Technical and Market Analysis by Vistabrokers - page 25
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GOLD. Market is in a Brown Study
Correction continued - bears have easily pushed through a first line of bulls' defense, located at a 38.2% Fibonacci correction level of decline started at the beginning of this year and ended in mid-March. At the moment sellers are contained with a 50% correction, but it may fall soon. Today preliminary inflation data for the current month are expected to be published in the euro zone, and it may affect, in particular, on a balance of power in the gold market, if expectations will differ much from the forecast (-0.3% y / y).
In this situation, it is not recommended to act actively, since there are no necessary preconditions for purchases yet (no evidence of rebound). It is also premature to sell, since a current wave of reduction has not been turned in a trend.
EUR / USD. InAnticipation ofInflationData
A situation in this pair is still unstable – from above a development of an upward correction is limited by a resistance line of a long-term downtrend, as well as by a 61.8% correctional Fibo level of a wave of decline in February-March, while from below bears are restrained in the last two weeks by a short-term support line. In the next few hours a Statistical Service of the euro zone is to publish data on consumer price index, which should definitely be reflected in the formation of investor sentiment.
This publication will give reason to enter the market, depending on what it would be like. If the data will be lower than expected -0.3%, it will put pressure on quotes, since it would mean that a volume of the ECB's asset purchase program could potentially be higher than announced 60 billions per month. More positive data will support bulls.
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Vista Brokers: On MondayEuroRemained underPressure
The single currency declined amid worries about Greece, while the dollar rose against its major counterparts on expectations that the Fed is planning to raise rates this year. Vista Brokers analysts point out that as a result of negotiations with creditors Athens may receive financial aid in the amount of 240 billion euros, but there are some doubts on this subject. Indeed, the list of reforms has not yet been approved, and lenders, in particular, Germany, said that it is needed to be improved again. Investors doubt whether negotiations will finish before mid-April, when the Greek treasury funds run out.
It is worth noting that the decline of the euro was limited with positive currency fundamental background. So, confidence in the economy of the euro zone rose to a maximum of July 2011, and preliminary data on consumer price index in Germany was better than expected. The pressure on the single currency has a program of quantitative easing, which was recently launched by the ECB. This is a long-term factor of pressure on the euro, as the difference in monetary policies of the ECB and the Fed is too obvious.
On Monday, the US dollar also took a lead from comments of the Fed Chairman Janet Yellen sounded during Friday's speech. Market participants have concluded from the speech that the Fed still intends to raise rates this year. Amid this the dollar index rose, moving away from the reached last week lows. The US dollar rose against the euro, yen and other major competitors.
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Vista Brokers: IranSanctionsRescindingwillIncreaseOil Market Supply
On Tuesday, oil continues to decline after Iran and six world powers (the Great Britain, China, Russia, the USA, France and Germany) have announced that negotiations on a nuclear program draw to an end. A deadline for signing the agreement between Iran and the "six" is July 1, 2015, but the prior agreement must be reached now.
Vista Brokers analysts note the high probability that in consequence of this deal Tehran will be obliged to perform only peaceful nuclear research, and major world powers will cancel a number of international sanctions. Sanctions were applied to Iran, when there were suspicions that the country is making a nuclear weapon, and they involve, including, strong oil exports limits.
If the embargo will be removed, the market supply of oil will increase. Especially because during the long period of sanctions, Iran has accumulated a lot of inventories to be released into the market. It is considered that in a seaway are stored 30 million barrels. In addition, experts note that in the first 3-6 months after the lifting of sanctions, Iran could increase production by 500,000 barrels a day, and during the year – by 700,000.
The possibility of the oil market supply increasing puts pressure on the "black gold". Thus, Brent crude on Tuesday fell to $ 55.94 a barrel, continuing Monday's decline. WTI fell to around $ 48.12 per barrel. A stronger U.S. dollar also weighed on oil prices. The greenback rose against major competitors and forced to fall commodity market after the Fed Chairman Janet Yellen on Friday confirmed that the central bank plans to increase rates this year.
