FXStreet (Mumbai) - WTI oil halted a 2-day rebound and fell sharply lower from fresh weekly reached near $ 47, although the black gold is poised to book first weekly gain in three weeks.
WTI drops $ 1 from weekly highs
Currently, WTI falls -0.75% to 45.72, capped below $ 46 in today’s trading session so far. Oil prices are seen heading lower as markets remain cautious ahead of the US rigs count report due later today. The number of rig counts dropped by just one to 594, the report showed by oilfield services company Baker Hughes on last Friday.
The US oil fails to benefit from broad based US dollar weakness as the persisting worries over supply glut as also global economic outlook weighs heavily on traders’ minds. Meanwhile, markets now await a host of US macro releases for further USD moves, which will eventually impact oil.
WTI Oil Technical Levels
WTI oil has an immediate resistance which stands at 46.22 (Oct 28 High) levels above which gains could be extended to 46.79 (Oct 29 High). While to the downside, the immediate support is at 45 (round number), below which the prices could drop to 44.66 (5-DMA).
For more information, read our latest forex news.
Friday, October 30, 2015
USD/CAD consolidates around 1.3140
FXStreet (Edinburgh) - The greenback remains on the back footing vs. its Canadian counterpart at the end of the week, with USD/CAD hovering over the 1.3140/45 band so far.
USD/CAD attention to GDP figures
The pair has practically retraced the FOMC-led spike to the mid-1.3200s on Wednesday, backed by the solid recovery of crude oil prices, which in turn continues to lend support to CAD.
Next of relevance in the pair will be the Canadian GDP figures during August, while PCE, Personal Income/Spending and the Employment Cost Index (ECI) will take centre stage in the US docket.
USD/CAD levels to consider
As of writing, the pair is retreating 0.15% at 1.3150 and a breach of 1.3069 (61.8% Fibo of 1.3459-1.2827) would open the door to 1.3015 (100-day sma) and finally 1.2941 (5-month uptrend). On the other hand, the immediate hurdle aligns at 1.3310 (23.6% Fibo of 1.3459-1.2827) ahead of 1.3400 (psychological handle) and then 1.3459 (high Sep.29).
For more information, read our latest forex news.
USD/CAD attention to GDP figures
The pair has practically retraced the FOMC-led spike to the mid-1.3200s on Wednesday, backed by the solid recovery of crude oil prices, which in turn continues to lend support to CAD.
Next of relevance in the pair will be the Canadian GDP figures during August, while PCE, Personal Income/Spending and the Employment Cost Index (ECI) will take centre stage in the US docket.
USD/CAD levels to consider
As of writing, the pair is retreating 0.15% at 1.3150 and a breach of 1.3069 (61.8% Fibo of 1.3459-1.2827) would open the door to 1.3015 (100-day sma) and finally 1.2941 (5-month uptrend). On the other hand, the immediate hurdle aligns at 1.3310 (23.6% Fibo of 1.3459-1.2827) ahead of 1.3400 (psychological handle) and then 1.3459 (high Sep.29).
For more information, read our latest forex news.
European stocks mixed, poised for best monthly gain in 6 years
FXStreet (Mumbai) - The stock markets across Europe trade mixed ahead of the monthly closing, but appear on track for its best monthly gain since 2009.
At the time of writing, the pan-European Euro Stoxx 600 index advanced 0.20% to trade around 376.46 levels. The blue chip Euro Stoxx 50 index traded largely unchanged. Among regional indices, Germany’s DAX was up 0.14%, while London’s FTSE was down 0.24%. France’s CAC was up 0.17%.
Shares in French lender BNP Paribas rose 3% after reporting earnings that topped estimates. Renault gained 5% after reporting revenue higher than estimates. The minus side includes Denmark’s GNT Store Nord; down 9.6%. The Greek lender Alpha Bank was down 4%.
The Stoxx 600 is up more than 8% in October, largely due to expectations that the ECB would come out with more stimulus. The central bank President Draghi did hint at a possibility of more easing – QE, rate cut – in December.
For more information, read our latest forex news.
At the time of writing, the pan-European Euro Stoxx 600 index advanced 0.20% to trade around 376.46 levels. The blue chip Euro Stoxx 50 index traded largely unchanged. Among regional indices, Germany’s DAX was up 0.14%, while London’s FTSE was down 0.24%. France’s CAC was up 0.17%.
Shares in French lender BNP Paribas rose 3% after reporting earnings that topped estimates. Renault gained 5% after reporting revenue higher than estimates. The minus side includes Denmark’s GNT Store Nord; down 9.6%. The Greek lender Alpha Bank was down 4%.
The Stoxx 600 is up more than 8% in October, largely due to expectations that the ECB would come out with more stimulus. The central bank President Draghi did hint at a possibility of more easing – QE, rate cut – in December.
For more information, read our latest forex news.
EUR/USD off highs, wavers around hourly 100-SMA
FXStreet (Mumbai) - The post-FOMC recovery extends further beyond 1.10 barrier and the EUR/USD pair keeps pushing higher in the European session on the back of a broadly weaker US dollar and mixed performance seen in the European markets.
EUR/USD regains hourly 100-SMA
The EUR/USD pair trades 0.36% at fresh daily highs of 1.1017, finally breaking through the hourly 100-SMA barrier. The major keeps gains and recovers more than half the post-FOMC slide, as the greenback remains undermined across the board on the back of the recent series of downbeat US fundamentals.
The main currency pair also received fresh impetus from the negative sentiment around the European stocks which boosted the safe-haven bids for the euro. The DAX pares gains and now trades 0.15% to 10,820, the UK’s FTSE drops -0.17% to 6,384 while the Euro Stoxx 50 trades marginally lower at 3,410 points.
Meanwhile, markets ignored the downbeat German retail sales data as the focus now remains on the Eurozone CPI and employment data due later in the European session. Germany’s retail sales remained flat at 0.0% m/m in September, coming in below market expectations of a 0.4% increase.
EUR/USD Technical Levels
The pair remains firmer above 1.10 handle, with the immediate resistance seen at 1.1036 (daily R2). A break above the last, the prices could climb further towards 200-DMA at 1.1084 and from there to 1.11 handle. To the downside, the pair finds immediate support at 1.0955/50 (daily pivot/ psychological levels). Selling pressure will intensify below the last, dragging the pair towards 1.0900 (round number) and below that 1.0844/40 (daily S3/ Aug lows) could be exposed.
For more information, read our latest forex news.
EUR/USD regains hourly 100-SMA
The EUR/USD pair trades 0.36% at fresh daily highs of 1.1017, finally breaking through the hourly 100-SMA barrier. The major keeps gains and recovers more than half the post-FOMC slide, as the greenback remains undermined across the board on the back of the recent series of downbeat US fundamentals.
The main currency pair also received fresh impetus from the negative sentiment around the European stocks which boosted the safe-haven bids for the euro. The DAX pares gains and now trades 0.15% to 10,820, the UK’s FTSE drops -0.17% to 6,384 while the Euro Stoxx 50 trades marginally lower at 3,410 points.
Meanwhile, markets ignored the downbeat German retail sales data as the focus now remains on the Eurozone CPI and employment data due later in the European session. Germany’s retail sales remained flat at 0.0% m/m in September, coming in below market expectations of a 0.4% increase.
EUR/USD Technical Levels
The pair remains firmer above 1.10 handle, with the immediate resistance seen at 1.1036 (daily R2). A break above the last, the prices could climb further towards 200-DMA at 1.1084 and from there to 1.11 handle. To the downside, the pair finds immediate support at 1.0955/50 (daily pivot/ psychological levels). Selling pressure will intensify below the last, dragging the pair towards 1.0900 (round number) and below that 1.0844/40 (daily S3/ Aug lows) could be exposed.
For more information, read our latest forex news.
EUR/NOK climbs to highs near 9.47
FXStreet (Edinburgh) - The Norwegian krone is extending its depreciation on Friday, sending EUR/NOK to the area of 9.4700 the figure.
EUR/NOK testing 4-week tops
The cross is advancing since Tuesday, managing to rebound from the 9.20 region to the boundaries of 9.47 today, trading at shouting distance from 4-week peaks recorded on Wednesday.
NOK lost further ground today after the unemployment rate stayed at a non-seasonally adjusted 2.9% during October. In addition, the Norges Bank has announced it will sell NOK 700 million per day during November under transfers to the Government Pension Fund Global (GPFG), ahead of its meeting on November 5.
EUR/NOK important levels
As of writing the cross is up 0.50% at 9.4492 facing the next resistance at 9.5165 (76.4% Fibo of 9.6319-9.1420) followed by 9.5564 (high Aug.24) and then 9.6317 (2015 high Sep.29). On the flip side, a breakdown of 9.3874 (50% Fibo of 9.6319-9.1420) would expose 9.3046 (55-day sma) and finally 9.1405 (100-day sma).
For more information, read our latest forex news.
EUR/NOK testing 4-week tops
The cross is advancing since Tuesday, managing to rebound from the 9.20 region to the boundaries of 9.47 today, trading at shouting distance from 4-week peaks recorded on Wednesday.
NOK lost further ground today after the unemployment rate stayed at a non-seasonally adjusted 2.9% during October. In addition, the Norges Bank has announced it will sell NOK 700 million per day during November under transfers to the Government Pension Fund Global (GPFG), ahead of its meeting on November 5.
EUR/NOK important levels
As of writing the cross is up 0.50% at 9.4492 facing the next resistance at 9.5165 (76.4% Fibo of 9.6319-9.1420) followed by 9.5564 (high Aug.24) and then 9.6317 (2015 high Sep.29). On the flip side, a breakdown of 9.3874 (50% Fibo of 9.6319-9.1420) would expose 9.3046 (55-day sma) and finally 9.1405 (100-day sma).
For more information, read our latest forex news.
GBP/USD hovers around 200-DMA, back below 50-DMA
FXStreet (Mumbai) - The GBP/USD trimmed gains to trade around its 200-DMA located at 1.5335. The spot tested 50-DMA and 10-DMA before trimming gains.
USD regains poise
The US dollar is taking back the losses suffered in early Europe. The cable rose to a high of 1.5359 and took out 50-DMA at 1.5349 and 10-DMA at 1.5359 for a brief moment, before the USD regained composure.
The UK data docket is empty, which leaves the pair at the mercy of the movement in the EUR/GBP cross (post EZ CPI inflation). Later in the day, the US personal spending and income report could affect overall demand for the US dollars.
GBP/USD Technical Levels
The immediate resistance is located at 10-DMA at 1.5356, above which the gains could be extended to 1.5387 (Oct 13 high) and 1.54 levels. On the other side, 5-DMA at 1.5306 could offer support followed by a major support at 1.5248 (50% of Apr-Jun rally).
For more information, read our latest forex news.
USD regains poise
The US dollar is taking back the losses suffered in early Europe. The cable rose to a high of 1.5359 and took out 50-DMA at 1.5349 and 10-DMA at 1.5359 for a brief moment, before the USD regained composure.
The UK data docket is empty, which leaves the pair at the mercy of the movement in the EUR/GBP cross (post EZ CPI inflation). Later in the day, the US personal spending and income report could affect overall demand for the US dollars.
GBP/USD Technical Levels
The immediate resistance is located at 10-DMA at 1.5356, above which the gains could be extended to 1.5387 (Oct 13 high) and 1.54 levels. On the other side, 5-DMA at 1.5306 could offer support followed by a major support at 1.5248 (50% of Apr-Jun rally).
For more information, read our latest forex news.
GBP/CHF struggles to stay positive
FXStreet (Mumbai) - The bid on the CHF is making it difficult for the GBP/CHF cross to maintain its gains, although a weekly gain is pretty much a done deal now.
Trades around 1.5160
The cross dipped to a low of 1.5138 before recovering to 1.5160 levels. A drop in the October Swiss KFP institute indicator appears to have halted the appreciation in the Swiss Franc. The USD/CHF pair, being overbought on technical charts, dropped 0.10%.
Meanwhile, the cable added 0.19% on the back of a broad based USD selling in early Europe. Consequently, the GBP/CHF has managed to stay marginally positive.
GBP/CHF Technical Levels
The immediate resistance is seen at 1.5201 (Oct 28 high), above which the cross could rally to 1.5316 (Aug 19 high). On the other side, support is seen at 1.5137 (hourly 50-MA) and 1.5106 (hourly 100-MA).
For more information, read our latest forex news.
Trades around 1.5160
The cross dipped to a low of 1.5138 before recovering to 1.5160 levels. A drop in the October Swiss KFP institute indicator appears to have halted the appreciation in the Swiss Franc. The USD/CHF pair, being overbought on technical charts, dropped 0.10%.
Meanwhile, the cable added 0.19% on the back of a broad based USD selling in early Europe. Consequently, the GBP/CHF has managed to stay marginally positive.
GBP/CHF Technical Levels
The immediate resistance is seen at 1.5201 (Oct 28 high), above which the cross could rally to 1.5316 (Aug 19 high). On the other side, support is seen at 1.5137 (hourly 50-MA) and 1.5106 (hourly 100-MA).
For more information, read our latest forex news.
USD/JPY off highs, near 120.70
FXStreet (Edinburgh) - The Japanese yen is now picking up pace vs. its American peer on Friday, sending USD/JPY to the 120.75/70 area.
USD/JPY choppy on BoJ
The pair has now returned to the 120.70 area after hitting session peaks in the mid-121.00s following the steady stance by the BoJ at its meeting today. The central bank left unchanged its monetary expansion at ¥80 trillion vs. expectations that it could expand it towards ¥100 trillion.
At his press conference today, Governor H.Kuroda reiterated that the economy is recovering at a moderate pace and that the ‘virtuous cycle’ remains intact. He further stressed that the ability of domestic consumer prices to reach the 2% goal hinges almost exclusively on crude oil prices.
USD/JPY levels to consider
At the moment the pair is retreating 0.29% at 120.76 with the next support at 119.84 (38.2% Fibo of 125.28-116.46) followed by 118.55 (2-month uptrend) and finally 116.16 (low post PBoC move Aug.24). On the other hand, a breakout of 121.79 (100-day sma) would open the door to 121.91 (61.8% Fibo of 125.28-116.46) and then 123.20 (76.4% Fibo of 125.28-116.46)
For more information, read our latest forex news.
USD/JPY choppy on BoJ
The pair has now returned to the 120.70 area after hitting session peaks in the mid-121.00s following the steady stance by the BoJ at its meeting today. The central bank left unchanged its monetary expansion at ¥80 trillion vs. expectations that it could expand it towards ¥100 trillion.
At his press conference today, Governor H.Kuroda reiterated that the economy is recovering at a moderate pace and that the ‘virtuous cycle’ remains intact. He further stressed that the ability of domestic consumer prices to reach the 2% goal hinges almost exclusively on crude oil prices.
USD/JPY levels to consider
At the moment the pair is retreating 0.29% at 120.76 with the next support at 119.84 (38.2% Fibo of 125.28-116.46) followed by 118.55 (2-month uptrend) and finally 116.16 (low post PBoC move Aug.24). On the other hand, a breakout of 121.79 (100-day sma) would open the door to 121.91 (61.8% Fibo of 125.28-116.46) and then 123.20 (76.4% Fibo of 125.28-116.46)
For more information, read our latest forex news.
EUR/USD rejected at hourly 100-MA, hovers around 1.10
FXStreet (Mumbai) - The EUR/USD failed to sustain above hourly 100-MA at 1.1012 and quickly shed 30 odd pips before moving closer to 1.10 again.
Supported by hourly 50-MA
The pair found support at its hourly 50-MA located at 1.0980, although the broad based USD selling came to a halt, keeping the pair around 1.10 levels. The weaker-than-expected German retail sales figure released few minutes ago was overshadowed by a wave of USD selling.
The attention now shifts to the preliminary Eurozone CPI figure, which will be followed by a monthly US personal spending and income report.
EUR/USD Technical Levels
The immediate resistance is located at 1.1012 (hourly 100-MA), above which the pair could target 1.1088 (50% of Mar-Aug rally). The next major resistance is seen at 1.1110 (200-DMA). On the other side, support is seen at 1.0980 (hourly 50-MA) and 1.0940 (61.8% of Mar-Aug rally).
For more information, read our latest forex news.
Supported by hourly 50-MA
The pair found support at its hourly 50-MA located at 1.0980, although the broad based USD selling came to a halt, keeping the pair around 1.10 levels. The weaker-than-expected German retail sales figure released few minutes ago was overshadowed by a wave of USD selling.
The attention now shifts to the preliminary Eurozone CPI figure, which will be followed by a monthly US personal spending and income report.
EUR/USD Technical Levels
The immediate resistance is located at 1.1012 (hourly 100-MA), above which the pair could target 1.1088 (50% of Mar-Aug rally). The next major resistance is seen at 1.1110 (200-DMA). On the other side, support is seen at 1.0980 (hourly 50-MA) and 1.0940 (61.8% of Mar-Aug rally).
For more information, read our latest forex news.
BoJ: Policy unchanged, long USDJPY suggested – Deutsche Bank
FXStreet (Delhi) - Taisuke Tanaka, Strategist at Deutsche Bank, suggests going long on dollar/yen after the BoJ policy meeting today decided to maintain current policy.
Key Quotes
“Since about 40% of leading analysts had expected further easing, we thought this decision could lead to some disappointment-driven pullback for the dollar/yen, and viewed this as a prime opportunity for buying on dips. The dip of 50-60bp was over in no time, and the market was quick to recover it.”
“In the new projection report, the BoJ maintained the view that the economy is recovering moderately and that prices excluding energy remained on a rise. Accepting the impact of weaker crude oil prices, however, they pushed the timetable for achieving the 2% inflation target out to 2H FY2016.”
“Considering that the BoJ’s 2% inflation target looks difficult to achieve and that Japan’s economy has stalled, as well as dovish bias in the Eurozone and China, we think market expectations for additional easing will likely surface repeatedly going forward.”
“We think many analysts will likely be unable to ignore the penchant for surprise shown by the BOJ’s reflationists such as Governor Kuroda and as attested by QQE1 and QQE2. We think the dollar/yen rate will continue to be supported by expectations for additional QQE, and estimate that it will likely move a notch higher when a firm US economy spurs expectations for the Fed to hike interest rates.”
“However, US economic indicators have lacked strength recently, and expectations that a rate hike will likely be postponed are confining the dollar/yen rate to a narrow range of around 120. We recommend dollar/yen long tactics. If US interest rates are hiked in March and June 2016 as we expect, we see the dollar/yen moving to 125-128 in the medium term.”
