give evidence that the current retreat may continue for a while. The RSI slid after it exited its overbought territory, while the MACD, although positive, has topped and fallen below its signal line. Switching to the daily chart, I see that Cable has moved back above the 80-day exponential moving average. As a result, I maintain my flat stance as far as the overall outlook is concerned.

• Support: 1.5515 (S1), 1.5460 (S2), 1.5400 (S3)

• Resistance: 1.5560 (R1), 1.5660 (R2), 1.5720 (R3)

• USD/JPY seems to have been oscillating within a triangle since the 25th of August. As a result, I would consider the short-term outlook of the pair to be flat. On Friday, the rate hit the lower bound of the formation and rebounded to find resistance at 120.15 (R1). Taking a look at our short-term oscillators I see the likelihood for another negative leg and perhaps the downside exit of the formation. The RSI hit resistance slightly below its 50 line and turned down, while the MACD, although it points sideways, stands below both its zero and signal lines. I would expect the bears to aim for a test at 118.90 (S1), where a dip could bring into the game the 118.40 (S1) line and confirm the downside exit of the triangle. As for the broader trend, the plunge on the 24th of August signaled the completion of a possible double top formation, which turned the medium-term outlook somewhat negative. As a result I would treat the recovery from the 116.00 zone as a corrective phase for now.

• Support: 120.00 (S1), 119.50 (S2), 118.90 (S3)

• Resistance: 120.85 (R1), 121.30 (R2), 121.75 (R3)

• Gold continued trading higher on Friday, breaking above the resistance (now turned into support) barrier of 1132 (S1) and hitting resistance at 1142 (R1). The short-term bias remains positive in my view, but having in mind our momentum signs, I would be careful of a possible downside corrective wave for now. The RSI just exited its overbought territory, while the MACD shows signs of topping and could fall below its trigger line soon. A clear move back below 1132 (S1) is likely to confirm the case of the retreat and perhaps challenge the 1125 (S2) line. As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance as far as the overall outlook is concerned.

• Support: 1132 (S1), 1125 (S2), 1117 (S3)

• Resistance: 1142 (R1), 1148 (R2), 1156 (R3)

• DAX futures slid on Friday, breaking below the short-term uptrend line taken from the low of the 25th of August. However, the decline was stopped fractionally above the 9950 (S1) line, defined by the low of the 4th of September. The fall below the short-term trend line has shifted the near-term bias to the downside and therefore, I would expect a clear dip below 9950 (S1) to set the stage for extensions towards 9780 (S2). Our momentum indicators detect negative momentum and amplify the case for further declines. The RSI edged lower after falling below its 50 line, while the MACD has topped slightly above zero, fell below its trigger line and turned negative. On the daily chart, the break below 10670 on the 20th of August has shifted the medium-term outlook to the downside, in my view. Therefore, I would treat the 24th of August – 9th of September recovery as a corrective phase.

• Support: 9950 (S1), 9780 (S2), 9540 (S3)

• Resistance: 10070 (R1) 10185 (R2), 10345 (R3)

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ForexYard's Commentaries Eur/usd Press review

IronFx 2015.09.22 05:10 #577

IronFX Daily Commentary | 22/09/15

Language English

•Monetary policy divergence is alive and well First the statement, then the interpretation.Fed fund rate expectations moved slightly higher and the dollar gained as Fed speakers continued their exegesis of the FOMC’s statement. Atlanta Fed President Dennis Lockhart, a voting member of the FOMC, said it was a “close call” and that “the domestic economy appears to me to be ready for the beginning of normalization.” He argued the decision to delay hiking was largely a matter of “risk management” to be sure that recent market volatility would not become a drag on the US economy. He too agreed with other members that October is a “live meeting,” that is, one that could change interest rates, although he questioned whether there would be enough new information by then to change people’s minds. St. Louis Fed President James Bullard, not a voting member, was even more hawkish; he said he argued against keeping on hold and that he would have dissented if he could’ve.

• The view from Europe though is quite to the contrary. Eugenio Gaiotti, the chief economist of the Bank of Italy, said it was important that the ECB not fall behind the curve in its efforts to revive the Eurozone economy. “We assess that downside risks for medium-term growth and inflation have increased,” he said. “It is crucial to avoid lower potential growth igniting a deflationary spiral, and this falls fully in the mandate of central banks.” ECB Executive Board member Peter Praet repeated the ECB’s usual statement that the Bank would “certainly do what’s necessary” if its inflation target is at risk and that it would “forcefully react.”

• So the famous monetary policy divergence between the two major central banks is alive and well and should at least keep EUR/USD in its current range for now. Let’s wait to hear what ECB President Draghi has to say tomorrow at a quarterly hearing before the Committee on Economic and Monetary Affairs of the European Parliament in Brussels.

• Today’s highlights: During the European day, Eurozone’s preliminary consumer confidence index for July is coming out.

