Monday, 29 August 2016

Euro/dollar slipped below 1.12

At the trading session in Europe, the US dollar is trading in the positive zone. The euro/dollar is losing 23 points compared to Friday's close at 1.1193. GBP/USD fell 60 pips to 1.3068. UK markets are closed for a bank holiday in the country, which leads the cable to low volumes and high volatility.
The US dollar continues to get support from Friday's speech by Janet Yellen and the next increase in US interest rates. The British pound fall against the dollar is stronger than the euro, as the cross-pair EUR/GBP is trading higher.
In the evening US are about to publish reports of expenditures on personal consumption and the index of personal income and costs. These can have an impact on the dynamics of the dollar, if they are significantly higher/lower than the predicted values. If they match with the expectations, there will be no reaction to the news.

Sunday, 28 August 2016

The dollar strengthened after the speech of Yellen

Dollar strengthend its position in the course of trading on Friday after the governor of the Federal Reserve Janet Yellen said, that the likelihood of interest rates hike has increased, though not pointed at the approaching of tightening of monetary policy.
The US currency rose after the speech of Yellen, but then turned down, as investors analyzed some of the details of a more peaceful character.
Speaking at a conference of representatives of the world's central bankers in Jackson Hole, Wyoming, Yellen said, that the probability of a Fed rate hike has increased in recent months in connection with improvements in the labor market and the prospects for accelerated economic growth.
The US Commerce Department reported on Friday, that the country's economy in the second quarter of 2016 expanded at a slower pace than previously thought. US GDP grew by 1.1 percent over the same period of 2015, according to revised data. Meanwhile, consumer spending, which make up more than two-thirds of the index of economic activity, showed the strongest growth since the fourth quarter of 2014.

Friday, 26 August 2016

Fed, ECB, Bank of England

Today, it is worth paying attention to the passing in Jackson Hole Economic Symposium, as it meets the majority of the central banks, and will be discussed the world economic situation and the possibility of settlement of the existing problems. It will be accompanied by performances of the FED's governer Janet Yellen, the chairmans of the ECB and BOE. This will undoubtedly lead to a strong volatility in all major pairs.
But often the most important conclusions and statements are not published until its end, so to predict the output of the trade will be problematic. At the moment, the major currencies are in a consolidation phase and are moving in a very narrow range. And it is worth to wait for the release of the more significant macroeconomic data, which will move the market forward.

Thursday, 25 August 2016

Jobless claims in the US fell to 261,000, the cuts are scarce

The number of Americans who have filed claims for unemployment benefits last week fell by 1,000 to 261,000, and remained near lows after the recession, indicating that the labor market is healthy and less people lose their jobs.
Economists had forecast jobless claims to total 264,000 in the week from August 14 to August 20.
The average number of new claims for unemployment fell last month by 1250 to 264,000, said the Labor Department on Thursday. Less reluctant average value for four weeks is seen as a more accurate measure of trends in the labor market.
The number of people, filing for benefits in weekly basis, reached 27 year high of 665,000 at the end of the Great Recession in 2009, before starting their long descent. Benefits fell below the key level of 300,000 in early 2015 and stayed there for 77 consecutive weeks, the longest run since 1970.
Continuing jobless claims, meanwhile, fell by 30,000 to 2.15 million in the week, ended August 13. These clims have been reported with a lag of one week and they reflect people, who already are receiving unemployment checks.

USD/CAD rising in anticipation of Yellen speech

On Wednesday, the US dollar was higher against the Canadian dollar, as investors are waiting for the speech of Federal Reserve Chairman Janet Yellen on Friday.
At the beginning of the US trade, the pair USD/CAD reached 1.2953, the session high; the pair subsequently consolidated at 1.2932, adding 0.16%.
The pair was likely to find support at 1.2854, Tuesday's low, and resistance at 1.2997, the high of August 12.
Market participants are waiting for the outlook of Yellen's on US economy, after the hawkish comments of other Fed officials in recent weeks and release of protocols of the July meeting of the Federal Committee, which showed that its members still disagree on the need to raise rates this year.
The US dollar was supported after data on Tuesday showed, that the volume of new home sales jumped by 12.4% to 654,000 last month, although the forecasts were for decline by 2.0%.
Investors remain cautious on the eve of speech of the Chairman of the Federal Reserve Janet Yellen on Friday.
At the same time the Canadian dollar remaind under pressure from falling of oil prices on Wednesday.
Canadian dollar rose against the euro, EUR/CAD fell by 0.18% to 1.4572.

