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AUD: Anti-Star Of The Day All the majors entered their consolidation ranges today ahead of the NFP report except AUD/USD. In spite of the fact the dollar is not in its best shape, AUD/USD is inching south. The Aussie has been under pressure ever since the Asian session, when Australia published the retail sales report with highly disappointing results. Sales fell 0.6% to 2.1% m/m. Here we are. The steepest decline since March 2013 and the weakest annual growth in sales since July 2013. This week RBA has left rates on hold at its record low 1.50%. That was quite a surprise… to no one. But the fact is that too-strong Aussie may have damaging effects on the economic growth. So, the Central Bank firstly will try to talk AUD down. If this measure doesn’t work, RBA may pull the trigger. And as a result, we may see a broader slide. AUD found support around August, 15 lows at 0.7807/16. In case it breaks the level, next bearish target will be the 0.7790 area.
by HelenRush
USD Is Struggling To Prove Its Power The dollar finally returned to the Earth and USD-bulls are retreating across the board. USD lost almost all its key drivers. The markets don’t cheer the high chance of a rate hike in December, Trump’s tax reform is not an open and shut case and most of all J. Powell is now the main candidate to replace for Federal Reserve Chair Janet. Why is it not dollar-positive? Because Powell is considered to be a dove. EUR took advantage of the dollar’s infirmity. Investors don’t see any danger in Catalan crisis, at least for the time being. EUR/USD wasn’t able to break through the round figure and psychological support at 1.1700 and returned to the mid-1.1700 area. If the EUR-bulls want to rule the show they’ll need to surpass the local resistance of 1.1780. A hefty jump in the ISM non-manufacturing index has pushed the dollar higher and EUR/USD is struggling at 1.1750. The decline, however, will probably be short term because the markets are waiting for the central banks' heads Draghi and Yellen speeches to decide where to go next.
by HelenRush
GBP Is Lying Low A very calm day for the markets. To some extent because of holidays, to some extent because of strikes. The UK provided the markets with some macro- and economic news. GBP/USD posted a session low at 1.3230 in the morning. Some buyers were waiting for the pair at these levels and it moved towards the 1.3300 handle before the soft data on construction PMI was published. The uncertainty around Brexit talks is still negative for the Pound. The EU continued talking about the deadlock in “the divorce process”. EU's Barnier said a sufficient progress on Brexit issues had not been achieved yet while EU's Juncker said Brexit speeches wer not negotiating positions hinting at Theresa May's hyped speech in Florence. So, no light at the end of the tunnel for GBP at the moment. At the same time, the dollar's positions are quite stable because of tax reform jitters and the high odds of a rate hike in December. Under this scenario, GBP/USD may follow its way towards the resistance-support area of the mid-September around 1.3160-80.
by HelenRush
EUR Has No Time To Rest Euro got hit again. This time from the results of the referendum on Catalan independence. Yesterday 90% of Catalans voted for independence but the turnout was 42.3%. After the German elections last weekend with the contradictory victory of Angela Merkel's party, another sign of separatism is the last thing EU and euro need at the moment. In the morning EUR/USD lost almost 0.45% and touched the session lows at the 1.1730 area. The pair has its local support here and it seems that for now the level can hold the pressure. Another political turmoil may push the euro currency through the round figure 1.1700 and after that towards the August lows at 1.1662. It's hard to say whether the bears may count on the breakout of this area. But, in case it happens we can say goodbye to the medium term bullish trend and wish EUR a nice trip to the 1.14s. Besides there is one more thing to consider. During the last weekend, Trump interviewed Fed´s Jerome Powell and Kevin Warsh as possible candidates to replace Janet Yellen as head of the FOMC. They both distinguished by being hawkish on monetary policy. So, this may work in dollar's favour as well.