• In the US, we get only data of secondary importance. The Richmond Fed manufacturing index for September and the FHFA housing price index for July are due out.

• As for the speakers, BoE’s MPC member Minouche Shafik speaks.

Currency Titles:

EUR/USD continues its tumble finds support at 1.1210

EUR/GBP breaks the lower bound of a sideways range

EUR/JPY breaks below 135.00

Gold pulls back

WTI slides after hitting resistance at 46.70

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• EUR/USD continued its slide on Monday, breaking below the uptrend line taken from the low of the 4th of September and below the 1.1210 (R1) hurdle. Yesterday’s plunge confirmed the negative divergence between our short-term oscillators and the price action, and turned the short-term bias somewhat negative. A break below the 1.1180 (S1) is likely to pull the trigger for further declines and perhaps aim for the next support at 1.1130 (S2). Our momentum indicators detect negative momentum and corroborate my view. The MACD stands below both its zero and signal lines, pointing south, while the RSI remains below its 50 barrier. However, the RSI has turned somewhat up, giving evidence that a minor corrective bounce could be looming before the next bearish leg. As for the broader trend, given that EUR/USD is still trading below 1.1500, I would hold a neutral stance as far as the overall picture is concerned. I would like to see another move above 1.1500 before assuming that the overall outlook is back positive. On the downside, a break below the 1.0800 hurdle is the move that could shift the picture negative.

• Support: 1.1180 (S1), 1.1130 (S2), 1.1090 (S3)

• Resistance: 1.1210 (R1), 1.1265 (R2), 1.1335 (R3)

• EUR/GBP traded lower yesterday, breaking the lower bound of the choppy range it had been trading since the 21st of August, between the 0.7240 (R1) and 0.7400 (R3) barriers. The rate also fell below the uptrend line taken from back the low of the 5th of August. These technical moves have turned the short-term picture cautiously to the downside in my view. Therefore, I would expect the bears to challenge the 0.7200 (S1) hurdle in the near future. A dip below that line is likely to bring into the game the key obstacle of 0.7170 (S2). Our short-term oscillators detect negative momentum and support the notion. The MACD stands below both its zero and signal lines, pointing north, while the RSI edged lower and is now testing its 30 line. Nevertheless, the RSI shows signs of bottoming near its 30 barrier, hence I would be careful of a minor corrective move before the next leg down. As for the broader trend, the move above 0.7170 (S2) on the 21st of August has turned the medium-term outlook positive. As a result, I would treat any further short-term declines that stay limited above that zone as a corrective phase of the longer-term path.

• Support: 0.7200 (S1), 0.7170 (S2), 0.7115 (S3)

• Resistance: 0.7240 (R1), 0.7265 (R2), 0.7285 (R3)

• EUR/JPY traded significantly lower on Monday after it found resistance at 136.00 (R3). The rate fell below the psychological barrier of 135.00 (R1) and this turned the short-term bias negative in my view. I would now expect the bears to continue their ride and perhaps challenge the 134.40 (S1) support zone. Shifting my attention to our short-term oscillators, I see that the RSI moved lower after it hit resistance slightly below its 50 line, while the MACD stands below both its zero and trigger lines. These indicators detect negative momentum and support the negative short-term outlook. However, the RSI has turned up again, giving evidence that a corrective bounce is possible before sellers pull the trigger again. Plotting the daily chart, I see that the pair is trading below the 137.00 obstacle, which is also the neckline of a double top formation competed back on the 25th of August. This is another reason I believe that the short-term downtrend is likely to continue.

• Support: 134.30 (S1), 133.75 (S2), 133.30 (S3)

• Resistance: 135.00 (R1), 135.35 (R2), 136.00 (R3)

• Gold pulled back on Monday, but the retreat was stopped slightly below the 1132 (S1) support hurdle. The short-term bias remains positive in my view, but a break above 1142 (R1) is needed to confirm a forthcoming higher high. Such a move is likely to initially target the next resistance at 1148 (R2) defined by the peak of the 1st of September. Taking a look at our short-term oscillators though, I see signs that further retreat could be on the cards before the next positive leg. The RSI continued lower after exiting its overbought territory, while the MACD has topped and fallen below its trigger line. A clear move back below 1132 (S1) is likely to confirm the case of further setback and perhaps challenge the 1125 (S2) line. As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance as far as the overall outlook is concerned.