Wednesday, 24 August 2016

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Sunday, 21 August 2016

Westpac recommends selling of pounds around $1.32 to $1.28 and $1.25

Westpac strategists recommend selling GBP at 1.32. They note, that there is a risk a risk of profiting from short positions. However, they say, that the correction of the GBP will likely be short term as the Bank of England took a very flexible position. Regular auctions should emphasize the intention of the Bank of England to cut rates again, which will support the bearish pressure on GBP, analysts say.
The level of economic activity and the housing market in August, which will be published at the end of the month, will likely cause more interest, than the GDP data for the second quarter, as signs of deterioration of the data can trigger further action by the bank of England, say analysts.
The closure of short positions on GBP/USD should allow sales to 1.3200, with the initial target 1.2800, as the more distant target is the psychological 1.2500 level, analysts conclude.

Danske Bank: EUR/USD can reach 1.20

Economic growth in the US is lower in the second quarter of 2016, but in recent months the labor market in the country pleasantly surprised market participants. Private consumption should remain strong in the coming months, although the weakness in retail sales in July, say analysts. European data was stronger than expected, they added. Brexit likely have a negative impact on the economy of the Eurozone later, they say, adding that we will see some weakness in European economic data in the coming months.
According to them, FED's boss Janet Yellen should clarify the outlook for US monetary policy in her speech on August 26. They believe, that the Fed will wait until the first half of 2017 before raising interest rates. At the same time the ECB is unlikely to cut interest rates. However, analysts expect the bank's quantitative easing program to be extended beyond March 2017.
According to forecasts of the bank, the exchange rate of EUR/USD should be in the area around 1,20. Thus prices are currently too low.
Political risks from the US elections could have a negative impact in the coming months as their impact can be negative for both dollar and euro, experts say.
Bank analysts maintain the view, that EUR/USD will reach 1.20 level.

Saturday, 20 August 2016

RBS: We did not expected raise rates by the Fed this year before, we do not expect it now

The published report from the meeting of the FOMC in July turned out to be less combative than market expectations. Committee members were divided on the need to continue raising interest rates. However, we should keep in mind, that the head of the Fed, Janet Yellen, is one of the most "pacifist" members of the FOMC.
Thus analysts of the bank remain of the view, that the Fed has no reason to hurry to increase interest rates and this move looks very unlikely in September.
Although recent US economic data are very encouraging, obstacle to continued tightening of monetary policy is the lack of sustained inflation. The increase in interest rates in December is still possible, but analysts of the bank are skeptical that it will happen even then.

Friday, 19 August 2016

GBP/USD pair fell, despite positive UK data

On Friday, the pound fell against the dollar, despite positive UK data, as yesterday's US economic reports continue to provide support to the US currency.
During European morning trade, the pair GBP/USD reached 1.3112, the session low and subsequently consolidated at 1.3115, down by 0.43%.
The pair was likely to find support at 1.2976, Wednesday's low and resistance at 1.3449, the high of August 4.
The Office for National Statistics said, that UK net borrowings in public sector declined in July by £1.47 billion, compared with expectations for falling to £ 1.20 billion pounds.
In June, an increase of £7,510 billion being revised to £7.31 billion.
The dollar strengthened, after data on Thursday showed, that the number of initial applications for unemployment benefits for the week, ending August 13, fell by 4000 up to 262000. Economists had expected a decline by 1000.
In addition, the Federal Reserve Bank of Philadelphia said that their index of manufacturing activity rose this month to 2.0 from -2.9 in July, similar to the consensus forecast.
Sentiments on the dollar remain under pressure after the minutes of the July's FED meeting for monetary policy, released on Wednesday, showed that the officials, responsible for the policies of the central bank still disagree on the need to raise rates this year.
Nevertheless, the president of the Federal Reserve Bank of San Francisco John Williams on Thursday expressed support for the increase in US interest rates in the coming months, saying that if it's too long to wait, it could cost the economy dearly.

The dollar is growing, but may show weekly decline

The dollar strengthened on Friday, but may show weekly decline against other major competitors, as investors doubt the possibility of raising the Fed rate in the current year.
Major currencies traded in narrow ranges, except for the Australian dollar, which dipped 0.9 percent as ratings agency Moody's downgraded the ratings of Australian banks.
Market's attention this week has been mostly focused on the mixed signals by the US Federal Reserve. Minutes of the last meeting of the regulator showed on Wednesday that the Fed heads view on the imminent rate hike has divided.
"The market generally believes, that the Fed will not raise rates in the near future, therefore the dollar in the short term remains vulnerable." - Said Lee Hardman of Bank of Tokyo-Mitsubishi.
The dollar index, which tracks the currency's value against a basket of six major currencies, to 12.28 UTR rose by 0.38 percent to 94.517, but shows weekly decline. Thursday's index slipped to 94.077, the lowest level since June 23.
Euro fell by 0.29 percent to $ 1.1320, for the week strengthened against the US currency, the yen fell by 0.41 percent to 100.28 on Tuesday after reaching a maximum of eight weeks at 99.55 yen.

