Sunday, 30 April 2017

Good results from Amazon and Alphabet

The US indices and the dollar remained unchanged on Thursday, in expectation of the key news about the growth of the US economy on Friday.
The S&P 500 is trading very close to its historic peak, and whether it will be overcome will depend on its medium-term movement.
Reported good results from US companies have helped the technological Nasdaq to rise to a new historic record.
After the good results, Amazon.com's shares rose to a new historic record at the OTC session, where they added nearly 5% of their value. The company posted sales growth of 23 percent to $35.7 billion, which exceeded analysts' average expectations of $35.2 billion.
The market capitalization of the company is approaching the psychological limit of $200 billion.
After the good results, a growth of nearly 4% recorded also Alphabet Inc. The company's profit has risen by 29% over the past quarter and shows no signs of slowing pace.

Record highs of purchases of call options on the S&P500

In light of expected tax changes by President Trump, investors have bought record volumes of call options based on the broad S&P500 index.
This has led to a record ratio between call and put options of the index on Thursday. Last time, when this ratio was so high, the index has seen an increase of 3% over the next two weeks, experts from Credit Suisse recall.
The increase in the ratio to a new record has become a reality on Thursday before the publication of Trump tax reforms. In practice, the ratio began to rise after the US presidential election in November last year.
It reached a record high on Feb. 14, after which the broad index rose by 3% over the next few days to reach a historic record on March 1.
Often, this ratio is also used by countertraders, especially when at peak levels. And the current ones may be a good indicator of peak market optimism, which is the first worrying signal for the markets.

Friday, 28 April 2017

Beijing promises further internationalization of the yuan and a free trade

China will continue to promote the internationalization of the renminbi, as well as free trade and investment, Vice Chairman of the People's Bank of China Fan Yifei said on Thursday.
The head of the regulator is sure that achieving sustainable economic growth and maintaining financial stability will create a good basis for the internationalization of the renminbi, the Central Bank's website said.
However, the process will be long, and the decisive role will be played by market forces, he said at a conference in Sydney.
The head of the central bank of Australia, Philip Lowe, on Thursday commented on the statement of the Chinese colleague, calling the internationalization of the yuan entailing significant consequences for the global financial system.
Fears of further weakening of the yuan and slowing the world's second largest economy prompted investors to withdraw funds abroad. In response, at the end of 2016 and early 2017, Beijing imposed restrictions on capital outflow, which influenced the pace of internationalization of the national currency. However, the weakening pressure of capital outflow helped to stabilize the yuan this year, while the country's foreign exchange reserves again exceeded the key $3 trillion mark.

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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Sunday, 16 April 2017

USD/JPY continues to fall

If the EUR/USD pair after the publication of an interview with Trump is growing, but remains within the usual dianpazon, in USD/JPY the discontent of the President from the strong national currency and sympathy to the policy of low interest rates leads to a decline to new lows, say analysts.
With the start of the Asian session on Thursday the pair has not undergone significant changes, as there were offers for purchase at 108.80 and the balance of risks remains in favor of a reduction to 107.86 (61.8% of the growth from 11/11/2016).

Saturday, 15 April 2017

Stock markets react to the uncertainty of the position of Trump

For obvious reasons, on Friday corporate reports weren't published.
The American stock market continues to remain flat. The outlook is moderately negative, despite the presence of a graphic "flag" pattern on the weekly charts of the Dow Jones index. Technically, on the daily charts, the trend indicators are directed downward. The 9-day moving average shows clear bearish sentiment, the Bollinger bands are also oriented downwards. Thus, bears, most likely, will continue to push down the market. It's too early to talk about changing the medium-term trend, I think that this will happen after the breakdown and consolidation below 20,200 points, to which there are 4 more figures.

WTI futures rose on Friday

Quotations for oil futures WTI rose during the European session on Friday.
On the New York Mercantile Exchange (NYMEX), WTI futures for May delivery rose to $52.89 per barrel, up by 0.41%.
WTI oil found support at $52.29 and resistance at $53.76.
As for other goods traded on ICE, futures for Brent crude for delivery in June rose by 0.02%, reaching $55.64 per barrel, and the difference in price between Brent crude oil contracts and WTI oil was 2.75 dollars per barrel.
Futures on the USD index, showing the ratio of the US dollar to the basket of the six major currencies, increased by 0.43% and is trading at around $100.49.

Friday, 14 April 2017

Gold is rising

Quotations of gold futures rose during the European session on Friday.
At COMEX, a division of the New York Mercantile Exchange (NYMEX), gold futures for delivery in June are traded at a price of $1.289.65 per troy ounce, up by 0.89%.
Gold found support at $1.248.20 and resistance at $1.290.70.
As for other commodities traded on COMEX, silver futures for delivery in May rose by 1.31% to $18.545 per troy ounce, while copper futures for delivery in May rose by 0.86% to reach the level of $2,567 per pound.

