Category: US/Midday Session Brief

Forex Signals US Session Brief, June 12 – UK Earnings and US CPI Can’t Move the Markets Today

Posted on by Skerdian Meta

This week is filled with economic and political events. The market is getting so distracted by all the news and data releases that it doesn’t really know what direction to take.

The G7 meeting was over pretty soon after Trump left the table over the weekend, while yesterday the meeting between Donald Trump and Kim Jong Un went pretty well. A deal has been reached which aims at denuclearizing North Korea and demilitarizing the Korean peninsula, because South Korea is quite militarized for those who don’t know. If you have a neighbor like North Korea, you have no choice.

The market got a bit excited on the news and risk currencies made a small run early in the morning, while safe havens lost around 50 pips as USD/JPY jumped above 110. The UK earnings report was published in the European session and the US CPI inflation was published in the US session, but the markets seem unimpressed by both reports. Well, tomorrow we have the UK CPI report and the FED meeting in the evening, so the markets are expected to remain on the sidelines until then.

 

The European Session

French Final Payrolls QoQ – The French private payrolls were expected at 0.3% today, down from 0.4% last quarter. The actual number came even lower at 0.2%. Payrolls or wages as we know them, have been growing by 0.4% for more than a year, so this decline today doesn’t look good, despite remaining positive.

Italian Unemployment Rate QoQ – The unemployment rate has declined steadily in Italy, from 12% a year ago to 11%. The trend looks good, but today unemployment ticked 0.1% higher. This doesn’t change the trend yet but it is not pushing it any lower either. Well, income taxes are pretty high in Italy, so there might be a few people who are doing unregistered work.

UK Average Earnings 3MoY– Wages were growing by 2.8% in March and April but growth slowed to 2.6% in May and this month it fell to 2.5%. The core earnings which excludes bonuses also came lower at 2.8% against 2.9% expected. While wages continue to grow, the trend of the last two months is worrisome.

UK Unemployment Rate – The unemployment rate remained unchanged at 4.2% which is below the 5% natural unemployment rate. The trend is also in decline so far this year, so the employment remains upbeat in the UK as wages also showed.

ZEW Economic Sentiment – The German and the European economic sentiment took a bearish turn in March and now it has deteriorated as the trend shows. From around 20 points several months ago, the sentiment has weakened and today we saw some really bad numbers. The German ZEW economic sentiment came at -16.1 points while the Eurozone sentiment came at -12.6 points. Trade tariffs and the political situation in Italy have taken their toll on the investor sentiment.

 

The US Session

US CPI – The consumer inflation came at 0.2% month-on-month as expected while the yearly number came at 2.8% which is 0.3% higher than last month. So, the trend looks promising for inflation and the FED must be taking notice for their meeting tomorrow.

US Core CPI – Core CPI came at 0.1% last month and this month was expected to remain the same. Although, it ticked higher and came at 0.2%. This is promising as well, considering the negative trend of the last several months.

UK Parliamentary Debate on Brexit Bill – The British parliament is currently holding a debate on the EU withdrawal bill. We don’t know how big the bill is going to be or if it will pass the vote today. Even if that’s the case, the EU might not accept it. So, it is going to be messy and noisy today.

Trades in Sight

Bearish GBP/USD

 

  • The trend is bearish
  • The highs are getting lowThe 100 SMA (red) provided resistance
  • Stochastic is heading down

The 100 SMA (red) provided solid resistance today

A while ago we sold GBP/USD, right after the US CPI report was published. The price was moving higher this morning, but the 100 SMA stopped the climb and this pair started turning lower when stochastic became overbought. Now, stochastic and the price are heading down, so we’re on the right side.

 

In Conclusion

The deal between Trump and North Korea offered nothing to forex traders today as the markets ignored it. The UK earnings report and the US CPI report couldn’t move the markets either, so we can say that the markets are pretty numb at the moment. A lot of economic and political events have confused forex traders.

Forex Signals US Session Brief, June 11 – Manufacturing Turns Negative in Europe

Posted on by Skerdian Meta

The attention was on the G7 summit over the weekend. The main thing which took the market’s attention during the summit was, of course, Donald Trump. He mocked the Canadian PM Trudeau, terming him a weak leader and, as a result, USD/CAD moved 100 pips higher as soon as the forex market opened last night.

This morning, the attention turned into the European manufacturing data. The Italian and the UK manufacturing reports were released in the European session and they were pretty horrible in my opinion. Not only did they miss expectations, but they also contracted this month. The European and the UK economies softened in Q1 but economists were expecting an improvement in Q2. Well, considering the recent data from the Eurozone and the UK, it seems like the economists at the respective central banks will have to wait for Q3 to see some positive numbers.

