Category: US/Midday Session Brief

Forex Signals US Session Brief, September 14 – US Retail Sales in Focus After Soft Inflation Figures Yesterday

Posted on by Skerdian Meta

Yesterday the US CPI (consumer price index) inflation came on the soft side as the headline and the core monthly numbers missed expectations. The yearly PI number was revised lower as well to 2.7% from 2.8% previously. This raised some old questions again.

Is inflation cooling off again after picking up for a few months? Is this a negative sign for the US economy? The USD lost considerable ground yesterday but most of forex majors today have been trading up and down in small ranges. This sort of price action tells us that the market is waiting for the US retail sales report which will be released today. If we see another negative report from the US today, then the USD should complete another bearish leg since it would be another negative sign from the US economy, which is in a decent shape at the moment.

Although, there have been some interesting events during the European session. USD/TRY was trying to break below the 6 level again today after it failed yesterday before Erdogan popped up again and ruined things for TRY bulls.

In Japan, Prime Minister Shinzo Abe held a debate and he talked quite extensively about the monetary policy. The main comment was that he wants the monetary easing to be over at some point, which is not coming anytime soon by the way. The central bank of Russia increased interest rates again to 7.0%.

 

The European Session

Bank of France Cuts Growth Forecasts – The Bank of France revised inflation higher but cut its growth forecasts for 2018 and 2019 to 1.6% from 1.8% and 1.7% respectively. Although ECB’s Villeroy said that the French economy is growing above the historical average, it lags behind other EU peers due to reforms.

Italian August Final CPI – The monthly CPI for August came at 0.4% against 0.5%. The Yearly CPI was revised lower as well to 1.6% from 1.7% previously.

Political Reasons Behind Lira’s Decline for Erdogan – Turkish president Erdogan said that politics are the reason for the decline in the Lira. He added that patience is running out with the central bank. USD/TRY was about to break the 6 level but it reversed after Erdogan’s comment about the central bank.

Eurozone Trade Balance – The Eurozone trade balance was expected at 16.3 billion but it fell short at 12.8 billion. The surplus used to be above 20 billion early in the year but it has declined steadily and now stands at around 12 billion, so the trend doesn’t look too promising.

Japan Prime Minister Abe Talks About the Monetary Policy – Prime Minister of Japan Shinzo Abe said this morning that the monetary easing cannot continue forever. The Yen gained some pips but it reversed lower again pretty soon after the market came to terms that nothing substantial will change anytime soon.

BOE Carney Speaks – The Bank of England Chairman Carney said in the European session that they are prepared for any Brexit scenario. He added that the fall in house prices is not a prediction of what will happen if Brexit goes wrong.

Russian Central Bank Hikes Interest Rates – The central bank of Russia increased interest rates by 25 basis points to 7.50%.

 

The US Session

UK Labour to Vote Against Brexit – According to The Financial Times, the British Labour Party won’t vote any Brexit deal. This is getting very confusing so we will see how it develops from here.

Mixed US Retail Sales Report – The US retail sales came at 0.3% against 0.5% expected for August and core retail sales also missed as they came at 0.1% against 0.4% expected. These are some soft numbers but the revisions from July improved the report. The main figure was revised to 0.9% from 0.6% and the core number was revised to 0.7% from 0.5%. As a result, the USD jumped higher despite soft numbers for August.

The Economy Is Strong for Kaplan – FED’s Kaplan said that the US economy is pretty strong and retail sales are noisy. The FED should continue hiking rates gradually and patiently.

US Import Prices – The US import prices fell by 0.6% against falling by 0.2% as expected. Export prices also fell. We will see if these declines will have an impact on inflation this month.

US Industrial Production – The US industrial production increased by 0.4% against 0.3% expected. Last month’s number was also revised higher to 0.4% from 0.1% previously. This is a good report but it hasn’t had any impact on the Dollar.

US UoM Consumer Sentiment – The US consumer sentiment is expected to come at 96.7 points. Last month’s number was revised higher to 96.2 points from 95.3 points, so half the work is already done

 

Trades in Sight

Bullish AUD/USD

 

  1. The trend is up
  2. The retrace down is complete
  3. The 50 and 100 SMAs are providing support

The 100 SMA is holding its ground

The trend has changed for AUD/USD this week. This pair has turned bullish as the USD has retreated but today we have seen a retrace take place, although it seems as this retrace might be over now. Stochastic is oversold on the H1 chart and the 100 SMA (red) is providing solid support. The previous H1 candlestick closed as a doji which is a reversing signal after the bearish move. So, we are about to go long on this pair right now.

 

In Conclusion

A very soft retail sales report from the US a day after the soft inflation report which was published yesterday. Yet, the USD jumped higher mainly due to higher revision from last month. The price action seems to favor the USD, so perhaps the Buck will turn back to bullish after a soft week.

Forex Signals US Session Brief, September 13 – A Day for Central Banks but the US CPI Inflation Steals the Show

Posted on by Skerdian Meta

Central banks have been the main focus today during the European session. The central bank of Turkey hiked interest rates by a surprising 6.25%. That’s a lot more than the market was expecting and the Turkish Lira jumped higher immediately. But, the jump stopped short and it is sliding lower once again. Erdogan popped up before the Central Bank of Turkey though, saying that they must lower interest rates to stabilize prices. We know he doesn’t know much about economics and this comment once highlights that, but that comment also made the 625 basis points hike even more surprising which increased the impact on the Lira.

The Bank of England also held their meeting today. They kept interest rates unchanged as anticipated, but the GBP slipped 30 pips lower as the statement highlighted the increased uncertainty which comes from Brexit. The European Central Bank kept interest rates unchanged at 0% in the European session. When the US session started, all attention shifted from the ECB to the US inflation report. Inflation softened once again in the US and the USD started tumbling lower, so that’s where we are right now.

 

The European Session

UK’s Raab Confident for A Good Brexit Deal – The Brexit secretary Dominic Raab said that he is very confident for a good Brexit deal. He also added that the UK will be haggling for every penny on Brexit payment, which doesn’t sound like a good plan to get a good deal.

