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  1. #1
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    Default Trade Idea of Day by Vinson Financials


    Market Review for August 4th, 2015

    The Reserve Bank of Australia kept the cash rate steady at 2.00 per cent for the third month in a row, but left the door partly open for a further cut this year. The decision was widely expected, but the Australian dollar still spiked against the US Dollar, reaching to the 0.7384 level, and confirming that the central bank's next move on interest rates will be possible. Moreover, RBA believes that the key interest rate is 'appropriate' with economic growth overall remaining below its long-term average and inflation likely to be contained for the next one or two years. 'In such circumstances, monetary policy needs to be accommodative,' RBA governor Glenn Stevens said in a statement on Tuesday. One key change in the statement from the previous month is that the governor appears satisfied that the Australian dollar is adjusting to the significant declines in commodity prices. Released from Australia during the Asian session, Retail Sales rose 0.7% beating the estimated 0.5% while Trade Balance came in at -2.93B versus the estimated -3.06B. AUD/USD is currently trading near the 0.7373 area.

    Released from Japan, Monetary Base rose 32.8% versus the estimated 32.2% while Average Cash Earnings dripped -2.4% missing the estimated 0.9%. Moreover, BoJ Deputy Governor Kikuo Iwata stated that he sees no risks posed by expected Fed, BOE rate hikes. He noted that the hikes "could be fully priced in" and "there wouldn't be much reaction". USD/JPY remained in previous week’s tight range and currently is trading near the 123.85 area.

    Released during the early European session, the United Kingdom Nationwide HPI rose 0.4%, as expected, while Spanish Unemployment Change dropped -74.0K beating the estimated -45.6K.

    The Key events for the day will be the United Kingdom Construction PMI, the United States Factory Orders and New Zealand’s GDT Price Index.

    Data releases to monitor:

    EUR: Eurostat Producer Price Index (PPI).

    USD: Factory Orders, IBD/TIPP Economic Optimism.

    GBP: Construction PMI, 10-y Bond Auction.

    NZD: GDT Price Index.

    Trade Idea of the Day

    GBP/USD

    Currently the pair is trading at 1.5604. Traders must monitor the 1.5689 resistance level and the support level of 1.5489 for possible breakouts. A possible scenario would be a movement towards the 1.5647 resistance level where a break may lead to the 1.5670 area. An alternative scenario could be a movement towards the 1.5565 support level where a break could lead to the 1.5530 area.


  2. #2
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    Financial News August 05, 2015

    Euro area July Final PMIs slightly down on lower services confidence

    Euro area final composite PMIs in July were slightly increased from the flash estimates by 0.2 points to 53.9, edging down from June's four-year peak (-0.3 point). The upward revision of PMI was equally driven by the services and manufacturing sectors.

    In July, lower services confidence led to a modest decline in composite PMIs, while manufacturing confidence held firm.

    According to Barclays's estimation, "Overall PMI at the start of Q3 suggests that the growth momentum will be maintained, with our Q3 PMI-based GDP indicator standing at + 0.4% q/q- a similar rate than our Q2 forecast (preliminary GDP data to be released on August 14) and only slightly below the 0.5% q/q Q3 GDP projection. The impact of the Greek crisis seems to have been muted until now, with the manufacturing sector showing resiliency despite the decline in Greek confidence."

    Gold price only under moderate pressure after hawkish Fed comments

    An interview in the Wall Street Journal with Atlanta Fed President Dennis Lockhart sparked a significant appreciation of the US dollar overnight, driving it to a two-week high against the euro.

    In the interview, Lockhart asserted that the US economy was ready for an interest rate hike, saying that the only thing that would prevent him from voting for a rate increase at the Fed's September meeting would be considerably poorer economic data.

    Lockhart has so far represented the average opinion of Fed members.

    "Accordingly, yesterday's interview is a strong indication that a rate hike will be forthcoming in September. The market responded by pricing in a rate hike in September with a likelihood of 50% for the first time this year", says Commerzbank.

    Against this backdrop, gold is still holding its own relatively well at just shy of $1,090 per troy ounce. In euro terms, the firm US currency has driven gold up to €1,000 per troy ounce. The gold price will remain under pressure until the first interest rate rise.

    "The price should climb again just as soon as the uncertainty over the timing diminishes", added Commerzbank .

    Meanwhile, the outflows from the gold ETFs continue. After a good 70 tons were withdrawn in July, the highest monthly outflows since December 2013, a further 3.2 tons have already been withdrawn in August too.

    Market Review for August 05, 2015
    Last night during the Asian session NZD traded lower after the employment data. Employment Change q/q was announced at 0.3% while the forecast was for 0.5%. Elsewhere in the US Atlanta's FED President Dennis Lockhart changed his usual dovish tone about rates and said that September would be an appropriate time to have a rate hike, unless "significant deterioration" in data would occur between now and then. Therefore all investors waits for the ADP data today. The ADP Non-Farm Employment Change is forecasted to show 216k growth. As a result of Lockhart comments gold is trading near this week critical support of 1085.