by HelenRush
GBP/USD Is Heading To South Who is under bad luck these days? Who showed wild dances today in the morning? Right, it is the Sterling. One may think what could be the problem since Carney's commentaries should have benefitted the GBP growth. The Bank of England governor told raising interest rates might be appropriate if the economy stayed on track. Even though he added that tightening would be limited and gradual that was enough to start opening longs. GBP/USD posted highs at 1.3442 but the happiness resulted to be short-lived. A little after the UK published its GDP third estimate. In a nutshell: bad news. Slow pace of growth in the 2nd quarter and the worst data in the last 4 years. Traders harried up with locking profits in. After 3,5% growth in September GBP/USD plunged to the 1.3353 lows. The pair, however, managed to recover some points to the 1.3380 levels. Yet, it seems that GBP may continue its way south because real data reflects the current situation way better than words. Most of all, the markets have already priced in the hawkish BoE, so, nice try, Marc.
by HelenRush
USD/CAD Is Surrounded By Unknown Loonie, one of the markets’ favorites, is probably going to change the course. Yesterday, Bank of Canada governor Poloz told that an appropriate path for rates is very difficult to know because of a number of unknowns around inflation outlook. He also assured the Bank would not be mechanical in policy approach since economy may act differently than in previous cycles. That said, the regulator expresses more cautiousness now. CAD, which has been growing for at least 5 months, is like a pain in the neck for the Central Bank. A strong currency may cause problems for the export activity and weight in on the economic growth. So, the regulator will try to discourage CAD. Under these scenario, we expect USD/CAD to struggle in the range of 1.2470-1.2510. This has been quite a strong support and resistance area since mid-July. In case of a breakout, the next bullish target will be the 1.26 level.
by HelenRush
USD Runs Things USD is unstoppable this week and especially today. Many strong triggers has been supporting the dollar since the beginning of the week. Yesterday, the head of FOMC Yellen told that “gradual approach to hikes particularly appropriate in light of subdued inflation”. Mrs. Yellen also made a very important hawkish comment: Fed should be wary of moving too gradually. So, dollar is rolling in buyers’ love. USD Index formed a local highs at the August, 23 levels at 93.50. The yield for the two-year Treasury note surged to its maximum from November, 2008 at 1,47%, also providing support to USD. Considering that today’s durable goods orders were pretty good with revisions to the upside we expect dollar to continue working his way forward against all the majors and gold. Markets are waiting for Trump and the long-awaited news on the tax reform. But, the US President used to make much sound but little actions in the past. Anyways, we expect the retracement in case of disappointments from Mr. Trump to be short-lived and the current strength of the dollar may become a sustained trend.
AMEX:USD
by HelenRush
Black Oil Is Looking For New Triggers Yesterday the president of Turkey Tayyip Erdonag warned he might cut off the pipeline that carries oil from Northern Iraq to other parts of the world. It happens sometimes when someone wants to vote for the independence there are always those who don’t. Kurds didn’t lose courage and had their referendum. But oil bears were scared and decided to run. Yesterday Brent ripped through two psychological areas and surged by 5% having touched July 2015 highs at $58. WTI added 4% and now holds above the $52 level. In spite of the today’s correction we think that some positive factors will support oil’s general bullish trend. Firstly, the markets now are almost sure about the start of rebalancing of the oil market. Secondly, traders believe OPEC will extend cuts beyond the March 2018 deadline. Yet, the US crude supplies data this week might make the markets be on the watch and make them lock some profits. Brent should find the support near the January, 1st lows 57.30. WTI will unlikely make a clear break of the support area, previous 24th, May resistance, at 51.85. At least until any strong bearish trigger appears.
TVC:UKOIL
by HelenRush
Merkel And EUR Are Shell-Shocked On the weekend Angela Merkel proved her might having won German elections one more time. It’s hard to say that it feels like a victory, with the worst result since 1949 at 32,9%. Merkel must now find coalition partners. And we already know that Martin Schulz, the head of center-left Social Democratic Party, won’t join Angela’s party and go into opposition. EUR/USD greeted new week with strong bearish gap and touched the lows at 1.1895 after the opening bell. Markets thought the results of the elections promise certain degree of uncertainty and risks. That said, euro may suffer short term but only till the markets recover from the blow. During the European session the pair has been trying to recover some ground but hasn’t succeeded. To fill the gap completely euro has to move back to the resistance area at the 1.1950 handle. We don’t expect a lot of triggers for EUR for today though. If it breaks below September, 20th lows at 1.1862 bears will be happy to push it towards next support at 1.1837.