• Support: 1132 (S1), 1125 (S2), 1117 (S3)

• Resistance: 1142 (R1), 1148 (R2), 1156 (R3)

• WTI traded lower on Monday, after it hit resistance at 46.70 (R1). With no clear trending structure on the 1-hour chart, I would stay flat as far as the short-term picture is concerned. However, looking at our hourly oscillators, I see signs that the current pullback may continue for a while. The RSI moved lower after it found resistance near its 70 line, while the MACD has topped and looks ready to fall below its signal line any time soon. A clear dip below 46.00 (S1) is likely to confirm the case and perhaps set the stage for extensions towards the next support line at 45.55 (S2). In the bigger picture, the rebound from near 43.40 printed a higher low on the daily chart. Thus, I would see a neutral overall outlook as well. A clear close above the psychological zone of 50 is needed to confirm a higher high and signal a possible trend reversal.

• Support: 46.00 (S1), 45.55 (S2), 45.00 (S3)

• Resistance: 46.70 (R1) 47.00 (R2), 47.55 (R3)

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Press review EURUSD Technical Analysis 2015, Eur/usd

IronFx 2015.09.23 05:10 #578

IronFX Daily Commentary | 23/09/15

Language English

• Draghi may hint further stimulus ECB President Mario Draghi speaks at a quarterly hearing before the Committee on Economic and Monetary Affairs of the European Parliament. He could reiterate the Bank’s readiness to act again if needed and if its inflation objective were to be at risk. Recent commentary from ECB officials point to a QE extension beyond 2016. Therefore, we could expect additional rhetorical support from Draghi that may suggest that the ECB will have to keep QE longer or increase the size of the monthly bond purchases. Even though the market now expects that the stimulus program will continue beyond September 2016, it will be interesting to see if the ECB will take further actions in the short-term. This could put EUR under renewed selling pressure.

• Overnight China’s preliminary Caixin manufacturing PMI declined to 47.0 in September, down from 47.3 in August and below consensus of 47.5. Once again, the manufacturing PMI stayed below 50, the threshold dividing expansion from contraction. The further fall in the PMI suggests that the Chinese economy has yet to stabilize and more stimulus could be needed to boost the economy. Australia and New Zealand, whose economies are heavily dependent on exports to China, saw their currencies plunging on the news. AUD/USD fell to find support few pips above the psychological figure of 0.70, while NZD/USD found some buy orders slightly above the 0.6250 level. The slowdown in the Chinese economy and the continued decline in key commodity prices are likely to keep AUD and NZD under renewed selling pressure.

• Today’s highlights: During the European trading day, we get the preliminary manufacturing and service-sector PMI data for September from several European countries and the Eurozone as a whole. Expectations are for both to decline somewhat. This could weaken EUR a bit. The final Q2 GDP figure for France is also coming out. The final data is expected to confirm the preliminary figure and show that the French economy fell back to stagnation. Therefore, the market reaction could be limited at this release.

• From Norway, we get the AKU unemployment rate for July. The official unemployment rate for the same month rose to 3.1% from 2.8%. This increases the possibilities for the AKU rate to rise as well. NOK could weaken a bit at this release.

• In Canada, retail sales for July are forecast to accelerate a bit, which could prove a bit CAD-positive.

• As for the speakers, besides President Draghi, ECB Governing Council member Jens Weidmann and Atlanta Fed President Dennis Lockhart speak as well. Lockhart spoke on Monday and he said that even though recent market volatility raised risks to the US economic and inflation outlook, he remains confident the Fed will raise interest rates this year. He also said that it was a “close call” and that “the domestic economy appears to me to be ready for the beginning of normalization.” Similar comments could keep USD supported.

Currency Titles:

EUR/USD continues south and hits support near 1.1100

GBP/JPY breaks below 184.15

Gold falls below 1130

DAX falls below 9780

AUD/USD is headed towards 0.7000 again

Currencies Image Url:

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Currencies Text:

• EUR/USD continued its slide on Tuesday, falling below the support (now turned into resistance) barrier of 1.1180 (R1). However, the rate was stopped slightly above the 1.1100 (S1) line and then it rebounded somewhat. The short-term outlook remains negative in my view and therefore, I would expect a clear move below 1.1100 (S1) to aim for the 1.1070 (S2) line. Another break below 1.1070 (S2) is likely to carry larger bearish extensions, perhaps towards the next support at 1.1020 (S3). Taking a look at our short-term oscillators though, I see signs that the current corrective rebound may continue for a while before sellers take the reins again. The RSI rebounded from near its 30 line, while the MACD, although negative, shows signs of bottoming and could move above its trigger line soon. As for the broader trend, given that EUR/USD is still trading below 1.1500, I would hold a neutral stance as far as the overall picture is concerned. I would like to see another move above 1.1500 before assuming that the overall outlook is back positive. On the downside, a break below the 1.0800 hurdle is the move that could shift the picture negative.