For more information, read our latest forex news.
Key Quotes
“Since about 40% of leading analysts had expected further easing, we thought this decision could lead to some disappointment-driven pullback for the dollar/yen, and viewed this as a prime opportunity for buying on dips. The dip of 50-60bp was over in no time, and the market was quick to recover it.”
“In the new projection report, the BoJ maintained the view that the economy is recovering moderately and that prices excluding energy remained on a rise. Accepting the impact of weaker crude oil prices, however, they pushed the timetable for achieving the 2% inflation target out to 2H FY2016.”
“Considering that the BoJ’s 2% inflation target looks difficult to achieve and that Japan’s economy has stalled, as well as dovish bias in the Eurozone and China, we think market expectations for additional easing will likely surface repeatedly going forward.”
“We think many analysts will likely be unable to ignore the penchant for surprise shown by the BOJ’s reflationists such as Governor Kuroda and as attested by QQE1 and QQE2. We think the dollar/yen rate will continue to be supported by expectations for additional QQE, and estimate that it will likely move a notch higher when a firm US economy spurs expectations for the Fed to hike interest rates.”
“However, US economic indicators have lacked strength recently, and expectations that a rate hike will likely be postponed are confining the dollar/yen rate to a narrow range of around 120. We recommend dollar/yen long tactics. If US interest rates are hiked in March and June 2016 as we expect, we see the dollar/yen moving to 125-128 in the medium term.”
For more information, read our latest forex news.
BOJ withholds easing, but expectations calm USDJPY impact - BNP
FXStreet (Delhi) - Research Team at BNP Paribas, note that the BOJ opted to keep policy unchanged with no change in policy rates and its asset purchase program continuing at a pace of an open-ended JPY80trn annual expansion of the monetary base.
Key Quotes
“The accompanying semi-annual outlook report included a downward revision to the BoJ’s CPI outlook with the inflation forecast for FY2016 lowered to 1.4%, down from 1.9%. The BoJ has pushed back the time it expects to reach is 2% CPI target to the second half of FY2016.”
“Although the CPI outlook has been lowered, the BOJ’s forecasts remain optimistic – BNP Paribas forecasts are for inflation to average only 0.7% in 2016 (calendar year).”
“USDJPY’s reaction to the announcement has been muted overall, reflecting that market expectations for further easing were low. In addition, as we have been highlighting throughout the week, JPY positioning is long according to our BNP Paribas Positioning Analysis, limiting scope for a bullish JPY reaction.”
“Going forward, monetary policy divergence remains a theme for USDJPY with the Fed moving closer to raising rates and the BOJ leaving open the option to loosen policy. We also expect Japanese investor flows to continue to provide a steady source of support for USDJPY and forecast 130 at mid-2016.”
For more information, read our latest forex news.
Key Quotes
“The accompanying semi-annual outlook report included a downward revision to the BoJ’s CPI outlook with the inflation forecast for FY2016 lowered to 1.4%, down from 1.9%. The BoJ has pushed back the time it expects to reach is 2% CPI target to the second half of FY2016.”
“Although the CPI outlook has been lowered, the BOJ’s forecasts remain optimistic – BNP Paribas forecasts are for inflation to average only 0.7% in 2016 (calendar year).”
“USDJPY’s reaction to the announcement has been muted overall, reflecting that market expectations for further easing were low. In addition, as we have been highlighting throughout the week, JPY positioning is long according to our BNP Paribas Positioning Analysis, limiting scope for a bullish JPY reaction.”
“Going forward, monetary policy divergence remains a theme for USDJPY with the Fed moving closer to raising rates and the BOJ leaving open the option to loosen policy. We also expect Japanese investor flows to continue to provide a steady source of support for USDJPY and forecast 130 at mid-2016.”
For more information, read our latest forex news.
GBP/USD tests Tuesday’s high and retreats
FXStreet (Mumbai) - GBP/USD extends its recovery on the 1.53 handle and now remains strongly bid ahead of Europe open, having jumped to fresh session highs beyond 200-DMA in recent dealings.
GBP/USD off-highs, below 1.5350
The GBP/USD pair trades 0.20% higher at 1.5340, retreating from daily highs scored at 1.5359 in last hours. A renewed selling wave hit the US dollar against its major peers, which triggered a fresh bout of gains in GBP/USD. The major finally clinched highs beyond 200-DMA located at 1.5353 and immediately faded the spike to now trade at 10-DMA placed near 1.5340.
Looking ahead, the economic calendar from the UK remains absolutely empty and hence, markets will take cues from the sentiment on the European markets. While a series of key US macro data due later in the US session will be eagerly awaited for fresh USD moves.
GBP/USD Levels to consider
The pair has an immediate resistance at 1.5360/64 (Oct 27 High/20-DMA) above which gains could be extended to 1.5400 (round number). On the flip side, support is seen at 1.5313/10 (1h 100-SMA/ Today’s Low) below which it could extend losses to 1.5245 (Oct 28 Low).
For more information, read our latest forex news.
GBP/USD off-highs, below 1.5350
The GBP/USD pair trades 0.20% higher at 1.5340, retreating from daily highs scored at 1.5359 in last hours. A renewed selling wave hit the US dollar against its major peers, which triggered a fresh bout of gains in GBP/USD. The major finally clinched highs beyond 200-DMA located at 1.5353 and immediately faded the spike to now trade at 10-DMA placed near 1.5340.
Looking ahead, the economic calendar from the UK remains absolutely empty and hence, markets will take cues from the sentiment on the European markets. While a series of key US macro data due later in the US session will be eagerly awaited for fresh USD moves.
GBP/USD Levels to consider
The pair has an immediate resistance at 1.5360/64 (Oct 27 High/20-DMA) above which gains could be extended to 1.5400 (round number). On the flip side, support is seen at 1.5313/10 (1h 100-SMA/ Today’s Low) below which it could extend losses to 1.5245 (Oct 28 Low).
For more information, read our latest forex news.
USD/CHF trades around 0.99 handle
FXStreet (Mumbai) - The broad based USD selling in early Europe pushed the USD/CHF to a low of 0.9880, before the bid tone recovered and the pair made its way back to trade around 0.99 handle.
Trades above hourly 50-MA
The spot currently trades few pips above its hourly 50-MA 0.9898. The CHF finally managed to make a minor comeback on Thursday, thereby snapping the ten day winning streak in the USD/CHF pair. Moreover, the speculation that the SNB could announce more easing in response to the ECB’s December easing hint led to a sell-off in the CHF.
Later in the day, the pair could take cues from the US personal income and spending report.
USD/CHF Technical Levels
At 0.9905, the immediate resistance is seen at 0.9957 (Oct 28 high), above which the pair could rise to 1.00 handle. On the other side, support is seen at 0.9898 (hourly 50-MA) and 0.9865 (hourly 100-MA).
For more information, read our latest forex news.
Trades above hourly 50-MA
The spot currently trades few pips above its hourly 50-MA 0.9898. The CHF finally managed to make a minor comeback on Thursday, thereby snapping the ten day winning streak in the USD/CHF pair. Moreover, the speculation that the SNB could announce more easing in response to the ECB’s December easing hint led to a sell-off in the CHF.
Later in the day, the pair could take cues from the US personal income and spending report.
USD/CHF Technical Levels
At 0.9905, the immediate resistance is seen at 0.9957 (Oct 28 high), above which the pair could rise to 1.00 handle. On the other side, support is seen at 0.9898 (hourly 50-MA) and 0.9865 (hourly 100-MA).
For more information, read our latest forex news.
EUR/GBP testing lows near 0.7160
FXStreet (Edinburgh) - After a brief test of the 0.7180 area, EUR/GBP has now returned to the 0.7160/55 band ahead of the European open.
EUR/GBP attention to EMU’s CPI
Absent releases in the UK economy, EMU’s preliminary inflation figures will take centre stage later in the session. Market consensus expects consumer prices to come in flat on a yearly basis, while the Core print is seen at 1.9%, matching September’s reading.
In the meantime, the cross is trying to consolidate the recent drop from the mid-0.7200s following the FOMC meeting on Wednesday, while the possibility that the ECB could incur in further easing in December continues to linger.
EUR/GBP relevant levels
As of writing the cross is losing 0.11% at 0.7163 facing the next hurdle at 0.7215 (50% Fibo of 0.6935-0.7496) followed by 0.7243 (200-day sma) and then 0.7313 (55-day sma). On the flip side, a breach of 0.7100 (psychological level) would aim for 0.7067 (23.6% Fibo of 0.6935-0.7496) and finally 0.6934 (2015 low Jul.17).
For more information, read our latest forex news.
EUR/GBP attention to EMU’s CPI
Absent releases in the UK economy, EMU’s preliminary inflation figures will take centre stage later in the session. Market consensus expects consumer prices to come in flat on a yearly basis, while the Core print is seen at 1.9%, matching September’s reading.
In the meantime, the cross is trying to consolidate the recent drop from the mid-0.7200s following the FOMC meeting on Wednesday, while the possibility that the ECB could incur in further easing in December continues to linger.
EUR/GBP relevant levels
As of writing the cross is losing 0.11% at 0.7163 facing the next hurdle at 0.7215 (50% Fibo of 0.6935-0.7496) followed by 0.7243 (200-day sma) and then 0.7313 (55-day sma). On the flip side, a breach of 0.7100 (psychological level) would aim for 0.7067 (23.6% Fibo of 0.6935-0.7496) and finally 0.6934 (2015 low Jul.17).
For more information, read our latest forex news.
Gold stalls recovery near $ 1150
FXStreet (Mumbai) - Gold prices halted its minor recovery and turned back in the negative territory, as the bullion remains stuck between increased Dec Fed rate hike bets and the recent streak of poor US fundamentals.
Gold recovers from $ 1144 lows
Currently, gold trades muted at 1147, retreating slightly from fresh three-week lows struck at 1144.40 in early Asia. Gold tries to recover losses amid broad based US dollar weakness on the back of falling treasury yields.
However, the recovery remains short-lived as the unchanged monetary policy decision by the BOJ dented the sentiment around the gold traders. Markets expected another round of easing by BOJ, which would lead to currency debasement and therefore benefit the bullion.
Markets now look forward to a data-heavy EUR and the US calendar for further momentum on the gold prices. While sentiment on the European stocks will be also closely tracked.
Gold Technical Levels
The metal has an immediate resistance at 1150 (psychological levels) and 1155.90 (Sept 24 High). Meanwhile, support stands at 1144.40 (Today’s Low) below which doors could open for 1138.70 (Oct 8 Low).
For more information, read our latest forex news.
Gold recovers from $ 1144 lows
Currently, gold trades muted at 1147, retreating slightly from fresh three-week lows struck at 1144.40 in early Asia. Gold tries to recover losses amid broad based US dollar weakness on the back of falling treasury yields.
However, the recovery remains short-lived as the unchanged monetary policy decision by the BOJ dented the sentiment around the gold traders. Markets expected another round of easing by BOJ, which would lead to currency debasement and therefore benefit the bullion.
Markets now look forward to a data-heavy EUR and the US calendar for further momentum on the gold prices. While sentiment on the European stocks will be also closely tracked.
Gold Technical Levels
The metal has an immediate resistance at 1150 (psychological levels) and 1155.90 (Sept 24 High). Meanwhile, support stands at 1144.40 (Today’s Low) below which doors could open for 1138.70 (Oct 8 Low).
For more information, read our latest forex news.
CAD: Canadian industry level real-GDP forecasted to decelerate - TDS
FXStreet (Delhi) – Annette Beacher, Chief Asia-Pac Macro Strategist at TD Securities, expects the Canadian industry-level real GDP is forecast to decelerate to +0.2% (mkt +0.1%, range flat to +0.4%).
Key Quotes
“We expect to see a further rebound in the extraction sector while momentum in retail volumes will help to offset a softer month in the wholesale and manufacturing sector.”
“For the quarter as a whole, we continue to see annualized real GDP growth tracking around 2.5% though some models are pointing to an even faster rate of growth. Recall the Bank of Canada revised its Q3 forecast to 2.5% in its October MPR released last week.”
For more information, read our latest forex news.
Key Quotes
“We expect to see a further rebound in the extraction sector while momentum in retail volumes will help to offset a softer month in the wholesale and manufacturing sector.”
“For the quarter as a whole, we continue to see annualized real GDP growth tracking around 2.5% though some models are pointing to an even faster rate of growth. Recall the Bank of Canada revised its Q3 forecast to 2.5% in its October MPR released last week.”
For more information, read our latest forex news.
EUR: Constructive on CEE markets post ECB - SocGen
FXStreet (Delhi) - Research Team at Societe Generale, suggests that amid the speculation of decisive ECB action as early as December, we remain constructive on selected CEE markets due to relatively tighter correlation to EUR rates, more policy room, benign fundamentals and better backstops to fend off headwinds to risk sentiment.
Key Quotes
“We see potential for CEE FX strength against EUR, though regional central banks’ likely reassessment of their monetary policy stance may cap appreciation.”
“We think that more ECB QE would have limited impact for CEE eurodenominated bonds, except for the Balkan countries and Romania which are trading cheap to the USD curve.”
“The extension of QE would provide a powerful backstop against the downside, however, and would propel the EUR primary bond market.”
For more information, read our latest forex news.
Key Quotes
“We see potential for CEE FX strength against EUR, though regional central banks’ likely reassessment of their monetary policy stance may cap appreciation.”
“We think that more ECB QE would have limited impact for CEE eurodenominated bonds, except for the Balkan countries and Romania which are trading cheap to the USD curve.”
“The extension of QE would provide a powerful backstop against the downside, however, and would propel the EUR primary bond market.”
For more information, read our latest forex news.
US: Multitude of data sets to steal the limelight – TDS
FXStreet (Delhi) – Annette Beacher, Chief Asia-Pac Macro Strategist at TD Securities, suggests that the US employment cost index is forecast to accelerate to +0.8% (mkt +0.6%) in Q3, reinforcing the stability in underlying inflation.
Key Quotes
“The market will also be focused on the Chicago PMI for October (expected to increase to 49.5 from 48.7) and the revised print for the University of Michigan measure of consumer confidence which is forecast to have increased to 92.5 from 92.1.”
“Note that personal income and spending for September will also be released, though the information released here will have been incorporated in the Q3 GDP report. Scheduled remarks from Fed officials are not expected to touch on policy.”
For more information, read our latest forex news.
Key Quotes
“The market will also be focused on the Chicago PMI for October (expected to increase to 49.5 from 48.7) and the revised print for the University of Michigan measure of consumer confidence which is forecast to have increased to 92.5 from 92.1.”
“Note that personal income and spending for September will also be released, though the information released here will have been incorporated in the Q3 GDP report. Scheduled remarks from Fed officials are not expected to touch on policy.”
For more information, read our latest forex news.
US: Rebound in wage growth likely – Danske Bank
FXStreet (Delhi) - Research Team at Danske Bank, suggests that Fed's preferred measure for wages, the employment cost index, for Q3 will be published today and the consensus is looking for a rebound in wage growth to 0.6% q/q after the dip to 0.2% in Q2.
Key Quotes
“The Fed's preferred inflation measure, PCE inflation, is also released. We expect core PCE to increase 0.2% m/m taking annual core inflation to 1.4%. We look for another monthly decline in headline inflation of -0.1% m/m and annual PCE inflation of 0.2% y/y. University of Michigan consumer confidence and Chicago PMI are due for release as well.”
For more information, read our latest forex news.
Key Quotes
“The Fed's preferred inflation measure, PCE inflation, is also released. We expect core PCE to increase 0.2% m/m taking annual core inflation to 1.4%. We look for another monthly decline in headline inflation of -0.1% m/m and annual PCE inflation of 0.2% y/y. University of Michigan consumer confidence and Chicago PMI are due for release as well.”
For more information, read our latest forex news.
EUR: Negative CPI numbers likely to be history – TDS
FXStreet (Delhi) – Annette Beacher, Chief Asia-Pac Macro Strategist at TD Securities, suggests that the days of negative CPI readings in the euro area are numbered.
Key Quotes
“Under almost any reasonable set of assumptions, headline CPI will start increasing at a fairly steady clip in coming months as last year’s energy price falls begin to drop out of the calculations.”
“German CPI data came in as we expected (and stronger than markets), and we expect to see a repeat on Friday with upside risks to euro area inflation. We expect a 0.1% y/y reading (markets: 0.0% y/y), up from -0.1% y/y in September.”
For more information, read our latest forex news.
Key Quotes
“Under almost any reasonable set of assumptions, headline CPI will start increasing at a fairly steady clip in coming months as last year’s energy price falls begin to drop out of the calculations.”
“German CPI data came in as we expected (and stronger than markets), and we expect to see a repeat on Friday with upside risks to euro area inflation. We expect a 0.1% y/y reading (markets: 0.0% y/y), up from -0.1% y/y in September.”
For more information, read our latest forex news.
USD/JPY drops further to 120.70 on BOJ’s Kuroda
FXStreet (Mumbai) - The staunch comments from BOJ Governor Kuroda at the presser added to the BOJ’s on-hold policy stance, and boosted the JPY bulls further in the early European trades.
USD/JPY keeps falling below 121 handle
Currently, the USD/JPY pair drops -0.33% to 120.74, heading for a retest of daily lows struck at 120.34 in mid-Asia. The USD/JPY pair dropped 40-pips as markets react to the BOJ Governor’s comment, especially after Kuroda acknowledged that the delay in timeframe to achieve the 2% price target is mainly due to the falling oil prices.
This means that the BOJ Chief thinks that the drop in energy prices is the main reason hampering Japan’s CPI target.
Moreover, renewed sell-off witnessed in the US dollar across the board amid expectations of a positive start on the European markets also contributed to the sharp drop in USD/JPY.
Meanwhile, markets continue to digest the latest BOJ news, while the focus now turns towards a batch of US economic releases due later today, which may set the tone for further USD moves ahead of the NFP week.
USD/JPY Technical levels to watch
The prices fall further below 121 barrier, with the immediate support in sight located at 120.23/21 (Oct 28 & 23 Low), below which 120 (round number) would be tested. While the USD/JPY recovery would face stiff resistance at 121 handle, above which the pair could test 121.50 (Today’s High + 200-DMA confluence) and from there to 121.62/73 (100-DMA + Aug 28 High).
For more information, read our latest forex news.
