Category: US/Midday Session Brief

Forex Signals US Session Brief, June 28 – All the Attention on the EU Summit

Posted on by Skerdian Meta

The main event today and tomorrow will be the EU economic summit in Brussels. Although it is an economic summit, the main issue that will be discussed there will be immigration. Europe has been flooded with waves of immigrants in the last several years, since the Arab Spring happened and the countries have been trying to tackle it, either on their own or together, but without much success. Now, the heat of migration has reached Germany and the German Interior Minister has given Angela Merkel time until the end of the month to find a solution, for Germany or for the entire continent.

Merkel wants a continent-wide solution, so she has to find consensus among the EU leaders. That’s a tough one. If she doesn’t, then there will likely be new elections in Germany. In that case, the EU project could be at risk, given the many problems and threats the EU faces right now such as Brexit, Trump’s trade war and the increasing populism in member countries. That is a big risk for the Euro, that’s why this summit is very important.

The European Session

German Inflation Cools – Last month CPI inflation surged in Germany. That was a good sign, although only for a month, because if inflation kept that pace for a year, it could get dangerously high. This month though, all the regional figures came much lower than last month. The main German CPI number hasn’t been published yet but it should be down too since it is a median average of the regional figures.

Spanish and Italian Inflation – The expectation for the CPI inflation for both countries this month was at 0.2%. The CPI numbers from Italy and Spain came at 0.3%, which is slightly positive. This means that inflation is keeping up in Europe despite the soft numbers we saw from Germany.

Anti Foreign Interference Law in Australia – The Australian lawmakers have passed a law to counter foreign interference, which is aimed at China. China has been against such a law but the Aussies have pushed it forward. The problem is that Australia is very dependent on raw material exports to China. This could mean more trade battles and that is negative for the AUD.

No Progress on Irish Border – The Irish Prime Minister Varadkar said earlier today that there is no progress being made regarding the border between Ireland and Northern Ireland. Well, there are so many things for the EU to take care right now so I think this will take some time, up to several months. Until then, the situation should remain bearish for the GBP.

EU Says We’re Heading for a Trade War – EU’s Trade Commissioner Malmstrom said that there is no trade war at the moment but things are moving in that direction. I guess the talks with the US administration are not going very well. So, trade war it is then.

The US Session

USD on Retreat – The USD was charging ahead during the European session. But in the afternoon, a reverse started to take place. EUR/USD is 70 pips higher and commodity Dolars are up too. Although to me, this seems like a good opportunity to sell them.

US Final GDP – The final GDP reading for Q1 will be released soon. It is expected to remain unchanged at 2.2% as the previous reading. Although, Mnuchin said yesterday that we should prepare for a strong Q2 GDP reading. Let’s see if we get a hint from the Q1 GDP figures today.

US Unemployment Claims – Unemployment claims came at 218K last week. This week they are expected at 220K. That is the level where the claims have been for most of the year, so unless there is a strong deviation, I don’t think they will have much impact on the USD.

US Final GDP Price Index QoQ – The price index is released together with the GDP report. This number is important because it shows the inflationary pressures which are important for the US economy and for the FED, obviously. It is expected at 1.9%, down from 2.3% back in March.

Trades in Sight

Bearish NZD/USD

  1. The main trend is down
  2. The sentiment is still negative
  3. The 20 SMA provided resistance

The 20 SMA is still pushing the price lower

Yesterday we had two sell forex signals in AUD/USD and NZD/UD. The trend has been bearish for several days in these pairs and it has picked up pace. The market sentiment has been negative for commodity currencies, so the situation remains bearish. For this reason, we decided to sell the latest bounce in NZD/USD.

In Conclusion

The EU summit is going on in Brussels, with the aim to reach an immigration deal. Merkel said this morning in the German Bundestag that it will be very difficult to reach a deal with all the EU leaders. We know this is challenging and it does seem unlikely to happen within this week, so it means new elections in Germany, right? We will keep an ear on the summit.

Forex Signals US Session Brief, June 27 – Risk Off, Risk On Again

Posted on by Skerdian Meta

Yesterday, the markets were calm as the sentiment improved somewhat. Donald Trump did tweet more threats to Europe and whoever he could think of, but the market ignored him. The negative sentiment or panic could probably pick up where it left off when Trump’s new tariffs on European cars become official. Safe-havens declined as a result but the decline in Gold is another matter which I explained on a previous forex update.

Today, the markets are slow again but the sentiment seems to lean on the negative side. The decline in the Chinese equities raised some eyebrows. Although, in the last hour or so we heard a few positive comments. Bagnai who is an Italian official and who is a Euro-skeptic said that the Italian government won’t attack the Euro. That’s a bit of a relief. Another administration official, this time from the US, has just commented that Trump won’t go for the harshest stances against China. These were some comforting comments which caught the markets by surprise. USD/JPY just popped 50 pips higher on the comments and it is climbing as are the risk currencies.

