Friday, 30 September 2016

Credit Suisse maintained their forecast for EUR/USD at 1.15

While Scotiabank believe, that the growth of the euro will be limited to 1.1250, Credit Suisse maintained their forecast for EUR/USD at 1.15.
Bank analysts maintained their three-month forecast for EUR/USD 1.15 dollars, recalling what justifies it:
- From Credit Suisse believe that this year the FOMC will raise rates, although the market price reported a 50 percent probability of such an event.
- Analysts believe that any increase in the political risk associated with the presidential elections in the US will increase demand for defensive currencies like the euro.
- According to their estimates, during the meeting of the ECB in December incentives will be increased minimally.
What could force analysts of the bank to revise their forecast? First, it is the system of political decision-making in Germany, which is quite slow and may fail to respond adequately to the possible aggravation of the situation in the banking sector. Analysts believe that this is unlikely.
Secondly, if as a result from scheduled for December 4 constitutional referendum in Italy, Prime Minister of the country Renzi be defeated and resigned, the regional situation will be complicated. It is quite likely, as with it should be recalled that the Italian problems this summer have not led to a massive outflow of deposits from European banks.

Thursday, 29 September 2016

Scotiabank: Growth of the euro will be limited to 1.1250

Despite the fact that the euro is rising, strategists at Scotiabank say that its progress will most likely be limited above 1.1250 and short-term technical outlook remains bearish.
Analysts believe that the euro is increasing in response to better-than-expected data on Ifo business index in Germany. The differences in the policies of central banks are likely to be dominant guide this week for the euro, as analysts expect few public appearances of ECB President Mario Draghi ahead of the awaited data on the consumer price index of the Eurozone CPI on Friday. Inflation is expected to rise to 0.4% yoy.

The spread between two-year bonds in Germany and the US remains high and there is a risk of expansion to levels, last seen in 2006. The ratio of risk for the euro is shifting downwards. Short-term increases in EUR/USD is likely to be limited above resistance level 1.1250, which served as a deterrent to the progress of the euro during most of September, analysts say. They look forward the pair to fall back to 1.1150.

BNP Paribas sell USD/JPY with target 97.00

While  Goldman Sachs maintained their forecast for USD/JPY at ¥108 level, BNP Paribas sell USD/JPY with target 97.00.
Bank analysts expect renewed weakness of the US currency due to disappointment from the meeting of the Federal Reserve last week (21 September). They believe that the market will probably continue to calculate in the prices the fact, that the Fed will delay further tightening of monetary policy. In the short term real yields on US should remain low and the positioning of the dollar has the potential to increase. At the same time risky assets (shares) should continue to decline, analysts say.Even if the Fed raise rates in December, analysts believe that the dollar is at risk of weakness in the coming weeks.
Therefore, in the short term they prefer to take a tactical short position in the pair USD/JPY. They emphasize that this is a short recommendation, which is not in contradiction with their forecast level of 108.00 at the end of 2016.

Wednesday, 28 September 2016

Goldman Sachs maintained their forecast for USD/JPY at ¥108 level

Last week was marked by the meeting of the Bank of Japan, which had a huge number of conflicting views of economists and market participants about what exactly did the regulator and what this means for the Japanese economy and markets.
Bank analysts agree, that it is unlikely that the new policy to be more effective than the previous in terms of stimulating the economy. For this the market will need to convince on promises of Kuroda for inflation over 2%, while long-term incentive policy failed to reach 1 percent, analysts say.
At the same time they do not agree with the fact that the Bank of Japan will not use more stimulus, or that they will reduce them. On the contrary, in their opinion, change of the course of monetary policy speaks for determination of the regulator to face the situation and to ensure that incentives will finally reach the real economy.
Currently the trade in yen is complexed. According to estimates of analysts the yen is close to its long-term "fair" exchange rate against the dollar and it is therefore preferable for the currency to be sold against the dollar than against the euro. Along with the decline in inflation expectations in Japan compared with the United States, means that this year the yen is more attractive than the dollar.
Currency strategists at Goldman Sachs maintained three months forecast for USD/JPY at ¥108 level. It is based on the assumption that the FOMC will realize the need for higher nominal interest rates, together with rising inflationary pressures. This, together with the commitment of the Bank of Japan to achieve the target level of inflation, should lead to a change in yield in favor of the dollar.