USD/JPY keeps falling below 121 handle
Currently, the USD/JPY pair drops -0.33% to 120.74, heading for a retest of daily lows struck at 120.34 in mid-Asia. The USD/JPY pair dropped 40-pips as markets react to the BOJ Governor’s comment, especially after Kuroda acknowledged that the delay in timeframe to achieve the 2% price target is mainly due to the falling oil prices.
This means that the BOJ Chief thinks that the drop in energy prices is the main reason hampering Japan’s CPI target.
Moreover, renewed sell-off witnessed in the US dollar across the board amid expectations of a positive start on the European markets also contributed to the sharp drop in USD/JPY.
Meanwhile, markets continue to digest the latest BOJ news, while the focus now turns towards a batch of US economic releases due later today, which may set the tone for further USD moves ahead of the NFP week.
USD/JPY Technical levels to watch
The prices fall further below 121 barrier, with the immediate support in sight located at 120.23/21 (Oct 28 & 23 Low), below which 120 (round number) would be tested. While the USD/JPY recovery would face stiff resistance at 121 handle, above which the pair could test 121.50 (Today’s High + 200-DMA confluence) and from there to 121.62/73 (100-DMA + Aug 28 High).
For more information, read our latest forex news.
Eurozone HICP inflation likely to bounce back into positive zone – Danske Bank
FXStreet (Delhi) - Research Team at Danske Bank, suggest that after the drop back into deflation territory in September, they expect the Eurozone HICP inflation figure to reverse back into inflation and forecast a rate of 0.1% y/y.
Key Quotes
“Gasoline prices declined again in October and we forecast the energy price component to be broadly unchanged. Instead we look for an increase in core inflation to 1.0% y/y from 0.9% y/y in September due to both higher service and goods price inflation.”
“Our forecasts are above consensus and after the higher-than-expected German numbers yesterday the risk might be skewed towards even higher numbers.”
For more information, read our latest forex news.
Key Quotes
“Gasoline prices declined again in October and we forecast the energy price component to be broadly unchanged. Instead we look for an increase in core inflation to 1.0% y/y from 0.9% y/y in September due to both higher service and goods price inflation.”
“Our forecasts are above consensus and after the higher-than-expected German numbers yesterday the risk might be skewed towards even higher numbers.”
For more information, read our latest forex news.
EUR/JPY stuck between key MAs
FXStreet (Mumbai) - The EUR/JPY cross finds itself stuck between the hourly 100-MA and 50-MA at 132.98 and 132.66 amid broad based USD selling in early Europe.
Yen gains as Kuroda disappoints
The Bank of Japan governor Kuroda kept the policy instruments unchanged and attributed the delay in achieving the inflation target to oil prices. The Yen is being bought across the board as Kuroda’s stance signaled markets that the bank may not ease further so long as weak oil is responsible for low inflation.
However, the downside in the EUR/JPY is being capped around hourly 50-MA on account of broad based USD selling; courtesy of which the EUR/USD pair rose to 1.10 handle.
EUR/JPY Technical Levels
The immediate support is seen at 132.66 (hourly 50-MA), under which the pair could drop to 132.20 (daily low). A break below the same would expose previous session’s low at 131.58. On the other side, resistance is seen at 132.98 (hourly 100-MA) and 133.15 (Sep 23 high), followed by a major hurdle at 134.00.
For more information, read our latest forex news.
Yen gains as Kuroda disappoints
The Bank of Japan governor Kuroda kept the policy instruments unchanged and attributed the delay in achieving the inflation target to oil prices. The Yen is being bought across the board as Kuroda’s stance signaled markets that the bank may not ease further so long as weak oil is responsible for low inflation.
However, the downside in the EUR/JPY is being capped around hourly 50-MA on account of broad based USD selling; courtesy of which the EUR/USD pair rose to 1.10 handle.
EUR/JPY Technical Levels
The immediate support is seen at 132.66 (hourly 50-MA), under which the pair could drop to 132.20 (daily low). A break below the same would expose previous session’s low at 131.58. On the other side, resistance is seen at 132.98 (hourly 100-MA) and 133.15 (Sep 23 high), followed by a major hurdle at 134.00.
For more information, read our latest forex news.
EUR/USD clinches highs beyond 1.10
FXStreet (Edinburgh) - A wave of selling pressure is hitting the dollar at the end of the Asian session on Friday, sending EUR/USD to session highs above the 1.0 barrier.
EUR/USD focus on CPI
The renewed offered tone around the greenback is allowing spot to stab the psychological handle at 1.1000 early today, extending the rebound after the FOMC-induced drop to the 1.0900 neighbourhood on Wednesday.
On the data front, preliminary October inflation figures in Euroland will grab all the attention, while Personal Income/Spending and Employment Cost Index (ECI) will take centre stage across the pond.
EUR/USD levels to watch
As of writing the pair is advancing 0.14% at 1.0993 and a break above 1.1021 (76.4% Fibo of 1.0808-1.1713) would target 1.1111 (200-day sma) en route to 1.1160 (100-day sma). On the other hand, the initial support lines up at 1.0894 (low post-FOMC Oct.28) followed by 1.0847 (low Aug.5) and finally 1.0808 (low Jul.20).
For more information, read our latest forex news.
EUR/USD focus on CPI
The renewed offered tone around the greenback is allowing spot to stab the psychological handle at 1.1000 early today, extending the rebound after the FOMC-induced drop to the 1.0900 neighbourhood on Wednesday.
On the data front, preliminary October inflation figures in Euroland will grab all the attention, while Personal Income/Spending and Employment Cost Index (ECI) will take centre stage across the pond.
EUR/USD levels to watch
As of writing the pair is advancing 0.14% at 1.0993 and a break above 1.1021 (76.4% Fibo of 1.0808-1.1713) would target 1.1111 (200-day sma) en route to 1.1160 (100-day sma). On the other hand, the initial support lines up at 1.0894 (low post-FOMC Oct.28) followed by 1.0847 (low Aug.5) and finally 1.0808 (low Jul.20).
For more information, read our latest forex news.
FX: Option expiries for today's NY cut
FXStreet (Bali) - FX option expiries for today's NY cut at 10am, via DTCC, can be found below.
- EUR/USD: 1.0800(E631mn), 1.0900(E591mn), 1.0925(E1.12bn), 1.0950(E782mn), 1.0985(E350mn), 1.1000(E1.19bn)
- USD/JPY: 120.00($531mn), 120.75($628mn), 121.00($1.65bn), 121.50($804mn), 121.95-122.00($1.59bn)
- GBP/USD: 1.5345(Gbp215mn)
- USD/CHF: 0.9750($460mn), 0.9850($200mn)
- AUD/USD: 0.6900(A$3.55bn), 0.7100(A$326mn), 0.7123-25(A$828mn), 0.7200(A$1.04bn)
- AUD/JPY: 83.10(A$250mn), 87.50(A$205mn)
- USD/CAD: 1.3120($330mn), 1.3250-65($341mn)
For more information, read our latest forex news.
- EUR/USD: 1.0800(E631mn), 1.0900(E591mn), 1.0925(E1.12bn), 1.0950(E782mn), 1.0985(E350mn), 1.1000(E1.19bn)
- USD/JPY: 120.00($531mn), 120.75($628mn), 121.00($1.65bn), 121.50($804mn), 121.95-122.00($1.59bn)
- GBP/USD: 1.5345(Gbp215mn)
- USD/CHF: 0.9750($460mn), 0.9850($200mn)
- AUD/USD: 0.6900(A$3.55bn), 0.7100(A$326mn), 0.7123-25(A$828mn), 0.7200(A$1.04bn)
- AUD/JPY: 83.10(A$250mn), 87.50(A$205mn)
- USD/CAD: 1.3120($330mn), 1.3250-65($341mn)
For more information, read our latest forex news.
EUR: Likelihood of December ECB action rising - SocGen
FXStreet (Delhi) - Michel Martinez, Research Analyst at Societe Generale, expects that the ECB now looks increasingly set to act in December.
Key Quotes
“Last week after the ECB meeting, we saw a December move as less likely – but still very possible – than a March 2016 move. A series of developments (dovish tone from ECB board members, weakness in credit dynamics, Fed action delayed) has changed our minds.”
“We expect: 1) a 10bp deposit rate cut, which happened the last two times; 2) an increase in the size of asset purchases from €60bn to €70-80bn (adding also corporate bonds); 3) an extension of the QE and TLTRO programmes beyond September 2016. We expect the ECB to indicate that the QE programme will run until inflation rates near 2%.”
For more information, read our latest forex news.
Key Quotes
“Last week after the ECB meeting, we saw a December move as less likely – but still very possible – than a March 2016 move. A series of developments (dovish tone from ECB board members, weakness in credit dynamics, Fed action delayed) has changed our minds.”
“We expect: 1) a 10bp deposit rate cut, which happened the last two times; 2) an increase in the size of asset purchases from €60bn to €70-80bn (adding also corporate bonds); 3) an extension of the QE and TLTRO programmes beyond September 2016. We expect the ECB to indicate that the QE programme will run until inflation rates near 2%.”
For more information, read our latest forex news.
CPI will be around 0.0% for the time being – BOJ’s Kuroda
FXStreet (Mumbai) - The Bank of Japan governor Kuroda, in his press conference, acknowledged the low inflation situation by stating that inflation is likely to stay around zero levels for the time being.
Kuroda assured markets that inflation is expected to hit the 2% target by H2 of FY 2016, a point noted in the BOJ’s semi-annual report released few minutes ago.
Key Quotes
Japanese growth will exceed potential in FY2015 & 16
Recovery moderate despite EM slowdown
The virtuous economic cycle is working in the economy
For more information, read our latest forex news.
Kuroda assured markets that inflation is expected to hit the 2% target by H2 of FY 2016, a point noted in the BOJ’s semi-annual report released few minutes ago.
Key Quotes
Japanese growth will exceed potential in FY2015 & 16
Recovery moderate despite EM slowdown
The virtuous economic cycle is working in the economy
For more information, read our latest forex news.
GBP/USD finds support at hourly 100-SMA
FXStreet (Mumbai) - The bid tone on the GBP remains intact heading into the European opening bells, driving GBP/USD towards 200-DMA placed at 1.5353 levels.
GBP/USD holds above 5-DMA
The GBP/USD pair trades 0.07% higher at 1.5320, retreating gradually from daily highs reached at 1.5335 at Tokyo open. The GBP/USD pair stalls its recovery from 1.5240 levels and now consolidates on the 1.53 handle, clinging to the hourly 100-SMA support located near 1.5310 levels.
The cable remains supported on the back of broad based US dollar weakness as markets continue to weigh the poor US GDP and pending home sales report. While upbeat mortgage and net lendings data from the UK released in the previous session keeps the GBP buoyed.
Meanwhile, markets will continue to track the sentiment on the European stocks amid lack of economic news from the UK docket. While a series of key US macro data will be closely watched for fresh cues.
GBP/USD Levels to consider
The pair has an immediate resistance at 1.5353/63 (200/20-DMA) above which gains could be extended to 1.5400 (round number). On the flip side, the immediate support is seen at 1.5313/10 (1h 100-SMA/ Today’s Low) below which it could extend losses to 1.5245 (Oct 28 Low).
For more information, read our latest forex news.
GBP/USD holds above 5-DMA
The GBP/USD pair trades 0.07% higher at 1.5320, retreating gradually from daily highs reached at 1.5335 at Tokyo open. The GBP/USD pair stalls its recovery from 1.5240 levels and now consolidates on the 1.53 handle, clinging to the hourly 100-SMA support located near 1.5310 levels.
The cable remains supported on the back of broad based US dollar weakness as markets continue to weigh the poor US GDP and pending home sales report. While upbeat mortgage and net lendings data from the UK released in the previous session keeps the GBP buoyed.
Meanwhile, markets will continue to track the sentiment on the European stocks amid lack of economic news from the UK docket. While a series of key US macro data will be closely watched for fresh cues.
GBP/USD Levels to consider
The pair has an immediate resistance at 1.5353/63 (200/20-DMA) above which gains could be extended to 1.5400 (round number). On the flip side, the immediate support is seen at 1.5313/10 (1h 100-SMA/ Today’s Low) below which it could extend losses to 1.5245 (Oct 28 Low).
For more information, read our latest forex news.
EUR/JPY retreats from highs, back below 133.00
FXStreet (Edinburgh) - The Japanese yen is now reclaiming some of the ground lost earlier, dragging EUR/JPY to levels below the 133.00 handle.
EUR/JPY lower on BoJ
The safe haven JPY has gathered further ground after the Bank of Japan has left intact its monetary policy today. In addition, the central bank has revised lower its forecasts for inflation and economic growth, as widely expected.
Regarding the inflation target, the BoJ now expects to reach the 2% goal in H2 FY2016, while it has argued that lower energy prices are to be blamed for the lack of reaction in consumer prices.
EUR/JPY significant levels
The cross is now losing 0.02% at 132.93 and a breach of 132.18 (monthly low Sep.8) would expose 131.79 (61.8% Fibo of 126.05-141.07) and finally 130.12 (low Jan.26). On the upside, the initial barrier lies at 133.56 (50% Fibo of 126.05-141.07) followed by 134.49 (200-day ma) and then 135.00 (psychological level).
For more information, read our latest forex news.
EUR/JPY lower on BoJ
The safe haven JPY has gathered further ground after the Bank of Japan has left intact its monetary policy today. In addition, the central bank has revised lower its forecasts for inflation and economic growth, as widely expected.
Regarding the inflation target, the BoJ now expects to reach the 2% goal in H2 FY2016, while it has argued that lower energy prices are to be blamed for the lack of reaction in consumer prices.
EUR/JPY significant levels
The cross is now losing 0.02% at 132.93 and a breach of 132.18 (monthly low Sep.8) would expose 131.79 (61.8% Fibo of 126.05-141.07) and finally 130.12 (low Jan.26). On the upside, the initial barrier lies at 133.56 (50% Fibo of 126.05-141.07) followed by 134.49 (200-day ma) and then 135.00 (psychological level).
For more information, read our latest forex news.
Germany: Domestic strength showcased by solid labour market – Deutsche Bank
FXStreet (Delhi) - Research Team at Deutsche Bank, suggest that the German October labour market development highlights the resilience of the domestic economy despite the strong international headwinds (e.g. EM slowdown).
Key Quotes
“The slight decline of the number of unemployed persons in October was in line with market expectations (-5,000 mom to 2.788 mio vs. Reuters consensus -4,000). The unemployment rate remained unchanged at the post-unification low of 6.4% and the harmonized rate stood at 4.5%, which is the lowest among EMU (EMU ex DE: 13.4%).”
“Positive surprise was the continued acceleration of employment growth and the upward revision of the employment level for previous months esp. in the services sector (prev. month revision of employment level + 122,000 or + 0.3pp). After the deceleration of employment growth, esp. at the start of 2015 due to corporations cutting low-paid employment after the minimum wage introduction (-195,000 or -3.9% yoy), it showed a stronger momentum recently.”
“In September employment grew by a healthy 50,000 mom which pushed the 3M mov. avg. to 45,000 and the year-on-year rate to 0.9% - the highest rate since July 2014.”
“Labour demand as measured by the Federal Labour Agency’s job index climbed to a new peak of 202 points in October.”
For more information, read our latest forex news.
Key Quotes
“The slight decline of the number of unemployed persons in October was in line with market expectations (-5,000 mom to 2.788 mio vs. Reuters consensus -4,000). The unemployment rate remained unchanged at the post-unification low of 6.4% and the harmonized rate stood at 4.5%, which is the lowest among EMU (EMU ex DE: 13.4%).”
“Positive surprise was the continued acceleration of employment growth and the upward revision of the employment level for previous months esp. in the services sector (prev. month revision of employment level + 122,000 or + 0.3pp). After the deceleration of employment growth, esp. at the start of 2015 due to corporations cutting low-paid employment after the minimum wage introduction (-195,000 or -3.9% yoy), it showed a stronger momentum recently.”
“In September employment grew by a healthy 50,000 mom which pushed the 3M mov. avg. to 45,000 and the year-on-year rate to 0.9% - the highest rate since July 2014.”
“Labour demand as measured by the Federal Labour Agency’s job index climbed to a new peak of 202 points in October.”
For more information, read our latest forex news.
USD/JPY: Yen back on the bids post-Semi-annual outlook, below 121
FXStreet (Mumbai) - The Japanese yen regained lost footing versus its American counterpart in the late-Asian trades, knocking-off USD/JPY back below 121 handle.
USD/JPY drops from above post-FOMC highs
Currently, the USD/JPY pair drops -0.16% to 120.94, sharply retracing from fresh four-day highs recorded at 120.47 in last hours. The USD/JPY recovery lost steam near the mid-point of 121 handle and the prices retreated below the last, as the yen bulls fought back control following the release of the BOJ’s Semi-annual outlook report.
The latest report released downgraded the assessment for Japan’s 2015 and 2016 CPI and GDP forecasts while also noted that downside risks outweigh the upside risks seen in the economy. However, on the positive side, BOJ sees 2% price target to be achieved around second half of FY2016 and also noted that there exists no signs of Japan asset price bubble due to the easy policy approach.
Earlier in Asia, the BOJ left its monetary policy settings unadjusted at its monetary policy decision today with the voting composition maintained at 8-1.
Meanwhile, markets continue to digest the latest forecasts published by the BOJ and eagerly await Governor Kuroda’s take on the economic outlook.
USD/JPY Technical levels to watch
The prices remain capped below 121 barrier, above which the pair could find the immediate hurdle near 121.50 (Today’s High + 200-DMA confluence) and from there to 121.62/73 (100-DMA + Aug 28 High). To the downside, the immediate support in sight is located at 120.23/21 (Oct 28 & 23 Low), below which 120 (round number) would be tested.
For more information, read our latest forex news.
USD/JPY drops from above post-FOMC highs
Currently, the USD/JPY pair drops -0.16% to 120.94, sharply retracing from fresh four-day highs recorded at 120.47 in last hours. The USD/JPY recovery lost steam near the mid-point of 121 handle and the prices retreated below the last, as the yen bulls fought back control following the release of the BOJ’s Semi-annual outlook report.
The latest report released downgraded the assessment for Japan’s 2015 and 2016 CPI and GDP forecasts while also noted that downside risks outweigh the upside risks seen in the economy. However, on the positive side, BOJ sees 2% price target to be achieved around second half of FY2016 and also noted that there exists no signs of Japan asset price bubble due to the easy policy approach.
Earlier in Asia, the BOJ left its monetary policy settings unadjusted at its monetary policy decision today with the voting composition maintained at 8-1.
