Category: US/Midday Session Brief

Forex Signals US Session Brief, July 27 – Market in a Limbo Between the ECB and the US GDP

Posted on by Skerdian Meta

Yesterday the market was waiting for the European Central Bank ECB to shed some light regarding its economic forecast and more importantly, about the future monetary policy. Many ECB members have mentioned next summer for the earliest rate hike and there were hopes for a definite date. But, the ECB President Mario Draghi left it open with the possibility of the rate hike coming after, not before, the summer of 2019. The market took it as a dovish signal and the Euro has turned bearish. Although, all major currencies seem bearish today against the US Dollar.

One of the reasons that the US Dollar is seeing some strong bids today is the fact that the US GDP report will be released soon. The first reading of the Q2 GDP figures is expected at 4.2%, which is pretty upbeat. Although, Donald Trump has hyped this GDP report, hoping that it might reach 5%. On the other hand, the Q1 GDP was revised lower to 2% from 2.3%, but the market doesn’t really care for what has gone and Q1 is way behind us. Trump might get a bonus this time since the Soybean producers have dumped all their production in that quarter, but that will weigh on the Q3 GDP numbers.

The European Session

French Q2 Flash GDP – The Q2 GDP was expected to have grown by 0.3% but it came at 0.2% this morning. Besides that, the previous reading was also revised lower to 0.2% from 0.3%. Last year, the GDP was growing at 0.5%-0.6% quarterly, so the bearish turnaround this year to 0.2% doesn’t look good and it will likely impact the Eurozone GDP negatively.

German Import Prices – Import prices grew by 0.5% this month in Germany, up from 0.3% expected. Although it is down from 1.6% that we saw last month, this is a respectable number nonetheless.

French Consumer Spending – The spending by French consumers was expected to have grown by 0.6% this month, but the headline number of the report came at 0.1%. It is a disappointing reading, but last month was revised higher from 0.9% to 1.0%. Although, that came after a 1.55% decline in the previous month. So, there is no trend here as this report is all over the place.

Trump Feels optimistic About Q2 GDP – I heard rumours today that Donald Trump was hoping that Q2 GDP figures would be above 5%, but even 3.8%-3.9% would be acceptable. Well, he will play a strong reading in his favour and will surely blame a soft reading on the rest of the world.

Twitter Follows Facebook Down the Sink – Yesterday, Facebook shares took a dive, Today Twitter shares followed suit. Twitter opened with a bearish gap and from what I can see, it was down around 10% at some point despite the revenue coming as anticipated. Perhaps, investors were hoping for something better.

The US Session

US Q2 Advance GDP – This is the first reading of the Q2 GDP and it came slightly lower than expected. The consensus was for a 4.2% reading but came at 4.1%. That’s a great number nonetheless, although Donald Trump would have liked a higher reading. Although, it might get revised up or down in the next two estimates. The previous reading was revised lower by 0.3%.

US Q2 GDP Price Index – The price index grew by 3.0% in Q2 which is by far the highest reading in a very long time. This means that inflation is picking up the pace which will put further pressure on the FED to keep hiking interest rates, something that Trump hates.

US Personal Consumption – One of the main components of the GDP is the personal consumption, since it shows how most Americans feel about their incomes and the future of their jobs. Personal consumption grew by 4.0% against 3.0% expected which is very strong, so that should offer some consolation for the USD since it is sliding lower on the lower GDP headline number.

Revised US Consumer Sentiment – The consumer sentiment in the US is expected at 97.1 points, same as last month. The consumer sentiment used to be at above 101 points back in March, but it has declined steadily and today’s number confirms the bearish trend if it comes as expected or lower.

Revised US Inflation Expectations – Last month, inflation expectations came at 2.9% in the US. There is no estimate for today, but considering the jump in the GDP price index, it is possible that inflation expectations will be upbeat as well.

Trades in Sight

Bullish Bitcoin

  1. The trend is still bullish
  2. The retrace lower is complete on the H4 chart
  3. The 50 SMA is providing support
  4. Stochastic is oversold
  5. Previous resistance will likely turn into support

The 50 SMA (yellow) is standing firm

Bitcoin has retraced lower in the last three days after failing to break above the 50 SMA on the weekly chart. But, the bearish retrace seems to be almost over now that the stochastic indicator is well oversold on the H4 timeframe. As you can see from the chart above, the 50 SMA is providing support to Bitcoin, standing at $7,735 according to my broker. Besides the 50 SMA, this area was the high last week which means that it provided resistance. Previous resistance levels usually turn into support when they are broken, so this level will add additional strength to the 50 SMA. It is possible that we see a bullish reverse from here, although I would like to get another confirmation from a candlestick formation. If a see a doji or a pin on the H4 chart, then that will be the signal to go long.

In Conclusion

The US Dollar has been bullish in the last 24 hours, but is under some pressure now, after the release of the GDP report. The report was pretty good despite inventories which were a drag, but this means that firms will order more materials in the coming months since inventories are down. However, I see this as an opportunity to go long on the USD once the decline is over.

Forex Signals US Session Brief, July 26 – Markets Await Draghi, While Trump-Juncker Strike A “Deal”

Posted on by Skerdian Meta

The financial markets were all getting ready for the European Central Bank (ECB) meeting today. All the attention has been on what Mario Draghi would say because, being the holiday season, not much matters now and the economic data hasn’t been that important this week. Various ECB officials have highlighted lately that the earliest rate hike won’t come before summer next year. So, we are all waiting to hear from the ECB President Draghi. He might offer clues that the first rate hike might come before or after the summer of 2019 which will likely send the Euro in the respective direction, so the market is interested in his opinion.