Commerzbank analysts tend to believe that the euro will test the upper limit of range

Commerzbank analysts suggest that there is still potential for EUR/USD to test areas around 1.1360. They believe that EUR/USD is trading in the range and the couple is ready to get out of the line of resistance at 1.1287. This will strengthen the determination of bulls and the couple will head to 1.1366, the peak of August, analysts say.
Only an unexpected rise above this level will open the way for a move to 1.1416/65 - highs from mid-April and June, they added.
In order to ease the current bull pressure, it is required the couple to get back in the zone of 1.1190, which keeps 1.1123 - low of August 31, said analysts of the bank. They expect that this support will hold, but not exclude a jump to the area of ​​1.1366. A break below 1.1123 opens the way for a test of support at 1.0992 and lows of June and July, at 1.0952/12.

Saturday, 24 September 2016

Societe Generale advise to use the fall of the USD/JPY for purchases

Currency strategists at Societe Generale believe that the chances of raising interest rates by the Federal Reserve this year have increased, but the overall the tightening policy in the current cycle seems limited. In the bank doubt that increase of the level will be significantly above 2%.
This opinion supports the adjustment of the economic forecasts of the Federal Reserve.
The futures market showed no significant reaction to the Federal Reserve meeting, but the bond market there was a decrease in profitability at the far end of the curve, but the risk appetite has increased, say analysts.
At Societe Generale see no reason to expect a decline in real interest rates. Bank analysts believe that the market reaction to Fed and the Bank of Japan will be short and prefer to accept the decline in USD/JPY as an option for purchases. SG recommend buying yen at 100.30 with a stop at 99.

Morgan Stanley are certain in buying EUR/USD with target 1.17

Currency strategists at Morgan Stanley remain confident in their strategy for portfolio, which includes purchases of EUR/USD without any adjustments and without adding new deals for major currencies.
They say that the slower increase in US interest rates lead to lower volatility in the market and keeps the dollar weak against high-yielding currencies like the Australian dollar and the New Zealand dollar and against the Brazilian real and the Russian ruble in emerging markets.
The index of the dollar managed to rise above the peaks in July. This is an important technical indicator that shows the potential reduction of current levels by 4-5%.
Now the analysts' attention will be focused on higher-yielding currencies, but they also see potential for growth in the EUR/USD to 1.1700.

Thursday, 22 September 2016

TD Securities confidently sell pounds, as it is to reach 1.20 by the end of the year

The pound is substantially stable in the period after the referendum, but this is a temporary phenomenon, say the analysts from TD Securities. At the macroeconomic level risks continue to increase. Some political issues have been resolved more quickly than expected, but the uncertainty remains, they added.
Therefore the stability of sterling has its limits. In combination with careful, yet peaceful tone of the Bank of England, the tendency to fall in economic growth, the increase in inflation and pressure on the balance of payments, the pound has the potential to become even cheaper, say analysts.
They say they sell in any attempt of strengthening of the pound, they believe that its target is 1.2000 by the end of this year.

Fed left interest rates unchanged, but signaled that they may soon rise

Last night the Federal Reserve left US interest rates unchanged, but they said, that the rise in interest rates may happen in the near future.
The Committee of the Federal Reserve was divided. There were three members who had agreed to increase interest rates at this meeting.
In their statement the Commission on Federal Reserve policy stated, that the possibility of an increase in the federal funds rate is getting stronger, but they decided to wait now for another proof of continued progress towards their goal.
The Fed also said, that the risks, which are facing the economy are "roughly balanced".
This is the first time that the Fed is optimistic about the prospects for the economy since last December, when they raised interest rates for the first time since 2006.

Wednesday, 21 September 2016

Free webinar: "Live Trading Analysis - FX, Commodities & Indices"

On September 22 there will be a very useful free "Live Trading Analysis - FX, Commodities & Indices".
The Pro advisor Malte Kaub will give us practical insight into the application of proven technical analysis.
Time: 7pm-8pm Cost: Free Place: Online
Don't the other interesting and useful webinar, which will be held in September:
September 29: "End of Q3 Review and Analysis".
For more information and registration, visit here.

