Thursday, 27 April 2017

Euro/dollar in the near future will still close the gap

The euro/dollar is falling and is trading near the 1.088 mark. Following the meeting, the ECB left the interest rate unchanged at zero level. The decision of the bank was expected, therefore the market reaction is indirect. However, the growth of volatility is still possible, in the evening there will be a press conference of the bank, whose rhetoric will be closely evaluated. I assume that in the near future the pair will close the gap. Also in the evening there will be statistics from the US: orders for durable goods, unemployment data and unfinished sales in the real estate market.

Trump did not excited markets

World markets on Wednesday showed mixed dynamics. The positive expectations of declaring the details of the tax reform in the US have been replaced by a negative reaction.
European markets on Wednesday grew up on expectations of the US president's speech on tax reform and the meeting of the European Central Bank. The US president did not intrigue: the details of the tax reform were published in the media the day before, and its items in general correspond to the pre-election program. The reform assumes a significant reduction in the tax burden for both business and the public. In particular, the maximum tax on companies' profits is proposed to be reduced from 35% to 15%. In relation to individuals, there are more indulgences: a reduction in the maximum income tax rate from 39.6% to 35%, a lower rate to 10-25%, while it is planned to abolish the inheritance tax and double the standard deductions. The reaction of the US markets to Trump's speech turned out to be moderately negative. Investors obviously expected more details, but in the current form the initiative of the new administration looks weak in terms of the possibility of its harmonization in the Congress.

Sunday, 23 April 2017

Wells Fargo: Short-term weakness of USD/JPY

Wells Fargo Securities chief strategist Erick Viloria predicts further weakness of the dollar against the yen in the short term in an interview with Bloomberg.
The reason for these expectations is the political uncertainty in Europe and other parts of the world that can make investors look for the yen as a safe haven.
The head of the Japanese central bank said on Thursday that the institution will continue its accumulation policy until the inflation targets are met. This is happening in an environment of rising interest rates from the Fed, which makes the situation favorable to the dollar against the yen.
Nevertheless, Viloria points to the previous few interest raises, in which market participants "bought on rumors and sold on news". That is to say, that the difference in the policies of the two central banks - the US and the Japanese - is already calculated in USD/JPY trading levels.

EUR/GBP - time to sell

Traders who traded the GBP were greatly surprised when British Prime Minister Teresa May announced that early elections will be held in the United Kingdom on June 8th. For some time, the Conservative Party has overriding the opposition, according to polls, so the prospect of them remaining in power continues to be up to date, and such a development of events will not have a particular weight on the markets. In the short term, additional information is needed to keep the pound rally.
EUR/USD also rose, on a par with the British currency, in part due to a weakening dollar.
In terms of technical analysis, in the currency pair, there is a breakthrough in the key support for a reversing "head and shoulders" figure, which has been developing for 9 months. We can look for short positions at the current price, putting a stop at 0.8460 and a target 0.7886.

Saturday, 22 April 2017

UOB remains in short positions in dollars

Forex strategists at the UOB Group believe that in the coming weeks, the probability for testing the level of $108.00 on dollar/yen will fall.
While the bank's analysts say that 108.00 is very strong support and is unlikely to pass the level so easily, the strong rally over 108.11 was unexpected. The upward movement has the potential to expand, but the pace of each recovery is expected to be slower, analysts said. Therefore, strong resistance above 109.30 will not be a surprise, with the next resistance at 109.80 being unlikely to be tested in the coming days.
The bank's stops at their short positions are at 109.30, as the move above this level will not be a surprise, the bank said. According to analysts, the probability of a new test is increased to 108.00 or lower. Otherwise, the chances of a downward break will continue to decline, experts write.

JPMorgan is waiting for a sharp rise in euro

The volatility of the European currency jumped to its highest level since the referendum on the withdrawal of Britain from the EU structure (Brexit), analysts say.
Investors are now facing the danger of a populist victory in the presidential election in France, they add.
Nomura analysts comment that significant cash flows are aimed at hedging currency risk, and most likely this will affect the euro and increase trading volumes on election days.
The French presidential elections will take place in two rounds: on April 23 and May 7. Polls indicate that voters in the second round are likely to vote for National Front party leader Marin Le Pen, who stands for leaving the country out of the Eurozone.
However, the newspaper notes that investors are concerned about fluctuations in the results of opinion polls.
According to JPMorgan analysts, Le Pen's win will be well accepted by market participants. So, the growth of the euro against the dollar to 1.15 dollars per euro is not excluded, compared to the current levels of about 1.07 dollars per euro, experts say.

Wednesday, 19 April 2017

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