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European PMIs and BOE Minutes in Watch List

Good morning traders. Yesterday we said that we were waiting for US housing data and Australian inflation release. Firstly in US Existing Home Sales were slightly better than expected providing nice support for the US dollar index which jumped to cap at 79.96, however afterwards retreated lower.

Secondly, the Australian dollar dipped from 0.9377 to 0.9270 due to slower inflation than projected. That has decreased speculation for Reserve Bank to higher its interest rates to fight rising consumer prices. Moreover, the HSBC flash Manufacturing PMI for China was lower than forecasted decreasing risk appetite and adding more weight on the AUDUSD. The sudden drop of the kangaroo forex pair breached key support at 0.9312 and created a new one at 0.9270. Prices overpassed the lower Bollinger band and for that reason we expect return back into the bands before the downside continuation revives. Looking ahead for the AUDUSD we are expecting the US New Home Sales release later today.

Elsewhere, the Euro was bombarded as of typing by French Markit PMI indicators which were lower than anticipated and the EURUSD start plummeting. PMI data are still in watch list for Germany and then for Euro-zone. The common currency against the greenback created a long upper shadow at the hourly candlestick and dropped from 1.3835 to as low as 1.3798 with volatility increasing during releases.

In focus, is the Bank of England minutes and UK Public Sector Borrowings for the Wednesday trading session. The GBPUSD is slightly below its four and a half year high at 1.6843 and should we see some willingness by some of the BOE members to normalize monetary policy then the forex pair could overpass this key upside limitation.

Questions and suggestions:analytics@infinmarkets.com

23 April 2014 @ 09:40

Thin Trading Still in Place Ahead of US Home Sales and Aussie CPI

Good morning traders. On Tuesday morning, holiday thin trading is still on markets. US stocks were slightly higher on yesterday trading with Dow Jones rising by 0.25% and S&P500 advancing by 0.38%. Asian indices on the other hand dipped with the NIKKEI 225 losing 0.85% and Shanghai composite retreating by 0.56%. As a consequence in recent trading the Japanese Yen has been increasing its value against its peers.

The US dollar against the Japanese Yen found resistance at 102.72 and is currently fluctuating around 102.40, bearish bias is likely to sustain in today’s USDJPY trading session. Economic news for the samurai currency are coming as soon as on Friday and are highly anticipated by market participants because inflation data will impact Bank of Japans policy steps. Moreover, the Euro against the Japanese Yen draw a resistance line at 141.80 and declined to 141.20. European equity future indices advance as of typing and that is providing a support for the EURJPY which is currently recovering.

Looking ahead for today, housing data for US will be released. Existing Home Sales for March are projected to be near February figure at 4.6M. Higher than that would underpin the US dollar against its major peers, in immediate trading the US dollar index jumped to 79.96 on improved US economy prospects. Lastly, the AUDUSD in the last week retraced from 0.9460 to 0.9314 but currently the currency pair is resuming its upside bias with Australian inflation data expected on Wednesday morning. Higher CPI would set pressure on Reserve Bank of Australia to increase key rates and that could underscore the currency pair. We remain alerted for CPI release.

Questions and suggestions:analytics@infinmarkets.com

22 April 2014 @ 08:55

Sideways Trading Ahead of Easter

Good morning everybody. Today most of the markets are closed ahead of Easter holidays. Currency pairs are also mostly in sideways. Yesterday, US Jobless Claims were slightly better than expected coupled by Philadelphia Manufacturing Index almost doubling expectations. That has underpinned US dollar against its major peers with the US dollar index rising back to resistance at 79.86.

Moreover, the US dollar against the Japanese Yen jumped to cap at 102.56 after Ukraine talks at Geneva directed towards deescalating tensions. Risk averse sentiment narrowed and equities were supported as well by that with NIKKEI 225 rising in Asian session by 0.68%. The currency pair is likely to continue its upside direction but is better to wait for next week to see that.

Elsewhere, the Australian dollar against the greenback is in sideways around 0.9330. The Euro versus the US dollar is also in sideways between 1.3820 and 1.3807. We expect that to continue during the Good Friday trading as well as on Monday due to thin trading.

Happy Easter to all of you and enjoy holidays in best way.

Questions and suggestions:analytics@infinmarkets.com

18 April 2014 @ 08:50

Sterling versus the Greenback at Fresh 4 ½ Year High

Good morning everybody out there. First we will look at the British pound against the US dollar performance after the better than projected employment report. Claimant count change declined by 30.4K and the unemployment rate plunged to 6.9%, down from projections at 7.2%. The GBPUSD jumped sharply to cap at 1.6820 and earlier today breached that level rising to a fresh 4 and a half year high at 1.6837. As we enter Easter holiday period the currency pair is expected to extend into sideways trading.

Elsewhere, the US dollar against the Japanese Yen declined from 102.35 to 101.85 after BOJ Governor Haruhiko Kuroda said that enhancive monetary policy will continue until deflation is over. We do not expect any major economic release for the Japanese Yen this week but we are focused for US Jobless Claims and Philadelphia Fed Manufacturing Index.

Moreover, the Bank of Canada maintained the key rate yesterday at 1.00% in line with expectations. The greenback against the Canadian peaked to 1.1032 and trades now around 1.10. Later today the Canadian CPI data will be released and is widely expected to be higher than previous figure. Higher inflation than projected could increase the value for the Candian dollar.
17 April 2014 @ 08:51

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


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