Category: US/Midday Session Brief

Forex Signals US Session Brief, August 10 – UK GDP Disappoints, Canadian Unemployment Rate Falls Back

Posted on by Skerdian Meta

The USD began the next bullish phase yesterday in the afternoon after having retraced for several days. The USD started getting its act together yesterday and today the USD has stretched the bullish move further. It seems that the Buck has resumed the uptrend again. The US consumer price index (CPI) inflation report came as expected at 0.2% and that gave the USD another push higher. Perhaps, USD traders were waiting on the sidelines in the last few hours leading to this report just in case there was a negative surprise. That didn’t happen and the USD resumed the uptrend immediately after the CPI report was released.

At the same time, the Canadian unemployment rate was published and it lost two decimal points, falling to 5.8% from 6%. Canadian unemployment rate has been at this level for many months but it jumped higher to 6% last month for some reason. It came back down today though so the hiccup is now over. It is a positive reading after a few negative economic reports we have seen from Canada this week. The UK monthly GDP came at 0.1% against 0.2% expected and down from 0.3% that we saw last month. The GBP resumed the bearish trend after this report.

The European Session

French Industrial Production – Industrial production increased by 0.6% in July against 0.5% expected. This is a promising turnaround after several negative months, although this is just one month. We have to wait and see how the industrial sector will perform in the next couple of months.

Italian Trade Balance – The trade surplus increased to 5.07 billion Euros this month. Trade balance has been at around 3 billion in the last several months so this is a nice jump. Although, we don’t know if it increased because exports increased or because the imports fell.

UK GDP – The quarterly GDP in the UK came as expected at 0.4% but the monthly GDP number missed expectations coming at just 0.1%. The economic growth has been weakening in the UK and if it continues like this, soon the UK economy might enter a recession.

UK Manufacturing Production – Manufacturing production increased by 0.4% in the UK in July against 0.3% expected and last month was revised higher to 0.6% from 0.4%. This report kept the GBP from crashing down after the weak monthly GDP numbers.

UK Construction Output – The construction output report was expected at 0.2%, but it the output increased by 1.4%. That was another positive reading from the UK but it didn’t help the GDP though.

Prelim Business Investment UK – Business investment increased by 0.5% against 0.4% expected. Although, last month’s decline was revised to -0.4% from -0.2%. That took some of the shine off this month’s positive number.

The US Session

Canadian Unemployment Rate – The unemployment rate was expected to decline to 5.9% today after it increased to decimal points last month. It fell back where it was before last month at 5.8% so the unemployment is back in track in Canada after the surprising jump last month.

Canadian Employment Change – New jobs increased by 54.1K this month against 17K expected. This is the biggest increase since January, so the employment sector looks solid.

US CPI – The US consumer price index came at 0.2% as expected, up from 0.1% last month. It is not much but it is an increase nonetheless.

US Core CPI – Core consumer price index grew by 0.2% as well, as expected. The number is the same but this is a bigger increase since it is the core number. Core CPI is usually lower than the main CPI number and a 0.25 increase on a monthly basis would mean 2.4% core inflation by the end of the year, so it is a respectable increase.

Trump Helps to Send the Turkish Lira Tumbling – the Turkish Lira has been in a freefall this year and the decline has accelerated lately. Today USD/TRY has jumped above $6 and Erdogan urged the Turks to sell their forex and Gold reserves. I don’t think that will help the Lira, it will only make the situation worse. Donald Trump has just tweeted that the US will increase Steel and Aluminium tariffs on Turkey to 20% and 50% respectively since the TRY is weakening pretty fast. That comes at the wrong time for Turkey. Trump also said that relations with Turkey are not good at this time. That should put some more pressure on the Lira and on the Turkish economy.

Trades in Sight

Bearish GBP/USD

  • The trend is bearish
  • The downtrend has picked up pace today
  • Moving averages are waiting above

Waiting for the price to reach one of the moving averages above

I am thinking about selling GBP/USD. It is retracing higher at the moment which is good for sellers. This pair has been on a solid downtrend for months and today the downtrend picked up pace after the soft monthly GDP figures. The 20 SMA (grey) might be the target now before the turnaround lower, but I would like to see the price reach the 50 SMA (yellow) before selling since this moving average is a stronger indicator.

In Conclusion

The US Dollar continues to advance in the US session but so are the safe-haven currencies. The JPY and the CHF are gaining even against the USD, which means that the sentiment in the market is negative at the moment. Today is Friday as well and the markets will close at the end of the US session so the price action might be a bit strange until then.

Forex Signals US Session Brief, August 9 – USD Survives the Soft PPI Report Without Side Damage

Posted on by Skerdian Meta

The US Dollar started the European session on the wrong foot and it has been on a soft spot in the first few hours. But, the USD buyers returned and brought the Buck back up. In the last few hours we have seen the USD climb higher despite the disappointing PPI (producer price index) inflation numbers. Today’s PPI report was pretty bad with both PPI and core PPI missing expectations and falling flat.

Commodities have been pretty quiet today. Oil has traded in an 80 pip range which looks tight after yesterday’s $3 decline. Indexes have found some solid ground and were crawling higher this morning which means that the market sentiment is currently positive. The GBP got a boost as well from Brexit rumours which suggested that the EU leaders were considering offering the UK a Brexit deal which leaves the UK inside the single market, but this has its perks which we will explain below, so have a quick reading guys.

The European Session

Unemployment Rate in Switzerland – The unemployment rate remained unchanged at 2.6% in Switzerland as expected. It is pretty low and it was still declining during the first few months of this year, but it has been keeping steady in the last few months.