by HelenRush
Markets Knocking On Heaven’s Door D. Trump announced a new round of financial sanctions against North Korea on Thursday. And the «hermit kingdom» wasted little time in responding. The leader of North Korea can’t help but bothering markets. This time the menace is quite serious since we may be talking about hydrogen bomb test in Pacific. It’s obvious that the traders’ attention is now far from FOMC and its monetary policy. Geopolitics is the major issue for today. Friday is passing by under the egis of safe-heavens. JPY, CHF and gold grew across the board. USD/JPY lost almost 100 points, dropped below the strong support line at 112.00 and touched session lows near 111.65 in the European morning. During the last couple of hours the pair has been trying to get back the psychological mark 112.00 which seems unlikely for today. Further slide might open the door to the intermediate support near 111.43. But, usually the entire story with the nuclear tests ends with stabilization. So, it’s quite possible that USD/JPY will make a U-turn and surge towards the fresh highs.
by HelenRush
Fed Turned It All Upside Down Yesterday evening the Fed delivered …nothing specials. . Nothing that should have triggered so much volatility in the markets. Yet traders for some reason saw in the FOMC decision something surprising and sent the dollar up across the board. Probably, it was the dots plot that made so much noise. predictions showed that Yellen and Co. are still ready to raise the rate one more time this year.The Fed also starts shrinking its $4.5 trillion balance of assets in October. Actually,this one was also quite predictable and had been chit-chatted for some time among the markets. EUR/USD dropped below strong support at 1.19 on the hawkish FOMC. The probability of a December rate hike is now neither more nor less 60%. That means USD bulls can’t count on the tightening policy from the Fed anymore. And if markets understand soon they overestimated the Fed hawkishness, that means EUR has formed the bottom at the area of yesterday’s lows and will start its way back to the September,8th highs at 1.2092. Still, the pair will have to be well-armed to break the area of tough resistance at 1.20.
by HelenRush
EUR/USD: Playing A Pushmi-Pullyu Waiting for the Fed Today it’s all about waiting again. The key event of the week is the Fed decision on monetary policy. This Central Bank’s decision will be quite a significant one. Of course, it’s almost for sure the Fed will keep its monetary policy on-hold. But, there may be some announcements on the trimming of the massive balance sheet stored up during the last 10 years. Yesterday, EUR/USD ended the day a few pips below the 1.2000 threshold on the news that the ECB may delay decisions on QE tapering. Someone may think that the regulator wants to keep the currency below the 1.2000 mark, as it had already happened earlier in the month. The pair is still ready to go further, and strong resistance at 1.20 may be broken with a help of really strong trigger. For today, all the hopes are on the FED – more dovish comments on the monetary policy or less optimistic assessment of US economy outlook may help to confirm the breakout and go higher. Under this scenario, EUR/USD may test 1.2100 level.
by HelenRush
It’s All About Cable Again The Pound is alive and kicking, although monetary officials are not satisfied with its appreciation. Yesterday, the Bank of England governor tripped up Cable by saying that monetary policy may have to "move in order to stand still" due to possibility that global equilibrium interest rates are rising. Despite the possibility of rate hike is looming somewhere in the future the markets obviously didn’t like the idea that monetary tightening might be just a compulsory measure. Also, the question about Brexit’s impact on inflation “concerns the extent to which this adjustment has been brought forward”. The comments shaded the scope started after the BOE meeting when GBP/USD jumped two figures higher. Carney sent Cable towards 1.3464 low which may become a strong support for now - today pair tried to break it through but haven’t succeeded yet. For now, the market is trying to understand whether it’s time to take profit and sit on the fence, or this is favorable environment for entering the long-term bullish trend. Personally I think there is much in store for Cable, and the current levels look very attractive for bulls with the nearest target at 1.3560.
by HelenRush
When Cat is Away, Mice Will PlayAsian markets are closed due to Respect for the Aged Day celebration. Anyways, USD/JPY managed to show quite an impressive rise ahead of the London opening. Geopolitical risks don’t seem to bother the markets anymore which supported the demand for the riskier USD and pushed USD/JPY up to 111.42 high. The pair is poised to refresh July, 27 highs at 111.70. It looks quite possible if the markets keep their sentiment through the European session. During the weekend Japan’s PM Shinzo Abe told he was considering calling a snap election in October. If so, political uncertainty may keep JPY under pressure in the short run. However, much will depend on US data. The more signs of slower US economy growth we get, the weaker is the demand on USD. And under this scenario we don’t rule out the U-turn for the pair with initial target below the intermediate support at 111.00 followed by 110.70. This week the traders will focus on FOMC and BoJ meetings.
