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Forex Tech Targets

Bulls-and_bears_forex_FXPIG_11.07.2019

EUR/USD:

24-HOUR VIEW Room for EUR to test 1.1285 but a move beyond 1.1310 is not expected. EUR surged during NY hours and took out a couple of strong resistance levels with ease. While the advance appears to be running ahead of itself, there is room for EUR to test 1.1285. At this stage, a move beyond 1.1310 is not expected. Support is at 1.1225 followed by 1.1200. The latter level is a solid support now and is unlikely to come into the picture.

1-3 WEEKS VIEW EUR is expected to trade sideways. The ‘downside bias’ in EUR highlighted on Monday (08 Jul, spot at 1.1225) has fizzled out as the strong overnight rebound took out the ‘strong resistance’ at 1.1255 (high of 1.1263). The price action was not exactly surprising as we noted yesterday (10 Jul, spot at 1.1200) that “downward momentum remains lackluster” and the weakness in EUR “lacks urgency”. From here, EUR is expected to trade sideways, likely between 1.1200 and 1.1310.

GBP/USD:

24-HOUR VIEW GBP could extend its overnight gains but a break of 1.2550 is unlikely. Instead of “weaken further”, GBP rebounded strongly to an overnight high of 1.2521. The recent weakness appears to have stabilized and a short-term bottom is likely in place. That said, the current GBP strength is viewed as a ‘corrective recovery’ and it is too early to expect a sustained up-move. From here, GBP could extend its overnight gain but the prospect for a break of the strong 1.2550 resistance is not high. On the downside, 1.2465 is expected to be strong enough to hold any intraday pull-back (minor support is at 1.2485).


1-3 WEEKS VIEW A NY close below 1.2440 would indicate GBP could weaken further to 1.2350. No change in view from yesterday, see reproduced update below. After yesterday’s rebound, the prospect for further weakness has diminished but only break of 1.2550 would indicate downward pressure has eased.

The relatively strong decline in GBP yesterday that tested the minor support at 1.2440 was not exactly expected (low of 1.2439). Our view from Monday (08 Jul, spot at 1.2645) was that while GBP is “under pressure”, the “the odds for a fresh year-to-date low are not high”. Shorter-term indicators are oversold and from here, we prefer to wait for a NY close below 1.2440 before adopting a more negative stance. Looking ahead, if GBP were to close below 1.2440 in NY, it would indicate that it could weaken further to 1. 2350. All in, the downward pressure in GBP is deemed as intact until it can move above 1.2550 (strong resistance was at 1.2590 yesterday).

AUD/USD:

24-HOUR VIEW AUD is likely to trade at a higher range of 0.6935/0.6985. While our view that “a break of 0.6900 is unlikely” was not wrong (low of 0.6911), the subsequent strong overnight rebound was not exactly expected. The advance is running ahead of itself even though a move above the overnight high of 0.6969 would not be surprising. That said, any AUD strength is viewed as higher 0.6935/0.6985 range (a sustained rise beyond 0.6985 is not expected).

1-3 WEEKS VIEW AUD is expected to trade with a downside bias towards 0.6880. For now, we hold the same view as yesterday (see reproduced update below).

Our view from Monday (08 Jul, 0.6985) was for AUD to trade sideways within a 0.6920/0.7030 range. The rapid pace of which AUD tested the bottom of the range (overnight low of 0.6920) was not exactly expected. Downward pressure has increased quickly and from here, AUD is expected to trade with a ‘downside bias’ towards the strong support at 0.6880. At this stage, the June’s low of 0.6832 is likely ‘safe’. All in, AUD is expected to stay under pressure unless it can move above the strong resistance at 0.6990.

NZD/USD:

24-HOUR VIEW NZD is expected to consolidate its gains and trade sideways, likely within a 06630/0.6675 range. The strong overnight surge that hit an overnight high of 0.6657 came as a surprise. While NZD could edge above the overnight high, a sustained advance is not expected. Overall, NZD is more likely to consolidate its gains and trade sideways at these higher levels, expected to be within a 0.6630/0.6675 range.

1-3 WEEKS VIEW NZD is expected to trade sideways for a period. We indicated yesterday that NZD is likely to trade with a ‘downside bias’ towards 0.6560. NZD subsequently briefly dipped to 0.6567 before staging a robust rebound and came close to taking out the 0.6560 ‘strong resistance’. The price action suggests that NZD could have made a short-term bottom at 0.6567. The outlook from here is not very clear and NZD could trade sideways between 0.6610 and 0.6710 for a period of time.

Source: efxdata

Room for EUR to test 1.1285 but a move beyond 1.1310 is not expected. EUR surged during NY hours and took out a couple of strong resistance levels with ease. While the advance appears to be running ahead of itself, there is...

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BOE Sees Significant Market Volatility

BoE_market_volatility_Brexit_Forex_FXPIG

UK banks are resilient to a worst-case disorderly Brexit, but such an event will cause significant market volatility, the Bank of England said in its Financial Stability Report on Thursday.

Further, the report said most risks to financial stability from the disruption to cross-border financial services in a no-deal Brexit have been mitigated. Nonetheless, further actions by EU authorities are needed.

The FSR is prepared twice a year by the Financial Policy Committee, setting out the risks to financial stability and how the system is prepared to withstand those risks.

Stressing that financial stability is different from market stability, the FPC cautioned that significant volatility and asset price changes in markets are to be expected in case of a disorderly Brexit.

The perceived likelihood of a no-deal Brexit has increased since the start of this year. UK banks are strong enough to continue lending through a range of economic and financial shocks, the FPC noted.

Rising trade tensions have raised the risks to the global outlook. That said, the UK banking system remains resilient to those global risks, the report added.

The FPC maintained the countercyclical capital buffer at 1 percent, but expressed willingness to alter the rate as economic conditions and the overall risk environment evolve.

In all political scenarios, looser fiscal policy, higher inflation and higher interest rates appear to be on the horizon, Paul Dales, chief UK economist at Capital Economics, said.

According to the systemic risk survey, confidence in the UK financial system stability over the next three years improved. Participants of the survey cited political risk as the most challenging risk.

Source: RTTnews

UK banks are resilient to a worst-case disorderly Brexit, but such an event will cause significant market volatility, the Bank of England said in its Financial Stability Report on Thursday...

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Gold steadily climbs to session tops

Gold_steadily-climbs_Forex_FXPIG
  • Trump’s criticism over Fed’s policy tightening helped regain traction on Monday.
  • Deteriorating risk sentiment further benefits the commodity’s safe-haven status.

Gold quickly reversed an early Asian session dip to sub-$1400 level and was now seen building on Friday's late rebound from the post-NFP swing lows.

The headlines NFP showed that the US economy added 224K new jobs in June and forced market participants to cut their bets for an aggressive interest rate cut by the Fed later this month. The same was evident from a sharp rebound in the US Treasury bond yields and exerted some downward pressure on the non-yielding yellow metal.

In fact, the yield on the benchmark 10-year US government bond jumped back above the key 2.0% level, which lifted the US Dollar to two-week highs and further collaborated towards driving flows away from the dollar-denominated commodity, dragging it farther below the key $1400 psychological mark.

However, the US President Donald Trump's fresh criticism on the Fed's policy tightening triggered a fresh leg of a slide in the US bond yields, which kept a lid on any strong follow-through up-move for the greenback and eventually helped the commodity to regain positive traction at the start of a new trading week.

This coupled with deteriorating risk sentiment, as depicted by a weaker trading sentiment around equity markets, and fading optimism over a quick resolution of the prolonged US-China trade disputes provided an additional boost to the precious metal's relative safe-haven status and remained supportive of the up-move.

It would now be interesting to see if bulls are able to capitalise on the positive momentum amid absent relevant market moving economic releases from the US and ahead of the next event risk - the Fed Chair Jerome Powell's two-day Congressional testimony on Wednesday and Thursday.

Source: fxstreet

Gold quickly reversed an early Asian session dip to sub-$1400 level and was now seen building on Friday's late rebound from the post-NFP swing lows. The headlines NFP showed that the...

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Forex Tech Targets

Bulls-and-bears_Forex_08.07.2019_FXPIG

EUR/USD:

24-HOUR VIEW EUR could test 1.1200 but the mid-June low of 1.1180 is not expected to come into the picture for today. Strong US jobs data sent EUR plummeting to a low of 1.1205. The sharp decline is running too fast, too soon and while a test of 1.1200 would not be surprising, the mid-June low near 1.1180 is not expected to come into the picture for today. On the upside, only a move above 1.1260 would indicate that the current weakness has stabilized (minor resistance is at 1.1245).

1-3 WEEKS VIEW EUR is expected trade with ‘downside bias’ towards 1.1180. We have held the same view last Tuesday (02 Jul, spot at 1.1285) wherein EUR “is in a sideway-trading phase” but we added, “the soft underlying tone suggest the immediate bias is tilted to the downside”. However, the expected ‘solid support’ at 1.1220 (bottom of the expected 1.1220/1.1340 range) did not materialize as EUR crashed to a low of 1.1205 last Friday (05 Jul). Downward momentum has improved even though not by as much as we would like. From here, EUR is expected to trade with a ‘downside bias’ towards the midJune low near 1.1180. A dip below this level is not ruled out but at this stage, the risk for a break of the year’s low at 1.1106 is not high. On the upside, only a move above the strong resistance at 1.1290 would indicate the current downward pressure has eased.

GBP/USD:

24-HOUR VIEW GBP is expected consolidate its loss and trade sideways, expected to be within a 1.2490/1.2560 range. The sharp decline in GBP that sliced through last month’s 1.2507 low came as a surprise (low of 1.2481 last Friday). The subsequent sharp bounce from the low amidst oversold conditions suggest 1.2481 could be a short-term bottom. That said, it is too early to expect a sustained rebound. GBP is more likely to consolidate its loss and trade sideways at these lower levels, expected to be within a 1.2490/1.2560 range.

1-3 WEEKS VIEW GBP is in under pressure but odds for a fresh year-to-date low are not high for now. Instead of “probing the bottom of the expected sideway-trading phase first” (our view since last Tuesday, 02 Jul, spot at 1.2645), GBP plunged last Friday (05 Jul) and cracked June’s low of 1.2507 and hit 1.2481. The rapid improvement in downward momentum came as a surprise. While the focus from here is clearly at the year-to-date low of 1.2409 (registered in early January), the odds for a move to this level are not high for now (there is a relatively strong support at 1.2440). That said, GBP is expected to stay under pressure unless it can move above 1.2590.

AUD/USD:

24-HOUR VIEW AUD is expected to trade sideways, likely between 0.6965 and 0.7005. The ease of which AUD cracked several strong support levels was unexpected (low of 0.6958 on Friday). The decline is severely ‘oversold’ and further weakness is not expected. From here, AUD is likely to consolidate and trade sideways, expected to be within a 0.6965/0.7005 range.

1-3 WEEKS VIEW AUD is expected to trade sideways. Our expectation for AUD to trade with an ‘upside bias’ towards 0.7070 from last Thursday (04 Jul, spot at 0.7030) was proven wrong quickly as AUD slumped on Friday (05 Jul) and cracked the strong support at 0.6980 (low of 0.6958). From here, it appears that AUD has moved back into a ‘sideway-trading’ phase and would likely trade sideways within a 0.6920/0.7030 range.