China has Received Invitation from the US for Trade Talks – China said that they welcome this, although I don’t think there will be any good outcome this time either, even if there is dialogue. The trade surplus with the US grew again in August to record highs and China said that this is due to demand from the US. We know Trump hates this.

New Measures to Prevent Lira Volatility from Erdogan – The Turkish President Erdogan said this morning that he will introduce new measures to calm the Turkish Lira market down. We don’t know what these measures are but they must include capital control, just like in Indonesia, otherwise, the Lira is doomed.

Brexit Divorce Bill Will Not Change for the EU – The EU announced today that they will not reconsider the Brexit bill, but the UK is not willing to pay up if there won’t be a deal. Too messy at the moment, and no one knows how this mess will end up.

BOE Keep Rates Unchanged – The Bank of England kept interest rates unchanged at 0.75% as expected. The statement wasn’t much different from last month apart from greater uncertainty from Brexit and global trade.

Turkish Central Bank Hikes Rates Massively – The Central Bank of Turkey increased interest rates by 6.25% despite Erdogan calling for lower rates earlier today, which didn’t make much sense. The Lira strengthened and USD/TRY fell from 6.50 to 6, but the decline has stalled for now.

The US Session

ECB Leaves Rates on Hold – The European Central Bank kept interest rates unchanged at 0.0%. The statement was little changed although they pleaded to keep the stimulus program running. They released inflation and growth forecasts as well. Inflation is expected to remain unchanged at 1.7% in the next three years, while growth is expected to tick lower to 2.0% in 2018 from 2.1% previously thought and to 1.8% in 2019 down from 1.9%.

Mario Draghi Press Conference – Draghi mentioned the risk from emerging markets such as Turkey and Argentina as well as the situation with the budget in Italy, but he added that those risks haven’t spilled over to Eurozone states. The market is taking this positively since he has not mentioned anything about postponing hiking of interest rates due to these factors and the Euro is climbing higher.

Soft US CPI Inflation, Stronger Wages – Inflation has picked up recently in the US, albeit very slowly. Today, the inflation report reversed those gains. CPI was expected to grow by 0.3% in August but it fell short at 0.2%. Core inflation also came lower at 0.1% from 0.2% previously. Wages increased by 0.2% on an hourly basis and by 0.5% on a weekly basis, but the market is concentrated on the inflation figures and the USD has lost half a cent so far.

US Unemployment Claims – Unemployment claims have been in the 210k region for quite some time and they were expected to remain the same today. But the actual number came at 204k, which is below the trend, although we will have to wait for next month’s number to see if the trend will change.

 

Trades in Sight

Bullish EUR/USD

 

  1. This week’s trend is up
  2. The 200 SMA has been broken
  3. ECB sounded hawkish

The 200 SMA has finally been broken

The ECB revised lower growth forecasts today, but that was expected given the soft economic numbers in recent weeks. What was a bit surprising was the upbeat speech from Mario Draghi, which is fuelling the Euro at the moment. Draghi’s conference took EUR/USD above the 200 SMA (purple) on the H1 chart and the soft US CPI figures gave it a hand as well. So, we have shifted our bias to bullish for EUR/USD. But, we will wait for a retrace lower to the 200 SMA before opening a buy trade here since stochastic is overbought.

 

In Conclusion

Plenty of economic events today. Central banks were in focus during the European session but the soft US CPI inflation figures stole the headline as the US session opened. The Euro has turned bullish after Draghi’s comments while the USD has turned bearish. Let’s see if the markets will continue on this path as the US session evolves or whether the demand for the USD will return.

Forex Signals US Session Brief, September 5 – GBP Continues the Downtrend and Bitcoin Joins, but New Brexit Rumors Surface

Posted on by Skerdian Meta

Today, the highlight of the day has been the UK services report. I could have included the interest rate decision by the Bank of Canada, but they will keep rates unchanged so there’s not much action expected from that event. We have seen some negative economic data from the UK recently, so there was a chance that today’s report could have been another disappointing one. But, the services come out pretty decent at 54.3 points, up from 53.5 points previously. That should have provided some relief rally for the GBP, given that it is by far the biggest sector for the British economy.

But, the GBP remains locked in the Brexit trading mindset, which leaves little room for buyers right now. GBP/USD lost around 80 pips from top to bottom today. Bitcoin is another asset which joined the bearish trend of the GBP. Bitcoin and other major cryptocurrencies have made a bearish turnaround today. Bitcoin has been on an uptrend in the last few weeks, but it broke that trend line today, although the uptrend is not over yet until we move below last week’s low. The reason for this turnaround came from Goldman Sachs which is halting its plans to build a cryptocurrency trading desk.

 

The European Session

Eurozone Final Services PMI – The Eurozone services number came at 54.4 as expected, unchanged from last month. German and French services were little changed, the Italian services were down while the Spanish services were up. The combination of the big four and the other Eurozone members has left the overall Eurozone services unchanged. Services have deviated very little in recent several months, which means that this sector is pretty steady.

UK Services PMI – After the disappointing construction report today, the market was remaining on the sidelines before the release of the services report from the UK. But, services moved from 53.5 points previously to 54.3, beating the expectations. Nonetheless, the GBP kept sliding lower against most other majors.

Merkel’s Coalition Wants to End Low ECB Rates? – There was a draft document from Merkel’s coalition partner, the CSU, which said that the EU should end its bond buying programme and that the new president might take measures to stabilize prices, meaning hiking interest rates. Is the ECB monetary policy going to be affected by this?

More Budget Talk from Italy – The Italian deputy PM Di Maio said that Italy will keep its finances in order but the budget will also be courageous. The additional comments were just as contradictory, so it remains very unclear how this will end for Italy.

Irish Border the Only Brexit Issue – These were the words of UK’s Lidington. He added that the EU and the UK have agreed on 85% of the issues and that PM May is very committed to Chequers deal. Well, the Irish border alone could leave Britain without a deal, but on top of that, the EU has rejected the Chequers plan.