• Support: 1.1100 (S1), 1.1070 (S2), 1.1020 (S3)

• Resistance: 1.1180 (R1), 1.1210 (R2), 1.1265 (R3)

• GBP/JPY traded lower on Tuesday, breaking below the 186.00 (R3) barrier and the short-term uptrend line taken from the low of the 4th of September. This confirmed the negative divergence between the MACD and the price action, and turned the short-term picture negative in my view. Today, during the Asian morning, the rate fell below the support (now turned into resistance) line of 184.15 (R1) and therefore, I would expect the negative move to continue and challenge the next hurdle at 182.60 (S1). Our short-term oscillators reveal strong downside momentum and corroborate my view. The RSI edged lower and now looks ready to fall below 30, while the MACD lies below both tis zero and signal lines, pointing down. On the daily chart, given the completion of a double top pattern on the 24th of August, I would consider the medium-term path to be cautiously negative as well. I would treat the 4th – 17th of September recovery as a corrective phase of that medium-term down path.

• Support: 182.60 (S1), 181.80 (S2), 180.30 (S3)

• Resistance: 184.15 (R1), 185.00 (R2), 186.00 (R3)

• Gold continued declining on Tuesday but the decline was stopped slightly above the 1120 (S1) support line. Yesterday’s decline has turned the short-term bias negative in my opinion and hence, I would expect a dip below 1120 (S1) to challenge the next support at 1115 (S2). Our short-term oscillators detect downside momentum and corroborate my view. The RSI fell below 50, while the MACD, although positive, stands below its trigger line and appears ready to challenge its zero line any time soon. As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance as far as the overall outlook is concerned.

• Support: 1120 (S1), 1115 (S2), 1110 (S3)

• Resistance: 1127 (R1), 1135 (R2), 1142 (R3)

• DAX futures tumbled and broke below 9780 (R1) on Tuesday after finding resistance at 10025 (R2) However the decline was stopped fractionally above the support line of 9540 (S1). The price structure still suggests a short-term downtrend in my view and therefore, I would expect a clear dip below 9540 (S1) to see scope for extensions towards the 9315 (S2) support, defined by the low of the 24th of August. Our momentum indicators detect negative momentum and amplify the case for further declines. The RSI stands below its 30 line, while the MACD lies below both tis zero and signal lines, pointing down. Nevertheless, the RSI has turned up and could exit its oversold territory soon. As a result, I would be careful of a corrective bounce before the next negative leg. On the daily chart, the break below 10670 on the 20th of August has shifted the medium-term outlook to the downside, in my view. Therefore, I would treat the 24th of August – 9th of September recovery as a corrective phase and I would expect the index to extend its declines.

• Support: 9540 (S1), 9315 (S2), 9130 (S3)

• Resistance: 9780 (R1) 10025 (R2), 10170 (R3)

• AUD/USD fell sharply yesterday and today, during the Asian morning it broke below the support (now turned into resistance) of 0.7055 (R1). The rate now looks to be headed towards the psychological barrier of 0.7000 (S1), where a clear dip is likely to open the way for our next support at 0.6950 (S2). Our short-term oscillators detect strong downside speed and magnify the case that AUD/USD is likely to continue trading lower, at least in the short run. The RSI continued its slide and now appears ready to fall below 30, while the MACD stands below both its zero and signal lines, pointing south. Plotting the daily chart, I still see a major downtrend. As a result, I would consider the 7th - 18th of September advance as a corrective move of that long-term down path.

• Support: 0.7000 (S1), 0.6950 (S2), 0.6900 (S3)

• Resistance: 0.7055 (R1), 0.7095 (R2), 0.7140 (R3)

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Press review ForexYard's Commentaries EURUSD Technical Analysis 2015,

IronFx 2015.09.24 05:50 #579

IronFX Daily Commentary | 24/09/15

Language English

• No new actions likely from ECB We had several ECB speakers yesterday and the impression they left was one of “we are ready to do more if necessary, but it’s too early to tell if more is necessary.” First up was Austrian central bank governor Ewald Nowotny, one of the proponents of QE. He admitted that inflation is well below the ECB’s 2% target, but said that there is no need to act in the near term. Slovenian central bank governor and ECB Governing Council member Bostjan Jazbec said that there are “no discussions” about policies other than quantitative easing, adding that it’s too early to talk about any other scenario than the one that was already outlined at the June ECB meeting.

• His comments may have been in reference to the market talk about the possibility of a further cut in the deposit rate, currently -0.20%. The 8th EONIA forward contract is now also implying the same rate of -0.2%, which would only be possible if the market is pricing in a further cut in the deposit rate. However, given that Draghi has already stated that rates are at the effective floor, it’s not likely that they would want to reopen this issue.

• Indeed, ECB President Draghi confirmed the impression that other ECB speakers had given. He reaffirmed that the ECB was flexible on QE, repeating previous comments that the ECB stood ready to adjust “the size, composition and duration” of the QE program rather than holding out the possibility of any further rate cuts. He also noted that more time was needed to determine if the loss of growth momentum in EM is temporary or permanent and downplayed the revisions to forecasts, which he said were marginal. So the ECB, like the Fed, is on hold for now waiting to see what happens in the future. This gave the market no reason to break out of its current range in EUR/USD and the pair continues to gyrate up and down.

