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US Dollar Mixed Against its Major Counterparties

Good morning to all of you, in our daily market overview today we will discuss about recent developments and how these influence equities and currencies. In yesterday’s trading session US equity indices ended higher supported by U.S tech stocks that helped the Asian stocks who were also boosted by Chinese growth data. China’s GDP grew by 7.4% the first quarter beating estimates of 7.3%, Retail Sales increased also slightly more than expected while Industrial Production was in line with forecasts. US dollar Index though remained mixed in recent trading as European major currencies as well as the Canadian were trading stronger in contrast to Asia-Pacific currencies.

The Australian dollar against the greenback jumped slightly on improving risk sentiment but was weighed by geopolitical risk emanating from Ukraine tensions. In addition, yesterday higher than expected US CPI helped the US dollar to stay firm against its major peers as inflation is moving closer to Fed goal at 2%. The AUDUSD rising pattern in the medium term was limited technically by cap at 0.9460 and fundamentally by risk rebound and stronger data for US dollar, however we anticipate that the uptrend will resume and prices are likely to retest 0.9460.

The US dollar against the Japanese Yen jumped from recent support at 101.32 to 102.29 as greenback strengthened and is expected to continue its upside bias. Looking ahead, investors will be watching employment report for March coming from UK. The British pound against the US dollar remains close to 5 month peak at 1.6820 and stronger than projected claimant count change could push the currency pair above that cap. Investors focus will turn onwards to Euro zone CPI, US Industrial Production data and lastly on Bank of Canada rate decision which is expected to keep rates at 1.00%.

Questions and suggestions:analytics@infinmarkets.com

16 April 2014 @ 09:28

Investors Look toward Chinese Growth Information

Stronger Retail Sales in US economy yesterday helped US equity indices to recover. Dow Jones Industrial Average rose after two days of losses and the same applies for the S&P 500, however in the short-term both indices seem like establishing a downtrend at the time being. NIKKEI 225 followed and rose by 0.62% while the Hang Seng dropped by 1.16% weighed by lower expectation on Chinese GDP growth.

Chinese money supply data showed that the creation of money in March was lower than projected. That as a consequence is reducing new credit for businesses and consumers in China weighing on economic expansion. On Wednesday morning China will release growth data and the expectations are lower than previous quarter with earlier information not providing many chances for a good surprise.

Turning to currencies the US dollar gained some ground against its major peers after shining retail sales data. The US dollar index jumped to resistance at 79.80 in yesterday trading and is likely to overpass that cap on lower Chinese economic growth. Geopolitical risk and disappointing GDP data for China could trigger a stronger risk aversion sentiment among investors. In that case the USDJPY could refresh it downside pattern and breach support at 101.26.

Moreover, investors are anticipating US CPI data today and in case of higher than projected, chances will increase for further asset tapering. That would lift greenback’s value and in turn we would see the EURUSD moving lower than support line at 1.3806, towards next floor at 1.3778. Concerning the Euro German ZEW Economic sentiment will be released expected to be in line with previous month.

Questions and suggestions:analytics@infinmarkets.com

15 April 2014 @ 09:10

Risk Aversion Drives Global Markets

Global equity markets are declining on risk aversion as tensions in Ukraine revive. Geopolitical risk is heightening and demand is increasing for safer assets. Moreover, FOMC meeting minutes the previous week showed that record low interest rates will remain in place until inflation moves higher. European central bank also showed some willingness to counter fight deflation and could take quantitative steps in second half of 2014.

The precious metal was benefited by risk aversion as investors were seeking for safety also traders have been looking for an inflation hedge instrument. The gold established a rising trend line early in April and stays stick to it climbing today to 3-week high at 1329.77. Upside potential is stronger than otherwise and we would expect the Gold prices to continue their rising path.

The US dollar against the Japanese Yen consolidates between 101.86 and 101.33, staying near its monthly low. Risk aversion weighs on USDJPY and further negative developments would push the currency pair lower. At the same time the EURUSD opened lower this morning creating a “breakaway gap” in the hourly timeframe triggering downside bias.

Questions and suggestions:analytics@infinmarkets.com

14 April 2014 @ 08:44

Risk Aversion Drives Global Stocks Lower

US equities declined last night spreading sell off elsewhere as well. Dow Jones Industrial Average Index dropped by 1.62% and S&P 500 fell by 2.09% to its lowest point since February 19th of 2014. Asian stocks followed with NIKKEI 225 retreating by 2.38%, Hang Seng declining by 0.64% and ASX closing lower by 0.95%. We expect to see falling European indices as well for today as it is early indicated by European index futures. Chinese inflation earlier today was lower than projected standing at 2.4% for March but accelerated compared February 2.0% inflation.