Sunday, 18 September 2016

Forex forecast for GBP/USD for September 19 - 23

As expected, the behavior of the pair GBP/USD last week was determined by the large amount of news from the UK. At the same time the most of analysts with a graphical analysis on the D1 predicted for the pair bearish trend in an effort to stay within the boundaries of the summer side channel. What happened - as a result of a sharp fall, the pair even broke through the central channel of the line and reached a level of 1.3000.
 Assessing the prospects for the GBP/USD, most of the indicators and technical analysis on the D1 insist on continuation of falling of the pair to the lower limit of three-months side channel - 1.2850. As for the experts, their opinions were divided into three almost equal - 35% for the fall, 30% of growth and 35% of the lateral trend. The common in their predictions is only that the pair will continue to stay in the corridor in the range 1.2850 - 1.3450.

Forex forecast for EUR / USD for September 19 - 23

Giving the outlook for EUR/USD, the vast majority of experts say that the couple some time will move sideways, with the support of 1.1200, and that happened all last week, until the mid-Friday. But then, instead of having to go upstairs, the pair made a breakthrough to the south. A pair directed to the support of 1.1120, though it has not reached it, and stoped at the level of 1.1150.
Speaking about the EUR/USD future, indicators on the D1 show that the breakthru may be false, and the ascending channel, which was launched in July, will be continued. However, more likely the pair will fall further first to 1.1100 and then at 100 points below. In the medium term I expect decrease in pair with the aim of 1.0500 - 1.0800.

Saturday, 17 September 2016

The Bank of England left interest rates unchanged at a level of 0.25%

The Bank of England left interest rates on the main level of 0.25 percent, but it became clear that there is a real opportunity for a new reduction in interest rates by year-end, which of course is related to the leaving of the United Kingdom from the European Union and all related consequences with this. The institution raised its forecast for growth of the economy in the third quarter to 0.3% compared to the previous forecast of 0.1 percent.
Immediately after the news GBP/USD fell to 1.3179, but later rebounded and closed at 1.3237, almost unchanged from closing on Thursday. Retail sales in the UK shrank in August, decreasing by 0.2%, although in July recorded a growth of 1.9%.

Strong growth of stocks in Europe and US

On Thursday European stocks interrupted losing streak after soft US economic data underlined expectations, that interest rates in the largest economy in the world will remain at very low levels.
Stocks in Europe were traded on significantly higher levels as reported decline in retail sales last month passed each other significantly with the expected. Also, data showed that industrial production has shrunk in August.
Bank of England left interest rate unanimously unchanged, at the same time raised their expectations for growth in the third quarter to 0.3% compared to the previous one, which was 0.1%.
British FTSE100 index ended the session with a growth of 0.85%, closing at 6730.30 points.
German DAX30 index ended the session at 10,431.20 points, registering a growth of 0.51%.
Overseas, US stocks also recorded strong gains, after data suggested, that the Federal Reserve will remain passive in their desire to raise interest rates.
The broader index SP500 recorded daily increase of 1.01% closing at 2147.30 points.
Dow Jones Industrial Average closed at 18,212.48 points, which was an increase of 0.99%.
The largest daily growth recorded NASDAQ COMPISTE ending Thursday's session with a growth of 1.47% to 5249.69 points.

Friday, 16 September 2016

S&P affirmed the ratings of the Russian Federation and improved the forecasts

International rating agency Standard&Poor's confirmed on Friday long-term sovereign rating of Russia at the level of "BB +" and improved its outlook to "stable" from "negative".
S&P said, that they are waiting for the growth of Russia's economy in the years 2017-19 by an average of 1.6 percent after an expected decline in GDP in the current year by 1%.
The agency expects that the economic growth in Russia is due to a slight recovery in oil prices and increased oil and gas sector in terms of volume as well as the rise outside of the oil sector, mainly related to household consumption.
S&P said that the outlook revision reflects the agency's opinion that the external risks for the Russian economy decreased significantly. It expects that the economy and the policy process in Russia will continue to adapt to the low oil prices.
According to S&P, the agency can raise the rating if the financial stability and the prospects for economic growth in Russia will improve more than it predicts, probably due to the softening of the sanctions against Russia because of countrys role in the Ukrainian conflict, or significantly stronger growth oil prices than currently expected.
Rating may be reduced if the geopolitical events will lead to a significant tightening of anti-Russian sanctions, and if GDP growth or the state budget or balance of payments seriously deteriorate compared to current forecasts.

