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US Dollar Strengthens Overnight amid Largely Stronger Data

Overnight the US dollar traded stronger against its major counterparties boosted by positive data. There were negative reports released yesterday but the most were stronger than expected. Initially, the US Durable Goods orders increased by 22.6% last month up from expectations at 7.5%. However, Core Durable Goods Orders contracted by 0.8% in July disappointing forecasts for a 0.5% increase. Later on, the Conference Board reported that the Consumer Confidence index rose to 92.4 for August standing above expectations 0f 89.1. The US stocks closed in green for another day with the S&P 500 closing slightly above 2000 and the Dow Jones Industrial Average stayi9ng close to fresh high in memory.


Stronger US data underpinned the greenback with the US Dollar index rising to fresh 1-year high at 82.69. On the data front today for the greenback we do not have anything, for tomorrow though we see a full calendar with 2nd quarter GDP data and US Jobless Claims. As of typing the US dollar index is retreating from freshly gained territory and it was lastly seen at 82.53 that is likely due to profit taking and for technical reasons.


The Euro against the US dollar last night declined to new 11-month low last night at 1.3152. The downward move gets deeper as the common currency had no fundamental support. Recently, the German Financial Minister, Schauble, said that he thinks Draghi’s comments on growth and austerity have been “over interpreted”. Currently, the EURUSD is bouncing up and at the moment is trading at 1.3179.


Elsewhere, the British pound against the US dollar formed a double bottom at 1.6538 and now is rising towards support at 1.6597. The Aussie retraced to 0.9300 against the US dollar. Risk-on is driving the Australian dollar which held strongly its ground against the greenback in contrary to other major currencies. That is indicated in the Currency Currency Market Correlation Table.


Questions and suggestions:analytics@infinmarkets.com

27 August 2014 @ 09:05

Currency Pairs in Consolidation, Risk appetite Seems Elevated, S&P500 at 2000

FX currency pairs are mostly steady after an eventful weekend. Risk appetite remains elevated as the S&P 500 rallied above 2000 handle for the first time in memory but eventually closed lower at 1997.92, experiencing gains of 0.48%. The Dow Jones Industrial Average closed higher by 0.44%, approaching its historical high at 17142.5. However, tensions between Ukraine and Russia returned somewhat, ahead of the meeting of Putin with Poroshenko later today.


Moreover, the European Central Bank President triggered speculation for further monetary stimulus after saying that ECB stands ready to adjust policy. That has supported traders risk appetite. Concerning Asia, main indices closed in red light, with NIKKEI 225 closing lower by 0.59%, the Hang Send was down by 0.30% and only the ASX 200 rose slightly by 0.05%.


Major FX pairs are consolidating at the time being with the Euro against the greenback extending in sideways zone between 1.3209/1.3182. Recent comments by Draghi have added pressure on the common currency, however the US dollar index is weighed by strong cap at 82.64. Therefore we would avoid for the time being the EURUSD trading since we do not have clear view. Looking ahead, the US Durable Goods orders would likely drive the US dollar later today, New Orders are expected to stand for July at 8.0%.



Elsewhere, the British pound against the greenback have clawed back Monday open losses and rose to resistance at 1.6597. Expectations over increase in BOE key rate could be lower than in previous months trading session however traders’ expectations could be easily triggered by stronger economic data release or by comments of officials. We would expect the GBPUSD to be more prone to positive reaction than for negative due to the negatively overextended trading.


Geopolitical risk seems to be eased however the tensions in Ukraine, Iraq, Gaza and Libya are not over yet and is not likely to end soon, so we would be alerted for any currency risk averse event. Should we see some risk worsening the Japanese Yen could strengthen against the Aussie and the Euro. The US dollar would likely be supported by risk averse events and thus the USDJPY is not considered for moving in favor of the Yen in that case. The EURJPY is consolidating at the time being around 137.20 while the AUDJPY advanced on Monday to cap at 97.13 and currently is hovering above support at 96.45.


Questions and suggestions:analytics@infinmarkets.com

26 August 2014 @ 09:35

EURUSD at Fresh 1-Year Low, Cable Quickly Recovers from 5-month Bottom

The US dollar advanced early on Monday against most of its major counterparties as the Jackson Hole made more clear the divergence of monetary policies among the Central Banks. The European Central Bank and the Bank of Japan possible steps toward further quantitative easing clearly diverge from Federal Reserve and Bank of England expectations for interest rate hike.


