Technical and Market Analysis by Vistabrokers - page 17
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Market Pulse 27.02
On Friday a trading day is again filled with fundamental data. The most important will be inflation data in Germany and the GDP changing in the United States. In the USA will also be published osome other statistics that may have an impact on the market.
7:45 **ConsumerSpending - January (France)
7:45 ** Producer Prices - January (France)
Moderate impact on the market (EUR). Forecasts for both indices are not too optimistic. Analysts expect that consumer spending in France has fallen, and the producer price index has declined again.
8:00 ** Flash Consumer Price Index - February (Spain)
Moderate impact on the market (EUR). It is expected that in February the slowdown in inflation in Spain was 1.5%, after the January index also fell by 1.3%. Decline in consumer prices in one of the largest economies of the euro area indicates its moderation.
13:00 *** Prelim Consumer Price Index - February (Germany)
13:00 *** Prelim Consumer Price Index - EU Harmonised - February (Germany)
Strong impact on the market (EUR). Forecasts for both indices are not too optimistic, although when compared to other euro zone economies, the situation in Germany with inflation is not critical. It is expected that in February figures have risen slightly mom and have fallen yoy.
13:30 *** GDP Second Release - Q4 (USA)
13:30 ** Prelim GDP Price Index - Q4 (USA)
13:30 ** Personal Consumption (Second Release) - Q4 (USA)
13:30 ** Core Personal Consumption Expenditure (Second Release) - Q4 (USA)
Strong impact on the market (USD). Preliminary data on changes in US GDP in the 4th quarter of 2014 showed an increase of 2.6%, while analysts were expecting 3%, so that in early February, the market has been disappointed by the data. Now it is expected that GDP will be revised down - from 2.6% to 2.1%.
14:45 ** Chicago PMI - February (USA)
Moderate impact on the market (USD). It is expected that the index of business activity in the Chicago area fell slightly in February, but it does not cancel the fact that the index is at a high enough level.
15:00 ** Pending Home Sales - February (USA)
15:00 ** Revised UoM Consumer Sentiment - February (USA)
Moderate impact on the market (USD). Forecasts for both indices are positive enough. Recall that in recent weeks the US housing market has surprised investors, showing disappointing data or far exceeding forecasts.
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GOLD. No Need to Hurry on theEdgeofBreakthrough
Some eloquent indications of a possible upward movement has appeared at the gold market after the bears were not able to push a very important support line. Today quotes show signs of buyers' activity. They have finally succeeded to overcome a resistance line of a descending trend in which bids gold was traded for a month. Whether a breakthrough happens in fact, will show today's closing price, and it is better to wait for another day and the closing price above the resistance line.
Currently we do not recommend to perform active actions in the market, and short positions (if any) should be closed. We need additional arguments, one of which (in addition to the above-mentioned closing of few days outside the downtrend channel) can be a) the formation of a clear upward impulse; b) its subsequent correction; c) and then the breakthrough of its extremum. This sequence will give us successively higher lows and highs, which is the essence of the uptrend.
GBP / USD.Daily Routine of Buyers...
This week will be full of macroeconomic publications and it means new trading opportunities for us. So, today bears will tickle nerves to those who continue to buy from a support line formed in the last few weeks short-term uptrend, because as early as 9.30 GMT an independent research agency Markit will release data on business activity in the UK manufacturing sector. As practice shows, this leading indicator can predict changes in the real sector, which means that the market will closely follow the release of the news. It is likely that the impulse will be relevant until the Bank of England will announce its decision on the next Monetary Policy meeting on Thursday.
The 1.5380 mark, corresponding to the nearest local minimum as well as the 1.5330 mark are important support levels, possible breakthrough of which will give sellers an opportunity to seize the initiative. Thus, the trend remains upward, and the price is right on the trend line. It is recommended to decide after the publication of mentioned statistics, depending on the subsequent dynamics. Thus, we should sell from the 1.5330 level breakthrough and to buy if the price will move from the support.
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Vista Brokers: US GDP in 4thQuarterRoseMore thanExpected
On Friday morning the euro rose slightly against the dollar. However, it will be very difficult for the single currency to return to its earlier levels. Vista Brokers analysts reminde that on Thursday the US dollar has risen sharply against its major competitors, when the inflation data and durable goods in the USA came out better than expected. The current fundamental picture is not supportive for the euro, which is suffering because of the uncertainty in Greece and numerous signals of slowing economy of the euro zone.