 

The European Session

Swiss Investor Sentiment – The investor sentiment plunged this month in Switzerland. The investor sentiment was at 28 points in May, but this month it declined to 8 points. The sentiment has been at around 20 points for most of the year, so this month’s tumble is not good news, especially considering the trade war that’s been going on.

Eurozone M3 Money Supply – The total amount of Euros that’s in circulation as cash and as bank deposits increased by 4.0% this month. That is a positive sign after two declining months. I suppose the ECB will increase the money supply as the trade war gets uglier.

Tax Increase from Japan’s PM Abe – Japan’s Prime Minister Shinzo Abe said earlier today that they will go on with the sales tax increase next year unless there is another crisis like the Lehman Brothers collapse. Well, Trump’s trade war could be worse and the last time the Japanese hiked this tax 4 years ago, it didn’t go too well.

UK Stability Report – The UK stability report from the Bank of England leaned on the dovish side. Governor Mark Carney said that global risks are real and are increasing. Trade tensions have increased which is a big problem considering that Brexit is coming. The GBP entered another bearish phase after the report.

Germany’s CSU Will Wait – Merkel’s coalition partner party the CSU commented that they will wait until the end of the EU summit. They want to act now on immigration, meaning starting deportations, but they will see what Merkel agrees on with the other EU leaders.

The US Session

US MBA Mortgage Applications – The mortgage applications declined by 4.9%. Last week they increased by 5.1% so this dip is not a good sign and it is pretty big. Although, it is a volatile report so we have to see how the next few weeks come up.

Trump Won’t Go Too Hard on China – US officials said that Trump won’t trigger the national emergency law on China and it won’t take the harshest measures on this trade war. They also said that the US will engage with partners to fight against technology and intellectual property theft. Hello, which partners? Trump doesn’t have any partners left – he turned them all into enemies of the state.

US Treasury Secretary Mnuchin Expects Great Q2 GDP Figures – Mnuchin followed up on previous comments saying that the US won’t single out China on investment restrictions and that he expects great GDP figures for Q2. Let’s se how great those figures will be when the GDP report is released next month.

US Durable Goods Orders Decline – Durable goods orders declined by 0.6% and the core orders declined by 0.3%. This is the second month that durable goods orders declined after tumbling 1.7% last month. Not a good trend, but the core orders for last month were revised higher to 1.9% and the USD is taking that as a positive sign.

US Wholesales Inventories – Inventories increased by 0.5% this month against 0.2% expected. This means that the US consumer is not that confident, else the inventories would have decreased. It also means that companies will order less in the coming weeks since they already have stock. Slightly negative for the USD.

 

Trades in Sight

Bearish AUD/USD

  1. The main trend is down
  2. The sentiment is still negative
  3. The NZD is the weakest currency today
  4. The RBNZ rate decision today looms on NZD traders

The 20 SMA is still pushing the price lower

The NZD has been on a bearish trend in the last two days and it has been the weakest of the majors so far. The statement from the Reserve Bank of New Zealand is scaring NZD buyers away. Although, NZD/USD popped higher on comments from the US officials. We saw that as a good opportunity to sell this pair which we did and we are already in profit.

 

In Conclusion

The US Dollar is advancing today, so it is possible that this is the Buck resuming its uptrend after several days of retracing lower. The latest comments from US officials are also helping the Buck but at this point, but I don’t think we can trust Trump’s administration. Beware of another reversal.

Forex Signals US Session Brief, June 26 – Quiet Markets and a Dovish BOE

Posted on by Skerdian Meta

Financial markets have been pretty quiet today. The sentiment has improved a little or at least is not negative anymore. As a result, the price action has been pretty slow. The US Dollar has been receiving some weak bids as the sentiment improves while stocks are on the climb. Albeit, the climb in indices seems pretty weak as well.

The most action came from GBP pairs today. A couple of Bank of England (BOE) members were on the wires earlier on speaking about the monetary policy. The current member McCafferty delivered some hawkish comments about interest rate hikes. But, that was not a surprise knowing that he is a hawk and voted to hike interest rates last week. The market was caught by surprise by the outside member Haskel who will be replacing McCafferty in a few months. Haskel’s comments were the opposite of what we heard from McCafferty and the GBP lost nearly 100 pips.

 

The European Session

UK High Street Lending – The UK mortgage financing by UK High Street Banks was expected at 38.15k, but came at 39.24k, which means that 39.240 mortgages were lent this month. This is one of the few good news from the UK although it is a minor data point.

BOE’s McCafferty – The leaving BOE member said earlier that waiting too long to raise interest rates creates a bigger shock and that the central bank shouldn’t wait too long to hike rates. These are hawkish comments but the market is aware he is a hawk and he is leaving in a few months after all.

BOE’s Haskel – Haskel said that the BOE has room to cut rates if the economy deteriorates further. There’s much more slack to the UK economy which could weaken it and strengthen the case for a rate cut. These words came as a surprise and the GBP entered a bearish phase.