Meanwhile, markets continue to digest the latest forecasts published by the BOJ and eagerly await Governor Kuroda’s take on the economic outlook.
USD/JPY Technical levels to watch
The prices remain capped below 121 barrier, above which the pair could find the immediate hurdle near 121.50 (Today’s High + 200-DMA confluence) and from there to 121.62/73 (100-DMA + Aug 28 High). To the downside, the immediate support in sight is located at 120.23/21 (Oct 28 & 23 Low), below which 120 (round number) would be tested.
For more information, read our latest forex news.
BOJ pushes back CPI target to H2 of FY 2016
FXStreet (Mumbai) - The Bank of Japan (BOJ), in its semi-annual report, pushed back its inflation target to second half of FY 2016 and said the timing of hitting the CPI target is dependent on oil prices.
The bank also revised its growth and inflation forecasts lower as expected and once again reiterated readiness to do more or adjust policy as needed to achieve its inflation target.
Key Points
BOJ expects to hit 2% CPI target by around second half of FY 2016, pushing back timeline from previous estimates
FY2015 GDP now seen at 1.2% vs 1.7% prior, FY2016 1.4% vs 1.5% prior, FY2017 0.3% vs 0.2% prior
Downgrades FY2016 core CPI estimate to 1.4% from 1.9% prior
Growth and inflation risks skewed to the downside, but the price growth trend steadily improving. Potential growth rate around 0.5% or lower
CPI outlook downgrade due to oil price drop. Inflation to accelerate as impact of oil fades, but considerable uncertainty in outlook
Wage improvement somewhat slow but mechanism seen for inflation rise with wage growth. Risks include 2017 sales tax rise
Easing exerting intended effects, will continue until 2% inflation is stable. Will monitor risks, adjust policy as needed
For more information, read our latest forex news.
The bank also revised its growth and inflation forecasts lower as expected and once again reiterated readiness to do more or adjust policy as needed to achieve its inflation target.
Key Points
BOJ expects to hit 2% CPI target by around second half of FY 2016, pushing back timeline from previous estimates
FY2015 GDP now seen at 1.2% vs 1.7% prior, FY2016 1.4% vs 1.5% prior, FY2017 0.3% vs 0.2% prior
Downgrades FY2016 core CPI estimate to 1.4% from 1.9% prior
Growth and inflation risks skewed to the downside, but the price growth trend steadily improving. Potential growth rate around 0.5% or lower
CPI outlook downgrade due to oil price drop. Inflation to accelerate as impact of oil fades, but considerable uncertainty in outlook
Wage improvement somewhat slow but mechanism seen for inflation rise with wage growth. Risks include 2017 sales tax rise
Easing exerting intended effects, will continue until 2% inflation is stable. Will monitor risks, adjust policy as needed
For more information, read our latest forex news.
EUR/USD capped below 1.10, recedes to 1h 50-SMA
FXStreet (Mumbai) - EUR/USD prolongs its post-FOMC recovery for the second day in a row, although failed to break through 1.10 barrier on couple of attempts seen during Asia.
EUR/USD wavers below 5-DMA
The EUR/USD pair trades modestly flat at 1.0981, having found strong support above the daily pivot located at 1.0955. The major remains on the bids and keeps the recovery mode intact as the USD bulls take a backseat following the dismal US economic releases in the last US session.
The advance US GDP estimate showed an expansion of 1.5% in Sept quarter, just as the markets had been expecting, slowing down sharply from a 3.9% rise seen in the second quarter. While the pending home sales index fell 2.3% to 106.8 points in September, completely missing the 1% gain markets had been expecting.
Moreover, the mixed performance seen on the Asian equities also fuels the demand for the safe-havens such as the euro. The Nikkei rallies 1% while Australia’s ASX closed -0.52% lower. While the Shanghai Composite index trades muted below 3,400 levels.
Looking ahead, markets will await the German retail sales data ahead of the Eurozone CPI and employment data due later in the European session. While a batch of crucial US economic news also remains in focus for further momentum.
EUR/USD Technical Levels
The pair faced rejection at 1.10 handle and heads lower towards the immediate the next support located at 1.0955/50 (daily pivot/ psychological levels). Selling pressure will intensify below the last, dragging the pair towards 1.0900 (round number) and below that 1.0844/40 (daily S3/ Aug lows) could be exposed. While to the upside, the immediate resistance is at 1.10 (today’s high/ round number), beyond which 1.1013 (1h 100-SMA) is likely to be attempted.
For more information, read our latest forex news.
EUR/USD wavers below 5-DMA
The EUR/USD pair trades modestly flat at 1.0981, having found strong support above the daily pivot located at 1.0955. The major remains on the bids and keeps the recovery mode intact as the USD bulls take a backseat following the dismal US economic releases in the last US session.
The advance US GDP estimate showed an expansion of 1.5% in Sept quarter, just as the markets had been expecting, slowing down sharply from a 3.9% rise seen in the second quarter. While the pending home sales index fell 2.3% to 106.8 points in September, completely missing the 1% gain markets had been expecting.
Moreover, the mixed performance seen on the Asian equities also fuels the demand for the safe-havens such as the euro. The Nikkei rallies 1% while Australia’s ASX closed -0.52% lower. While the Shanghai Composite index trades muted below 3,400 levels.
Looking ahead, markets will await the German retail sales data ahead of the Eurozone CPI and employment data due later in the European session. While a batch of crucial US economic news also remains in focus for further momentum.
EUR/USD Technical Levels
The pair faced rejection at 1.10 handle and heads lower towards the immediate the next support located at 1.0955/50 (daily pivot/ psychological levels). Selling pressure will intensify below the last, dragging the pair towards 1.0900 (round number) and below that 1.0844/40 (daily S3/ Aug lows) could be exposed. While to the upside, the immediate resistance is at 1.10 (today’s high/ round number), beyond which 1.1013 (1h 100-SMA) is likely to be attempted.
For more information, read our latest forex news.
Time has come for next leg of dollar rally? – SocGen
FXStreet (Delhi) – Kit Juckes, Research Analyst at Societe Generale, questions that whether commodity prices are in overshoot and set to stabilise, or still set for another significant leg lower as global growth slows which would drive the dollar up more than anything the FOMC might deliver.
Key Quotes
“The FX market’s focus has moved back to G4 (US, Euro, Japan and China) central bank
policy divergence. The Fed is teasing us with the possibility of a December rate hike. The
ECB is suggesting rather more forcefully that more easing (more QE, perhaps a deposit
rate cut as well) could be forthcoming. At least the PBoC has cut rates.”
“How the dollar trades against the yen and the Euro may depend on the minutiae of policy divergence between the ECB, BOJ and Fed, but for the wider FX market, the bigger questions is where the commodity super-cycle is headed.”
“While we wait and see whether China’s economy and policy-makers can avoid triggering another downturn in commodity prices and another significant period of dollar strength, we go on being seduced into over-reacting to every single hint and nudge from the Fed, ECB and
BOJ.”
“If the Fed hikes in December and the ECB delivers a further cut in the deposit rate, I reckon EUR/USD will re-test the March lows before Christmas. If the Fed delays again and the ECB goes on talking while delivering little (a bit more QE but no rate cut), then EUR/USD could easily meander back towards 1.16. ECB action is likelier than Fed action, and I suppose that keeps EUR/USD in the bottom half of its range. In the meantime, EUR/USD will go on loosely tracking the Bund/Treasury spread.”
For more information, read our latest forex news.
Key Quotes
“The FX market’s focus has moved back to G4 (US, Euro, Japan and China) central bank
policy divergence. The Fed is teasing us with the possibility of a December rate hike. The
ECB is suggesting rather more forcefully that more easing (more QE, perhaps a deposit
rate cut as well) could be forthcoming. At least the PBoC has cut rates.”
“How the dollar trades against the yen and the Euro may depend on the minutiae of policy divergence between the ECB, BOJ and Fed, but for the wider FX market, the bigger questions is where the commodity super-cycle is headed.”
“While we wait and see whether China’s economy and policy-makers can avoid triggering another downturn in commodity prices and another significant period of dollar strength, we go on being seduced into over-reacting to every single hint and nudge from the Fed, ECB and
BOJ.”
“If the Fed hikes in December and the ECB delivers a further cut in the deposit rate, I reckon EUR/USD will re-test the March lows before Christmas. If the Fed delays again and the ECB goes on talking while delivering little (a bit more QE but no rate cut), then EUR/USD could easily meander back towards 1.16. ECB action is likelier than Fed action, and I suppose that keeps EUR/USD in the bottom half of its range. In the meantime, EUR/USD will go on loosely tracking the Bund/Treasury spread.”
For more information, read our latest forex news.
BOJ set to cut inflation outlook - Nikkei
FXStreet (Bali) - BOJ is set to cut its inflation outlook, Nikkei reports, via Bloomberg, noting BOJ will cut FY15 CPI outlook to 0.1% from 0.7%, while also cutting FY2016 to 1.4%.
Reuters reported on the likelihood of downgrading both CPI and GDP last Friday. See report here. The BOJ semi-annual report, where these predictions may be confirmed, is due at 6GMT, that is, in just under 15m.
For more information, read our latest forex news.
Reuters reported on the likelihood of downgrading both CPI and GDP last Friday. See report here. The BOJ semi-annual report, where these predictions may be confirmed, is due at 6GMT, that is, in just under 15m.
For more information, read our latest forex news.
US debt ceiling bill passes Senate
FXStreet (Bali) - The US debt ceiling bill had enough votes to pass the Senate, with votes 63-35 (60 was minimum threshold to reach). Unless a major surprise, the bill has clearance to be signed by US President Barack Obama.
For more information, read our latest forex news.
For more information, read our latest forex news.
AUD weakness led by lower terms of trade - Nomura
FXStreet (Delhi) - Charles St-Arnaud, Research Analyst at Nomura, suggests that the main driver of the weaker AUD is the lower terms of trade, not lower rates.
Key Quotes
“The AUD TWI has depreciated by about 25% since 2013. We decompose the depreciation and found that only between 15% and 20% of the move is owing to the narrower rates differential, while lower commodity prices account for about 75% of the move.”
“This means that using monetary policy to stimulate the economy via a weaker currency is very inefficient. Moreover, it also shows that the main way AUD can depreciate is via a further decline in commodity prices, which in turn would be negative for Australia’s terms of trade and the economy.”
“The weak CPI report for Q3 has raised expectations that the Reserve Bank of Australia (RBA) will cut rates sooner rather than later. Currently, we continue to believe the RBA’s next move will be a cut in February.”
“With the RBA having said many times that a weaker currency will support the transition from a resource-led economy to a non-resource-led one, many investors have now taken this to mean that the RBA wants monetary policy to weaken AUD. However, what impact does the rate cut have on the currency?”
For more information, read our latest forex news.
Key Quotes
“The AUD TWI has depreciated by about 25% since 2013. We decompose the depreciation and found that only between 15% and 20% of the move is owing to the narrower rates differential, while lower commodity prices account for about 75% of the move.”
“This means that using monetary policy to stimulate the economy via a weaker currency is very inefficient. Moreover, it also shows that the main way AUD can depreciate is via a further decline in commodity prices, which in turn would be negative for Australia’s terms of trade and the economy.”
“The weak CPI report for Q3 has raised expectations that the Reserve Bank of Australia (RBA) will cut rates sooner rather than later. Currently, we continue to believe the RBA’s next move will be a cut in February.”
“With the RBA having said many times that a weaker currency will support the transition from a resource-led economy to a non-resource-led one, many investors have now taken this to mean that the RBA wants monetary policy to weaken AUD. However, what impact does the rate cut have on the currency?”
For more information, read our latest forex news.
Yen volatile post-BOJ, Kuroda presser, EU CPI – Up Next
FXStreet (Mumbai) - Finally the much-awaited BOJ policy decision was announced earlier in Asia, with markets disappointed as BOJ eventless yet again. While the Japanese currency experienced wild swings on both sides following BOJ’s on-hold policy stance. The Antipodeans staged a solid comeback from the previous slump, despite the ongoing divergent policy outlooks.
Key headlines in Asia
BOJ leaves policy unchanged
BOJ out of the way, Kuroda presser up next
Dominating themes in Asia - centered on JPY, AUD, NZD
Markets shrugged off the economic releases across the Asia-pac regions as the main market mover during this session emerged the BOJ policy decision. The BOJ made no changes to its monetary policy and continued with its pledge to increase monetary base at annual pace Of 80 trln yen. The status-quo maintained by the BOJ today squashed market expectations of further easing, thus boosting the sentiment around the Japanese currency in a knee-jerk reaction.
However, the USD/JPY bulls quickly regained ground, driving the major beyond post-FOMC highs near 120.40, as markets turned attention towards the BOJ semi-annual outlook report expected to be published at 6GMT. The central bank is expected to downgrade the assessment of Japan’s CPI and GDP forecasts, thus weighing heavily on the yen.
While the Antipodes rebounded sharply higher, with the Kiwi gaining the most on the back of a strong jump in the NZ business confidence outlook as reported by ANZ. While the Aussie towed-in and extended higher on the back of recovery in the commodities space. While markets also cheered upbeat Aus factory gate prices data, with the PPI rising 0.9% in Sept quarter against a 0.3% rise expected. While Australian private sector credit also came in better than expected at 0.8% (0.5% expected). AUD/USD rallies 0.37% to 0.7100, while the Kiwi flies 0.60% to 0.6733.
On the equities space, the Asian stocks trade mixed, with the Japanese stocking rebounding higher as markets continue to digest the latest BOJ policy decision. The Nikkei is rallying 1.04% to 19,140. Australia’s S&P ASX index drops -0.54% to 5,239. While China’s A50 index gains 0.39% to 10,058. Hong Kong’s Hang Seng turns positive to 22,857.
Heading into Europe & the US
BOJ Kuroda’s press conference is likely to kick-start a data-heavy European session, with all eyes on the German retail sales and the Euro zone flash CPI estimate and labor market report.
Germany will report the results of retail sales in September, with a 0.4% gain forecast on a monthly basis, following the 0.4% drop in August, and a 3.4% hike annually after advancing 2.5% y/y a month ago.
The euro zone will publish its October inflation data estimate, with inflation expected to register a flat 0.0% result year-on-year. In September, consumer price growth in the euro zone reached a negative 0.1% annual level.
While the rate of registered unemployed in the region was 11.0% in August, and is expected to remain at the same level.
Looking towards the NA session, we have an eventful macro calendar with the Fed’s most preferred inflation gauge to hog the limelight. While personal spending, Chicago PMI, UoM consumer sentiment and employment cost index will be also published. The core PCE inflation rate is expected to decline, slipping to 1.4% from the previous 1.9%.
Besides, FOMC member Williams is scheduled to deliver a speech in Washington.
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FXStreet explained, “The short term picture however, is far from supporting additional gains, as in the 1 hour chart, the technical indicators have turned flat after recovering above their mid-lines, whilst the price remains well below a bearish 100 SMA. In the 4 hours chart, the technical indicators are heading slightly lower well into negative territory, while the 20 SMA maintains its bearish tone, offering an immediate resistance around 1.1015. Being the last day of the month, investors may take some profits out of the table this Friday although sellers will likely add at higher levels.”
For more information, read our latest forex news.
Key headlines in Asia
BOJ leaves policy unchanged
BOJ out of the way, Kuroda presser up next
Dominating themes in Asia - centered on JPY, AUD, NZD
Markets shrugged off the economic releases across the Asia-pac regions as the main market mover during this session emerged the BOJ policy decision. The BOJ made no changes to its monetary policy and continued with its pledge to increase monetary base at annual pace Of 80 trln yen. The status-quo maintained by the BOJ today squashed market expectations of further easing, thus boosting the sentiment around the Japanese currency in a knee-jerk reaction.
However, the USD/JPY bulls quickly regained ground, driving the major beyond post-FOMC highs near 120.40, as markets turned attention towards the BOJ semi-annual outlook report expected to be published at 6GMT. The central bank is expected to downgrade the assessment of Japan’s CPI and GDP forecasts, thus weighing heavily on the yen.
While the Antipodes rebounded sharply higher, with the Kiwi gaining the most on the back of a strong jump in the NZ business confidence outlook as reported by ANZ. While the Aussie towed-in and extended higher on the back of recovery in the commodities space. While markets also cheered upbeat Aus factory gate prices data, with the PPI rising 0.9% in Sept quarter against a 0.3% rise expected. While Australian private sector credit also came in better than expected at 0.8% (0.5% expected). AUD/USD rallies 0.37% to 0.7100, while the Kiwi flies 0.60% to 0.6733.
On the equities space, the Asian stocks trade mixed, with the Japanese stocking rebounding higher as markets continue to digest the latest BOJ policy decision. The Nikkei is rallying 1.04% to 19,140. Australia’s S&P ASX index drops -0.54% to 5,239. While China’s A50 index gains 0.39% to 10,058. Hong Kong’s Hang Seng turns positive to 22,857.
Heading into Europe & the US
BOJ Kuroda’s press conference is likely to kick-start a data-heavy European session, with all eyes on the German retail sales and the Euro zone flash CPI estimate and labor market report.
Germany will report the results of retail sales in September, with a 0.4% gain forecast on a monthly basis, following the 0.4% drop in August, and a 3.4% hike annually after advancing 2.5% y/y a month ago.
The euro zone will publish its October inflation data estimate, with inflation expected to register a flat 0.0% result year-on-year. In September, consumer price growth in the euro zone reached a negative 0.1% annual level.
While the rate of registered unemployed in the region was 11.0% in August, and is expected to remain at the same level.
Looking towards the NA session, we have an eventful macro calendar with the Fed’s most preferred inflation gauge to hog the limelight. While personal spending, Chicago PMI, UoM consumer sentiment and employment cost index will be also published. The core PCE inflation rate is expected to decline, slipping to 1.4% from the previous 1.9%.
Besides, FOMC member Williams is scheduled to deliver a speech in Washington.
EUR/USD Technicals
Valeria Bednarik, Chief Analyst at FXStreet explained, “The short term picture however, is far from supporting additional gains, as in the 1 hour chart, the technical indicators have turned flat after recovering above their mid-lines, whilst the price remains well below a bearish 100 SMA. In the 4 hours chart, the technical indicators are heading slightly lower well into negative territory, while the 20 SMA maintains its bearish tone, offering an immediate resistance around 1.1015. Being the last day of the month, investors may take some profits out of the table this Friday although sellers will likely add at higher levels.”
For more information, read our latest forex news.