    In regards the economic releases so far Australia AIG Services Index came in at 54.1. China Caixin Services PMI at 53.8. Switzerland CPI m/m came in at -0.6%. European economic release where the following Italian Services PMI at 52, French Final Services PMI at 52 and German Final Services PMI at 53.8. The Eurozone Final Services PMI announced at 54. The UK Services PMI came in at 57.4
    As mention before the highly of the day is the ADP Non-Farm Employment Change from US. The trade balance data from Canada and US may also move the market. Traders should also watch the US ISM Non-Manufacturing PMI release.
    View our full economic calendar for a daily roundup of major economic events.

    Data releases to monitor:
    EUR: Retail Sales m/m
    USD: ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI, Crude Oil Inventories, Trade Balance
    CAD: Trade Balance

    Trade Idea of the Day

    NZD/USD

    Currently the pair is trading at 0.6535. Traders must monitor the 0.6655 resistance level and the support level of 0.6500 for possible breakouts. A possible scenario would be a break of the 0.6500 support with target 0.6470 area. An alternative scenario would be a retrace to 0.6575 level and possible testing of 0.6620 level.

    Last edited by VinsonFinancialsFX; 08-05-2015 at 04:03 AM.

  3. #3
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    Financial New for August 07, 2015

    Bank of Japan holds course

    The JPY has been under pressure for some days now, particularly against the USD. The Bank of Japan's meeting did not move the FX markets during the night. As expected, not much has changed in Japan.

    The BoJ continues to buy huge amounts of government bonds. So far, the markets are not interested in the fact that the quantitative and qualitative easing (QQE) does not have the desired effects.
    Commerzbank suspects, "For now, any USD/JPY fluctuations will be triggered by developments on the USD side. If the US labour market report is favourable, the exchange rate might pass the threshold of 125 today."

    Market Review for August 07, 2015

    The Bank of Japan maintained its massive stimulus program and upbeat view of the economy, ignoring the recent weak data that clouded the prospects for hitting its 2.00% Inflation target. BOJ Governor Haruhiko Kuroda stressed that the current weakness in Japan's exports and household spending was temporary, sticking to the view the world's third largest economy continues to recover moderately. Furthermore, Kuroda acknowledged that China and other emerging market economies were slowing while he maintained the view that overseas demand will pick up as strength in advanced economies broadens out. USD/JPY is currently trading near the 124.75 area with the next resistance seen at 125.00 level.

    Released during the Asian session this morning, the Australian Home Loans rose 4.4% missing the estimated 5.2% while AIG Construction Index came in at 47.1 versus the previous of 46.4. AUD/USD is currently trading near the 0.7372 area after reaching to the 0.7247 level in previous days.

    Released during the early European session, the Swiss Unemployment Rate rose 3.3%, as widely expected, causing insignificant impact on the CHF, USD/CHF hit fresh four- month highs and currently is trading near the 0.9800 area.

    EUR/USD spiked higher today despite the mixed economic data from Germany and France. Released from Germany, Industrial Production dropped -1.4% versus the estimated 0.3% while Trade Balance came in at 22.0B missing the estimated 23.2B. Released from France, General Budget Outcome came in at -58.5B versus the previous of -63.9B, Industrial Production dropped -0.1% missing the estimated 0.3% and Trade Balance came in at -2.7B beating the estimated -3.7B. The EUR/USD pair is currently trading near the 1.0940 area awaiting for today’s economic data from the United States.

    The main focus for the day will be the United States jobs data and the Canadian jobs data. The United States Non-Farm Employment Change is expected to show 222k growth with unemployment rate unchanged at 5.3%, while average hourly earnings are expected to grow 0.2%. Today’s Job data has major importance, as it will be indication for the FOMC members to find he needed evidence for "some further improvement in labor market" for their decision for rate hike timing.

    Data releases to monitor:

    CAD: Building Permits, Employment Change, Unemployment Rate, Ivey PMI.

    USD: Average Hourly Earnings, Non-Farm Employment Change, Unemployment Rate, Consumer Credit.

    GBP: Trade Balance.

    Trade Idea of the Day

    CAD/JPY


    Currently the pair is trading at 95.13. Traders must monitor the 95.92 resistance level and the support level of 94.10 for possible breakouts. A possible scenario would be a movement towards the 95.53 resistance level where a break may lead to the 95.80 area. An alternative scenario could be a movement towards the 94.80 support level where a break could lead to the 94.45 area.


  4. #4
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    Financial News Monday August 10, 2015

    Swiss inflation to be near 0 by 2016

    Over a one-year horizon, the outlook for Swiss inflation remains very weak. By 2016, Switzerland is expected to be the only G10 country with inflation still hugging zero.