• BRL plunges; crisis could have global impact On the other hand, things might get worse for EM countries in the near future. BRL, the worst-performing currency in the world so far this year, did even worse yesterday – down 3% in one day after Lower House President Eduardo Cunha said he would address impeachment procedures in response to opposition requests. Later he released the document that covers the process of impeachment. Just because things are bad doesn’t mean they can’t get worse! The Brazilian crisis has global implications. The collapse in Brazil can cause a general outflow from EM stock and bond funds, which would help to spread the downturn to other EM countries as well. And as we’ve seen from many central banks around the world, instability in EM markets is a major concern for the G10 central banks as well. Plus a slowdown in EM growth means naturally a slowdown in G10 growth as well.

• Platinum plunges (then recovers), palladium surges Platinum fell to nearly a 7-year low in New York trading on fears that the VW scandal would hit demand for the metal, which is used in diesel catalytic converters. On the other hand palladium, which is used in catalytic converters for gasoline-driven vehicles, surged 7%, aided by China’s clean-air drive too. However, platinum recovered in Asian trading and is now higher – no idea why.

• VW crisis may impact CZK, HUF The VW crisis could have a more direct impact on the currency market. Both Czech Republic and Hungary are both highly exposed to the auto industry, Germany in general and VW specifically. Auto exports accounted for 16% of GDP in the Czech Republic last year and almost 13% of GDP in Hungary. Volkswagen owns Skoda, the largest car manufacturer in the Czech Republic, and also Audi Hungary, which between cars and engines is the largest auto manufacturer in Hungary and an important employer. More broadly, exports to Germany account for some 28% of GDP in the Czech Republic, vs 22% in Hungary.

• Today’s highlights: During the European day, the main event will be the Norges Bank rate decision. The current market expectations are for the Bank to keep the rates unchanged. Although Norway’s CPI is still close to the Bank’s 2.5% target, negative developments since the last meeting, including lower oil prices, soft industrial production and weak manufacturing PMI, increase the risk of another cut. This could push NOK to fresh lows. The country remains sensitive to oil prices, with Brent being the key focus amid renewed concerns surrounding the outlook for global balances. Low oil prices lead to a drop in investment in the oil sector, which affects oil-related businesses. Cost cuts and layoffs from the sector could put upward pressure in Norway’s unemployment rate, which increased to 3.1% in August from 2.8% in June, when their last meeting took place. Therefore, the Bank may cut interest rates one more time this year to support its economy.

• From Germany, we get the Ifo survey for September. The German ZEW survey showed a mixed picture for the Eurozone’s strongest economy: the expectations index declined once again from the previous month, while the moderate increase in the current situation index was not enough to reverse investors’ concerns about Germany’s weak recovery. We expect all the Ifo indices to nudge down further this month, adding to evidence that the German recovery is petering out.

• From Sweden, we get the economic tendency survey for September. The forecast is for the indicator to decrease a bit, which could weaken SEK somewhat.

• From the US, we get the durable goods orders for August. The headline figure is expected to fall, a turnaround from the month before, while durable goods excluding transportation equipment are estimated to decelerate somewhat. The focus is usually on the core figure where a positive surprise could suggest the possible start of a turnaround in business investment and could support the dollar. New home sales for August are also to be released. In line with the recent strong housing data, new home sales are expected to show a firming housing market. Initial jobless claims for the week ended Sept. 19 are also coming out.

• As for the speakers, ECB Executive Board member Peter Praet speaks. He spoke earlier in the week, and furthermore ECB head Draghi spoke yesterday, so this is not likely to be a market-moving event. Late in the European day, Fed Chair Janet Yellen speaks at the University of Massachusetts. She might emphasize that the majority of FOMC members – 13 out of 17 – expect to start normalizing rates this year, which could be USD-positive.

Currency Titles:

EUR/USD rebounds from the 1.1100 zone

GBP/USD plunges and hits support at 1.5220

USD/JPY continues within a triangle pattern

Gold rebounds and breaks above 1135

DAX consolidates above 9540

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Currencies Text:

• EUR/USD rebounded from near the 1.1100 (S1) support zone and hit resistance at the 1.1210 (R1) hurdle. The price structure on the 4-hour chart still suggests a short-term downtrend, but I see signs that the current rebound could continue, so I would switch my view to flat for now. The RSI edged higher and could now challenge its 50 line, while the MACD, although negative, has bottomed and crossed above its trigger line. These momentum signs amplify the case that the recovery from 1.1100 (S1) could continue for a while. A clear break above 1.1210 (R1) is likely to confirm that and could aim for the next resistance at 1.1265 (R2). As for the broader trend, given that EUR/USD is still trading below 1.1500, I would hold a neutral stance as far as the overall picture is concerned. I would like to see another move above 1.1500 before assuming that the overall outlook is back positive. On the downside, a break below the 1.0800 hurdle is the move that could shift the picture negative.