 

The European Session

Italian Manufacturing Production MoM – The manufacturing production increased by 1.2% last month. That looked promising after two months of declines. This month it was expected at -0.7%, so the rough times weren’t over. The Italian industrial production declined by 1.2% instead, which wiped out last month’s gains. Today’s report brings Italian manufacturing back into negative territory, so things are looking pretty bad in Italy and politics are making them worse.

UK Manufacturing Production – The UK manufacturing report was expected to be positive today after declining during the past two months. It was expected to grow by 0.3%, but the actual number came at -1.4%. That’s quite a decline and it is the third straight negative month. This puts the UK manufacturing in contraction for Q2.

UK Industrial Production – The British industrial production was expected to grow by 0.1% this time, same as last month. It declined by 0.8% which makes it another horrible economic piece of data coming out of the UK.

EU Tariffs on the US to Begin in July 1st – Merkel’s spokesman Seibert commented earlier today that the EU is ready to take action as a counterattack on US steel and aluminum tariffs. The retaliatory tariffs are set to start on July 1st. Unless there are negotiations, the trade war will go on for quite some time, so be prepared for these sorts of comments.

The US Session

UK NIESR GDP Estimate – The UK GDP was expected to grow by 0.3% in the period between March and May according to NIESR. The report was just released and it came at 0.2%. It’s a miss on expectations, but an increase from the previous three months which came at 0.1%. This is a positive report considering the negative economic numbers we have seen from the UK over the last several months.

New Zealand Electronic Card Sales – The debit and credit card purchases from New Zealand are to be released later in the evening. Last month, credit and debit card sales declined by 2.2%, while this month they are expected to grow by 1.2%. This will be a nice turnaround, but the effect of this data is not too strong on NZD pairs.

Trades in Sight

Bullish NZD/USD

  • The trend has been bullish for two weeks
  • The pullback lower is complete on the H1 and H4 charts
  • The 100 SMA provided support on the H4 chart
  • NZD/USD has been making higher lows today

 

The 50 SMA (yellow) provided solid support today

Last week we opened a buy forex signal on this pair which is still live. The sellers have tried the downside a few times today, but the 100 SMA is holding on the H4 chart. Also, the price is making higher lows, which is a bullish sign. The price was oversold a few hours ago and it is now turning up, so this signal looks good at the moment.

 

In Conclusion

The price action in forex has been pretty quiet in the European session, besides GBP pairs which took a dive after the negative manufacturing report. The economic calendar is very light in the US session, so I don’t expect much volatility. Anyway, we have to keep an eye on Trump’s tweets just in case!

 

Forex Signals US Session Brief, June 8 – Risk On, Risk Off Again

Posted on by Skerdian Meta

Financial markets have been uncertain lately. For weeks until Wednesday last week, the market sentiment was really bad and safe haven currencies were in high demand. EUR/CHF dived 650 pips during that period while USD/JPY dived around 300 pips. In the last several days though, the market sentiment improved and risk currencies kept climbing higher. AUD/USD and NZD/USD moved more than 200 pips higher, while EUR/USD climbed 340 pips.

Yesterday, the sentiment started turning negative once again and in the last few trading sessions, the markets have traded in fear. Stock markets have tumbled, making today’s candlestick the biggest bearish candlestick so far this month. USD/JPY has also lost 100 pips in the last few trading sessions.

A strange thing has been going on with EUR/CHF though – this pair has been following a bullish channel despite the sentiment being negative. It seems strange because this pair was the most affected during May. Well, we made use of this upward channel today as we went long on this pair and already booked profit.

The European Session

Chinese Trade Balance – The trade surplus was expected at 223 billion Yuan but it came at 157 billion, 26 billion below last month. The USD-denominated trade balance also declined by over 7.6 billion. I suppose the US threats have already started to take their toll on the Chinese exports. Well, that is a good thing since China has been keeping the domestic demand subdued for so long.

German Industrial Production – Industrial production fell by 1.0% while expectations were that they would grow by 0.4%. That’s another disappointing number from Germany after yesterday’s terrible number of factory orders which declined by 2.5%.

French Industrial Production – Industrial production declined in France as well. It was expected to grow by 0.4% but it declined by 0.5%. This is the fourth month when industrial production has fallen in France this year. So, the situation doesn’t look good in Europe. Q1 was bad but the CEB was hoping that we would see a rebound in Q2. Well, it doesn’t look like that to me.

UK Consumer Inflation Expectations – Inflation remains quite high in the UK. Today’s number came at 2.9% as expected, way above the 2% target that the Bank of England has set. I don’t think we will see inflation cool off anytime soon in Britain.

Italian Di Maio Wants More Funds From the EU Budget – The Italian political leader Di Maio who is the Minister of Economic Development, commented that Italy will ask the EU for more funds from its budget. The German Finance Minister Scholz popped up right after him saying that “Italy should be responsible for its own finances”. Well, the clash between Italy and Germany continues and that’s not good for the Euro.