Despite the risk aversion in stocks the Japanese Yen value reduced. Bank of Japan member reiterated their commitment to achieving 2% inflation by continuing qualitative and quantitative monetary easing. That weighed on the Yen, however we would expect the USDJPY to resume its downside after correction which is likely to go to cap at 50.0% of 104.11 to 101.31, at 102.67.

Elsewhere, the Euro against the greenback keeps its upside tone confirming our yesterday forecasts. Draghi said yesterday that further easing is not excluded while interest rates are expected to stay at record low levels for an extend period, however the EURUSD maintains its bullish bias. The currency pair is hovering as of typing slightly above 1.39 and could go as high as 5-month peak at 1.3964.

Questions and suggestions:analytics@infinmarkets.com

11 April 2014 @ 09:26

FX Market Waits for BOE Release and ECB Bulletin

US dollar was weighed last night by dovish comments on US economy included in the FOMC meeting minutes. There were different views among Fed officials concerning the slack in economy and employment sector outlook was not clear. The greenback lost across the board against its major peers with the US dollar index dipping lower than 79.67 to 79.40, exposing March lowest at 79.24.

The Australian dollar was well supported by much better employment data. Unemployment rate declined for March to 5.8%, surprisingly lower than expected at 6.1%. Thus, the AUDUSD jumped from 0.9344 to as high as 0.9440 in the recent trading, holding well in its uptrend style.

Chinese Trade Balance has improved surprisingly to surplus of $7.7 billion in March compared to -$23.0 billion deficit in February. However, that was a result of declining Exports and Imports. Exports declined by 6.6% compared to 2013 March and imports reduced by 11.3% in comparison to one year ago. That has eventually provided support to the Japanese Yen. The USDJPY retests previous support at 101.60 and should it breach that would head towards 101.18.

The Bank of England monetary policy committee meets today to decide on policy. Economists are widely expecting that key rate will stay at 0.5% and asset purchase facility will also stay at 375B. The GBPUSD has been trading in sideways in intraday below cap at 1.6820. Should the policy remain the same there will be no BOE statement release and due to strong resistance we may see some retracement. Lastly, investors are expecting Italian Industrial production data and ECB Monthly Bulletin which reports activities of the European System of Central Banks. The Euro against the greenback is characterized by upside bias, rising early today to 1.3869 and is likely to continue on that direction.

Questions and suggestions:analytics@infinmarkets.com

10 April 2014 @ 09:20

US Dollar Weakens, UK Trade Balance and US FOMC in Focus

The greenback has been under strong pressure on Tuesday, falling broadly against its major peers. The US dollar index declined to support at 79.67 after better than expected news on CHF Retail Sales and shining manufacturing and industrial production in UK. Traders are focusing on FOMC meeting minutes to get further clues regarding asset tapering and interest rate potential hike timing.

The sterling jumped from 1.6612 to cap at 1.6752 boosted by improved production data. Upside bias revived and prices breached previous resistance at 1.6682, exposing almost 2-month peak at 1.6820. Investors at the moment are likely to wait for the Bank of England monetary decision coming out on Thursday; also today we will be expecting UK Trade Balance. Therefore, consolidation at current level or a correction is more likely given that technical oscillators are overbought.

US equity indices recovered somewhat on Tuesday session. Dow Jones Industrial Average jumped by 0.06% and S&P 500 lifted by 0.38%. During Asian session NIKKEI 225 continued its downside and dropped by 2.10% supporting demand for the Japanese Yen. Thus the Yen crosses held their downward direction. The US dollar against the samurai currency declined to 101.71 making a 100% correction of the 27 of March upside with peak at 104.11, indicating that is directionless. The EURJPY also dropped near support at 139.92 expanding its trading in range formation between 143.34 and 139.92.

Questions and suggestions:analytics@infinmarkets.com

9 April 2014 @ 08:39

Eyes Turn to Swiss and UK Economic News after BOJ Release

The Japanese Yen value kept its rising value tendency early on Tuesday. The USDJPY dropped closer to 61.8% fibo retracement of 101.71 to 104.11, at 102.67. Asian shares declined this morning following the US stocks correction taking place for the last three trading days. The Bank of Japan decided to hold monetary base annual increase at 60-70 trillion yen. Risk averse is strengthening as global equities retrace. Moreover, the BOJ refrained from adding stimulus but held the same monetary stance while on the other side of Pacific the Fed monetary policy is diverging towards less QA. Consequently we would be bearish on USDJPY forex pair as long as equity indices are falling. On technical side though, we would expect an intraday rebound from 102.7 amid oversold momentum indicators.