EU Trade Commissioner Malmstrom – Cecilia Malmstrom commented on the trade war today. She said that the EU can’t remove tariffs unilaterally. Well, the EU is not just one country. She also said that there have been no talks with the US, but the US knows there are consequences to Trump’s tariffs. So, no compromise, just war.

 

The US Session

Philly FED Non-Manufacturing Index – This index stood at 45.3 points previously while this time it declined to 39.1 points. New orders decline as well, but employment and wages rose considerably. A mixed report overall.

US S&P Case-Shiller House Price Index – The house price index has seen a positive trend in the last three months, beating expectations. Today, this index was expected at 6.9% but came at 6.6%. This is the first miss so we have to wait until next month in order to see if the positive trend is shifting.

Trump Threatens Harley&Davidson – The EU and China retaliate on Trump’s tariffs. The EU is targeting Harley-Davidson motorcycles and apparently the company is planning to relocate one of its production sites. I don’t know where because I haven’t heard anything but Trump just posted a tweet saying that if Harley-Davidson moves, then they will be taxed like never before. Trade war escalating.

Tariffs on EU Cars – Another early tweet from Trump saying that “they” are finishing a study on tariffs for cars coming from the EU. That would be the next big mistake from Trump in my opinion since it will trigger more retaliation from the EU. Harley-Davidson is already thinking about leaving the US.

US CBS Consumer Confidence – The consumer confidence is expected to decline slightly, from 128 points last month to 127.6 points. It will be interesting to see where the consumer confidence stands now. It is a bit early for Trump’s trade war to catch up with the consumer but it will.

Trades in Sight

Bullish AUD/USD

  1. The main trend is down
  2. The retrace up seems exhausted
  3. The 50 SMA is pushing the price lower

The 50 SMA is still pushing the price lower

Earlier on, I posted an update about AUD/USD. It was stuck between two moving averages on the H1 chart. Now, the moving average at the bottom has been broken so it seems that the sellers have taken control. The main turn is bearish and the retrace of the last few days seems complete. For these reasons, we have a bearish bias towards AUD/USD at the moment.

In Conclusion

It seems like the trade war is only escalating. Trump is placing more tariffs on foreign goods and it’s only reasonable to think that the rest of the world will retaliate even more. This doesn’t look good. I’m worried that another global crisis will follow and then many Americans will be out of work since Trump and the US don’t care about the rest of the world. The global economy is still weak so I see another crisis on the horizon.

Forex Signals US Session Brief, June 22 – EU Immigration and OPEC Meetings Take the Attention

Posted on by Skerdian Meta

The markets have been experiencing a negative mood for the last two weeks. As a result, safe havens have received strong bids with EUR/CHF and USD/JPY diving lower. But, the markets reversed yesterday and the reversal has stretched further today. I have heard some forex analysts say that the market sentiment has improved but that doesn’t seem to be the case to me. While risk currencies have been rallying strong against the US Dollar, the JPY rallied as well, sending USD/JPY around 100 pips lower. So, it is more of USD pullback lower after trending higher for weeks, rather than a shift in the market sentiment.

The OPEC meeting is continuing in Vienna. There are contradicting comments coming out but an agreement on Oil output might be near. Another important meeting is taking place in Brussels where the European leaders are discussing immigration and what is to be done to fix this whole mess. Merkel has a two week deadline to find a solution and if she doesn’t, then new elections are an option in Germany, probably in early autumn. Next week is definitely going to be terrible for the Euro in my opinion if the political situation goes in that direction.

 

The European Session

Eurozone Manufacturing PMI – The German and French flash manufacturing PMI came lower than expected, but the Eurozone manufacturing PMI came right on expectations at 54.0 PMI points, down from 55.5 last month. The US manufacturing came lower yesterday too, so perhaps Trump’s tariffs are already starting to work, bringing the worst for everyone.

Eurozone Services PMI – The services PMI was better though. It came at 55 PMI points, up from 53.8 last month. Although, manufacturing is the Achilles’ Heel in Europe.

OPEC Agrees in Principle – Sources from the OPEC meeting report that an agreement in principle has been reached. The agreement is for a 1 million barrel increase which will be divided among the member countries. Iraq, Iran and Venezuela don’t look too happy, but they might get in line.

Positive Comments from Italy – Italy’s economy minister Giovanni Tria said today that Italy wants to respect the deficit rules by EU. Earlier on, we heard Borghi say that Italy has no plans on abandoning the Euro. This is a bit of a relief and it should support the Euro.

Merkel’s Party Is Preparing for New Elections – Angela Merkel has a two week deadline to find a solution for immigration, otherwise there will likely be new elections in Germany. The EU leaders are meeting in Brussels to discuss immigration but Merkel’s SPD party is preparing for new elections. Perhaps there won’t be an EU-wide deal on immigration. This is negative for the Euro.

The US Session

Canadian CPI Inflation – The CPI (consumer price index) inflation was expected to grow by 0.4%, up from 0.3% last month. This month’s number came at 0.1% which is terrible. It is the lowest number since January and it is a head dive, which of course is a bad sign for the Canadian economy.