NZD/USD:

24-HOUR VIEW NZD is expected to trade sideways, likely between 0.6610 and 0.6655. The outsized drop in NZD that crashed to a low of 0.6603 last Friday was unexpected. While it is too soon to expect a sustained recovery, the 0.6600 level is unlikely to come under serious threat from here. NZD is more likely to consolidate and trade sideways, expected to be within a 0.6610/0.6655 range.

1-3 WEEKS VIEW NZD is expected to trade sideways. NZD dropped to a low of 0.6603 last Friday, just above the bottom of our expected 0.6610/0.6730 sideway-trading range (see update from last Tuesday, spot at 0.6675). Despite the large decline, downward momentum has not improved by that much. For now, we continue to hold the view that NZD is trading in a 0.6610/0.6730 range. However, if NZD were to close below 0.6610 in NY, it would indicate that it is ready to tackle the next support at 0.6560 (there is another relatively strong support at 0.6590).

USD/JPY:

24-HOUR VIEW USD could edge higher but last month’s 108.80 peak is unlikely to yield so easily. The strong and sudden surge last Friday appears to be over-extended. While USD could edge above last Friday’s 108.63 top, last month’s peak near 108.80 is a solid resistance and is unlikely to yield so easily. Support is at 108.25 but only a move below 108.00 would indicate that the current upward pressure has eased.

1-3 WEEKS VIEW USD to stay supported, sustained gain only if it can move and stay above 108.80. Our view for USD to test the bottom of the expected 107.20/108.30 sideway-trading range first did not materialize as it surged to a high of 108.63 last Friday. Upward momentum has improved and USD is expected to stay supported for now. That said, it has to move and stay above 108.80 in order to suggest that it is ready to move higher in a sustained manner. On the downside, a break of the strong support at 107.75 would indicate that the current upward pressure has eased.

Source: efxdata

EUR could test 1.1200 but the mid-June low of 1.1180 is not expected to come into the picture for today. Strong US jobs data sent EUR plummeting to a low of 1.1205. The sharp decline is running too fast, too soon and while a test of 1.1200 would not be surprising...

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Forex Today

Forex_today_USD-looking-strong_FXPIG
  • The US dollar has been consolidating its significant gains after Friday's upbeat jobs report.
  • The Turkish lira is plunging after the president sacked the central bank governor.
  • Fed Chair Jerome Powell's all-important testimony is awaited.

Here is what you need to know to start your day:

- The USD is a tad low after enjoying significant gains following the excellent jobs report. The US economy gained 224K jobs in June, far above 160K expected and contrary to the early indicators
- The Fed may even refrain from cutting rates altogether according to some analysts. Trump said the Fed does not know what it is doing. Powell's testimony later this week is already causing tension.
- Japan slapped export controls on certain South-Lorean semiconductor materials, adding new trade tensions. The safe-haven yen is stronger.
- Bank of Japan Governor Kuroda reiterated that the bank will maintain the easing policy until the 2% inflation is reached.
- The Turkish Lira has plunged after President Erdogan fired the central bank governor on Sunday. He calls for easier monetary policy.
- Gold is stable at around $1,400 and WTI oil around $57.
- Cryptocurrencies are stable as well with Bitcoin around $11,500. It was a quiet weekend for a change.

Source: fxstreet

The US dollar has been consolidating its significant gains after Friday's upbeat jobs report;The Turkish lira is plunging after the president sacked the central bank governor;Fed Chair Jerome Powell's all-important testimony is awaited...

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FOREX WEEK AHEAD

KIng_dollar_Forex_FXPIG

How big will the punch bowl be this time around?  Financial markets are convinced the Fed is set to commence on an easing cycle this summer, but if we see Fed Fund futures price in only two rate cuts this year, US stocks will struggle to make fresh highs and the highly anticipated dollar reversal may not come to fruition. Friday’s blockbuster US non-farm payroll report tentatively derailed stock and equity bullish plans.  The needle was moved from a slight lean towards 3 rate cuts to two cuts.  The dollar’s broad gains accompanied a surge with US Treasury yields and a pullback in stocks.

The focus will now shift to incremental updates on the trade front and a plethora of Fed speak and the Minutes to last month’s decision.  US inflation data will be released but other indications do not point for a significant surprise rise.  The release of China’s trade figures will show how resilient their economy was during the tensest moments in the trade war.  With the PBOC waiting to stimulate their economy, we could see dismal data support earlier action.  Regarding trade, we will need to see meaningful updates or scheduled trips to DC or Beijing to support optimism that both sides are closing the gap.  A wrath of Fed speak will see investors search for clues if the Fed waiver on its signal for a July rate cut.

  • Powell testifies on Semiannual Monetary Policy Report
  • Trade War impact on Chinese Trade and Inflation data
  • German Industrial Production could fuel contraction bets

Euro

Stimulus bets from the ECB may grow if we continue to see a trend of softer than expected data out of Germany.  The brewing trade war between the US and Europe will likely to continue to weigh on car manufacturers, with Germany bearing the brunt of the troubles.  Industrial production on a monthly basis is expected to rebound, but following a very disappointing factory orders reading, we should not be surprised if the German data comes in softer.

If we see Lagarde become the ECB Chief, we could see fiscal stimulus expectations rise, which should be very positive for both growth and the euro.  Draghi’s ECB has stated they are in no rush to deliver a rate cut this month, but if the data continues to show significant slowdowns, a 20 basis-point cut could happen this month.

CAD

The Bank of Canada (BOC) is widely expected to keep rates steady, with only one economist calling for a 25-basis point cut.  Monetary policy is expected to remain on hold for the rest of the year, as the recent data has been surprisingly better than expected, not counting Friday’s cool labor market number.  Employment has been on a tear, with the first half being the best start since 2002.  

Oil

The crude selloff that stemmed from global slowdown concerns appears to be fully priced in. West Texas Intermediate crude may find key support from the mid-$50-barrel area.  Oil got a boost on an improving outlook for demand on a surprising robust US nonfarm payroll report.  Fresh stimulus bets are still strong for the Fed to deliver a rate cut at the end of July and for the other big three banks, the PBOC, ECB and BOJ, to remain active in delivering additional stimulus.

If we do see US and China come through with scheduling face-to-face talks, we could see markets again to price in further optimism we could see a deal done this year.  Global demand would get a reprieve if China and US could finalize a trade deal.

Geopolitical risks are also keeping a bid in place for oil as Iran continues to increase their nuclear activities.  Up until now, most of Europe has been trying to negotiate with Tehran, but if Iran continues to with their nuclear agenda, we could see deeper international sanctions that could completely cripple Iran’s economy. 

Gold

Gold lost some of its mojo after a robust nonfarm payroll report eased up dovish bets on the Fed.  The overall outlook for bullion is still looking bright as gold ETF inflows appears insuppressible.  Robust demand for the yellow metal will continue to be supported on the backdrop of expectations of fresh stimulus to be released by the four largest central banks.

Bitcoin

The cryptocurrency markets have been on a mission to deliver wide range interest that will attract retail, institutional and mainstream commerce interest over the past several weeks.  With social media giant Facebook entering the digital coin space, all coins have benefited on renewed interest.  Bitcoin remains the bellwether that has yet to be threatened by other altcoins and we should not be surprised if it eventually makes a complete recovery of the $16,000 plummet that started at the end of 2017.

Source: marketpulse

How big will the punch bowl be this time around? Financial markets are convinced the Fed is set to commence on an easing cycle this summer, but if we see Fed Fund futures price in only two rate cuts this year...

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USD at the crossroads

USD_at-the-crossroad_Forex_FXPIG

According to analysts at ING, with the release of June nonfarm payroll data and Fed rate expectations, the US dollar is facing a crossroads.

Key Quotes

“Markets still attach a 27% probability to a 50 basis point move at the 31 July meeting, despite recent comments by dovish Fed member James Bullard, who said such a move would be "overdone". The OIS curve also shows that market participants expect one more cut by December and a total of 116bp of easing (almost five cuts) by the end of 2020.”

“Our forecasts are for a 170,000 increase in payrolls (consensus 160k) and 3.3% year-on-year wage growth (consensus is 3.2%). It appears that, unless the report shows a radically lower figure – as happened in May – markets could accept a broadly solid jobs report as confirmation that the July FOMC meeting will result in only 25bp of easing.”

“If today’s numbers materially surprise to the upside, the dollar would jump alongside US Treasury yields as markets may partly scale down expectations for the two additional cuts by end-2019.”

“On the whole, aggressive pricing of forthcoming Fed stimulus suggests that the risks for the dollar are mostly tilted to the upside ahead of the release. Should our NFP forecasts prove correct, we wouldn’t be surprised to see the DXY testing the 100-day MA resistance at 97.10.”

Source: fxstreet

According to analysts at ING, with the release of June nonfarm payroll data and Fed rate expectations, the US dollar is facing a crossroads...

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Oil: Prices likely to rebound

Oil-prices-likely-to-rebound_Forex_FXPIG

Danske Bank analysts point out that oil is generally trading on the weak side, setting up for the biggest weekly decline since May.

Key Quotes

“Weak global demand concerns seem to be outweighing the recent proposal from the OPEC+ pact to extend supply curbs into 2020 and worries that a renewed US confrontation with Iran may threaten supplies.”

“We continue to believe that oil prices will rebound over the course of this year following the OPEC+ deal, supply concerns in Iran, Libya and Venezuela and a modest recovery in the global economy towards the end of the year.”

Source: fxstreet

Danske Bank analysts point out that oil is generally trading on the weak side, setting up for the biggest weekly decline since May...

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US: Payrolls likely to increase 150k in June - TDS

US_payrolls_Forex_FXPIG

Analysts at TD Securities are looking for the US payrolls to increase 150k in June, following the soft 75k print in the previous month.

Key Quotes

“We expect job creation in the manufacturing sector to stay subdued, remaining in the single-digit range for a third consecutive month. Likewise, we forecast employment in the services sector to register a modest rebound following the weak 82k print in May.”

“The household survey should show the unemployment rate remaining steady at 3.6%, while wages are expected to rise 0.3% m/m on the back of a favorable reference week. The latter should bring the annual print up a tenth to 3.2% in June.”

Source: fxstreet

Analysts at TD Securities are looking for the US payrolls to increase 150k in June, following the soft 75k print in the previous month...

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RBA: More rate cuts to come?

RBA_more-rates-to-come_Forex_FXPIG

Analyst at Westpac, points out that the RBA’s cash rate cut to a record low 1.0% was clearly flagged by Governor Lowe beforehand and in the statement and subsequent speech, Lowe reiterated that the rationale for cutting at consecutive meetings was not a deteriorating growth outlook but a desire to drive the unemployment rate lower.

Key Quotes

“But is there more to come? The statement repeated June’s final paragraph, with the eye-catching exception of saying further adjustment would occur “if needed”. It seems the RBA will make limited changes to its key forecasts in the August quarterly statement. In the meantime, the RBA will no doubt be pleased to see agreement in Canberra this week to pass income tax cuts. This points to a period of steady rates.”

“However, the RBA will “continue to monitor developments in the labour market closely” and we expect they will see some softening in jobs growth and higher unemployment.”

“Our base case is another cut in Nov 2019, to 0.75%. But we also expect the Fed to have cut the funds rate 25bp by then, keeping the AUUS cash spread steady. After that, further Fed easing will trim the discount on the AU cash rate. Markets lean towards yields moving back in AU’s favour next year.”

“In the week ahead though, whether AUD/USD can extend its recovery to 0.71+ probably depends most on Jay Powell.”

Source: fxstreet

Analyst at Westpac, points out that the RBA’s cash rate cut to a record low 1.0% was clearly flagged by Governor Lowe beforehand and in the statement and subsequent speech...