US GDP slowed, but overall positive momentum continues – NAB
FXStreet (Delhi) - Research Team at NAB, note that that the U.S. GDP growth slowed in the September quarter to 0.4% qoq or 1.5% annualised, but while growth in most of the major categories slowed, the details were more positive.
Key Quotes
“A large part of the slowdown was due to an inventory correction which will be transitory. Consumption growth remained strong, as did housing investment, while business fixed investment and government demand continued to expand. As a result, domestic final demand remained strong, growing at a 2.9% annualised rate in the quarter.”
“The major surprise was that the net exports detraction from growth was only minimal, with both export and import growth slowing in the quarter.”
“Real private consumption slowed to a still strong 0.8% qoq from 0.9% the previous quarter. Both export and import growth slowed in the September quarter. Exports over the last year have managed to grow by 1.5% qoq despite the strong appreciation of the U.S. dollar and a lacklustre world economy. Import growth has, however, been stronger, again reflecting the U.S. dollar appreciation (which improves the competitiveness of importers) and reasonably strong U.S. domestic demand.”
“However, we expect that the economy will continue to grow at a solid pace given the strong underlying momentum in consumption and residential investment. The drag on business investment from lower oil prices should slow as prices stabilise, although investment from businesses exposed to the U.S. dollar (particularly in manufacturing) will continue to come under pressure. Easing lending standards are also likely to continue to be a positive factor.”
“Moreover, the headwind from fiscal policy seems well and truly past. This week’s federal budget deal (still subject to Senate approval, but this appears almost certain to be given) not only provides a small fiscal boost, but also removes the tail risks around government shutdowns and default at least until 2017.”
“While our outlook for the economy is essentially unchanged, due to the slightly lower than expected September quarter result the forecast for 2015 has been lowered from 2.5% to 2.4%.”
For more information, read our latest forex news.
Key Quotes
“A large part of the slowdown was due to an inventory correction which will be transitory. Consumption growth remained strong, as did housing investment, while business fixed investment and government demand continued to expand. As a result, domestic final demand remained strong, growing at a 2.9% annualised rate in the quarter.”
“The major surprise was that the net exports detraction from growth was only minimal, with both export and import growth slowing in the quarter.”
“Real private consumption slowed to a still strong 0.8% qoq from 0.9% the previous quarter. Both export and import growth slowed in the September quarter. Exports over the last year have managed to grow by 1.5% qoq despite the strong appreciation of the U.S. dollar and a lacklustre world economy. Import growth has, however, been stronger, again reflecting the U.S. dollar appreciation (which improves the competitiveness of importers) and reasonably strong U.S. domestic demand.”
“However, we expect that the economy will continue to grow at a solid pace given the strong underlying momentum in consumption and residential investment. The drag on business investment from lower oil prices should slow as prices stabilise, although investment from businesses exposed to the U.S. dollar (particularly in manufacturing) will continue to come under pressure. Easing lending standards are also likely to continue to be a positive factor.”
“Moreover, the headwind from fiscal policy seems well and truly past. This week’s federal budget deal (still subject to Senate approval, but this appears almost certain to be given) not only provides a small fiscal boost, but also removes the tail risks around government shutdowns and default at least until 2017.”
“While our outlook for the economy is essentially unchanged, due to the slightly lower than expected September quarter result the forecast for 2015 has been lowered from 2.5% to 2.4%.”
For more information, read our latest forex news.
USD/JPY skyrockets above post-FOMC high
FXStreet (Bali) - USD/JPY has skyrocketed in tandem with the Nikkei 225, extending the recovery post BOJ, which as a reminder, left its policy unchanged.
Nikkei 225 bid to the boots
A headlines crossing the wires a few minutes ago, right at the time of the spike in USD/JPY, could read "Japan lobby group seeks corp tax cut to 30.88%." Another headline read "Japan considers extra budget of more than JPY 3 Tln, according to Nikkei."
Impressive USD/JPY bounce
The headlines might well be what's behind the new impulsive leg in the Nikkei 225, currently up by 1.3% today, and USD/JPY, up 15/20 pips for the session, last at 121.28, after a V-shape bounce from 120.30 all the way to 121.40, with 124.50 now acting as next key level, as per highs on Oct 23th, followed by 122.00 round number.
For more information, read our latest forex news.
Nikkei 225 bid to the boots
A headlines crossing the wires a few minutes ago, right at the time of the spike in USD/JPY, could read "Japan lobby group seeks corp tax cut to 30.88%." Another headline read "Japan considers extra budget of more than JPY 3 Tln, according to Nikkei."
Impressive USD/JPY bounce
The headlines might well be what's behind the new impulsive leg in the Nikkei 225, currently up by 1.3% today, and USD/JPY, up 15/20 pips for the session, last at 121.28, after a V-shape bounce from 120.30 all the way to 121.40, with 124.50 now acting as next key level, as per highs on Oct 23th, followed by 122.00 round number.
For more information, read our latest forex news.
USD/JPY: Yen fades BOJ-led spike, revisits 121 handle
FXStreet (Mumbai) - The USD/JPY pair stages solid recovery from the BOJ-led slump and reverted to familiar ranges near 121 handle seen before the policy announcement.
USD/JPY recovers from 120.34 lows
Currently, the USD/JPY pair drops -0.17% to 120.91, recovering from fresh session lows struck at 120.34 in last hours. The recovery in the major appears to gain momentum, with the bulls fighting back control somewhat as markets turn attention towards the BOJ semi-annual outlook report expected to be published at 6GMT. The central bank is expected downgrade the assessment of the Japan’s CPI and GDP forecasts, which may keep the gains restricted in the yen.
Earlier this session, the BOJ made no changes to its monetary policy and continued with its pledge to increase monetary base at annual pace Of 80 trln yen. The status-quo maintained by the BOJ today squashed market expectations of further easing, thus boosting the sentiment around the Japanese currency.
Meanwhile, markets now await the BOJ Semi-Annual Outlook followed by Governor Kuroda’s press conference for further momentum on the major.
USD/JPY Technical levels to watch
The prices remain capped below 121 barrier, above which the pair cold find the immediate hurdle near 121.50 (Oct 23, 26 High + 200-DMA confluence) and from there to 121.62/73 (100-DMA + Aug 28 High). To the downside, the immediate support in sight is located at 120.23/21 (Oct 28 & 23 Low), below which 120 (round number) would be tested.
For more information, read our latest forex news.
USD/JPY recovers from 120.34 lows
Currently, the USD/JPY pair drops -0.17% to 120.91, recovering from fresh session lows struck at 120.34 in last hours. The recovery in the major appears to gain momentum, with the bulls fighting back control somewhat as markets turn attention towards the BOJ semi-annual outlook report expected to be published at 6GMT. The central bank is expected downgrade the assessment of the Japan’s CPI and GDP forecasts, which may keep the gains restricted in the yen.
Earlier this session, the BOJ made no changes to its monetary policy and continued with its pledge to increase monetary base at annual pace Of 80 trln yen. The status-quo maintained by the BOJ today squashed market expectations of further easing, thus boosting the sentiment around the Japanese currency.
Meanwhile, markets now await the BOJ Semi-Annual Outlook followed by Governor Kuroda’s press conference for further momentum on the major.
USD/JPY Technical levels to watch
The prices remain capped below 121 barrier, above which the pair cold find the immediate hurdle near 121.50 (Oct 23, 26 High + 200-DMA confluence) and from there to 121.62/73 (100-DMA + Aug 28 High). To the downside, the immediate support in sight is located at 120.23/21 (Oct 28 & 23 Low), below which 120 (round number) would be tested.
For more information, read our latest forex news.
JPY: Japanese love for USD to prevail in future – Nomura
FXStreet (Delhi) - Research Team at Nomura, note that the updated lifers’ investment plans and the higher possibility of near-term Fed lift-off suggest the trend of buying USD and USD denominated securities for investments is likely to continue and USD will benefit the most from Japanese investment in foreign securities.
Key Quotes
“Japanese investment in foreign securities has been strong. Foreign bond investment has recovered recently, recording the third consecutive week of net buying last week. The start of the second half of the fiscal year is likely encouraging lifers to purchase foreign bonds.”
“Major lifers’ investment plans for H2 FY2015 showed strong dip-buying demand for foreign bonds. Their FX forecasts show a strong bias for USD bond investment, rather than EUR bonds, while some lifers specifically said they are considering concentrating their foreign bond investment in USD-denominated bonds.”
“Retail investors also have a strong preference for USD among major currencies, according our individual investor survey. In the toshin market, the share of USD and US assets in the outstanding of foreign currency denominated toshins has been rising. Public pension funds’ foreign investment likely follows key benchmarks and their investment is less biased towards USD than that of lifers and retail investors.”
“Since Japanese foreign portfolio investment accelerated last fiscal year, USD-denominated securities have been attracting the most Japanese flows, according to the BOP. In FY2014, 45.8% of foreign security investment (excluding JPY-denominated) was in USD-denominated securities. The USD share is even higher so far this fiscal year and more than 100% (101.6%) of foreign security investment between April and August this year was in USD-denominated securities.”
“Japanese investors have been selling EUR-denominated securities recently, even though they have been strong net buyers of foreign securities. So far in FY2015, GBP (12.2%) and AUD (7.9%) are also attracting some Japanese flows, but Japanese investors’ preference for USD assets is strong.”
For more information, read our latest forex news.
Key Quotes
“Japanese investment in foreign securities has been strong. Foreign bond investment has recovered recently, recording the third consecutive week of net buying last week. The start of the second half of the fiscal year is likely encouraging lifers to purchase foreign bonds.”
“Major lifers’ investment plans for H2 FY2015 showed strong dip-buying demand for foreign bonds. Their FX forecasts show a strong bias for USD bond investment, rather than EUR bonds, while some lifers specifically said they are considering concentrating their foreign bond investment in USD-denominated bonds.”
“Retail investors also have a strong preference for USD among major currencies, according our individual investor survey. In the toshin market, the share of USD and US assets in the outstanding of foreign currency denominated toshins has been rising. Public pension funds’ foreign investment likely follows key benchmarks and their investment is less biased towards USD than that of lifers and retail investors.”
“Since Japanese foreign portfolio investment accelerated last fiscal year, USD-denominated securities have been attracting the most Japanese flows, according to the BOP. In FY2014, 45.8% of foreign security investment (excluding JPY-denominated) was in USD-denominated securities. The USD share is even higher so far this fiscal year and more than 100% (101.6%) of foreign security investment between April and August this year was in USD-denominated securities.”
“Japanese investors have been selling EUR-denominated securities recently, even though they have been strong net buyers of foreign securities. So far in FY2015, GBP (12.2%) and AUD (7.9%) are also attracting some Japanese flows, but Japanese investors’ preference for USD assets is strong.”
For more information, read our latest forex news.
Nikkei pares gains as BOJ keeps policy on hold
FXStreet (Mumbai) - The stocks on the Asian bourses are trading on a mixed note, with the Japanese stocks disappointed by BOJ’s steady policy decision, as markets were widely anticipating the BOJ to unveil additional stimulus at today’s meeting.
BOJ leaves policy settings unchanged, Presser eyed
The Japanese stocks are seen losing strength and retraced below 19k mark after the BOJ’s status-quo dampened the sentiment around the corporate world amid expectations of more easy money flowing into markets.
The BOJ left its monetary policy settings unadjusted, pledging to increase the increase monetary base at annual pace Of 80 trln yen. Markets also turn cautious ahead of the BOJ semi-annual outlook report and Kuroda’s presser for more hints on the economic outlook. The Nikkei trades modestly flat around 18,977 points.
The Australian benchmark, the S&P/ASX trades marginally lower at 5,257, following the weak cues overnight from Wall Street and lower commodity prices.
Stocks on the Chinese indices traded mixed, with the mainland’s China’s Shanghai Composite index, up 0.12% at 3,391. While Hong Kong’s Hang Seng loses -0.10% to 22,796.
For more information, read our latest forex news.
BOJ leaves policy settings unchanged, Presser eyed
The Japanese stocks are seen losing strength and retraced below 19k mark after the BOJ’s status-quo dampened the sentiment around the corporate world amid expectations of more easy money flowing into markets.
The BOJ left its monetary policy settings unadjusted, pledging to increase the increase monetary base at annual pace Of 80 trln yen. Markets also turn cautious ahead of the BOJ semi-annual outlook report and Kuroda’s presser for more hints on the economic outlook. The Nikkei trades modestly flat around 18,977 points.
The Australian benchmark, the S&P/ASX trades marginally lower at 5,257, following the weak cues overnight from Wall Street and lower commodity prices.
Stocks on the Chinese indices traded mixed, with the mainland’s China’s Shanghai Composite index, up 0.12% at 3,391. While Hong Kong’s Hang Seng loses -0.10% to 22,796.
For more information, read our latest forex news.
AUD impacting businesses negatively - NAB Business Survey
FXStreet (Delhi) - Research Team at NAB, note that despite the degree of AUD depreciation since mid-2014, there is actually a higher proportion of firms in the survey indicating a negative impact from the current level of the AUD (around a third of firms).
Key Quotes
“While this is counter to the idea that a lower AUD will aid the economy’s transition through the end of the mining boom, this appears to largely reflect significant variation in the impact across industries – driven primarily by a sharp deterioration reported by the wholesale sector, and to a lesser extent the retail and transport sectors . Other key sectors of the economy (such as services), appear to be largely insulated or are better off from the depreciation.”
“As the AUD has depreciated, firms appear to have become even more focussed on hedging and import substitution, as opposed to greater cost cutting (e.g. downsizing)."
“In particular, currency depreciation over recent years appears to be having the greatest impact on exporter hedging, with these firms electing to hedge a growing share of their exposure (32% in Q3 2015 compared with 24% in Q1 2013). Yet, at the same time they are also reducing the average hedge tenor (almost 8 months in Q3 2015 compared to almost 10 months in Q1 2013). In contrast, importers have kept a fairly constant share of their FX exposures hedged in recent quarters (35%), although this is below the levels seen back in 2013 (around 40%).”
“Interestingly, larger export firms have increased their FX exposures that are hedged markedly in recent quarters, to over 40% in Q3 2015 (compared to 27% in Q1 2014). Medium exporters have pulled back after a big increase over 2014. The proportion of FX exposures hedged by importers has been relatively steady across all firm sizes in recent quarters.”
For more information, read our latest forex news.
Key Quotes
“While this is counter to the idea that a lower AUD will aid the economy’s transition through the end of the mining boom, this appears to largely reflect significant variation in the impact across industries – driven primarily by a sharp deterioration reported by the wholesale sector, and to a lesser extent the retail and transport sectors . Other key sectors of the economy (such as services), appear to be largely insulated or are better off from the depreciation.”
“As the AUD has depreciated, firms appear to have become even more focussed on hedging and import substitution, as opposed to greater cost cutting (e.g. downsizing)."
“In particular, currency depreciation over recent years appears to be having the greatest impact on exporter hedging, with these firms electing to hedge a growing share of their exposure (32% in Q3 2015 compared with 24% in Q1 2013). Yet, at the same time they are also reducing the average hedge tenor (almost 8 months in Q3 2015 compared to almost 10 months in Q1 2013). In contrast, importers have kept a fairly constant share of their FX exposures hedged in recent quarters (35%), although this is below the levels seen back in 2013 (around 40%).”
“Interestingly, larger export firms have increased their FX exposures that are hedged markedly in recent quarters, to over 40% in Q3 2015 (compared to 27% in Q1 2014). Medium exporters have pulled back after a big increase over 2014. The proportion of FX exposures hedged by importers has been relatively steady across all firm sizes in recent quarters.”
For more information, read our latest forex news.
EUR/JPY: Bears fight back control as BOJ stands pat
FXStreet (Mumbai) - The EUR/JPY cross resumed its downside momentum, revering a temporary rebound seen yesterday, as the yen bulls remain in complete control following the steady monetary policy decision announced by the BOJ.
EUR/JPY: Rejected at 133 handle
Currently, the EUR/JPY pair loses -0.36% to 132.49, recovering slightly from session lows struck at 132.26 immediately after the BOJ policy statement. The cross in the EUR/JPY came under renewed selling pressure and dropped more than 50-pips after the BOJ’s on-hold policy decision bolstered the Japanese currency across the board.
However, further downside in EUR/JPY remains cushioned as the BOJ is expected to release its semi-annual outlook on the Japanese economy at 6GMT, with wide expectations of the central bank revising lower CPI and GDP forecasts, which may dampen the sentiment around the yen.
While the EUR/USD remains almost unchanged and awaits fresh incentives from a batch of significant economic data from the US due for release later today. While the Fed’s preferred inflation gauge remains the main highlight.
EUR/JPY Technical Levels
To the upside, the next resistance lies at 133.01/133 (Today’s High + round number), above which it could extend gains to 133.59 (Oct 28 High). To the downside, the cross finds immediate support at 132.26/132 (Today’s Low + round number), below that 131.57 (Oct 29 Low), could act as a major support.
For more information, read our latest forex news.
EUR/JPY: Rejected at 133 handle
Currently, the EUR/JPY pair loses -0.36% to 132.49, recovering slightly from session lows struck at 132.26 immediately after the BOJ policy statement. The cross in the EUR/JPY came under renewed selling pressure and dropped more than 50-pips after the BOJ’s on-hold policy decision bolstered the Japanese currency across the board.
However, further downside in EUR/JPY remains cushioned as the BOJ is expected to release its semi-annual outlook on the Japanese economy at 6GMT, with wide expectations of the central bank revising lower CPI and GDP forecasts, which may dampen the sentiment around the yen.
While the EUR/USD remains almost unchanged and awaits fresh incentives from a batch of significant economic data from the US due for release later today. While the Fed’s preferred inflation gauge remains the main highlight.
EUR/JPY Technical Levels
To the upside, the next resistance lies at 133.01/133 (Today’s High + round number), above which it could extend gains to 133.59 (Oct 28 High). To the downside, the cross finds immediate support at 132.26/132 (Today’s Low + round number), below that 131.57 (Oct 29 Low), could act as a major support.
For more information, read our latest forex news.
BOJ out of the way, Kuroda presser up next
FXStreet (Bali) - Following the decision by the BOJ to keep its monetary policy unchanged, vote 8-1, expanding its monetary base at a pace of Y80 trln/yr, the focus is now shifted to BOJ Governor Kuroda presser.
The market will be looking for any possible hint of further easing by Kuroda, although he is starting to be nicknamed ' Mr.Yawner', so hopes should not be that high, and whether or not the central bank downgrades its assessment of CPI and GDP, as was reported late last week, according to sources familiar with the matter.