The US Session

Canadian Trade Balance – The trade balance in Canada was expected at -1.1 billion, but the deficit was only 0.1 billion. The trade deficit used to be around 3 billion for a long time, but it has been declining in the last several months and now seems like it might turn into a surplus in the coming months in Canada.

No Second Brexit Referendum Says may – British PM Theresa May said at the Parliament early that they are still working on a deal by October but the country should be prepared for a no deal scenario. The same old words.

Goldman Sachs Stays on Hold Regarding Cryptocurrencies – Goldman Sachs was planning on opening a trading desk for cryptocurrencies, but we heard rumours today that they are postponing those plans. That was the reason for the quick dive in cryptocurrencies.

A UK-Germany Deal? – There was a report published on Bloomberg just a while ago citing competent names which points to a soft Brexit exit. The report said that Germany and the UK will seek fewer details on post Brexit ties and the shift of Germany’s position could ease the path for a Brexit deal. These comments sound very positive and the GBP has jumped higher, finding itself 200 pips up from the lows. Hmmm, we have heard similar remarks before but Britain still looks to be heading towards a no deal. Is this another great opportunity to sell the GBP?

BOC Interest Rate Decision – The Bank of Canada is expected to keep interest rates unchanged today, so the market will be more interested in the statement. Although, the economic data has been positive recently so I expect a hawkish statement

 

 

Trades in Sight

Bearish NZD/USD

 

  • The trend is bearish
  • The retrace up seems complete
  • The SMA is supposed to provide resistance

The 20 SMA is supposed to turn into resistance here

We sold NZD/USD a couple of hours ago as this pair was retracing higher after being in a downtrend for more than a week. The price was just below the 50 SMA on the hourly chart and the stochastic indicator was overbought. But, the NZD got pulled up by the rumours about Brexit together with the Euro and other risk currencies as the sentiment improved a little. Now, the price is just below the 20 SMA (grey) on the weekly chart. Stochastic is not overbought yet but will be soon, so this is a good chance to sell this pair.

 

In Conclusion

Another positive Brexit rumor and the GBP jumps 200 pips higher. But how true is this? We have heard such rumors numerous times before so this might be yet another fluke. In that case, this would be a great opportunity to get on the short side of the GBP. But, let’s wait some time for more information on this issue.

Forex Signals US Session Brief, September 4 – The USD Finds Its Feet Again

Posted on by Skerdian Meta

The day started with the Reserve Bank of Australia (RBA) holding interest rates on hold at 1.50% early in the Asian session. That was expected, but what came as a bit of a surprise was the outlook that the RBA had for the economy. Wages, inflation and consumption are not as they should be on an economic expansion and in recent weeks we have also seen some negative events for Australia such as the expulsion of Huawei from Australia and Westpac increasing interest rates, apart from the trade war which will affect the Australian economy. So, the market, including me (yes, we are the market), was expecting the RBA to sound dovish today.

But, they brushed aside everything and the glass looked half full from their perspective instead of half empty. As a result, AUD/USD jumped 50 pips higher during the relief rally. But, it turned bearish again and lost 80 pips during the European session as the USD resumed the uptrend which it started yesterday. Speaking of the USD, it was declining pretty fast in the previous few weeks, but it has resumed the major bullish trend this week.

The European Session

Spanish Unemployment Change – The unemployment in Spain has been declining steadily by nearly 100k a month in the last several months. Although, last month unemployment decreased by just 27k which wasn’t a good sign. This month, unemployment increased by 47k, more than the 35k expected.

UK Construction PMI – Last month the construction output jumped by nearly three full points to 55.8 PMI points. That was a bit of a surprise but today the construction PMI fell back even lower than where it was before. It was expected at 54.9 points but only came at 52.8 points.

Eurozone PPI – Producer price index inflation was expected to grow by 0.3% this month, but it increased by 0.4%. We have seen some really decent PPI numbers in the Eurozone during the last three months, so there is a chance that it will help accelerate the CPI (consumer price index) in the coming months.

UK Still Pushing for Chequers Plan on Brexit – The UK permanent secretary at the Brexit Ministry said that work has been done on the economic analysis of the impact that Chequers plan on Brexit might have. So, the UK Government is just sticking to this proposal then, even though the EU has made it clear that it doesn’t like it. Again, no Brexit deal it seems.

The US Session

No Rate Hike from the RBA – The head of the Reserve Bank of Australia, who just popped up, continued the rhetoric from the statement this morning saying that any moves in cash rates still seem some way off, but if there is one, it will be up. He praised the economy, but at least acknowledged the risks that come from emerging markets and the global trade war.

FED’s Bullard Defies Trump – Trump doesn’t like rate hikes but Bullard said that most of his colleagues see a rate hike in September, meaning that September is a closed deal for hiking rates. He added that Trump has more influence on the FED with appointments than with tweets, meaning that we should ignore Trump’s tweets about FED’s monetary policy.

BOE Inflation Report Hearings – Members of the Bank of England are testifying on economic projection before the British parliamentary committee and Carney said that the BOE doesn’t have a plan for a no-deal Brexit scenario. He added that this would bring another squeeze on real income and that GBP would fall if that is to happen.

US ISM Manufacturing PMI – The manufacturing PMI report has shown a pretty upbeat sector in the last few months, but this month it is expected to decline to 57.6 points. But before that, we will see the final manufacturing PMI report which is not important but it gives some indication for the main ISM manufacturing numbers.

Trades in Sight

Bearish USD/JPY

  • The trend has turned bullish
  • The retrace down is complete
  • The 100 SMA provided solid support

The 100 SMA used to be resistance, but has turned into support now

USD/JPY turned bullish last Friday after having traded in a bearish trend all week. But the 100 SMA (green) has been scaring the buyers off for the last few days. That moving average was broken this morning and it turned into support as USD/JPY retraced lower during the European session. It held the decline well and the price reversed after failing to break back below it. Currently, we are seeing the next leg of the uptrend.

In Conclusion

The US Dollar is back in full control of the situation today after the positive signs we saw yesterday. So, this seems like the beginning of the next leg of the bigger USD uptrend. Bitcoin is also crawling higher, so we will continue to hold on to our buy signal here.