While on Friday there were some positive for the single currency data, but at the general background investors did not pay much attention to it. Thus, in Germany, the preliminary index of consumer prices in February has risen by 0.9% against the expected 0.6% on a monthly basis and by 0.1% against 0.3% in annual terms. This is good news for the euro zone's largest economy, where a month earlier slowdown in inflation was 1.1% and 0.4%, respectively. But successes of Germany do not allow to forget problems of the euro zone.
In the afternoon, the dollar began to grow against the euro again - investors awaited revised data on the US GDP, and these data came out stronger than forecast. Thus, the US GDP growth in Q4 2014 was 2.2% quarterly and 2.4% year on year against the expected 2.1%. This strengthened the already strong enough faith of market participants that the Fed will raise interest rates this year.
At the end of trading the EUR / USD peaked 119.80 and traded at 119.56, up 0.13% during the day. Note that the dollar index finished February with growth, and this is the eighth consecutive month when the index is increasing, which was not observed since 2004.
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Vista Brokers: China'sCentralBankUnexpectedlyCut itsRates
On Saturday, it was reported that the Chinese central bank has decided to support the economic growth and inflation, lowering interest rates: a key rate by 0.25 to 5.35% and the deposit one – by 0.25 to 2.5%. Vista Brokers analysts say that markets were expecting monetary policy easing from the Central Bank of China, but a little later, and remind us that Chinese controller has already become the 21st bank to adopt new measures easing in January and February 2015.
In the accompanying statement, the central bank said that the rate cut was a necessary measure, given the fall in global commodity prices. The bank's decision on Monday support commodity markets, in particular copper. At the time of writing, the metal is traded on the New York Stock Exchange, Comex for 2,701 dollars per pound (May delivery), up from the opening of trading by 0.35%. Recall that China is the world's largest consumer of copper.
Also, the central bank noted problems in the property market, the growth in consumer prices which is minimum for the last 5 years, and a high debt levels. Markets expect the government can reduce the forecast for economic growth in 2015 to 7% after 7.4% growth in 2014 at a party meeting on March 5.
Analysts also note that at the weekend the data on Manufacturing PMI index was released in China, and it has grown up in February a little more than it was expected, but still remained in the negative zone. Thus, the index is at around 49.9 points, while only values above 50 are considered to be growth.
Recall that the last time the People's Bank of China cut interest rates not so long ago - in November 2014, but this decline have had little impact on the economy, and even then experts said that easing of monetary policy will continue. Now we can also assume that the Central Bank will go along this path in the future. The next step will likely be declining in banks' reserve requirements.
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Market Pulse 02.03
Monday's economic calendar is quite full. In many European countries, China and Canada the manufacturing PMI index will be published and in the US - the same ISM manufacturing PMI index. There will be some interest data in consumer price index flash estimate and the unemployment rate in the euro zone.
8:15 **Manufacturing PMI - February (Spain)
8:45 **Manufacturing PMI - February (Italy)
8:50 **Manufacturing PMI - February (France)
8:55 **Manufacturing PMI - February (Germany)
9:00 **Manufacturing PMI - February (euro zone)
Moderate impact on the market (EUR). Analysts expect that the index of purchasing managers in the manufacturing sector, will mainly remain at the level of the previous month (in France, Germany, the euro zone) or slightly increase (in Spain, Italy).
9:30 ***Manufacturing PMI - February (UK)
9:30 ** Net Lending to Individuals - January (UK)
9:30 *** Mortgage Approvals - January (UK)
Strong impact on the market (GPB). In addition to data on the PMI index the statistics in lending, including mortgage approvals will be interesting. Growth in lending reflects a possible increase in consumer spending in the future, and the growth of mortgage lending shows the health of the housing market. Strong data on the PMI index and the growth of credit activity can support the pound.
10:00 *** Consumer Price Index Flash Estimate - February (euro zone)
10:00 ** Flash Core CPI - February (euro zone)
10:00 ** UnemploymentRate - February (euro zone)
Strong impact on the market (EUR). The greatest attention will draw the consumerpriceindexflashestimate. It is expected that in February this index will show a decline of 0.5% after falling 0.6% in January, but there may be surprises. The unemployment rate is still at a very high level, and it is expected that this level in January will remain unchanged.