by HelenRush
Pound Is Bound For Rise We knew it from the moment the MPC uttered: “…some withdrawal of monetary stimulus is likely to be appropriate over the coming months” - the pound was bound to rise. Cable managed to jump to 1.3616 hitting fresh 14-month high on the comments of the BOE member. Gertjan Willem Vlieghe commented that bank rates will have to rise soon and may need more than one increase. He even hinted on the term, saying the appropriate time “might be as early as in the coming months.” The comments added fuel to the fire after the BOE meeting drove GBPUSD two figures higher. The cumulative appreciation during the last two days is almost 15%. And it looks like it’s not the end. The break above 1.33 started the new era for the pair – long-term uptrend supported by strong fundamentals, and more hawkish BOE stance. Until Brexit woes arise again, the pair may reach 1,38 area. And weak US data will only speed up the move.
by HelenRush
When USD Falls…USDJPY has gone high during the last 4 days. And it looks like the time for profit taking is not far away. To understand when to wait for it, we need to understand the key drivers for the pair at the moment. First, Treasury yields keep rising and pushing USD higher, and we need just watch the trend. Second, Trump promises. Now we have second round of hopes – corporate tax reduction that business has been waiting for so long. But as usual, it’s just words. Additional details of the future bill are planned for announcement on September, 25th. And it sound familiar. Somewhere in early January Trump announced of new reforms, then announced of the time of the detailed plan, and then just forgot about all that. The conclusion – we need to wait till market optimism fades away, and everybody understands that there is a long way between the words and deeds. Most likely, USDJPY profit taking will start by the end of Friday. Especially if the scheduled for today CPI and scheduled for tomorrow retail sales reports prove to be worse than expected. The nearest target for USDJPY is at 109.70.
by HelenRush
Pound Superstar UK reported stronger than expected retail price index, PPI, CPI and DCLG House Price index. Moreover, Consumer Price Index showed the gathering pace rising to 2.9%. We need to mention that whenever CPI number exceeds 3.0% target, the BOE chairman is have to write a letter to Prime Minister to explain the situation. And the regulator won't like this tendency at all. So, the chances the BOE dares to tighten monetary policy soon are growing. And in such a case the first pair to rise is GBP/USD. It already touched 1.3297 high nearing strong resistance level around 1.33. And on Wednesday, we may get another reason to buy pound, as labor data is released. Better than expected number may help GBPUSD to break the round level higher with initial target at 1.3370, not seen since July, 2016.
by HelenRush
It’s Time to Buy Euro Yesterday, EURUSD more than 80 pips on nothing. We mean there are no major economic data from euro zone this week, and it turns investors focus to US reports. The pair moves will depend on market sentiment towards USD, and for now it gains popularity. North Korean woes have not come true, and Irma was downgraded to tropical storm leaving most populated areas intact. It gave the market hope that damages would not be so devastating, leaving the chance to see the Fed rate hike before the year end. But it’s all only hope. This week we are going to see the reports on inflation and retails sales, and the chances to get stronger than expected are not that high. Under this scenario EURUSD looks very attractive for buys at current levels with potential to rise up to 1.2050 by the week end.