Forex Signals US Session Brief, September 3 – The USD Continues the Uptrend While GBP Resumes the Bearish Trend

Posted on by Skerdian Meta

Today the US and Canada are off in observance of Labor Day, nonetheless, the markets have been moving and the price action has been volatile enough to open a few forex trades. Commodities have been pretty choppy, with Gold (XAU) and Crude Oil first declining in the first few hours and then reversing back up as the European session got underway. Indices have been climbing higher slowly, making up for some of the losses from last week, although the climb looks pretty weak so I don’t think this is a trend reversal just yet.

The USD seems to be in demand as it gains against safe havens, with USD/JPY and USD/CHF slowly trending up. But again, I don’t see this as a trend reversal after the downtrend of last week, because the climb looks pretty weak here as well. The main action in financial markets today took place in GBP pairs.

GBP/USD opened with a 45 pip gap lower after EU’s chief Brexit negotiator Barnier commented during the weekend that unless there is a solution on the Irish border, a Brexit deal will be hard to reach. This morning, the UK manufacturing data missed expectations and that gave the GBP a second push lower. But, I don’t think we will see much action from now on as we head towards the end of the European session.

The European Session

Swiss Retail Sales – Retail sales were expected to increase by 1.2% in Switzerland but instead, they declined by 0.3%. Last month was also revised a tick lower so this was a negative report overall, hence the slight bearish bias of the CHF.

Italy Will Respect the Debt/GDP Budget Rules – Recently, we have heard rumours from Italian officials that Italy might exceed the 3% EU rule of budget debt to GDP ratio which has raised a few eyebrows. But, the deputy Prime Minister Mateo Salvini said today that he would like the budget deficit to be close to 3% but below it. These are some reassuring words, but we will have to wait for next month when they present the budget to the EU.

Spanish Manufacturing PMI – Just like in Britain, the trend in Spanish manufacturing has been declining in the last several months, but today the actual number beat expectations as they came at 53 points against 52.5 expected. This might be the beginning of a trend reversal, but it is too early to tell.

Italian Manufacturing PMI – The trend in Italian manufacturing has been bearish as well in recent months and, unlike in Spain, it got even worse today. The manufacturing index was expected at 51.2 points today, but it came at 50.1 PMI points. This is very close to contraction although let’s wait for next month once again.

Eurozone Final Manufacturing PMI – German and French manufacturing were little changed this month, while Spanish manufacturing numbers were positive and Italian ones were negative. So, the final Eurozone manufacturing figures came as expected at 54.6 points, unchanged from last month. Although, the trend here is bearish as well because it has declined steadily from around 56.5 points back in spring.

British Manufactuirng – The decline in the British manufacturing was a bit of a surprise today. It was expected at 53.9 points but came at 52.8. the GBP lost around 40 pips after the release of the report this morning.

CBT to Hike Interest Rates Again This Month – The central bank of Turkey is going to meet on September 13 and they said that they will not hesitate to take the necessary steps, meaning hike interest rates. That sent the Turkish Lira higher today and will likely help it some more when they increase the rates again, but that won’t tackle the problem in the long term.

Chequers Proposal the Only Brexit Plan – The UK spokesperson for the Prime Minister said that the Chequers proposal was the only credible Brexit plan. This means that we will end up with no Brexit deal then because the EU didn’t exactly agree to that.

Mark Carney Is Leaving the BOE – The head of the Bank of England Mark Carney finishes his term next year and he has said a few times that he will leave and not ask for a second term. Although, this morning the UK treasury is said to be in talks with the BOE for Carney to stay. Later, the UK PM spokesperson James Slack said that Carney is expected to step down next year and that is still the plan. So, Carney hasn’t accepted the proposals from the Treasury then.

The US Session

CBRT to Hike Interest Rates Again – The Turkish central bank and the Ministry of Finance said today that they will take action to tackle the price volatility of the Turkish Lira. That means only one thing, hiking interest rates again after they hiked them by 1.50% a few weeks ago. Despite the first hike, the Lira is still pretty volatile and weak, so I don’t think that just hiking rates will finish the job.

Labor Day in US and Canada – The US and Canada are off today for Labor Day which is an excuse to have a long weekend holiday at the end of summer. Therefore, expect the market to calm down and die out as we head toward the end of the European session.

Trades in Sight

Bullish AUD/USD

  • The trend has turned bearish
  • Fundamentals are bearish
  • The 50 SMA is providing resistance
  • The retrace up is complete

The chart setup is pointing to a bearish reversal soon

AUD/USD turned bearish last week as fundamentals deteriorated. Australia expelled the Chinese giant Huawei last week and the economic data has been pretty disappointing since then. So, AUD/USD has turned bearish. Although, this morning it has been retracing higher but it seems that the retrace looks compete now. The 50 SMA (yellow) is just standing above and it is providing resistance. So, we decided to go short on AUD/USD and it seems like the reverse is about to take place.

In Conclusion

The European session is drawing to a close now and the US is off, so I expect the price action to die off in forex. Bitcoin is making some nice moves, but we already have a long term signal open in Bitcoin so we will just keep that signal on since it is already in profit.

Forex Signals US Session Brief, August 31 – So Long for A Good Brexit Deal

Posted on by Skerdian Meta

On Wednesday, we heard some surprising comments from the EU’s chief Brexit negotiator Michel Barnier. He has been quite tough on UK regarding demands for a Brexit deal and, as time passed, it looked increasingly like Britain would end up with no Brexit deal at all. But, he made a 180 degree turnaround on Wednesday saying that the EU is willing to give the UK a deal like no other third country has with the EU. But today, we heard the EU spokesperson say that the EU won’t back down regarding the Irish border. UK’s Raab and Barnier are meeting today in UK and the comments aren’t promising at all. So it seems that we’re back where we were before Wednesday.

On other fronts, Italian officials said that they might exceed the 3% budget deficit to GDP ratio. But, they have to present that to the EU first so we will see how that goes through. Although, Italy seriously needs some investment in infrastructure. The bridge collapse in Genoa was a good example. Today was inflation day for Europe and it ticked lower but that wasn’t a big surprise given the weak inflation numbers from Germany yesterday.