• Support: 1.1100 (S1), 1.1070 (S2), 1.1020 (S3)

• Resistance: 1.1210 (R1), 1.1265 (R2), 1.1335 (R3)

• GBP/USD collapsed further yesterday, falling below the key obstacle of 1.5330 (R2). The fall was stopped at 1.5220 (S1) and subsequently, the rate rebounded somewhat. The short-term trend remains negative in my view, but given our momentum signs, I would be careful of further upside, perhaps to challenge the 1.5290 (R1) barrier. A break above that line would set the stage for a test of the 1.5330 (R20 hurdle, as a resistance this time. The RSI has bottomed within its oversold territory and could move above 30 soon, while the MACD, although negative, shows signs of bottoming. Plotting the daily chart, I see that the rate is back below the 80 day exponential moving average. Given that Cable now oscillates above and below that average, which points sideways, I prefer to stay on the sidelines as far as the overall outlook is concerned.

• Support: 1.5220 (S1), 1.5165 (S2), 1.5100 (S3)

• Resistance: 1.5290 (R1), 1.5330 (R2), 1.5365 (R3)

• USD/JPY continued to trade within the triangle it’s been oscillating in since the 25th of August. As a result, I still consider the outlook of the pair to be flat. Yesterday, the rate hit resistance at 120.55 (R1) and then it retreated somewhat. I believe that the rate could continue lower for a while and perhaps challenge once again the 119.60 (S1) support line. However, a break below 118.90 (S2) is needed to signal the downside exit of the triangle. Something like that is likely to initially target the next support at 118.40 (S2). Our short-term momentum studies oscillate around their equilibrium barriers, supporting the flat near-term picture. As for the broader trend, the plunge on the 24th of August signaled the completion of a possible double top formation, which turned the medium-term outlook somewhat negative. As a result I would treat the recovery from the 116.00 zone as a corrective phase for now.

• Support: 119.60 (S1), 118.90 (S2), 118.40 (S3)

• Resistance: 120.55 (R1), 121.00 (R2), 121.75 (R3)

• Gold rebounded from slightly above the 1120 (S3) barrier on Wednesday and managed to break above the resistance (now turned into support) hurdle of 1135 (S1). Although it is possible for the positive move to continue towards 1142 (R1), I would change my stance to neutral for now. I prefer to see a clear break above 1142 (R1) before getting more confident on the upside. Such a move would confirm a forthcoming higher high and perhaps challenge the next resistance at 1148 (R2). On the downside, I prefer to see a clear dip below 1120 (S3) before assuming that the bears are in the front seat. As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance as far as the overall outlook is concerned as well.

• Support: 1135 (S1), 1128 (S2), 1120 (S3)

• Resistance: 1142 (R1), 1148 (R2), 1155 (R3)

• DAX futures opened below 9540 (S1) on Wednesday, but rebounded to trade in a consolidative mode slightly above that hurdle. The price structure still suggests a short-term downtrend in my view and therefore, I would expect another attempt below 9540 (S1) to see scope for extensions towards the 9315 (S2) support, defined by the low of the 24th of August. Our momentum indicators detect strong downside speed and the case for further declines. The RSI fell back below its 30 line, while the MACD lies below both its zero and signal lines. On the daily chart, the break below 10670 on the 20th of August has shifted the medium-term outlook to the downside, in my view. Therefore, I would treat the 24th of August – 9th of September recovery as a corrective phase and I would expect the index to extend its declines.

• Support: 9540 (S1), 9315 (S2), 9130 (S3)

• Resistance: 9780 (R1) 10025 (R2), 10170 (R3)

Benchmark Currency Rates:

http://shared.ironfx.com/Morning_Pictures_2015/September2015/September24/benchmark.JPG

Market Summary Url:

http://shared.ironfx.com/Morning_Pictures_2015/September2015/September24/table.JPG

currency tags:

EUR

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ForexYard's Commentaries Press review Forecast for Q1'16 -

IronFx 2015.09.25 05:50 #580

IronFX Daily Commentary | 25/09/15

Language English

• Dollar stronger after Yellen reaffirms intention to tighten The dollar was generally stronger this morning after Fed Chair Janet Yellen reaffirmed the central bank’s intention to tighten this year. Most of my colleagues and I anticipate that it will likely be appropriate to raise the target range for the federal funds rate sometime later this year, she said. This is nothing new; the documents accompanying the recent FOMC meeting showed that 13 out of the 17 Committee members expect to raise rates this year. The point is though that the focus in her talk was on why they were likely to tighten at the October or December meeting, rather than why they didn’t tighten at the September meeting. This is a slight change of emphasis and shifts the balance slightly. It also contrasts with the recent comments from ECB members, such as Wednesday’s comments by ECB President Draghi that the ECB stands ready to adjust the size, composition and duration of the QE program if they fail to hit their inflation target. So Yellen’s comments reinforced the monetary policy divergence and firmed the dollar up slightly.