The US dollar index jumped to fresh 1-year high at 85.57 while Janet Yellen indicated that the most important economic measure for increasing interest rates is labor. Today US New Home Sales will be in the focus of market participants, expected to increase to 426K. Moreover, US Durable Goods orders are highly anticipated on Tuesday followed by US GDP report on Thursday, for the 2nd quarter, previous estimate of 2Q GDP stood at 4.0%.


Elsewhere, the Euro against the greenback declined to fresh lows at 1.3182 as the ECB monetary policy is diverging from Federal Reserve likely path. Moreover, the Euro-zone will report this week employment and inflation data which could add to stimulus expectations since CPI y/y is expected to drop lower at 0.3% for August. The chart of the EURUSD indicates a falling structure which is likely towards next support at 1.3102 due to the heightened speculation for further ECB stimulus.


The British pound dropped to support at 1.6538 against the US dollar on Monday open, creating a gap. However, the currency couple quickly recovered at 1.6575 filling the gap. Technically the GBPUSD is oversold and at the same time BOE meeting minutes showed that two members voted for rate increase. Lower increase in inflation though allows for later than expected rate hike and that has weakened the Sterling. We could see a quick positive reaction in the cable but this must justified with positive data release. The economic calendar this week would cover UK Mortgage Approvals on Tuesday, UK House Price Index growth and Consumer Sentiment on Friday.


Questions and suggestions:analytics@infinmarkets.com

25 August 2014 @ 10:43

US Declines Ahead of the Janet Yellen Speech at the Jackson Hole

The US dollar retreated broadly against the most of its counterparties after rising to fresh 11-month highs. The FOMC meeting minutes release on Thursday was more hawkish than expected lifting the US dollar index to fresh highs at 82.33 however from early on Thursday trading the index was on a slippery slope falling to as low as 82.03. Technically the US dollar index was overbought with OsMA and Stochastic being overextended to the upside in multiple time frames.


In addition, the risk appetite was higher this week compared to previous weeks as the S&P 500 rose yesterday to a record peak at 1993.54 taking back all previous losses. The Dow Jones Industrial Average Index also closed higher by 0.36%, at 17039.49, approaching cap at 17142.50 before record peak. Upbeat US data supported the US stocks, like the stronger Philadelphia Fed Manufacturing Index, the more than expected Existing Home Sales and the higher than projected Manufacturing PMI for August. That also raises the possibility of an earlier Fed rate hike which in turn would further support the greenback. We remain focus at the Jackson Hole speech of Janet Yellen today. The recent retracement of the greenback could just be a good opportunity to reposition on the long side.


Elsewhere, the Euro rebounded against the US dollar to support at 1.3296 as investors were collecting profits ahead of Jackson Hole main speeches; ECB President is among the speekers. The British pound against the greenback remained under selling pressure due to weaker than expected UK Retail Sales. The cable currency couple dropped yesterday to almost new 5-month bottom at 1.6562 and is currently hovering above its new support level. The US dollar against the Canadian retreated to 1.0926 on Thursday trading due to strong resistance at 1.0985 weighing on prices. On the data front, we expect the Canadian CPI data and Retail Sales.


Questions and suggestions:analytics@infinmarkets.com

22 August 2014 @ 09:11

Greenback Soars to Fresh Peaks, Eyes on Jackson Hole

The greenback soared as Fed reported more hawkish than expected meeting minutes. FOMC members were discussing about plans for monetary policy normalization as economic data are improving. The greenback was broadly stronger against its major peers with the US dollar index advancing to a new 11-month high at 82.33and has now established a well-structured uptrend. Today, the annual symposium at Jackson Hole begins and all eyes turn to that for the following days, Janet Yellen is expected to speak tomorrow. In case Yellen add to the hawkish tone then we would expect the greenback to lift again.


The Euro against the US dollar declined further to 11-month fresh lows, drawing support at 1.3239. The EURUSD overextended to the downside as the most of the indicators are oversold while today we are expecting the PMI Manufacturing and Services August reports for France, Germany and Euro-zone in whole. The PMI reports are projected to be mostly lower than in July.


Elsewhere, we saw the HSBC Flash Manufacturing PMI falling to 50.3 disappointing expectations and that added pressure on Hang Seng and Shanghai composite indices who closed lower. The Aussie against the US dollar declined due to hawkish Fed to support at 0.9240 but remains under pressure due to its biggest trade partner sluggish PMI report. The AUDUSD revived its downside bias and we would expect to see lower levels than 0.9240 but we should keep in mind that this support is strong.