The European Session

French CPI MoM – CPI (consumer price index) inflation increased by 0.5% in France this month against 0.4% expected and the annualized number also moved higher to 2.3% from 2.2% previously. Although, that didn’t help improve the Eurozone inflation report today.

Trade Ceasefire with the US to Continue for Juncker – The European Commission President Juncker commented this morning that he expects the ceasefire to be upheld regarding a possible trade war with the US. But he added that if Trump’s administration increases tariffs on cars, then the EU will retaliate.

China Says Putting Pressure on Trade Won’t Work – The Chinese Foreign Ministry said that pressure from the US won’t work on China. This comes after Donald Trump and his administration have refused to negotiate with China seriously. China was begging for some negotiations with the US but now it is getting back to its battle position as the date for new tariffs approaches.

German Retail Sales – Retail sales took another dive in Germany this month as they fell by 0.4% against -0.1% expected. Last month was revised lower as well, although this is a very volatile indicator.

Eurozone Inflation – Inflation has been increasing considerably in Europe this year but today it slipped a tick lower to 2.0% from 2.1% previously. The core inflation also slipped to 1.0% from 1.1%. The Euro didn’t notice that at first, but it has turned bearish now.

Barnier Represents the View of 27 Countries for France – The French Minister of European Affairs said today that Barnier represents the view of all 27 EU member states. Which view is it then: that the EU is willing to offer the UK a great deal like no other third country which we heard on Wednesday, or that without a proper Irish border solution and a Brexit plan from the UK no deal will be in place? I didn’t see these comments earlier but there goes another obstacle for a good Brexit deal.

Exchange Rate Has Turned Into An Exchange Bullet for Erdogan – That is what Turkey’s President Erdogan said and he added that there is a FX instability operation taking place in Turkey. USD/TRY is lower today after the central bank of Turkey made it more difficult to hold forex reserves, but these are only temporary measures, and they won’t stop the decline in the long term.

Eurozone Unemployment Rate – The unemployment rate fell to 8.2% in the Eurozone this month. Last month was also revised lower to 8.2% from 8.3% previously. A small decline but in the right direction nonetheless.

The US Session

EU’s Quest to Avoid a Hard Irish Border Remains Undiminished – These were the words of the EU spokesperson Weinstein and a Brexit deal looks pretty unlikely again now. The GBP started slipping lower after that.

Italian Debt/GDP Ceiling – These were the comments of Italian officials today. It sound worrying for investors and for the Euro, but it is still too early to get carried away. There’s still a month time until Italy presents its budget to the EU.

Don’t Bet Your House on a NAFTA Deal – Canadian officials said a while ago that negotiations between Canada and the US have turned sour so we shouldn’t expect a NAFTA deal by Friday as expected. The comments from the Canadian negotiating side don’t look promising, so this is going to be another problem for markets for some time to come.

Raab-Barnier Meeting – The UK Brexit Minister Raab and Michel Barnier met today and Raab said that they have made progress but there’s clearly more work to do. These comments don’t sound too positive but Barnier made things worse when he said that with no backstop on the Irish border, there will be no deal.

Trump Wants A Trade War with the EU – EU’s trade chief Cecilia Malmstrom said yesterday that the EU will drop tariffs on industrial production and cars to zero if the US did the same. But Trump said yesterday that the European consumers have a habit of buying their own cars, not US cars. Well, it’s not the European consumer, it’s the US cars which are too huge to be driven in Europe. Plus, they consume a lot of fuel and fuel is about twice as expensive in Europe so it is more about the cars actually, but Trump wants a war.

Chicago PMI – The purchasing managers survey in the Chicago area is expected to decline to 63 points from 65.5 points previously. This indicator has been increasing in the last several months but today it is expected to take a bearish turn, but let’s see first before making a judgement.

Trades in Sight

Bullish USD/JPY

  • The main trend is still bullish
  • This pair is oversold
  • The 200 SMA is providing support
  • The previous candlestick is pointing up

The chart setup is pointing to a bullish move soon

USD/JPY has lost more than 100 pips in the last two days, but the main trend is still bullish on the higher timeframe charts, which makes this just a retrace before the next bullish move. The retrace is complete now since stochastic is severely oversold and the 200 SMA (purple) has been providing solid support. The previous candlestick formed a doji which is a reversing signal, so this chart setup is pointing to a bullish reversal and we just went long on this pair.

In Conclusion

After today’s events we conclude that the NAFTA deal remains in danger, the Brexit deal looks improbable again and that the trade war between the US and the rest of the world is going to go ahead since that’s what Donald Trump wants. As a result, the sentiment has turned negative again for financial markets, so keep that in mind when trading today during the US session guys.

Forex Signals US Session Brief, August 30 – Market Sentiment Turns Negative Once Again

Posted on by Skerdian Meta

The market sentiment has been positive in the last few weeks. But today, the risk is off again so this might be the beginning of a period when traders cave in and markets retreat. If you see the charts of risk assets during the last few weeks such as Indices and Commodity Dollars, they have been on a bullish run. On the other hand, safe haven assets such as the JPY, the CHF and Gold have been losing ground. Although, Gold made a bullish turnaround last week after trending down for months. Could that have been a sign of a shift in the market sentiment?

Perhaps it was. Safe haven currencies have turned higher recently and as a result, EUR/CHF has lost more than 100 pips in the last few sessions while USD/JPY turned bearish today after the surge higher yesterday.

Will this last? Maybe, but we are drawing close to the end of the week on the last week of August, so we might see markets trading water in the next few sessions until everyone comes back loaded in September.

The European Session

German Import Prices – Import prices were expected to remain unchanged this month in Germany but they posted a 0.2% decline. This is the first decline in import prices since March. It might affect inflation next month but it is not a major data point.

German CPI Inflation – Consumer price index CPI inflation came at 0.1% as expected this month. Last month stood at 0.3% but we knew we wouldn’t see last month’s numbers today because the regional CPI numbers have been coming out all morning and they have been way below last month’s inflation figures.