But, Donald Trump stole the attention once again. Trump and EU’s Juncker met in Washington yesterday to discuss international trade and all of a sudden they came out with an agreement. Given Trump’s hostility and the firm position of the EU in recent months, I thought that this would be a disastrous meeting and both parties would go their own ways, cursing at each other after the meeting. But, a deal was reached and the EU accepted to start buying US soybeans. Although, the deal was just in principle as both parties have to send teams to negotiate the details and that is going to be tricky. We already heard comments from European politicians which didn’t sound too promising, so it is too early to tell. But, the market got excited since there will be a pause between the EU and the US in this trade war. Too bad for China which was fearing that the EU might cave in. Yesterday, risk currencies jumped higher after the deal, but today they are slowly sliding lower.

The European Session

German GfK Consumer Climate – Just like the business climate figures yesterday, the consumer climate in Germany today remained pretty much unchanged. It came at 10.6 points against 10.7 points expected, so not much change here, which is positive considering the trade war.

Spanish Unemployment Rate – Despite being exceptionally high, the unemployment rate had been increasing in the last two quarters in Spain. Today though, unemployment declined to 15.3% against 15.8% expected and from 16.7% previously. This is a really nice turnaround and should help decrease the unemployment rate for the EU.

ECB Main Refinancing Rate – As widely anticipated, the ECB kept the refinancing rate, which is the interest rate, unchanged at 0%. No surprise here, but Draghi’s speech later on will likely get the markets moving.

More Time Says German Foreign Minister – Maas said early this morning that the deal between the EU and US yesterday buys more time for the EU regarding trade dispute with the US since there won’t be escalations for now. He added that this is not a result, but it is likelier now that it ends with a positive result.

Explosion Close to the US Embassy in China – There was an explosion near the US embassy in China today. There isn’t much news on the topic coming out of China since censorship is normal there. But, can this be due to the EU-US deal yesterday?

French Finance Minister Not Too Optimistic – Le Maire commented earlier on the US-EU trade deal. He said that France doesn’t want broad trade negotiations and agricultural products should be left out of negotiations. He also added that the trade deal should be based on reciprocity, expecting a gesture of goodwill from the US. I haven’t seen any such gestures from Trump since he took power and I’m not too optimistic about a final deal.

The US Session

US Durable Goods Orders – Durable goods orders increased by 1% this month which is pretty good, but not as good as expectations which stood at 3%. Nonetheless, this is a positive reading after the last two months which were negative. The decline in last month’s was revised and it was a bit lesser than previously thought.

US Core Durable Goods Orders – Core orders were expected to grow by 0.5% and today’s number came pretty close at 0.4%. Last month’s was revised higher at 0.0% from -0.3% so we haven’t seen a decline in core durable goods orders since February.

US Unemployment Claims – Last week, the unemployment claims decreased below 210k for the first time this year. Today, they picked up again, coming at 217K, so back where we were in June.

US Goods Trade Balance – The US goods trade balance has been decreasing in the last three months, from around -$75 billion to -$64 billion last month. Although, that didn’t last too long and this month the deficit increased again to $68.3 billion. Donald Trump must be furious. After all his work, the trade balance is not really improving.

US Wholesale Inventories – Last month’s inventories increased by 0.5% while today they came flat at 0%. This is good news though, because US companies will have to order more inventories from their suppliers, which obviously is good for business in the coming months.

Draghi Sounds Positive – Mario Draghi is holding the press conference now and he said that yesterday’s Trump-Juncker meeting is a good sign. He expects wages to grow in H2 of this year. But, the Euro has appreciated considerably since the beginning of 2017. This last comment is definitely bad news for the Euro which has taken a 40 pip dive.

Trades in Sight

Bearish USD/JPY

  1. The bigger trend is still bearish
  2. The retrace higher is almost complete
  3. The 50 SMA is likely to provide resistance
  4. Stochastic is overbought on the H1 chart
  5. The 111 level has acted as support & resistance before

The 50 SMA is standing firm

We just opened a sell forex trade in USD/JPY. This forex pair entered a bearish phase last week when Donald Trump said that the FED hiking interest rates goes against the policy of his government and threatened more tariffs on China. The bearish trend has lasted all week but today we are seeing a pullback in USD/JPY. This looks like a really good chance to get in and go with the trend. The pullback seems complete now since stochastic is overbought. The 50 SMA (yellow) is also providing resistance and the 111 level is a support and resistance level in itself.

In Conclusion

The ECB kept interest rates unchanged today but Draghi is still speaking. He sounded positive about the economy but said that the Euro has gone up too much since early last year. Contradicting comments for the Euro and he is still speaking, so let’s get this update posted and see what else he has to say.

Forex Signals US Session Brief, July 25 – European Forex Traders, Get Ready for New Regulation

Posted on by Skerdian Meta

Today is another very quiet day in forex. The summer holiday period has dried up liquidity and the moves have been pretty small. The range in most forex majors is 30-40 pips at best. The range in the Aussie (AUD) pairs was a tad wider due to the inflation report that was released this morning in Australia. One thing to notice today is the bullish momentum in Gold. While safe-haven currencies were in great demand in recent weeks, Gold has been following a steep downtrend. Today, safe-havens moved little, yet Gold has gained nearly 100 pips so far.

Although, the most important thing for forex traders is the new regulation that the EU will impose on forex brokers, if you haven’t already heard. The European Securities and Markets Authority will implement new rules to the European forex industry. The leverage that brokers offer to their clients for brokers operating in the EU will decrease dramatically from 200:1 to 30:1 for major pairs and to 20:1 for minor pairs. CFDs (contracts for difference) will also be restricted while Binary Option will be made illegal altogether, so no more binary options guys, not that I ever liked them. Brokers will be required to include a warning when offering promotions so traders don’t get lured too easily by the offers. Brokers will also have to implement a mechanism to close trades when the balance falls below the 50% of the minimum required margin. What does that mean? It means that forex traders won’t have to lose more funds than their forex account balance. These are all great news guys. Some might complain about the leverage, but I never use more than 10:1 leverage, otherwise it becomes too risky.