Note that in the decline of oil is limited by a military conflict that Saudi Arabia and its allies have begun in Yemen. Once the country has caused the first air strikes on Yemen, oil started to rally. But then investors calmed down, realizing that major oil transportation arteries, especially the Strait of Bab el Mandeb, are not in danger. As a result, oil prices rather quickly returned to their previous levels, but at any moment this factor can again become decisive in the market.
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Market Pulse03/31
Tuesday's economic calendar is full of important publications, which will be released in the euro zone, the UK, Canada, the USA, New Zealand. Market volatility will be high. The strongest influence on the movement of currency pairs can provide data on inflation in the euro zone and the indicator of consumer confidence in the United States.
6:00 ** Retail Sales - February (Germany)
Moderate impact on the market (EUR). In February, analysts expect a decrease of the index by 0.9% after a significant growth in the previous month. Weak data could put pressure on the euro.
7:55 ** Unemployment Change - March (Germany)
7:55 ** Unemployment Rate - March (Germany)
7:55 ** Unemployment Data Released by Federal Labor Agency - March (Germany)
Moderate impact on the market (EUR). Predictions about the labor market data in Germany are rather optimistic. Experts expect th unemployment change decrease by 10 000 and drop in the unemployment rate to 6.4%.
8:30 *** Current Account - Q4 (UK)
8:30 ** Final GDP - Q4 (UK)
Strong impact on the market (GPB). Current account index includes the results of goods and services fluctuations, as well as inflow and outflow of capital. Growth or exceeding the forecast is favorable for the currency. With regard to the final GDP data, investors do not expect any surprises, but everything is possible.
9:00 *** Consumer Price Index Flash Estimate - March (euro zone)
9:00 ** Flash Core CPI - March (euro zone)
9:00 ** UnemploymentRate - March (euro zone)
Strong impact on the market (EUR). Analysts expect that the inflation in the euro zone has fallen by 0.3% in March. Unemployment is projected to remain at a high level of 11.2%. If the data will be worse than expected, this may have a negative impact on the euro. While an opposite scenario is also possible.
12:00 ** FOMC members Jeffrey LackerSpeaks- March (USA)
12:50 ** FOMC members Dennis LockhartSpeaks- March (USA)
Moderate impact on the market (USD). Comments of FOMC members can affect the dynamics of the greenback, as they can reflect sentiments of the Committee. So that market participants keep track of these data.
12:30 *** GDP - January (Canada)
Strong impact on the market (CAD). Analysts expect that in January, the Canadian economy grew slightly weaker than the previous month - by 0.2% on a monthly basis and 2.4% on an annualized one.
13:45 ** Chicago PMI - March (USA)
Moderate impact on the market (USD). The index of business activity in the Chicago area. Values above 50 reflect the increase to the previous month, below – the reduction. It is expected that the rate will grow to 52.5.
14:00 *** CB Consumer Confidence - March (USA)
Strong impact on the market (USD). The consumer confidence index from the Conference Board is based on a survey of households regards the level of confidence in the current state of the economy and its development in the future. The growth of the rate reflects the confidence in the economy, favorably affecting the currency.
*** Global Dairy Trade Price Index - March (New Zealand)
Strong impact on the market (NZD). This indicator has a significant impact on the New Zealand dollar, as dairy products loom a large part of New Zealand's exports. Analysts expect a significant reduction in the index in March.
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Vista Brokers: Euro Recovered amid Dollar Weakness
On Tuesday, statistics from the USA was multidirectional. The US Commerce Department data showed the most significant trade deficit in nearly 7 years. Meanwhile, the ISM non-manufacturing index has shown better than expected results. Vista Brokers analysts note that the weakness of the dollar gave the single European currency a possibility to recover.
The US trade deficit in March rose to 51.37 billion - the highest level since October 2008, showing the highest growth over the month since December 1996 (43.1%). Analysts believe that the weak data (the forecast assumed a decline only to 41.2 billion US dollars) may indicate that the country's GDP in the first quarter will show a decline. But the growth in the second quarter of 2015 can neutralize the weak performance in January-March. So it does not affect expectations about the Fed interest rate hike.
