US Inflation Figures Disappoint But Markets Still Uncertain What to Do

Posted on October 11, 2018October 11, 2018 by Skerdian Meta

US inflation figures were disappointing today. They were released a while ago and the USD spiked lower for a while but is pulling itself back up now, so the first thing that comes to mind after this price action is that the market is unsure what to do right now. Let’s have a look at the numbers.

The headline for the monthly CPI number came at 0% against 0.2% expected and down from 0.2% last month. Core monthly CPI came at 0.1% against 0.2% expected. The yearly CPI declined to 2.3% from 2.7% previously and against 2.4% expected. That’s a big miss.

Continue reading “US Inflation Figures Disappoint But Markets Still Uncertain What to Do” →

Forex Signals US Session Brief, Oct 10 – UK Data Disappoints, but Markets are Still Focused on Sentiment

Posted on October 10, 2018October 10, 2018 by Skerdian Meta

Finally we have some economic events on the forex calendar today after two days of nothing. Later in the US session, the US PPI (producer price index) report will be released, but the major release today came from UK during the European session. The UK GDP report and the manufacturing report were released in the morning and they were pretty disappointing. The GDP report published last month, which showed economic growth for July, posted a surprising 0.3% jump after having slowed to just 0.1% in the previous month. Today’s report which shows economic growth for August was expected to come at 0.1%, but it fell flat at 0.0%, which means that the British economy didn’t grow in August. Continue reading “Forex Signals US Session Brief, Oct 10 – UK Data Disappoints, but Markets are Still Focused on Sentiment” →

Forex Signals US Session Brief, October 9 – Market Sentiment Prevails Again As the Economic Calendar Is Empty

Posted on October 9, 2018October 9, 2018 by Skerdian Meta

Today is another day of no economic data in the calendar. So, the price action has to come from somewhere else, doesn’t it? The German trade balance report was the biggest economic data release today but the markets didn’t even acknowledge it. As a result, the price action has been pretty slow but there has been some motion nonetheless and it shows that the sentiment in financial markets is still negative today.

Continue reading “Forex Signals US Session Brief, October 9 – Market Sentiment Prevails Again As the Economic Calendar Is Empty” →

Forex Signals US Session Brief, October 8 – Markets Are Wary As the EU Summit Approaches

Posted on October 8, 2018October 8, 2018 by Skerdian Meta

Last week, the sentiment turned sour in financial markets but we didn’t see a run for safe-haven assets until the end of the week. This week, the sentiment is already pretty negative and it is expected to deteriorate further as we approach the last EU summit for the year. This will be the last chance to get a Brexit deal on the vote, so Britain and the EU have to reach an agreement by then. Although, from what we have heard today, both sides are far from reaching an agreement on this sensitive issue. The UK PM spokesperson said that the backstop would be temporary, which raises questions about what happens next when the temporary period is over. He also said that the EU still needs to move its position in negotiations, which I don’t think the EU will, so no deal then. Continue reading “Forex Signals US Session Brief, October 8 – Markets Are Wary As the EU Summit Approaches” →

Forex Signals US Session Brief, October 5 – Markets in Limbo as the US Employment and Earnings Report Approaches

Posted on October 5, 2018October 5, 2018 by Skerdian Meta

The markets continue to be a bit hungover from yesterday. Italian budget worries sent shivers through financial markets once again yesterday as collisions between Italian politicians and EU officials intensified. We are hearing similar comments today. The Italian deputy PM Mateo Salvini said that Juncker and Moscovici are ruining the EU, which are pretty harsh words. On the other hand, it is getting increasingly obvious that the EU won’t approve Italy’s budget for 2019.

Continue reading “Forex Signals US Session Brief, October 5 – Markets in Limbo as the US Employment and Earnings Report Approaches” →

Market Sentiment Has Suddenly Take A Hit

Posted on October 4, 2018 by Skerdian Meta

The US Dollar has been on a strong uptrend this week. Yesterday in the evening, FED’s chairman Powell sounded pretty hawkish which sent the USD jumping 50 pips higher, so we thought that today the USD would stretch the uptrend further.

