Technical and Market Analysis by Vistabrokers - page 19
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Vista Brokers: Markets Waitfor US LaborMarket Data
Today during the American session will be released statistics that can influence the dynamics of major currency pairs, as well as affect stock markets. These are data on unemployment rate and non-farm payrolls in the US. Vista Brokers analysts note that the strong data would strengthen confidence regarding the Fed rates hike in June or even earlier.
It is expected that in February, the US non-farm payrolls rose by 240,000 after rising 257,000 in January. Thus, February may be the 12th consecutive month, when the number of jobs is increasing by more than 200,000 monthly, and it will be the longest period of growth since 1994.
In addition, experts expect a decline in the unemployment rate from 5.7% to 5.6%, as well as a small increase in the average wage: 0.2% after rising 0.5% in January. Recall that recently the largest US companies said that this year they will increase wages of their employees. So, the biggest retailer Wall-Mart will provide more than one billion dollars to raise wages of 40% employees. Other companies, like TJX Cos Inc and health insurer Aetna, have also announced wage increases.
Given all these facts, the US labor market looks really healthy, and it increases the likelihood of rising interest rates by the Fed. Analysts say that if today's data will be even more than expected, market participants can move their expectations of growth rates on May. The dollar may be able to gain versus all counterparts.
Expectations of strong data today have supported Asian stock indexes. The MSCI's broadest index of Asia-Pacific shares outside Japan grew up during the Asian session 0.4%. Japan's Nikkei gained 1% amid the yen falling against the dollar.
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Market Pulse 06.03
7:00 ** Industrial Production - January (Germany)
Moderate impact on the market (EUR). Industrial production gives a small contribution to GDP, but it allows to predict the dynamics of interest rates. Therefore, the growth or exceeding the forecast may be favorable for the currency. Analysts expect a small growth of the indicator on a monthly basis.
8:15 ** Consumer Price Index - February (Switzerland)
Moderate impact on the market (CHF). Experts expect that the growth of the consumer price index on a monthly basis in February was 0.1% after falling 0.4% in January. Although it is unlikely to give support to the Swiss franc - the inflation is expected to fall by 0.6%.
10:00 ** Revised GDP - Q4 (euro zone)
10:00 ** Gross Fixed Capital - Q4 (euro zone)
10:00 ** Household Consumption - Q4 (euro zone)
Moderate impact on the market (EUR). According to forecasts, the GDP growth in the 4th quarter amounted to 0.3% mom and 0.9% yoy. The grossfixedcapital is also the important business climate indicator.
13:30 *** Building Permits - January (Canada)
13:30 *** Trade Balance - January (Canada)
13:30 ** Labor Productivity - Q4 (Canada)
Strong impact on the market (CAD). These are sufficiently important indicators for Canada, which could affect the national currency. In January, analysts expect the growth of building permits by 5.5% after a significant increase in the previous month.
13:30 *** Trade Balance - January(USA)
13:30 ***UnemploymentRate - February (USA)
13:30 *** Non-Farm Employment Change - February (USA)
13:30 ** Change in Private Payrolls - February (USA)
13:30 ** Change in Manufacturing Payrolls - February (USA)
13:30 ** Average Hourly Earnings - February (USA)
13:30 ** Participation Rate - February (USA)
13:30 ** Two-Month Payroll Net Revision - February (USA)
Strong impact on the market (USD). The most anticipated data of the day, which can significantly affect the greenback dynamics against all major competitors. It is expected that the unemployment rate in February fell by 0.1%, while the number of non-farm payrolls rose by 241,000.
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GOLDis in Little Demand
Once again the US currency has strengthened in the foreign exchange market and also in the adjacent market where the gold price has made one of the most significant movements in recent months. The reason for the fall was the long-awaited data on the US labor market, which is globally confirmed that one of the world's largest economies is rapidly growing. In a narrower sense, it means that in the near future the Fed can loose all arguments in favor of keeping monetary policy unchanged, and will be forced to go to its tightening. In other words, US treasuries are doomed to yield growth, that in comparison with its lack for gold will force investors to get rid of the yellow metal in favor of the greenback.
So, the price has overcome a support line of a long-term uptrend, which increases the risks of continuing medium-term downtrend in an existing channel boundaries. At the same time, bears were not been able to push the level of support corresponding to the January minimum. It is recommended to hold short positions opened on the break of 1190 and to add to positions on the break of 1163 dollars per troy ounce.
EUR / USD. Speaking about Prospects...
At the moment we see a full wave reduction in boundaries of a downward price channel, which was launched back in the distant 2008. Since then, the market experienced strong fluctuations, because of all possible crises - from the subprime mortgage crisis to the European debt one, whereas now the ECB is launching an unprecedented asset purchase program. Simply put, the European Central Bank switches on its printing press for the benefit of bringing the region's economy in a sense (60 billion euros per month). Will the European QE replicate the success of the Fed's one? That remains to be seen. Meanwhile, the quotes overcame a major support level - the 61.8% Fibonacci correction from the growth in the period 2000-2008. That definitely adds confidence to sellers.