Nevertheless, the US stock markets, as well as "treasuries" were down on Tuesday, while the dollar fell against a basket of major currencies. The decline was limited by positive data on the ISM composite index for the non-manufacturing sector. In April, the activity in this sector of the US economy rose from 56.5 to 57.8, although most experts had expected a decline to 56.2.
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Market Pulse 05/06
On Wednesday, in some countries, which are foreign exchange market participants will be published data on business activity in the service sector and the composite PMI index. In China, the index of business activity in the services sector from HSBC has been already published. Australia also has published data on retail sales.
7:15 ** Services PMI - April (Spain)
7:15 ** PMI Composite - April (Spain)
07:45 ** Services PMI - April (Italy)
7:45 ** PMI Composite - April (Italy)
7:50 ** Services PMI - April (France)
7:50 ** PMI Composite - April (France)
7:55 ** Services PMI - April (Germany)
7:55 ** PMI Composite - April (Germany)
8:00 ** Services PMI - April (euro zone)
8:00 ** PMI Composite - April (euro zone)
Moderate impact on the market (EUR). Analysts expect that in the euro zone and its major economies, business activity in the services sector rose in April or remained at the March level, so generally forecasts are optimistic. Strong data could support the single currency.
8:30 *** Services PMI - April (UK)
8:30 ** PMI Composite - April (UK)
Strong impact on the market (GPB). It is expected that the activity in the UK services sector fell in April, but it is worth noting that the Purchasing Managers' Index is still at a high level - a value above 50 indicates the improvement of the situation in comparison with the previous period.
9:00 ** Retail Sales - March (euro zone)
Moderate impact on the market (EUR). The increase in retail sales comparing with the previous month (or the excess of the forecast), reflecting higher consumer activity that strengthens the currency. In March, the index is expected to decline mom and to increase yoy.
12:15 *** ADP Non-Farm Employment Change - April (USA)
12:30 ** Prelim Nonfarm Productivity - Q1 (USA)
12:30 ** Prelim Unit Labor Costs - Q1 (USA)
Strong influence on the market (USD). Portion of the statistics on the US labor market may seriously affect the greenback, as the statistics on employment is one of benchmarks for the Fed, which is expected to raise interest rates in the near future. The data is published by ADP before the official statistics and no less often it causes a reaction of the market.
13:15 *** Federal Reserve Chairperson Janet Yellen Speaks - May (USA)
Strong influence on the market (USD). Yellen's speeches always carry a strong potential impact on the dollar. In the current situation the market expects from the head of the Fed some hawkish signals to confirm that the central bank will raise the rate soon. The absence of these signals may weaken the dollar.
14:00 *** Ivey PMI - April (Canada)
Strong influence on the market (CAD). The index is based on a survey of purchasing managers showing improvement (> 50) or degradation (<50) of the situation in comparison with the previous month. The growth of the rate of exceeded forecast are favorable for the Canadian dollar.
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Vista Brokers: Brent Updated 2015 High
On Wednesday, rally in the oil market continues, and during morning trading the "black gold" has grown on the average by $1, updating this year highs. Vista Brokers analysts name some current major factors of support for oil. Firstly, it is protests in Libya, because of which has stopped the supply of oil from the port of Zueitina. Secondly, it is the weakness of the US dollar after the release of disappointing trade balance statistics on Tuesday. And thirdly, it is the reduction of oil inventories in the United States.
At the time of writing, Brent crude oil has reached the high of $ 68.30, gaining 78 cents. Previously, the price has updated this year high at $ 68.53. WTI crude oil rose in price by $ 1.08 to $ 61.48. Recall that in April both brands have shown a significant growth (by 20-25%), despite the fact that soon it will be the meeting of OPEC, where it is expected that exporting countries will not take decisions on oil production cuts again.
In Libya Zueitina terminal remained one of the few oil shipped out of the country, where for several years the civil war continues. Now it is closed - competing political forces in Libya are trying to take control of the country's rich oil industry. As they decide who has more rights to power, oil production in Libya was reduced to less than 500 thousand barrels per day, which is only the third part of the volume, which was produced here until the beginning of the war.
