A strong official PMI from China contrasted a weak reading on the sector from HSBC. Despite a three day slump to end the month, the US dollar was easily the best performer in May while the Australian dollar lagged badly. Weekly CFTC positioning data show growing AUD and CHF shorts. We reintroduced USDCHF after a long absence from the Premium Insights with 2 new trades and monthly and weekly charts. 1 EURUSD remain in progress as well as 3 USDJPY, 2 EURJPY, 2 USDCAD and 1 silver. For full detail, see latest Premium Insights.
The official manufacutring sentiment survey from China rose to 50.8 compared to 50.0 expected and 50.6 in April. The number could give the Australian dollar some respite to start the week but traders may be skeptical. The PMI earlier in the week from HSBC slipped to 49.6 from 50.4 in April.
There is also uncertainty about the US manufacturing. Signs were pointing to a worsening slump until Fridaywhen the Chicago PMI soared to 58.7 compared to 50.0 expected. In the span of a month, the index when from the lowest since 2009 to the highest since early 2012.
We caution that it's only one month and one data point but renewed strength from US factories would be another reason to buy the US dollar. The other data point on Friday was the PCE report, which showed core inflation up 1.1% compared to 1.0% y/y expected. Rising inflation could give the Fed an incentive to taper QE, which could be a major boost for the US dollar. One negative part of the report was personal spending, which fell 0.2% in April. Commitments of Traders
Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.
EUR -85K vs -81K prior JPY -100K vs -95K prior GBP -75K vs -77K prior AUD -42K vs -32K prior CAD -33K vs -34K prior NZD +14K vs +18K prior CHF -29K vs -20K prior US Dollar Index longs at 46K vs 43K prior
The market has quietly built up the largest short position in CHF in 11 months. There are always rumors about hiking the EUR/CHF floor but it's mostly a trade on dollar strength and improving fundamentals in Europe.
Meanwhile, euro shorts are showing no sign of quitting even though more than half of the short position was initiate in the past two weeks – all of which are underwater. It's also interesting to note the lack of movement in NZD despite the rush in Australian dollar shorts. The carry is better in New Zealand but it's difficult to imagine the divergence continuing.
Disclaimer
The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities.
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Daily Forex Brief
London :Tuesday 21st May 2013
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Data/ Event Risks
GBP: The inflation data today will be a key focus, with PPI (producer prices) also released. We would agree with the market view that CPI inflation should moderate from 2.8% to 2.6%. If seen, this would be the first fall in headline inflation for 7 months. For now, it’s unlikely that sterling will be badly hit if we see a number lower than 2.6% as for now, expectations of more QE are being held back by the transition to the new Governor.
USD: The dollar is waiting for the Fed minutes tomorrow and the testimony by the Fed Chairman Bernanke to Congress. There are more speakers from the US Fed today and dollar is proving to be more sensitive than normal to what members are saying. Both Bullard and Dudley are currently voting members of the FOMC.
Idea of the Day
It’s been something of a fight but sterling has been struggling to keep its head above water after last week’s more upbeat news from the Bank of England, fighting against the stronger tone of the dollar. For the first time in recent history, the Bank was able to downgrade inflation forecasts and upgrade growth. A couple of years ago, the UK was beset by inflation coming in above expectations, but the past 5 releases have come in bang in line with market expectations. It has been 11 months since inflation has come in below expectations, so if seen, this could be taken as a further sign of good news on the economy. Sterling is unlikely to fall significantly on this scenario as expectations of further quantitative easing are constrained by the fact that the market is not going to push for more QE until the new governor is at the helm of the Bank in July.
Latest FX News
JPY: A modestly weaker tone to the yen, with the latest BoJ meeting taking place today and tomorrow. After the extent of policy measures announced in April, there are no strong expectations of more from this week’s meeting, but the market is naturally a little nervous nonetheless.
AUD: If the gains made in the Asia session are maintained, then this will be the first time this month the Aussie has risen on two consecutive days. The minutes to the RBA meeting (where rates were cut to 2.75%) did not boost near-term rate cut expectations, allowing the Aussie to outperform in the Asia session for the second consecutive day.
NZD: A second day of gains, but trumped by the Aussie, meaning another push below the 1.20 level on AUDNZD.
EUR: Holding steady for now, having fought against the former dollar tone of the past two weeks, with EURJPY also holding to a tight range. German PPI data in line with expectations at the start of European trading, rising 0.1% YoY.