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ECB’s Lane

ECB_no-comments_Forex_FXPIG

The European Central Bank (ECB) Chief Economist Philip Lane is on the wires now, via Reuters, speaking at a conference hosted by the central bank on the theme 'Challenges in the digital age'.

Key Headlines:

Productivity growth plays an important role in the conduct of monetary policy.

European productivity has been lacklustre for more than two decades.

Current estimates point, however, to the rise of e-commerce having relatively modest effects on inflation.

In relation to labour market dynamics, the structural changes associated with digitalization imply the contraction, or elimination, of some occupations but also the emergence of new types of jobs.

Source: fxstreet

The European Central Bank (ECB) Chief Economist Philip Lane is on the wires now, via Reuters, speaking at a conference hosted by the central bank on the theme 'Challenges in the digital age'...

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Gold slips back closer to overnight swing low

Gold_slips_Forex_FXPIG
  • The prevalent risk-on mood undermined the commodity’s safe-haven status.
  • Fed rate cut expectations/subdued USD demand does little to lend any support.
  • The downside seems limited amid US holiday and ahead of Friday’s NFP report.

Gold prices edged lower on Thursday and dropped back closer to the previous session swing low, around the $1413 region.

Tracking the overnight solid gains on Wall Street - with all the three major indices posting record closing highs, Asian stocks advanced on Thursday and turned out to be one of the key factors undermining the precious metal's relative safe-haven demand.

The incoming softer US economic data - Wednesday's ADP report and ISM non-manufacturing PMI being the latest, reinforced market expectations that the Fed will eventually move to cut interest rates this month and boosted investors' appetite for perceived riskier assets - like equities.

However, a subdued US Dollar demand might extend some support to the dollar-denominated commodity. This coupled with the recent slump in the US Treasury bond yields to more than 2-1/2 year lows might further collaborate towards limiting the downside for the non-yielding yellow metal.

Hence, it would be prudent to wait for a strong follow-through selling before confirming that the commodity might have already topped out near the $1440 region and positioning for any further near-term corrective slide as the focus now shifts to Friday's closely watched US monthly jobs report (NFP).

Source: fxstreet


Gold prices edged lower on Thursday and dropped back closer to the previous session swing low, around the $1413 region...

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EUR/USD Technical Analysis

EURUSD_tech-analysis_forex_FXPIG
  • EUR/USD extended the recent breakdown of the 200-day/week SMA in the mid-1.1300s and dropped to multi-day lows in the vicinity of 1.1270.
  • Further retracements are now on the table and could test the 100-day SMA in the 1.1260 region ahead of the 55-day SMA at 1.1231.
  • On the other hand, and If spot manages to resume the upside, the next hurdle emerges near 1.1420, or last week’s highs, ahead of the more relevant 1.1450, or March tops.

Source: fxstreet

EUR/USD extended the recent breakdown of the 200-day/week SMA in the mid-1.1300s and dropped to multi-day lows in the vicinity of 1.1270...

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RBA delivers consecutive cuts

RBA_cuts_Forex_FXPIG

Senior Asia-Pacific rates strategist at TD Securities, points out that the RBA cut the cash rate today to a record low of 1% and is the first time it has cut the cash rate in consecutive meetings since 2012.

Key Quotes

“On balance this is a dovish statement compared to neutral toned statements when the Bank has cut the cash rate in the past.”

“The Bank essentially kept the last paragraph from its June statement, but made a small tweak indicating it could adjust monetary policy 'if needed'. This suggests the RBA is willing to cut the cash rate further.”

“With 2 cuts delivered as per the Bank's forecasts and no major changes to the Bank's medium term GDP or CPI forecasts, it does suggest the Bank can buy itself time and move to the sidelines.”

“Our current RBA cash rate profile assumes the Bank moves to the sidelines, with a deterioration in the labour market bringing the Bank back in play, cutting again in Nov.”

“The clear risk is for the Bank to cut earlier than we forecast.”

“While we don't anticipate an August cut, it cannot be ruled out.”

Source: fxstreet

Senior Asia-Pacific rates strategist at TD Securities, points out that the RBA cut the cash rate today to a record low of 1% and is the first time it has cut the cash rate in consecutive meetings since 2012.

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Forex Tech Targets

Bulls-and-bears_Forex_FXPIG-02.07.2019

EUR/USD:

24-HOUR VIEW Rapid drop in EUR has room to extend a little further but weakness is likely limited to 1.1255. We highlighted yesterday that the recent consolidation “appears to be close to completion” and added, “a clear break out of the 1.1340/1.1400 range would indicate the start of a more sustained directional move”. That said, the extent and pace of the subsequent decline was not exactly expected as EUR plummeted by -0.73%, the largest 1-day decline in 2 months (closed at 1.1285). The rapid drop appears to have room to extend a little further but for today, any weakness is likely limited to 1.1255 (next support is at 1.1220). On the upside, 1.1345 is expected to be strong enough to cap any intraday recovery (minor resistance is at 1.1320).

1-3 WEEKS VIEW EUR is in a sideway-trading phase. While we noted the “flagging momentum” yesterday, the ease of which EUR cracked the 1.1290 ‘key support’ and the subsequent weak daily closing at 1.1285 in NY (-0.73%) came as a surprise. The ‘positive phase’ that started on 24 Jun (spot at 1.1375) has ended and last week’s 1.1412 high is deemed as a short-term top (our previous view was for the rally in EUR to extend to 1.1450). After yesterday’s price action, EUR is viewed to have moved into a ‘sideway-trading phase’ and is likely to trade within a relatively broad range of 1.1200/1.1370.

GBP/USD:

24-HOUR VIEW GBP is expected to drift lower to 1.2605. Our view for GBP to “retest last Friday’s peak of 1.2735” was incorrect as it dropped sharply and cracked the strong 1.2650 support (overnight low of 1.2633). Downward momentum has ticked up albeit not by much and from here, barring a move above 1.2700 (minor resistance is at 1.2675), GBP is expected to drift lower to 1.2605.

1-3 WEEKS VIEW GBP is in a sideway-trading phase, likely to probe bottom of range first. The break of the strong 1.2650 support was not exactly surprising as we indicated yesterday despite the rebound last Friday, “upward momentum has not improved by much”. The breach of the strong support indicates that instead of trading with an ‘upside bias’, GBP is likely to ‘trade sideways’ from here, expected to be between 1.2570 and 1.2725. That said, the slightly weakened underlying tone suggests the immediate bias is for GBP to probe the bottom of the range first.

NZD/USD:

24-HOUR VIEW Rapid decline in NZD has scope to test 0.6645 first before stabilizing. We highlighted yesterday “the combination of overbought conditions and waning momentum suggest further NZD strength is unlikely for today”. However, the subsequent sharp pull-back in NZD that hit an overnight low of 0.6665 came as a surprise. The rapid decline appears to have scope to test the 0.6645 support first before stabilizing. Resistance is at 0.6700 but the stronger level is at 0.6715.

1-3 WEEKS VIEW NZD is expected to trade sideways. We indicated yesterday (01 Jul, spot at 0.6720), “despite the relatively strong gains, upward momentum has not improved by much and the odds for NZD to extend its advance to 0.6760 are not high” and added, “only a NY close above 0.6720 would indicate further NZD strength to 0.6760”. However, the subsequent swift and sharp drop to an overnight low of 0.6665 was not exactly expected. While the 0.6660 ‘key support’ is still intact, the price action is enough to indicate that the early Sydney hours high of 0.6737 yesterday is a shortterm top. From here, NZD is deemed to have moved into a ‘sideway-trading phase’ and is expected to trade within a relatively broad 0.6610/0.6730 range.

USD/JPY:

24-HOUR VIEW USD could drift lower and test the bottom of the expected 108.00/108.55 range first. USD traded between 108.09 and 108.53 yesterday, narrower than our expected range of 107.90/108.50. While USD is likely to continue to trade sideways, the slightly weakened underlying tone suggests it could drift lower and test the bottom of the expected 108.00/108.55 range first.

1-3 WEEKS VIEW USD is expected to trade towards the June’s peak of 108.80. USD closed above 108.40 in NY (108.43) and as indicated yesterday, this would suggest USD has moved into a ‘positive phase’. From here, barring a move below the 107.65 ‘key support’, USD is expected to move towards the June’s peak of 108.80 (next resistance is at 109.00). That said, overbought shorter-term conditions could lead to a couple of days of consolidation first.

Source: efxdata

Rapid drop in EUR has room to extend a little further but weakness is likely limited to 1.1255. We highlighted yesterday that the recent consolidation “appears to be close to completion” and added...

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Forex Week Ahead

USDCAD-rises-on-rate-forex-week-ahead_FXPIG

USD/CAD Canadian Dollar Rises on Rate Divergence With Fed

The Canadian dollar rose 1.03 percent in the last five trading sessions. The loonie is trading at 1.3085 after monthly GDP data was higher than forecasted at 0.3 percent and the Bank of Canada (BoC) business outlook survey showed companies were optimistic about sales growth in the second half of the year. The main challenge facing the Canadian economy is the possible slowdown of its biggest trading partner: the United States.

The loonie is not immune to trade concerns, but this year it has been boosted by trade developments as the USMCA, which replaces NAFTA, is on its way to being ratified by all three members.

The Bank of Canada (BoC) is not expected to cut rates as soon as other major central banks given the positive indicators of late, but it is not out of the woods yet.

Central Bank Rate Cuts and US Employment Ahead

The US dollar is mixed against major pairs at the end of trading on Friday. Commodity currencies lead the charge with the New Zealand dollar almost 2 percent up on the greenback. The Canadian dollar rose 1 percent as strong economic indicators play down the probability of an interest rate cut. The Fed clipped the dollar’s wings by signalling an upcoming benchmark rate cut.

Global stock markets were flat in anticipation of what the G20 meeting would bring. A side meeting that was not part of the official agenda between China and the US was the most awaited moment.

Markets will look forward to an action packed first week of July. The Organisation of the Petroleum Exporting Countries (OPEC) will meet with major producers this week to decide the fate of their production cut agreement. Manufacturing data in China and the US will not show any impact from the G20 meeting, but the indicator could change drastically going forward. The Reserve Bank of Australia (RBA) could slash its rate to 1 percent as the central bank is part of the dovish choir of monetary policy makers that are back to their easing ways.

The week wraps up with the release of the U.S. non farm payrolls (NFP) on Friday. US jobs are expected to bounce back after the disappointing March report that showed only a gain of 75,000. A range form 150,000 to 210,000 is forecasted with a bump in average hourly earning up to 0.3 percent.

Oil finished the week mixed with West Texas Intermediate rising 1 percent but Brent losing 1.53 percent. Trade uncertainty before the weekend added volatility to energy pricing. It was the main reason the OPEC and the other major producers pushed back their ministerial meeting to this week. Russia remains on the sidelines and seems only a big drop in oil prices would expedite an extension of the agreement to cut production to stabilise prices.

Crude prices have been pressured downward as the trade war between US-China was a negative factor on energy demand. Supply disruptions added support to prices, but the major factor was the OPEC+ which is why if Russia does not agree to an extension the initiate could be too much for Saudi Arabia to handle by itself.

Gold rose 0.97 percent as the yellow metal is back on top as the favourite destination for investors seeking refuge from uncertainty. The willingness to cut rates from the Fed is keeping the dollar weak and gives the gold the upper hand as July gets underway. The market is pricing in a rate cut to be announced at the July Federal Open Market Committee (FOMC) that will put more downward pressure on the dollar.