Spanish CPI Inflation – The CPI inflation expectations for the year remained unchanged at 2.2% in Spain. Inflation jumped higher in May and it has been holding above the ECB’S 2% target since then.

China Still Hopes for Negotiations – The Chinese Commerce Minister said that China and US had constructive talks on current trade issues and only negotiations as equals can resolve things. They are referring to the discussion between both countries last week, but Trump and his associates have made it clear that now is not a good time to talk properly. So, these comments from China are just wishful thinking.

No Brexit Deal Still possible for Germany’s Scholz – The German Finance Minister Olaf Scholz said that a disorderly Brexit is a very real possibility. We heard encouraging comments from EU’s Brexit negotiator Barnier yesterday and Barnier is still in Germany. I suppose the two have talked about Brexit, so these comments from Scholz are pouring cold water on a Brexit deal.

Eurozone Final Consumer Confidence – The consumer confidence fell by 1.9 points in Europe. Economic confidence came at 111.6 against 111.9 points, business climate came at 1.22 points against 1.26 expected. So, there is an overall softening to the business and consumer confidence in Europe, albeit small.

EU Willing to Drop Car Tariffs – There was a report from Brussels saying that the EU is willing to drop tariffs on car and industrial imports from the US. This should be good news for the stocks, but I don’t think that Europeans will hurry to buy US cars given the different models and different infrastructure of the European road systems. The largest part of the US cars are just too massive for Europe and they consume a lot of petrol.

The US Session

More Good News for Financial Markets to Come – Donald Trump tweeted a while ago that news from financial markets are better than expected and there is more good news to come. He is referring to record highs for US stocks in the last couple of days but what does he mean when he says there’s more to come? Does he know something we don’t?

Canadian GDP Growth Slows – Last month, the Canadian monthly GDP number posted a surprising jump by 0.5%, but today it fell flat at 0.0% against 0.1% expected. The annualized GDP number declined to 2.9% from 3.1% previously.

US Core Price Inflation – Core price inflation came at 2.0% as expected this month, up from 1.9% previously. This takes the core inflation to the 2% target set by the FED while the headline inflation number stands much higher. This strengthens FED’s view to keep hiking interest rates.

US Personal Spending – Personal spending increased by 0.4% this month in the US. The pace of growth is pretty decent here and the USD has gained around 30 pips after the report.

US Personal Income – US personal income increased by 0.3% as expected, slightly lower than the 0.4% increase that we saw last month.

Trades in Sight

Bearish EUR/GBP

  • The trend has turned bearish
  • The retrace up is almost compete on the H1 chart
  • The 20 and 200 SMAs are providing resistance
  • The previous candlestick is pointing down

The chart setup is pointing to a bearish move soon

EUR/GBP has been bullish for weeks but it has turned bearish now after Michel Barnier sounded very positive about a Brexit deal yesterday, which is the first time to hear such comments. EUR/GBP lost around 100 pips yesterday but has been retracing higher today, the retrace up seems complete now because stochastic is overbought and the 20 SMA (grey) and the 200 SMA (purple) are providing resistance.

In Conclusion

EUR/GBP has already made the bearish move as I was wrapping up this US session brief. The economic data from the US was released and it seems to be supporting the USD, while risk currencies have taken another dive. So, the sentiment continues to turn dovish as risk currencies continue to slide.

Forex Signals US Session Brief, August 29 – US Q2 GDP Revised Higher

Posted on by Skerdian Meta

Everyone was waiting for the second estimate of the US Q2 GDP report. Donald Trump has been praising his economic and fiscal policy and yesterday, the US Commerce Secretary Mnuchin sounded pretty upbeat about today’s GDP report. He mentioned the Atlanta FED GDP projections, which stood at around 4.7% for Q2, although he didn’t stick to it. Today, the US Q2 GDP figure came at 4.2% against 4.0% expected and up from 4.1% in the first reading.

The reaction after that was pretty muted though. The USD is gaining some pips but very slowly. I suppose the market was expecting something flashier to make a move, perhaps a 4.5% reading or more. The European session was pretty quiet again and stocks were in decline during the first half, but they started to reverse a few hours ago and are climbing back up now. Bitcoin is also bullish and it broke above the $7,000 level today.

The European Session

Italy Asks for Help from the ECB – There were rumours today that the Italian Government is asking the ECB for another round of QE to buy government issued bonds. This would protect Italian bonds from speculation and narrow the yield gap with German bonds.

German GfK Consumer Confidence – The GfK consumer confidence was expected to remain steady at 10.6 points as last month. But, it ticked lower to 10.5 points and although this is not a major decline, it is trending lower nonetheless from around 11 points back at the beginning of the year, which is not a good sign.

Increasingly Difficult for the RBA to Hike Rates – The US trade tariffs on China have made it difficult for the Reserve Bank of Australia to increase interest rates but today’s decision by Westpac to raise variable mortgage rates by 14 basis points makes it even more difficult. The other major banks in Australia are expected to do the same, so it becomes extremely difficult for the RBA to follow its monetary policy. AUD/USD has lost around 60 pips so far today on this news.

French Prelim Q2 GDP – The second estimate for the Q2 GDP in France came as expected at 0.2%, same as the previous reading. Although the economy is still expanding, the pace of growth has slowed considerably

French Consumer Spending – The consumer spending numbers came together with the GDP report. It was expected to increase by 0.3% on a monthly basis, but it only increased by 0.1%. Still, it is an increase in spending which is welcome.

UK Government Is Getting Frustrated – We had a report earlier from The Guardian that the UK Brexit Secretary is getting frustrated by EU’s Barnier for not being available to talk to him face to face. Brexiteers were so confident and full of themselves but now the harsh truth is revealing itself.

No Aid to Turkey from Germany – There was a report overnight that Germany might offer financial aid to Turkey, but a Government spokesperson said that there will be no such thing and that alternatives are being looked into. Well, Turkey and Erdogan were so confident and cocky until a few months ago that they were even threatening Germany. How about now?