The European Session

German IFo Business Climate – The business climate in Germany came at 101.7 points, pretty much in line with expectations as well as last month’s number. This indicator used to be above 110 for a long time until April when Trump pushed the trade war forward. Although, it has been in the 102 region for the last three months, so it is good that the business climate is not deteriorating any further.

Eurozone M3 Money Supply – The total amount of currency in circulation and in bank deposits increased by 4.4% while it was expected to grow by 4%. This is the biggest increase since February and it is an early indicator for future rate hikes from the ECB, since more cash in circulation means more spending and higher inflation in the months to come.

UK High Street Lending – High Street lending is the number of mortgage applications that have been approved by major banks operating in the UK. Mortgages increased by 40.5K against 39.1K expected. Mortgages slipped below 40K in March and they have been below that level since then. So perhaps, the slight bullish momentum for the GBP is due to the increase in Mortgages.

Bitcoin Fails at Resistance Once Again – Bitcoin buyers had another try at the upside today but they failed to break the 50 SMA on the weekly chart. Now Bitcoin is slipping lower, so this might actually be the beginning of a bearish reversal for Bitcoin if the top side remains unbroken.

French PPI – The producer price index increased by 0.1% in June, which is much slower than the 0.6% increase in the previous month. Although, the yearly number came at 3.4%, up from 2.9% in the previous reading.

Twitter Diplomacy Is Infecting the Germans – The German Foreign Minister tweeted this morning that the US is not an adversary of the EU, but EU’s biggest partner outside of the Block, obviously. He also stated that the US is bigger than the White House and that Trump won’t change anything. Well, I don’t know about that, Trump is alienating the US from all of its partners.

The US Session

Belgian Business Climate – The Belgian business climate index is like a median indicator which shows the average business climate for the whole of the Eurozone. It is expected at 0.4 points which is positive, although lower than last month’s 0.6 points.

US New Home Sales – The US new home sales have been a bit soft this year although in April and June we saw some decent numbers. Today, new home sales are expected at 669k, which is somewhere in the middle.

US Crude Oil Inventories – Crude Oil inventories have been pretty volatile recently. In the first week of July inventories increased by 1.2 billion barrels, in the second week they fell by 12.6 billion and last week they increased again by 5.8 billion barrels. Today, they are expected to decline again by 2.6 billion barrels. While the USD doesn’t really care much for this economic indicator, the CAD is pretty vulnerable to it, so watch the CAD pairs after this release.

Junker and Trump Meet in the White House – EU’s Juncker and Donald Trump will meet in Washington today and we all know what they will talk about. Trade tariffs, particularly with the EU and the deterioration of Trans-Atlantic relations. Knowing Trump, I don’t think we will see a positive outcome from this meeting. Instead, I expect more Twitter threats from Trump.

Trades in Sight

Bearish Litecoin

  1. The bigger trend is still bullish
  2. The pullback lower is complete
  3. The 50 SMA is providing support
  4. Stochastic is oversold

The 50 SMA (yellow) held its ground well today

Cryptocurrencies have been on a bullish run for some time now with Bitcoin leading the climb. Litecoin was a bit late to come to the party and the climb has been slow, but it gained some pace yesterday. Today though, cryptocurrencies are retracing lower but Litecoin has found a base. The stochastic indicator is oversold on the H1 chart and it is now turning higher, which means that the retrace should be over. The 50 SMA did a good job holding the sellers above as it provided solid support. Besides that, the hourly candlestick from three hours ago formed a hammer which is a reversing signal. The three following candlesticks are bullish, so the chart setup here points to a bullish reversal and a continuation of yesterday’s trend. For these reasons, we have a bullish bias for Litecoin now.

In Conclusion

Juncker has flown to the US today to meet Trump at his den. As I said above, I don’t see a lot of positivity coming out of this meeting. In fact, it might be a disaster with Trump trying to bully his counterparts. Whatever the outcome, it is likely that the USD and especially the Euro will be heavily affected from the comments coming out of this meeting, so we will keep an ear behind the door.

Forex Signals US Session Brief, July 24 – The Forex Market Remains Confused While Cryptocurrencies Get Going

Posted on by Skerdian Meta

Today we had the European services and manufacturing data being released in the morning. The numbers were sort of mixed, with services showing a slight slowdown while the manufacturing sector beat expectations and stopped the bearish trend of the last several months. It seems that Trump’s tariffs on Steel and Aluminium as well as threats about more tariffs on European cars are not impacting the outlook for the future of the European manufacture managers who have increased their business. I’m afraid, the tariffs will hurt the US manufacturing industries more. If Steel and Aluminium become more expensive in the US, US manufacturers who use these metals as input for producing goods will surely have trouble. There are a lot more companies and people employed in steel using industries in America than in steel producing ones, so it is easy to do the math.

Forex has been sort of confused. First, the market headed towards the USD but then the tide shifted as the European session progressed. Cryptocurrencies, on the other hand, have been pretty clear in their goal. They have been making some considerable gains and Bitcoin leads the way. The $8,000 level has been broken, so the downtrend now seems over.

The European Session

French Flash Manufacturing – The manufacturing PMI came at 53.1 points in France. The previous months stood at 53.1 as well, but it was revised lower to 52.5 PMI points. This month’s was expected at 52.6 points, so this is a positive reading.