    "The SNB does not expect inflation to turn positive until early 2017 and it expects to keep rates at -0.75% throughout the forecast horizon (Q1 2018)", says RBC capital markets.

    The ECB is expected to end QE in Sept 2016 which should allow EUR/CHF to drift back towards fair value over time.

    GBP higher, but risks remain


    Longer-term, there are two key risks for GBP, the UK's unsustainable current account deficit (6.2% of GDP) and the EU referendum, promised for end-2017 at the latest.

    Both are manageable, however.

    The current account deficit is the counterpart to the budget deficit domestically and so long as the government's fiscal strategy is credible, it should remain fundable.

    "This would have been a much greater risk under other, less certain, election outcomes. When we look in detail at the EU referendum risk, we concluded the UK electorate is probably less Eurosceptic than the most recent opinion polls imply", says RBC capital markets.


    In the longer term, the balance of opinion has almost always been in favour of staying in and it still is when pollsters add a qualification that the government recommends voting to stay. The long-term view on GBP is moderately constructive.

    Market Review August 10, 2015


    US employment rose in July and wages rebounded after a surprise stand in the prior month, providing signs of an improving economy that could open the door wider to a Federal Reserve interest rate hike in September. Non-farm payrolls increased 215K versus expectation of 225k, while jobless rate was held at a seven-year low of 5.3 per cent and Average hourly earnings rose 0.2% in line with consensus, according to the US Labour Department. The data was not strong enough in order to insure that the Fed will proceed with a rate hike, as it did not provide the needed evidence of "some further improvements" that the Fed was looking for. The US Dollar seems that lost some of its strength against the other majors after the release of the Job Data.

    EUR/USD dropped heavily at the end of last week's trade, but consolidated after the US Job Data and rallied off the 1.0855 level reaching to the 1.0978 level and closed the week at the 1.0958 level.

    Released from Japan during the Asian session and early European session this morning, Current Account came in at 1.30T versus the estimated 1.41T, Bank Lending rose 2.6% versus the previous of 2.5% and Economy Watchers Sentiment came in at 51.6 missing the estimated 53.1.

    Moreover, the BOJ in its Monthly Report reversed its previous estimates of economic growth pointing to positive numbers almost across the board. The central bank stated that Japanese exports are expected to increase moderately and that business fixed investment is projected to continue growing modestly. Private consumption is expected to remain robust and housing investment should be improving. The report also pointed to continued improvement in the employment sector. USD/JPY is currently trading near the 124.45 area with the next resistance seen at the 125.06 level.

    The key events for the day will be released from the United States. More specifically, FOMC Member Lockhart and Member Fischer are due to speak today. In addition, Sentix Investor Confidence will be released from Europe and Labour Market Conditions Index will be released from the United States.

    Data releases to monitor:

    EUR: Sentix Investor Confidence.

    USD: FOMC Member Fischer speech, FOMC Member Lockhart speech, Labour Market Conditions Index.

    Trade Idea of the Day

    EUR/USD


    Currently the pair is trading at 1.0962. Traders must monitor the 1.1113 resistance level and the support level of1.0847 for possible breakouts. A possible scenario would be a movement towards the 1.0980 resistance level where a break may lead to the 1.1030 area. An alternative scenario could be a movement towards the 1.0910 support level where a break could lead to the 1.0875 area.

    Last edited by VinsonFinancialsFX; 08-10-2015 at 03:04 AM.

  5. #5
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    Financial News August 11, 2015

    USD again in demand as safe haven after PBoC's decission



    The PBoC today's decision to lift the USD-CNY fixing by almost 2% has thrown the market into turmoil. Concerns about the Chinese economy have resurfaced again and are weighing on the currencies of those countries for which China is an important trade partner, in particular the AUD and the NZD.

    What is somewhat more surprising is that safe-haven demand for USD has jumped this morning. This has not always been the case during Chinese market fluctuations in the last few weeks.In fact, however, external risks for the USD from this side should not be underestimated, says Commerzbank. While the Fed obviously focuses on domestic developments, Fed Vice-Chairman Stanley Fischer confirmed only yesterday that he and his colleagues are currently less worried about the US labor market than about inflation.

    To a significant extent, the low inflation rate is due to temporary factors, such as the oil price decline. However, the declining oil prices have started to drag down long-term inflation expectations again - and this development is certainly a cause for concern, as it does not create the ideal environment for a pick-up in inflation any time soon. And since a pronounced economic slowdown in China would weigh not only on global growth, but also on oil prices, it would not surprise anyone if the recent developments were thought to be negative for the USD, too, adds Commerzbank.


    SNB benefits from strong EUR


    The franc has depreciated palpably versus the euro in the last few days caused EUR-CHF to reach its highest level in months.
    The general trend of the EUR exchange rates suggests that most of the rise in EUR-CHF is due to a strong EUR.