More Rate Cuts from the RBNZ? – McDermott from the Reserve Bank of New Zealand said this morning that the chances of any rate hikes are off the tables and that the chances of a rate cut have increased. He is worried about the yield curve, growth and inflations. So, he sounded as dovish as it gets and today the NZD finds itself more than 100 pips lower from yesterday.

ECB Economic Bulletin Points to Risks Ahead – The ECB monthly economic bulletin looked sort of dovish. There’s economic growth which is broad based but it is slower than last year. US tariffs are a protectionist threat and the downside risks to the global economy have intensified.

EU to Offer A Concession to the UK? – There was a report published by Business Insider earlier today which suggests that the EU states are considering a Brexit deal which would leave the UK inside the European Economic Area. That is wrong for two reasons; first, this goes totally against the EU since it gives the UK the right to benefit from the EU market access without any obligations which would be tempting to many other EU member states to do the same thing and second, the Brexiters might not accept this since it ties the UK to the EU. It is just a report though and we don’t know if it is authentic.

The US Session

Canada Housing Starts – New house starts came at 206k, down from 220k expected and 246k previously. This is a soft reading and comes after yesterday’s 2.3% in building permits. This might be the beginning of a weak period for the construction sector in Canada.

US Unemployment Claims – The unemployment claims cam at 213k today, down from 220k previously. The unemployment claims have been declining steadily in the last several months.

Canada Building Permits – Building permits declined by 2.3% against 0.15% expected last month. Residential housing permits also fell by 5.7%, so this report is pretty negative, although the yearly numbers were a bit better, but still not good enough.

US PPI – The producer price index was expected at 0.2% today but came at 0.0%, down from 0.3% last month. This is a surprising turnaround in input prices in the US. PPI was on a positive run in the last several months, so today’s number comes out of the blue.

US Core PPI – US core PPI also came softer than was expected. It was expected at 0.2% but came at 0.1%, two points down from last month. The consumer price index inflation is still below FED’s target so there is a possibility that the lower input prices might weaken the CPI inflation.

US Wholesale Inventories – Wholesale inventories fell by 0.1% against expectation which were for a 0.2% build up. This is a positive sign since companies will order more materials to build up their inventories.

Trades in Sight

Bullish EUR/GBP

  • The trend is bullish
  • Stochastic is oversold
  • The 50 SMA is providing support
  • Previous resistance has turned into support
  • Candlesticks are pointing to a bullish reversal

This looks like a really good place to buy this pair.

GBP/USD has been trading on a solid uptrend for the last several weeks, but this week the uptrend really picked up pace as the downtrend stretched further down in GBP pairs. This morning though, EUR/GBP was retracing lower and it reached the 50 SMA (yellow). We decided to buy this pair right there since the 50 SMA was holding and the stochastic indicator was oversold, which meant that EUR/GBP was oversold on this timeframe chart. Besides, the previous candlesticks formed pins/hammers which are reversing signals especially when the trend is bullish and the retrace down is complete.

In Conclusion

The USD is continuing to advance in the afternoon, although I can see some solid upside in safe-havens. I haven’t heard anything that would turn the market sentiment negative but the JPY is making gains against the USD and EUR/CHF is more than 70 pips lower so far today, so be careful not to get caught in the middle of a storm today. Here it has started to rain heavily, thank God.

Forex Signals US Session Brief, August 8 – GBP and JPY at Opposite Sides of the Spectrum Today

Posted on by Skerdian Meta

Financial markets have been all over the place today. I can’t say there have been major moves but there has been action out there and the instruments have followed their own agendas today. At the beginning, I thought that there was a flight for safety going on since USD/JPY had lost 50 pips. But, the CHF is lower against the USD and Gold is also lower during the European session so it was just the Yen which was performing pretty well. The European equities have been soft in the European session while the Yen made a quick bearish turnaround losing considerable ground.

That is one of the reasons for the Yen strength in the European session. The Euro and the Aussie are up against the Buck today so far, while the Kiwi and GBP/USD are down. The 100 pip decline in GBP/USD is just the next leg of the bigger bearish move while the decline in NZD/USD is due to the meeting of the Reserve Bank of New Zealand scheduled for this evening. The economic calendar has been empty during the European session so the brief will be about other forex events in this session.

The European Session

Bitcoin Continues to Fall – Bitcoin broke the 50 SMA on the daily chart yesterday. I thought that this moving average was going to hold, but the delay of the ETF listing by the SEC has discouraged the buyers. Today Bitcoin has broken the $6,500 level as well.

China Is Opening Capital Markets Further – The Chinese Securities Regulatory Commission released a statement early in the morning explaining that China will ease the regulation to attract more foreign funds, by allowing more types of foreign investments and broadening the access by foreign funds.

Italy Can Live with the EU Budget Rules – The Italian Deputy Prime Minister Di Maio said that Italy can respect the EU budget rules which allow a 3% ceiling of yearly debt. He also added that the EU budget restrictions must be improved. Italy has to finalize next year’s budget by September so it can propose it to the EU in October. This is a tricky situation. We don’t know if Italy wants a higher debt/GDP ceiling or whether it can cope with current rules.

Industry Sentiment in France – The industry sentiment indicator by the Bank of France remained unchanged at 101 points as expected. This indicator has been declining so far this year, but the decline has stopped for now.

Conte Says the Budget Will Be “Serious, Courageous, Rigorous” – The Italian Prime Minister Conte popped up for a press conference in Rome after Di Maio said that the budget will include a package of reforms and that easing bureaucracy will boost the economy. We surely hope it does but we have to see the draft first, don’t we Mr Conte?