Giving the dynamics of the pair, the next target of bears will be the lower limit of the above-mentioned channel, the achievement of which is very likely to be on an equal value - one euro for one dollar.
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Vista Brokers: Non-farmsandUnemployment did notDisappoint theMarket
On Friday, the dollar updated 11-year high against the euro and rose against the other competitors after strong data on the US labor market. Vista Brokers analysts note that the statistics was oppositely directed, but main landmarks of the Fed - employment in the non-agricultural sector (non-pharms), and the unemployment rate came out better than expected. This reinforces expectations of market participants that the Fed will raise rates in the middle of the year.
Thus, the euro fell to 1.0886 dollars from 1.0986 dollars loosing during the day 1.4% and breaking level of 1.09 for the first time since September 5, 2003. Against the Japanese currency, the dollar rose by 0.4% to 120.70 yen from 119.91 yen earlier.
Note that the number of people employed in the non-agricultural sector of the US in February rose by 295,000 against the expected 240 000. The unemployment rate fell to 5.5% compared to 5.7% last month, less than expected 5.6%. In addition, hourly wages - another important indicator for the Fed, rose in February, though slightly less than the market expected (0.1% vs. 0.2%).
Earlier, the Fed said that it would consider raising interest rates when the economic data, particularly data on inflation and the labor market will be strong.
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Vista Brokers: OilFell due toStrongDollar
On Monday during morning trading Brent crude oil has lost 43 cents, falling down to $59.30. WTI fell by 27 cents to $49.34. Vista Brokers analysts point out that during the previous week both brands of oil have finished with a decline. The main reason is strong data on the US labor market, which provided significant support to the dollar. This factor has forced investors to forget about geopolitical tensions and the threat of a possible decline in production in Libya and Iraq.
On Friday, the dollar hit a 11-year high against a basket of currencies after data on the US labor market. Statistics showed that the unemployment rate in the US fell to a minimum of May, 2008 - 5.5%. Non-farm payrolls rose by 295,000, exceeding the forecast for 55,000.
Analysts expect that this week Brent will be traded in the range of $ 55.36- $ 63.04 and WTI - in the range of $ 48.45- $ 55.02.
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Market Pulse 09.03
A new busy week has started in Forex, though on Monday there is not so many important releases. Australia today has already published an ANZ job advertisements index. Japan has released Eco Watchers Surveys. The most important event of the day is a Eurogroup meetings.
7:00 **Trade Balance - January (Germany)
Moderate impact on the market (EUR). The trade balance is the difference between exports and imports for the period. Positive values are favorable for the currency as it reflects flow of funds to the country's economy.
14:45 ** ECB Announces Covered Bond Purchase- March (euro zone)
Moderate impact on the market (EUR). ECB announces its weekly balance sheet, from which investors and market observers conclude about scale of the ECB bond purchase. Expansion of purchase is a signal for greater activity of the central bank, which puts pressure on the euro.
*** Eurogroup Meetings- March (euro zone)
** ECB President Mario Draghi Speaks - March (euro zone)
Strong impact on the market (EUR). Today's meeting of the Eurogroup, as well as the previous one will be held under the Greece sign. Over the weekend, Athens sent the Eurogroup chairman Jeroen Deysselblum a letter in which they urged to initiate discussions between representatives of Greece, the ECB, the European Commission and the IMF, as well as introduced a series of reforms that the country agrees to hold. The list consists of seven major reforms, including the establishment of an independent Economic Council, the introduction of an upper limit for government spending and Internet gambling taxation, measures to combat bureaucracy and financial support to the poorest people of Greece.
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GOLD. Priceis Close to StrategicSupport
We have a breakthrough of the indicated in our previous review level 1163, which means that a decline continues in a downward channel of last few weeks. During this time, the price has dropped from $ 1,300 per troy ounce to current levels, and, apparently, it is not the end. The nearest support level (local minimum of November 2014) is located at 1142, whereas the last bastion of bulls is at 1130. At this level is also the five-year minimum, where in November 2014 buyers have begun their counterattack after failing to break below the correctional Fibo level 61.8% of support from the growth in 2008-2011.
It still makes sense to work in a southerly direction with abovementioned targets. Upon reaching the level of 1130 we should be extra careful because here, as expected, the further dynamics of the instrument may be indicated.
USD / JPY. BuyersDemonstrateSeriousIntent
Quotes continue their ascent in the medium-term rising channel, having currently reached its upper limit and freshed the maximum value since July 2007 - at the moment quotes have broken the mark of 122 yen per dollar. According to some economists, dollar in this pair is strengthening relatively slow, but, in our opinion, there are some limiting factors: close completion of the fiscal year in Japan and the corresponding income repatriation by investors and companies. Perhaps, this factor will cease to affect the market at the end of the month, which will give a new impetus to growth. Note that the next week it will be a regular meeting of the Federal Reserve, which market is already beginning to take into account in the form of dollars' purchases.