Sunday, 14 August 2016

Overview of NZD/USD

On Thursday the worst results from the pairs showed the New Zealand dollar. Initially, after the RBNZ cut interest rates, NZD/USD rose, as investors hoped, that the decline will be by 0.50% instead of 0.25%. However, when all has settled, market participants realized, that the RBNZ is not only lowered the interest rate to 2%, but warned about their plans to reduce the rates further. Chairman Graham Wheeler decided, that there is no need to cut rates by 0.5% now, but has made it clear, that a further easing is needed. Exactly "needed" rather than "may need". In the forecasts of RBNZ is inherented a decline of 0.6%, so a further reduction by 0.25% in this year is quite possible, especially if the NZD/USD does not register a fall. The Thursday's growth of quotations was completely unjustified, but Friday's pullback corresponded to the fundamental logic. The main objective for reducing the rates by the Reserve Bank's officials were weakening of NZD positions, so they will continue to say and do everything possible to send the currency down. NZD/USD will soon be close to the level of 71 cents.

Saturday, 13 August 2016

Overview of AUD/USD

After the strengthening of AUD/USD, sellers have intensified. But their activity is reduced by the weakening in prices. This may due to the fact, that the pair is approaching important 0.7660 support level, which is a "mirror-level" on a large time period. The significance of this level of support is difficult to identify. Given all this, for the continuation of the downward movement, sellers need a fairly powerful driver of growth of the US dollar.
In fact, the absence of a driver is another reason for the decline in sellers activity. As we can see, the technical factor (strong support) and the fundamental (no fundamental reasons for the substantial strengthening of the US dollar) does not allow to count on a decrease in quotations of the pair.
Friday's weak US data, which is negative for the US dollar, should be positive for the pair.
A break of 0.7690 resistance could lead to another wave of strengthening for the pair, while the breakdown of 0.7625 support could be the first signal of the ability of sellers to continue to decline further to the base figure.

Thursday, 11 August 2016

CAD - daily note for August 11

The best results after the US dollar today showed the Canadian dollar, unexpectedly and significantly raised in the conditions of strengthening USD. This very remarkable fact is fully explained by the increase in oil prices by 4.5%. Discussions on possible measures to stabilize oil prices caused the increase in commodities, although the talks will take place only at the informal meeting at the end of next month. The probability of changes in production volume is small, but today there weren't no major factors, so even a minimum chance was enough for USD/CAD to fall to its lowest level for the month.

Dollar strengthens

Today was a good day for the dollar. He rose against most major currencies, with USD/JPY fell back to 102. The data from the US has been relatively good. The reports had little impact on the dollar, which rose after the yield of US government bonds and the overall demand for US assets. Dow Jones Industrial Average reached a record high, while the yield on 10-year US government bonds jumped by 0.7%. Despite the fact that there were no news that would explain today's motion, it is clear that further policy easing in other countries make US assets more attractive.
Yesterday the Reserve Bank of New Zealand cut interest rates by 0.25% and stated that they will fall even further. In the US, the situation is reversed - Federal Reserve officials say the rise in interest rates in 2016 is still possible. The latest about this said the president of the Federal Reserve Bank of San Francisco John Williams. Supporters of tight policy even claimed that the rates can be increased in the next month, but I highly doubt it. Also, demand for the dollar can be attributed to tomorrow's release of data on retail sales in the US. As wages rose, while sales of cars fell back, in July it is expected to increase consumer spending. However, I fear that the figure may be disappointing, because gas prices have fallen, and, according to the Johnson Redbook, spending last month decreased. If I'm right, USD/JPY will end the week close to the 101. If I'm wrong, and the index will still be high, it will serve as an argument in support of the policy tightening this year and may return the USD/JPY to the August peak.