As Reuters reported late last week, BOJ is likely to cut this year's fiscal core CPI forecast to below 0.5% at next week's rate review vs the current 0.7%, while GDP forecast is also expected to be downgraded to 1% from 1.7%.
Headlines via Reuters - from last Friday
BOJ likely to cut this fiscal year's core cpi forecast to below 0.5 pct next week from current 0.7 pct projection
BOJ likely to cut next fiscal year's core cpi forecast only slightly from current 1.9 pct projection
BOJ likely to cut this fiscal year's gdp forecast to around 1 pct from current 1.7 pct expansion
BOJ unlikely to make substantial changes to next fiscal year's economic growth forecast of 1.5 pct
Will only slightly tweak its projections for next year, sources said, possibly tempering expectations that the central bank will soon ease monetary policy further
For more information, read our latest forex news.
The market will be looking for any possible hint of further easing by Kuroda, although he is starting to be nicknamed ' Mr.Yawner', so hopes should not be that high, and whether or not the central bank downgrades its assessment of CPI and GDP, as was reported late last week, according to sources familiar with the matter.
As Reuters reported late last week, BOJ is likely to cut this year's fiscal core CPI forecast to below 0.5% at next week's rate review vs the current 0.7%, while GDP forecast is also expected to be downgraded to 1% from 1.7%.
Headlines via Reuters - from last Friday
BOJ likely to cut this fiscal year's core cpi forecast to below 0.5 pct next week from current 0.7 pct projection
BOJ likely to cut next fiscal year's core cpi forecast only slightly from current 1.9 pct projection
BOJ likely to cut this fiscal year's gdp forecast to around 1 pct from current 1.7 pct expansion
BOJ unlikely to make substantial changes to next fiscal year's economic growth forecast of 1.5 pct
Will only slightly tweak its projections for next year, sources said, possibly tempering expectations that the central bank will soon ease monetary policy further
For more information, read our latest forex news.
USD/JPY: Yen jumps 50-pips in knee-jerk on BOJ’s status-quo
FXStreet (Mumbai) - USD/JPY witnessed a downward spike to 120.30, although quickly retraced from lows towards 120.65 region, as the JPY bulls were boosted after the BOJ left its monetary policy settings unchanged at its latest policy decision announced last minutes.
USD/JPY drops from 120.90 levels
Currently, the USD/JPY pair drops -0.44% to 120.62, retreating from fresh session lows struck at 120.34 post BOJ announcement. The USD/JPY pair dropped nearly 50-pips in a knee-jerk reaction after the Japan’s central bank decided to sit tight on its policy decision, squashing widespread expectations of further easing at today’s meeting.
The BOJ kept the monetary policy decision intact and continued with its pledge to increase monetary base at annual pace Of 80 trln yen. While the voting composition was maintained at 8-1.
Meanwhile, markets will continue to digest the latest policy decision while shifting attention towards the BOJ Semi-Annual Outlook followed by Governor Kuroda’s press conference for further insights on the BOJ move.
USD/JPY Technical levels to watch
The prices remain capped below 121 barrier, above which the pair cold find the immediate hurdle near 121.50 (Oct 23, 26 High + 200-DMA confluence) and from there to 121.62/73 (100-DMA + Aug 28 High). To the downside, the immediate support in sight is located at 120.23/21 (Oct 28 & 23 Low), below which 120 (round number) would be tested.
For more information, read our latest forex news.
USD/JPY drops from 120.90 levels
Currently, the USD/JPY pair drops -0.44% to 120.62, retreating from fresh session lows struck at 120.34 post BOJ announcement. The USD/JPY pair dropped nearly 50-pips in a knee-jerk reaction after the Japan’s central bank decided to sit tight on its policy decision, squashing widespread expectations of further easing at today’s meeting.
The BOJ kept the monetary policy decision intact and continued with its pledge to increase monetary base at annual pace Of 80 trln yen. While the voting composition was maintained at 8-1.
Meanwhile, markets will continue to digest the latest policy decision while shifting attention towards the BOJ Semi-Annual Outlook followed by Governor Kuroda’s press conference for further insights on the BOJ move.
USD/JPY Technical levels to watch
The prices remain capped below 121 barrier, above which the pair cold find the immediate hurdle near 121.50 (Oct 23, 26 High + 200-DMA confluence) and from there to 121.62/73 (100-DMA + Aug 28 High). To the downside, the immediate support in sight is located at 120.23/21 (Oct 28 & 23 Low), below which 120 (round number) would be tested.
For more information, read our latest forex news.
BOJ leaves policy unchanged
FXStreet (Bali) - BOJ left policy unchanged, committing to an annual rise in its monetary base of 80 trillion yen.
Headlines - via Reuters
Boj Keeps Monetary Policy Steady, Pledges To Increase Monetary Base At Annual Pace Of 80 Trln Yen
Boj's Policy Decision Was Made By 8-1 Vote
Boj Board Member Kiuchi Proposed Tapering Annual Jgb Purchases To 45 Trln Yen, Which Was Turned Down By Majority Vote
Boj's Kiuchi Votes Against Keeping Policy Steady
For more information, read our latest forex news.
Headlines - via Reuters
Boj Keeps Monetary Policy Steady, Pledges To Increase Monetary Base At Annual Pace Of 80 Trln Yen
Boj's Policy Decision Was Made By 8-1 Vote
Boj Board Member Kiuchi Proposed Tapering Annual Jgb Purchases To 45 Trln Yen, Which Was Turned Down By Majority Vote
Boj's Kiuchi Votes Against Keeping Policy Steady
For more information, read our latest forex news.
AUD/JPY halts a 3-day slide, tests 86 ahead of BOJ
FXStreet (Mumbai) - AUD/JPY posed a solid rebound from three-week troughs and now extends gains in a bid to reclaim 86 handle.
AUD/JPY supported at 50-DMA
Currently, the AUD/JPY pair rises 0.34% to 85.96, moving further away from lowest levels in three-weeks reached at 85.46 on Thursday. The cross in the AUD/JPY extends its recovery in Asia as the AUD bulls jumped back into bids after the recent run of lows. Also, the cross found fresh bids near 50-DMA located at 85.72 and bounced higher towards 86 barrier.
However, gains remain in check on the back of a stronger yen versus the US dollar, expectant of the BOJ standing pat at today’s policy decision due to be announced any moment. While a better print of the Japan’s inflation report also remain yen-supportive.
In the session ahead, the cross will take cues from the upcoming BOJ decision followed by its Semi-annual outlook and the press conference. While a host of crucial US macro releases will be also watched for further momentum.
AUD/JPY Technical Levels
To the upside, the next resistance is located at 86.43/58 (5-DMA + 1h 100-SMA) and above which it could extend gains to 86.78/79 (1h 200-SMA + 10-DMA). To the downside immediate support might be located 85.72 (50-DMA) below that at 85.11/85 (Oct 6 low + round number).
For more information, read our latest forex news.
AUD/JPY supported at 50-DMA
Currently, the AUD/JPY pair rises 0.34% to 85.96, moving further away from lowest levels in three-weeks reached at 85.46 on Thursday. The cross in the AUD/JPY extends its recovery in Asia as the AUD bulls jumped back into bids after the recent run of lows. Also, the cross found fresh bids near 50-DMA located at 85.72 and bounced higher towards 86 barrier.
However, gains remain in check on the back of a stronger yen versus the US dollar, expectant of the BOJ standing pat at today’s policy decision due to be announced any moment. While a better print of the Japan’s inflation report also remain yen-supportive.
In the session ahead, the cross will take cues from the upcoming BOJ decision followed by its Semi-annual outlook and the press conference. While a host of crucial US macro releases will be also watched for further momentum.
AUD/JPY Technical Levels
To the upside, the next resistance is located at 86.43/58 (5-DMA + 1h 100-SMA) and above which it could extend gains to 86.78/79 (1h 200-SMA + 10-DMA). To the downside immediate support might be located 85.72 (50-DMA) below that at 85.11/85 (Oct 6 low + round number).
For more information, read our latest forex news.
Thursday, October 29, 2015
European stocks struggle after Fed revives December rate hike talk
FXStreet (Mumbai) - The stock markets across Europe trade with a bearish undertone after the Federal Reserve revived December rate hike talk.
The pan-European Euro Stoxx 600 index dropped 0.35%. The blue chip Stoxx 50 index retreated 0.60%. Among regional indices, Germany’s DAX fell 0.20% and the UK’s FTSE declined almost 1%. The periphery nation stock markets also trade with losses.
The Fed statement released yesterday carried a slightly hawkish tone as it dropped the warning about slowing global growth, and indicated readiness to consider a rate move in December. The futures now price-in about 42-43% probability of a rate hike in December.
The European Central Bank last week signaled its readiness to inject more stimulus to boost prices and the People's Bank of China followed with its sixth interest rate cut in less than a year.
For more information, read our latest forex news.
The pan-European Euro Stoxx 600 index dropped 0.35%. The blue chip Stoxx 50 index retreated 0.60%. Among regional indices, Germany’s DAX fell 0.20% and the UK’s FTSE declined almost 1%. The periphery nation stock markets also trade with losses.
The Fed statement released yesterday carried a slightly hawkish tone as it dropped the warning about slowing global growth, and indicated readiness to consider a rate move in December. The futures now price-in about 42-43% probability of a rate hike in December.
The European Central Bank last week signaled its readiness to inject more stimulus to boost prices and the People's Bank of China followed with its sixth interest rate cut in less than a year.
For more information, read our latest forex news.
GBP/USD: Upside capped by hourly 20-SMA
FXStreet (Mumbai) - GBP/USD keeps range around 1.5265 levels in the mid-European session, failing several attempts to extend beyond the hourly 20-SMA located near 1.5275 region.
GBP/USD striving to surpass 1h 20-SMA
The GBP/USD pair trades almost unchanged at 1.5265, re-attempting session highs posted at 1.5275 post European open. The GBP/USD pair remains stuck in a 20-pips narrow over the last few hours, little affected by the release of upbeat datasets from the UK.
The mortgage market in the UK remained on a solid footing in September, with an increase in the value of loans remained at more than a seven-year high. While the net-lending figures to individual grew to 4.9B above expectations of a drop to 4.4B.
While the cable remains resilient to the renewed sell-off in the US dollar against its major competitors as markets anticipate a poor US Q3 first estimate reading. Markets are predicting the advance Q3 GDP to show a 1.6% increase y/y, less than half of the expansion seen in the previous quarter.
GBP/USD Levels to consider
The pair has an immediate resistance at 1.5296/1.5300 (5-DMA/ round number) above which gains could be extended to 1.5350/60 (200/20-DMA). On the flip side, support is seen at 1.5245 (Oct 28 Low) below which it could extend losses to 1.5221 (daily S1).
For more information, read our latest forex news.
GBP/USD striving to surpass 1h 20-SMA
The GBP/USD pair trades almost unchanged at 1.5265, re-attempting session highs posted at 1.5275 post European open. The GBP/USD pair remains stuck in a 20-pips narrow over the last few hours, little affected by the release of upbeat datasets from the UK.
The mortgage market in the UK remained on a solid footing in September, with an increase in the value of loans remained at more than a seven-year high. While the net-lending figures to individual grew to 4.9B above expectations of a drop to 4.4B.
While the cable remains resilient to the renewed sell-off in the US dollar against its major competitors as markets anticipate a poor US Q3 first estimate reading. Markets are predicting the advance Q3 GDP to show a 1.6% increase y/y, less than half of the expansion seen in the previous quarter.
GBP/USD Levels to consider
The pair has an immediate resistance at 1.5296/1.5300 (5-DMA/ round number) above which gains could be extended to 1.5350/60 (200/20-DMA). On the flip side, support is seen at 1.5245 (Oct 28 Low) below which it could extend losses to 1.5221 (daily S1).
For more information, read our latest forex news.
EUR/USD clings to gains around 1.0960
FXStreet (Edinburgh) - The common currency keeps its daily gains vs. the dollar on Thursday, taking EUR/USD to the 1.0955/60 band, or session tops.
EUR/USD attention to German CPI
The pair is looking to recover from the FOMC hangover, managing at least to bounce off the recent lows near 1.0900 the figure. Recall that spot lost more than a big-figure in the wake of the FOMC statement, where the Fed left the door (wide) open for a lift-off in December. The hawkish tone from the Committee has lifted December’s probabilities to nearly 60% from 30% before the meeting.
On the data front, EMU’s Economic Sentiment and Business Climate are next on tap, while German inflation figures will follow in the European midday.
EUR/USD levels to watch
As of writing the pair is advancing 0.31% at 1.0958 and a break above 1.1021 (76.4% Fibo of 1.0808-1.1713) would target 1.1113 (200-day sma) en route to 1.1162 (100-day sma). On the other hand, the initial support lines up at 1.0894 (low post-FOMC Oct.28) followed by 1.0847 (low Aug.5) and finally 1.0808 (low Jul.20).
For more information, read our latest forex news.
EUR/USD attention to German CPI
The pair is looking to recover from the FOMC hangover, managing at least to bounce off the recent lows near 1.0900 the figure. Recall that spot lost more than a big-figure in the wake of the FOMC statement, where the Fed left the door (wide) open for a lift-off in December. The hawkish tone from the Committee has lifted December’s probabilities to nearly 60% from 30% before the meeting.
On the data front, EMU’s Economic Sentiment and Business Climate are next on tap, while German inflation figures will follow in the European midday.
EUR/USD levels to watch
As of writing the pair is advancing 0.31% at 1.0958 and a break above 1.1021 (76.4% Fibo of 1.0808-1.1713) would target 1.1113 (200-day sma) en route to 1.1162 (100-day sma). On the other hand, the initial support lines up at 1.0894 (low post-FOMC Oct.28) followed by 1.0847 (low Aug.5) and finally 1.0808 (low Jul.20).
For more information, read our latest forex news.
GBP/JPY hovers around 50% retracement
FXStreet (Mumbai) - The GBP/JPY pair is trading around its 50% retracement of the almost 800 point rally seen in the first half of the September located at 184.32.
Trades below 50-DMA
The cross currently trades below its 50-DMA located at 184.47 levels. Sterling ran into offers close to 185.00 handle in Asia as the increased probability of the Fed moving rates in December has reduced the bets of more Bank of Japan easing tomorrow.
Moreover, this is the third consecutive session when the pair is finding support at the 50% retracement located at 184.32 levels.
GBP/JPY Technical Levels
A failure to sustain above 184.32 could push the pair down to 183.90 (previous day’s low). A break below would open doors for a sell-off to 183.38 (61.8% of rally in September). On the higher side, a break above 184.47 (50-DMA) could see the cross re-test 10-DMA at 185.00.
For more information, read our latest forex news.
Trades below 50-DMA
The cross currently trades below its 50-DMA located at 184.47 levels. Sterling ran into offers close to 185.00 handle in Asia as the increased probability of the Fed moving rates in December has reduced the bets of more Bank of Japan easing tomorrow.
Moreover, this is the third consecutive session when the pair is finding support at the 50% retracement located at 184.32 levels.
GBP/JPY Technical Levels
A failure to sustain above 184.32 could push the pair down to 183.90 (previous day’s low). A break below would open doors for a sell-off to 183.38 (61.8% of rally in September). On the higher side, a break above 184.47 (50-DMA) could see the cross re-test 10-DMA at 185.00.
For more information, read our latest forex news.
EUR/USD risks a visit to 1.0850 – OCBC
FXStreet (Edinburgh) - FX Strategist at OCBC Bank Emmanuel Ng sees the likeliness of the pair to test the mid-1.0800s.
Key Quotes
“The latest FOMC statement set against dovish comments from the ECB (Coeure, Constancio, Praet) may continue to sink the EURUSD, with the slew of EZ confidence indicators and German CPI readings potentially another headline risk today”.
“After having violated 1.1000, the pair may be at risk of re-visiting 1.0850 in the near term”.
For more information, read our latest forex news.
Key Quotes
“The latest FOMC statement set against dovish comments from the ECB (Coeure, Constancio, Praet) may continue to sink the EURUSD, with the slew of EZ confidence indicators and German CPI readings potentially another headline risk today”.
“After having violated 1.1000, the pair may be at risk of re-visiting 1.0850 in the near term”.
For more information, read our latest forex news.
USD/JPY back below hourly 100-MA
FXStreet (Mumbai) - The recovery in the USD/JPY pair ran out of steam at the hourly 100-MA at 120.80, following which the pair made its way back towards daily lows.
Drop in BOJ easing bets
The increased probability of the Fed moving rates in December has reduced the bets that the Bank of Japan would announce more easing tomorrow. Consequently, the USD/JPY failed to capitalize on the post-Fed gains and fell back below 121.00 handle.
The immediate focus is now on the US Q3 GDP estimate, following which the Yen traders would await the BOJ decision due tomorrow.
USD/JPY Technical Levels
The immediate resistance is located at 121.00 (200-DMA), above which gains could be extended to 121.50 (Oct 26 high). A break above the same would expose 121.86 (100-DMA). On the other side, support is seen at 120.58 (daily low) and 120.41 (10-DMA), under which the pair could test 120.14 (50-DMA).
For more information, read our latest forex news.
Drop in BOJ easing bets
The increased probability of the Fed moving rates in December has reduced the bets that the Bank of Japan would announce more easing tomorrow. Consequently, the USD/JPY failed to capitalize on the post-Fed gains and fell back below 121.00 handle.
The immediate focus is now on the US Q3 GDP estimate, following which the Yen traders would await the BOJ decision due tomorrow.
USD/JPY Technical Levels
The immediate resistance is located at 121.00 (200-DMA), above which gains could be extended to 121.50 (Oct 26 high). A break above the same would expose 121.86 (100-DMA). On the other side, support is seen at 120.58 (daily low) and 120.41 (10-DMA), under which the pair could test 120.14 (50-DMA).
For more information, read our latest forex news.
USD/CHF snaps 10-day winning streak
FXStreet (Mumbai) - The USD/CHF pair weakened in the European session, after having rallied for the ten consecutive sessions.
Rejected at Wednesday’s high
The spot was rejected at the previous session’s high of 0.9957. The Swiss Franc was higher ahead of the FOMC statement, but erased gains and fell sharply after the Fed left doors open for the December rate hike.
The sharp rally has left the pair overbought on the charts and thus exposed to technical correction. Ahead in the day, the technical correction could gain traction if the US GDP prints lower than expected.