Friday, 9 September 2016

Gold fell after the ECB meeting

Gold lost ground during yesterday trading, after the ECB left interest rates unchanged. The spot price of the precious metal fell by 0.6 percent to 1337.40 dollars for an ounce. Futures for deliveries in December retreated to 1341.60.
Important resistance level for the gold is the area around 1352. The first major support is 1327 dollars.
Platinum fell by 0.6 percent to 1078.20 dollars for an ounce, after on Wednesday failed to reach a 2-week high. Palladium retreated by 0.25 percent to 685.25 and the silver is down by 0.90% to 19.58 dollars for an ounce.
Oil prices rose to 47.60 dollars for a barrel after data on oil stocks in the US. For the week to September 3 stocks fell by 14.5 million barrels. Preliminary estimates of economists was for growth by 0.6 million barrels.

By the end of the year ECB may extend the program of quantitative easing

Thursday was very eventful for the major currency pair. Immediately after the September meeting of the European Central Bank, the euro/dollar rose sharply and touched a two-week high at 1.1316, but quickly came back under the 1.13.
ECB left the interest rate at zero, the deposit rate at -0.4% and the monthly purchase of assets amount to 80 billion euro. In his comments after the meeting, Mario Draghi said that QE will continue until the designated period (March of the following year) or longer, if adjustments of inflation are required. The consumer price index, on the assessment of the ECB, is steadily improving. Eurozone GDP in the third quarter will be equal to growth in April-June this year, and in general, the ECB expected growth of the region's GDP by 1.7% by the end of 2016.
Investors appear to be reasoned as follows: while the statistics for the euro area at most part is positive, the European regulator will not increase or extend QE. However, such a possibility is present for further meetings. March 2017 is not so far away as it seems. For half a year significant improvement in the European economic system could not happen, and the ECB is not one of those, who would make desperate attempts to align the boat at the last minute. Typically, Mario Draghi warnes markets in advance about the bank's readiness to act. It is possible that in November and December, the ECB would inform the capital markets of the intention to expand or extend the QE. In the meantime, let the euro fans rejoice.

Thursday, 8 September 2016

USD/CAD rebounded from lows and won back losses

On Thursday, the US dollar regained ground against the Canadian dollar after the publication of upbeat data on benefits for unemployment in the US, as well as a disappointing report on the volume of permits for construction in Canada.
In early US trade, the pair USD/CAD rebounded from 1.2851, the session low, to 1.2902, gained 0.10%.
The pair was likely to receive support at 1.2818, Wednesday's low and resistance at 1.2934, the high of September 6th.
US Department of Labor said, that the number of initial applications for unemployment benefits for the week ending September 3 fell by a seasonally adjusted 4,000 to 259,000 from 263,000 the previous week. Analysts had forecast for a decline of 2,000 to 265,000.
However, sentiment on the dollar remained fragile after the release of weak employment data in the United States on last Friday, as the expectations for rate rise by the Federal Reserve have lowered.
Also on Thursday, Canada's Statistics reported that the amount of issued building permits rose by 0.8% in July, while they were expected to grow by 0.3%. In June, the volume of building permits declined by 5.3%, the value was revised from the preliminary 5.5%.
But the commodity "Canadian" was supported against the background of rising oil prices, as market participants expect fresh weekly information on US stockpiles of crude oil and petroleum products.
Canadian fell against the euro, EUR/CAD rose by 0.86% to 1.4608.

Wednesday, 7 September 2016

The new "stone in the garden" of the US economy

US economic data continues to disappoint market participants. Yesterday was published the index of activity in the service sector ISM in August. Its value greatly disappointed market participants - figure dropped to a mark of 51.4 from 55.0 in July. This was the worst result for the last 6 years.
US dollar responsed to the data with weakness on all fronts. The EUR/USD in a wave of purchases broke through psychological barrier near 1.1200 and it is now in the 1.1250-60 area, intending to continue to grow.
In the past few days, there was enough evidence, that the US economy remains far from being in the state, which would allow to successfully survive the increase in Fed rates. The labor market, according to the Friday's NFP, is growing with uneven pace, inflationary pressures are not observed, and economic activity is reduced. This may force the US Federal Reserve to postpone the resumption of the cycle of rate hikes until next year.
Any new signs of recession in the US economy would immediately lead to a selling USD, so the major currency pairs will be subject to high volatility.