Middle East tensions and the ongoing Brexit debate will be in the spotlight in July making a strong case for gold climbing higher as major central banks run back their easing monetary policy playbook.

Source: marketpulse

The Canadian dollar rose 1.03 percent in the last five trading sessions. The loonie is trading at 1.3085 after monthly GDP data was higher than forecasted at...

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G20 meeting

G20_forex_FXPIG

Westpac analysts suggest that in the G20 meeting, financial markets appear to be a lot more interested in the bilateral meetings that will take place on the side, especially between US President Trump and Chinese President Xi.

Key Quotes

“Risk appetite improved last week when President Trump tweeted that the pair would have “an extended meeting.” But the schedule from the White House allows only about 90 minutes for the meeting on Saturday, before Trump is due to meet Turkey’s Erdogan. This raises the suspicion that the meeting will largely be a rubber stamp of a pre-agreed policy tweak.”

“It’s not clear how much has been agreed in advance though. Press reports suggest that “Xi plans to present Trump with a set of terms the U.S. should meet before Beijing is ready to settle a market-rattling trade confrontation”. This list includes removing the blacklisting of Huawei, lifting all new tariffs and dropping efforts to get China to buy even more US exports than was agreed at the December G20 in Buenos Aires.”

“While the US has not published a list of its demands, ending forced technology transfer, IP theft and state owned enterprise funding of foreign company acquisition would arguably top that list.”

“Thus it’s not obvious that an agreement is within easy reach in 90 minutes. However,  with the US willing to suspend the threat of 25% tariffs on the $300bn or so of China goods imports that are not already subject to tariffs, there is a keen sense that both sides should be able to agree to further talks.”

“This is hardly the basis for a major improvement in the risk mood but is at least better than delivery of Trump’s 5 May declaration that the 25% tariffs would be imposed “shortly”.”

Source: fxstreet

Westpac analysts suggest that in the G20 meeting, financial markets appear to be a lot more interested in the bilateral meetings that will take place on the side, especially between US President Trump and Chinese President Xi...

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USD/JPY: Market stays immediately offered

USDJPY_immediately-offered_Forex_FXPIG

Analyst at Commerzbank, suggests that USD/JPY’s correction higher has so far been thwarted by the 20 day ma at 108.05, and the market stays immediately offered below the near term downtrend at 108.23.

Key Quotes

“We note that the Elliott wave count is implying a deeper retracement into the 108.65/109.25 band ahead of failure and for now will stay side lined. We continue to look for losses to the 78.6% retracement at 105.87.”

“Above the near term downtrend, minor resistance comes in at the 110.84 April 10 low and the 111.03 200 day moving average. These guard the 2015-2019 downtrend at 112.14.”

“We look for the market to remain capped by its 112.14 2015-2019 downtrend, only above here would target the 114.55 October 2018 high.”

Source: fxstreet

Analyst at Commerzbank, suggests that USD/JPY’s correction higher has so far been thwarted by the 20 day ma at 108.05, and the market stays immediately offered below the near term downtrend at 108.23...

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USD/CAD struggles below 1.3100

USDCAD_struggles_Forex_FXPIG
  • The USD remains on the defensive ahead of the crucial Trump-Xi meeting at G20 summit.
  • A modest pullback in Crude Oil undermines Loonie and might help limit the downside.
  • Traders now eye Canadian GDP report/US economic data some short-term impetus.

The greenback remained on the defensive against its Canadian counterpart, with the USD/CAD pair slipping further below the 1.3100 handle to hit near five-month lows on Friday.

The pair extended its recent bearish trajectory from levels beyond the 1.3400 round figure mark and remained under some selling pressure for the fifth consecutive session on Friday, also marking its eighth day of a downtick in the previous nine.

Despite Thursday's mostly in line final US Q1 GDP report, the US Dollar failed to attract any buying interest and failed to lend any support to the major as investors remained on the sidelines ahead of the US President Donald Trump's trade-related meeting with Chinese President Xi Jinping.

Even a modest pullback in Crude Oil prices, which tend to undermine demand for the commodity-linked currency - Loonie, failed to provide any meaningful impetus, albeit seemed to be the only factor that might help limit further losses, at least for the time being.

Moving ahead, Friday economic docket - highlighting the monthly Canadian GDP report, along with the releases of Core PCE price index, personal income and spending data for May, Chicago PMI and revised UoM Consumer Sentiment index from the US will now be looked upon for some fresh impetus.

Source: fxstreet

The pair extended its recent bearish trajectory from levels beyond the 1.3400 round figure mark and remained under some selling pressure for the fifth consecutive session on Friday, also marking its eighth day of a downtick in the previous nine...

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Gold climbs to weekly tops

Gold_weekly_tops_Forex_FXPIG
  • US-China trade tensions continue to benefit traditional safe-haven assets.
  • Increasing Fed rate cut bets weighed on the USD and remained supportive.

Gold edged higher through the early European session on Thursday and is currently placed at the top end of its weekly trading range, above the $1335 level.

After the previous session's late pullback, a combination of supporting factors helped the precious metal to regain positive traction for the second consecutive session on Thursday. Numerousness amid fears of a further escalation in the US-China trade tensions continued benefiting traditional safe-haven assets and turned out to be one of the key factors lending some support.

The risk-off mood was evident from declining US Treasury bond yields, which kept the US Dollar bulls on the defensive and underpinned the dollar-denominated commodity. Meanwhile, expectations for an eventual Fed rate cut move were reinforced by Wednesday's softer US consumer inflation figures, which further collaborated towards driving flows towards the non-yielding yellow metal.

In absence of any relevant market moving economic releases, it would be interesting to see if the commodity is able to capitalise on the positive move and aim back towards testing a key barrier near the $1346-48 zone, or yearly tops touched in reaction to last week's weaker US monthly jobs report.

Source: fxstreet

Gold edged higher through the early European session on Thursday and is currently placed at the top end of its weekly trading range, above the $1335 level...

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Forex Tech Targets

Bulls-and_bears_tech_analysis_Forex_FXPIG

EUR/USD:

24-HOUR VIEW EUR is expected to extend its decline but strong 1.1250 support is unlikely to come under threat for now. Instead of “edging above last week’s 1.1347 peak”, EUR plummeted after touching 1.1343. While the sharp and rapid drop appears to be running ahead of itself, the weakness is not showing sign of stabilizing. From here, barring a move above 1.1335 (minor resistance at 1.1310), EUR is expected to extend its decline even though the strong 1.1250 support is unlikely to come under threat for now (minor support at 1.1270).

1-3 WEEKS VIEW Diminished odds for further EUR strength. The relatively steep decline of -0.37% yesterday (12 Jun) has further dented further the fragile upward momentum and the chance EUR to test the strong 1.1380 resistance appears to be slipping away. However, only a breach of the 1.1250 ‘key support’ (no change in level) would indicate that the ‘positive phase’ that started last Tuesday (04 Jun, spot at 1.1245) has ended. In order to revive the current flagging momentum, EUR has to move and stay above 1.1335 within these 1 to 2 days or a break of the ‘key support’ would not be surprising. Looking ahead, a move below 1.1250 would indicate EUR could trade sideways for a period (a sustained decline in EUR is not expected).

GBP/USD:

24-HOUR VIEW GBP is expected to move lower but any weakness is likely limited to a test of 1.2650. While the registered range of 1.2682/1.2759 is close to our expected sideway trading range of 1.2690/1.2760, the soft daily closing of 1.2690 has weakened the underlying tone. That said, momentum is patchy at best and any weakness is likely limited to a test of Monday’s (10 Jun) low near 1.2650. The next support at 1.2610 is not expected to come into the picture. On the upside, any intraday GBP strength is not expected to move beyond 1.2760 (1.2730 is already a rather strong resistance).

1-3 WEEKS VIEW GBP is expected to trade sideways. The ‘sideway-trading’ phase that started last Tuesday (04 Jun, spot at 1.2665) is still clearly intact as GBP traded well within our expected 1.2570/1.2770 range since then. Momentum indicators are mostly neutral and we continue to expect GBP to trade within the range mentioned above. Looking ahead, barring a break of 1.2570, the current ‘sideway-trading’ phase is likely to be resolved by a move above the top of the expected range.

AUD/USD:

24-HOUR VIEW Further AUD weakness is not ruled out but oversold conditions suggest 0.6900 is unlikely to break. Expectation for AUD to trade sideways was incorrect as it slumped to 0.6925 before ending the day on a weak note (NY close of 0.6929). The decline has moved into oversold territory and while a dip below the 0.6920 support would not be surprising, the 0.6900 level is unlikely to come under threat. All in, AUD is expected to remain under pressure unless it can reclaim 0.6960.

1-3 WEEKS VIEW AUD is expected to trade sideways. While our 0.6920 ‘key support’ is still intact (overnight low of 0.6925), the weak daily closing (NY close of 0.6929, -0.45%) is enough to indicate the recent mild upward pressure has eased (we have expected AUD to trade with an ‘upside bias’ since last Tuesday, 04 Jun). From here, AUD is deemed to have moved into a ‘sideway trading’ phase and while a test of last month’s 0.6865 low is not ruled out, any weakness is viewed as part of 0.6865/0.6990 range (at this stage, the prospect for a sustained decline below 0.6865 is not high).

NZD/USD:

24-HOUR VIEW NZD is expected to trade sideways, likely between 0.6560 and 0.6600. Yesterday, we held the view that the weakness in NZD “could test 0.6560 before stabilizing”. NZD subsequently dipped to 0.6566 before trading mostly sideways. While downward pressure has waned, it is too early to expect a recovery. NZD is more likely to trade sideways (to slightly higher) for now, expected to be between 0.6560 and 0.6600.

1-3 WEEKS VIEW NZD is expected to trade sideways. No change in view from yesterday, see reproduced update below.

We highlighted yesterday the “prospect for further NZD strength has diminished” and the subsequent breach of the 0.6600 ‘key support’ was not surprising. The price action indicates that the ‘positive phase’ that started last Tuesday (04 Jun, spot at 0.6585) has ended. From here, NZD is deemed to have moved into a ‘sideway-trading’ phase even though the immediate bias is for it probe the bottom of the expected 0.6530/0.6630 range.

USD/JPY:

24-HOUR VIEW USD is expected to trade sideways between 108.25 and 108.75. USD traded between 108.20 and 108.57, a lower and narrower range than our expected 108.30/108.80. The little changed daily closing (108.49, -0.01%) offers no fresh clues and momentum indicators are still mostly neutral. USD is likely to continue to trade sideways for now, likely between 108.25 and 108.75.

1-3 WEEKS VIEW Diminished odds for further USD weakness. No change view from yesterday, see reproduced update below. However, the ‘key resistance’ has moved lower to 109.05 from 109.30.

USD edged higher and touched 108.79 yesterday (11 Jun) before easing off to end the day little changed at 108.50 (+0.06%). The price action offers no fresh clue and the current narrative still remains unchanged wherein the ‘negative phase’ in USD is still intact, the “odds for further weakness have diminished”. In order to revive the flagging momentum, USD has to move and stay below 108.30 within these few days or the risk of a break of the 109.30 ‘key resistance’ (no change in level) would increase quickly. Looking forward, if the ‘key resistance’ is taken out, it would signal the start of a ‘sideway-trading’ phase that could last for a while.