    After all, the EUR has appreciated versus other currencies, too, for example the SEK, the GBP and the USD - probably due to the recent pick-up in euro-area growth and inflation. Progress with the negotiations about a third bail-out package for Greece is another supportive factor. This situation is ideal for the SNB.According to Commerzbank, "The strong EUR is driving the market equilibrium EUR-CHF exchange rate upwards, which means that appreciation pressures are declining and the SNB does not need to intervene to weaken the franc any more. Of course, it cannot be excluded that the SNB uses this opportunity to accelerate the upward movement of EUR-CHF by interventions. Nevertheless, it can relax somewhat in view of the current EUR strength. Still, we doubt that the situation will last."


    Market Review August 11, 2015

    China’s central bank devalued its currency, causing its biggest one-day loss in two decades. The devaluation was the most significant downward adjustment to the Yuan since 1994. PBoC lowered the Yuan’s fixing by -1.9% from the previous trading day, leaving the fixing at 6.2298 to USD compared to the 6.1162, which was yesterday. Chinese authorities said the change would help drive the currency toward more market-driven movements. The move also signalled the government’s growing worry about slow growth. A shift toward a weaker currency could help boosting exports at a time when many other efforts to boost the economy have not proven very effective. China’s central bank announcement dragged Australian dollar against the US dollar to the 0.7305 level after reaching to the 0.7439 level in previous days.
    Released during the Asian session this morning, the Japanese M2 Money Stock rose 4.1% beating the estimated 3.9% while Prelim Machine Tool Orders rose 1.6% compared to the previous of 6.6%. USD/JPY is currently trading near the 125.00 level after reaching to the 124.09 level in previous days.

    Released during the early European session, the German Wholesale Price Index (WPI) rose 0.1% versus the estimated 0.2% causing insignificant impact on EUR/USD, which is currently trading near the 1.1008 level with the next resistance seen at the 1.1040 level.

    The key events for the day will be German ZEW Economic Sentiment, the United States Prelim Unit Labour Costs and Prelim Nonfarm Productivity.

    Additional economic releases will be the Canadian Housing Starts and the United Kingdom CB Leading Index.

    Data releases to monitor:
    EUR: German ZEW Economic Sentiment, ZEW Economic Sentiment.
    USD: NFIB Small Business Index, Prelim Unit Labour Costs, Prelim Nonfarm Productivity, Wholesale Inventories.
    GBP: CB Leading Index.
    CAD: Housing Starts.

    Trade Idea of the Day

    AUD/JPY


    Currently the pair is trading at 91.55. Traders must monitor the 92.68 resistance level and the support level of 89.96 for possible breakouts. A possible scenario would be a movement towards the 91.00 support level where a break may lead to the 90.55 area. An alternative scenario could be a movement towards the 92.09 resistance level where a break could lead to the 92.40 area.


  6. #6
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    Financial News August 12, 2015

    No Greek chaos this time round



    The experts from the extended troika (The ECB, the EU Commission, the IMF and now also the ESM) appear to have reached a 'basic' agreement at 'technical level' with the Greek government on a new aid package.

    Only a few details allegedly still need to be worked out. The Greek parliament is to vote on the agreement tomorrow, followed by the euro zone finance ministers on Friday and then the remaining countries.
    If all goes well, Greece will have fresh funds next Thursday to pay back the ECB the €3bn due. The leftist wing of Syriza has already said it intends to vote against the agreement. And in other countries, too, not least in Germany, there is a growing body of dissent regarding another aid package. So the votes aren't a cut and dried thing at all, but the market should be spared the wheeling and dealing of July, says Commerzbank.

    The FX market is responding by sending the euro above 1.1050 to the dollar. The devaluation of the yuan has seriously shaken the Asian markets and has already given rise to new doubts of a Fed rate hike as early as September. Greece first has to implement the reforms demanded, and the Fed is expected to act in September, meaning that the dollar will gain ground again over the coming weeks, adds Commerzbank.


    Market Review August 12, 2015

    The International Monetary Fund welcomed China’s move to devalue the Yuan and added that it does not directly affect the country’s push to win reserve currency status. The comments by the IMF came as China cut the value of the Yuan for a second day by setting the daily midpoint reference to 6.3306 per dollar and after surprising markets on Tuesday when it lowered the Yuan’s value by the most in two decades and since 1994. The central bank said the move would boost exports and improve the economy gradually. Asian markets are weighed down by intensifying worry over China’s move. AUD/USD dropped further, reaching as low as the 0.7215 level while NZD/USD hit fresh six-year lows of 0.6466.

    Elsewhere, Greece agreed to harsh terms for a new three-year bailout on Tuesday and vowed to push it through Parliament this week, despite mounting dissent in the ruling left-wing party. With the country facing the risk of a debt default next week, Prime Minister Alexis Tsipras had sought to speed up the talks after Greece and its creditors reached an agreement on the main points on Tuesday. The agreement still requires approval from higher-level representatives and senior finance officials from the 28 EU states, while Greek Parliament will vote on Thursday to decide if the measures in the third bailout program will be implemented.