Canadian Retail Sales – The retail sales report was another negative economic report from Canada. Sales declined by 1.2% which is the biggest fall in more than two years. Core retail sales also declined by 0.1% while expectations were for a 0.5% growth. This is the second negative month, so nothing looks good in Canada right now.

Belgian NBB Business Climate – The business climate has taken a hit with Trump’s tariffs and trade war. As a result, this indicator has declined from around 2 points at the beginning of the year. The economic slowdown in winter has also affected the business climate. It is expected at 0.0 points today, down from 0.2 points last month. Let’s see if the business climate has deteriorated further after the latest tariffs.

US Flash manufacturing PMI – This will be another interesting report to watch. Yesterday, the US Philly FED manufacturing index took a dive, so perhaps the US manufacturing sector is also trembling. It is expected to come at 56.4 points.

 

Trades in Sight

Bullish NZD/USD

  1. The trend has turned bullish
  2. The retrace down seems complete
  3. The 100 SMA is providing support
  4. Stochastic is almost oversold

NZD/USD is finding support at the 100 SMA

We opened a buy forex signal on this pair a while ago. The trend has turned bullish now, at least in the short term. NZD/USD retraced lower in the last few hours but the 100 SM (green) is providing solid support. Besides, stochastic is nearly oversold so the retrace looks almost complete.

 

In Conclusion

The Canadian retail sales and inflation CPI took a hit today. The Canadian Dollar also took a hit sending USD/CAD above 1.33. My colleague Shain is covering the Canadian data today, so have a look at his article on the matter for a better understanding.

Forex Signals US Session Brief, June 21 – The Sentiment Deteriorates Further, but GBP Spikes Higher on the BOE

Posted on by Skerdian Meta

Yesterday, the markets took a moment to breathe as the sentiment improved a little. The safe haven currencies lost some of the gains they had made over the last few days and risk currencies stopped the decline. But the serenity didn’t last long and today the markets are back in panic. The Italian government chose a new head of the Senate Finance Committee. To be honest, I don’t exactly know what this post means since it is not the finance minister post, but the markets don’t like that one bit because Alberto Bagnai who took the post is a Euro skeptic.

He has said previously that the Euro was an economic monster and that’s why the markets don’t like him. I don’t know if he still keep that view but financial markets don’t forget that easily. So, the stocks and risk currencies are sliding today.

The situation with OPEC+ countries is still intriguing today. Countries that want to increase production such as Saudi Arabia are giving some positive comments, saying that the other countries that don’t want to increase the oil output such as Iran will accept the deal; Iran on the other hand still refuses to agree. The Bank of England (BOE) kept rates and the policy unchanged but the GBP is surging on some hawkish/less dovish comments.

 

The European Session

New Italian Official – Alberto Bagnai was chosen as the head of Senate Finance Committee today. He is a Euro skeptic and that he has been chosen by a government that said Italy should leave the Eurozone a few months ago rings some bells among the investors. So, the market sentiment took another hit today.

OPEC Meeting – Saudi Arabia wants to increase the crude Oil output by 1 million barrels which is more than the 300k-800k increase that was estimated at the beginning of the week and the OPEC secretariat is backing that. Some rumours imply that Iran might fall in line if an agreement is reached, but Iran officials are against any increase in the output. Many mixed and confusing messages have sent Oil sliding lower.

SNB Leaves Rates on Hold – The Swiss National Bank left the interest rates and monetary policy unchanged. But, the comments from President Jordan sounded hawkish and the CHF is climbing. He said that rate differences with the Eurozone are important, which means that the SNB will only hike when the ECB hikes, in more than a year’s time.

Less Dovish BOE – The Bank of England left interest rates unchanged as anticipated, but the members who are in favour of a rate hike increased to 3 from 2 previously. The statement also was a bit less dovish. I would say hawkish but with Brexit going as it is going, I don’t think the BOE can get hawkish at this moment.

Brexit – The Irish Foreign Minister said earlier today that there will be no border between North Ireland and the Republic of Ireland. He said that the UK has been negotiating with itselfon Brexit. That comment cracked me up because it is the ultimate truth. This whole Brexit thing from the beginning has looked to me more like an inner dialogue in the UK than anything else.

 

The US Session

US Commerce Secretary – Wilbur Ross is on the wires saying that “the ultimate objective for Trump is to remove trade barriers and tariffs”. Well, he is going the opposite direction pretty fast so these comments sound very contradictory to what we are seeing. He is making some more funny comments but I will post them on the next update where I will explain them more in detail.

Central Bankers Speak – Today we have the RBA governor Lowe, the BOJ governor Kuroda, the ECB president Draghi and the FED chairman Powell speaking in Lisbon at the conference. As I mentioned above, we don’t know if they will touch the monetary policy because the forum is on central banking in general. But I heard today that the ECB is really worried about the trade war, so they might touch this subject instead.