Source: efxdata

EUR is expected to extend its decline but strong 1.1250 support is unlikely to come under threat for now. Instead of “edging above last week’s 1.1347 peak”, EUR plummeted after touching 1.1343.

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Javid: My absolute priority is to deliver a Brexit deal

Brexit_deal_priority_Javid_Forex_FXPIG

The UK Prime Minister (PM) Candidate is on the wires now, via Reuters, making some comments on a potential no-deal Brexit ahead of the first round of Conservative voting due later today.

Key Headlines:

He wants a Brexit deal, but will prepare for no deal.

He won't seek a general election before Brexit is delivered.

We have to be prepared to leave the EU with no deal at the end of October.

We can be much more prepared to leave the EU with no deal at the end of October than we are now.

He doesn't accept that no-deal Brexit would be disorderly, would be challenging for the first few months.

My absolute priority is to deliver a Brexit deal.

Source: fxstreet

The UK Prime Minister (PM) Candidate is on the wires now, via Reuters, making some comments on a potential no-deal Brexit ahead of the first round of Conservative voting due later today.

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Damage already done from the Mexico tariff threat

Damage_Mexico_tariff_Forex_FXPIG

According to Senior economist at ABN AMRO, market sentiment has been buoyed by the deal struck between the US and Mexico to control migrant flows, thereby avoiding the imposition of tariffs threatened by the US at the end of May.

Key Quotes

“While a positive development, the news has done little to change our conviction in there being a significant growth slowdown over the coming year – and in turn, that the Fed will cut rates. A precedent has been set whereby, with very little lead-time, the US can impose trade tariffs to extract concessions on a non-trade matter.”

“Such a policy environment makes it extremely challenging for businesses to plan and to make investment decisions that depend on stable trading arrangements. Even before the latest Mexico threat, the raising of tariff rates on Chinese imports and the threat of a further escalation was weighing on the growth outlook.”

“By raising uncertainty and causing firms to delay or cancel investment plans, the threat of tariffs has likely played a significant role in the global manufacturing sector weakness that is – with a lag – now hitting the US.”

“While the direct effect of additional tariffs is likely to remain small, we expect the latest ratcheting up in tensions to further weigh on business confidence and in turn real activity over the coming months. As a result, we expect US economic growth to fall to 1.5% next year, well below growth in 2018 (2.9%) and projected growth in 2019 (2.2%).”

“Given the weaker outlook and a still-subdued inflationary backdrop, we expect the Fed to deliver three rate cuts by Q1 2020, starting with a 25bp cut in July.”

Source: fxstreet


...market sentiment has been buoyed by the deal struck between the US and Mexico to control migrant flows, thereby avoiding the imposition of tariffs threatened by the US at the end of May...

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Forex Tech Targets

Bulls-and-bears_tech-analysis-12.06.2019_forex_FXPIG

EUR/USD:

24-HOUR VIEW EUR could edge above last week’s 1.1347 peak but 1.1380 is unlikely to come into the picture. While our view for EUR to trade sideways yesterday was not wrong, the registered range of 1.1300/1.1337 was narrower than our expected 1.1280/1.1340. Momentum indicators have improved a tad and for today, EUR could edge above last week’s peak of 1.1347. That said, the next resistance at 1.1380 is unlikely to come into the picture. On the downside, only a move below 1.1300 would indicate the current mild upward pressure has eased.

1-3 WEEKS VIEW ‘Positive phase’ in EUR is still intact, a test of 1.1380 would not be surprising. After rising to a 2-1/2 month high of 1.1347 last Friday (07 Jun), EUR has not been able to make much headway on the upside. As highlighted over the past couple of days, while the price action continues to suggest further EUR strength, upward momentum has not improved by much. For now, we still think the ‘positive phase’ that started last Tuesday (04 Jun, spot at 1.1245) could test the strong 1.1380 resistance. That said, it is left to be seen whether EUR can maintain a toehold above this level. On the downside, a breach of the 1.1250 ‘key support’ (level was previously at 1.1230) would indicate that the ‘positive phase’ has run its course.

GBP/USD:

24-HOUR VIEW GBP is expected to trade sideways, likely within a 1.2690/1.2760 range. Expectation for GBP to “dip to 1.2635” did not materialize as it rebounded after touching 1.2671. While downward pressure has eased, it is too early to expect a sustained up-move. The current movement is more akin to a consolidation phase. In other words, GBP is expected to trade sideways albeit with an upside bias. Expected range for today, 1.2690/1.2760.

1-3 WEEKS VIEW GBP is expected to trade sideways. No change in view from yesterday, see reproduced update below.

There is not much to add to the update from yesterday (10 Jun, spot at 1.2720). As highlighted, the advance to 1.2763 last Friday (07 Jun) lacks momentum and GBP is still in a ‘sideway-trading’ phase. In other words, we continue to expect GBP to trade within the 1.2570/1.2770 range that was first indicated last Tuesday (04 Jun). Looking ahead, barring a break of 1.2570, the current ‘sidewaytrading’ phase is likely to be resolved by a move above the top of the expected range.

AUD/USD:

24-HOUR VIEW AUD is expected to trade sideways, likely between 0.6940 and 0.6980. We highlighted yesterday the “soft patch in AUD could extend to 0.6940”. AUD subsequently drifted lower and touched 0.6948 before trading sideways. The mild downward pressure is beginning to wane and the current price action is deemed as the early stages of a consolidation phase. In other words, AUD is expected to trade sideways, likely between 0.6940 and 0.6980.

1-3 WEEKS VIEW Upward momentum is still slightly positive; AUD could grind higher to 0.7050. No change in view from yesterday, see reproduced update below.

We highlighted yesterday (10 Jun, spot at 0.7000) that despite the strong advance to 0.7022 last Friday (07 Jun), “upward momentum has not improved by much and the risk of a sustained advance in AUD is not high”. That said, the subsequent sharp pull-back that hit an overnight low of 0.6957 was not exactly expected. For now, upward momentum is still slightly positive and we continue to see chance for AUD to grind higher to 0.7050. However, AUD has to move and stay above 0.7000 within these 1 to 2 days or upward momentum would wane rapidly. A break of 0.6920 would indicate that the current mild upward pressure has eased and AUD would then likely to trade sideways for a period.

NZD/USD:

24-HOUR VIEW Weakness in NZD could test 0.6560 first before stabilizing. We expected NZD to “dip below 0.6600” yesterday but were of the view “the next support at 0.6580 is unlikely to come into the picture”. However, NZD subsequently moved below 0.6580 and touched 0.6569. While the decline appears to be running ahead of itself, NZD could test the next support at 0.6560 first before the current weakness stabilizes. On the upside, only a move above 0.6610 would indicate that a short-term bottom is in place.

1-3 WEEKS VIEW NZD is expected to trade sideways. We highlighted yesterday the “prospect for further NZD strength has diminished” and the subsequent breach of the 0.6600 ‘key support’ was not surprising. The price action indicates that the ‘positive phase’ that started last Tuesday (04 Jun, spot at 0.6585) has ended. From here, NZD is deemed to have moved into a ‘sideway-trading’ phase even though the immediate bias is for it probe the bottom of the expected 0.6530/0.6630 range.

USD/JPY:

24-HOUR VIEW USD could trade between 108.30 and 108.80. Instead of “drifting lower to 108.10”, USD rose to 108.79 before easing off. The relatively subdued price action offers no fresh clue. From here, USD could continue to trade in a quiet manner and trade between 108.30 and 108.80.

1-3 WEEKS VIEW Diminished odds for further USD weakness. USD edged higher and touched 108.79 yesterday (11 Jun) before easing off to end the day little changed at 108.50 (+0.06%). The price action offers no fresh clue and the current narrative still remains unchanged wherein the ‘negative phase’ in USD is still intact, the “odds for further weakness have diminished”. In order to revive the flagging momentum, USD has to move and stay below 108.30 within these few days or the risk of a break of the 109.30 ‘key resistance’ (no change in level) would increase quickly. Looking forward, if the ‘key resistance’ is taken out, it would signal the start of a ‘sideway-trading’ phase that could last for a while.

Source: efxdata

EUR could edge above last week’s 1.1347 peak but 1.1380 is unlikely to come into the picture. While our view for EUR to trade sideways yesterday was not wrong, the registered range of 1.1300/1.1337 was narrower than our expected...

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Draghi’s speech at ECB conference

Draghi_ECB_CESEE_Forex_FXPIG

The European Central Bank (ECB) President Mario Draghi’s speech is expected to be closely eyed in a data-light European session ahead.

Draghi is due to deliver the opening address at the ECB conference on Central, Eastern, and South-Eastern European countries (CESEE).?", in Frankfurt. The conference is based on the theme of "Resilience to global headwinds. His speech is scheduled at 0815 GMT and is expected to last for about 15 minutes.

How could it impact EUR/USD?

According to Omkar Godbole, Analyst at FXStreet, “the yield differential will likely narrow in the EUR-positive manner, helping the EUR/USD pair capitalize on Friday’s bullish breakout if the European Central Bank (ECB) President Draghi sounds less dovish during his speech at 08:15 GMT today. The central bank said last week that it would delay its first post-crisis rate hike until the middle of next year and Draghi offered to pay banks if they pass on the cash borrowed from the ECB to households and firms. The gains in the EUR/USD, however, will likely be short-lived, if the US reports a better-than-expected consumer price inflation for May at 12:30 GMT today.”

Meanwhile, “the Technical Confluences Indicator shows that EUR/USD is hovering above a dense cluster of support lines at 1.1327. The lines include the Simple Moving Average 5-4h, the Fibonacci 38.2% one-day, the Bollinger Band 1h-Middle, the previous 4h-low, and the BB 15min-Lower. The next support is even stronger. 1.1280 is the convergence of the powerful SMA 100-1d, the Fibonacci 38.2% one-week, and the Fibonacci 161.8% one-day. On the other hand, resistance is weaker. The line to watch is 1.1368 which is the confluence of the Fibonacci 161.8% one-month and the 200-day SMA. Further above, weaker resistance awaits at 1.1415 where we find the Pivot Point one-month R3 waiting for EUR/USD,” as cited by FXStreet’s Senior Analyst Yohan Elam.

Key Notes

EUR/USD forecast: Developing uptrend awaits Draghi’s speech/US CPI for confirmation

EUR/USD: Consolidating - Commerzbank

ECB’s Villeroy: France is resisting the unfavorable environment rather well

About Draghi’s speech

As part of his job in the Governing Council, he gives press conferences in the back of how the ECB observes the current European economy. President's comments may determine positive or negative the Euro's trend in the short-term. Usually, if he shows a hawkish outlook, that is seen as positive (or bullish) for the EUR, while a dovish is seen as negative (or bearish).

Source: fxstreet

Draghi is due to deliver the opening address at the ECB conference on Central, Eastern, and South-Eastern European countries (CESEE).?", in Frankfurt. The conference is based on the theme of "Resilience to global headwinds. His speech is scheduled at 0815 GMT and is expected to last for about 15 minutes...

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OPEC+ and global supply risks

OPEC_OIL-global-supply_Forex_FXPIG

TD Securities analysts suggest that strong fundamentals are likely to offer support in the near term at $50/bbl and $60/bbl for WTI and Brent respectively after crude oil felt the burn from the Mexico and China trade war worries, while also having to contend with bearish US inventory stats.