Disclaimer
The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities.
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Over the weekend, G7 finance chiefs and central bankers reaffirmed their February commitment to “not target exchange rates.” That statement seems to indicate that they will tolerate a weakening Yen for now, as they stepped up their focus on Japan’s recovery strategy.
According to economists surveyed by Bloomberg News, much of the data scheduled for release this week will show that the Euro area remained in recession for the first quarter of 2013, and that U.S. retail sales fell in April for a second consecutive month. This probably explains why the finance chiefs are accommodative of loose monetary policies.
Bank of Japan Governor Haruhiko Kuroda used the G7 talks to reiterate that his doubling of monthly bond purchases is aimed at meeting a 2% inflation target by 2015, and not at artificially helping exporters. While the Yen’s weakness aids local exporters such as Sony Corp., it risks undermining prospects of trade partners. Nations including Australia, New Zealand and Switzerland are also moving to counter climbing currencies.
NZD tumbles on Reserve Bank of New Zealand (RBNZ) intervention
New Zealand intervened in the currency market last week for the first time in five years to curb the Kiwi’s stubborn rise. Reserve Bank of New Zealand Governor Graeme Wheeler noted that the Kiwi rose about 12% against the U.S. Dollar since the middle of last year and hurt the country’s exporters.
However, the tune for this week could be markedly different. I expect the U.S. Dollar to strengthen against several currencies. In fact, when markets opened on Monday morning, the USDJPY rose to 102.14, the highest level since October 2008. The Greenback is also at a one-month high against the Euro and a ten-month high against the Aussie Dollar.
A strong U.S. Dollar will hurt the country’s exporters but benefit foreign companies listed on the New York Stock Exchange. As an example, Avon, who generates over 85% of their total revenue outside the US, saw their earnings dip by 4% due to the Greenback’s strength. Toyota on the other hand, saw their Q1 earnings skyrocket. The car company made JPY314 billion, more than double last year’s JPY121 billion, and beat expectations for JPY296 billion. That whopping first-quarter figure is the company’s largest in more than five years.
Investment Insights
NZDUSD – resistance at 0.8340
On the 4-hourly chart, the NZDUSD moves in a strong downtrend, especially after the RBNZ intervened last week. I expect a weak number for retail sales tomorrow morning, which will cause the downtrend to continue.
An entry is taken when prices reach 0.8340, which is at the level of the EMA 12 (exponential moving average). A stop loss of 50 pips is placed just above the EMA 24, as I do not expect prices to rise above that level. We will have two targets on this trade, exiting the first position at 0.8290 and the second position at 0.8240.
Disclaimer
The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities.
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The Daily Forex Brief is written by FxPro's team in the City of London. Visit fxpro.co.uk
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Daily Forex Brief
London :Wednesday 8th May 2013
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Data/ Event Risks
EUR: Focus on the German production numbers after the stronger orders data yesterday gave the euro a lift, although it was notable that the euro failed to sustain the gains later on. Production is seen falling 0.1% in March, after 0.5% gain during February.
NZD: Labour market data is released at 23:45 GMT, with the unemployment rate seen nudging lower to 6.8%. Note that AUDNZD has been moving lower for the previous 7 weeks now, but comments overnight threaten a continuation of this trend.
GBP: The market will have half an eye on the state opening of parliament, but it’s not likely to be a market moving event.
Idea of the Day
Things are changing in FX, perhaps more so than usual. Three themes are worth noting. Firstly, the dollar’s positive correlation with data surprises has been falling, but this should not be that surprising. Earlier in the year, there was excitement at stronger data on the basis that this could mean the Fed withdrawing stimulus earlier than expected, but subsequent data and comments have undermined this. Secondly, the Aussie rate cut has further put to bed the risk-on/risk-off categorisation that dominated last year, but this has been a long-running theme. Finally, there is a lot more two-way traffic in the yen, so the dominant trend of the first quarter has turned a lot more neutral. What this leaves us with is a market currently more inclined to trade ranges, rather than push new territory. That was evident yesterday with USDJPY’s move away from the 100 level, the Aussie’s failure to test the year lows after the rate cut and the reluctance of the euro to hold above the 1.31 level. The CAD and the NZD are the main exceptions, with AUDNZD having pushed lower for the previous 7 weeks. Having failed to break below 1.20 on a sustained basis yesterday, keep an eye on AUDNZD for a possible reversal, especially in light of the latest comments from the central bank governor overnight, suggesting more intervention may have taken place to weaken the currency.