German Flash Manufacturing – Last month the German manufacturing number came at 55.9 PMI points and this month it was expected to decline to 55.5 points. Today manufacturing surprised us as it came at 57.3 points, which puts German manufacturing back on the bullish trend.

French Flash Services – French services came below expectations at 55.3 points and last month’s number was revised lower as well. The trend continues to be bearish here but services still remain at a decent level.

German Flesh Services – German services came as expected at 54.4 PMI points. Although, this is a positive reading because the bearish trend ends with this reading. Last month’s number was also revised higher to 54.5 points from 53.9 points.

Iran Threatens the US Back – Iranian officials said earlier this morning that if the US blocks Iran’s Oil exports, then Iran will take equal countermeasures. Seems like a war of words more than anything else because military action is out of the way in this conflict.

Bitcoin Breaks $8,000 – Cryptocurrencies have turned bullish in recent days and Bitcoin is leading the pack. Bitcoin broke the $8,000 level today, for the first time since May. A more detailed update on Bitcoin will follow the midday brief.

The US Session

US Philly FED Non-Manufacturing PMI – The non-manufacturing index came at 44.3 points, more than five points above last month. Looking at the subcomponents, new full time employment was the only positive indicator, while wages, new orders and business activity missed expectations by a wide margin.

US House Price Index – The house price index was expected to grow by 0.4% but it came at 0.2%. This index used to be at around 0.6%-0.8% until April, but in the last three months, it has been stuck at 0.2%, which casts a shadow on the overall economy.

US Flash Manufacturing – The US manufacturing index is expected to come at 55.1 points. Last month came at 54.6 PMI points but was revised higher at 55.4 points. Perhaps today’s number will be revised higher as well if it misses the consensus.

US Flash Services – The services indicator came at 56.5 points last month and it is expected to be exactly the same today. This indicator used to be at around 54-55 points for many months until June, so this will likely be a positive reading even if it comes as expected.

Trades in Sight

Bearish GBP/USD

  1. The bigger trend is still bearish
  2. The H1 chart is overbought
  3. The 50 SMA is providing resistance on the H4 chart
  4. The previous candlesticks signaled a bearish reversal

GBP/USD is forming a bearish reversing chart setup

Earlier today in the European session, I opened a sell trade in GBP/USD. This forex pair made a move up north and stochastic became oversold on the H1 timeframe. Stochastic is turning lower now on the H1 chart which is a bearish signal. Although on the H4 chart, the situation looks even more bearish. The 50 SMA (yellow) is providing solid resistance on top and the previous candlestick closed as a doji which is a reversing signal, so I feel pretty confident on this trade.

In Conclusion

Today has been another quiet day at the office for forex traders as most of the major players are already on holidays. At the moment, the US Dollar is under some slight pressure but don’t mark any positions because the market is shifting every few hours. Even the surge in Bitcoin has come to an end for the time being.

Forex Signals US Session Brief, July 23 – Oil and Bitcoin the Only Movers on a Summer Monday Market

Posted on by Skerdian Meta

Today is Monday and Mondays are usually quiet, but we are also at the last week of July when the major players in the forex industry take some time off. Forex has been even quieter than usual this Monday, so forex is already in summer mode now. This means that liquidity is thinner than usual, so even though the markets are quiet, be prepared for a spike to happen. Donald Trump is not awake yet and his Twitter account has been quiet, but be prepared for anything because, in a thin market, small things turn into huge moves.

The USD made a small bullish move this morning, but it ended before anyone could even notice it. Bitcoin and Crude Oil, on the other hand, are making some respectable moves. Perhaps, the liquidity that has been drained from forex is pouring into these two assets. WTI Crude Oil broke above the 200 SMA on the H4 chart. That moving average has been providing resistance for most of last week, so now Oil looks pretty bullish. Bitcoin also broke above the moving average that kept the buyers in check last week and the picture here looks bullish too now.

 

The European Session

JPY in Demand – The JPY found some strong demand overnight. Japanese yields are going up for the first time since anyone can remember and that has helped the JPY. USD/JPY lost around 70 pips during the Asian session but is retracing higher now.

Swiss M3 Money Supply – This was the only economic data during the European session. The money which is in circulation, as well as in deposits, grew by 2.9% in the last year, but the pace slowed to 2.4%. It is not that the Swiss lack physical cash though.

Bitcoin Bullish – Bitcoin found some decent bids once again this morning. It opened at around $7.370 and climbed all the way to $7.770. It took out last week’s high making new highs and it climbed above the 100 SMA on the daily chart which had provided solid resistance all week. The buyers are in control for now.

Oil Closing the Gap – Oil started to recover last week after having lost nearly $10 from the top to the bottom this month. It even opened with a bearish gap last week but it started recuperating late last week and today the buyers are making another move. Oil broke the 200 SMA which provided resistance last week on the H4 chart, so the picture looks bullish here as well.

EU Commission Spokesperson Comments – A while ago we heard comments from the EU Commission spokesperson saying that the meeting between Junker and Trump will help to de-dramatize trade. Oh, and also to maintain dialogue. From what I’ve seen, Junker is drunk pretty often, but that might help de-dramatize the meeting with Trump, just saying!

The US Session

Canadian Wholesale Sales MoM – Canadian wholesale sales grew by 1.2% this month, twice as much as what was expected. This is good news for Canada which is also being targeted by Trump’s tariffs. Last month’s was revised lower to -0.1%.

Chicago FED Business Activity – The national business activity index measured by the Chicago branch of the FED was expected to improve by 0.25 points, but it grew by 0.43 points. Although, the previous month was negative and it was revised even lower, nonetheless, this is a good sign for the US economy.

Eurozone Consumer Confidence – The consumer confidence in the Eurozone is expected at -1 point which is negative of course. Consumer confidence came at the same level last month. Let’s see if there are any surprises this time around.

