Technical and Market Analysis by Vistabrokers - page 8
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Vista Brokers:US Jobless Claims Reached15-yearLow
On Thursday it became known that one of the key indicators of the US labor market showed the best results since April 2000. For the week ending on January 24, the number of jobless claims fell by 43 000 to 265 000. Most experts were expected a decline to only 300,000.
These data provided the yet another confirmation of the US labor market rapid recovering, and supported expectations that the Fed would start to raise interest rates later this year.
However, Vista Brokers analysts say that yesterday the market took the strong data on jobless claims in stride. The dollar has not received much support, firstly because of the fact that this statistics is strongly influenced by seasonality. And secondly, because market participants expected data on home sales in the United States. As a result, the euro even rose against the dollar.
By the way, data on pending home sales did not make investors happy. In December, the indicator decreased by 3.7% against the expected growth by 0.6%. It is worth noting that the level of sales is still quite high, and indeed against other major world economies the United States looks like an oasis of stability.
Actions of the central bank of Switzerland and the European Central Bank have a strong influence on the European region. Regulators of other countries are forced to cut rates to prevent the strong growth of their national currencies against the euro. In particular, the central bank of Denmark for the third time in the last two weeks has lowered its deposit rate.
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Market Pulse 30.01
The last day of the trading week is full of statistics. In particular, the United States will released some important data on the 4th quarter of last year. In the euro zone the data on the consumer price index and the unemployment rate, which may affect the dynamics of the market, will be released.
7:00 ** Retail Sales - December (Germany)
Moderate impact on the market (EUR). The growth of the indicator reflects higher consumer activity that can support the single currency. In December analysts expect the indicator's growth.
9:30 ** Net Lending to Individuals - December (UK)
9:30 ** Mortgage Approvals - December (UK)
Moderate impact on the market (GPB). In December, analysts expect a slight slowdown in growth of loans to individuals, reflecting the deterioration in lending. It promises a drop in consumer spending in the future.
10:00 *** Consumer Price Index Flash Estimate - January (euro zone)
10:00 ** Flash Core CPI - January (euro zone)
10:00 ** Unemployment Rate - December (euro zone)
Strong impact on the market (EUR). Consumer price index is an important indicator for the market and a reference point for the central bank. Inflation slowing in January can be a factor of pressure for the euro on Friday. Experts predict that the unemployment rate will leave the same - 11.5%.
13:30 *** Advance GDP - Q4 (USA)
13:30 ** Advance GDP Price Index - Q4 (USA)
13:30 ** Personal Consumption (First Release) - Q4 (USA)
13:30 ** Core Personal Consumption Expenditure (First Release) - Q4 (USA)
13:30 ** Employment Cost Index - Q4 (USA)
Strong impact on the market (USD). In general, analysts expect the data to be positive, which can support the dollar. According to forecasts, the growth of the US economy has slowed down in the 4th quarter compared to the 3d, but the growth still remains stable.
14:45 ** Chicago PMI - January (USA)
14:45 ** Revised UoM Consumer Sentiment - January (USA)
Moderate impact on the market (USD). Analysts expect that Chicago PMI index in January has decreased, but the rate is stable at above 50, which means the growth.
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GOLD. What'sthenext?
Now we have a complete set - the graphic pattern "head and shoulders" has realized fulfilling the minimum program for the correction of all the upward movement in January. Is this the end? It is likely that the upward movement still may, but it is no need to hurry with purchases until we will receive a confirmation from for one thing computer indicators. On the other hand, the reached Fibo level may be only an intermediate goal of reducing, and we should be ready for this because there are other levels of Fibonacci support, as well as the trend line, and this is a very different purpose. Today's data on the dynamics of the American economy in the 4th quarter may influence on the dynamics of quotations, because if situation in the second world's economy is not as good as expected, gold will get its support amid investors' run in assets-havens such as gold.