Lastly, the British pound lost against the US dollar after the release of the FOMC minutes. The currency couple gave back previous gains. The yesterday meeting minutes of the Bank of England revealed that 2 members voted for raising key rates and that was a surprise. Expectations now for an earlier lift for BOE key interest rate, increase which could support the sterling. Also, the GBPUSD is overextended to the short side and needs some fundamental trigger to revive its upside. For more information look at Technical Analysis. Today we are expecting the UK Retail Sales which is an important growth indicator and is forecasted to show some increase.


Questions and suggestions:analytics@infinmarkets.com

21 August 2014 @ 08:51

US Dollar Rises to 11-month Peak Looking to FOMC Minutes and Jackson Hole

On Wednesday morning the US dollar strengthened further against its major counterparties. There is increased speculation by market participants that the Fed would move toward raising key rates. The US dollar index rose to 11-month high at 81.99 ahead of the July FOMC meeting minutes release later today. The index has breached upper boundary at 81.64, of its long term range and the bullish bias dominates.


Moreover, there are expectations for hawkish comments to be revealed with the release of the meeting minutes and that supports well the greenback. Therefore we will be watching the release closely and we would cautiously trade the US dollar. In addition, the most important event this week is the annual symposium at Jackson Hole, starting on Thursday with Fed Chairwoman giving a speech on Friday.


Elsewhere, the British pound declined to a more than 4-month low at 1.6599 against the US dollar. According to technicals the currency couple is oversold as it dropped straight from 6-year high at 1.7178 to support at 1.6599 without a corrective move in the daily timeframe. Yesterday the Office of National Statistics reported UK annual inflation at 1.6% for July down from 1.9% in June and lower than projections. The latter, added pressure on the sterling, however there is still speculation that the BOE would raise rates soon, which could support the currency. We would be focusing today on the BOE release of the last meeting minutes for further clues.


The Euro against the US dollar retreated to 1.3299 early on Wednesday after breaching key support yesterday at 1.3340. Downside pressure increased today with the release of the lower than expected German PPI. Looking ahead, we are alerted for the release tomorrow of the European major economies PMI reports and for the Euro-zone PMI. Currency pair falling structure is in place, US dollar strengthens but technical indicators are oversold ahead of important releases for both the US dollar and the Euro, therefore we should be conservative.


Questions and suggestions:analytics@infinmarkets.com

20 August 2014 @ 08:52

US Dollar Strengthens Ahead of Jackson Hole Symposium

US Stocks last night closed in positive light, recovering from previous sessions’ losses. The Dow Jones Industrial Average closed higher by 1.06% and the S&P 500 rose by 0.85%. Risk appetite is improving as talks between Ukraine and Russia have started and the humanitarian aid from Russia continues. In addition, US housing data released yesterday evening supported the greenback while expectations that the Fed will end its asset purchase program in October remain high. The US dollar index jumped from support at 81.35 and rose to previous resistance at 81.64 recovering back previous retreat. The market participants cautiously trade ahead of annual symposium at Jackson Hole where ECB president and Fed Chairwoman are among the speakers.


The Australian dollar advanced against the US dollar to cap at 0.9341 after the RBA meeting minutes release showed that the interest rates would be held steady at 2.50%. The AUDJPY rebound back to previous resistance around 96.00. The Aussie advanced strongly against the Kiwi climbing to a more than a year peak at 1.1072. New Zealand reported yesterday weaker than expected Producer’s Price Index and that added pressure on the Kiwi.


For today’s FX developments we are watching the UK CPI data and other inflation related indicators. The British pound against the US dollar retraced to 1.6737 in recent trading after the weekend comment by Mark Carney that rates may be raised earlier than expected, but today the couple is under pressure due to strong greenback. Later on we would watch the US Building Permits and CPI reports. Stronger than projected reports would support the greenback and the US dollar index may overpass cap at 81.64 toward fresh yearly highs.


Questions and suggestions:analytics@infinmarkets.com

19 August 2014 @ 09:20

British Pound Revives Bullish Bias on Mark Carney

Early on Monday morning the British pound was well underpinned by Mark Carney’s comments. The BOE Governor said to the Sunday Times that the key rate may rise earlier than what is expected. Concerning the economy, Mark Carney was optimistic that is “much more than halfway towards that finish line”. The GBPUSD jumped to 1.6737 and holds a bullish bias in today’s trading. In the longer term the currency couple made a deep fall driving oscillators to extreme oversold levels and perhaps now we could be at a turning point towards bullish bias. On the data front we expect UK CPI figures tomorrow, monetary meeting votes on Wednesday and UK Retails Sales on Thursday.