Philly FED Manufacturing Index – The manufacturing index was expected at 28.9 points, down from around 34 points last month. It missed expectations, coming at 19.9 points. The manufacturers’ expectations have dived, so is the trade war really worth or is it hurting the business? Pretty simple answer, no?

BOE Carney Speaks – The Bank of England Governor Mark Carney is expected to speak in the evening today. He should have held a press conference after the BOE meeting, but instead he’s speaking in the afternoon. Well, we will see what he has to say after the slightly positive comments that we saw on the statement. If he sound hawkish too, then I expect a second wave of buying for the GBP.

 

Trades in Sight

Bearish AUD/USD

  • The trend is bearish
  • The sentiment is dovish
  • The 50 SMA is providing resistance
  • The previous candlestick closed as a doji

AUD/USD is above the 50 SMA now

We went short on AUD/USD a while ago. This pair was retracing up and it found resistance at the 50 SMA (yellow). The previous H1 candlestick formed a doji which is a reversing signal. Pullbacks on such trends are a good opportunity to sell. Although, the price has just jumped above the 50 SMA at the moment.

 

In Conclusion

So, the market sentiment has been dovish today but the risk currencies have just popped higher. USD/JPY is stumbling, so this is not a reverse in the sentiment. We have two sell forex signals in NZD/USD and AUD/USD, so I will have a look around to see what happens.

 

Forex Signals US Session Brief, June 20 – OPEC and Central Banks

Posted on by Skerdian Meta

The main events for financial markets today are the OPEC meeting and the European Central Bank forum. The OPEC+ meeting includes other oil producing countries which aren’t part of OPEC, and it is being held in Vienna as always.

Some major OPEC members such as Russia and Saudi Arabia want to increase the Oil output, but the catch here is that other Oil producing countries with sanctions on them such as Iran and Venezuela want to keep the current output levels. As I mentioned yesterday, they can’t export more even if they increase production.

That should be positive for crude Oil at first glance. But the problem is that the countries that want to increase the output might go their own way and do so without a consensus, hence the volatility in Oil prices recently. The other main event is the meeting of central bankers that is taking place in Portugal. Many major central bankers are holding speeches, although they might not touch the monetary policy at all, so we have to keep an eye out for them.

The European Session

German PPI MoM – Producer price index (PPI) is not the main inflation measure like the CPI, but it is an indicator nonetheless. It shows the trend of producer prices which will likely be passed on to the consumer when the goods are produced and then sold. It was expected at 0.4% but came at 0.5%, same as last month. This is the second month of solid gains, so inflation is looking good in Europe.

UK CBI Industrial Expectations – Last month, this index came at -3 points, which means that expectations were negative. This month was expected at 1 point, but jumped to 13 points. This means that manufacturers are expecting the industrial orders and production to pick up considerably. That’s positive, considering the UK data hasn’t been that good this year.

The Trade Was Escalates Further – Yesterday, China responded to the latest US tariffs on Chinese products which will be worth around $100 or $200 billion – who knows where this will end. They said they don’t want trade wars but are not afraid to fight back. Today the EU announced tariffs on US products worth 2.8 billion Euros. It’s not much but it’s the beginning.

OPEC – The OPEC secretary general Barkindo said a while ago that he is confident that a deal on Oil production increase will be reached on Friday. On the other hand, Iran’s OPEC governor said that OPEC+ should stick to the existing deal for the rest of 2018. So, no deal then, right?

The Market Sentiment – The sentiment has been really negative in the last several days as the trade war escalates. Although, today it seems as the sentiment has improved somewhat. The safe haven currencies are declining and as a result, USD/JPY and EUR/CHF are climbing higher.

The US Session

US Trade Balance – The US trade balance came at -$128 billion last month and this month the deficit was expected to grow to $129 billion. It shrank to -$124 billion instead. Probably, Trump’s trade tariffs are already showing its effects.

Central Bankers Speak – Today we have the RBA governor Lowe, the BOJ governor Kuroda, the ECB president Draghi and the FED chairman Powell speaking in Lisbon at the conference. As I mentioned above, we don’t know if they will touch the monetary policy because the forum is on central banking in general. But I heard today that the ECB is really worried about the trade war, so they might touch this subject instead.

US Existing Home Sales – The sales of existing houses declined last month to 5.46 million. This month, they are expected to increase to 5.52 billion. That would bring this indicator back to normal levels and make last month’s decline an odd occurrence since home sales have been in the 5.50-6.0 million region the whole year so far.

US Crude Oil Inventories – The US Oil inventories are expected to decline by 2.1 billion barrels this week. Last week, inventories fell by 4.1 million, so if we see another negative number today, it will have a positive impact on the CAD, which is getting beaten up on OPEC comments.

New Zealand GDP QoQ – The GDP is expected to have grown by 0.5% in Q1. Looking at the history since the beginning of 2017, the GDP has missed expectations almost every time, so it won’t be a surprise if today’s number disappoints again.