We fix a result of the short position and wait for one of the following conditions. In the case of the breakthrough of yesterday's extremum of the decline wave at 1252, we will open the order to sell with the goal 1220, where is the 61.8% Fibonacci correction of the January increase, as well as the line of a medium-term uptrend support. We can take into account the growth scenario after receiving confirmation from the indicators, such as the intersection of a price with moving averages values. The graph shows moving averages with 25 period (shift 5), and with 3 period (3 shift).
USD/JPY. FailedExpectations
On the last meeting FOMC leaders got off with platitudes and it was expected, but, if so, what can we do without a fundamental mover?.. The first thing that comes to mind is to use all the possibilities in working with support and resistance levels on the rebound in fairly long time sideways, which replaced the wave of growth after the correction 38.2% of the growth in October-December 2014. Seemingly a very "soft" monetary policy in Japan and a quite "hard" in the United States should contribute to a further growth. Thus, it seems that reached levels generally reflect the expectations of the market and we need something else.
Today's publication of preliminary data on US GDP in the 4th quarter can become this "something else". As expected, after rising by 5% in the 3rd quarter, this time we will see an increase by 3%. Exceeding of this indicator which is already embedded in prices will give an impetus to further growth and the achievement of upper lateral border of the current channel, and then the upper limit of the above-mentioned "triangle". If bulls have enough passion the main goal may be the Fibonacci extension level from the January growth at 120.69.
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Vista Brokers: USD/JPYRemains withinNarrowPriceRange
From Thursday to Friday Japanhas publisheda large portion of statistics, and the data were highly controversial.
The consumer price index in December rose slightly larger than analystshad expected- by 2.4% vs. 2.3%, and this is probably due to the increase in sales tax. Inflation excluding volatile food prices rose by 2.5% vs. 2.6%.
Production in Japan is slowly but surely recovering. In December,theindustrial output in the country increased by 1%momand by 0.3%yoy, whichisslightly less thanit wasexpected. Exports to the USAgrew due to the increased stability of the US economy.
Vista Brokersanalysts note that weak consumer spending and low inflation make the achievement ofinflation target difficult forthe Bank of Japan. Although the decline in oil prices canbe a positive factor for the country, because Japanis exportingalmost all of the fuel.
Labor market data came out positive. In December, the unemployment rate in Japan fell to the lowest in more than 15 years - 3.4%. The number of employees has grown, including both employed in full-time and employed part-time. Despite this, the income of households in September rose by 2.1% compared tothelast year, when adjusted for inflation corresponds to a decline in real income by 0.8%.
Analysts say that the yen against the dollar for the second week in a rowistrading ina tightrange of 117.3-118.8.The pair can leave theseboundariesonly due tothe influence of suchafactor as different vectors of monetary policyofthe Fed and the Bank of Japan.TheJapanese regulator continues the program of quantitative easing, whilethe Fed isaimed at tightening monetary policy. Against this background, USD/JPY has all the prerequisites for the restoration of the uptrend.
Meanwhile, the Bank of Japaniswaiting. ThePrime Minister Shinzo Abe fears that newstimulationmeasures can lead to excessive reduction of the national currency.
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Vista Brokers:Aussie Fell to 5.5YearsMinimum
It is expected that the next week the Reserve Bank of Australia will cut interest rates. It puts pressure on the Aussie, and on the morrow of it, on the other currencies of commodity producers.
Vista Brokers analysts note that the last trading day the currency has finished at $ 0.7794. From the beginning of the year, the Australian dollar has fallen by 4.7%, and this is the third consecutive monthly fall.
The probability that the central bank of Australia will really cut interest rates on the next meeting on 3 February is very high. Futures on bonds imply a 70 percent probability of such a scenario.
Morgan Stanley has already advised its clients to sell the Australian dollar against the Japanese yen at 85.00 with a stop-loss order placed at 94.00.
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Vista Brokers: RisingOil Hardly Supported Loonie
The Canadian dollar is increasingly weak against the US currency. After January 21, when the Bank of Canada has unexpectedly cut interest rates, the country's national currency fell to six-year low, and since then is gradually losing ground.