by HelenRush
Yen Gets Ready To Fall North Korean “Foundation Day” holidays have not brought havoc to the markets. Investors feared that Kim Jong-un could launch an attack or provocative missile test On September,9 in a symbolic show of force against South Korea, Japan and America. And these fears supported the demand on safe heavens, pushing USDJPY down to 10-month low at 107.31. However, nothing scary happened, and it recovered the demand on US Dollar. The pair opened Monday with a gap higher at 108.19, and is ready to do more. This week promises a lot of market movers, including US CPI and retail sales data. If American data shows stronger than expected numbers, it may trigger profit taking on such pairs like USDJPY. The pair has lost around 6% during the last two months, and the Bank of Japan hardly likes the trend. It would step in with verbal interventions rather sooner than later. And the market understands that. Besides, USD weakness on geopolitics and slower rate hike expectations may ran out of steam these days, sending USDJPY to the nearest target at 109.00
by HelenRush
Brent May Test 55 Brent started the day at 54.50 and looks ready to go further targeting strong resistance at 55.00. As we expected the market was closely monitoring the EIA crude oil stock changes report. And it did confirm the more significant than expected draw of crude inventories as a result of Harvey storm damages. The storm hit the Gulf two weeks ago, initially triggering oil prices slide, as refineries reduced the capacities slowing the demand on crude. However, later on the restarting activity of the refineries returned back the demand on oil, while production is still under pressure. According to EIA data, the output reduced by 8%, from 9.5 mln barrels to 8.8 mln barrels per day. By the way, oil shipments suffered as well. The crude import to the Gulf slid to 1990s lows. And it will take not less than two weeks to recover the production and shipments to the previous levels, giving Brent all the chances to go higher. Now the focus turns to Irma hurricane that is forecasted to bring even more damages this Saturday. Every coming EIA weekly crude report will be scrutinized by the market, and every significant inventories draw may bring new splashes of demand on Brent. Brent is ready to test 55.00 resistance today, however, we don’t expect the level will surrender from the first time given the strength of the barrier, and the coming weekend triggering take profit in the market.
TVC:UKOIL
by HelenRush
Draghi Helps Euro, or Not? Thursday has come, and all the eyes of forex market is now on the ECB meeting. On Wednesday, EURUSD showed shy attempts to go higher coming closer to 1.20 area. And we see it even though the market understands the ECB is in no rush to taper QE too soon. Last week we got the headlines on possibility the ECB may move only in December. Now we need to confirm Draghi is in the same stance. If he fails to disappoint the market and turns out to be just a bit more aggressive than the market expects, it will be enough for the euro to break through 1.20 area. Besides, the US economy stance may be another argument on favor of EURUSD rise. Given the strength of Irma hurricane that may bring devastation to Florida cost, we do not rule out the huge loss the economy will face. The consequences of such catastrophe could be seen one-two months later by economic indicators. And in such environment the Fed will have hard time hiking the rate. And it means that USD has fewer arguments for appreciation. And thus, EURUSD has all the chances to touch 1.2070 once the strong resistance is broken.
by HelenRush
Oil Gets Ready For New Highs Brent is nearing strong resistance around 53.60, failing to break the level from the first time yesterday. The level already was tested on August, 10, but the breakthrough has not succeeded triggering the further 7.2% plunge of Brent prices. Will it be the same scenario this time? Not a sure thing. Harvey played its role in Brent rise – it make take time before the refineries, pipelines and ports knocked out by the hurricane restore the normal capacity. By the time of writing, about 20% of daily refining capacity was shut. And there is another test for American refineries in store, as Hurricane Irma of Category 5 is moving towards the Caribbean and Florida with potential to knock out some more refineries. Today, the American Petroleum Institute (API) storage data is released, and it may prove that Harvey had a disastrous impact on the fuel reserves. If the number is sharply below expectations, it may drive Brent higher above 53.60 resistance targeting 54.30 initially.
TVC:UKOIL
by HelenRush
AUD May Reverse The moves of AUDUSD this morning are indicative. The Reserve Bank of Australia monetary meeting confirmed the regulator is not happy with the recent sharp rise of AUD. Moreover, the central bank claimed rising aussie would lead to slower economic growth. However, the pair tried to move higher on the comments touching 0.7958 this morning. The market expected from the RBA more clear hints on interventions in case of stronger AUD. Mild comments made investors focus on positive economic forecasts, and supported the AUD move higher. However, we believe it’s an initial “rumors-facts” reaction, and there fewer fundamental reasons for further AUD appreciation. Every new RBA meeting may bring more aggressive comments concerning the rise of national currency, and this will be pressuring Australian dollar in the long run. In such environment we do not rule out AUDUSD reversal. The pair bumped into strong 0.7980 resistance, and the following retracement may send the pair to 0.79 in the nearest future.
by HelenRush