Wednesday, 10 August 2016

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Sunday, 7 August 2016

Fed's rates raising back on the agenda

In response to the unexpectedly strong data on US labor market, dollar strengthened against most of its competitors. The release can be called truly impressive. In July, the employment rate for payrolls, excluding the agricultural sector, increased by 255 thousand, against the expected growth by 180 thousand. At the same time the previous two indicators were revised upward, bringing the average for the last three months amounted to an impressive 190 thousand.
No less noteworthy was the component of the average hourly and weekly earnings, which J. Yellen gives great importance. The indicator rose to 2.7% y/y, reaching a maximum of more than one year level. The increase in earnings gives hope for acceleration of inflation in the country, which is the second reference point for the Fed in determining the course of monetary policy. Thus, Friday's statistics unit immediately gives two arguments in favor of the fact that this year the regulator can still decide to raise borrowing costs.
As expected, the pair EUR/USD, which was trading near 1.1150, has responded to the report, falling under the mark of 1.11. Reaching the 8-day low at 1.1050, the euro has lost more than one figure. To improve the technical picture EUR/USD is now required to return above the mark of 1.11.

Thursday, 4 August 2016

The Bank of England is preparing for the worst

During the last meeting of the Bank of England, the regulator did not disappoint those who counted on the generous incentives. The regulator has reduced the expected rate by 0.25%, while enhancing the program of buying assets to 375 billion up to 435 billion pounds. Surprisingly, it was the decision to buy not only the state, but also corporate bonds. The program will be applied within 6 and 18 months, respectively.
GBP/USD naturally weakened in response to the verdict of the monetary authorities, having lost the level of 1.32. The pair found support on the way to the level of 1.31, and is still under pressure.
In the aspect of longer-term prospects for the British currency, we should pay attention to the attitude of the Central Bank.
Firstly, the Central Bank sharply lowered its economic growth forecast for 2017 to 0.8%, while in May, GDP was expected at 2.3%. Such a grim assessment, combined with the increasing talk about a technical recession, create unfavorable conditions for the pound. Secondly, M. Carney made it clear that he is ready to further easing of policy in the future. It raises the issue of divergence rates of monetary policy of the Bank of England and the Federal Reserve. And although the issue of the next rate hike in the United States is still shrouded in fog, it is important to remember that in the United States we are talking about the normalization of monetary policy, but the British regulator after today's "warm-up" paves the way for further action in this direction.
The closest factor that may affect the expectations of the Fed's rates will manifest itself tomorrow and will have an impact on the dynamics of the GBP/USD and the dollar as a whole. Strong key report on the US labor market will strengthen the position of the US currency across the board. In this scenario, the pressure on the pound will continue and may worsen. Otherwise, we expect a restoration of the pair above the level of 1.32.

The Hong Kong bitcoin stock exchange suspended work due to hacking

Nearly 120,000 bitcoins were stolen from the Hong Kong Stock Exchange Bitfinex, told Reuters the representative of the stock exchange Zane Tuckett on Wednesday, after on Tuesday evening the company announced the suspension of trading due to hacking the system.
Bitfinex is one of the largest stock exchanges, carrying out operations with virtual currencies.
The company said, that they informed the police about the incident. It has not yet determined, what's the value of the virtual currency, stolen from clients.
A similar attack on Mt. Gox, bitcoins stock exchange based in the Tokyo, forced her to declare bankruptcy in early 2014. Back then hackers stole customer's Bitcoin worth about $650 million.

Wednesday, 3 August 2016

ADP and Non-farm payrolls - what to expect on Friday?

Today in the United States came out data on the number of employees by ADP, which have purely prognostic value. According to these statistics, you can more accurately predict the next data on Non-farm payrolls, which will be released on Friday, and most often they exceed the ADP data by 30-40 percent. Forecast for ADP was 170 thousand, while the Non-farm are only 175 thousand. The real statistics exceeded expected - 179 thousand. It is easy to calculate, that according to the forecast by ADP, Non-farm will be released in the area of ​​220-250 thousand. And with this in mind, we can expect a significant excess of forecasts and, consequently, the volatility in the region of 100-150 points in pairs with the US dollar. Moreover, this volatility will be one-way, which is very convenient for trade "by hand", or with a slight indentation in the trade with pending orders.

Fiscal stimulus in Japan disappointed

In Japan Prime Minister's Shinzo Abe long expected fiscal stimulus was finally disclosed. The cabinet approved on Tuesday a package of spending and loans totaling 28 trillion yen (about 275 billion dollars). The government announced their plans days after the central bank adopted a modest increase of their incentives.
IMF determine the increased costs as slightly improving the prospects. The Fund welcomes the decision of BoJ expansion of the incentives.
The government may issue 40 year government bonds worth 100 trillion yen to finance the budget.
Dollar/yen fell because of fiscal incentives and dealers continued to close long dollar positions. Short-term resistance is at 101.50 and the major support is 100.