Latest FX News
JPY:Fighting the trends towards a stronger dollar and once again this lead to a push back from a test of 100 on USDJPY. EURJPY was the main mover on Tuesday, the push above 130 soon undermined by the afternoon’s change in tone.
GBP: Suffering on Tuesday although not real specific factors were behind the move, with cable moving back below the 1.55 level. Overnight data suggested a weak retail picture, the BRC measure showing like for like sales falling 2.2% YoY.
NZD: Revering some of the recent strength on the back of comments from the central bank chief Wheeler, who said that “there had been intervention” which will become evident in their balance sheet data later this month.
EUR: The push above 1.31 on EURUSD soon met with sellers during the afternoon session, the euro suffering in line with sterling.
Most Likely Scenario: SHORT positions below 1466 with targets @ 1441 & 1423.
Alternative scenario: The upside penetration of 1466 will call for 1488 & 1507.
Comment: gold prices are capped by a declining trend line while a bearish flag pattern is taking place. As long as the resistance at 1466 is not surpassed, the risk of the break below 1441 remains high.
CRUDE OIL (JUN 13) INTRADAY: THE DOWNSIDE PREVAILS.
Pivot: 96.30
Most Likely Scenario: SHORT positions @ 95.8 with 94.65 & 92.95 in sight.
Alternative scenario: The upside breakout of 96.3 will open the way to 97.2 & 98.
Comment: the RSI has just broken below a rising trend line.
Disclaimer
The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities.
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This pair had a significant and unexpected upward movement during the Friday session, but the kiwi dollar found the 8500 level to be very resistive. That’s the second shooting star in a row, so this will suggest that there will be a major downward movement in the next days, starting Monday.
4H Chart
We see a support at the 8400 level, so it’s a good moment to short this pair having 8400 as first and 8300 as second target in the short and medium term respectively.
This pair could not resist above the 8500 level for too long, but we have to say that the 8500 resistance hasn’t been broke yet, so this pair may continue higher if this resistance is broken. However I am confident that it won’t since this area seems like a wall in the recent weeks for this pair.
If there will be a decent break above 8500, aim for the buy, otherwise I am confident for a nice downfall considering the fact that there were two shooting stars in a short period of time.
Disclaimer
The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities.
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The second trading week of April is behind us, so let’s recap what happen here atPaxForex. We took a look at the popularity of forex trading which has been on a sharp increase despite economic conditions and while traders have reduced their activities in other sectors of the financial market (Popularity of Forex Trading). We have identifies five key factors why forex trading has enjoyed and continues to enjoy outstanding growth rates as well as popularity.
Later in the week we took a closer look at late British Prime Minister Margaret ‘The Iron Lady’ Thatcher who passed away at the age of 87 (Margaret Thatcher: Political Realism vs. Apathy). She was responsible for many great accomplishments such as reducing the power of trade unions, a surge in privatization and low tax rates in order to stimulate the British Empire. Unfortunately there have been many voices of anger directed at her all the way to happiness about her death.
We closed the week reverting back to the forex theme and published a vital piece of forex literature in order to better the understanding among novice traders as well as seasoned traders when and how forex profits are generated (Forex Profits are generated when you enter your Currency Trade). We strongly recommend you take the time to read it carefully and understand how novice as well as unprofitable traders approach a currency trade and how professional as well as profitable traders approach a currency trade.
Overview of profits for the week which ended April 12th
AUDUSD: 9 pips NZDUSD: 120 pips
Total: 129 pips
Monday, April 8th
NZDUSD Short Recommendation
We recommended a short position at 0.8475 with a take profit level of 0.8400 (NZDUSD Spinning Top at Resistance). This was an addition to our existing short position we took on March 26th at 0.8380 as well as our hedge taken on April 2nd at 0.8430. We closed our hedge for a profit of 120 pips and the two open positions carry a floating trading loss of 322 pips. This represents an increase of 270 pips compared to last week. We maintain our take profit target of 0.8400.
Tuesday, April 9th
USDJPY Short Recommendation
We recommended a short position at 99.25 with a take profit level of 97.25 (USDJPY Bump-and-Run Reversal). This currency pair has moved lower and currently carries a floating trading profit of 83 pips. We will maintain our take profit target of 97.25.