The US Session

Canadian Current Account – The current account deficit was expected at 15.3 billion but came at 15.9 billion. That is a miss but also it is a big decline from the 19.5 billion deficit that we saw last month. It brings the deficit back to its normal levels in Canada.

Raab Confident About A Brexit Deal – The frustration didn’t last long for the UK Bexit Secretary Raab who said a while ago that a Brexit deal is within our sight. But, there is some leeway he added, so nothing basically. Hard to imagine a deal if Barnier refuses to meet him.

NAFTA Is Moving On – The Canadian NAFTA negotiator Freeland said that the progress so far is encouraging. He met with Mexican counterparts yesterday and is meeting with the US party today. So it seems that we will have a new NAFTA agreement soon.

US Prelim Q2 GDP – The second estimate of the US Q2 GDP came at 4.2% against 4.0% expected and up from 4.1% in the first reading. This is a good reading but the USD is barely noticing it as it remains drowsy.

US Pending Home Sales – US pending home sales are expected to increase by 0.3% this month. This is an increase nonetheless, although, it is smaller than the 0.9% increase we saw last month. But, they fell by 0.7% and the USD is making a bearish reversal once again now.

Trades in Sight

Bullish NZD/USD

  • The bigger trend is bullish
  • The retrace is almost compete on the H1 chart
  • The previous candlestick points to a bullish reversal
  • The 100 SMA is providing support

The 100 SMA held its ground pretty well

While the trend has turned bearish in AUD/USD due to Westpac’s decision to increase mortgage rates, NZD/USD still holds the bullish trend. There was a retrace down as the Aussie pulled the Kiwi lower but the retrace seems complete now as stochastic is almost oversold and the 100 SMA (green) is providing solid resistance. The previous candlestick closed as a hammer which is a reversing signals, so the price action is turning bullish for NZD/USD again now.

In Conclusion

The GBP was turning bearish in the last few hours but we just had a new development regarding Brexit. EU’s Brexit negotiator Barnier just commented on the matter, saying that the EU is prepared to give Britain a deal unlike any other. This might change things and the GBP has just jumped more than 100 pips on the news, although let’s see how this will evolve.

Forex Signals US Session Brief, August 28 – Sentiment Remains Positive, the USD Remains Bearish

Posted on by Skerdian Meta

The sentiment in the financial markets has turned positive recently and today the situation is pretty much the same. Stocks continue to climb up although they took a hit in the early hours of the European session. They recuperated from that small bump and are moving up now, with CAC leading the way. Crude Oil and Gold continue to make gains and it seems like Gold might have changed the trend now from bearish to bullish, although it is still a bit early to tell whether this is a proper shift in the trend or if it is a major retrace before the downtrend resumes again.

Risk currencies are also up. EUR/USD has broken above 1.17 today but it is having second thoughts now, so I think that the pullback from the bigger downtrend which started in April might be coming to an end. Commodity Dollars are also up and the Canadian Dollar is leading the way. Emerging market currencies such as the Chinese Yuan, the Mexican Peso or the Russian Rubble are also benefiting from the improved sentiment and everything is falling on the USD’s shoulders. I bet Donald Trump is very happy with it, although he is not happy with Google. Anyway, let’s have a look at what has been happening today.

The European Session

Germany’s Foreign Minister on tariffs and Brexit – The German Foreign Minister Heiko Maas said that he expects the US to back down from tariff threats to the European car industry and added that the Chinese state capitalism is jeopardising fair global trade. It seems that the EU is lining up with Trump on this one. He also commented on Brexit saying that a hard Brexit option is very much alive.

Eurozone M3 Money Supply – The M3 money supply which accounts for the cash that is in circulation as well as bank deposits was expected to have increased by 4.3% on a yearly basis, down from 4.4% previously. But, it increased by 4.0% instead. Although, lending to households increased from 2.9% to 3% which is the second time it reaches the 3% level this year.

Is North Korea Deal Falling Apart – Months ago, Donald Trump and Kim Jong Un made a deal to denuclearize North Korea, but the Secretary of State Mike Pompeo received a letter form North Korea and it seems like the deal might be falling apart. Pompeo had a meeting planned for next week, but Trump has canceled it so even the North Korean situation which looked promising a while ago doesn’t seem so good now.

UK Made A Fair Offer to the EU – That’s what the UK Trade Secretary Liam Fox said earlier on and added that the UK doesn’t want a no-deal Brexit. But, the offer hasn’t been fair or reasonable and it seems like we might be heading for a hard Brexit.

Trump Turns on Google after Amazon – Donald Trump tweeted a while ago that search results about Trump on Google come from left wing media and they make him look good. He said that “Google and others” are suppressing voices from conservatives and that they are hiding the good news. Seems a bit off the edge, but he is right on this occasion. It seems like Google, YouTube, PayPal and other major online companies are turning into fascists now. They are deciding arbitrarily who and what can say things or can do business with them.

Patience and Prudence for the ECB Says Praet – ECB’s Praet said that the ECB monetary policy should remain patient, prudent and persistent. This should have been sort of bearish for the Euro but it is still climbing higher.

The US Session

Not the Time to Negotiate with China – US Commerce Secretary Wilbur Ross said that now is not the best time to negotiate with China. China has been dying to negotiate with the US as many Chinese officials have announced lately, but it might not happen at all.

Is NAFTA Coming Back to Life? – Yesterday Mexican officials said that the NAFTA deal between the US and Mexico will be announced soon and today Mnuchin added that he doesn’t expect many problems with Canada. So, it seems we might have a new NAFTA agreement soon.

US Goods Trade Balance – The US goods trade balance increased to $-72.2 billion from $-67.9 billion this month. The trend has been decreasing since April, but last month the deficit increased and this month we see that an increasing trend in the deficit is forming. Trump should hate this.

US Wholesale Inventories – US wholesale inventories increased by 0.7% this month which is the biggest increase in the last five months. This is not good news for the economy since businesses will order less in the coming months, but it increases the GDP which will be welcomed by Trump before the mid-term elections.