Key Quotes

“Despite the fact the OPEC countries cannot decide on a date for their meeting, Saudi and Russia have been talking up the need for an extension. The $60/bbl level in Brent is a pain point for Russia, and certainly Saudi, and it is no surprise the recent selloff prompted both parties to talk up extended cooperation from OPEC+ on production cuts. Comments this morning from Russia's Novak that he sees a high risk of oversupply and potentially $40/bbl oil in the second half of the year if there is no extension is just the latest hint that the countries will come to an agreement.”

“Add to this the likely continued decline in Venezuelan production amid the restriction on US diluent exports, the constant geopolitical risk in Iran and Libya, and the eventual increase in refinery utilisation in the US after floods and outages recover, and the global fundamentals appear much stronger. Furthermore, the easing of Mexico tensions and the somewhat short term nature of floods and refinery outages which have have constrained US crude demand.”

Source: fxstreet

TD Securities analysts suggest that strong fundamentals are likely to offer support in the near term at $50/bbl and $60/bbl for WTI and Brent respectively after crude oil felt the burn from the Mexico and China trade war worries, while also having to contend with bearish US inventory stats...

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Gold slips to 1-week low

Gold-slips-to-1-week-low_Forex_FXPIG
  • Improving risk sentiment continues to weigh on the commodity’s safe-haven status.
  • Positive US bond yields/a modest USD uptick further add to the prevalent selling bias.
  • The downside is likely to remain limited amid speculations for a Fed rate cut in 2019.

Gold finally broke down of its Asian session consolidation phase and retested its immediate horizontal support near the $1325-24 region in the last hour.

The precious metal remained depressed for the second consecutive session on Tuesday and added to the overnight heavy losses - led by fading safe-haven demand amid encouraging trade-related development.

The US President Donald Trump suspended plans to impose tariffs on Mexico after the two countries reached an agreement on immigration and provided a strong boost to the global risk sentiment on Monday.

The risk-on mood was evident from a solid rebound in the US Treasury bond yields, which underpinned the US Dollar demand and exerted some additional pressure on the dollar-denominated commodity.

The yellow metal dropped to the mentioned support, albeit Trump's fresh threat to raise tariffs on imports from China extended some support and helped stage a late rebound during the US trading session.

The uptick, however, lacked any strong follow-through rather fizzled out quickly amid persistent improvement in the investors' appetite for riskier assets, as depicted by a positive mood around equity markets.

Meanwhile, the downside is likely to remain cushioned in the wake of firming market expectations that the Fed will eventually move to cut interest rates by the end of this year, which tends to benefit the non-yielding metal.

Hence, it would be prudent to wait for a strong follow-through selling before confirming that the commodity might have actually topped out in the near-term and positioning for any further near-term corrective fall.

Source: fxstreet

Gold finally broke down of its Asian session consolidation phase and retested its immediate horizontal support near the $1325-24 region in the last hour...

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FOREX Tech Targets

Bulls-and-bears_Forex_Tech-analysis_11.06.2019_FXPIG

EUR/USD:

24-HOUR VIEW EUR is expected to trade sideways, likely within a 1.1280/1.1340 range. In line with expectation, EUR traded sideways even though the registered range of 1.1288/1.1337 was narrower than our expected range of 1.1280/1.1340. The quiet price action offers no fresh clue and EUR could continue to trade sideways for now. Expected range for today, 1.1280/1.1340.

1-3 WEEKS VIEW ‘Positive phase’ in EUR is still intact, a test of 1.1380 would not be surprising. No change in view from yesterday, see reproduced update below.

In our last update on 04 Jun (spot at 1.1245), we held the view that EUR has “moved into a ‘positive phase’” and “could move to 1.1300”. We added, the prospect for EUR strength to extend to 1.1380 is not high. EUR closed below 1.1300 on Wednesday and Thursday before surging higher on Friday (07 Jun) and hit 1.1347 (on a weekly basis, EUR gained +1.47%, the largest 1-week advance since Aug 2018). While the price action continues to suggest further EUR strength, upward momentum has not improved by as much as preferred. That said, a test of 1.1380 would not be surprising but whether EUR can maintain toehold above this level is left to be seen. All in, the ‘positive phase’ could last for a while more and only a break of 1.1230 (‘key support’ previously at 1.1155) would indicate that a short-term top is in place

GBP/USD:

24-HOUR VIEW GBP could dip to 1.2635; next support at 1.2600 is unlikely to come into the picture. We were of the view yesterday that GBP “could edge lower to 1.2685 but a sustained decline is not expected”. The expected decline went deeper than expected as GBP touched 1.2653 before rebounding quickly. Despite the bounce from the low, the underlying tone has weakened and the intraday risk is tilted to the downside. From here, barring a move above 1.2735 (minor resistance at 1.2715), GBP is expected to dip to 1.2635 before the current weakness should stabilize (the next support at 1.2600 is unlikely to come into the picture).

1-3 WEEKS VIEW GBP is expected to trade sideways. There is not much to add to the update from yesterday (11 Jun, spot at 1.2720). As highlighted, the advance to 1.2763 last Friday (07 Jun) lacks momentum and GBP is still in a ‘sideway-trading’ phase. In other words, we continue to expect GBP to trade within the 1.2570/1.2770 range that was first indicated last Tuesday (04 Jun). Looking ahead, barring a break of 1.2570, the current ‘sidewaytrading’ phase is likely to be resolved by a move above the top of the expected range.

AUD/USD:

24-HOUR VIEW Soft patch in AUD could extend to 0.6940. Expectation for AUD to “retest 0.7025” was incorrect as it dropped to an overnight low of 0.6957 before ending the day on a soft note (NY close of 0.6960). Despite the relatively large drop, downward momentum has not improved by much. That said, there is scope for the current soft patch in AUD to extend to 0.6940. The next support at 0.6920 is likely ‘safe’ for today. Resistance is at 0.6980 but only a move above 0.7000 would indicate that the current mild downward pressure has eased.

1-3 WEEKS VIEW Upward momentum is still slightly positive; AUD could grind higher to 0.7050. We highlighted yesterday (10 Jun, spot at 0.7000) that despite the strong advance to 0.7022 last Friday (07 Jun), “upward momentum has not improved by much and the risk of a sustained advance in AUD is not high”. That said, the subsequent sharp pull-back that hit an overnight low of 0.6957 was not exactly expected. For now, upward momentum is still slightly positive and we continue to see chance for AUD to grind higher to 0.7050. However, AUD has to move and stay above 0.7000 within these 1 to 2 days or upward momentum would wane rapidly. A break of 0.6920 would indicate that the current mild upward pressure has eased and AUD would then likely to trade sideways for a period.

NZD/USD:

24-HOUR VIEW A dip below 0.6600 below would not be surprising but next support at 0.6580 is unlikely to come into the picture. We held the view that “further intraday strength in NZD is unlikely” yesterday. However, instead of “trading sideways”, NZD staged a relatively deep pull-back that hit an overnight low of 0.6604. The soft daily closing of 0.6608 in NY suggests there is room for further weakness. While a dip below 0.6600 would not be surprising, the next support at 0.6580 is unlikely to come into the picture. Resistance is at 0.6630 followed by 0.6650.

1-3 WEEKS VIEW Prospect for further NZD strength has diminished. We indicated yesterday (10 Jun, spot at 0.6655) that “overbought conditions could limit gains to 0.6700” (note that NZD touched 0.6681 last Friday, 07 Jun). In that context, the subsequent sharp sell-off that came close to taking out the 0.6600 ‘key support’ came as a surprise (overnight low of 0.6604). The prospect for further NZD strength has clearly diminished and if 0.6600 were breached, it would indicate that the ‘positive phase’ that started last Tuesday 04 Jun (spot at 0.6585) has ended a bit earlier than expected.

Source: efxdata

24-HOUR VIEW EUR is expected to trade sideways, likely within a 1.1280/1.1340 range. In line with expectation, EUR traded sideways even though the registered range of 1.1288/1.1337 was narrower than...

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This Time It's Different

Different_Forex_FXPIG

I personally tend to believe that life itself was never meant to be complicated...Even more,I believe that if we look close into the nature, the Bible, the universe ( take it as you wish,  without trying to make a debate here about the creation of the world, the universe, the human race etc, its divine nature or its accidental set up) one can find a perfect manual on how to live the life in a very simple, content and fulfilling manner…

You see, making mistakes is part of the journey...That is how you learn… A toddler can only learn how to get up when he falls down...and you learn to walk with the constant effort… But here is the catch - constant effort with applying lesson of your mistake or failure.

Someone said (most probably Einstein, or maybe not, as all the wisdom of the 20th century is credited to the guy, as recently it is done to Paulo Coelho) you can’t expect a different outcome if you do the same thing over again.

The problem is, we are all extremely wise, smart, and outstandingly right… You may call it EGO, self-righteousness, or anything that will please your inner self contentment...but, each time we willingly and consciously repeat the same action, in a very smart manner, we repeat to us the 4 words that are the root of all F**ks up in life and in the world in general…

Yes, you read well, 4 words are the problem, ALWAYS, for EVERYTHING and ANYTHING, 4 words are the reason why life is so damn complicated (or why we complicate life) and why the world is so difficult place to live in...and those 4 words are: THIS TIME IT’S DIFFERENT!

THIS TIME IT’S DIFFERENT - this is what we say to our self, each time when we try to justify doing the same thing that messed up our career, our relationship, our family, our FOREX Portfolio…

Of course it is different...everything in life is unique, but just like in Forex, there are patterns…

Each time you get back with a partner that cheated on you, vote for the same political party that didn't deliver the last time, change your decision to quit your job because you were not valued as you should have, each time it is different - there are different reasons for  everything, always,  and reasons, excuses and justifications, you can always find them even without trying hard… But it is the same pattern- there are cycles that repeat and will repeat constantly…

Each time you allow your work to be underestimated, it is different- the company is facing a hard period, your boss has other, bigger headaches...but it is the same pattern, you will end up being the person that can take any type of crap on you, die and not say a word about it… Maybe eventually you will get a tapping on your shoulder, and you can continue feeling that you are the person that is the stronghold of the company...until you get replaced by another idiot that can get an excessive amount of crap on his shoulders...and costs less...

Each time you jump into fire at 3 am in the morning for a friend that failed you a million times, it is different - this time your friend really needs you and will appreciate your sacrifice and your hand...until the next time you need his help and he gives you an excuse that he can’t help you right now because he is bathing his dog...if you only called 35 seconds earlier.

Each time you enter a trade and continue to add up positions even though the market is against you, is different - you know that this time you are right and eventually the market will realise that. This time you read the fundamental reports very thoughtfully, and you followed the rate cuts of the central bank..and the market is going to realise that any second, hopefully before you get a margin call.

You see, if you could only stop using those 4 words, and instead say: I’ve seen this movie, bought the popcorn and got this T-shirt that says: “Move On you Idiot...or stop crying when you get your portion of crap served on a different plate”...then, you can start living and trading by the manual...



...Someone said (most probably Einstein, or maybe not, as all the wisdom of the 20th century is credited to the guy, as recently it is done to Paolo Coelho) you can’t expect a different outcome if you do the same thing over again...

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EU still has risks to monitor...

EU-risks-to-monitor-FOREX-FXPIG

The European Union Commissioner Pierre Moscovici is out on the wires now, via Reuters, making the following comments in his speech in Tokyo.

EU still has risks to monitor, including Brexit and Italy’s finances.

Rise of protectionism and questioning of multilateralism must be combatted.

Key players, including the US and China, need to deliver on their commitments.

G20 acknowledgement of intensifying trade tension is best possible outcome from the EU perspective.

G20 communique shows roadmap for WTO reform and resolution of US-China trade dispute.