Support for oil prices has also a decline of the US dollar, which is down against a basket of major currencies the fourth consecutive week. Yesterday it became known that the US trade deficit in March rose to 51.37 billion - the highest level since October 2008, showing the highest monthly growth from December 1996 (43.1%). This has led to talks about that the US economy in the first quarter of 2015 will show a decline.
Let us dwell on the third supporting factor. Also on Tuesday was released the data on crude oil inventories from API, which showed a decline for the first time this year. So, the last week, US crude inventories fell by 1.5 million barrels, while analysts had expected the growth by 1.5 million barrels per day. Today, the market is expected for the confirmation of inventories reduction from EIA (official data).
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Vista Brokers: Services Sector Activity Rose in most Euro Zone Countries
On Wednesday, the euro zone has released data on the PMI index for the services sector. Vista Brokers analysts note that in most countries statistics was better than expected, except for the region's largest economy, Germany.
For example, in Spain, the PMI index for the services sector rose in April to 60.3 vs. 57.4, while the composite index increased to 50.6 instead of 50.4. In Italy, the index for the services sector rose to 53.1 vs. 52.1, while the composite index increased to 53.9 instead of the expected 52.7. Activity in the services sector in France in April rose to 51.4, while analysts expected it to remain at the level of March - 50.8. The composite PMI index rose by 0.4 vs. 0.2. Overall, in the euro zone index rose to 54.1 and 53.9 respectively, against forecasts of 53.7 and 53.5.
Analysts had expected German PMI index for services and composite PMI in April to remain at March levels: 54.4 and 54.2, but the index fell to 54.0 and 54.1 respectively. Note that values above 50 are considered as the situation in the services sector improving.
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USD / CAD is at the Crossroads
The pair continues to remain close to the rising trend line, which was started in July of the last year, but this, however, does not give grounds to enter the market yet, because there was no sufficient impulse for purchases. Also recall that current levels of support are reinforced with important corrections - 38.2% of the above-mentioned trend, and 61.8% of the USD / CAD growth in January. It should be noted that today in 14.00 GMT in Canada will be published the index of business activity from business school of Richard Ivey (which may affect the dynamics of the pair for the next couple of days), whereas the coming Friday should be determining. This day will be published data on the labor market in the United States and Canada.
It is recommended to wait for today's data, and if it will be negative, to open long positions with a stop at 1.1940 - the lowest since January 19 and the top of the two-month wave of decline.
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EUR / USD Resumes Growth
After testing a 38.2% Fibonacci correctional level of the wave of growth in the last decade of April, the pair resumed its climb. Prior to the US labor market data, expected on Friday, investors tend to fix results of their long positions that continues to push the greenback down.
It seems that in coming hours euro buyers will be ready to storm the nearest local maximum (1.1289), with the target of 1.1530, corresponding to the bottom level of the declining wave in February and March. However, before the release of Friday's employment data in the United States, it is recommended not to open large positions.
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AUD / USD Fills Cramped in Triangle Boundaries
Today's data on employment in Australia brought mixed feelings to investors, because, on the one hand, in April, the number of employees reduced (!), while the March data were revised with a significantly increase. In the context of the recent RBA interest rate cut and expectations of market players regards further steps of the central bank, any important statistics will influence AUD / USD. Thus, the primary response to the publication, which lasted just a minute, was the fall of the AUD against the dollar by about 30 points, but then bulls quickly took the wheel. Currently quotes are again close to the upper boundary of the graphic figure "expanding triangle", going beyond which will give an important advantage to this or that side.
In our case, AUD / USD consolidation above the reached in April three-month high (0.8075) will mean the opportunity to open long positions. The target of purchases will be the beginning of the descending wave on January 15 at 0.8295.
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USD / JPY Goes back to Mid-Range
The dollar did not have enough momentum to hold above the upper boundary of the "triangle", which caused sales, and now the pair is in the middle of the way to the bottom of this pattern. Sentiment changing that occurred during yesterday's trading, was supported with the negative data on the US employment from ADP, which casted a shadow on prospects of getting strong official data from the Labour Department on Friday.
Anyway, before the release of tomorrow's employment data we should not expect a directional movement, while after the release the best tactic will be to work for a breakthrough of next support (currently it is at 118.47) and resistance levels (120.50).
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