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US Dollar Weakens on Bank Holiday and ahead of Full Events Week

The US dollar is retreating early on Monday against its major peers with the US economy today being on Bank Holiday due to Labor Day. The British pound appears the biggest winner until now on Monday, followed by the Australian dollar. The week ahead is full of economic releases with investors likely to hold a wait and see stance therefore low liquidity would prevail in markets today.

The Australian dollar jumped from support at 0.9324 to 0.9350 and then consolidated slightly lower against the US dollar. Economic releases were not supportive for the Aussie this morning but even though the currency gained ground against the greenback. The AUDUSD in the longer term remains in range trading between 0.9500/0.9240. Looking ahead, we expect RBA Rate Statement tomorrow where the central bank is forecasted to hold rates unchanged at 2.50%. In addition, the Australian dollar maintains its ground while the prices for its major exports like Iron Ore and Copper were falling in the previous week.

Elsewhere, the Euro declined to fresh 1-year low at 1.3118 against the US dollar but the bounced up to 1.3138. The British pound overpassed a major resistance at 1.6613 and is currently trading at 1.6638. Looking ahead for this week, we would be extra cautious due to almost all major central banks deciding ofr their monetary policies. The RBA on Tuesday, Bank of Canada decides on Wednesday, on Thursday Bank of England and ECB would decide as well. Also, on Thursday we expect the US ADP employment report and eventually on Friday the most important event the US Non-Farm Payrolls. For those who trade the news this is a paradise week.

Questions and suggestions:analytics@infinmarkets.com

1 September 2014 @ 10:14

Risk-off Supports US Dollar, Euro Eyes at Inflation Report

The US dollar strengthened on Thursday as risk appetite deteriorated. Yesterday Ukraine President, Poroshenko, claimed that Russian troops joined separatists at Donetsk and that has decreased demand for riskier assets. The US stocks closed slightly lower amid heightened Ukraine tensions but also due to strong cap limiting upside potential. The S&P 500 closed lower by 0.17% and the Dow Jones Industrial Average was down by 0.25% despite that US GDP for the 2nd quarter was stronger than projected.

The US dollar index bounced up to resistance at 82.56 from support at 82.28 signaling that the greenback returned to gains against its major counterparties. Risk-off due to geopolitical risk as well as stronger data have supported the US dollar index until now. In Asia, demand for safe haven currencies strengthened the Japanese Yen with the USDJPY falling yesterday to support at 103.58. However, the USDJPY pulled back to 103.85 as Japanese inflation was reported as projected. Expectations for the BOJ increase in monetary stimulus remain unchanged, that weighs on the Yen. Therefore we see two dynamics in the Yen and that implies for the time being indecision trading, in other words range trading for USDJPY likely to continue between 104.27/103.58.

Elsewhere, the Euro dropped to 136.56 Yen, as of typing, downside bias prevails in the forex couple mainly because of the common currency’s weakness which persists in the last months. Draghi’s latest comments increased downside pressure. Market participants look ahead for Euro-zone inflation report, lower than forecasted CPI would push the Euro lower because monetary stimulus by ECB would become more imminent.

Lastly, the British pound against the US dollar is consolidating in recent trading. UK data were stronger than expected with the latest one coming as of typing. Nationwide House Price Index released by Building Society stood at 0.8%, beating estimates of 0.1% and up from previous figure at 0.2%. However, the greenback stands strong as well in recent trading with the GBPUSD extending in range between 1.6600/1.6538. That is a battle we are closely watching since the currency pair is oversold in the longer term and breaching of the recent term cap at 1.6600 would indicate a deeper correction while falling lower than 1.6538 would suggest downward continuation.

Questions and suggestions:analytics@infinmarkets.com

29 August 2014 @ 08:55

US Dollar Retreats Lower, Aussie Jumps amid Stronger Capital Expenditure

US Dollar continued its retreat overnight against its major counterparties. The US dollar index dropped to 1-week low at 82.29. There is some uncertainty over Thursday economic releases and investors perhaps avoid for the time being the US dollar. We are in anticipation for the US 2nd quarter GDP data release, US Jobless claims and US Pending Home Sales report. Yesterday, US equity indices were mostly unchanged due to finding major resistance level and is not easy to overcome it. The S&P 500 remained flat at 2000 level, that level works as a psychological resistance.

The Australian dollar was jumped to a 4-week high at 0.9371 against the US dollar after release of the stronger than projected Capital Expenditure index. At the same time the commodity prices like Iron ore and Gold were falling in recent trading sessions but that seems to work in favor of the Aussie since demand is now increasing for its major export products.

The other commodity currency, the Canadian dollar has been also strengthening against the greenback. The USDCAD declined yesterday to 1.0824 forming a double top trading pattern in the daily time-frame and therefore increasing downside potential. We would expect US reports and the Canadian Current Account release for further clues concerning fundamental developments but concerning technical chances favor the falling direction.

Elsewhere, the Euro against the greenback held its recent gains near the weekly high at 1.3216. the retracement could go higher towards the next resistance at 1.3294. On the data front, we have German and Spanish preliminary CPI which could have a direct impact on the currency pair because deflation in Euro-zone is of great concern. Also we expect the German Unemployment report and Italian Retail Sales. In general, should we see lower CPI than expected then chances for ECB stimulus increase and that would add selling pressure on the Euro. Lastly, the British pound against the US dollar has been in short term range between 1.6602/1.6538, we expect to see a larger corrective move due to the overextended fall in the last 1 and a half month.

Questions and suggestions:analytics@infinmarkets.com

28 August 2014 @ 08:32

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


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