US Existing Home Sales – Existing home sales have taken a bearish turn in the last two months. They used to be in the 5.50-60 million in March and April, but declined in the next two months, falling into the 5.40 million region. Today, they are expected to grow by 5.46 million.

 

Trades in Sight

Bearish EUR/GBP

 

  1. The bigger trend is still bullish
  2. The retrace down is complete
  3. The 100 SMA is providing support
  4. The previous two candlesticks signalled a bullish reversal

EUR/GBP is turning bullish indeed

We bought EUR/GBP last week and still have that signal open. We went long in the 0.8940s region as this pair was retracing lower, but the retrace kept going. Now, this pair is severely oversold on the H1 and H4 charts and the retrace down seems exhausted. Stochastic is well oversold and turning up now, while the 100 SMA did a good job in providing support, despite being pierced for some time. The previous two doji candlesticks signalled a bullish reversal which seems to be underway already since the last two candlesticks are bullish. So, we are holding on to our signal in this pair.

In Conclusion

The market is trying to make a move but all moves have been pretty pathetic today. They lack the grind so I think we will have a really quiet US session. By the way, the bigger picture for Bitcoin looks increasingly bullish now as the buyers are pushing above moving averages one after another. I would have liked to go long on this move, but I will wait for a retrace lower before taking a decision.

 

 

Forex Signals US Session Brief, July 20 – More Tariffs on China and No Rate Hikes for the FED

Posted on by Skerdian Meta

Financial markets opened with a slight hangover from yesterday. Donald Trump bashed interest rates going up in the US even though he said he liked Jerome Powell as the FED Chairman. That sent the USD around 100 pips down but the move was only limited to forex because the stocks barely felt it. It is strange for a President to interfere in the monetary policy of a central bank but these are strange times. Trump said that he is not trying to mess with the central bank’s independence and he is only commenting as a normal citizen would. But he is not a normal citizen, he is the President of the US.

Anyway, the market was calm this morning but Trump popped up again on CNBC during the European session and messed the markets once more. Trump repeated that raising interest rates puts the US at a disadvantage and that all the good things that his government is doing for the US economy, are undone by higher interest rates. Unlike yesterday, the stock markets tumbled lower today after these comments. He also said that he is planning to place tariffs on $505 billion of Chinese goods. That was another surprise. China, on the other hand, is fighting its battle on its soil once again, so read on to see what has happened today.

The European Session

China Retaliates – The PBOC (Bank of China) devaluated the Yuan overnight. This is the biggest devaluation in a year. If the US places tariffs on Chinese goods which increases the value of them by 10% or 20%, then the Chinese can devalue the Yuan by the same amount and just carry on.

German PPI – The German producer price index came as expected, growing by 0.3%. That’s down from the previous two months’ figure which stood at 0.5%, but it still much better than March and April and it still is a good number nonetheless.

Eurozone Current Account – The current account surplus was expected at 27.2 billion Euros but came much lower at 22.4 billion. The trend has been bearish, declining from above 30 billion at the beginning of the year and this month’s miss confirms it.

Italy the Black Sheep of the Eurozone – The head of the budget committee Borghi said that Italy will sooner or later come out of the Euro. He is a Euro-skeptic, so not much reaction to his comments, although the danger is present. If Italy leaves, the Eurozone likely falls. We also heard comments this morning that the de facto Italian leaders Di Maio and Salvini are calling for the resignation of the Finance Minister Tria, although they denied it. More trouble in Italian politics.

More Tariffs from Trump – Trump said today that he is planning on putting tariffs on $505 billion of Chinese goods. He also repeated yesterday’s comments that he doesn’t like the FED hiking rates as it goes in the opposite way with what his government is doing. The Dollar is under attack as a result and stocks have taken a deep dive as well.

A Backstop on the Irish Border Is A Must – Earlier in the morning, Irish officials said that a backstop is necessary and later, the British PM May said that they are committed to a workable backstop. Although, she is trying to pass the ball on the EU court. I don’t think the EU will take the ball; it’s Britain’s Brexit so they have to solve the issue themselves.

Merkel Against Tariffs – Angela Merkel said that she doesn’t want tariffs on EU cars but if Trump goes ahead then retaliation is on the way.

The US Session

Kudlow Backs Trump on China – The White House economic adviser commented that Trump won’t let go on trade issues with China despite mid-term elections coming up. He added that the Chinese President Xi Jinping is making a bad bet if he thinks that mid-term elections will weaken Trump.

Bearish Signal for the US Economy – FED’s Bullard said a while ago that the Yield curve inversion is a bearish signal for the US economy. He also repeated that the FED should hold off to hiking interest rates further. The USD took another dive on these comments.

Canadian Retail Sales – Retail sales jumped 2% higher while they were expected to grow by 1%. Last month’s numbers were revised higher as well. Core retail sales which strip out autos also beat expectations, growing by 1.4% while last month was revised up as well into positive territory. That’s great news for Canada despite Trump’s trade war.

Canadian CPI Inflation – The consumer price index remained unchanged month-on-month but the yearly number came higher at 2.5% from 2.3% in the previous reading. Good news all around for Canada and the Loonie is surging.

 

Trades in Sight

Bullish EUR/GBP

 

  1. The trend is bullish
  2. The 50 SMA is pushing this pair higher
  3. The fundamental picture is better for the Euro

The trend is clearly bullish for this pair

We went long on EUR/GBP a while ago. This forex pair has been on a bullish trend for more than a month and this week the bullish trend has taken more pace. The 50 SMA has been pushing the price higher so a retrace to this moving average looks like a good opportunity to go long. The stochastic was almost oversold earlier and it is now turning higher. Besides, Brexit is always a danger for the GBP and it is a bigger thing than anything that the Euro might be facing.