• Central banks on the move: Norges Bank and Taiwan cut; Banco Central do Brasil threatens intervention Two more central banks cut rates yesterday, while the Brasilian central bank threatened FX intervention to support its currency.

• Norges Bank cut rates by 25 bps to a record low 0.75%, as we expected (but contrary to market expectations). The move is notable because Norway is one of the few countries where the central bank is hitting its inflation targets. Nonetheless the economy is suffering from the effects of low oil prices and so they not only acted, but said that they were likely to cut rates further. Norway already has the lowest real interest rates among the G10 countries. Its actions show the difficulties that commodity-based economies are experiencing now. It bodes ill for other commodity currencies, such as AUD and NZD, as well as the EM world, where many countries depend on commodity exports.

• Taiwan cut its policy rates by 12.5 bps. The country has been in deflation all this year, exports are declining, the Chinese economy is slowing and the renminbi depreciation has created spillover effects, it explained. This could turn out to be a widespread course of action among other EM countries, which will also be affected by the slowdown in global trade and the effects of the CNY devaluation.

• Brazil took another course. As I mentioned yesterday, BRL has been the worst performing currency in the world this year, including a 3% collapse on Wednesday. Yesterday, BCdB Gov. Tombini said the central bank could use all available instruments, including its FX reserves, to assure that the FX and rate markets function properly. BRL jumped 5.8% vs USD. The move reassured investors that central banks were likely to defend their currencies and helped to bring a better tone to risk assets and EM currencies.

• Personally though I doubt they can hold the line as the potential outflows are almost as big as their reserves or USD 370.6bn. Short-term foreign-currency debt is around USD 119bn, while foreign investors hold some USD 125bn of government debt and about USD 110bn in stocks. That amounts to some USD 354bn total More fundamentally, the BRL’s problems are political, not economic. Unless they can fix the political problem – highly unlikely – the outflows are likely to continue, in my view.

• Japan back in deflation…or not? How hot it is depends on what thermometer you use. Japan’s national CPI excluding fresh foods slipped back into deflation in August, falling 0.1% yoy. Bad? Not according to BoJ Gov. Kuroda! He emphasized that excluding energy, prices are up around 1.1% yoy. Nice! There seems to be a major disconnect between Gov. Kuroda and the market. According to a Bloomberg poll, nearly 40% of analysts expect the BoJ to increase its market stimulus next month; 60% expect it’ll happen by next April. But Gov. Kuroda gives no sign that he’s worried about it. Furthermore, research suggests that it’d be difficult for them to boost their bond-buying, because there just aren’t that many bonds left for them to buy! There’s likely to be some confusion and more volatility in JPY next month as these different visions clash.

• Today’s highlights: During the European day, Eurozone’s M3 money supply is forecast to have risen 5.3% yoy in August, unchanged in pace from the previous month. The 3-month moving average is expected to accelerate a bit if the forecast is met.

• In the US, the 3rd estimate of Q2 GDP is expected to confirm the 2nd estimate and show that the US economy expanded at a 3.7% qoq SAAR. Even though this is the final estimate and not that big a market mover, it could prove USD-positive as it will show a strong growth in Q2. Following the dovish stance by the Fed last week, strong US data are needed for the dollar to remain supported. The final University of Michigan consumer sentiment for September is also due to be released along with the surveys of 1-year and 5-to-10 year inflation expectations. The final Markit service-sector PMI for September is also coming out.

• As for the speakers, ECB Governing Council member Jens Weidmann, St. Louis President James Bullard, and Kansas City Fed President Esther George speak.

Currency Titles:

EUR/USD slides after hitting 1.1300

AUD/USD finds support slightly below 0.6950

GBP/JPY rebounds from slightly below the 181.80 line

Gold surges and hits 1155

DAX rebounds from slightly above 9315

Currencies Image Url:

http://shared.ironfx.com/Morning_Pictures_2015/September2015/September25/EURUSD_25Sep2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/September2015/September25/AUDUSD_25Sep2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/September2015/September25/GBPJPY_25Sep2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/September2015/September25/XAUUSD_25Sep2015.PNG

http://shared.ironfx.com/Morning_Pictures_2015/September2015/September25/DAX_25Sep2015.PNG

Currencies Text:

• EUR/USD traded higher on Thursday, but hit resistance at the 1.1300 (R3) barrier and the prior uptrend line taken from back the low of the 4th of September. Then, it retreated again and is currently trading below the 1.1185 (R1) barrier. The price structure on the 4-hour chart still suggests a short-term downtrend and therefore I would expect sellers to continue to push the rate lower, and perhaps challenge once again the 1.1100 (S1) zone. Our short-term oscillators support the case for further declines. The RSI fell back below its 50 line, while the MACD, already negative, has topped and could fall below its trigger line soon. In the bigger picture, as long as EUR/USD is trading between the 1.0800 key support and the psychological zone of 1.1500, I would hold a flat stance as far as the overall picture is concerned. I would like to see another move above 1.1500 before assuming that the overall outlook is back positive. On the downside, a break below the 1.0800 hurdle is the move that could shift the picture negative.