The US Session

US MBA Mortgage Applications – Last week, MBA mortgage applications fell by 2.6%, this week they declined by 3%. The refinancing index has fallen to the lowest level since the year 2000, so this report doesn’t paint a pretty picture.

China Retaliatory Tariffs – US announced 25% tariffs on a further $16 billion worth of Chinese goods to start on August 23. China replied by announcing tariffs on $16 billion worth of US goods which will start on, the same date. Yep, trade war is accelerating.

Canada Building Permits – Building permits declined by 2.3% against 0.15% expected last month. Residential housing permits also fell by 5.7%, so this report is pretty negative, although the yearly numbers were a bit better, but still not good enough.

UK Government to Hold a No-Deal Brexit Meeting in September – The UK Government will hold a meeting in September to discuss the possibility of a no-deal Brexit and how to keep the Irish border open if that is the case. It is looking increasingly possible that there will be no EU-UK deal for Brexit.

More rate Hikes for FED’s Barkin – The Richmond FED president Barkin said that the FED should continue to raise interest rates. He added that inflation is at FED’s target and unemployment is low. Positive comments for the USD after Trump complained a couple of weeks ago about higher interest rates.

The Conflict between Saudi Arabia and Canada Continues – If you haven’t heard, there has been a conflict between Canada and Saudi Arabia in the last few days after Canadian Officials condemned the imprisonment of human right activists in Saudi Arabia. The Saudis have instructed asset managers today to sell Canadian holding that they have.

US Crude Oil Inventories – US Crude Oil inventories are expected to decline by 2.8 million barrels. This is a volatile report, but it might have some effect on Oil and the CAD.

Trades in Sight

Bearish USD/JPY

  • The trend is bearish
  • Today the downtrend has picked up pace
  • The fundamentals are bearish
  • Moving averages are waiting to provide resistance above

We sold before the reverse took place

USD/JPY has entered the next bearish phase today. This forex pair fell by around 60 pips from top to bottom but it is retracing higher right now. The best place to sell USD/JPY would be at the zone where the three moving averages are standing which is at 111.40. Although, the price has formed a doji which is a reversing signal and stochastic is approaching the overbought levels pretty soon, so this pair might reverse back down before reaching the moving averages. I will wait though.

In Conclusion

The economic calendar is pretty light until the evening when the Reserve Bank of New Zealand will hold its usual meeting. So, the market sentiment will be doing all the work today. Barking gave the USD a small boost a while ago but that is over now.

Forex Signals US Session Brief, August 7 – Slight Pullback in the USD Following the RBA Statement

Posted on by Skerdian Meta

The main forex event today was the interest rate decision from the Reserve Bank of Australia (RBA) and the statement that followed the rate decision. The RBA kept interest rates unchanged at 1.50% as widely expected, so there was no reaction in the market from that decision. But, the statement that followed got the markets moving with AUD leading the way this morning during the European session.

The RBA expects inflation to be a bit lower than expected this year, but in 2019 and 2020, inflation is expected to pick up and accelerate pace. The RBA was also positive on employment and expects the unemployment rate to decline to 5% in the coming years. That sent AUD/USD higher as it was reversing after several days of trending lower. That spilled into other pairs and it later turned into a broad USD selloff. I say this because safe-haven assets such as the JP and Gold are making gains against the USD and so are risk currencies.

The European Session

Hawkish RBA – The RBA expects inflation to be a bit on the soft side this year but it expects inflation to accelerate in the next two years. They also expect the unemployment rate to fall to 5% in the coming years, so this sounded pretty positive to the market and the AUD jumped higher.

German Industrial Production MoM – Factory orders were expected at -0.5% in Germany this month but came at -0.9%. That is a pretty bad reading and it follows yesterday’s soft manufacturing numbers from Germany.

Italian Government to Discuss the Budget Tomorrow – The Italian Deputy Prime Minister Di Maio said yesterday that it is not a priority for the Italian government to respect the fiscal rules. Rules are set by the EU that all members don’t exceed 3% deficit on a yearly basis. Di Maio said earlier this morning that the government seniors will meet tomorrow to discuss the budget and I expect some increase in public infrastructure, which will increase the debt. But, the attention will be on the comments about Italy staying in or leaving the Eurozone.

UK Halifax House Price Index – The Halifax HPI rose by 1.4% against 0.2% expected. Last month’s number was also revised higher to 0.9% from 0.3%. Apart from May when this index declined, the trend has been positive in the house prices in the UK.

UK to Use Trump As A Weapon for Brexit – Earlier on, we heard some news that the UK sees the Brexit deal deadline pushed towards November. The reason behind this is that the EU will have its hands full with Donald Trump’s tariffs so the UK can have a better deal with the EU. Everyone is playing games nowadays.

The US Session

US JOLTS Job Openings – The new JOLTS job positions were expected at 6625k but came at 6662k. That is a solid reading which shows the strength in the employment sector. The problem remains in the wages and salaries which are not picking up as fast as the job growth numbers suggest.

US IDB/TPP Economic Optimism – Economic optimism was expected at 57 points, but it beat estimates coming at 58 points. That is a nice increase in optimism from 56.4 points that we saw last month. Economic optimism has been growing steadily since March when it was at around 52 points.

New Zealand GDT Auction – The dairy price action will be held today in New Zealand and it is quite important for the Kiwi. The prices have been declining in the last four auctions, so there is a possibility that we might see another decline which would hurt the NZD.