The US Session

Canadian Employment Change – New jobs declined last month in Canada, albeit slightly by 1.1K. Today, jobs are expected to have gone up by 19K. The unemployment rate will steal all the attention, so I don’t think the employment change figures will have much of a say in the markets.

Canadian Unemployment Rate – The Canadian unemployment rate has been steady at around 5.8% this year. It is expected to remain unchanged. Although, the risk is to the downside. We have seen a few positive economic reports from Canada recently, which might help decrease unemployment a tick or two lower. If that happens, I expect the CAD to have a great trading session this afternoon.

US Final Wholesale Inventories – The US wholesale inventories have been coming above expectations throughout this year apart from last month, which was a good sign at least. If inventories fall, companies will increase production, therefore buy additional supply. So, that is a positive sign for future spending. Inventories are expected at 0.0%, which would be a positive number.

Trades in Sight

Bullish EUR/USD

  • The trend has been bullish for nearly two weeks
  • The pullback lower is complete on the H1 and H4 charts
  • The 100 SMA provided support on the H1 chart
  • The 100 SMA is catching up on the H4 chart

The 100 SMA is already providing support

OK, I did say that the economic and political situation doesn’t look good for the Euro at the moment. But, the trend is still bullish and the ECB will start ending the QE programme soon. The moving averages are also providing support and the H1 and H4 chart time-frames. The price is oversold on both time-frames so it looks like a good opportunity to open a short term buy signal. I’m hoping for a bounce before the next major bearish move.

In Conclusion

The negative sentiment is hurting the risk currencies today and EUR/USD has been losing considerable ground. But, it looks like the sentiment might turn around or at least remain neutral for a while which would help risk currencies and hurt the safe havens. Therefore, we will follow the markets closely to see if there is another trade setup in sight.

Forex Signals US Session Brief, June 6 – The USD Extends Losses in a Quiet Market

Posted on by Skerdian Meta

Today is another quiet day, but the trend so far has been clear nonetheless. The trend is going against the USD. While in the last few days we have seen the risk currencies advance against the Buck, today the safe havens are joining them in this attack against the USD. USD/JPY has pulled back lower below the 110 level, although I see this as an opportunity to go long on this pair.

The economic data has been second tier today without much effect on financial markets. The Australian trade balance was the biggest release today which my colleague Rowan covered. It came lower than last month which was revised higher, but it was exactly as expected so no surprise for the markets.

 

 

The European Session

German Factory Orders – The factory orders have been disappointing in Germany so far this year apart from February. They have declined in three out of the last five months. Factory orders were negative again today, declining by 2.5%. The trend doesn’t look good and it shows the softening of the Eurozone economy.

 

Italian Retail Sales – Another sign that the economy of the Eurozone has cooled off is the Italian retail sales. They declined by 0.7%, which is the fourth negative month this year. The political situation in Italy is starting to have an impact on the whole Eurozone economy.

 

UK Halifax HPI – The Halifax house price index (HPI) turned positive this month. House prices increased by 1.5%. So, there’s still lots of inflation in the UK, although this data is pretty volatile.

 

Eurozone Q1 GDP Revisions – The second revision for the Q1 GDP of the Eurozone came as expected at 0.4%. The GDP has been growing by 0.6% in the last four quarters while growth stands at 0.4% now. That’s another sign of a softening economy. Although, looking at the details of this report, one component stands out. It is the household consumption which grew by 0.5% against 0.2% expected. That’s positive but if the sentiment deteriorates, consumption will plunge again.

 

The US Session

US Unemployment Claims – The unemployment claims came at 221K last month and this month they’re expected at 223K. They have been at the 220K region the entire year so far, so I don’t expect any surprises from that piece of data. We need to watch it though to see if employment is on the right track.

 

US IDB/TIPP Economic Optimism – This fundamental indicator dipped to 52.6 points in April from 55 points in the previous months, but picked up last month. This month, the economic optimism is expected to have improved again. It is expected at 54.2 points but it might be even better than that considering the improvement in the US economy in the last two months.

 

BOC Gov Poloz Speaks – The Bank of Canada Governor Poloz is speaking at a conference about the financial system. The Canadian trade balance report was positive yesterday, but I don’t know if the Governor will touch that subject or if he will stick to the financial system review. So, we have to follow his speech, don’t we? Remember that positive comment will be negative for USD/CAD.

 

US Consumer Credit – The consumer credit has declined in the last four months in the US. This month though, it is expected to increase again to nearly $14 billion. That would be a nice turnaround. If it increases as expected, then it will be a good sign, signaling an increase in consumer spending in the coming months.

 

 

Trades in Sight

Bullish USD/JPY

 

  • The trend has been bullish for this pair
  • The pullback lower is complete on the H4 chart
  • The 100 SMA provided support on the H4 chart
  • The previous candlestick formed a doji

The 100 SMA (green) held its ground this morning

If you check the H1 chart, you can see that stochastic is oversold so the pullback is complete on this chart. On the H4 chart, the 100 SMA was providing solid support and the previous H4 candlestick closed as a doji, which is a reversing signal. So we decided to go long on this pair.