Quotes fixing above USD / JPY 122.00 will signal to refill long positions, however, to deduct the breakthrough we need more arguments in the context of said rising channel boundary impact, as well as the impact of the resistance level corresponding to multi-year highs of the pair. The probability of the false breakout is high, but if the next wave of growth to be, then it will be large-scale.
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Vista Brokers: FedRateHikeProbabilityPressuresonMetals
On Tuesday, the yellow metal has updated three-month low on expectations that the US Federal Reserve will raise rates in the middle of the year. Vista Brokers analysts note that the probability of the Fed rates hike for the first time since December 2008 from a historical low of 0-0.25%, is putting pressure on precious metals. Raising rates could lead to a significant strengthening of the dollar and the decline in demand for protective assets.
Today during morning trading, April gold futures on Comex fell by 0.49% to 1160.8 dollars per troy ounce, updating the three-month low at 1163.45 dollars per troy ounce. May futures for silver on the same stock exchange decreased by 0.42% to 15.71 dollars per troy ounce.
On Monday metals received a short-term support before the Eurogroup meeting, where the situation in Greece was discussed. Economic problems of the country mean increased demand for safe-haven assets, so that each new round of negotiations, as a rule, support the price of gold. Yesterday the Eurogroup led by Jeroen Deysselblum rejected a revised list of reforms proposed by Athens, which means a happy ending is far away.
Amid the failure of Greece at the Eurogroup meeting on Tuesday markets returned to the subject of interest rates of the Fed. Impact on the precious metals still have data on the labor market, which came in the United States on Friday. It was reported that the unemployment rate in January fell from 5.7% to 5.5%, while the number of jobs in the non-agricultural sector grew by 295 000. Analysts have predicted a decline in unemployment to 5.6% and growth in the number of jobs by 235 000.
Thus, real values have exceeded forecasts, causing large fluctuations in the financial markets.
Analysts suggest that the labor market data, released on Friday, will have an impact on the gold in the medium term.
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Market Pulse 10.03
On Tuesday theeconomic andfinancialaffairscouncil (ECOFIN)meetings is held. In Australia, has already been published the NAB business confidence index, in China – the consumer price index and the producer price index. The most interesting event of the day promises to be the BOEgovernor Mark Carney's speech.
6:45 ** UnemploymentRate - February (Switzerland)
Moderate impact on the market (CHF). Analysts expect that in February, the unemployment rate in Switzerland rose from 3.1% to 3.2%. The growth of the rate may adversely affect the dynamics of the Swiss franc.
7:45 ** Industrial Production - January (France)
Moderate impact on the market (EUR). It is expected that industrial production in France in January has shown a decline of 0.2% since the previous month it had risen by 1.5%.
14:00 ** JOLTs Job Openings - January (USA)
Moderate impact on the market (USD). Job openings is considered to be a not too important indicator when compared with statistics on the US labor market, which was published last Friday. However, currently the US labor market receives much attention because of the expectations regarding to the Fed rates hike, so this indicator can also affect the greenback's dynamics.
14:35 ** House of Lords Economic Affairs Committee hearing - March (UK)
14:35 *** BOE Governor Mark Carney Speaks - March (UK)
Strong impact on the market (GPB). Market will look in the statements of Mark Carney for hints that the Bank of England will go on the path of monetary policy tightening after the US Federal Reserve. Positive comments about the economy, inflation, the real estate market investors may understand as a signal for a possible rate hike in the foreseeable future.
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Vista Brokers: Trend for EUR / USD is Still Downward
Despite weak attempts to rise, which the euro has made on Monday, the trend for EUR / USD is still downward, and the bears will be able to hold their positions for a long time. Vista Brokers analysts say that the single currency tends to parity with the US dollar, but perhaps even 1 mark will not be able to provide sustainable support to the euro.
There are many reasons for it, and in the first place is the difference in the monetary policy of the ECB and the Fed. If the first CB is just beginning a program of quantitative easing amid low rates to support the economy, the second one plans to raise rates amid its recovery. Also, the pressure on the euro puts the situation in Greece. Country where radical political forces have come to power, can not negotiate with creditors to restructure debt and the list of necessary reforms. And it begins to blackmail the eurozone with a referendum on Greece's exit from the monetary union.
According to the results of yesterday's Eurogroup meetings, a revised reform plan, submitted by Greece, has not been approved by ministers of finance, so probably this month, the country will not receive financial bailout. According to the Eurogroup chairman Jeroen Deysselblum, a list that Athens gave at the meeting was different from the first list of proposals which has been performed two weeks ago, and in such a "raw" form it can not be accepted. Deysselblum previously stated that the EU is willing to give Greece the first tranche of 7.2 billion euros in March, but only with the consent of all reforms.
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