Trades in Sight

Bearish NZD/USD

  • The trend is bearish
  • The retrace higher is complete
  • The 100 SMA provided strong resistance
  • The reverse is already underway

We sold before the reverse took place

NZD/USD has been on a strong downtrend during the last several days. Today, it decided to put up a fight and retrace higher after the RBA sounded sort of hawkish or at least, not as dovish as the market was expecting. We decided to sell the retrace but the buyers continued pushing higher and the price reached the 100 SMA. That moving average provided solid resistance and eventually NZD/USD reversed. Now, we are in profit with our signal here, but it will need some more work from the sellers until we reach the take profit target.

In Conclusion

Our GBP/USD signal just hit take profit now but the NZD/USD signal remains open. The dairy auction will be at any time now and we hope to see another decline in dairy prices which would send NZD/USD lower, so fingers crossed.

Forex Signals US Session Brief, August 6 – GBP/USD Break Support, Bitcoin Finds Support

Posted on by Skerdian Meta

Today is Monday and the economic calendar is pretty light. Besides that, the summer is officially here so liquidity has dried up, therefore the price action has been quite slow. At the same time, the moves are pretty sudden when the liquidity is thin, so don’t take trading too lightly in such markets. Today was very quiet during the European session with 10-20 pip ranges in most major pairs, but now the market is starting to move and we are seeing some decent moves, particularly in GBP/USD.

This forex pair just broke this year’s low which stood at 1.2950s. Now the downtrend which started after the Brexit vote is finally underway again in this pair after a major retrace higher which lasted more than a year. Bitcoin retraced lower last week after it made a big bullish move last month. The retrace has brought Bitcoin to the 50 SMA on the daily chart. This is the moving average I was waiting to see before trying to get in on the Bitcoin uptrend. Now, the retrace is complete on the daily chart and the price reached the 50 SMA, so we decided to go long.

The European Session

German Factory Orders – Factory orders took a dive in Germany as today’s number shows. They declined by 4.0%, against -0.3% expected. This makes it the 6th negative month this year, with factory orders increasing only in February and July. After last month’s 2.6% increase in orders, the market got excited that the negative trend might be over, but today’s terrible number takes us back to that bad spot. Are Trump’s tariff threats materializing? They surely don’t help the investor and business sentiment.

Eurozone Sentix Investor Confidence – On the other hand, the Eurozone Sentix investor confidence beat expectations. Investor confidence came at 14.7 points against 12.8 points expected. The trend has been bearish for this indicator since last December when it stood at 34 points. Although, the trend has started to change to bullish in the last two months after it bottomed out at just 9.3 points in June.

Iraq to Double Oil Supply – Ok, this looks like a bit of a stretch now – Iraq Oil Minister said that Iraq is planning to increase Oil output to 7.5 million bpd in 2023-2024 from around 4.3 billion bpd currently. He also said that oil prices are approaching stability. Oil is trading just below $70 at the moment.

Waiting for the Inevitable Recession Is Wrong, Says Bullard – FED’s Bullard is referring to the yield curve. The yield in 2 year bonds are approaching the yield of the 10 year treasuries in the US and the last time this happened was back in 2005-2006, 2 years before the big recession. Bullard doesn’t like this but the FED thinks this time is different and they will keep hiking rates.

EU’s Nowotny Wants Faster Normalization of the Monetary Policy – The ECB member Nowotny said that if the ECB started to hike interest rates slowly it wouldn’t harm the EU economy. This should be positive for the Euro, but we know that the ECB has next summer set as the earliest date to hike rates and unless we hear these words from the man himself, which is Mario Draghi, then the market will ignore it.

Italy’s Di Maio Playing Tough Against – The Italian Deputy Prime Minister Luigi Di Maio said that respecting EU’s fiscal rules is not priority in next year’s budget. This isn’t new and the risk here is that the national debt increases even more than it is in Italy, which is around 130% of the GDP from what I remember.

No Deal Is Better than A Bad Brexit Deal for the UK – The UK PM spokesman said earlier today that a no-deal Brexit is better than a bad-deal Brexit and Theresa May is prepared to go all the way if that is the case. Although, he added that the chances lean towards a Brexit deal. Threats coming from everywhere. Trump’s way of doing politics is contagious it seems.

The US Session

Canadian Bank Holiday – Canadian banks will be closed for Civic Day. I have no idea what this holiday is about, but it explains why the markets have been so quiet today, because Canada is off. Just kidding.

US Loan Officer Survey – There isn’t an exact time for the release of this report but it is an indicator of the consumer spending and the consumer sentiment. The more the banks lend, the higher confidence in the banking sector about the economy, but there aren’t any forecasts either for this indicator.

Trades in Sight

Bearish GBP/USD

  • The trend is bearish
  • The bearish trend picked up pace in the last few days
  • The support at 1.2950 has been broken
  • Fundamentals are against the GBP

The previous support should turn into resistance now

GBP/USD turned bearish after Mark Carney’s speech last Thursday. He made it clear that there won’t be any more rate hikes soon and the GBP sellers got activated. The fundamentals were dovish and the trend was bearish until then, but it has picked up pace since Thursday and today the support at 1.2950s was broken. I could sell right now but I like to sell retraces during a downtrend. So I will wait for the price to retrace higher, probably to the previous support at 1.2950s, which will likely turn into support now.

In Conclusion

The factory orders posted another terrible number in Germany today. It is not a good sign for the Eurozone and with Trump’s tariffs coming up later in the year, the situation doesn’t look good for any major economy. The market made a move today, but it has slowed again in the last hour. Perhaps, the US traders will make things more interesting when they come in shortly.