Trades in Sight

Bearish EUR/CHF

  • The main trend is bearish
  • The retrace up seems complete
  • The 100 SMA is providing resistance

The reverse down has already started

EUR/CHF has pulled back higher today as the sentiment has improved a bit. Although, the market sentiment still remains bearish in general so I expect this pair to reverse down now. The retrace up is complete as stochastic shows and the 100 SMA is providing resistance. We have a sell signal in USD/JPY, which is correlated to EUR/CHF, so we might not take this opportunity, but it is a good chance for those traders who have free capital on their accounts.

In Conclusion

Oil prices continue to be volatile today as the OPEC meeting gets underway. We’re hearing all sorts of comments from officials, so no one knows what will be decided. The CAD is getting battered though, despite Oil recovering considerable terrain today.

Forex Signals US Session Brief, June 19 – Safe Havens Benefit as the Trade War Escalates

Posted on by Skerdian Meta

The economic calendar has been very light during the European session. Nonetheless, there has been plenty of price action in the forex market and in other markets so far today. The situation is pretty clear though – the escalating trade war between US and the rest of the world has dented the market sentiment.

So, the risk-off sentiment has set across all markets today. Chinese officials said earlier that they don’t like the US opening trade wars and messing things up, but they are not afraid of it and will fight back, so there you have it. The safe haven currencies are benefiting considerably from all this. USD/JPY has tanked 100 pips lower while EUR/CHF is still sliding.

 

The European Session

Eurozone Trade Balance – The trade balance of the Eurozone was expected at around 30 billion Euros. It came lower at 28.4 billion, down from around 32 billion last month. Yesterday, the Italian trade balance shrank as well, so this is not a good sign.

No Consensus for OPEC – The OPEC countries want to increase the Oil production output, hence the bearish crude Oil. But today, Iran, Venezuela and Algeria said that they are against it since it would hurt Oil prices. Venezuela is under sanctions so it can’t sell more even if it increased production and Iran seems to be going that way too after Trump ripped the Iran nuclear deal earlier this year.

China Can Stand Up to Trump – China urged the US today to “stop deeds that will hurt the US and others”. The Chinese foreign minister also said that the US should go back to rationality. But, China is not afraid of a trade war. These were the comments which deteriorated the market sentiment further today.

EU’s Barnier Is Not Backing off – The EU Brexit negotiator said earlier that the UK needs more realism on Brexit and that the EU will not fall into the Brexit blame-game. Well, he is right. The UK is trying to get whatever it can from the EU and it has been blaming the EU for whatever is wrong in the country – dovish comments for the GBP.

The US Session

US Building Permits – US building permits posted a decline this month from 1.36 billion previously to 1.30 billion. The last two months came at 1.35-36 billion, but this month the permits have declined.

US Housing Starts – Unlike the building permits, the housing starts jumped higher this month. Expectations were for 1.29 billion new homes but the number came at 1.35 billion. This is the highest number so far this year, so perhaps next month the building permits will increase as well.

GDT Price Index – The global dairy trade auction will be held today, although as with all auctions you don’t know when it will end. This event is important for the NZD since New Zealand is a major exporter of dairy products. The last time, prices fell by 1.3%. We’ll see how it goes this time. The Kiwi is already pretty bearish so another negative number will make the situation worse for the NZD.

 

Trades in Sight

Bearish USD/JPY

  • The bearish trend has accelerated
  • The sentiment has worsened
  • The retrace up is complete
  • The 200 SMA is ready to provide resistance

 

Stochastic shows that the pullback is over

We opened a sell forex signal in USD/JPY a while ago. This pair accelerated the decline this morning but it started retracing higher during the European session. Although, the retrace seems complete now. Stochastic is overbought and the price is making some pins and doji candlesticks. The 200 stands just above here so it should provide resistance if the buyers decide to push higher.

 

In Conclusion

The sentiment continues to be negative in financial markets today and we are playing along with it. We had two winning signals earlier today and we just opened another one going long on the JPY, which means going short on USD/JPY.

Forex Signals US Session Brief, June 18 – The Market Sentiment Remains Negative

Posted on by Skerdian Meta

The financial markets have been pretty quiet today. Little has changed since Friday when the markets took a break after the major move on Thursday. That move on Thursday looked strange now that I think of it. The FED hiked interest rates and sounded a bit more hawkish than previously on their press conference, but the USD ended the day lower after the initial knee-jerk reaction. So, the market sort of ignored the FED.

The next day, the USD started a strong climb which sent EUR/USD 300 pips lower, GBP/USD 200 pips lower and so on. That move came after the ECB turned dovish, which justifies the bearish move in EUR/USD. But how come the Buck gained massively against other major currencies?

That looks strange to me. Anyway, today the market sentiment is leaning slightly on the negative side. Risk currencies are sliding while safe havens are finding some bids. Oil has found some bids too after taking a deep dive on Friday. The European session has been pretty light regarding economic data; nonetheless, let’s have a look at the main events.