USD/CHF Technical Levels
At 0.9923, the immediate support is seen at 0.9903 (Aug 11 high), under which the losses could be extended to 0.9844 (Sep 25 high). On the higher side, the pair could rise to 1.00 handle in case the spot manages to take out offers at 0.9957 (previous day’s high).
For more information, read our latest forex news.
Rejected at Wednesday’s high
The spot was rejected at the previous session’s high of 0.9957. The Swiss Franc was higher ahead of the FOMC statement, but erased gains and fell sharply after the Fed left doors open for the December rate hike.
The sharp rally has left the pair overbought on the charts and thus exposed to technical correction. Ahead in the day, the technical correction could gain traction if the US GDP prints lower than expected.
USD/CHF Technical Levels
At 0.9923, the immediate support is seen at 0.9903 (Aug 11 high), under which the losses could be extended to 0.9844 (Sep 25 high). On the higher side, the pair could rise to 1.00 handle in case the spot manages to take out offers at 0.9957 (previous day’s high).
For more information, read our latest forex news.
AUD/USD could test 0.69 if the RBA cut rates – Westpac
FXStreet (Edinburgh) - Strategist Sean Callow at Westpac sees the Aussie dollar testing the 0.69 handle in case the RBA decides to cut rates at its meeting next week.
Key Quotes
“It is hard to make a bullish AUD/USD case near term. The FOMC’s surprisingly firm tone should support US yields and USD near term, notably including USD/Asia”.
“Yet the Fed had no reason to sound an “all clear” on Asian/EM growth so this weight remains. China’s rate cut has been rightly seen as an admission that growth is failing to revive, with hints of more to come”.
“This fits the ongoing pressure on commodity prices, with spot iron ore probing below $50 for the fi rst time since July, -11% this month”.
“If the RBA holds steady in what could be a close call then AUD/USD should trade mostly 0.70-0.72. But a rate cut would open up losses towards Sep’s lows near 0.69”.
For more information, read our latest forex news.
Key Quotes
“It is hard to make a bullish AUD/USD case near term. The FOMC’s surprisingly firm tone should support US yields and USD near term, notably including USD/Asia”.
“Yet the Fed had no reason to sound an “all clear” on Asian/EM growth so this weight remains. China’s rate cut has been rightly seen as an admission that growth is failing to revive, with hints of more to come”.
“This fits the ongoing pressure on commodity prices, with spot iron ore probing below $50 for the fi rst time since July, -11% this month”.
“If the RBA holds steady in what could be a close call then AUD/USD should trade mostly 0.70-0.72. But a rate cut would open up losses towards Sep’s lows near 0.69”.
For more information, read our latest forex news.
EUR/USD keeps range around 1.0930 post-European open
FXStreet (Mumbai) - Having failed to sustain at higher levels, EUR/USD reverted to familiar ranges around 1.0930 and remains little changed after the European markets opened on a mixed note.
EUR/USD forms a small doji on daily sticks
The EUR/USD pair trades modestly flat at 1.0926, stuck around hourly 5 & 10-SMA confluence. The major extends its consolidative phase, although remains better bid as the shared currency benefits from the cautious start seen in the European markets, with the traders still digesting the recent FOMC decision.
The stocks on the European bourses opened on a positive note; however, the indices quickly pared gains and trades cautious amid mixed corporate news. The DAX trims gains to trade 0.16% higher, while the UK’s FTSE drops -0.84%. The pan European benchmark, the Euro Stoxx 50 defends mild gains and trades near 3,420 points.
However, the recovery in the EUR/USD pair appears short-lived as the divergent monetary policy outlooks between both continents continue to weigh on the EUR. On Wednesday, the Fed indicated chances of a Dec rate hike while the ECB hinted towards more easing in Dec last week.
Meanwhile, the sentiment on the European markets is likely to dominate the moves in EUR/USD. While German CPI print and the crucial first estimate of the US Q3 GDP is lined up for released later today.
EUR/USD Technical Levels
The pair bounced-off 1.09 handle and heads lower towards the immediate resistance seen at 1.0970 (daily pivot), beyond which 1.0994/1.1000 (5-DMA/ round number) would be tested. A break above the last, 1.1022 (1h 50-SMA) would come into the picture. While to the downside, the next support is located at 1.09/1.0897 (psychological levels/ Oct 28 Low). Selling pressure will intensify below the last, dragging the pair towards 1.0844/40 (daily S1/ Aug lows) and below that 1.0800 (round number) could be exposed.
For more information, read our latest forex news.
EUR/USD forms a small doji on daily sticks
The EUR/USD pair trades modestly flat at 1.0926, stuck around hourly 5 & 10-SMA confluence. The major extends its consolidative phase, although remains better bid as the shared currency benefits from the cautious start seen in the European markets, with the traders still digesting the recent FOMC decision.
The stocks on the European bourses opened on a positive note; however, the indices quickly pared gains and trades cautious amid mixed corporate news. The DAX trims gains to trade 0.16% higher, while the UK’s FTSE drops -0.84%. The pan European benchmark, the Euro Stoxx 50 defends mild gains and trades near 3,420 points.
However, the recovery in the EUR/USD pair appears short-lived as the divergent monetary policy outlooks between both continents continue to weigh on the EUR. On Wednesday, the Fed indicated chances of a Dec rate hike while the ECB hinted towards more easing in Dec last week.
Meanwhile, the sentiment on the European markets is likely to dominate the moves in EUR/USD. While German CPI print and the crucial first estimate of the US Q3 GDP is lined up for released later today.
EUR/USD Technical Levels
The pair bounced-off 1.09 handle and heads lower towards the immediate resistance seen at 1.0970 (daily pivot), beyond which 1.0994/1.1000 (5-DMA/ round number) would be tested. A break above the last, 1.1022 (1h 50-SMA) would come into the picture. While to the downside, the next support is located at 1.09/1.0897 (psychological levels/ Oct 28 Low). Selling pressure will intensify below the last, dragging the pair towards 1.0844/40 (daily S1/ Aug lows) and below that 1.0800 (round number) could be exposed.
For more information, read our latest forex news.
EUR/JPY upside could struggle near 132.65/133.40 – Commerzbank
FXStreet (Edinburgh) - In the view of Karen Jones, Head of FICC Technical Analysis at Commerzbank, rallies in the cross are expected to find strong resistance in the 132.65/133.40 area.
Key Quotes
“EUR/JPY has sold off into 6 month lows and remains under pressure. The 132.24 4 th September low has been eroded to leave it on target for 127.91 the 2013-2015 support line”.
“Intraday rallies are indicated to now struggle 132.65/133.40 and should ideally remain capped by its 6 month uptrend, which should now act as initial resistance at 134.57”.
For more information, read our latest forex news.
Key Quotes
“EUR/JPY has sold off into 6 month lows and remains under pressure. The 132.24 4 th September low has been eroded to leave it on target for 127.91 the 2013-2015 support line”.
“Intraday rallies are indicated to now struggle 132.65/133.40 and should ideally remain capped by its 6 month uptrend, which should now act as initial resistance at 134.57”.
For more information, read our latest forex news.
Gold/EUR rejected at 50% of Jan-Sep fall
FXStreet (Mumbai) - The upward momentum in gold prices in the EUR terms stalled at EUR 1069.69/Oz, which is the 50% fib retracement of the plunge witnessed from Jan to Sep.
Gold supported by dovish ECB
The common currency suffered bigger losses against the USD as the possibility of a Fed rate hike in December widened the divergence between ECB and Fed. Consequently, the yellow metal remained resilient in the EUR terms.
Ahead in the day, the German CPI could influence the gold/EUR pair. At the moment, the prices are hovering around EUR 1060.15/Oz levels.
Gold/EUR Technical Levels
A break above the immediate resistance is located at 1069.69 (50% of Jan-Sep plunge) could push the prices higher to 1081.06 (June 29 high). On the other side, a break below 1055.62 (previous day’s low) could push the prices lower to 1046.52 (38.2% of Jan-Sep plunge).
For more information, read our latest forex news.
Gold supported by dovish ECB
The common currency suffered bigger losses against the USD as the possibility of a Fed rate hike in December widened the divergence between ECB and Fed. Consequently, the yellow metal remained resilient in the EUR terms.
Ahead in the day, the German CPI could influence the gold/EUR pair. At the moment, the prices are hovering around EUR 1060.15/Oz levels.
Gold/EUR Technical Levels
A break above the immediate resistance is located at 1069.69 (50% of Jan-Sep plunge) could push the prices higher to 1081.06 (June 29 high). On the other side, a break below 1055.62 (previous day’s low) could push the prices lower to 1046.52 (38.2% of Jan-Sep plunge).
For more information, read our latest forex news.
Fed teases market into talking Dec rate hike - SocGen
FXStreet (Bali) - Should conditions warrant, the Fed will raise rates at their December meeting, that's the conclusion reached by Kit Juckes, Global Head of FX Strategy at Societe Generale.
Key Quotes
"The FOMC left the door ajar. If markets don’t tighten financial conditions for them, if the US data remain firm, if global events don’t scare them and if the sun shines every day, the Fed will raise rates at their December meeting."
"All those caveats leave the market pricing the odds of a move at close to 50%, and the focus switches immediately to data-watching. Today that means jobless claims (exp 270k) and Q3 GDP. We expect a 2.4% gain, the forecast revised up after the trade data released yesterday, while the consensus is looking for looking for 1.6% (according to Bloomberg)."
"Inventories will be a big, temporary drag and guesses of how big vary. The consensus forecast for personal consumption growth is at 3.3%, our forecast at 3.5%. Real domestic final sales probably grew at a similar rate, slightly slower than the 3.7% of Q1 and that’s a far better measure of the health of the US economy right now, than the GDP figure itself."
For more information, read our latest forex news.
Key Quotes
"The FOMC left the door ajar. If markets don’t tighten financial conditions for them, if the US data remain firm, if global events don’t scare them and if the sun shines every day, the Fed will raise rates at their December meeting."
"All those caveats leave the market pricing the odds of a move at close to 50%, and the focus switches immediately to data-watching. Today that means jobless claims (exp 270k) and Q3 GDP. We expect a 2.4% gain, the forecast revised up after the trade data released yesterday, while the consensus is looking for looking for 1.6% (according to Bloomberg)."
"Inventories will be a big, temporary drag and guesses of how big vary. The consensus forecast for personal consumption growth is at 3.3%, our forecast at 3.5%. Real domestic final sales probably grew at a similar rate, slightly slower than the 3.7% of Q1 and that’s a far better measure of the health of the US economy right now, than the GDP figure itself."
For more information, read our latest forex news.
EUR/CHF testing lows around 1.0850
FXStreet (Edinburgh) - The Swiss franc is gathering traction vs. its European peer on Thursday, dragging EUR/CHF to the lower band of the range at 1.0850/45.
EUR/CHF lower post-FOMC
The cross is now trading closer to post-FOMC troughs in the 1.0830 area posted on Wednesday, after sellers have faded the initial spike towards daily peaks near 1.0880.
Ahead in the session, EMU’s Business Climate and Economic Sentiment are due followed by the more relevant preliminary inflation figures in Germany for the current month.
EUR/CHF levels to consider
At the moment the cross is losing 0.08% at 1.0851 with the immediate support at 1.0739 (low Oct.26) ahead of 1.0733 (100-day ma) and finally 1.0501 (Fibo 23.6% of 0.8696-1.1058). On the other hand, a breakout of 1.0877 (55-day ma) would aim for 1.0890 (downtrend from 1.1049) and then 1.1049 (high Sep.11).
For more information, read our latest forex news.
EUR/CHF lower post-FOMC
The cross is now trading closer to post-FOMC troughs in the 1.0830 area posted on Wednesday, after sellers have faded the initial spike towards daily peaks near 1.0880.
Ahead in the session, EMU’s Business Climate and Economic Sentiment are due followed by the more relevant preliminary inflation figures in Germany for the current month.
EUR/CHF levels to consider
At the moment the cross is losing 0.08% at 1.0851 with the immediate support at 1.0739 (low Oct.26) ahead of 1.0733 (100-day ma) and finally 1.0501 (Fibo 23.6% of 0.8696-1.1058). On the other hand, a breakout of 1.0877 (55-day ma) would aim for 1.0890 (downtrend from 1.1049) and then 1.1049 (high Sep.11).
For more information, read our latest forex news.
Key events ahead – Deutsche Bank
FXStreet (Mumbai) - Analysts at Deutsche Bank enlist the risk events lined up release on both sides of the Atlantic in the day ahead.
Key Quotes:
“Turning over to today’s calendar now. In Europe Germany’s preliminary CPI report will be closely watched with the market expecting the YoY rate to nudge up a couple of tenths to +0.2%.”
“German unemployment data is also due and in Spain we’ll also get the latest CPI data along with retail sales.”
“Euro area consumer confidence is expected while the latest UK credit aggregates and mortgage approvals numbers for September are due. In the US this afternoon.”
“It’s all eyes on the Q3 GDP read, while we’ll also get the latest quarterly core PCE data, along with initial jobless claims and September pending home sales.”
“The Fed’s Lockhart is expected to make some comments today around lunchtime while it’s another busy day for earnings with 49 S&P 500 companies due to report with the highlights including ConocoPhillips and Time Warner (both prior to the US open).”
“In Europe 33 Stoxx 600 companies are expected to report earnings also, with Total, Royal Dutch Shell, Barclays Bank, Danske Bank and Banco Santander just some of the highlights.”
For more information, read our latest forex news.
Key Quotes:
“Turning over to today’s calendar now. In Europe Germany’s preliminary CPI report will be closely watched with the market expecting the YoY rate to nudge up a couple of tenths to +0.2%.”
“German unemployment data is also due and in Spain we’ll also get the latest CPI data along with retail sales.”
“Euro area consumer confidence is expected while the latest UK credit aggregates and mortgage approvals numbers for September are due. In the US this afternoon.”
“It’s all eyes on the Q3 GDP read, while we’ll also get the latest quarterly core PCE data, along with initial jobless claims and September pending home sales.”
“The Fed’s Lockhart is expected to make some comments today around lunchtime while it’s another busy day for earnings with 49 S&P 500 companies due to report with the highlights including ConocoPhillips and Time Warner (both prior to the US open).”
“In Europe 33 Stoxx 600 companies are expected to report earnings also, with Total, Royal Dutch Shell, Barclays Bank, Danske Bank and Banco Santander just some of the highlights.”
For more information, read our latest forex news.
Dovish foreign central banks increase probability of Fed liftoff – Goldman Sachs
FXStreet (Mumbai) - Goldman Sachs research notes, other things being equal, the dovish actions of the foreign central banks raises the probability of the Fed rate hike.
Key Quotes
“Foreign central banks—including the ECB and BoJ—are expected to provide additional monetary easing. The implication for Fed policy is, however, unclear as foreign easing boosts global growth but also appreciates the dollar.”
“We therefore use statistical techniques to estimate the net effect of foreign policy “surprises” on historical Fed policy decisions. Our results suggest that dovish foreign central bank surprises typically raise the likelihood of funds rate hikes, all else equal. But we do not find a systematic effect on the probability of rate cuts.”
For more information, read our latest forex news.
Key Quotes
“Foreign central banks—including the ECB and BoJ—are expected to provide additional monetary easing. The implication for Fed policy is, however, unclear as foreign easing boosts global growth but also appreciates the dollar.”
“We therefore use statistical techniques to estimate the net effect of foreign policy “surprises” on historical Fed policy decisions. Our results suggest that dovish foreign central bank surprises typically raise the likelihood of funds rate hikes, all else equal. But we do not find a systematic effect on the probability of rate cuts.”
For more information, read our latest forex news.
GBP/USD fades a spike to 1.5275
FXStreet (Mumbai) - The GBP bulls regain control somewhat in the European morning, now keeps GBP/USD in close proximity to the daily highs reached in last minutes beyond 1.5270 levels.
GBP/USD capped below hourly 20-SMA
The GBP/USD pair trades modestly flat at 1.5264, easing-off fresh session highs posted at 1.5275 some minutes ago. A renewed buying interest on the GBP, refuelled the recovery mode in the GBP/USD pair, as the USD bulls remain on the backseat and consolidate the previous rally ahead of the crucial advance Q3 GDP estimate from the US due later today.
Moreover, markets now await the reaction of the European traders’ to the hawkish FOMC statement, thus restricting further upside in the cable.
On Wednesday, GBP/USD slumped to lowest in more than two-week at 1.5252 on the release of the Fed outcome, which revived hopes of 2015 Fed rate rise and sent the USD through the roof against its major rivals.
In the day ahead, the pair will be influenced by the UK net lending to individuals and CBI realized sales data ahead of a batch of significant US data.
GBP/USD Levels to consider
The pair has an immediate resistance at 1.5296/1.5300 (5-DMA/ round number) above which gains could be extended to 1.5350/60 (200/20-DMA). On the flip side, support is seen at 1.5245 (Oct 28 Low) below which it could extend losses to 1.5221 (daily S1).
For more information, read our latest forex news.
GBP/USD capped below hourly 20-SMA
The GBP/USD pair trades modestly flat at 1.5264, easing-off fresh session highs posted at 1.5275 some minutes ago. A renewed buying interest on the GBP, refuelled the recovery mode in the GBP/USD pair, as the USD bulls remain on the backseat and consolidate the previous rally ahead of the crucial advance Q3 GDP estimate from the US due later today.
Moreover, markets now await the reaction of the European traders’ to the hawkish FOMC statement, thus restricting further upside in the cable.
On Wednesday, GBP/USD slumped to lowest in more than two-week at 1.5252 on the release of the Fed outcome, which revived hopes of 2015 Fed rate rise and sent the USD through the roof against its major rivals.
In the day ahead, the pair will be influenced by the UK net lending to individuals and CBI realized sales data ahead of a batch of significant US data.
GBP/USD Levels to consider
The pair has an immediate resistance at 1.5296/1.5300 (5-DMA/ round number) above which gains could be extended to 1.5350/60 (200/20-DMA). On the flip side, support is seen at 1.5245 (Oct 28 Low) below which it could extend losses to 1.5221 (daily S1).
For more information, read our latest forex news.
EUR/USD: Take profit on shorts after ECB/Fed diverge - BNP
FXStreet (Bali) - EURUSD is now trading in line with BNP year-end target and as such, the bank turns now more neutral on the pair into year-end, suggesting to take profits on shorts.
Key Quotes
"The FOMC statement was more hawkish than we and the market anticipated. The statement noted the pace of job gains has slowed and that exports have been soft, but this was more than offset by more positive language on household spending and business investment."