10:00 ** Annual Gross Domestic Product - 2014 (Italy)
Moderate impact on the market (EUR). It is expected that Italy's economy during the last year has fallen by 0.4%. This is less than the rate of 2013 - 1.9%, but it will hardly increase the optimism in common currency.
13:30 ** Core PCE Price Index - January (USA)
13:30 ** Personal Spending - January (USA)
13:30 ** Personal Consumption Expenditure Deflator - January (USA)
Moderate impact on the market (USD). The growth of private consumption expenditure tells us about the health of the economy, but we do not see a persistent increase in these direction yet, as well as in the growth of wages.
14:30 ** RBC Manufacturing PMI (s.a.) - February (Canada)
Moderate impact on the market (CAD). Manufacturing PMI index shows an improvement or deterioration in comparison with the previous month. Growth or exceeded forecast is favorable for the currency.
15:00 *** ISM Manufacturing PMI - February (USA)
Strong impact on the market (USD). Analysts expect a slight reduction of the index in February compared with the previous month, but the rate is still at a high level.
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USD / JPY. Coincidenceor not?
USD / JPY moves gradually start to look aesthetic within boundaries of the upward channel formed in last couple of weeks. We can also name the other, more far-reaching trend, the direction of which is similar and it is worth remembering that currently this trend is useful only for its vector. It is clearly evident in recent years that in the way of growth of the yen Japanese officials choose the right time and drop bulls from the top. This expression is figurative, but it is the real fact that at the approach of quotations to certain price levels, a representative of Japanese ruling elite suddenly appears with a particular statement. So today, the yen strengthened significantly after approaching of the upper channel boundary when Etsuro Honda, the economic adviser to Prime Minister Kuroda, expressed doubts about the feasibility of further quantitative easing volume increasing. He motivated this with the normal course of affairs regarding the achievement of the inflation rate of 2%. Honda also pointed out that the current rate of the yen is at the edge of the comfort zone. The market's reaction was appropriate – quotes started to reduce.
It is recommended to consider short positions in order to achieve the lower boundary of the rising channel. Stop order is at 120.26.
AUD / USD. IsMarketReady forCorrection?
The pair continues to trade in the long-term and medium-term downward price channel. The latter rebound from the trend line was took place only a few days ago. Recall that, according to the results of the February RBA meeting, it was decided to reduce the rate for the first time since August 2013 to 2.25%, and it has led quotes to the lowest level since May 2009. So today, the another rate cut was expected, but the RBA did not go to new stimulation measures. Basic argument was a need to limit the growth in property prices. Overheating in the housing market could adversely affect the economic recovery of the Green continent. Amid this AUD / USD has increased significantly, threatening to retest the above-mentioned trend line.
It is too early to talk about it, but it should be noted that the breakthrough of the local high at 0.7910 will give a technical basis for the development of full correction of all decline. If to theorize further, the first target of this correction may be the level of 0.8330, where is the Fibo level of 38.2% of the descending wave in July 2014 - February 2015.
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Vista Borkers: Euro Tested Fresh Lows
On Monday, the single currency has rebounded slightly against the dollar amid quite positive statistics. Thus, in Italy and Germany manufacturing PMI index rose more than analysts had expected. Consumerpriceindexflashestimate in the euro zone showed a decline of 0.3% against a more pessimistic forecast of 0.5%. The unemployment rate in the region in January unexpectedly fell by 0.1% instead of expected growth by the same amount.
However, as Vista Borkers analysts say, positive statistics did not make much impression on investors, and a recovery has stopped at about 1.1250. Market participants were waiting for strong data on the ISM manufacturing index in the US, and although these expectations were not met (index came out worse than forecast), it must be admitted that the rate is still at a high level. In January, the index was at 53.5, and in February fell to 52.9 vs. 53.4. A value above 50 is considered to be the growth of the industry.
It is worth noting that after the release of ISM data two world's largest bank have announced a reduction of forecasts for the US GDP growth in the first quarter of 2015. Goldman Sachs cut its forecast from 2.7% to 2.5%, arguing it with an unexpected decline in the cost of construction index and ISM data. Barclays also lowered the forecast for the 1st quarter from 2.1% to 1.9%.