 

In Conclusion

The markets continue to be quiet today apart from GBP which took a 100 pip dive right now. I don’t know what that was about, so let’s post this forex brief and see what is going on in the UK. Brexit is still playing with GBP pairs.

Forex Signals US Session Brief, June 6 – Safe Havens Get Smashed As Market Sentiment Improves

Posted on by Skerdian Meta

The financial markets seem to be back to normal today. Panic and fear has been prevailing in financial markets during the last few weeks due to trade wars and global politic. Italian politics particularly have deteriorated the market sentiment during this period, but this week the sentiment has improved.

The sentiment seems great today as safe havens continue to fall while risk currencies keep climbing. Commodity currencies made new highs today and even the CAD is gaining ground, despite falling oil prices. Although, EUR/USD and GBP/USD are leading the way up. Safe havens are getting smashed. USD/JPY has broken above 110 level, while EUR/CHF has gained around 100 pips so far today and keep climbing.

 

The European Session

Eurozone Retail PMI – The Eurozone retail number was the only data in the calendar for Europe today. It is a low tier data but it shows the current shape of the retail sector, so it is a leading indicator. Last month it dived to 48.6 PMI points, which meant that retail sales declined. However, the retail number moved back to positive territory this month, up to 51.7, so this sector is back on track.

Swiss CPI – The CPI (consumer price index) inflation picked up more than expected in Switzerland. Last month it was at 0.2%, and this month it touched 0.4%. That’s another decent inflation number. Last week the Eurozone and US inflation picked up nicely. Now the Swiss inflation is moving higher as well, so it seems that inflation is moving in the right direction on a global scale.

US MBA Mortgage Applications – Mortgage applications have been declining for nine weeks out of the last 12 weeks. That was a worrisome trend, but today mortgage applications came at 4.1%. That is a really decent jump, so hopefully the bearish trend will turn bullish now. This is a good sign for the broader economy in the US since higher mortgages means a better housing sector.

Positive Comments from the ECB – Today we heard several comments from ECB members and they sound pretty hawkish. Weidmann and Hanson said that inflation is moving towards the ECB target. Although to me it is still a bit early to be so confident about inflation – one month is not enough. Hanson also said that higher interest rates are possible before mid-2019. Knot and Praet also pushed for the QE programme to come to an end, which seems to be coming soon.

 

The US Session

Canadian Trade Balance – The trade balance has been negative for Canada since March last year. It has also missed expectations almost every month. Today, trade balance is expected to be negative again, albeit the deficit is expected to be smaller. The deficit is expected to shrink from -4.1 billion to -3.4 billion. If the deficit is smaller than that, then it would be welcomed by the markets.

Canadian Building Permits – Building permits are expected to decline by 1% this month. Although, we come from a really strong month where permits increased by 3.1%. The trend has been mainly positive and strong for building permits and if today’s number beats expectations and comes up positive, then I expect some bullish price action in the CAD.

US Revised Unit Labour Costs QoQ – US labour costs are important since they show the trend for wages and salaries which have been lagging during the economic recovery. In March we saw a strong pickup in unit labour costs. They increased by 2.5%, and this time they are expected at 2.7% which is a stronger number. If the headline number comes as expected or higher, then it will improve the sentiment at the FED.

US Crude Oil Inventories – The US crude Oil inventories are to be released this afternoon. Last month they declined by 3.4 billion barrels while this month they are expected to decline by 2 billion barrels. It won’t have much effect on the USD, but the CAD is heavily affected by this data due to Canada’s huge Oil sector.

 

Trades in Sight

Bullish USD/CAD

 

  • The trend is bullish
  • The risk sentiment is on
  • The pullback down is complete
  • The 50 SMA provided support

 

The price is reversing back up

We opened a buy forex signal in NZD/USD earlier on. The stochastic indicator became oversold which meant that the pullback was complete. The 50 SMA (yellow) was also providing support. Risk currencies are on the charge at the moment since the market sentiment has improved, so we went bullish on this pair.

 

In Conclusion

The markets are quiet now as they have been most of the day today. But, the trend is clear for all forex pairs across the board. They are all going up except for USD/CAD. Although, some important data is coming out of Canada in a few minutes which might change the situation for the CAD.

Forex Signals US Session Brief, June 5 – UK Services Steal the Show as the RBA Goes by Without Much Notice

Posted on by Skerdian Meta

The cash rate and the statement from the Royal Bank of Australia (RBA) was the main event on the economic calendar today. However, it went by pretty smoothly without disturbing the AUD markets. The cash rate and the statement didn’t offer any surprises and the AUD didn’t even notice that event.