JP Morgan: We must be careful with the pound as the bulls remain in control of the situation

The break of support around 1.2430/20 last week has a negative impact on the dynamics of the British currency, and now the pair found support near 1.2360, as analysts of JP Morgan advised to be careful.
In the bank warned that a break below 1.2316/00 will signal the return of the couple to a model of consolidation and the support moves to 1.2229 then the focus will be on 1.1988.
So far, the banking scenario is consolidation of the pair in the short term and new test of the resistance above 1.2631. The ability of the pound to overcome the last resistance is a sign of support for the Bulls, who hope for formation of bottom, as a way opens to test 1.2839 and then 1.3187.

Sunday, 9 April 2017

TD Securities prefers to stay in the camp of bulls for the dollar

Asked whether the glass is half empty or half full, and whether the current consolidation of USD/JPY has paused, strategists at TD Securities adhere to the camp of optimists.
In the bank noted that the pair remains above the important support near 110 and it is expected that the statistics from the US this week will support bulls in US currency, especially if the yield on ten-year government bonds remain above 2.3%.
In TD Securities connect strengthening of the yen in recent times with the activities of hedgers and repatriation of capital by Japanese investors and expect that the started a new financial year in Japan will lead to a negative character for the Japanese currency.
At the same time the positive signals from economic reports are expected to contribute to increased overall risk appetite, as their weakening last week also affect the yen.
In TD Securities advised to use attempts to reduce the USD/JPY to 110 for tactical purchases with expectations for growth to 113.50, as the bank adhere to forecast for second-quarter level of 114, but expect a return to 112 and 110 over the next two quarters.

Commerzbank maintains a bearish view on pounds

Commerzbank analysts believe that the short term outlook for the pound remains negative.
Last week, the pound failed to close above the short term resistance at 1.2579/81 (maximum of February 9), the negative forecast of analysts remains.
The pound is still not closed below 55- and 100-day moving average, but analysts believe that it will happen this week. Elliott waves are positive, but the market is facing 1.2640 and 1.2660. Below 1.2347 (minimum of February), attention will focus on the recent minimum of 1.2110. It is considered the last defense of 1.1988 - bottom-January.
Key short-term resistance is at 1.2640. Only break above 1.2707 most of February will enable expect further strengthening to the maximum since December - 1.2777. Between this level and 1.2836 lie several Fibonacci corrections and greater resistance and analysts suspect that the bulls will not go further.

Saturday, 8 April 2017

The dollar was volatile against the yen after the US attacks on the Syrian airbase and NFP

The dollar fell in price against the Japanese yen on Friday morning after the US fired cruise missiles, striking at the airbase in Syria and provoking concern about the sharp escalation of the Syrian conflict.
President of the United States Donald Trump on Thursday said that he ordered to launch missile strikes on the Syrian airbase, with which a lethal chemical attack was carried out.
The dollar index to the basket of six major rival currencies by 6 am GMT fell by 0.08 percent to 100.59.
Against the yen, which traditionally grows during geopolitical tensions and risk aversion, the dollar sank by 0.3 percent to 110.45 yen.
However, after positive NFP dollar managed to climb to daily highs at 111.37.

Wednesday, 5 April 2017

Deutsche Bank: The defeat of Marine Le Pen could send EUR/USD to 1.08

In case of victory of Emmanuel Macron on the presidential elections in France (the first round is on April 23, and the second - on May 7), EUR/USD could rise to 1.08 dollars, the bank analysts said. Furthermore, they believe that:
- Low volatility talk about market confidence in the fact that Le Pen would win;
- despite recent bellicose statements of the administration of Donald Trump on currency manipulators, neither the US nor China want excessive weakening of the yuan;
- breakthrough of US 10-year bonds below 2.25% could spark a new wave of liquidation of short positions;
- in general, the yield on US bonds look quite low relative to the general economic picture and it seems the market underestimated the warlike attitude of the Federal Reserve.

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Saturday, 1 April 2017

UOB: Chances for a breakthrough of USD/JPY below 110.00 fall substantially

In light of recent changes in the price of USD/JPY, the pair can reach the bottom near the psychological level of 110.00, suggest currency strategists at UOB Group.
The major support at 110.00 still remains as the dollar rose sharply from the minimum at 110.15. The further expansion of the correction to 111.50 seems likely, but it has strong resistance level and a break above this level is a low-probability. Support is at 110.75 and then at 110.40.
Support key level of 110.00 helped the Bulls to gather strength indicating a sharp recovery in the dollar from the minimum at 110.15. The recent downward pressure lose weight but needs the dollar to break above 111.50, to show that it has formed a short term bottom. In other words, it is too early to expect a sustained recovery, although a break below 110.00 is unlikely, analysts say.