 

In Conclusion

There isn’t much on the economic calendar in the US session apart from the Canadian data which came out a while ago. Although, with the comments from Trump in the last few days and the moves that have followed, there is a risk that the forex traders try to position themselves, before the week draws to a close, so be careful.

Forex Signals US Session Brief, July 19 – USD Buyers Charge Ahead Again

Posted on by Skerdian Meta

The economic calendar has been pretty light today apart from the UK retail sales which came out negative. That sent GBP/USD tumbling lower, although most of that move came from the USD side. The Dollar bulls are back in charge today after playing dead in the last few trading sessions. The Euro and the GBP were down against the Buck yesterday and the slide continued further today.

The commodity Dollars and safe-haven currencies were on a bullish run yesterday making some considerable gains, but they are all down today as the USD pushes higher in what seems as the next leg of the major uptrend. China is back commenting on the trade war that the US has opened and it is putting the blame back on the US as it should be. Although, the markets didn’t react on the comments like it did yesterday when they went through a mini phase of panic.

The European Session

Japan Machinery Tool Orders – The machinery tool orders grew by 11.4% in japan on a yearly basis. It looks like much but the trend has been bearish since the beginning of the year when the growth stood at 50%.

China Is Getting Vocal Again – After keeping quiet for a long time, China is now retaliating with comments. They said today that it is clear who is on the wrong side. China has done everything to avoid trade war escalation and the flip flop of the US is well known. They also said that Kudlow’s accusations that China is holding things up is shocking. At least, the Chinese are being honest.

UK Retail Sales – The UK retail sales declined by 0.5% month-on-month. Core retail sales which strip out fuel and auto sales fell by 0.6% while the yearly numbers were revised lower too. Not good news for PM May and the Bank of England which is planning to hike interest rates in August.

EU Says US Tariffs on Cars Would be Disastrous – The European Trade Commissioner Malmstrom said that dividing the EU and the US would weaken both and that the EU is preparing a list of countermeasures if the US places tariffs on European cars.

Brexit White Paper Detailed but Unclear – EU officials said that the Whitepaper is unclear and that the EU is negotiating a divorce deal, not just the whitepaper. They also said that Article 50 might be postponed. Well, this is increasingly looking like the most probable option as everything about Brexit keeps failing.

May’s Spokesperson Is Confident – The spokesperson for the UK Government said that progress has been made in negotiations with the EU, which suggests that there won’t be a no-deal Brexit. These are just words to calm May’s supporters, I think.

The GBP and the

The US Session

US Philly FED Manufacturing Index – This manufacturing index was expected at 21.6 points but came at 25.7 points, up from 19.9 points last month. Last month’s number was worrisome because this indicator took a dive from where it has been all this year, but it is back on trend now.

US Unemployment Claims – Unemployment claims were expected at 220k but came at 207k. This is another positive indicator today and it is the first time that unemployment claims fell to these levels.

CB Leading Index – This index includes a number of economic indicators such as housing, consumer confidence, new factory orders, employment etc. It is expected at 0.4% this month, up from 0.2% previously but perhaps we will see another positive surprise today from the US.

Trades in Sight

Bearish GBP/USD

  1. The main trend is bearish
  2. The downtrend has picked up additional pace this week
  3. Fundamentals are all bearish

The moving averages look like good places to sell GBP/USD

I would have liked to sell GBP/USD when it was retracing higher but the reverse came early in the morning so I missed the chance. This pair is on a strong bearish trend on the bigger timeframe charts and this week the bearish trend has picked up even more pace. The previous low at 1.3050 has been broken and the big round level at 1.30 has alao been broken today. Although, I don’t like to get in right in the middle of a trend, so I will wait for a pullback higher before shooting. A good place would be either at the 20 MA or the 50 SMA, but they have to catch up with the price first.

In Conclusion

I just heard that some Euribor traders were sentenced to more than five years in prison each. They were convicted for trade rigging. So, if any of you guys are thinking of doing some rigging, then think twice. But, we don’t need rigging since we are doing pretty well with forex signals.

Forex Signals US Session Brief, July 18 – Inflation Weakens in Europe, the USD Continues to Advance

Posted on by Skerdian Meta

Today is an inflation day in Europe. The main CPI inflation number remained unchanged at 2%, which is the target for the European Central Bank. Although, the core inflation number ticked down for the second month in a row. It wasn’t as bad as the turnaround in the UK inflation. The monthly CPI fell flat at 0% and the core number declined below the target from the Bank of England. This comes a day after the UK Prime Minister Theresa May survived a “putsch” from rebellious Conservatives who teamed up with Labours to take her down.

As a result, the GBP has been falling pretty fast and in the last 24 hours GBP/USD has lost more than 250 pips. Bitcoin and other major cryptocurrencies have completed the second bullish wave yesterday and are still crawling higher today. The US Dollar continues to be one of the strongest currencies out there, although, safe-haven currencies are charging ahead at the moment. Perhaps, the latest comments from Chinese officials saying that they will take further measures to respond to US tariffs have dented the sentiment in the forex market. Gold still can’t get its act together though, even when the sentiment is negative and that’s a big red flag for Gold traders.

The European Session

Theresa May Threatens with New Elections – Yesterday, Theresa May barely survived a coup set up by Tory rebels who don’t like the Brexit outcome. They had the backing of the Labour Party obviously and she was very close to getting voted out in a vote of no confidence. But, she threatened her party with new general elections in summer and she passed the bill with just 6 votes of difference.

No Brexit Negotiations Now for Irish Foreign Minister – The Irish Foreign Minister said this morning that the UK needs to come up with a backstop for the Irish border and that Ireland or the EU cannot negotiate with Britain when Britain is still negotiating with itself.