Forex Signals US Session Brief, August 3 – USD Falls Together with the Unemployment Rate

Posted on by Skerdian Meta

The UK construction sector posted some solid numbers yesterday but the market ignored it because the Bank of England meeting was due in a few hours. So, there was plenty of interest to see if the services data today was going to be as impressive as the construction numbers we saw yesterday. It was also interesting to see if the market was going to react. Neither of those things happened – the UK service data was a disappointment and the market ignored it nevertheless. The GBP still remains on the backfoot though after yesterday’s dovish comments from the BOE officials.

The US employment report is the main event today though. The unemployment rate declined by 0.1% after having picked up two decimal points last month. Although, the market looked at other components of this report such as the average hourly earnings and the employment change. Earnings came as expected but last month’s was revised lower and the employment came softer than expected. The Buck lost around 40 pips after the employment report was released but is reversing back up now.

The European Session

Spanish Services PMI – The services PMI index has been holding well around the 54-56 point region for the past several months in Spain. Today though, services dived, posting 52.6 points against 54.4 expected. The trend is turning worryingly bearish here.

Italian Services PMI – Italian services were expected to decline to 53.4 points but came at 54 points. The trend here is the opposite of what we are seeing in Spain. A few months ago the Italian services were pretty soft, but they have picked up in the last few months.

German Services PMI – German services posted 54.1 PMI points, slightly lower from last month which stood at 54.4 PMI points. This sector has steadied in Germany after it softened in May and June.

Eurozone Final Services PMI – The Eurozone services report came at 54.2 PMI points. That’s slightly softer than last month, but it remains steady nonetheless.

UK Services PMI – The UK services were expected to remain in the same levels as last month, but there was hope that they might come out higher today after the impressive construction report yesterday. Although, the services took a dive to 53.5 points from 54.7 expected.

Italian Industrial Production – Industrial production grew by 0.5% in Italy against 0.4% expected. Last month was revised higher as well from 0.7% to 0.8%. So, the trend looks promising here after several negative months earlier this year.

Eurozone Retail Sales – The Eurozone retail sales grew by 0.3% this month against 0.4% expected. Last month was revised higher from 0% to 0.3%. This is another nice turnaround in the trend because retail sales have been around 0%-0.1% for many months in Europe.

The US Session

China Threatens More Tariffs on the US – Chinese officials said earlier today that they will put tariffs on $60 billion worth of US goods, varying from 5% to 25%. Although, this is more of a threat to the $200 billion proposed US tariffs.

US Unemployment Rate – The unemployment rate fell to 3.9% as expected from 4%. This is a bit of a relief after the jump from 3.8% to 4% last month. Now unemployment is back on track again in the US.

US Non-Farm Employment Change – The employment change came at 157k against 191k expected and down from 213k last month. Employment change softened in April and May but picked up in June and July. Today’s number puts us back in the soft spot though and the USD felt the pain as it lost 40 pips.

US Average Hourly Earnings – The US hourly earnings increased by 0.3% in July as expected. This is a nice jump, although last month was revised lower to 0.1% from 0.2%.

US Trade Balance – The trade deficit grew again after having shrunk to $43.2 billion. Now it stands at $46.3 billion. So much for Trump’s tariffs aimed at decreasing the deficit.

US ISM Non-Manufacturing PMI – Non-manufacturing PMI is expected to slide to 58.6 points today after it increased to 59.1 points last month. That would still be a very decent reading nonetheless.

Trades in Sight

Bearish NZD/USD

  • The trend is bearish
  • The bearish trend picked up pace yesterday
  • The retrace higher is complete
  • The 50 SMA was providing solid resistance

The retrace up is already complete

After the US non-farm employment change missed expectations and came pretty soft, the USD lost some ground and NZD/USD moved 40 pips higher. Although, the unemployment rate declined again after having jumped two ticks last month, so that was a positive aspect of the employment report. USD traders forgot about the non-farm employment numbers and started trading the decline in the unemployment rate. NZD/USD started reversing after it failed to break above the 50 SMA (yellow) on the hourly chart. The stochastic was also overbought which meant that the retrace was complete. The trend has been bearish for some time in NZD/USD and it picked up pace yesterday, so we decided to go with the flow and sell this pair below the 50 SMA. Now the price is approaching the take profit target.

In Conclusion

The US employment report was a bit of a mixed bag earlier today. Now we wait for the US ISM non-manufacturing PMI. It this indicator is positive, then I expect the USD to resume the bullish trend again, although, it looks pretty bullish right now

Forex Signals US Session Brief, August 2 – BOE Hikes Rates with A Cautious Outlook for the Future

Posted on by Skerdian Meta

Today, the European session was all about the Bank of England. Everyone was expecting them to increase interest rates, and they did. The BOE hiked interest rates by 25 basis points from 0.50% to 0.75%, which we covered live on the forex calendar section in our site which we opened today. Although, the market was expecting it to be accompanied by a bearish statement from the BOE and that went exactly according to the market expectations as well.

The statement acknowledged the higher inflation and the economic pickup in Q2 after the soft numbers in Q1. But the BOE brushed the weak Q1 numbers aside saying that it was a one-off after the strong Q4 last year. But, the Brexit process is a major negative event which could derail the UK economy, said the statement and the GBP reversed immediately after having jumped 40 pips higher on the unanimous vote to hike interest rates. BOE Chairman Mark Carney added that the trade war will likely hurt the investor sentiment on a global scale which is another major event which could materialize negatively for the UK economy. The pound lost nearly 100 pips after Carney’s comments. Now the GBP has entered a bearish phase.