The UK services PMI report took a lot of attention though. It came higher than last month and it beat expectations as well, so the GBP received some strong bids after the release. Later in the afternoon, we have the US ISM non-manufacturing PMI on our radar, as well as the JOLTS jobs openings and the global dairy trade (GTD) auction prices, which might affect the NZD.

 

 

The European Session

  • RBA Cash Rate & Statement – The RBA was expected to hold the interest rates, or the cash rates as the Aussies call them, unchanged. They did leave the rates unchanged, so no surprise there. The attention was on the statement. The statement from the RBA was pretty much the same as well. Although, two comments stand out. The RBA accepted that inflation is likely to remain low for quite some time and that household consumption remains a source of uncertainty. These are dovish comments from the RBA, but a bigger risk is emerging for Australia in my opinion. The Chinese are increasing imports from the US and that is likely to hurt some Australian exports. Perhaps they will address this later in the year after seeing its effects.
  • European Services PMI – Today was a services day for Europe and the UK. It kicked off with Spanish services report which came at 56.4 PMI points, up from 55.6 points last month. That was a decent reading and at 53.1 points, the Italian services posted an increase as well, albeit not much. But the rest of Europe didn’t follow through. French services remained unchanged at 54.3 PMI points and so did German services which came at 52.1 PMI points as last month. At 53.8 points, the Eurozone also remained at the same levels as the previous month. One thing is positive here: the service sector is not softening, like other data has shown in Q1.
  • UK Services PMI – The UK services report took all the attention during the European session. This figure jumped to 54 PMI points, up from 52.8 previously. That is the second positive surprise from the UK after the pickup in construction that we saw yesterday. It’s a turnaround after many weeks of very soft economic data from Britain.
  • Eurozone Retail Sales – Retail sales were expected to grow by 0.5% but they only grew by 0.1%. That is a disappointing number, but at least last month’s number was revised up from 0.1% to 0.4%. That took some of the negativity off this report although the Euro started turning bearish after the release. The yearly retail sales number came at 1.7% though, up from 1.5% last month, so it is not a bad report after all.

 

The US Session

  • Canadian Labour Productivity – Labour productivity is expected to tick higher to 0.3% from 0.2% previously. That would be negative for the CAD though. Lower productivity means more working hours and more people employed, so it translates into more cash flowing into the economy. In the long term, lower productivity is negative, but it helps in the short term. If this data misses expectations, then it will be good for the CAD.
  • US ISM Non-Manufacturing PMI – The US final services are expected to remain unchanged at 55.7 PMI points. The non-manufacturing PMI is expected to move higher to 57.9 PMI points from 56.8 points currently. That would be positive for the USD since it would bring this sector back at really decent levels after the miss that we saw last month.
  • JOLTS Job Openings – This report is released more than a month late, but it is a leading indicator for employment. It is expected at 6.5 million, just a tad softer than the previous reading, but it is still a decent number if it remains above 6 million.
  • GDT Price Index – There isn’t an exact time for this release and there is no expectation since it is an auction. But it affects the NZD since New Zealand is a major dairy producer and exporter. The prices increased by 1.9% last month, which is positive after a few negative months previously.

 

Trades in Sight

Bullish USD/CAD

 

  • The trend today is bullish
  • Commodity currencies are declining as a group
  • Oil is tumbling

The bullish price action has resumed again today for USD/CAD

Oil prices continue to tumble today. The US Oil producing firms are increasing their fracking operations and Canada is increasing oil production too. Besides that, the US has asked OPEC to increase the output so Oil prices are taking a hit. The CAD is the first loser in such conditions, so our bias for USD/CAD is bullish. This pair jumped 100 pips higher today and if it retraces back lower again, we might be persuaded to go long.

In Conclusion

The services from Europe and the UK leaned a bit on the positive side. In the US session, the US services and non-manufacturing reports will be released. They might not move the markets at all, but they might turn things around if the deviation is too big. So, we will follow that closely later on and probably trade that report as well.

Forex Signals US Session Brief, June 4 – USD Continues to Pull Back

Posted on by Skerdian Meta

The US Dollar has been on a strong bullish trend over the last several weeks. Now it has started to pullback. The USD started to retrace lower Wednesday last week. From the price action that we are seeing, we can say that the pullback is continuing. The US economic data that came out on Friday was very strong. The unemployment rate declined again to 3.8%, after declining two decimal points in the previous month.

The average hourly earnings also increased. Nevertheless, there was no follow-through from USD buyers. We have seen USD buyers jump in at any half decent US economic data during the last couple of months. But, we didn’t see that happen on Friday, despite the great round of data. That tells us that USD buyers have paused and the sellers are currently in control. Today’s price action reinforces this idea.