    Released during the Asian session this morning, the Japanese Revised Industrial Production rose 1.1% beating the estimated 0.8%, Tertiary Industry Activity rose 0.3% versus the 0.1% and Producer Price Index (PPI) dropped -3.0% versus the estimated -2.9%. USD/JPY remained above the 124.50 level and currently is trading near the 124.60 area. Australia Westpac consumer confidence rose 7.8% in August while wage cost index rose 0.6%, as widely expected.

    Released during the early European session, China’s Industrial Production rose 6.0% missing the estimated 6.7%, Fixed Asset Investment rose 11.2% versus the estimated 11.5% and Retail Sales rose 10.5%.

    The key events for the day will be United Kingdom job data, the United States JOLTS Job Openings and Federal Budget Balance and Eurozone industrial production.

    Additional economic releases will be the Swiss ZEW expectations and RBA Deputy Governor Lowe speech.

    Data releases to monitor:

    EUR: Industrial Production, German 10-y Bond Auction, Greek Gov Debt Crisis Vote, Italian Trade Balance.

    USD: FOMC Member Dudley speech, JOLTS Job Openings, Crude Oil Inventories, 10-y Bond Auction, Federal Budget Balance.

    GBP: Average Earnings Index, Claimant Count Change, Unemployment Rate.

    CHF: ZEW Economic Expectations.

    AUD: BA Deputy Gov Lowe speech.


    Trade Idea of the Day

    NZD/CHF


    Currently the pair is trading at 0.6421. Traders must monitor the 0.6520 resistance level and the support level of 0.6341 for possible breakouts. A possible scenario would be a movement towards the 0.6383 support level where a break may lead to the 0.6360 area. An alternative scenario could be a movement towards the 0.6452 resistance level where a break could lead to the 0.6485 area.


  7. #7
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    Financial News August 13, 2015
    Chinas depreciation reason to postpone Fed rate hikes?

    A sack of rice falls over in China, and the global financial markets tremble. Of course, this is not just any old sack. The decision by the Chinese central bank, to allow market forces to play a greater role in determining its fixing rate of USD-CNY with immediate effect undoubtedly represents a historic breakthrough.



    Commerzbank assumes, the market might indeed interpret developments in China as negative for the USD. For a marked economic slowdown in China would of course have important implications for global economic growth and the commodity markets. Therefore, the Fed might well regard this as posing a risk to growth and inflation in the USA, says Commerzban in a report on Thursday.


    However, it is not more than a risk factor. The extent of the growth slowdown in China is not yet known, let alone the contagion effects for the US economy. And the recent measures taken by the PBoC are certainly also intended to support the economy and prevent a "hard landing". It may be somewhat premature to completely dismiss the prospect of an interest rate hike by the Fed in September, as the market did yesterday, adds Commerzbank.


    Is EUR a Safe Haven?

    While the reaction of USD exchange rates to developments in China is understandable, the movement in EUR rates is somewhat surprising. For the EUR has benefited most so far - clearly acting as a safe haven.



    "However, some important factors militate against the continuing strength of the EUR. On the one hand, a marked growth downturn in China would presumably hit the Eurozone as hard, if not even harder than the US. And this would be against a backdrop of the ECB already in expansionary mode to stimulate economic growth and inflation", according to Commerzbank.


    This would not raise the question of whether the ECB will defer normalising its monetary policy, but whether it might take further expansionary measures. Moreover, the ECB is likely to show a particularly marked allergic reaction to a stronger appreciation of the EUR, which would endanger its inflation target. Commerzbank suggests, somehwat of a correction of the EUR strength is required.



    Market Review August 13, 2015

    Once again, China was the main focus of the day, as China’s Central bank weakened its currency further by 1.1% after previous official cuts. More specifically, the central bank put the Yuan’s central parity rate at 6.4010 Yuan for $1, a drop of 1.11% from the previous day’s 6.3306. Furthermore, it was also lower than Wednesday’s close, which came after China adopted a more market-oriented method of calculating the currency rate in a move widely seen as a devaluation. Rumours say that China's devaluation of Yuan may delay Fed's rate hike as China's move was seen as deflationary to the United States and could trigger much uncertainty in the global financial markets.


    Released during the Asian session this morning, New Zealand manufacturing index dropped to 53.5 versus the previous of 55.10 while Australia’s Consumer inflation expectation rose 3.7% compared to the previous of 3.4%. Moreover, RBA warned investors to be on guard for unexpected fallout from China's decision to devalue the Yuan, which has triggered large shifts in exchange rates around the region. "We know that movements in exchange rates often set off a chain reaction of events which can be difficult to predict," said Reserve Bank deputy governor Philip Lowe. AUD/USD dropped yesterday to the 0.7215 area but did not remain there as the pair climbed back to the 0.7350 area, where is currently trading.