Trade War IS the Biggest Confidence Killer Says China – Chinese officials said today that the US trade war has become the confidence killer for the global economy. The US is fabricating excuses such as national security and if it continues like this, the world will fight back. Well, the Chinese make a lot more sense than Trump’s economics.

UK CPI Inflation – The monthly consumer price index fell flat on June and the core yearly number declined below the 2% target that the BOE has set. It came at 1.9%, although this could be a good thing for household consumption in the long run.

European CPI Inflation – The monthly inflation came as expected at 0.1% while the core yearly inflation missed expectations and came at 0.9%, down from 1.0% in May and 1.1% in April. The trend doesn’t look too good and the ECB shouldn’t be too hawkish now.

European Construction Output – The monthly construction output increased by a mere 0.3% this time, much lower than the 1.8% increase we saw in the previous month. The previous monthly and yearly construction output figures were revised lower as well.

The US Session

US Building Permits – The US building permits are expected to pick up this time after having declined to 130k last month from the 135k levels that we have seen on average this year. This time, the permits are expected at 133k.

FED Chairman Testifies – FED’s Jerome Powell is due to testify on the semi-annual monetary policy report. Today is the second day. Yesterday, the Buck started its upward journey before he started, so perhaps we will see another jump today?

US Crude Oil Inventories – Last week, the US oil inventories declined unexpectedly by a massive 12.6 million barrels. Today, they are expected to decline by 3.4 billion barrels, but beware another major decline because Oil and the CAD took a beating last week when the numbers were published.

UK PM May Tries to Stay Alive – Theresa May said a while ago that the Chequers agreement and the Whitepaper are the basis for Brexit. The UK officials should make sure that a plan for no-deal Brexit is in place. Well, these comments surely sound like she is trying to convince some of the Conservative rebels to hold the lines and keep her in the job.

Trades in Sight

Bearish NZD/USD

  1. The trend is bearish
  2. Stochastic is almost overbought
  3. The 100 SMA is providing resistance
  4. A resistance levels stands above

The 100 SMA is capping the retrace at the moment

NZD/USD turned bearish yesterday as the USD bulls charged ahead against all major currencies. Today, the bearish move extended further below but in the last few hours this pair started retracing higher. The stochastic indicator is almost overbought now so the retrace higher should be over soon. Besides that, we have a resistance level standing above the current price. That level comes at around 0.7885 and it has provided resistance earlier this week.

In Conclusion

The market sentiment has turned negative after the comments from Chinese officials earlier on. The USD is also retracing now and some currencies are making some slow gains against the Buck, although to me this is a good opportunity to look for sell trades in the main pairs, including commodity dollars.

Forex Signals US Session Brief, July 17 – No Market Reaction From Carney, the Focus Turns to Powell

Posted on by Skerdian Meta

This morning we had the average earnings report from the UK as well as a press conference from Mark Carney of the Bank of England. One of these events should have got the market moving, at least the GBP pairs, but the forex market has been pretty quiet. The earnings in Britain came as expected, which should be good for an interest rate hike that the Bank of England has planned for August.

Although, Brexit would be a headache for any central banker and it is Carney’s job to deal with it. Carney held a speech after the earnings report was published. He said that if the UK government doesn’t reach a deal with the EU regarding Brexit, then that would affect the monetary police of the BOE. So, according to these comments, a rate hike next month will only happen if there is a deal regarding the UK departure from the EU. In the last hour, the USD has found its feet and is now making a move. Perhaps the market is expecting some positive comments from FED’s Powell later on.

The European Session

Italian Industrial Orders – The monthly industrial orders rose by 3.6% in Italy. The previous month’s was revised higher too, from -1.3% to -0.6%. The yearly number came at 4.9%, which is why the industrial sales rose by 1.7% month/month. These are some solid numbers from Italy.

UK Average Earnings 3M/Y – The UK average earnings rose by 2.5% which is pretty solid. Although, the trend has been bearish as the wages were increasing by around 3% at the beginning of the year. Nonetheless, it is enough for the Bank of England to start raising interest rates. The unemployment rate remained unchanged at 4.2% which is below the natural level, supporting the rate hike scenario.

Italian CPI MoM – The CPI (consumer price index) inflation was expected to have picked up by 0.3% in June, but it came a tick short at 0.2%. At this pace, inflation will likely be between 2% and 3% by the end of the year. Although, not very related to the Euro since the Eurozone CPI numbers will take all the attention tomorrow.

Late Rate Hike From the SNB – According to a survey, the Swiss National Bank will likely start hiking interest rates in Q4 of 2019. This means that they will hike rates several months after the ECB. Not only has the SNB pegged the CHF to the Euro, but it has also pegged its monetary policy to that of the ECB.

EU-Japan Trade Deal – The EU and Japan have signed the bilateral trade agreement today after negotiating for 5 years. Hurray for Donald Trump who has made it possible to move things fast forward. Too bad the US is not in on the deal. In fact, the US is without trade deals with all major economies now.

The US Session

Higher Earnings for Goldman Sachs – The earnings and profit numbers from US companies started coming out yesterday as we left behind the Q2 and H1 of 2018. The earnings figures were pretty good yesterday and today Goldman Sachs’ total revenue came at $9.4 billion against $8.74 billion expected.

UK Labour back Tories Against May – The UK Labour Party will back the rebels at Theresa May’s conservative party regarding the amendment of the customs deal. They’re both doing it to take Theresa May down, who is in a very weak position now but they want opposite results. The Tories want a hard Brexit, while the Labour wants no Brexit at all. A big mess will follow if May falls.