At the same time the Euro reached support at 1.3673 and then rebounded to 1.3747. Downtrend is in place thus the bearish bias is expected to revive sooner or later. Looking ahead the French Trade Balance is expected to increase volatility today on the EURUSD forex pair. We would be bearishly influenced at the time being amid technical falling structure, but we will closely watch economic developments.

Investors today are focused on UK Manufacturing and Industrial Production data as well as Switzerland Retail Sales. Both the sterling and the Swiss franc have been recovering against the greenback in recent trading. The GBPUSD resumed its upside and is heading towards monthly peak at 1.6682. The USDCHF dipped lower than 1.10 and is currently at 1.0946; also 10 20 and 50 SMAs are currently forming a triple negative cross increasing falling chances. Better than expected CHF Retail Sales could boost Swiss franc performance.

Questions and suggestions:analytics@infinmarkets.com

8 April 2014 @ 09:36

Japanese Yen Dips as Risk Appetite Weakens

The Canadian dollar strengthened in the recent trading on unexpectedly better unemployment report. At the same time the US dollar employment increase was slightly lower than projected. As a direct result the USDCAD dipped on Friday at 1.0955. The USDCAD on daily is rising but intraday is on negative correction. Looking ahead, FOMC meeting minutes on Wednesday would reveal some clues on Fed future policy, although it is widely expected for asset tapering to continue.

The USDJPY following weaker than forecasted US job report retraced almost to 50.0% Fibonacci level of 101.71 to 104.11, at 102.98. Global equities are also retracing lower as investors are collecting profits due to weaker risk appetite. Asia indices dropped today with NIKKEI falling by 1.69% and Hang Seng decreasing by 0.72% and that is increasing demand for safe haven Yen currency. We would expect the USDJPY to consolidate around 103 for today ahead of risk of BOJ Press Conference. Moreover, Stochastic is oversold according to the chart and that increases chances for a upside resumption.

Questions and suggestions:analytics@infinmarkets.com

7 April 2014 @ 10:12

All Eyes Turn to NFP Report

Yesterday the ECB decided to maintain the key rates unchanged. Despite that Draghi tried to play down the risk of deflation he also said that the central bank has not ruled out further enhancive monetary steps. The EURUSD dipped to more than a month low at 1.3697 on refreshed downside bias. Earlier on Friday German factory orders increased more than projected limiting the falling path of the common currency above the support at 1.3697.

Looking ahead all market participants are highly expecting the Non-Farm Payrolls of March. It is widely projected that employment will increase by 199K. In February the people employed rose by 175K in US. Moreover, previously in this week the ISM employment showed expansion but was below expectations and the ADP employment was in line with forecasts. According to that we would expect slightly lower number for the NFP than 199K.

In the case of lower than projected NFP number, the US dollar would get heavier against its major peers. However, risk appetite is likely to weaken as well with investors likely to start collecting profits. As a result we could experience equity indices retracement from recent peaks. Note that the S&P500 has reached recently record high at 1890. Concerning impact on forex, Japanese Yen might strengthen and the USDJPY would retrace from recent peak at 104.11 to 103.57 or even deeper to 102.67.

Questions and suggestions:analytics@infinmarkets.com

4 April 2014 @ 09:25

ECB Monetary Stance at the Epicenter of FX Markets

In today’s trading we are closely anticipating ECB rate decision. It is widely expected that the ECB will maintain the rate at 0.25%. However the recent data illustrated lower than projected inflation as well as declining producers’ price index, and that increased risk of deflation. Thus ECB now has more reasons to consider rate cut. The Euro declined yesterday from peak at 1.3819 to support at 1.3752 and have been hovering above that support since then. Sideways is likely to continue until the release of ECB. In case the rates remain unchanged volatility is expected to increase during ECB press conference but contingent upon a rate reduction the EURUSD would get much softer.

Market participants are mostly expecting the US Non-farm payrolls of February which will be released tomorrow and that is possible to keep major forex pairs in range trading for now. Asian shares though closed in positive ground today indicating that risk appetite is still strengthening. The latter was a result of upbeat ADP jobs report and stronger factory orders. The US dollar index jumped slightly yesterday but still waits for Friday employment report.

At the same time the Australian dollar was weighed by weaker than forecasted Retail Sales this morning and dropped as low as 0.9204, currently the forex pair is bouncing up on renewed upside interest. In general today we would try to keep it neutral ahead of major releases which lift the risk of higher volatility.

Questions and suggestions:analytics@infinmarkets.com

3 April 2014 @ 09:16


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