    Released from Japan during the Asian session, Core Machinery Orders dropped -7.9% versus the estimated -5.3%. USD/JPY dropped to the 123.78 level on Wednesday and currently is trading near the 124.55 area.


    Released during the early European session, German Final CPI rose 0.2%, while French CPI dropped -0.4%. EUR/USD remained above the 1.1100 handle and reached as high as the 1.1223 level. Currently the pair is trading near the 1.1120 area. Furthermore, Swiss PPI dropped -0.3% versus the estimated -0.2% causing insignificant impact on the CHF, which gain some strength against the relatively weak US Dollar.


    The key events for the day will be ECB Monetary Policy Meeting Accounts, the United States Core Retail Sales and Unemployment Claims.


    Data releases to monitor:

    EUR: ECB Monetary Policy Meeting Accounts.

    USD: Core Retail Sales, Retail Sales, Unemployment Claims, Import Prices, Business Inventories, Natural Gas Storage, 30-y Bond Auction.

    CAD: NHPI.

    Trade Idea of the Day

    AUD/USD

    Currently the pair is trading at 0.7352. Traders must monitor the 0.7438 resistance level and the support level of 0.7215 for possible breakouts. A possible scenario would be a movement towards the 0.7300 support level where a break may lead to the 0.7265 area. An alternative scenario could be a movement towards the 0.7390 resistance level where a break could lead to the 0.7425 area.

    Last edited by VinsonFinancialsFX; 08-13-2015 at 12:35 PM.

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    Financial News August 14, 2015

    CNY flexibility takes leap forward



    Adjustment in the USDCNY fixing was announced earlier this week as a further step towards liberalising the domestic FX market. The move also reflects the fact that the CNY REER has been far stronger than other currencies.

    Weaker trade data seem to have increased pressure on the authorities to allow greater currency flexibility. In fact, the CNY REER has appreciated about 18.5% since mid-2014, a far bigger rise than most other currencies, as China has not let the CNY weaken despite a broadly stronger USD, notes Barclays.
    The PBoC noted that it will increase yuan flexibility while moving towards convergence of onshore and offshore rates. Importantly, China's central bank now decides the yuan midpoint based on market-makers' quotes, together with closing quotes. The implication is that the fixing will be much more dependent on the market and could move in a more volatile and potentially weaker trajectory than previously, depending on market movements, states Barclays.


    German GDP growth rate on downside risk

    The Chinese export boom reached its peak quite some time ago and support from South-East Asia as a whole has been shrinking noticeably in recent years, China's problems will impose quite a strain on the German economy.

    Commerzbank says, "And while they will hardly threaten the present upturn, the risks for our growth forecast (+1.8% both this year and next) are on the downside, especially next year."

    The impact would of course be even greater if China's problems ballooned to become a general emerging market crisis. Some 40% of all German exports are meanwhile destined for these countries, and almost 15% of German value added depends directly or indirectly on local final demand. In addition, in this case we would see significant second round effects, i.e. a weaker demand in the Emerging markets would be a break on the economy in the industrial countries. In that case, the German upswing would be clearly in danger, added Commerzbank.



    Market Review August 14, 2015


    New Zealand retail sales rose 0.1% versus the estimated 0.5%, while Core Retail Sales rose 0.1% missing the estimated 0.7%. The dominant NZD/USD trend continues to favour the downside despite the slight recovery from the six-year low of 0.6466 reached last Tuesday. The pair is currently trading near the 0.6542 area with the next support seen at the 0.6513 level.

    Elsewhere, RBA Assistant Governor Christopher Kent stated that the current monetary policy is helping to support the economy despite limited assistance from other sources of demand. Furthermore, he added that policy “is working against some strong headwinds” and that “Consumption growth has picked up since 2013. But it is still a little weaker than suggested by historical experience”. AUD/USD had seen some recovery from the current week losses. The pair is currently trading near the 0.7388 and it seems that is approaching current week's highs of 0.7439.

    China’s Central bank moves to ease uncertainty around currency on global markets after raising the value of the Yuan against the US dollar by 0.05%, and ending three days of falls in a surprise series of devaluations. The daily reference rate was set at 6.3975 Yuan to $1, from 6.4010 the previous day, which was also slightly stronger than Thursday’s close of 6.3982 Yuan.

    Released during the early European session, French Prelim GDP rose 0.0% versus the estimated 0.2%, French Prelim Non-Farm Payrolls rose 0.2% versus the estimated 0.1% and German Prelim GDP rose 0.4% missing the estimated 0.5%. Furthermore, the Greek lawmakers approved their country's draft third bailout in a parliamentary vote that relied on opposition party support and saw the government coalition suffer significant dissent.The vote came after a marathon all-night session marked by procedural delays and acrimonious debate over the three-year, about 85 billion-euro rescue package that includes harsh spending cuts and tax hikes. Greece needs the money to avoid defaulting on its debts and securing its future in the euro currency. EUR/USD remained near the 1.1147 area with the next resistance seen at the 1.1213 level.