"Language on the negative impact of recent global developments was removed, and specific reference was made to the conditions that might make it appropriate to hike “at the next meeting.”
"The message from the Fed is sharply divergent from the easing signalled by the ECB less than a week ago and the resulting move lower in EURUSD has pushed the pair through the 1.09 target on our short cash recommendation and we close the trade for an approximately 4.8% gain."
"We are also taking profit on the 1.10 put with a 0.9950 RKO which has been in our derivatives recommendations portfolio since June."
"EURUSD is now trading in line with our year-end target and we turn more neutral on the pair into year-end."
"The risk now is that the US data comes in too weak to support rate hike expectations or that ECB speakers sound more neutral in light of the big move in the effective exchange rate over the past few days."
"Our economics team still views a December hike as unlikely to materialize. Today, we expect a slower 1.7% q/q saar reading on Q3 GDP due to drag from inventories and trade, and softer numbers could lead markets to again question the Fed’s scope for delivering in December."
For more information, read our latest forex news.
Key Quotes
"The FOMC statement was more hawkish than we and the market anticipated. The statement noted the pace of job gains has slowed and that exports have been soft, but this was more than offset by more positive language on household spending and business investment."
"Language on the negative impact of recent global developments was removed, and specific reference was made to the conditions that might make it appropriate to hike “at the next meeting.”
"The message from the Fed is sharply divergent from the easing signalled by the ECB less than a week ago and the resulting move lower in EURUSD has pushed the pair through the 1.09 target on our short cash recommendation and we close the trade for an approximately 4.8% gain."
"We are also taking profit on the 1.10 put with a 0.9950 RKO which has been in our derivatives recommendations portfolio since June."
"EURUSD is now trading in line with our year-end target and we turn more neutral on the pair into year-end."
"The risk now is that the US data comes in too weak to support rate hike expectations or that ECB speakers sound more neutral in light of the big move in the effective exchange rate over the past few days."
"Our economics team still views a December hike as unlikely to materialize. Today, we expect a slower 1.7% q/q saar reading on Q3 GDP due to drag from inventories and trade, and softer numbers could lead markets to again question the Fed’s scope for delivering in December."
For more information, read our latest forex news.
EUR/GBP wipes-out losses, recedes to 0.7160
FXStreet (Mumbai) - The EUR/GBP cross ran through fresh offers near hourly 20-SMA at 0.7180 and retreated slightly towards ten-week lows reached on Wednesday in response to the hawkish FOMC.
EUR/GBP hovers around hourly 10-SMA
Currently, the EUR/GBP pair trades muted at 0.7156, easing-off fresh session highs recorded at 0.7174 last hours. The recovery from two-month lows lost steam and the cross now trims gains as the pound appears to regain strength and edges higher against the US dollar.
The cross, however, remains supported on the back of a minor recovery in the EUR/USD pair as the greenback corrects lower across the board after the FOMC-backed rally.
EUR, GBP traders now await a slew of economic news to be reported this session for further momentum. German CPI and the UK net lendings data may influence the EUR/GBP cross.
EUR/GBP Technical Levels
To the upside, the next resistance is located at 0.7174/80 (Today’s High/ 1h 20-SMA), above which it could extend gains to 0.7200 (round number). To the downside immediate support might be located at 0.7142 (Oct 28 Low) below that at 0.7116 (daily S1).
For more information, read our latest forex news.
EUR/GBP hovers around hourly 10-SMA
Currently, the EUR/GBP pair trades muted at 0.7156, easing-off fresh session highs recorded at 0.7174 last hours. The recovery from two-month lows lost steam and the cross now trims gains as the pound appears to regain strength and edges higher against the US dollar.
The cross, however, remains supported on the back of a minor recovery in the EUR/USD pair as the greenback corrects lower across the board after the FOMC-backed rally.
EUR, GBP traders now await a slew of economic news to be reported this session for further momentum. German CPI and the UK net lendings data may influence the EUR/GBP cross.
EUR/GBP Technical Levels
To the upside, the next resistance is located at 0.7174/80 (Today’s High/ 1h 20-SMA), above which it could extend gains to 0.7200 (round number). To the downside immediate support might be located at 0.7142 (Oct 28 Low) below that at 0.7116 (daily S1).
For more information, read our latest forex news.
EUR/USD forecast: FOMC hangover – Commerzbank and Danske Bank
FXStreet (Edinburgh) - EUR/USD is navigating the low-1.0900s following yesterday’s surprising hawkish tone by the Fed, leaving the door wide open for a rate hike in December.
Karen Jones, Head of FICC Technical Analysis at Commerzbank, argued the pair “has closed below its 1.0968/65 7 month 2015 support line, this is bearish and is considered to be the completion of a consolidation pattern which has developed for most of this year. We would like to also see a weekly close below here and we then look for losses to 1.0808 and 1.0457, the March low”.
Furthermore, Chief Analyst at Danske Bank Arne Rasmussen noted “we have previously seen how the cross becomes vulnerable to the upside when momentum loses pace and investors take profit. We expect this vulnerability to remain a risk factor, especially as we think speculative EUR/USD positioning has returned to stretched short levels post the dovish ECB and hawkish Fed surprises over the past week”.
For more information, read our latest forex news.
Karen Jones, Head of FICC Technical Analysis at Commerzbank, argued the pair “has closed below its 1.0968/65 7 month 2015 support line, this is bearish and is considered to be the completion of a consolidation pattern which has developed for most of this year. We would like to also see a weekly close below here and we then look for losses to 1.0808 and 1.0457, the March low”.
Furthermore, Chief Analyst at Danske Bank Arne Rasmussen noted “we have previously seen how the cross becomes vulnerable to the upside when momentum loses pace and investors take profit. We expect this vulnerability to remain a risk factor, especially as we think speculative EUR/USD positioning has returned to stretched short levels post the dovish ECB and hawkish Fed surprises over the past week”.
For more information, read our latest forex news.
FOMC: Hawkish language hints at Dec rate hike - BBVA
FXStreet (Bali) - Kim Chase, US Economist at BBVA, notes that as expected, the FOMC did not increase rates in October but specifically alluded to the potential for action at the next meeting.
Key Quotes
"October’s FOMC announcement played right into expectations as the Fed decided yet again to hold off on the first federal funds rate hike."
"Prior to the meeting, the implied probability of an October liftoff had declined to just 4%, so it was in the Fed’s best interest to keep rates unchanged and avoid any unwanted surprise to markets."
"However, the statement wasn’t completely a dud, with new hawkish language hinting at preparation for a possible December liftoff as long as data evolve in line with the Fed’s outlook."
"The Committee’s review of economic activity was less dovish than anticipated. Participants agreed that consumer spending and business investment had increased “at solid rates” rather than just “moderately”, highlighting more optimistic views compared to September."
"The statement acknowledged the slowdown in job growth in recent months but contributed no additional assessment of the labor market other than maintaining that underutilization “has diminished since early this year.”
"Finally, the FOMC qualified views on market-based measures of inflation compensation as having shifted only “slightly lower”, though it is likely that this underplays their true feelings on inflation."
For more information, read our latest forex news.
Key Quotes
"October’s FOMC announcement played right into expectations as the Fed decided yet again to hold off on the first federal funds rate hike."
"Prior to the meeting, the implied probability of an October liftoff had declined to just 4%, so it was in the Fed’s best interest to keep rates unchanged and avoid any unwanted surprise to markets."
"However, the statement wasn’t completely a dud, with new hawkish language hinting at preparation for a possible December liftoff as long as data evolve in line with the Fed’s outlook."
"The Committee’s review of economic activity was less dovish than anticipated. Participants agreed that consumer spending and business investment had increased “at solid rates” rather than just “moderately”, highlighting more optimistic views compared to September."
"The statement acknowledged the slowdown in job growth in recent months but contributed no additional assessment of the labor market other than maintaining that underutilization “has diminished since early this year.”
"Finally, the FOMC qualified views on market-based measures of inflation compensation as having shifted only “slightly lower”, though it is likely that this underplays their true feelings on inflation."
For more information, read our latest forex news.
Gold recovery stalled near the 23.6% retracement
FXStreet (Mumbai) - The recovery in the gold prices stalled in Asia near the 23.6% fib retracement of July to Oct rally located at USD 1163.57/Oz levels.
Gains erased
The moderate gains have been erased in early Europe. The metal now trades around USD 1159/Oz levels after having been rejected at the high of USD 1162.70. Moreover, the Treasury yields remain near NY session highs, keeping the USD on strong footing and capping gains in gold prices.
The immediate focus now is on the sentiment in the European stock markets. Later in the day, the preliminary Q3 US GDP may influence Fed rate hike bets and influence the yellow metal.
Gold Technical Levels
The immediate resistance is located at 1171.94 (200-DMA), above which the prices could revisit the previous session’s high at 1183.00. On the other side, support is seen at 1146.25 (38.2% of Jul to Oct rally) and 1141.37 (50-DMA).
For more information, read our latest forex news.
Gains erased
The moderate gains have been erased in early Europe. The metal now trades around USD 1159/Oz levels after having been rejected at the high of USD 1162.70. Moreover, the Treasury yields remain near NY session highs, keeping the USD on strong footing and capping gains in gold prices.
The immediate focus now is on the sentiment in the European stock markets. Later in the day, the preliminary Q3 US GDP may influence Fed rate hike bets and influence the yellow metal.
Gold Technical Levels
The immediate resistance is located at 1171.94 (200-DMA), above which the prices could revisit the previous session’s high at 1183.00. On the other side, support is seen at 1146.25 (38.2% of Jul to Oct rally) and 1141.37 (50-DMA).
For more information, read our latest forex news.
RBNZ calls time on cuts…for the time being - BNZ
FXStreet (Bali) - RBNZ left the OCR unchanged at 2.75%, keeping its easing bias, notes Craig Ebert, Economist at BNZ, adding that a final 25bp cut in December is expected, but much now depends on the data.
Key Quotes
"Given recent history, we didn’t quite trust the Reserve Bank to resist pervasive pressure to cut its cash rate. We should have. To be clear, we think the Bank is doing the right thing here, in steadying its Official Cash Rate at 2.75%, after a string of reductions. This is even though we were 51/49 on the side of a final tweak lower for today’s meeting. We thought the Bank should hold fire today, but weren’t quite convinced it would."
"Nor can we take any umbrage at the Bank’s only-moderate easing bias, which we infer from its commentary. Our take is that the RBNZ is doing its best to buy some more time, before potentially having to cut further. It’s still, at heart, a reluctant cutter, in our view, but is keeping its options open nonetheless."
"Yes, there is the phrase in the last paragraph of RBNZ text that “To ensure that future average CPI inflation settles near the middle of the target range, some further reduction in the OCR seems likely.” Note the return of “middle”, with the Bank recently highlighting just “the range.” However, this was followed by “This will continue to depend on the emerging flow of economic data. It is appropriate at present to watch and wait.” So, while a maintained easing bias, it did not seem a strong or immediate one to us."
"We will, however, keep with our 2.50% base call for the OCR, which we migrate over to the 10 December Monetary Policy Statement (MPS). But we wouldn’t want to hard sell it, from what the RBNZ has outlined today. A lot will depend on the data between now and the 10 December MPS."
For more information, read our latest forex news.
Key Quotes
"Given recent history, we didn’t quite trust the Reserve Bank to resist pervasive pressure to cut its cash rate. We should have. To be clear, we think the Bank is doing the right thing here, in steadying its Official Cash Rate at 2.75%, after a string of reductions. This is even though we were 51/49 on the side of a final tweak lower for today’s meeting. We thought the Bank should hold fire today, but weren’t quite convinced it would."
"Nor can we take any umbrage at the Bank’s only-moderate easing bias, which we infer from its commentary. Our take is that the RBNZ is doing its best to buy some more time, before potentially having to cut further. It’s still, at heart, a reluctant cutter, in our view, but is keeping its options open nonetheless."
"Yes, there is the phrase in the last paragraph of RBNZ text that “To ensure that future average CPI inflation settles near the middle of the target range, some further reduction in the OCR seems likely.” Note the return of “middle”, with the Bank recently highlighting just “the range.” However, this was followed by “This will continue to depend on the emerging flow of economic data. It is appropriate at present to watch and wait.” So, while a maintained easing bias, it did not seem a strong or immediate one to us."
"We will, however, keep with our 2.50% base call for the OCR, which we migrate over to the 10 December Monetary Policy Statement (MPS). But we wouldn’t want to hard sell it, from what the RBNZ has outlined today. A lot will depend on the data between now and the 10 December MPS."
For more information, read our latest forex news.
EUR/USD sidelined near 1.0930, EMU data eyed
FXStreet (Edinburgh) - The single currency remains under the sedative effects post-FOMC meeting, taking EUR/USD to a flatline pattern near the 1.0930 area.
EUR/USD attention to EMU data
After briefly testing the 1.0900 support following the hawkish tone by the Committee on Wednesday, the pair has managed to regain some ground and advance to the 1.0930/35 band, or daily highs.
The strong rebound of the greenback has triggered a wave of selling interest in the pair during the NA session on Wednesday, after the FOMC has left the door still open for a Fed’s lift-off in December, keeping at the same time its ‘data-dependent’ stance unchanged.
Later in the session, October’s Spanish and German inflation figures are due along with EMU’s Economic Sentiment and Business Climate.
EUR/USD levels to watch
As of writing the pair is advancing 0.14% at 1.0939 and a break above 1.1021 (76.4% Fibo of 1.0808-1.1713) would target 1.1113 (200-day sma) en route to 1.1162 (100-day sma). On the other hand, the initial support lines up at 1.0894 (low post-FOMC Oct.28) followed by 1.0847 (low Aug.5) and finally 1.0808 (low Jul.20).
For more information, read our latest forex news.
EUR/USD attention to EMU data
After briefly testing the 1.0900 support following the hawkish tone by the Committee on Wednesday, the pair has managed to regain some ground and advance to the 1.0930/35 band, or daily highs.
The strong rebound of the greenback has triggered a wave of selling interest in the pair during the NA session on Wednesday, after the FOMC has left the door still open for a Fed’s lift-off in December, keeping at the same time its ‘data-dependent’ stance unchanged.
Later in the session, October’s Spanish and German inflation figures are due along with EMU’s Economic Sentiment and Business Climate.
EUR/USD levels to watch
As of writing the pair is advancing 0.14% at 1.0939 and a break above 1.1021 (76.4% Fibo of 1.0808-1.1713) would target 1.1113 (200-day sma) en route to 1.1162 (100-day sma). On the other hand, the initial support lines up at 1.0894 (low post-FOMC Oct.28) followed by 1.0847 (low Aug.5) and finally 1.0808 (low Jul.20).
For more information, read our latest forex news.
USD/JPY diverges from treasury yields
FXStreet (Mumbai) - The USD/JPY pair dipped in Asia despite treasury yields remaining resilient around the NY session highs.
Back above hourly 100-MA
The pair dipped to a low of 120.58 in Asia before recovering slightly to trade above its hourly 100-MA located at 120.78 in early Europe. Still, the pair is well below its NY session high of 121.26 levels. However, a more policy sensitive 2-yr treasury yield still trades around 0.71%.
Later today, the USD/JPY pair and the treasury yields could take cues from the US preliminary Q3 GDP figure. A strong figure could strengthen the direct correlation between the USD/JPY and the treasury yields.
USD/JPY Technical Levels
The immediate resistance is located at 121.00 (200-DMA), above which gains could be extended to 121.50 (Oct 26 high). A break above the same would expose 121.86 (100-DMA). On the other side, support is seen at 121.58 (daily low) and 120.41 (10-DMA), under which the pair could test 120.14 (50-DMA).
For more information, read our latest forex news.
Back above hourly 100-MA
The pair dipped to a low of 120.58 in Asia before recovering slightly to trade above its hourly 100-MA located at 120.78 in early Europe. Still, the pair is well below its NY session high of 121.26 levels. However, a more policy sensitive 2-yr treasury yield still trades around 0.71%.
Later today, the USD/JPY pair and the treasury yields could take cues from the US preliminary Q3 GDP figure. A strong figure could strengthen the direct correlation between the USD/JPY and the treasury yields.
USD/JPY Technical Levels
The immediate resistance is located at 121.00 (200-DMA), above which gains could be extended to 121.50 (Oct 26 high). A break above the same would expose 121.86 (100-DMA). On the other side, support is seen at 121.58 (daily low) and 120.41 (10-DMA), under which the pair could test 120.14 (50-DMA).
For more information, read our latest forex news.
What to expect from today's US Q3 GDP? - TDS
FXStreet (Bali) - The Strategy Team at TD Securities looks for US Q3 GDP to show a deceleration to 1.5% from 3.9% in Q2.
Key Quotes
"With the Fed muscling market pricing for 2015 rate hikes back above the 50% mark, the market’s attention will shift back to fundamentals."
"We look for Q3 GDP to show a deceleration in the pace of growth momentum to 1.5% from 3.9% in Q2."
"The devil will be in the details for the market reaction, and we look for personal consumption to remain strong at 3.4% as final domestic demand continues to grow at a 3.0% pace."
"If the details of the report are stronger than the headline reading suggests, Treasuries could continue to bear flatten as the market pushes December hike odds higher still."
"September pending home sales and weekly jobless claims will largely play second fiddle, with the former expected to rebound 1.6% m/m and the latter to edge lower to 254k from 256k."
"Treasury will also auction $29bn in 7s following the weak 5yr sale, with averages pointing to a decent sale stopping 0.3bp through as the buy side takes 67% of the auction."
For more information, read our latest forex news.
Key Quotes
"With the Fed muscling market pricing for 2015 rate hikes back above the 50% mark, the market’s attention will shift back to fundamentals."
"We look for Q3 GDP to show a deceleration in the pace of growth momentum to 1.5% from 3.9% in Q2."
"The devil will be in the details for the market reaction, and we look for personal consumption to remain strong at 3.4% as final domestic demand continues to grow at a 3.0% pace."
"If the details of the report are stronger than the headline reading suggests, Treasuries could continue to bear flatten as the market pushes December hike odds higher still."
"September pending home sales and weekly jobless claims will largely play second fiddle, with the former expected to rebound 1.6% m/m and the latter to edge lower to 254k from 256k."
"Treasury will also auction $29bn in 7s following the weak 5yr sale, with averages pointing to a decent sale stopping 0.3bp through as the buy side takes 67% of the auction."
For more information, read our latest forex news.
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