We saw a retrace during the European session today which was normal. Every trend needs a refreshing now and again. But in the last few hours we are seeing some strange price action in financial markets. The retrace lower in USD has accelerated suddenly and I don’t see any reasons for this. I am looking around but I can’t find any news which could have sparked this move.

USD/JPY has just fallen through an air pocket and is nearly 100 pips down on the day, while EUR/USD and GBP/USD are surging higher. Looking at the stock markets, they are also tumbling now after being slightly bullish during the European session.

Bond yields increased yesterday and again earlier today, which could have turned the sentiment negative, but they are flat on the day now, so if this was to be the case, then this reaction is a day late, so it doesn’t make much sense either.

Nothing from Italy, Brexit or Donald Trump so this turnaround in the market sentiment looks weird. Perhaps as I mentioned at the end of the midday brief, the market might just be getting carried away. You know, some traders start selling, then some big levels or moving averages get broken and everyone panics and starts selling as well. The USD and stock decline has stalled now so perhaps this is the end of it, let’s hope.

Forex Signals US Session Brief, October 4 – USD Retraces But the Strong Uptrend Continues

Posted on October 4, 2018October 4, 2018 by Skerdian Meta

Yesterday in late US session or early Asian session, the FED chairman Jerome Powell held a speech about the monetary policy. The US Dollar had been on a strong uptrend all week and after Powell’s speech, it extended the gains and increased the pace of the uptrend. The main comments from him were along the lines of “Interest rates are still accommodative”, “Rates are a long way from neutral” and “rates will move past neutral”. What does this mean? It means that the FED will keep increasing interest rates further.

USD buyers got worried that the FED might have reached the neutral stance after the release of the last FOMC statement, but now we have the FED head confirming that the FED will keep increasing interest rates for quite some time to come, whether Trump likes it or not. The USD remains the only currency to buy now, if we only take into account the interest rates. Oh, and the economic growth since the US economy is growing faster than the Eurozone economy, the British economy and, of course, the Japanese economy. The USD jumped 50 pips higher yesterday in the evening although, it has been retracing lower during the European session, but it is only a matter of time before USD bulls become active again.

The European Session

Italians Trying to Calm the EU Again – Yesterday we heard Italian politicians trying to convince Europe that they have finances under control, saying that they will reduce the deficit in 2019 and 2020 by increasing economic growth. Today, the deputy Finance Minister Garavaglia said that the government has set the growth targets for the next two years at 1.6%. That is not much and it won’t help convince the EU.

Markets and the ECB Agree on the First Rate Hike for Rehn – The ECB member Olli Rehn said today that market expectations about the first rate hike are consistent with ECB statements. He added that key interest rates will remain as they are until September 2019, which is a little later than what the consensus was. We thought it was going to be next summer, so this is a little dovish for the Euro.

German Construction PMI – This indicator fell to 50.2 points which is almost flat, from 51.5 points previously. It shows that the growth of Eurozone economy continues to remain soft throughout the continent.

Saudis Try to Excuse Themselves for Higher Oil – The Energy Minister of Saudi Arabia, Al-Falih, said this morning that fundamentals aren’t behind the increase in Oil prices. He added that the geopolitics are feeding the market frenzy and Saudi Arabia has increased Oil exports to the US. US sanctions on Iran surely is a fundamental factor, isn’t it?

New Proposal on Irish Border Makes A Deal Possible – These were the comments from an unknown EU source for Reuters this morning. The source also said that new proposal on the Irish backstop border issue is a step in the right direction.

“We Haven’t Seen Anything” Says Ireland – The Foreign Minister of Ireland Coveney popped up pretty quickly after the previous comments on Reuters saying that the UK hasn’t placed any official proposals on the table. He added that real progress is needed on the border issue and that the UK has to offer new proposals by next week before the EU summit.

The US Session

US Unemployment Claims – Unemployment claims increased to 214k last month in the US from around 200k. This month, unemployment claims were expected to remain in the same levels, but the actual number came at 207k.

White House Economic Advisor Sees USD As Steady – Larry Kudlow said a while ago that his sense is that the US Dollar has been steady and stable. Well, it is a bit relaxing since the FED wants to hike interest rates but on the other hand, the US President Donald Trump wants a weaker Dollar.