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Vista Brokers: RBAKeptRatesUnchanged
On Tuesday, it was reported that the Reserve Bank of Australiaon on its meeting has decided to keep the interest rate at the same level - 2.25%, while the market has been expecting another decrease of it. Vista Brokers analysts point out that the absence of new stimulation measures led to a rise of the Australian dollar in the foreign exchange market. Immediately after the publication of the RBA decision, AUD / USD pair rose by 0.6%, exceeding the 0.78 level.
Why did the Reserve Bank of Australia postponed the lowering of the rates which was expected by many of analysts? In anticipation of the publication of the meeting's decision their forecasts about the rate decline by 0.25% voiced Goldman Sachs, Morgan Stanley, Bank of America, Westpac.
They named such reasons as decline in world commodity prices, the highest since 2002 unemployment rate, a low level of confidence in the economy of consumers and businesses, the economic slowdown in China, which is the main buyer of Australian raw materials.
The arguments are sufficient, but nonetheless, the RBA decided to keep the rate. In the accompanying statement, the regulator noted the following: it is expected that economic growth will be weak, as a domestic demand; further depreciation of the national currency is necessary for balanced growth in the future; prospects for a rate cut will be discussed at further meetings. Thus, the RBA did not lower the rate, but showed that probably do so in the near future in order to stimulate the economy.
The head of the Reserve Bank Governor Glenn Stevens said that after the last meeting rate has already been reduced, at the moment it is advisable to leave it at that level. "Further easing of policy may be appropriate over the period ahead. The Board will further assess the case for such action at forthcoming meetings"- he said.
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Vista Brokers: Oil is above $60 per barrel
On Tuesday morning, April futures for Brent crude rose by 1.37% to $ 61 per barrel during London trading. Meanwhile, in New York April futures for WTI grew by 0.75% to $ 51.91 per barrel.
Vista Brokers analysts note that the growth factor for oil was the information from Baker Hughes that the number of active rigs in the US last week fell to its lowest level since 2011 - 986. However, there are still so many factors of pressures on oil. Thus, the US Department of Energy expects that in 2015 the growth of oil production in the country will be 7.8%. It will be produced 9.3 million barrels per day. In 2016, daily production could grow to 9.52 million barrels.
Note also that in February the volume of oil production in Saudi Arabia increased by 130 thousand barrels per day to 9.85 million barrels - a maximum since 2013.
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Market Pulse 03.03
Today Australia has already published data on building approvals, and the Reserve Bank has released its decision on interest rates, together with the accompanying statement. The RBA decided to leave the rate unchanged. Today interesting statistics will be also released in Canada and the UK.
7:00 ** Retail Sales - January (Germany)
Moderate impact on the market (EUR). Analysts expect that retail sales in January have risen. Growth of this index reflects higher consumer activity that strengthens the currency.
8:00 ** Unemployment Change - February (Spain)
Moderate impact on the market (EUR). One of the most important indicators showing the change in the number of unemployed people during the past month. The rate growth reflects negative processes, although in February it is expected a much smaller increase of the index than in the previous month.
9:30 *** Construction PMI - February (UK)
Strong impact on the market (GPB). The index of purchasing managers in the construction industry. Shows the improvement or deterioration compared with the previous month. The situation in the construction industry in Britain is always closely watched by the market.
10:00 ** Treasury Select Committee Hearings - March (UK)
10:00 *** BOE Governor Mark Carney Speaks - March (UK)
Strong impact on the market (GPB). Market participants will closely monitor statements of Mark Carney looking for some hints at the future Bank of England strategy in respect of monetary policy. Optimistic signals can enhance investors' hopes that the British regulator will raise rates after the Fed.
13:30 *** Gross Domestic Product - December (Canada)
13:30 *** Quarterly Gross Domestic Product Annualized - Q4 (Canada)
13:30 ** Raw Materials Price Index - January (Canada)
Strong impact on the market (CAD). Analysts expect that in December, Canada's economy has grown by 0.1%. It's quite a bit, but compared with the value of November, when GDP has fallen by 0.2%, it is a better result. During the 4th quarter of 2014, experts expect growth of 2%.
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