 

The European Session

  • Spanish Employment Change – The Spanish unemployment change came at -86.7K. This is more or less the same level as last month. It was expected to decrease further to 105K, so this is considered a miss. Though, it is not a soft number by all means. The unemployment change numbers have been decreasing in the last several months, which means that unemployment is falling and the new jobs should be on the increase. This trend is positive for Spain and for the Eurozone.
  • Eurozone Sentinex Investor Confidence – The Sentinex investor confidence took a dive this month. It was expected to decline to 18.6 points from 19.2 points the previous month. It dove to 9.3 points, half of last month’s figure. In January, the investor confidence number was up to 33 points, but it has kept declining every month. Now, we are at 9.6 points. The trend is worrisome here. If investors don’t feel confident, then that’s a major problem. Although, the European politics have affected this indicator negatively, so it’s all economic.
  • UK Construction PMI – The construction numbers from the UK have been close to 50 points for months. Above 50 means that the sector is expanding, below 50 means that the sector is contracting. It dipped to 47 points in April but it climbed up to 52.5 points last month. This month remains unchanged, a positive sign for the UK. At this level, this sector is not exactly booming, but at least it moved away from the 50 region.
  • Eurozone PPI – The Producer Price Index or producer inflation as we call it, was expected to grow by 0.2% but remained flat. At 0.1%, PPI has been pretty weak in the last few months. On the other hand, the good consumer inflation numbers from the Eurozone last week increased hopes for a better PPI reading this month. That didn’t happen, the opposite happened in fact, and PPI dived to 0%. Not a good sign.

 

The US Session

  • US Factory Orders MoM – The US factory orders are a leading indicator of economic health. It means that factories will increase their production activity to meet the orders. But, they are expected to decline by 0.4% today. That isn’t good obviously. The last two months have been pretty decent, increasing by more than 1%. This decline comes as a bit of a surprise.
  • The USD Retrace – As mentioned at the beginning of this brief, the USD is pulling back lower. Commodity currencies are advancing higher and so is EUR/USD and GBP/USD. This move looks exhausted at the moment, indicating that a reverse might be underway. After all, the bigger trend is still up for the USD.
  • Declining Cryptocurrencies – Cryptocurrencies reversed the bearish trend last week. They have been on a bullish run for several days, but today they are tumbling lower. This might be a good opportunity for buyers.

 

Trades in Sight

Bearish EUR/GBP

  • The trend turned bearish last Friday
  • The pullback is complete on the H1 chart
  • Stochastic is overbought
  • The 50 SMA is providing resistance

 

The reverse has already started for EUR/GBP

We sold EUR/GBP a while ago when it was at the 50 SMA (yellow). That moving average was providing resistance and stochastic was overbought, so we thought that the retrace higher was complete. Now, this pair is heading down, showing that we were right.

 

In Conclusion

The USD is on a major pullback now. It has lost considerable ground in the last few days, but that pullback might be coming to an end. We have to be careful not to get caught on the wrong side when the reverse happens and the uptrend resumes.

Forex Signals US Session Brief, June 1 – A Quiet Session in Forex Besides GBP Pairs

Posted on by Skerdian Meta

Yesterday the markets were more relaxed after three days of extreme price action. Today the markets seem even more relaxed. All forex majors have traded in quiet ranges apart from GBP pairs. GBP/USD has gained around 80 pips so far. The UK came above expectations. We have seen a number of disappointing economic reports from the UK, so today’s manufacturing report has improved the sentiment for this currency.

The sentiment has improved across the markets to be honest. The safe havens are pulling back as EUR/CHF and USD/JPY climb higher. Safe havens were on a strong bullish trend this week, meaning these two forex pair were in a freefall. But today we see that they have reversed so the market sentiment is back to slightly positive.

 

The European Session

  • Swiss Manufacturing – Yesterday, the Swiss retail sales jumped by 2.2% and last month’s number was revised higher as well. Today, manufacturing came close to expectations, but at 62.4 PMI points, it is at a very decent place. It’s a good sign for the Swiss economy.
  • Eurozone Manufacturing – The manufacturing reports from the Eurozone countries were sort of mixed. The French and Spanish manufacturing missed expectations while the Italian and the German numbers as well as the whole Eurozone numbers came as expected. Inflation really picked up in Europe from what we saw yesterday. But the manufacturing is not backing it up today.
  • British Manufacturing – The UK manufacturing report was a positive surprise today. It came at 54.5 PMI points up from 53.5 expected. That is the first positive economic report from the UK recently because we have seen a string of really bad reports in the last several months.
  • Italian GDP – The Q1 Italian GDP came at 0.3% as expected but the number for Q4 2017 was revised higher to 0,.4% from 0.3%. That’s not great but a positive sign nonetheless.