CAD Ivey PMI – This is an indicator collected from business purchase managers. It has been at around the 60-62 levels for several months and it is expected to come at 62.3 points today, slightly higher from last month.

US Factory Orders – US factory orders declined by 0.8% last month, after having increased in the previous two months. Today, factory orders are expected to increase by 2.2%, which would be really positive and would probably help the USD resume the uptrend.

Trades in Sight

Bullish USD/JPY

The trend is bullish
The trend picked up pace yesterday
The retrace lower seems complete
The 50 SMA is providing support

The 50 SMA is holding the decline today

We just open a signal in USD/JPY. We bought this forex pair during the retrace down. We think that the retrace will likely be over soon because stochastic is oversold on the H1 chart. Besides that, the 50 SMA (yellow) is providing support and in case it goes, the 100 SMA (green) will take its place since these two moving averages have been defining the uptrend during this time.

In Conclusion

The retrace in the US Dollar is stretching further in the US session. The fundamentals and technicals point to more upside momentum for the Dollar, but the market which is bearish for the USD at the moment, might get carried away, so trade with care guys.

Forex Signals US Session Brief, October 3 – Markets Look Confused Before FED Speeches in the Evening

Posted on October 3, 2018October 3, 2018 by Skerdian Meta

Yesterday, the financial markets went through another period of panic after the small crash last Friday. The comments on the fiscal deficit in Italy for next year’s budget scared investors away and the stock markets opened with a gap lower and stretched further to the downside. Continue reading “Forex Signals US Session Brief, October 3 – Markets Look Confused Before FED Speeches in the Evening” →

Forex Signals US Session Brief, October 2 – Markets in Panic Mode Again As Italian Budget Worries Resurface

Posted on October 2, 2018October 2, 2018 by Skerdian Meta

Once again, the Italian deficit worries for next year’s budget come to markets’ attention as sentiment turns sour in financial markets. We saw most markets decline sharply last Friday as the deficit for next year’s budget was made public by Italian politicians. The deficit is supposed to be at 2.4% of the GDP which is below EU’s 3% ceiling, but since the Italian national debt stands at around 130% of the GDP, the EU is sceptical about that. Yesterday the markets were pretty calm and the sentiment was positive, so safe haven assets were sold off. Continue reading “Forex Signals US Session Brief, October 2 – Markets in Panic Mode Again As Italian Budget Worries Resurface” →

Forex Signals US Session Brief, October 1 – Stocks and the CAD Recuperate Losses As Brexit and NAFTA/USMCA Deals Come “Within Sight”

Posted on October 1, 2018October 1, 2018 by Skerdian Meta

Last Friday we left the markets on a pretty negative momentum as the market sentiment deteriorated over Italian budget deficit. The deficit for the 2019 budget was said to be at 2.4% of the GDP, which falls below the EU limit at 3%. But the total debt stands at 130% of the GDP in Italy which is pretty dangerous and it stands only second to Greece in Europe. Although Italy has a large industrial sector which can support it, unlike Greece, but the EU is set to not accept it as a piece on La Repubblica showed today. So, the market was in panic on Friday and stocks had a small crash. Today though, the sentiment has improved despite the article on La Repubblica, so the European stock markets have been rallying during most of the European session.

The Canadian Dollar is also rallying strongly. It started to reverse higher on Thursday last week and it picked up pace on Friday. Today, the CAD opened with a 65 pip gap higher on news that Canada might be included in the NAFTA (North American Free trade Agreement). The new agreement is called the USMCA which sounds pretty similar to YMCA, doesn’t it? I would love to see the three leaders doing the dance from the YMCA song of the Village People. Anyway, the CAD has gained around 300 pips against the USD in the last few trading sessions, and considering that the USD has been the strongest of the major currencies during this period besides the CAD, it makes the CAD seem much stronger against the other majors.

The European Session

EU to Reject Italian Budget? – There was an article today in the Italian newspaper La Repubblica which said that the European Commission is to reject the Italian budget since they would like the deficit below 2% for Italy, despite the ceiling set by the EU being at 3%. The stock market is not responding to that. Perhaps the markets know something we don’t?