• Support: 1.1100 (S1), 1.1070 (S2), 1.1020 (S3)

• Resistance: 1.1185 (R1), 1.1230 (R2), 1.1300 (R3)

• AUD/USD traded lower on Thursday, but rebounded strongly after it hit support slightly below the 0.6950 (S1) barrier, marked by the low of the 10th of September. Nonetheless, the rebound was stopped at 0.7040 and then the rate retreated somewhat. The short-term outlook remains negative in my view, so I would treat the aforementioned rebound as a corrective move for now. I would expect sellers to eventually take control and aim for another test at 0.6950 (S1). A break below that support could open the way for the 0.6900 (S3) line, marked by the low of the 4th of September. Plotting the daily chart, I still see a major downtrend. As a result, I would consider the 7th - 18th of September advance as a corrective phase and I would expect AUD/USD to extend its declines in the foreseeable future.

• Support: 0.6950 (S1), 0.6900 (S2), 0.6775 (S3)

• Resistance: 0.7040 (R1), 0.7095 (R2), 0.7140 (R3)

• GBP/JPY continued trading lower on Thursday, but triggered some buy orders marginally below the 181.80 (S1) support line and rebounded to hit resistance at 183.20 (R1). On the 4-hour chart, the price structure still suggests a short-term downtrend and hence, I would expect the bears to take in charge again at some point and drive the rate lower. A break below the 181.80 (S1) support is likely to set the stage for extensions towards eh 180.30 (S2) obstacle, defined by the low of the 7th of September. But for now, I see the likelihood that the current corrective bounce may continue for a while. The RSI exited its below-30 zone, while the MACD has bottomed and could move above its signal line in the near future. On the daily chart, given the completion of a double top pattern on the 24th of August, I would consider the medium-term path to be cautiously negative. I would treat the 4th – 17th of September recovery as a corrective phase of that medium-term down path.

• Support: 181.80 (S1), 180.30 (S2), 180.00 (S3)

• Resistance: 183.20 (R1), 184.15 (R2), 185.00 (R3)

• Gold surged yesterday, breaking above the resistance (now turned into support) barrier of 1142 (S1). The rally was stopped slightly above the 1155 (R1) obstacle and then the metal retreated. The break above 1142 (S1) confirmed a forthcoming higher high on the 4-hour chart, and this keeps the short-term picture positive, in my opinion. However, taking a look at our short-term oscillators, I believe that the current setback is likely to continue for a while before the bulls take the reins again. The RSI exited its above-70 zone and is now pointing down, while the MACD, although positive, shows signs of topping and could fall below its trigger line soon. As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance as far as the overall outlook is concerned.

• Support: 1142 (S1), 1135 (S2), 1128 (S3)

• Resistance: 1155 (R1), 1164 (R2), 1170 (R3)

• DAX futures slid yesterday, falling below the support (now turned into resistance) level of 9540 (R1). Nevertheless, the decline fell short of reaching the 9315 (S1) hurdle, marked by the low of the 24th of August, and then the index rebounded. The short-term trend remains to the downside in my view, but taking into account our short-term momentum indicators, I would expect the upside corrective bounce to continue for a while, perhaps above the 9540 (R1) obstacle. The RSI has bottomed within its oversold territory, crossed above its 30 line and is now pointing up, while the MACD, although negative, shows signs of bottoming and could move above its trigger any time soon. A clear break above 9540 (R1) is likely to confirm further upside correction and perhaps aim for the next resistance at 9780 (R2). On the daily chart, the break below 10670 on the 20th of August has shifted the medium-term outlook to the downside, in my view. Therefore, I would treat the 24th of August – 9th of September recovery as a corrective phase and I would expect the index to extend its declines in the foreseeable future.

• Support: 9315 (S1), 9130 (S2), 9000 (S3)

• Resistance: 9540 (R1), 9780 (R2), 10025 (R3)

Benchmark Currency Rates:

http://shared.ironfx.com/Morning_Pictures_2015/September2015/September25/benchmark.JPG

Market Summary Url:

http://shared.ironfx.com/Morning_Pictures_2015/September2015/September25/table.JPG

currency tags:

EUR

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ForexYard's Commentaries EUR/USD: Trading The ECB 20 ways to trade

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