Wednesday, April 10th
USDCHF Long Recommendation
We recommended a long position at 0.9300 with a take profit level of 0.9375 (USDCHF Falling Wedge Formation). This pair has moved slightly lower and currently carries a floating trading loss of 30 pips. We will maintain our take profit target of 0.9375.
Thursday, April 11th
GBPJPY Short Recommendation
We recommended a short position at 153.00 with a take profit level of 148.00 (GBPJPY Overextended Rally). This pair has moved lower and currently carries a floating trading profit of 246 pips. We have adjusted our take profit level to 150.50.
Exit from trades of previous weeks
AUDUSD Hedge
We have closed our open AUDUSD hedge on April 9th for a profit of 9 pips. The hedge was opened on January 24th at 1.04920.
We had a total of four trading recommendations this week, all of which remain open and currently carry a floating trading loss of 23 pips. This represents a decrease of 29 pips compared to last week. We closed two hedges for a profit of 129 pips which equals our total weekly profits.
In addition to the four positions from this week we also carry seven positions from previous weeks. We have three open USDCAD positions, two long positions and one short hedge, which currently carry a floating trading loss of 248 pips. This represents an increase of 102 pips compared to last week. We have increased our take profit level to 1.0350.
We have four open GBPUSD positions, two long positions and two hedges, which currently carry a floating trading loss of 2,174 pips. This represents a decrease of 7 pips compared to last week. We will continue to monitor this currency trade and seek profitable exit levels for both sides of the trade.
We have three open GBPCHF positions, two long positions and one hedge, which currently carry a floating trading loss of 1,564 pips. This represents an increase of 84 pips compared to last week. We will maintain our take profit level of 1.4700.
We have four open EURGBP positions, three short positions and one hedge, which currently carry a floating trading loss of 1,406 pips. This represents an increase of 188 pips compared to last week. We maintain our take profit level of 0.8275.
We have three open EURAUD long positions which currently carry a floating trading loss of 605 pips. This represents an increase of 102 pips compared to last week. We will maintain our take profit level of 1.2575.
We have two open AUDUSD short positions which currently carry a floating trading loss of 327 pips. This represents an increase of 125 pips compared to last week. We will maintain our take profit level of 1.0330.
We have two open AUDCHF short positions which currently carry a floating trading loss of 311 pips. This represents an increase of 90 pips compared to last week. We will maintain our take profit level of 0.9580.
Our total floating trading loss for the week stood at 6,658 pips. This represents an increase of 655 pips or 10.91% compared to last week. This was our first increase in five weeks and we plan to reduce our floating trading losses throughout the rest of the month. GBP related trading losses accounted for 4,898 pips or 73.57% of all losses and are up 21 pips or 0.39% compared to last week. We will maintain our take profit target for April of 1,200 pips as well as our floating trading loss range between 6,000 and 6,500.
Disclaimer
The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities.
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Trade Idea NZD/USD intraday: the downside prevails.
Pivot: 0.7895
Our preference: Short positions below 0.7895 with targets @ 0.788 & 0.7855 in extension.
Alternative scenario: Above 0.7895 look for further upside with 0.8035 & 0.807 as targets.
Comment: the RSI advocates for further downside.
Disclaimer
The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities.
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For NZD USD next Monday is a new beginning in the formation of pair formation, although the movement was very slow going but the 0.6995 level will be key to the 68% Fibo of construction to the next price projections.
Disclaimer
The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities.
Indonesia Analisa yang kami berikan adalah berdasarkan perkiraan pergerakan rata rata harga dalam satu hari. Tidak menjamin apa yang kami sampaikan adalah sesungguhnya menjadi tepat dan benar. Segala hal yang terjadi dalam anda melakukan keputusan terhadap transaksi trading yang anda lakukan adalah menjadi tanggung jawab anda.
Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities. Indonesia Analisa yang kami berikan adalah berdasarkan perkiraan pergerakan rata rata harga dalam satu hari. Tidak menjamin apa yang kami sampaikan adalah sesungguhnya menjadi tepat dan benar. Segala hal yang terjadi dalam anda melakukan keputusan terhadap transaksi trading yang anda lakukan adalah menjadi tanggung jawab anda. Visit Us http://www.deryworldscorponforex.co.cc/ Support Us Doing Better
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The second trading week of April is behind us, so let’s recap what happen here at