 

The US Session

  • US Employment Report – The US employment report includes the non-farm employment change, the unemployment change and the average hourly earnings. Unemployment is expected to remain at 3.9% as last month, but that’s already a really good number. The problem for the US has been low wages. Despite low unemployment, the wages have been picking up very slowly. Today, average earnings (wages and salaries) are expected to grow by 0.2% from 0.1% last month. That would be a good start and it would improve the situation for the USD. If it is a bad numbers, then I expect a decent pullback in the USD.
  • US ISM Manufacturing – The manufacturing report is expected to come at 58.3 PMI points today, up from 57.3 points previously. That would be another positive piece of data which points to the right direction if there are no nasty surprises. The ISM manufacturing prices are less important, unless we see a major deviation.
  • US Construction Spending – The US construction spending is another aspect which shows the shape of the economy since money spent on construction gets distributed fairly quickly in the economy. It is expected to grow by 0.8%, which would be positive after three disappointing months. Last month, the spending declined by 1.7%, so this would be a nice turnaround.

Trades in Sight

Bearish EUR/USD

 

  • The main trend is still bearish
  • The pullback is complete on the H1 and H4 charts
  • Stochastic is heading down
  • The upside down hammer candlestick

 

The reverse has already started

We sold EUR/USD a while ago at 1.1685 when the price was trading below the 100 SMA (red). It moved higher above 1.17 earlier today, but the price formed an upside down hammer and the stochastic became overbought on the H1 chart. That looked like a nice bearish chart setup and the price has already started to reverse down now.

 

In Conclusion

The US employment report just came out and it is another great one. Unemployment declined again while wages picked up nicely. Let’s get this update posted and take a better look at that report. We just cashed in on our EUR/USD signal.

 

Forex Signals US Session Brief, May 31 – Finally Some Inflation in Europe

Posted on by Skerdian Meta

Today’s market saw some improvement. Yesterday, we saw a decent pullback after the major bearish moves in the beginning of the week. That was a sign that the panic was wearing off. The political situation remains the same in Italy but the markets seem a bit tired of trading Italian politics. Today, risk currencies have recovered some more ground while safe havens are getting sold off.

EUR/USD was trading at 1.1720s earlier on, which is more than 200 pips up from the lows on Tuesday. Inflation was a huge factor which helped the Euro and market sentiment in general. Inflation has been a headache for the European Central Bank lately but today we saw some really decent inflation numbers all over Europe. With the promising inflation numbers, hopefully, wages will start going up as well.

 

The European Session

  • Swiss GDP & Retail Sales – The Swiss Q/Q GDP beat expectations this morning when it came at 0.6% as opposed to 0.5%. This is the second quarter which comes at 0.6%, twice what we saw last year. It seems like a trend is forming here and it is good. Retail sales jumped by 2.2%, which is another great number. Last month’s number was revised higher too. Well done Swissies.
  • French & Italian Inflation – French and Italian CPI inflation came in at 0.4% today. That’s quite a jump from the 0.1% that we have seen in previous months. It is also a good increase for a single month. Although, it is just one month. Inflation should remain at these levels for several months to be considered a trend.
  • Italian Unemployment Rate – Last month, the unemployment rate in Italy was at 11% and it was expected to decline to 10.9% this month. Instead, it increased to 11.2%. Inflation might be going in the right direction, but the economy is not doing that well. Take notice Italian politicians.
  • Eurozone Inflation – Eurozone inflation jumped from 1.2% to 1.9% this month. It beat expectations and at this level, the ECB should be really pleased. The ECB target is at 2%, so we’re getting close. Core inflation also beat expectations, jumping to 1.2% from 0.7% previously.
  • UK Money Supply – The money supply increased in the UK. M4 money supply represents the domestic currency in circulation and bank deposits. It increased by 0.2% while net lending to individuals came at 5.7 billion, up from 4.2 billion last month. You can increase the cash in the economy, but when fundamentals are not right, the economy still suffers. That’s what’s happening in the UK now and it is all because of Brexit.

The US Session

  • Canadian GDP – The Canadian GDP report is due shortly. Expectations are not great and after the soft numbers we saw yesterday, it will be interesting to see today’s data. The Bank of Canada (BOC) turned hawkish all of a sudden yesterday and the CAD rallied. I don’t think they will remain hawkish if the GDP today is bad again.
  • US Data – The US price index, personal spending, personal income, and unemployment claims will be released at the same time as the Canadian GDP. The price index is expected to decline to 0.1% from 0.2% last month while the rest of the data is expected to remain unchanged. Inflation picked up nicely in Europe today. We will probably see some surprising numbers from the US as well.
  • US Crude Oil Inventories – The US Crude Oil inventories are another factor which might affect the CAD. CAD and Oil are closely related. If inventories increase, then the CAD is expected to decline since this means more supply in the market.
  • FED Members Speak – Later in the afternoon we have two FED members speaking. Bostic and Brainard have speeches scheduled today. It will be interesting to see what they have to say about the US economy, the trade war and the USD. I have a feeling that they will sound a bit hawkish, potentially giving market sentiment another boost.