Free webinar: "Trading the US Indices"

On September 8 there will be a very useful free "Trading the US Indices".
The Pro Trader Paul will provide us introduction into trading the US indices markets.
Time: 7pm-8pm Cost: Free Place: Online
Don't the other interesting and useful webinars, which will be held in September:
September 15: "The Four Pillars of Personal Success at Trading";
September 22: "Live Trading Analysis - FX, Commodities & Indices".
For more information and registration, visit here.

Saturday, 3 September 2016

China and Risk Off

For a long time, the Chinese economy is not mentioned in the world's main lobby, which publish the first negative signals for the dynamics of financial markets. Neither GDP growth nor the last publication on inflation, no data on the index of business activity are a factor for adverse movement of risk assets.
Many financial market participants are talking about the upcoming US presidential elections, raising the Fed's rates, Bank of Japan's decision on the new incentive program, Brexit and so on. The existence of a major player in the current global market - China, all forgotten. As a rule, unexpected negative news can cause large fluctuations in the financial markets. Chinese "miracle" last August is still fresh in the memory, when global trade demonstrated aggressive drop in prices down. A similar situation was in the beginning of this year, and once again the reason was the Celestial Empire.

Unemployment in the European Union stabilized in July

Unemployment in the 28 countries - members of the European Union stabilized in July for the third consecutive month, to a 7-year low of 8.6 percent.
EU unemployment rate in July remained at the level from June - 8.6% and below the level of 9.4% a year earlier. Thus European unemployment remains for the third consecutive month at its lowest level since March 2009, according to Eurostat.
According to European statistics, a total of 21.063 million Europeans were unemployed in July, compared to June is a marked decrease of the unemployed in the EU with 29 000 and 1.688 billion compared to July 2015.
The lowest unemployment rate in July was registered in Malta (3.9%), followed by the Czech Republic (4.2%) and Germany (4.2%), while the highest was unemployment in Greece (23.5%) and Spain (19.6%).
In July, a total of 4.276 million young people aged under 25 were unemployed in the EU, this represents a decrease in youth unemployment by 310,000 compared to July 2015.

Friday, 2 September 2016

Business activity in the British manufacturing sector improved surprisingly sharply in August

Business activity in the British manufacturing sector improved surprisingly sharply in August to a 10-month high after a dramatic drop to 41-month low in July. The reason was that industrial companies in the country seemed to have recovered from the initial shock of the decision of Britain to leave the EU and managed to increase their export orders, and found support from the sharp depreciation of the British pound after news for Brexit, say analysts.
The industrial PMI index in UK grew strongly in August to 53.3 points from 48.3 points in July with expectations by financial markets for index level of 49.0 points. This is the highest level of the index for 10 months.
Index PMI, which measures industrial new export orders, rose from 51.4 points in July to 54.9 points in August, reaching the highest level since June 2014, while the index for industrial production rose to a 7 month high.
Now on focus is the research by agency Markit about the activity in the UK services sector in August, which will be announced early next week.

How the employment report will affect the dollar?

In anticipation of today's release of the report on employment in the non-farm sector of the US, investors have started to fix profit on their long positions on the dollar. The release from positions has been associated with a weak index of manufacturing activity from the ISM, but today will be a tense day, so some traders also decided to reduce their dollar assets. Officials from the Federal Reserve made it clear, that the decision about raising interest rates in September will largely depend on today's labor market report. If the increase in the number of employees exceeds 200 thousand and the unemployment rate will remain unchanged or fall, expectations about rate hikes in the next month will increase, causing a full-scale dollar strenghtening, wich would bring USD/JPY at the highest level for the month. If the figures are quite high, USD/JPY could even reach 105. However, if the report disappoint, the dollar can meet a nasty correction after rising last month. Stronger than all the dollar would fall to the British pound and the New Zealand dollar - the two currencies, which showed particularly good results in the eve the publication of the report.