    The key events for the day will be the Canadian Manufacturing Sales, the United States Producer Price Index (PPI), Prelim UoM Consumer Sentiment, Industrial Production and Capacity Utilization Rate.

    Additional economic releases will be the Eurostat Final CPI, Flash GDP and Final Core CPI.

    Data releases to monitor:


    EUR: Italian Prelim GDP, Final CPI, Flash GDP, Final Core CPI, Eurogroup Meetings.

    USD: PPI, Core PPI, Capacity Utilization Rate, Industrial Production, Prelim UoM Consumer Sentiment, Prelim UoM Inflation Expectations.

    CAD: Manufacturing Sales.

    GBP: Construction Output.

    Trade Idea of the Day

    USD/CAD


    Currently the pair is trading at 1.3067. Traders must monitor the 1.3196 resistance level and the support level of 1.2950 for possible breakouts. A possible scenario would be a movement towards the 1.3102 resistance level where a break may lead to the 1.3145 area. An alternative scenario could be a movement towards the 1.3008 support level where a break could lead to the 1.2975 area.


  9. #9
    Join Date
    Aug 2015
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    93

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    Financial News August 17, 2015


    CNY under pressure due to capital outflows

    PBoC set the USD-CNY fixing rate at 6.3969 this morning, compared with the previous fixing of 6.3912. Both CNY and CNH exchange rates were narrowly range traded last Friday and this morning.

    Ma Jun, chief economist of PBoC, said over the weekend that the CNY exchange rate will probably move in both directions in the future, following last week's devaluation, says Commerzbank.
    In addition, FX purchase positions on the balance sheet of PBoC dropped by CNY308bn in July, the biggest decline in record. This signals that the central bank stepped up intervention to stabilize the CNY exchange rate in July. In general, CNY is still under pressure to weaken due to strong capital outflows, adds Commerzbank.

    Australia's concerns towards risks from China to rise

    The Reserve Bank of Australia (RBA) will release the minutes of its August meeting during the night. However, one should not read too much into these statements.

    For Australia, economic developments in China, its largest trading partner, are the biggest risk.

    Con-cerns in that area are likely to have increased after the August meeting due to the surprise step of the PBoC to allow for CNY depreciation.

    "However, there is reason for optimism for the RBA. On the back of favourable signals from the labour market and the domestic econ-omy, it will wait and see and monitor the effects of the weaker CNY closely. AUD-USD is likely to have reached a new comfortable level for now", says Commerzbank.


    Market Review August 17, 2015


    Japan’s economy contracted in the second quarter as overseas demand for Japanese goods slumped and consumers cut back spending, raising pressure on Prime Minister Shinzo Abe to step up his policy drive to lift the economy out of decades of deflation. Japan’s GDP dropped -0.4% down from first quarter’s 1.0% growth while Prelim GDP Price Index rose 1.6% versus the estimated 2.2%.The data show that a sustainable recovery in the world’s third-largest economy has been elusive, despite efforts by Prime Minister Shinzo Abe and the Bank of Japan to stimulate growth. Japan’s economy expanded the previous two quarters, but that growth followed two quarters of contraction. USD/JPY is currently trading near the 124.55 area raising up from the 124.05 area.
    Elsewhere, The International Monetary Fund (IMF) has called on Eurozone ministers to offer Greece debt relief, following the approval of a new bailout deal. Greece will receive up to €86bn in loans over the next three years, in return for tax rises and spending cuts. IMF chief Christine Lagarde welcomed the agreement, but warned Greek debt had become unsustainable. She said the country needed significant relief "well beyond what has been considered so far”. “Greece cannot restore debt sustainability solely through actions on its own," she added. Furthermore, German chancellor, Angela Merkel has said that she expects the International Monetary Fund to take part in a new €86bn bailout for Greece.

    Released during the early European session, Swiss Retail Sales dropped -0.9% versus the estimated -0.6%. USD/CHF is currently trading near the 0.9777 area with the next resistance seen at 0.9798 level.

    The key events for the day will be the Empire State Manufacturing Index, the Canadian Foreign Securities Purchases and German Buba Monthly Report.

    Additional economic releases will be the Eurostat Trade Balance, NAHB Housing Market Index and TIC Long-Term Purchases.

    Data releases to monitor:
    EUR: Trade Balance, German Buba Monthly Report.
    USD: Empire State Manufacturing Index, NAHB Housing Market Index, TIC Long-Term Purchases.
    CAD: Foreign Securities Purchases.

    Trade Idea of the Day

    NZD/USD


    Currently the pair is trading at 0.6542. Traders must monitor the 0.6649 resistance level and the support level of 0.6466 for possible breakouts. A possible scenario would be a movement towards the 0.6579 resistance level where a break may lead to the 0.6610 area. An alternative scenario could be a movement towards the 0.6509 support level where a break could lead to the 0.6480 area.