The European Session

Swiss Retail Sales – Swiss retail sales increased by 0.3% against expectations which were for a flat reading. Last month was revised higher as well, to 0.4% from -0.1%. This is the third positive month in a row so the trend looks promising.

Chinese Manufacturing PMI – The manufacturing number was expected at 60.8 but came at 61.9 PMI points. So, despite tariffs from Donald Trump, the Chinese manufacturing sector continues to be in a really good shape.

UK Construction PMI – The construction sector was in trouble during the winter period, but it slowly picked up over the past few months. Today, the construction PMI was expected at 52.8 points but came at 55.8 PMI points. That was a nice jump, but with the BOE meeting in a couple of hours, the market totally ignored the construction report.

BOE Interest Rate Decision – The Bank of England increased interest rates from 0.50% to 0.75% as widely anticipated. The surprise here came from the votes which were unanimous for a rate hike, while expectations were for a 7-2 vote in favour of hiking rates. That was the reason for the 40 pip jump in the GBP after the rate announcement.

BOE Monetary Policy Summary – The increased economic activity and higher inflation in Q2 were reflected in the BOE monetary policy summary. But, there were also comments highlighting risks from Brexit which could hurt the UK economy in the near future. That was the reason for the quick reverse in GBP pairs after the pop from the rate hike votes.

Mark Carney Speaks – The BOE Chairman Carney said that even though the rate hike was unanimous, we must not expect that bank rates will reach 2%-3%. Short term factors such as Brexit and the trade war are pushing the equilibrium lower. That gave the GBP another push lower.

The US Session

US Unemployment Claims – The US unemployment claims came at 218k which is very close to expectations. It falls in line with the trend of the last several months.

US Commerce Secretary Ross Speaks – Wilbur Ross said a while ago that it is possible that Chinese tariffs might not be cataclysmic and that the US has already excluded 1,000 Chinese products from tariffs. Yeah, very assuring comments to the US consumer who loves Chinese products. He added that the US will only implement tariffs on European cars if the negotiations with the EU fail.

US Administration Proposes Easing Auto Emission Rules – Trump’s administration is proposing on easing the auto emission rules. In Europe, the regulations for car manufacturers are toughening. Trump’s administration surely is an old fashioned one when it comes to economics.

US Factory Orders MoM – US factory orders increased by 0.4% last month after declining by 0.8% in the last month. Today, they are expected to grow by 0.7% which would be welcomed by the market.

Trades in Sight

Bearish GBP/USD

  • The trend has turned bearish
  • The fundamentals are bearish
  • Moving averages are waiting to provide resistance above

The moving averages are a good place to sell

I was thinking about opening a sell forex signal when GBP/USD popped higher after the unanimous vote to hike interest rates. The price was finding resistance at the 100 SMA (red) but the reverse down came pretty quickly so I didn’t have a chance to get in. GBP/USD fell 100 pips lower after Carney’s dovish comments, but is climbing higher now. We have a bunch of moving averages clustered above 1.31 where the price reversed. They are supposed to be a very strong barrier, so if this pair manages to climb up there, then I will look to sell GBP/USD.

In Conclusion

Now the Bank of England is out of the way. They hiked interest rates but sounded dovish as the market had priced in. The GBP turned bearish after that, so it has entered a bearish phase now and we will look to sell this pair during pullback higher.

Forex Signals US Session Brief, August 1 – Forex in Limbo Ahead of the FED

Posted on by Skerdian Meta

Yesterday, the forex market was pretty quiet and today things have been even quieter despite some decent economic data releases during the Asian and the European sessions. In the Asian session, the employment picked up by 0.5% in New Zealand, more than expected while the unemployment rate ticked higher as well. But, the Kiwi only moved around 20 pips.

The UK manufacturing data was released in the European session and it came close to expectations, but the GBP totally ignored it. The Italian and German manufacturing came a bit on the soft side as well, but the French manufacturing balanced it out and the Eurozone manufacturing remained unchanged from the previous reading. The cryptocurrencies have extended their bearish move today after Bitcoin failed to move higher on the weekly chart, so at least there is some action in that market if you are a trading junkie.

The European Session

UK Nationwide HPI MoM – The house price index grew by 0.6% against 0.1% expected in July. The previous month was revised higher as well to 0.7%, which makes this the beginning of a bullish trend after this indicator had been negative for several months.

Italian Manufacturing PMI – The manufacturing number from Italy came at 51.5 PMI points against 53 expected. The trend is worrying here since this indicator used to be around 58-59 points back at the beginning of the year, while now it is close to being flat.

German Manufacturing PMI – The manufacturing PMI was expected at 57.3 points in Germany, but it declined to 56.9 points. The trend is not very promising here either, but at around 57 points, manufacturing is in a solid shape in Germany.

French Manufacturing PMI – French manufacturing number came at 53.3 points, up from 53.1 points expected. This is a good turnaround since last month came at 52.4 points. Hopefully, the trend will reverse and move up now.

Eurozone Manufacturing PMI – The manufacturing sector for the whole of the Eurozone, came at 55.1 PMI points as expected which is the same as last month. The increase in French manufacturing balanced out the softening of the German and Italian manufacturing and the bearish trend of the last several months has stopped for now.

UK Manufacturing PMI – The British manufacturing came on the soft side as well, just like the figures we saw from Germany and Italy. Although, with the Bank of England expected to hike interest rates tomorrow, the market ignored this report today.

The US Session

US ADP Non-Farm Employment Change – The ADP non-farm employment change was expected at 186k but came at 219k. That means that 219,000 people found work in July. After two soft months where this indicator fell into the 170k region, we’re back up in the 220k zone.