Canadian Manufacturing Sales MoM – The retail sales picked up by 1.4% in June in Canada. In the previous month, retail sales declined by 1.3%, so we’re back at the starting point. Retail sales are pretty volatile but today’s numbers bring us to the positive trend of the Q2.

US Industrial Production MoM – Industrial production has increased steadily throughout this year in the US, although in June it declined by 0.1%. Today, the production is expected to grow by 0.5%.

FED’s Powell testifies – The FED Chairman Jerome Powell will testify on the semiannual monetary policy report. The market has already started to move in favour of the USD, so I suppose forex traders are expecting some hawkish comments from him.

Trades in Sight

Bullish USD/CAD

  1. The 100 SMA has provided solid support
  2. Stochastic is turning higher
  3. The previous candlestick formed a doji
  4. The USD is advancing up

The 100 SMA didn’t let go

USD/CAD is already off the lows, having climbed 50 pips higher. Although, I think there’s still upside potential for this pair technically. The previous H4 candlestick closed as a doji which indicates a bullish reversal after the downtrend of the last few days. The 100 SMA (red) has been providing support to USD/CAD today, so it is another bullish indicator. Stochastic was oversold, but has started to turn up now. I would say that USD/CAD will likely climb higher for another 50 pips at least.

In Conclusion

The US is without a trade deal now that Trump has ripped off all deals with major economies. Jerome Powell will come up shortly so we will see if he sounds dovish or hawkish. Although, the central bankers have a really difficult job now that politics is messing with economies: think Brexit and the BoE, and Trump’s trade war and the FED.

Forex Signals US Session Brief, July 16 – Friday’s Hangover Continues for the USD As Trump Meets Putin

Posted on by Skerdian Meta

The USD traded in an uptrend for most of last week. The USD index tried to break the topside resistance at 95 points but failed to do so and the buyers threw in the towel. That lead to a bearish reversal that day and it turned into an ugly picture for the Buck. That sort of price action is continuing today as well. The Buck is on the backfoot again with all major currencies advancing against it.

Risk currencies are advancing but so are the safe-havens, so this is mostly a USD driven market today. The economic data has been very light in the European session, therefore the forex market has been slow, although the US retail sales report which will be published soon will likely shake the markets. By the way, Donald Trump called the EU a foe over the weekend, so we can only imagine what’s coming up next.

The European Session

Eurozone Trade Balance – The Eurozone trade balance missed expectations today. This is the first time that the trade surplus falls below $17 billion and the trend this year doesn’t look too promising, so perhaps Trump’s trade war is already having its effects.

EU’s Tusk Warns Trump – EU’s Donald Tusk warned Trump this morning that trade wars can lead to hot conflict. He said that Trump should help reform the world rather than bring it down and he also called for a reformation of the World Trade Organization WTO. That and a few other organizations need reforming big time in my opinion and I have mentioned it a few times before.

EU-China Statement on WTO – The EU and China are meeting in Beijing. They are committed to reform the WTO and they signed an exchange of market access for investment. If Trump wants to close the US for business to the rest of the world, then the rest of the world will carry on doing business without the US and that will weigh on the US citizens in a couple of years.

Italy’s Salvini Strikes Again – The Italian Deputy Prime Minister Salvini repeated again that “the Euro was an experiment that begun ugly”. But, he also repeated that Italy has no plans on exiting the Euro. Before him, we heard another Italian official saying that the EU should allow Italy to increase infrastructure spending, so Salvini is trying to force the EU to drop the budget rules. In my opinion, Italy should increase investment which will help give the economy a boost.

No Second Referendum on Brexit – The UK spokesperson said today that there won’t be a second referendum on Brexit. He also said that the Whitepaper Chequers Plan is the only way for Brexit.

The US Session

US Retail Sales – The US retail sales beat expectations which were for a 0.4% increase. They grew by 0.5% in June. Although, the best part of this report was the revision of the previous figures. They were revised from 0.8% to 1.3%.

US Core Retail Sales – Core retail sales which strip out auto sales, came as expected at 0.4%. But again, the previous numbers were revised 0.5% higher.

US Empire State Manufacturing Index – The US manufacturing index was expected at 20.3 points but it came at 22.6 points. Although lower than the previous month, the trend in manufacturing index has been positive in the last six months.

Iran heading for the Courts – The Foreign Minister of Iran tweeted today that they have filed a complaint with one of the international courts and that they will push on this direction regarding the breakup of the nuclear deal and the sanctions from the US. It’s not that Trump really cares about it, but it might give some backup to European countries and China to continue doing business with Iran.

Bitcoin Jumps on BlackRock Rumours – Bitcoin has claimed more than $300 today and the main reason is that the giant hedge/investment fund Blackrock is interested in Bitcoin and other cryptos. They have formed a team to evaluate Bitcoin, so it seems as they will start investing in cryptocurrencies soon.

 

Trades in Sight

Bullish USD/JPY

  1. The main trend is bullish
  2. The pullback is complete
  3. The 20 SMA is providing support

The 20 SMA is keeping sellers in check

We went long on USD/JPY last Friday as this pair was retracing lower after a strong uptrend which lasted all week. The price continued to slip lower but it stopped before the markets closed. Today, the 20 SMA (grey) has caught up with the price on the H4 chart and it is providing solid support to this pair. If you switch to the H1 chart, you can see that USD/JPY is oversold there as the stochastic indicator shows. So, the bias for this pair remains bullish for us.

In Conclusion

Trump is meeting with Putin in Helsinki today. They were supposed to meet for 90 minutes but the meeting is past two hours now. Well, it seems like the two old friends are catching up on past times now. We will see/hear what they have talked about, but one thing is for sure, they both hate the EU so mocking Europe is surely one of their main topics.