US Consumer Confidence – The US consumer sentiment came at 127.4 points last month but it is expected to fall to 126.6 points. This is still a good level of confidence though, but let’s see the numbers first.

Trades in Sight

Bullish USD/JPY

  • The bigger trend is bullish
  • The retrace is complete on the H1 chart
  • The 100 SMA is providing support on the H4 chart
  • The previous candlestick points to a bullish reversal

The 100 SMA is holding on pretty well

Yesterday we opened a buy forex signal around these levels in USD/JPY. That trade went pretty well and we booked profit in the afternoon as this pair moved higher, but this morning we saw another good opportunity to buy. USD/JPY has been retracing lower during the European session and the H1 chart is oversold now. The price is finding support at the 100 SMA (red) on the H4 chart and the previous candlestick closed as a doji which is a bullish reversing signal after the bearish retrace. We bought USD/JPY again since the retrace seems complete now, hoping to book some more pips from this pair.

In Conclusion

The USD continues to be on the backfoot now so I won’t try to catch the falling knife, apart from USD/JPY, which seems to have stopped sliding lower. The economic calendar is very light in the US session so the sentiment will do all the work once again today and the sentiment is going against the USD.

Forex Signals US Session Brief, August 24 – Markets Wait in a Limbo Before Central Bankers Pop Up from the Hole

Posted on by Skerdian Meta

Yesterday the Jackson Hole Symposium started and financial markets have been trying to get into position before the major central bankers start popping up for their speeches to share their wisdom. Today, FED’s Bullard and more importantly Powell are on the schedule for a speech and markets are waiting on the sidelines to see where he will take us. Bullard popped up shortly to say that Powell will be very careful with his remarks later. We don’t know if he means being careful when talking about interest rates or when talking about Trump’s comments on FED’s monetary policy. Well, I suppose we will know soon, or perhaps Powell will ignore everything and give us nothing substantial to trade.

On the opposite side of the globe, Australia has a new Prime Minister. That was a bit of a surprise to me, maybe because I’m not a close observer of Australian politics. Yesterday, the Aussie lost more than a cent on political troubles, but today it reversed and AUD/USD has climbed around 70 pips so far. The USD has been in a bit of a retreat again today, so we will see if Powell can change that later on.

The European Session

No New Election in Australia – After being appointed the Prime Minister of Australia, Scott Morrison said that there won’t be elections anytime soon. That, as well as the fact that he was the Treasurer before, has calmed the market’s nerves regarding the Aussie.

No Signs of Normalizing Relations from the US, Says Russia – Russian Foreign Minister said early this morning that he sees no signs that the US wants to normalize relations and that what was agreed upon during the Trump-Putin meeting is being undone. Well, there you go, Russia hasn’t backed off from Ukraine, so why did they expect Trump to take the first step backwards when he is now known for making the first aggressive move? In this occasion, Trump is totally justified.

German Final GDP QoQ – The final estimate for the Q1 GDP came at 0.5% as expected. After the weak growth at 0.3% in Q1, the Q2 number looks pretty good and it brings growth back to its normal pace.

UK High Street Lending MoM – The number of mortgages lent by High Street banks jumped above 40k in June and the number for July was expected to come at 40.6k. But, it fell back below that level coming at 39.6K.

Italy to Clash with EU on Budget – That is what the Italian Interior Minister said this morning and he added that he sees first signs of economic attack on Italy. Not sure what he means by that, attacks from the EU rules, attacks from trade tariffs from the US or pressure from increased immigration in Italy? Well, the deadline is approaching for Italy to present its budget to the EU before the EU summit.

Sanctions on Russia to Continue for Bolton – Trump’s National Security Advisor John Bolton is in Kiev and he said that sanctions on Russia are to stay in place until Russia changes its behaviour.

The US Session

Don’t Expect Much Today Says Bullard – FED’s Bullard said today that Powell will be very careful with remarks. He said that we mustn’t worry about the yield curve and that’s correct according to me. He added that the FED is focused on its legal mandate given by the Congress. This is the second member to take a shot at Trump for trying to interfere with FED’s work.

US Durable Goods Orders – US durable goods orders fell by 1.7% against 1.0% expected. Last month’s number was revised lower as well. That sent the Buck tumbling 40 pips lower so far despite the great jump in core durable goods orders which increased by 1.4% against 0.2% expected.

US Economy Is Doing Better Than Mester Had Anticipated – Kansas City FED president George said that the FED will likely hike interest rates twice. FED’s Mester said a while ago that the economy had more momentum than previously anticipated. She boosted her growth forecast to 3% this year. The case for raising interest rates is pretty compelling, so that should be bullish for the USD which is declining at the moment.

More US Sanctions on Russia – I heard news just a while ago that the US is going to impose more sanctions on Russia for using chemical agents. If you haven’t heard, there have been a few cases of poisoning of Russian citizens in the UK who are supposedly spies. It was about time this thing got taken care of.

US Flash Manufacturing PMI – US manufacturing data came at 54.5 PMI points against 55.1 points expected. The trend is bearish here as well, so it is very similar to Europe.

US New Home Sales – New home sales came at 627K against 643k expected. It is still a solid number and the USD is finding some bids now after the release of this report.

Eurozone Consumer Confidence – The consumer confidence fell to -2 points from -1 prior. Tariffs and trade disputes are hurting the confidence among consumers in the US and in Europe and they will likely hurt the global economy as well if they escalate.

Trades in Sight

Bearish NZD/USD

  • The intraday trend has turned bearish
  • Moving Averages are providing resistance
  • The H1 chart is overbought

The moving averages are clustered together

We opened a sell forex signal a while ago in this pair as it was retracing higher from the decline that we saw yesterday. A bunch of moving averages are providing resistance on top, particularly the 50 SMA (yellow) and besides that, the stochastic indicator is severely overbought on the H1 chart, meaning that this timeframe chart is overbought.

In Conclusion

Ok, the USD has lost some more ground after the durable goods orders report despite the great core number, but it is steady now. Let’s just wrap this up and get it posted before Powell starts his speech so we can see if he will take a jab at Trump as well.