Source: fxstreet

The European Union Commissioner Pierre Moscovici is out on the wires now, via Reuters, making the following comments in his speech in Tokyo...

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Gold drops to multi-day lows

Gold_drops-to-multy-day-lows_Forex_FXPIG
  • Improving risk sentiment dents the commodity’s safe-haven status.
  • A goodish bounce in the US bond yields/USD adds to the selling bias.

Gold remained under some heavy selling pressure through the early European session and dropped to multi-day lows, around the $1325 region in the last hour.

The precious metal failed to capitalise on last week's strong up-move, further boosted by Friday's weaker US monthly jobs report, and opened with a bearish gap at the start of a new trading week.

Encouraging trade-related development, wherein the US President Donald Trump suspended plans to impose tariffs on Mexico, boosted the global risk sentiment and undermined the precious metal's safe-haven demand.

The risk-on mood was evident from a goodish rebound in the US Treasury bond yields, which helped ease the recent US Dollar bearish pressure and further drove flows away from the dollar-denominated commodity.

With today's steep decline, the metal has now erased gains recorded in the previous four trading session, though has still managed to hold its neck above the key $1300 psychological mark amid increasing Fed rate cut bets.

Hence, it would be prudent to wait for a strong follow-through selling before confirming that the non-yielding yellow metal might have actually topped out in the near-term or positioning for any further depreciating move.

Source: fxstreet

Gold remained under some heavy selling pressure through the early European session and dropped to multi-day lows, around the $1325 region in the last hour...

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Forex Tech Targets

Bulls-and-bears_forex_FXPIG_tech_analysis_10.06.2019

EUR/USD:

24-HOUR VIEW EUR is expected to trade sideways, likely within a 1.1280/1.1340 range. The strong and swift advance in EUR that touched 1.1347 last Friday appears to be running ahead of itself. For today, the risk of EUR moving above the 1.1347 is not high. That said, EUR does not appear to be ready to stage a significant pull-back just yet. All in, EUR is more likely to trade sideways to slightly lower. Expected range for today, 1.1280/1.1340.

1-3 WEEKS VIEW ‘Positive phase’ in EUR is still intact, a test of 1.1380 would not be surprising. In our last update on 04 Jun (spot at 1.1245), we held the view that EUR has “moved into a ‘positive phase’” and “could move to 1.1300”. We added, the prospect for EUR strength to extend to 1.1380 is not high. EUR closed below 1.1300 on Wednesday and Thursday before surging higher on Friday (07 Jun) and hit 1.1347 (on a weekly basis, EUR gained +1.47%, the largest 1-week advance since Aug 2018). While the price action continues to suggest further EUR strength, upward momentum has not improved by as much as preferred. That said, a test of 1.1380 would not be surprising but whether EUR can maintain toehold above this level is left to be seen. All in, the ‘positive phase’ could last for a while more and only a break of 1.1230 (‘key support’ previously at 1.1155) would indicate that a short-term top is in place.

GBP/USD:

24-HOUR VIEW GBP could edge lower to 1.2685 but a sustained decline is not expected. The rapid pull-back from last Friday 1.2763 peak occurred amidst overbought conditions and waning momentum. In other words, 1.2763 could be a short-term top. From here, barring a move above 1.2763, GBP could edge lower to 1.2685. At this stage, a sustained decline below 1.2685 is not expected.

1-3 WEEKS VIEW GBP is expected to trade sideways. GBP touched 1.2763 last Friday (07 Jun), not far from the top of our expected sideway-trading range of 1.2570/1.2770 (see update from last Tuesday, 04 Jun). The advance lacks momentum and this coupled with the pull-back from 1.2763 suggests that GBP is likely to continue to trade sideways. In other words, GBP is still in a ‘sideway-trading’ phase. Looking ahead, the ‘sideway-trading’ phase appears more likely to be resolved by a move above the top of the expected range.

AUD/USD:

24-HOUR VIEW Scope for AUD to retest 0.7025 before a pull-back can be expected. While the strong gains in AUD last Friday that touched 0.7022 appears to be running ahead of itself, there is scope for AUD to retest the 0.7025 level before a more significant pull-back can be expected. Only a move below 0.6975 would indicate that a short-term top is in place. The next support at 0.6960 is unlikely to come into the picture.

1-3 WEEKS VIEW Upward momentum is still slightly positive; AUD could grind higher to 0.7050. In our last update on 04 Jun (spot at 0.6965), we expected AUD to “trade with an upside bias towards 0.7010”. While AUD exceed this level last Friday (07 Jun) with a high of 0.7022, upward momentum has not improved by much and the risk of a sustained advance in AUD is not high. That said, upward momentum is still slightly positive and only a move below 0.6920 would indicate that the current mild upward pressure has eased. Meanwhile, AUD could grind higher to 0.7050.

NZD/USD:

24-HOUR VIEW NZD is likely to consolidate its gains and trade sideways at these higher levels, expected to be between 0.6630 and 0.6680. The strong rally in NZD that hit 0.6681 last Friday has moved deep into overbought territory. While further NZD strength is not ruled out in the days ahead, further intraday strength appears unlikely. NZD is more likely to consolidate its gains and trade sideways at these higher levels, likely between 0.6630 and 0.6680.

1-3 WEEKS VIEW ‘Positive phase’ is still intact but overbought conditions could limit gains to 0.6700. In our update on 04 Jun (spot at 0.6585), we ‘upgraded’ our view for NZD from ‘sideway-trading phase’ to a ‘positive phase’. We indicated that NZD “could move to 0.6635”. The subsequent advance exceeded our expectation as NZD hit a high of 0.6681 last Friday (07 Jun). While the ‘positive phase’ is still intact, overbought conditions suggest any further gains would likely be at a slower pace and could be limited to a test of 0.6700. All in, only a break of 0.6600 (‘key support’ previously at 0.6520) would indicate that the ‘positive phase’ has run its course.

USD/JPY:

24-HOUR VIEW Further USD strength is not ruled but is likely limited to a test of 108.95. USD gapped higher upon opening this morning. Further USD strength is not ruled out but for today, any up-move is likely limited to a test of 108.95 (minor resistance is at 108.75). Support is at 108.15 followed by last Friday’s low near 107.85.

1-3 WEEKS VIEW Diminished odds for further USD weakness. Our view for USD to “extend its weakness” did not really materialize (see update on 03 Jun, spot at 108.30) as it traded sideways for most of last week. Downward momentum has eased considerably and while the current ‘negative phase’ in USD is still intact, the odds for further weakness have diminished. However, only a break of 109.30 (no change in ‘key resistance’ level) would indicate that the end of the ‘positive phase’ and the start of a ‘sideway-trading phase’.

Source: efxdata

EUR is expected to trade sideways, likely within a 1.1280/1.1340 range. The strong and swift advance in...

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FOREX WEEK AHEAD

USDCAD-cad-dollar-higher-Canadian-job-report-Forex_FXPIG

The Canadian dollar rose on Friday as employment reports in both countries told different stories. The Canadian jobs data impressed by beating expectations with a 27,700 job gain. The forecasts were lower after a monster April gain of 106,500 and the loonie ended up higher against the greenback as the U.S. non-farm payrolls (NFP) disappointed to the downside. The negative effects of a prolonged trade war with China are starting to appear in the jobs sector. Equities remain on a winning streak as the US and Mexico appear to be near an agreement, but the market is sensitive to escalations on the trade front.

Monetary policy divergence is driving part of the gain of the Canadian currency. The Fed was forced to pump the brakes hard in January on monetary policy after four rate hikes in 2018. Now the Fed’s dot-plot is pointing to no rate hikes, and rising probabilities of a rate cut as the US economy is not immune to the negative effects of a trade war.

Commodities jumped on dollar softness and other factors. Gold is enjoying a boost from investor appetite for the metal as a safe haven, while oil prices were supported by Russia and Saudi Arabia signalling their willingness to extend the OPEC+ deal. Russia had been non-committal and still hold most of the cards with Saudi Arabia willing to make some concessions, but until an agreement is reached and maybe announced in the meeting between the OPEC and other major producers in June, oil will remain sensitive to trade headlines and increases to US production.

Dollar Tumbles as NFP Disappoints and Rate Cut Probabilities Rise

The US dollar is down across the board against major pairs. The May employment report shocked with a lower than expected number of new jobs. The US added 75,000 positions, short of the 180,000 that was forecasted. The U.S. Federal Reserve has been dropping hints that an easing monetary action might be needed and that it is ready to act. An interest rate cut has been rising in probability as Fed member remarks and mixed data has been pouring in.

Wednesday’s ADP private payrolls data was a preview of how challenging it was for job seekers in May with a 27,000 gain on estimates close to 200,000.

Euro Rises After US Jobs Report Shows Employment is Losing Momentum

The EUR/USD rose 0.56 percent on Friday and 1.48 percent in the last five trading days after the greenback was on the back foot since the start of the week. Ironically this week the European Central Bank (ECB) issued a dovish statement, but in comparison to market expectations it was not as dovish giving the edge to the euro.

Trade disputes continue to guide the market and this week there was progress made, but not enough to delay the tariffs on Mexican imports to the US. Opening two fronts caused the dollar to lose its appeal as a safe haven, and investors decamped to other assets to hedge their dollar positions. The miss by the US jobs report could force the hand of the Fed into making an interest rate cut. A summer cut could be on the table, unless US inflation and retail sales can turn the tide set in motion by the weak May jobs report.

Gold Hits 14 Month High as Dollar Drops on Potential Rate Cut

Gold rose 0.22 percent on Friday on its way to a 2.64 percent gain in that past five trading days. The yellow metal took advantage of the NFP miss that showed the US employment component is running out of momentum which could force the central bank into its first rate cut since abandoning its monetary easing policy.

Gold benefited from the Trump administration’s decision to engage in two open trade fronts at the same time. US-China negotiations stalled, and the market is not expecting anything new before the G20 meeting in Japan at the end of the month. The US escalated its immigration demands with Mexico via a tariff threat that is still very much on, despite both sides issuing positive comments on the negotiations.

The yellow metal has risen as investors are searching for a safe haven as the dollar is offering little refuge as market uncertainty has been triggered by the US. Further appreciating gold is the fact that disappointing economic data is making a stronger case for an interest rate cut coming sooner rather than later form the Fed. A soft dollar would continue to validate higher gold prices if trade war anxiety remains.

Oil Higher After Russia and Saudi Arabia Hint at OPEC+ Deal Extension

Oil prices jumped on a soft dollar and news that a Saudi Arabia and Russia pledge to extend the OPEC+ production cut agreement. The group’s attempt to soak up the excess supply in the market in effort to add stability has for the most part worked. Outside factors such as the rise of US production and trade war concerns putting pressure on global growth have been the major obstacles.

Brent and WTI rose close to 3 percent on Friday and will finish the trading week with gains despite trade war anxiety. The World Bank announced a downgrade of global growth as trade disputes are trickling down. Slowdowns in major economies are evident and if protectionism prevails there will be a slower pace of growth around the globe.

The upside for the OPEC+ is limited as reducing supply is only one part of the equation and with stable prices the appeal of increasing production in the US, Brazil and Canada will be higher as well as the continued negative effect on energy prices that trade disputes can bring.

The month of June is crucial for crude prices as the OPEC+ meets at the end of June with the G20 in Japan a couple of days after. An extension of the production cut, and more details on how the US-China are hoping to repair their trade relationship could make a huge difference for crude prices. Vice versa not reaching an extension on the OPEC+ agreement and if the US and China continue to spar on trade will only bring more downward pressure to the black stuff.