The European Session

Italian Trade Balance – The Italian trade balance was expected at 3.21 billion Euros but it came lower at 2.94 billion. That is quite a decline from 4.53 billion Euros last month. I don’t think Trump’s tariffs have begun to have an effect on Italian exports yet, not to this degree, so it is an Italian job. Nothing seems to be going right in Italy.

BUBA Monthly Report – The Bundesbank report was published earlier today and it looked pretty upbeat. They saw inflation remain at around 2.2% as in May in the short term. They also saw the economy pickup in Q2 after softening in Q1, although, I say we must see some good numbers first, then we can party.

German Immigration Deal – The German Interior Minister gave Angela Merkel a two week deadline to strike a deal on immigration. It seems like Merkel want to strike an all-inclusive EU deal and the next EU meeting is in two weeks. That should be interesting to watch and should weigh on the Euro during this two week period.

OPEC and Oil – Some OPEC members have pushed for an increase in Oil output, hence the strong decline in Oil recently. The market was pricing in a 1-1.5 million barrels increase, but the rumours today point to a 300k-800k range. Oil prices have climbed nearly $3 so far today, so this is positive for Oil. But, nothing is certain until the OPEC meeting that is scheduled for this weekend is over.

The US Session

ECB President Draghi Speaks – Mario Draghi’s speech is the highlight of the day on the economic calendar. Although, I don’t think he will touch anything having to do with monetary policy. We#ll still keep an eye on it though.

FED Members Speak – Today we have three FED members holding speeches. Atlanta’s Bostic will hold a question and answer session after that so we might get one or two interesting questions from the audience. Dudley and Williams are also speaking on another conference but I don’t think they will touch the monetary policy.

 

Trades in Sight

Bearish GBP/USD

  • The trend is very bearish
  • The 20 SMA is providing resistance
  • The 50 SMA is catching up
  • Stochastic is turning down

Our signal is already in profit

GBP/USD has moved 50 pips lower this morning but it retraced in the next several hours. Although, the sellers returned before the retrace was complete. The 20 SMA (grey) was providing resistance on the top side and the 50 SMA (yellow) was catching up as well, so we decided to open a sell forex signal here. It seems to be on the right track since we are well in profit on this signal.

 

In Conclusion

The economic data is very light today so the market sentiment is going to do all the talking. The sentiment is negative at the moment, so we remain short on risk currencies such as commodity dollars and on GBP/USD. Oil is picking up though, but beware of comments from OPEC members.

Forex Signals US Session Brief, June 15 – The USD Makes a Pullback Before the Next Assault

Posted on by Skerdian Meta

Yesterday, the ECB kept refinancing rates on hold as expected and announced that they will taper off the QE (quantitative easing) programme. The market already knew that so it didn’t offer much in regard to the price action in Euro pairs. The statement that followed the rate decision and the press conference from Mario Draghi sounded sort of dovish though.

In the statement, we saw that the ECB is nowhere close to raise interest rates. It said in there that there won’t be any rate hikes until summer next year at least. Until then, it’s a very long time and things might turn upside down, so the market took that as a dovish sign.

The economic growth was lowered as well and that’s what it took for the Euro to start the journey south. EUR/USD lost around 300 pips from top to bottom, although some of that move came from the USD side after the US retail sales posted a nice jump. The same price action continues today, but there is a last round of economic data to be released from the US, which might change the situation, so let’s have a look at the economic calendar.

 

The European Session

BOJ Press Conference – Bank of Japan Chairman Kuroda held a press conference earlier in the European session. He said that the Japanese economy is only expanding moderately and that long term inflation has been slow to improve. Inflation is picking up in Europe and in the US, so Japan is really behind. USD/JPY resumed the uptrend after those dovish comments.

Eurozone Final CPI YoY – The final consumer price index inflation report was expected at 1.9% and it came as expected. That’s quite a jump from 1.2 that we saw last month, which makes this a confirmation that inflation is moving in the right direction in Europe, unlike in Japan.

Eurozone Q1 Labour Costs – The labour costs picked up by 2% this time, against 1.5% previously. Wages also came higher at 1.8% this quarter from 1.7%. Wages and labour costs are picking up nicely in Europe as well as in the US, so that is a really good sign.

Italy April Industrial Orders MoM – The industrial orders declined by 1.3% in Italy. This shows that the Italian economy is suffering from the political situation there, although industrial production was weak in Germany and France as well this month.

More US Tariffs on China – Reuters reported today that US officials are preparing another list of Chinese products to impose tariffs on. It is estimated to be worth around $100 billion. We haven’t heard any comments from the Chinese side but it seems that the trade war is here.

 

The US Session

Canadian Manufacturing Sales MoM – The Canadian manufacturing sales are expected to grow by 0.6%, down from 1.9% and 1.4% in the last two months. Perhaps the US tariffs are weighing on Canadian manufacturing products already.

Empire State Manufacturing Index – Last month, this index jumped from 15 points to 20 points. Today it is expected to come slightly lower at 19 points, although that would still be a good number. It came at 25 points right now, which means that the US manufacturing is heating up.