US ISM Manufacturing PMI – The US manufacturing PMI moved higher last month from 58.7 to 60.2 points. That brought this sector to very decent levels. This month, it is expected to fall to 59.4 points but that would still be a great number, although let’s see if the tariff war has had an impact on US manufacturing.

US Construction Spending – Construction spending is expected to grow by 0.3% this time, while last month it grew by 0.4%. It’s not much but it’s going in the right direction if there aren’t any nasty surprises today.

US Personal Income MoM – Personal income grew by 0.4% as expected, the same as last month. Nothing to be too excited about, but it comes back at this level after slowing to 0.3% in April and May.

US Crude Oil Inventories – Oil inventories are expected to decline by 2.6 million barrels this week. Last week, they declined massively by 6.1 million. If we see another big drawdown in inventories today, then Oil and CAD will find some decent bids.

FOMC Statement – The FED is expected to keep interest rates on hold today. So, the attention will shift to the FOMC statement. Two weeks ago Trump said that he doesn’t like higher interest rates, so it will be interesting to see what the FED thinks about that.

Trades in Sight

Bearish GBP/USD

  • The trend has been bearish for many weeks
  • The 100 SMA is providing resistance
  • The BOE is expected to be dovish tomorrow

The 100 SMA has turned into support now

The Bank of England is widely expected to hike interest rates tomorrow, although they are expected to follow up with a dovish statement after that, considering that Brexit and the trde war are well underway. So, GBP sellers are waiting on the sidelines to make the move. The stochastic indicator is heading up on the H4 chart, but it is well overbought on the hourly timeframe chart. The 100 SMA (green) is also providing solid resistance here and the buyers are already reversing their trades as GBP/USD starts to slide lower.

In Conclusion

The US ISM manufacturing PMI is expected to be released soon which we will cover on our economic calendar live. But, I don’t expect much action since the market is waiting for the FED meeting later in the evening. So, if you want to trade, keep your targets small.

Forex Signals US Session Brief, July 31 – Inflation Up, GDP Down in Europe

Posted on by Skerdian Meta

Yesterday was inflation day for Germany and Spain, and today we had the Italian and French CPI (consumer price index) inflation as well as the Eurozone CPI report released in the European session. While the German inflation was a bit on the soft side compared to expectations yesterday, today the French and Italian CPI inflation came out a bit stronger than anticipated. That had its effect on the overall Eurozone inflation. Both the CPI and core CPI ticked higher and now the ECB target is reached and overtaken.

In forex, the USD has been under some pressure during the European session and it is still slipping lower at the beginning of the US session. The Bank of Japan Chairman Kuroda sounded pretty dovish in the Asian session, pleading to keep the monetary policy loose for as long as it takes, until inflation picks up in Japan as well as in the other developed economies. But, inflation is pretty low in Japan and it is not going anywhere anytime soon and the markets know that. So, that means that the BOJ will keep pumping money in the markets and will keep the negative rates policy. That has improved the sentiment, hence the progress of risk currencies against the USD and other safe-haven assets. Bitcoin, on the other hand, is falling in what seems to be a retrace of the uptrend that started late last month.

The European Session

German Retail Sales – Expected to grow by 1.1%, German retail sales grew by 1.2% this month which is a nice turnaround from the big 2.1% decline we saw last month. The previous month came at 2.3% but the previous three months were all negative, so while we can’t say the trend has turned bullish yet, at least the bearish trend has ended.

French Prelim CPI MoM – CPI inflation declined by 0.1% in France, but that’s better than expectations which were for a 0.3% decline. This is the first negative month since February.

Italian Prelim CPI MoM – Inflation picked up by 0.3% in Italy this month, against 0.2% expected. Although, last month’s was revised lower from 0.3% to 0.2%. Inflation has been picking up nicely in the last several months in Italy nonetheless.

Eurozone Prelim CPI MoM – The core inflation was expected to remain unchanged at 1.0% in the Eurozone, but it ticked higher to 1.1%. The main inflation number also ticked higher to 2.1% from 2.0%. Now, the 2% target from the ECB has been surpassed, which is a positive signal for the Euro since it means that the ECB has the road open to start hiking interest rates.

Spanish Flash GDP QoQ – Spanish GDP was expected to have grown by 0.7% in Q2 but the actual number came at 0.6%. The trend is a bit worrying here since it has been declining constantly since Q2 last year when Spanish GDP was growing by 0.9% quarterly.

Eurozone Prelim Flash GDP – The Eurozone Q2 GDP missed expectations by 0.1% as it came at 0.3%. The trend here doesn’t look good either because last year the Eurozone economy was growing by 0.6%, but on Q1 of 2018, the growth slowed to 0.4% and now the Q2 comes at 0.3%.

Eurozone Unemployment Rate – The unemployment rate fell to 8.3% as expected in the Eurozone, from 8.4% last month. The trend here is promising and this month’s unemployment rate didn’t get affected by the 0.2% increase in the Italian unemployment rate.

The US Session

Canadian GDP MoM – The Canadian GDP grew by 0.5% last month, which is the biggest increase so far this year. I think Donald Trump must be jealous of that because his tariffs on Canadian products are not keeping the Canadian GDP down. Well, Canadians have switched to buying their own products from what I have heard, so that must be helpful.

US Core Price Index YoY – The yearly core price index came at 1.9% from 2.0% previously. This is still a pretty good number since this is the core inflation number and it is still near the FED’s 2% target which is for the headline inflation number, not the core one.