The British pound against the Japanese Yen recovered from support at 170.40 and bounced up to 171.45. Ukraine tensions are still in investors focus as there were unconfirmed reports of humanitarian aid convoy attack. That helped the Yen to strengthen against its major counterparty the US dollar. The USDJPY found support on Friday at 102.13 and bounced back to 102.43 early on Monday. Looking ahead main focus this week is the speech of the Federal Reserve Chairwoman, Janet Yellen at the annual Economic Symposium at the Jackson Hole.


Elsewhere, we do not see much of activity in major currencies as the week ahead could be overwhelmed by economic news. The Australian dollar against the greenback is in sideways around 0.9314 with investors expecting RBA Meeting Minutes on Tuesday morning. The Euro versus the US dollar has been fluctuating between 1.3399 and 1.3380 with no clear direction while August PMI surveys are to be reported on Thursday for Euro-zone and its major economies. Lastly, the US dollar against the Canadian eased to support at 1.0859 on Friday in an attempt to revive downside bias, currently prices are at 1.0883 while on Wednesday we would watch Wholesale Sales and on Friday Retail Sales and CPI.


Questions and suggestions:analytics@infinmarkets.com

18 August 2014 @ 10:24

Sterling at New Lows, Euro Held by Strong Bottom, Eyes on EZ CPI and GDP

The British pound dipped to fresh 5-month lows against the greenback at 1.6669. The downtrend is pushing lower while the BOE’s inflation report was interpreted by market participants as more dovish than expected. Also expectations of interest rate hike moved further into 2015 and that decreased demand for the sterling. Governor Mark Carney referred to increased geopolitical risk and at the same time there is uncertainty over Euro-area recovery.


The British pound weakened substantially against the Euro as well. Market participants were abandoning the sterling and were buying the Euro. The EURGBP bounced up from support at 0.7923 to 0.8015. Due to the latter, buying orders on Euro underpinned the EURUSD, during the BOE Governor Mark Carney’s speech. The Euro against the greenback jumped sharply from 1.3357 to 1.3414 but then quickly returned back, currently is trading at 1.3357. As of typing French and German GDP data reported both disappointing investors’ expectations. Investors are now focusing on EZ CPI and quarterly GDP, the European currency pair is likely to continue its downtrend should the news keep disappointing however the support at 1.3336 appears to be strong coupled by contrarian signals from technical indicators.


Elsewhere, the US dollar against the Japanese Yen rose to 102.65 as traders risk appetite increased. US indices closed in green last night, NIKKEI 225 followed closing higher by 0.66%. Also, geopolitical risk is softening. Thus market participants’ demand for Yen reduced. Looking ahead, we are expecting the US Jobless Claims forecasted to stand at 307K. The Aussie against the US dollar found cap at 0.9318 and eased to 0.9287 due to MI Inflation expectations for July released at 3.1% lower than previous month figure at 3.8%. The AUDUSD remains in longer term downward formation and for that reason we would expect revival of the downside bias.


Questions and suggestions:analytics@infinmarkets.com

14 August 2014 @ 09:11

UK BOE Inflation Report and Governor Carney Comments in Focus

Early on Wednesday a lot of economic announcements took place from the Asia part. Looking ahead European reports are following with German CPI as of writing coming at 0.8% as projected. The Japanese GDP data stood at -1.7% as expected, however it was well below than the previous figure. NIKKEI 225 despite that was mostly flat and closed eventually higher by 0.35%, the USDJPY was also flat trading around 102.26 unable to continue its upside path.


Later on Chinese New credit provided to consumers and business surprised investors by falling to 385 billion Yuan in July down from 1080 billion Yuan in June. China’s Industrial Production and Retail Sales were also slightly lower than projected. Chinese Indices like the Shanghai and the Hang Seng ended slightly lower as data disappointed investors. The Australian dollar strengthened though against the US dollar amid the Westpac Consumer Sentiment increased to 3.8% in August from 1.9% in July. The AUDUSD was unable to return to previous low at 0.9241 in the longer term then it created a higher low and earlier today went to a higher high at 0.9299.


Next, German CPI supported the Euro for the time being against the US dollar. The EURUSD is reacting positively after touching 9-month lows at 1.3336, currently trading at 1.3362. The British pound also attempts a corrective move after 2-month trough at 1.6756 against the greenback. The calendar indicates that in a couple of hours employment report for the British pound would be released. The UK Unemployment benefit claims change for July is expected to stand at -29.7K and unemployment rate is forecasted to be at 6.4% for July. Moreover, BOE Governor Mark Carney would speak today on monetary policy based on the Inflation Report which is highly waited as well. Lastly, US Retail Sales and FOMC Member Dudley would speak.


Questions and suggestions:analytics@infinmarkets.com

12 August 2014 @ 10:05

 

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