Vista Brokers analysts note that last Friday, the Canadian dollar has gotten a little support amid rising oil prices. March WTI futures on the Comex per day increased by 8.3%, to 48.24 dollars per barrel. Brent futures in London rose by 6.6%, to 52.50 dollars per barrel. Apparently, the reason of oil rising was the data on declining production in the United States that has the potential to reduce the amount of produced oil. Also, many market participants have closed short positions on oil futures on the last day of the month.
Let's go back to the Canadian dollar - at the end of the last week, it was worth 79.87 cents, and some experts expect a further decline even to 75 cents. On Friday, the International Monetary Fund gave some comments on the situation in Canada. According to the IMF, the main inland risk for the country is a possible "shock in the housing market", and the external one is tightening of the Fed monetary policy. Factors affecting the Canadian economy are the economic slowdown in the world and the decline in oil prices.
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Market Pulse 02.02
On Monday, some European countries and Canada will publish data on the PMI index for the manufacturing sector. During the US trading session, the USA will publish the manufacturing index ISM.
8:15 **Manufacturing PMI- January (Spain)
8:45 ** Manufacturing PMI - January (Italy)
8:50 ** Manufacturing PMI - January (France)
8:55 ** Manufacturing PMI - January (Germany)
9:00 ** Manufacturing PMI - January (euro zone)
Moderate impact on the market (EUR). According to analysts, data on the index of purchasing managers in manufacturing in substantially all euro zone countries in January will be released at the level of the previous month. Growth or overachievement of the indicator may be favorable for the single currency.
9:30 *** Manufacturing PMI - January (UK)
Moderate impact on the market (GPB). According to analysts, in January, the index of purchasing managers in manufacturing in the UK rose slightly. Growth or overachievement of the indicator may be favorable for the pound.
13:30 ** Core PCE Price Index - December (US)
13:30 ** Personal Spending - December (US)
13:30 ** Personal Consumption Expenditure Deflator - December (US)
Moderate impact on the market (USD). Personalconsumptionexpendituredeflator shows the annual growth rate of prices for consume goods and services for Americans. The Fed has long been tracking this particular indicator as inflation.
15:00 *** ISM Manufacturing PMI - January (USA)
Strong impact on the market (USD). It is expected that in January the index has shown a slight decline. Growth or overachievement of the indicator may be favorable for the currency.
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AUD / USD.Waiting for Support onSupport Level
All seemingly goes on - trades continue to be maintained in the long-term price channel, which started back in 2011, when the pair had reached a historical high amid rising rates of the Australian Central Bank. And this despite the fact that most all the major economies of the world felt themselves not so well, being far from the tightening of monetary policy. Aussie enjoyed the favor of investors, attracting large amounts of money in the economy from global investors. However, then the RBA seemed to realize the risks of such a high rate of national currency, and in the period of 2011-2013 reduced the rate eight times, bringing its level to a historic low of 2.5%.
Currently the price has reached and even locally overcomed the channel line of the mentioned trend. At that point another support level was reached, - the level of the medium-term trend, and at the same correctional Fibo level 61.8% of growth during 2008-2011. Given the context, it is necessary to pay special attention to the current situation and be prepared for a variety of scenarios. Thus, in the early hours of the Asian trading session on Tuesday many questions can be solved by giving the final vector to the pair movement. It will be the Reserve Bank of Australia meeting and it can bring some surprises. The regulator can draw attention to the absence of inflationary risks and on recent actions of some world's central banks for monetary policy easing, and hint at the possibility of similar stepsfrom the RBA. It is recommended to wait for the event before taking positive steps in accordance with the reaction of the market.
EUR/USD. Does Everybody Want to Sell Euro?..