German retail Sales – The retail sales took a bearish turn last month in Germany as they declined by 1.1%. this month they were expected to increase by 0.4%, but they declined again, albeit by only 0.1%.

European Manufacturing PMI – The manufacturing output remain unchanged in France and Germany in September but it declined sharply in Spain and it remained almost flat in Italy. That hurt the Eurozone manufacturing PMI number a little as it slipped to 53.2 points, from 53.3 previously.

Eurozone Unemployment Rate – The unemployment rate declined again in Europe to 8.1% from 8.2% previously. The unemployment number from Italy seem to have contributed most to the decline as it fell to 9.7% from 10.4% previously and against 10.5% expected. That was a bit of a surprise but a positive one nonetheless.

UK Manufacturing PMI – This manufacturing index was supposed to decline again today from 52.8 points to 52.6, but it jumped higher to 53.8 points. Last month’s number was revised higher to 53, so it was a positive report for British manufacturing. Although, lending and the money supply dried up a little.

Genoa Bridge Might increase Italian Budget Deficit – The Italian Interior Minister said today that the construction of the bridge, which collapsed in Genoa killing many people, might increase the deficit. Italy desperately needs some infrastructure spending for those who haven’t been in Italy recently.

EU Must Match UK Says Raab – The UK Brexit Minister Dominic Raab said earlier today that the EU must match UK’s pragmatism and ambition regarding Brexit. He added that the EU’s approach is one sided and that it is wrong to try to punish the UK. Well, the EU stands where it was, the UK has the burden to find a way out.

The US Session

Trudeau to Hold Conference at 16:00 GMT – The Canadian Prime Minister Justin Trudeau is holding a press conference at 4 pm GMT time. The North American trade deal seems almost complete now, hence the relentless surge in the CAD, but positive comments from Trudeau will surely give the CAD some more support.

Trump to Speak on NAFTA/USMCA at 15:00 GMT – Donald Trump will hold a press conference on NAFTA which will now be called USMCA (US, Mexico, Canada). Trump already gave it all away when he tweeted a while ago that they reached a new trade agreement last night which was the deadline, but there are always surprises with Donald Trump.

UK to Make A Compromise on the Irish Border? – There was a piece published on Bloomberg just now saying that the UK Prime Minister Theresa May has a new proposal for the Irish border issue. She has rejected a soft border, saying that it would break up the UK, but there might be a concession from the UK just to get a deal. This isn’t anything major just yet and Raab popped up a few minutes later saying that the Irish border is an outstanding issue, but a deal is within sight if we can deal with this issue. We have heard that many times before, but the GBP jumped 100 pips higher in minutes nonetheless.

US Manufacturing PMI – The US manufacturing PMI report will be released shortly, It is expected to cool off slightly to 60.1 points from 61.3 last month, although, this is still a very decent pace of expansion.

US Construction Spending – The construction spending is expected to have increased by 0.5% in August, the report for which will be released today. Although these were the expectations for July, construction spending fell short that month, increasing by only 0.1%, so we will see how the real numbers look today.

US Total Vehicle Sales – Vehicle sales have been slowing in the US in recent months. They have declined to 16.7 million from above 17 million several months ago. Today they are expected at 16.8 million.

Trades in Sight

Bearish GBP/USD

The trend is bearish
The 50 SMA was providing resistance
Stochastic was overbought

The 50 SMA provided solid resistance this morning

This is not a signal per se but more of a chart setup which we used for our GBP/USD sell signal which we opened earlier on and which hit the take profit target a while ago, before the jump on Brexit rumours.

As you can see from the GBP/USD H1 chart, we sold this pair when it was retracing higher this morning. It found resistance at the 50 SMA (yellow) and stochastic was overbought so we decided to go short since the trend is down. We booked profit on it already, but there might be another case for sellers now since moving averages are again providing resistance.

In Conclusion

The market sentiment has improved today after the deterioration last Friday. Stocks are making new highs for the day while the CAD continues to surge higher on NAFTA/USMCA trade agreement which will likely be officially declared soon. The GBP is still too dangerous to trade but we got a handful of pips from it already so we will leave it out for today.