  10. #10
    Join Date
    Aug 2015
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    93

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    Financial News August 18, 2015


    No price pressure in UK

    Recent, more dovish statements by the Bank of England have dampened rate-hike expectations in the UK. Sterling suffered, of course. Today, the ONS will release several inflation series for July. None of them is likely to signal that rate hikes are necessary.

    Year-on-year producer price inflation looks set to be clearly negative.
    According to Commerzbank, "Consumer prices are likely to have risen a bit more strongly, but not much. Headline inflation looks set to have remained at 0.0%. Only the core rate might provide a ray of hope; it might climb to 0.9% and thus be not too far away from the BoE's target of 2%. The BoE has recently focused on wage inflation, which should lead to price pressure if the economy is doing well."

    IMF participation in Greek aid package more than a political question

    The negotiations about the bailout package for Greece have reached their final stage - at least that is what the German government suggests. The FX markets are certain that the Bundestag will not withhold its agreement tomorrow.

    While EUR-USD has depreciated slightly again over the last few days and is trading around 1.1060 this morning, the euro is not experiencing a significant bout of weakness, says Commerzbank.
    Once again, the bailout package is throwing key structural concepts overboard which were originally introduced to protect the euro. The Bundesbank recently emphasized again that a haircut would definitely violate the EU Treaties. However, Greece benefited from a debt haircut some time ago.

    Still, this "debt haircut light" has a small flaw, which might have significant consequences for EMU as a whole. This time, the IMF is at the centre of the problem. The fund says it will not participate in a bailout package which does not include a palpable debt haircut. That creates a problem for all those who claim that the support loans will be paid back eventually. Why is the IMF insisting on a debt haircut? Because, according to its analysis (which nobody contradicts), Greece´s debt level is unsustainable. Under its statutes, the IMF may not extend loans to countries if it is obvious that the debt service is not bearable in the long run (i.e. if the country has taken on too much debt). It seems quite impossible to find a compromise with the IMF on this issue.

    If the IMF does not provide financial assistance, it will no longer be able to exercise pressure during the regular monitoring of the programme. And who, apart from the IMF, is really capable of monitoring whether Greece implements the agreed-upon reforms as planned? Neither the EU Commission nor the ECB have the necessary staff or expertise. Nor does the ESM, which was created only in 2013 and has only 140 employees. The IMF is the only organization which has decades of experience with helping flailing countries. And it can only use this expertise if it has the opportunity to exercise pressure. The real problem about a "debt haircut light" is that the IMF's know-how will not be available any longer. The Greek bailout has not been a success story so far, and it is unlikely to become one if the IMF is no longer one of the creditors.

    The key question for the FX markets is now: How long will it take until the Greek issue pops up once more and negotiations for a fourth bailout package become necessary? The an-swer may surprise some: Without the IMF, it might take longer until it becomes obvious that the recently agreed measures are not implemented or insufficient. One reason is that the remaining supervisors are less experienced, another that all parties are under more political pressure. However, the longer the calm continues, the bigger the damage in the end, adds Commerzbank.


    Market Review August 18, 2015


    In minutes of its monetary policy meeting, the Reserve Bank of Australia (RBA) said that weakening currency is assisting a transition away from mining investment, while adding that accommodative policy remains appropriate to support growth. Furthermore, the minutes for August meeting noted that “an accommodative monetary policy setting remained appropriate given the forecasts, while observing that the Australian dollar had been adjusting to the shift in activity in the resources sector from the investment production phase." The central bank reiterated that "further depreciation of the Australian dollar was expected to impart stimulus to the economy through stronger net exports."

    The central bank kept its cash rate steady at 2.0 percent and noted that "New information about economic and financial conditions would continue to inform the Board’s assessment of the outlook and determine whether the current stance of the policy remained appropriate to foster sustainable growth and inflation consistent with the target."

    RBA also commented on the expected rate hike by Fed this year and said that "it was likely that financial market volatility would increase and the U.S. dollar could appreciate further, including against the Australian dollar." AUD/USD remained within the previous days range and currently is trading near the 0.7345 area.

    The early European session is quite empty with the focus turned on the UK inflation data that will be released later during the day.

    Additional economic releases will be the United States Building Permits , Housing Starts and New Zealand’s GDT Price Index.

    Data releases to monitor:

    GBP: CPI, PPI Input, RPI, Core CPI, HPI, PPI Output.

    USD: Housing Starts, Building Permits.

    NZD: GDT Price Index.

    Trade Idea of the Day

    EUR/USD


    Currently the pair is trading at 1.1067. Traders must monitor the 1.1213 resistance level and the support level of 1.0925 for possible breakouts. A possible scenario would be a movement towards the 1.1035 support level where a break may lead to the 1.0990 area. An alternative scenario could be a movement towards the 1.1103 resistance level where a break could lead to the 1.1155 area.


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