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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

Aussie Down Despite Housing Prices Strengthening

The Australian dollar was weaker against the US dollar despite that data released showed that the Housing Prices increased more than expected and the Business Confidence improved. The AUDUSD pair initially jumped to 0.9268 but then selling pressure prevailed and drove prices back to 0.9250. In the longer term downtrend is dominant and that increase chances for lower levels.


Geopolitical risk is declining this week and that was reflected on the US stocks. The Dow Jones Industrial Average closed higher by 0.10%, the S&P 500 was up by 0.28% and NASDAQ increased by 0.70%. NIKKEI 225 also ended higher by 0.20 and the Japanese Yen got softer. The US Dollar against the Japanese Yen bounced up from support at 101.51 to 102.35.


The economic calendar is rather light today; investors are expecting the German and Euro-zone Economic Confidence indicators which are expected to show weakness in the sentiment. The EURUSD is extending in a sideways zone as of typing between upper level at 1.3432 and lower level at 1.3336.


Tomorrow though the economic releases would get busier with the Japanese Yen GDP early on Wednesday followed by Australian Sentiment, then by Chinese Industrial Production and Fixed Asset Investment. These releases are most likely going to impact risk appetite of investors in Asia. Reports for UK and US would follow on Wednesday like UK BOE Inflation Report and US Retail Sales.


Questions and suggestions:analytics@infinmarkets.com

12 August 2014 @ 09:07

Central Banks Hold Monetary Policies Unchanged, Eyes on Canadian Employment

Following the European Central Bank rate statement the Euro extended its sideways against the US dollar between 1.3366/1.3333. The ECB maintained its key rate at 0.15% and its President Mario Draghi said that geopolitical risk can have an uncertain impact on Euro-zone recovery which has been “weak, fragile and uneven”. The EURUSD held its ground as investors were expecting more steps toward easier monetary policy.


At the same time the US Jobless Claims dropped from 303K two weeks ago to 289K as reported yesterday for the previous week. That initially underpinned the US dollar but eventually the greenback returned in consolidation mode. The US dollar index was limited by resistance at 81.60 and retreated today to 81.45.


The Bank of England also held its monetary policy unchanged with key rate at 0.50% and the Asset Purchase program at 375 billion pounds. So we will need to expect the meeting minutes to get an idea on what the members of the monetary committee think. The British pound against the US dollar as of typing declined below the support at 1.6811. Downtrend prevails in the price chart and we would expect it to continue in that way. Moreover the UK Trade Balance will be released and should the deficit widens the sterling would weaken further.


Elsewhere, the Australian dollar against the greenback declined further to 0.9240 early on Friday. The US dollar versus the Japanese Yen fell to a new 2-week low at 101.53 and downside bias prevails, for that reason is likely the forex couple to be driven lower. The Bank of japan decided to maintain the same monetary stance. That is, continue increasing monetary base by 60-70 trillion yen.


On the data front today we are going to watch UK Trade Balance and Canadian Employment report. Canadian Unemployment rate is expected to decline to 7.0%. The USDCAD is up trending in the intraday and has recently retraced from 1.0979 to 1.0909 and that could be a good chance to reposition on the long side. However we should wait for the news to confirm expectations.


Questions and suggestions:analytics@infinmarkets.com

8 August 2014 @ 08:51

Risk-off Dominates Markets ahead of ECB and BOE

FX Market is still shadowed by investor’s risk aversion. Geopolitical risk is considered to get heightened as Russia retaliates against US and EU sanctions. A negative effect of the sanctions imposed by EU member could be the unexpectedly weaker German factory orders. Moreover, the ECB meet today to decide over the monetary policy where at least some dovish comments are expected. The Euro dropped to a new 9-month low yesterday against the greenback at 1.3333 and is expected to went even lower towards support at 1.3296. We would be watching closely the ECB decision for further analysis.


Earlier on Thursday, Australia released its employment report and the Unemployment rate stood at 6.4% for July that was surprisingly higher than projected and Employment declined by 0.3K while it was forecasted to increase by 13.5K. The Aussie against the US dollar revived its downside bias and declined below previous support at 0.9274 to a new 2-month low at 0.9261.


Risk-off is identified in global stock indices, the US stocks closed mostly unchanged on Wednesday session while the Asian indices ended in red light except from NIKKEI 225. Moreover, the current German bond yield curve is lower than one month ago or one year ago which reflects the higher risk in the markets. Therefore as the Ukraine tensions increase and the Russian relations with EU and US worsens then risk will remain high, Yen will be preferred, Aussie will be under pressure, AUDJPY could be a good short. On the data front today, we are on watch for the ECB and the BOE release and then for the US Jobless claims.


Questions and suggestions:analytics@infinmarkets.com

7 August 2014 @ 08:50

 

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