 

Trades in Sight

Bearish GBP/USD

  • The trend is bearish
  • The pullback is complete on the H4 chart
  • Stochastic is overbought
  • The 50 SMA is providing resistance

 

Theis chart setup looks pretty bearish to me

A while ago we opened a sell forex signal in GBP/USD. The trend is still down despite the pullback over the last two days. In fact, the pullback is complete now that stochastic has become overbought. The 50 SMA which has provided resistance previously is doing the same job again. That chart setup is screaming sell so that’s what we did.

 

In Conclusion

Today has been great for the Eurozone including the Swiss. We’re used to seeing weak inflation numbers in Europe, but inflation picked up considerably today. Maybe this is the turning point for Europe. We wil have to wait a few more months to see if this is a trend or just a one off.

Forex Signals US Session Brief, May 30 – Markets Take A Moment to Breathe

Posted on by Skerdian Meta

Yesterday’s financial markets took a dive. Market sentiment has been deteriorating partly due to Donald Trump’s cancellation of the Iran deal and partly due to Trump’s trade tariffs. But, the main event to trigger a massive selloff across all markets has been the political situation in Italy.

The two parties in Italy’s political situation are populist Euro-skeptics. Although they have been vocal about remaining in the Eurozone recently, the markets have been fearing Italy’s potential exit from the EU. Yesterday, the panic set in and everyone dumped the risk assets for safe haven currencies. Today, the sentiment has improved, but in my opinion, this is just temporary before we see the next round of selloff. Let’s have a look at today’s main forex events and the coming events for the US session.

 

The European Session

  • German Data – The German retail sales jumped by 2.3% this month. Last month’s number was revised higher as well. The monthly inflation CPI grew by 0.5%, which is quite impressive. This should calm the Germans for some time. Import prices also grew considerably compared to last month.
  • French Data – We can’t say the same for the French figures, unfortunately. The consumer spending declined by 1.5% while the GDP only grew by 0.2% month-on-month, against 0.3% last month.
  • Canadian Data – The current account deficit grew more this month by an additional $3 billion. The RMPI (raw material price index) was expected to grow by at 2.1% this time, same as last month. But, this data missed expectations and came in at 0.7%. Are Donald Trump’s tariffs already hurting the Canadian economy? Perhaps this is just a bad month for Canada, we will see in the coming months.
  • US Data – The prelim GDP report was published a few minutes ago and it slightly missed expectations. It was expected at 2.3% but it came at 2.2%. That’s still a respectable number nonetheless, so it is not weighing on the USD at the moment. The ADP non-farm employment numbers came lower than expected as well.
  • Trade Tensions Resurface Again Between the US and China – The trade war was put on hold a couple of weeks ago. Nevertheless, the US will push for Steel and Aluminium tariffs on China causing China to fight back. The Chinese are calling for a united front against the US, particularly with European and Asian countries. Chinese officials accepted to increase food products from the US, but they are threatening with retaliation on US farm products. That’s another factor which should weigh on market sentiments.
  • New Elections in Italy – Italy is forming a caretaker government. Italy’s Cinque Stelle leader said earlier that they want new elections (which are likely to be held in late August or September). His party doesn’t want a coalition with Nord League. However, with the current electoral law, they’re bound to get together again. We will have to wait a few months to see where this is going.

The US Session

  • Interest Rate Decision by the Bank of Canada – The Bank of Canada (BOC) is expected to keep interest rates on hold today at 1.25%. So, there won’t be any surprises there. At the same time, the rate statement will be interesting and it might be a major market mover for CAD pairs. The economic data from Canada took a dovish turn today and that might reflect in the statement. If the BOC acknowledges that, I expect some more weakness in the CAD.
  • Swiss National Bank Chairman Speaks – The SNB Chairman Jordan will hold a speech in about an hour. The CHF has been appreciating considerably in the last two week and I’m sure the SNB doesn’t like that. There is a chance that Jordan might try to talk the CHF down, which means up for EUR/CHF.
  • The selloff of Italian stocks has stopped and the sentiment has improved from yesterday. That has helped the Euro and other risk currencies climb up. That might end soon as they start to reverse again. I expect some more bearish price action in EUR/USD, AUD/USD and USD/JPY in the afternoon today.

 

Trades in Sight

Bearish USD/JPY

  • The trend is bearish
  • The pullback is complete on the H1 chart
  • The 50 SMA is providing resistance
  • Stochastic is overbought

 

The 50 SMA has been resisting well

We sold USD/JPY a while ago as it was hitting against the 50 SMA (yellow). The moving average is providing resistance while stochastic is overbought. That means that the retrace is complete while the trend is still very bearish. We decided to take a trade up there which is going well at the moment.   

 

In Conclusion

The price action is much slower than yesterday but that’s not keeping us away from trading. We have closed several forex signals and several others which remain open. Let’s concentrate on the charts and the signals in the afternoon.