US Personal Spending MoM – Personal spending grew by 0.4% this month as expected, but last month’s number was revised higher to 0.5% from 0.2%, which is helping the USD.

US Personal Income MoM – Personal income grew by 0.4% as expected and the same as last month. Nothing to be too excited about, but it comes back at this level after slowing to 0.3% in April and May.

US Employment Cost Index QoQ – The employment cost index, which is an indicator for wages and salaries, grew by 0.6%. That is 0.1% lower than expectations and 0.2% lower than the previous quarter.

US CB Consumer Confidence – The consumer confidence is expected at 126.5 points which is pretty much the same as last month. It is interesting to see if Trump’s tariffs have affected the consumer sentiment in the US.

Trades in Sight

Bearish EUR/CHF

  1. The trend has been bearish for the last three weeks
  2. The retrace up is almost complete
  3. The previous candlestick has formed an upside-down hammer
  4. The 20 SMA is providing solid resistance

The 20 SMA is not letting go today

A while ago we opened a sell forex trade in EUR/CHF. This forex pair has been trading on a bearish trend for nearly three weeks now, but at the moment it is retracing higher. Although, the retrace might be over soon because the price is overbought on the hourly chart and the stochastic is approaching overbought levels on the H4 chart. Besides that, the 20 SMA (grey) has been providing solid resistance in the last two weeks and it is doing the same today. Another bearish indicator is the previous candlestick. It has formed an upside-down hammer which is a reversing signal, particularly after a retrace higher such as in this occasion. So, we have a bearish bias for this pair and expect it to reverse lower soon.

In Conclusion

Inflation in Europe ticked higher today and surpassed the ECB target, but the GDP figures weren’t too promising, unlike Draghi’s promise last week. The USD has found its feet again now after the US data was released, so let’s see if we can get a few trades going.

Forex Signals US Session Brief, July 30 – Inflation Day for Europe

Posted on by Skerdian Meta

From the price action that we have seen in the European session, we can conclude that today is an extension of last Friday. Major currencies made a slight bullish turnaround in the US session and ended the day up against the Buck. Today, the USD is still under some light pressure. Commodity currencies have been trying to make some gains against the USD, although they are only marginally higher. The Euro, on the other hand, is continuing higher with EUR/USD trying to break above 1.17 at the moment.

In Europe, it is an inflation day as CPI (consumer price index) figures got released. Last week we heard Mario Draghi say that the softening of the Eurozone economy was just a one-off after the strong jump in exports at the end of last year. He also sounded quite optimistic about the inflation outlook, but today’s numbers don’t agree. German and Spanish inflation numbers came a bit on the soft side, although let’s have a look at them.

The European Session

China Point the Finger Back at the US – China’s State Counsellor added this morning that the trade imbalances between China and the US are not China’s fault and shouldn’t be blamed on China. The root of the trade deficit lies with the US and the US has benefited from trading with China. Sensible comments, but can you make Trump hear them?

BOE’s Carney Takes His Hit at Trump Too – The Bank of England Chairman Mark Carney said that the road of protectionism will cost jobs, growth and stability. He also added that in less than a year there could be a messy Brexit. Negative comments from Carney.

German CPI Inflation – The German regional monthly CPI numbers came out considerably better than last month, but the yearly figures were unchanged or even lower than previous ones, which was mirrored in the main CPI number for the whole country. The yearly German CPI figure came at 2.0% against 2.1% previously, so inflation is not really that great, Draghi.

Spanish CPI Inflation – The inflation has increased in Spain reaching 2.3% on a yearly basis last month. This month was expected to be the same, but it ticked lower to 2.2%, so this is another sign that Draghi might be wrong.

UK PM Spokesperson on Brexit – The UK government will set out technical sensible precautions in case of a no-deal Brexit. He also added that there will be consequences for the EU as well in such a case. It sound increasingly as the UK government is accepting a no-deal Brexit.

The US Session

US Pending Home Sales – The US pending home sales are expected to grow by 0.4%, That would be a welcome turnaround, since home sales have declined in the last two months. Although, if we see another negative number today, then the bearish/negative trend will be official.

NAFTA Deal Is Close for Wilbur Ross – The US Commerce Secretary Ross said that NAFTA is the trade deal that is closer to completion, especially the one with Mexico. This guy is partly responsible for the trade war, so I wouldn’t trust him. Probably Mexico has caved in and will come out as a loser on this.

Carney on Bloomberg – Mark Carney was interviewed previously by Bloomberg and the interview has been published today. Carney thinks that removing QE and increasing rates is the right way to go for central banks of large global economies. We know that, but with Brexit and Trump’s trade war, things could go the other way pretty quickly.

Trades in Sight

Bearish USD/JPY

  1. The trend is still bearish
  2. The price has slipped below the 100 MA (red)
  3. The last 2 candlesticks formed 2 dojis
  4. Stochastic is turning bearish

The 200 SMA finally gave way today

We sold USD/JPY last week as this pair was retracing higher on the daily chart. USD/JPY slipped lower on Friday but the price missed our take profit target by only a few pips and it moved back up. Although, the picture is starting to turn bearish again as stochastic is turning lower. The last two candlesticks formed two dojis, which are reversing signals after the small uptrend this morning. The price slipped below the 100 SMA as well. This moving average was providing support in the first half of last week and it might turn into support now, therefore we remain bearish on USD/JPY.

In Conclusion

The inflation from Germany and Spain didn’t meet Mario Draghi’s expectations today, although we will see in the coming months whether Draghi’s words materialize. The markets have been really quiet today and I expect them to become calmer as the US session heads toward the close.