Once again market players have chosen to close their eyes to facts which do not fit their view of the world, because forecasts are relentless - according to economists the dollar in FOREX must continue to increase. There are many reasons of it: a stability of the US economy, growing much faster than other developed countries (about 5% y/y) and a relatively stable permanent reduction in the unemployment rate and the program of quantitative easing which has already become a part of a history. Thus, the ECB has only announced its QE, whereas in Japan, all in full swing. It is clear that all of this is reflected in the growth of government US Treasury bonds yields. Although they are now on historically meager levels 1.9% (10-year), but in comparison with other ones US bonds are in the lead. And here is the eternal question again – is everything we have talked about taken into account in current prices? Only the time will give the answer, and now we see the downward trend at all levels, including the medium-to-date, on which we, first of all, will make an impression on the future prospects for the major currency pair.
Price is currently located at 1.13, where is the correction Fibo level 38.2% after a rebound from the lows over the past 11 years. The ATR with period 21 shows volatility about 136 points. Such a value has been noticed for the last time at the junction of 2011-2012, during the height of the European debt crisis. In general, we have everything to work to increase with the aim 1.1620 with all certain conditions: trend line break, and (that is very desirable) receiving a portion of disappointing US data. Such a data may be the index of business activity in the manufacturing sector of the US economy publication by the Institute for Supply Management (ISM) - expected to decline to 54.9 points from 55.5. In turn, good data may mark a new wave of the pair falling (especially given the general feeling in favor of the dollar) to the area of 1.1096. For this price will have to pass the level 1.1261.
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Vista Brokers: DollarTakes a Lead from Weak GDP
On Monday, the yen has reached a 2-week high against the dollar amid commodity currencies falling. Concerns about the economic situation in China put pressure on these currencies.
Vista Brokers analysts point out that today, in early trade, the dollar has fallen against the Japanese currency to a minimum from January 16 - 116.64 yen. For comparison, at the close of trading on Friday, USD/JPY was trading at 117.52.
According to analysts, the dollar now looks vulnerable against the yen and it is also due to the weak GDP data for the 4th quarter, published in the US on Friday. US economic growth was lower than the market had expected – 2.6% versus 3.0%. Today, investors will wait for the data on ISM manufacturing index in the United States which can attest to the weakness of the dollar or help greenback to regain lost ground. So far, analysts expect the index to decline in January.
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AUD / USD. And weGo to...South
So, our wildest expectations were fulfilled - the Reserve Bank of Australia had decided to decline the interest rate to a new historic low (2.25%), referring to a low inflation in the context of energy prices fall, as well as, to actions of other CB, which are not hesitate to pursue an aggressive policy incentives. "Why they can, and we can not?" - the RBA thought and lowered the rate, also mentioning just in case about still overvalued Aussie.
Thus, the path continues to the south, and now we can already say with certainty about the breakout of the Fibonacci correction 61.8% of the growth in 2008-2011 (and this is important), and the fact that the dynamics of the pair in all measurements is within the clearly defined price channel directed to the south.
Anyway, despite receiving an iron argument in favor of selling the pair, the technical picture forces us to make informed decisions at all stages of the movement. So, at the moment we state the formal achievement of the channel in the medium-term and short-term trend, and here classics of the genre requires fixing the intermediate results of the transaction, and than, when the correction to the area of the resistance line comes, to resume work in the trend.
GOLD. Wait aLittleLonger
The gold has achieved our first identified goals (which may be counted as the minimum program executio in respect of correction under the figure «Head & Shoulders») which gives a reason to look for the point to enter a long position once all the necessary prerequisites appear. Also note that the price has tested the level of support fit in with a correctional Fibo level 38.2% of the growth in first two-thirds of January. Now, after a quite conspicuous and suitable as a primary bounce up was formed, this is the only thing to do.
So, to be considered that the correction is over, we need a break of the resistance line, which is connecting gradually lowering highs, to confirm the presence of the uptrend by formation of gradually highering lows and highs. In other words, closing the day above $ 1285 will be seen as an opportunity to purchase with very ambitious goals, the fixation of which requires further analysis and will depend on many factors coming permanently.
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