US Industrial Production MoM – The industrial production is expected to grow by 0.2%, down from 0.7% last month. Industrial production has beaten expectations 4 out of 5 times this year, so I expect another positive number considering the positive economic data we have seen from the US lately.

Prelim UoM Consumer Sentiment – The consumer sentiment used to be above 100 points in February and March but dipped below in the last two months. It is expected at 98.5 points today, up from 98 points last month after revisions, but again, I have a feeling that this will be another positive surprise for the US.

Trades in Sight

Bearish USD/JPY

  • The 50 SMA is providing support
  • Stochastic was oversold but it is heading up now
  • The BOJ sounded dovish again

The 50 SMA has been a strong support indicator today

We opened a buy forex signal in this pair a few hours ago. The price was finding support at the 50 SMA and a doji candlestick formed. USD/JPY started reversing and moved 20 pips higher after we opened the signal, but it has dived back down in the last hours. Although, the 50 SMA is still standing strong.

 

In Conclusion

The Canadian manufacturing report was just released and it showed that manufacturing sales dropped by 1.3%. On the other side of the border, the US manufacturing looks in decent shape as the Empire state manufacturing index came at 25 points, up from 19 points expected. The trade war is working well for the US, isn’t it? Sorry Canada.

Forex Signals US Session Brief, June 13 – UK Earnings and US CPI Can’t Move the Markets Today

Posted on by Skerdian Meta

Today is inflation day in the economic calendar. Earlier this morning we had the Swiss PPI (producer price index) which missed expectations, while the UK PPI number came much higher than expected. Perhaps Britain and Switzerland are using different suppliers for their raw material imports.

The UK CPI inflation, on the other hand, came as expected and it maintained the declining trend which started earlier this year. The US PPI inflation report is due shortly and it is expected to be better than last month. Although, I don’t expect this report to have much effect on the USD today because the FED meeting is coming up later in the evening. The FED has set their mind to hike the interest rates today from 1.75% to 2% and I don’t think the PPI report will change anything.

The European Session

Swiss PPI MoM – The Swiss producer inflation PPI was expected at 0.4% this morning but it came at 0.2%. This is a considerable miss, but producer inflation remains upbeat in Switzerland nonetheless. PPI has followed a positive trend this year and today’s miss doesn’t change that. If PPI grows by 0.2% every month, it would mean that PPI inflation would grow by 2.4% in a year, which is pretty good.

UK CPI YoY – The UK CPI report was published in the morning and it came as expected at 2.4%. The CPI inflation used to be at 3% at the beginning of the year but it started cooling off in March and since then it has been slowing down. Now it stands at 2.4% and the Bank of England doesn’t feel pressured to hike interest rates, hence the bearish move in GBP pairs today.

UK PPI MoM – The PPI output grew by 0.4% this month against 0.3% expected, while the PPI input grew by 2.8%, up from 1.8% expected. That’s quite a jump in the input number, but it remains to be seen if it will translate into higher CPI in the following months.

Eurozone Employment Change QoQ – The employment change used to be stable at a 0.4% growth rate for several months. It ticked lower last month at 0.3% and this month was expected to remain the same, but it ticked higher again at 0.4%. Employment remains on the right track in Europe despite the economic slowdown in the last two quarters.

Eurozone Industrial Production – Speaking of economic slowdown in Europe, the industrial production declined by 0.9% this month. The economic and political uncertainty which is coming from all sides has eroded the investor confidence and the economy is suffering from it.

The US Session

US PPI MoM – The PPI inflation has been growing steady at around 0.3% throughout this year, but last month it slowed down to just 0.1%. This month it is expected to pick up again and grow by 0.3% which would be good, but won’t have much effect on the USD considering that the FED meeting is coming up in the evening.

US Crude Oil Inventories WoW – The US oil inventories are expected to shrink by 1.4 million barrels today after having increased by 2.1 million last week. While the USD doesn’t really care about this data, the Canadian Dollar will likely find some bids if the drawdown is bigger than expected.

US FOMC Meeting – The much anticipated FOMC meeting is coming up this evening. The market is expecting the FED to hike interest rates again after having increased them twice in the last six months. The rate hike is already priced in, so I don’t expect much action on that besides the initial knee-jerk reaction. The action will come from the FOMC statement, the economic projections statement and the press conference that will follow.

 

Trades in Sight

Bearish NZD/USD

  • The price is near resistance
  • The stochastic is overbought on the H1 chart
  • The FED is expected to be hawkish today

NZD/USD is very close to resistance now

We sold NZD/USD a while ago as this pair was climbing higher. Now it seems like the climb might be coming close to an end since the price is close to resistance which comes at around 0.7050. The stochastic indicator is also overbought so the move up should be over soon.

In Conclusion

The US PPI report was just published as I was writing this midday forex brief. It was yet another positive economic report from the US which makes things even better for the FED tonight. So, the rate hike is a done deal, now we will see what the FED has to say about the economy.