Source :marketpulse

The Canadian dollar rose on Friday as employment reports in both countries told different stories. The Canadian jobs data impressed by beating expectations with a 27,700 job gain. The forecasts were lower after a monster...

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ECB: Inflation outlook is 'not bad'

ECB_inflation_is_not-bad_Forex_FXPIG

Reuters reports the comments by the European Central Bank (ECB) Governing Council member Vitas Vasiliauskas, with the key headlines found below.

The inflation outlook is 'not bad'.

Still, need time to see how the economy develops in 2H 2019.

ECB didn't discuss any 'concrete' scenario.

Discussion on tools available was more theoretical.

Source: fxstreet

Reuters reports the comments by the European Central Bank (ECB) Governing Council member Vitas Vasiliauskas, with the key headlines found below...

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BOJ: Expect further easing in Sept

BoJ_further-easing-in-sept_forex_FXPIG

In their latest outlook report on the Bank of Japan (BOJ) monetary policy, the analysts at JP Morgan expect the Japanese central bank to cut the benchmark interest rates this September.

Key Quotes:

“We now expect a 20bp rate cut in September.

Expect a cut in the short-term policy rate from -0.1l% to -0.3% in September against the risk of financial tightening after the expected Fed rate cut.

If the US-China trade negotiations collapse and equity prices plunge, the BOJ may increase the amount of ETF purchases in July.”

Source: fxstreet

In their latest outlook report on the Bank of Japan (BOJ) monetary policy, the analysts at JP Morgan expect the Japanese central bank to cut the benchmark interest rates this September...

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EUR/USD flirting with daily lows

EURUSD_flirting-with-daily-lows_Forex_FXPIG
  • EUR/USD loses some shine after testing 1.1300 and above.
  • German Industrial Production contracted 1.9% MoM in April.
  • US Non-farm Payrolls next of significance in the calendar.

The shared currency is now giving away part of its weekly gains and is prompting EUR/USD to recede some ground and test so far daily lows in the 1.1265/60 band.

EUR/USD looks to data

After testing fresh 2-month peaks above 1.1300 the figure in past sessions, the pair has sparked a correction lower to the current comfort-zone around 1.1260 on Friday.

As usual this week, USD-weakness was exclusively behind the recovery in spot amidst speculations of a Fed’s rate cut and rising trade tensions, while the ECB event lent extra wings to the European currency after its tone disappointed bears on Thursday.

In the calendar, German Industrial Production contracted at a monthly 1.9% during April, missing previous estimates, while trade surplus shrunk to €17.0 billion during the same period. Moving forward, French trade balance figures are also due seconded by Italian Retail Sales.


Across the pond, US Non-farm Payrolls will be on top of the agenda later in the day (185K exp.).

What to look for around EUR

The ECB did not sounded as dovish as expected yesterday despite revising slightly lower its forecasts for inflation and economic growth in the region for the next years and after members discussed restarting QE or event cutting rates at the meeting. So, rates are expected to remain at current levels at least through H1 2020, although the ECB convincing optimism on an eventual pick up in inflation figures and the economic activity appeared to remove some bearishness surrounding the shared currency. On the broader picture, the broad-based risk-appetite trends and USD-dynamics should dictate the sentiment surrounding the European currency for the time being, all in combination with developments from the trade front including the US, China, the EU and Mexico. On the political front, Italian politics is expected to remain a source of uncertainty and volatility, with the centre of the debate on the country’s opposition to EU fiscal rules.

EUR/USD levels to watch

At the moment, the pair is retreating 0.11% at 1.1267 facing the next support at 1.1214 (55-day SMA) followed by 1.1194 (21-day SMA) and finally 1.1116 (low May 30). On the other hand, a breakout of 1.1309 (high Jun.6) would target 1.1323 (high Apr.13) en route to 1.1343 (200-week SMA).

Source: fxstreet

After testing fresh 2-month peaks above 1.1300 the figure in past sessions, the pair has sparked a correction lower to the current comfort-zone around 1.1260 on Friday...

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ECB and Eurozone GDP market movers today

ecb-gbp-market-movers_Forex_FXPIG

According to analysts at Danske Bank, focus in markets remains on US trade talks - with short-term emphasis on Mexico, and speculation of central bank easing for most notably the Fed.

Key Quotes

“Today's highlight is the ECB meeting, with a policy statement to be released at 13:45 CEST and a press conference at 14:30 CEST. We expect the ECB to maintain its easing bias, with no new additional stimulus measures announced. The update of the staff projections is unlikely to change much for inflation, but we see a downside risk to the 2020-21 growth forecast from its already low level. We will also get more information on the TLTRO3 terms, which we expect to be favourable in light of the ongoing struggles of the economy.”

“We will also get euro area GDP details for Q1. We will closely monitor the domestic demand drivers and see how they fared; private consumption and fixed investments were probably strong judging from the German figures already released.”

“In the US, we get the jobless claims, which will attract attention ahead of tomorrow's NFP number amid contradicting labour market signals yesterday. We expect initial jobless claims to come in at the low end.”

Source: fxstreet

According to analysts at Danske Bank, focus in markets remains on US trade talks - with short-term emphasis on Mexico, and speculation of central bank easing for most notably the Fed...

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EUR/USD: Downtrend eroded?

eurusd-downtrend-eroded-forex-FXPIG

According to analyst at Commerzbank, EUR/USD pair has eroded the 2018-2019 downtrend at 1.1287, but not closed above here and a close above here (preferably on a weekly basis) will complete a falling wedge pattern.

Key Quotes

“Initial target will be the 200 day ma at 1.1369 and then the 1.1570 2019 high. Dips lower will find initial support at the 55 day ma at 1.1215 and will ideally be contained by 1.1150. We regard recent lows at 1.1110/06 as an interim turning point.”

“Support at 1.1110/06 is regarded as the break down point to the 2018-2019 support line at 1.1027 and the 1.0814 78.6% Fibonacci retracement.”

Source: fxstreet

According to analyst at Commerzbank, EUR/USD pair has eroded the 2018-2019 downtrend at 1.1287, but not closed above here and a close above here (preferably on a weekly basis) will complete a falling wedge pattern...

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FOMC: July meeting priced in for 21bps of cuts – Deutsche Bank

FOMC_Meeting_Forex_FXPIG

Deutsche Bank analysts point out that the July FOMC meeting is now priced in for 21bps of cuts, with 88bps of cuts priced in for the next 12 months.

Key Quotes

“The market is still priced for a very dovish shift in policy. Friday’s jobs report is looking ever-more pivotal for the Fed and for markets. Despite the firming market expectations for rate cuts, the 2s10s curve actually bull steepened to 27.7bps (over 30bps intra-day and 28.8bps this morning) and to the steepest since November last year with 10y yields down a more modest -0.9bps (down a further -2.5bps this morning though).”

“In three days the curve has actually steepened more than +8bps and it continues to defy inversion unlike most of the other common yield curve measures in the US.”

Source: fxstreet

Deutsche Bank analysts point out that the July FOMC meeting is now priced in for 21bps of cuts, with 88bps of cuts priced in for the next 12 months...

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EUR/USD firmer, approaches 1.1300 ahead of US ADP

EURUSD_firmer_Forex_FXPIG
  • EUR/USD pushes higher and trades closer to the 1.1300 handle.
  • EMU Producer Prices disappointed expectations during May.
  • US ADP, ISM Non-manufacturing next of significance later in the day.

The optimism around the European currency stays everything but abated today and is lifting EUR/USD to fresh tops in the boundaries of the 1.1290 level.

EUR/USD remains firm and closer to 1.1300

Spot keeps the needle-like recovery well in place so far on Wednesday and is now trading at shouting distance from the critical barrier at 1.1300 the figure, always amidst the continuation of the sell off in the greenback.

As usual since last Friday, speculations around the likelihood of a rate cut by the Fed at some point later this year remain on the rise and keep weighing on the buck, forcing the US Dollar Index to break below the critical 97.00 support for the first time since mid-April.

Data wise in Euroland, Producer Prices rose less than expected at an annualized 2.6% during last month and contracted 0.3% inter-month. Further data in the region saw Retail Sales contracting at a monthly 0.4% during April and expanding 1.5% from a year earlier. Previously, final services PMIs in Germany and the euro area surprised to the upside.

Across the ocean, ADP will report on the performance of the job creation in the US private sector ahead of the release of the ISM Non-manufacturing, the EIA weekly publication on crude oil supplies and the Fed’s Beige Book.

What to look for around EUR

Lower-than-expected preliminary inflation figures in Euroland, albeit anticipated, showed the absence of conviction in the previous up tick in consumer prices and opens the door at the same time for a potential dovish tilt at the ECB event on Thursday. On the broader picture, the broad-based risk-appetite trends and USD-dynamics should dictate the sentiment surrounding the European currency for the time being, all in combination with developments from the trade front including the US, China, the EU and Mexico. On the political front, Italian politics has resurfaced as a source of uncertainty and volatility, with the centre of the debate on the country’s opposition to EU fiscal rules.

EUR/USD levels to watch

At the moment, the pair is advancing 0.24% at 1.1278 and a breakout of 1.1288 (high Jun.5) would target 1.1323 (high Apr.13) en route to 1.1343 (200-week SMA). On the other hand, the next down barrier lines up at 1.1217 (55-day SMA) followed by 1.1190 (21-day SMA) and finally 1.1116 (low May 30).

Source: fxstreet

The optimism around the European currency stays everything but abated today and is lifting EUR/USD to fresh tops in the boundaries of the 1.1290 level...

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ECB: Tweak in policy rate forward guidance?

ECB_Tweak_Forex_FXPIG

According to analysts at TD Securities, the ECB threatened to put all policy levers on the table this week, but they are looking for a simple announcement of generous TLTRO terms.

Key Quotes

“We see risks the ECB could tweak policy rate forward guidance, however.”

“Rates: Generous TLTRO terms support tighter EGBs vs Bunds spreads. Any intention to cut rates could push bunds below the -25bps mark. We continue to favor steepening bias for the curve expressed via 5s10s EUR IRS steepeners.”

“FX: This outing may be more about the financial plumbing but a dovish shift would cap recent gains and put fresh downside EUR risks sub 1.11 back into view. With the USD now on the defensive amid Fed rate cut hopes, our hawkish scenario could see EURUSD break into a new trading range above resistance near 1.1325.”

Source: fxstreet

According to analysts at TD Securities, the ECB threatened to put all policy levers on the table this week, but they are looking for a simple announcement of generous TLTRO terms...

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USD: Further selling? – Danske Bank

USD_Further_selling

Analyst at Danske Bank, points out that the USD sold off broadly after the Fed’s Bullard blinked late yesterday, when he argued a rate cut may be warranted soon.

Key Quotes

“We have stressed numerous times  that a key driver for FX markets would be if the Fed started to acknowledge dovish market pricing. Bullard’s comment was a first step in that direction, but the market likely needs more confirmation (and at some point action) for further selling USD.”

Source: fxstreet

Analyst at Danske Bank, points out that the USD sold off broadly after the Fed’s Bullard blinked late yesterday, when he argued a rate cut may be warranted soon...

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Gold jumps to over 3-month tops

Gold_jumps_over_Forex_FXPIG

 •  The prevailing USD selling bias helped gain positive traction for the fourth straight session.
  •  Increasing bets that the Fed might be forced to cut rates remained supportive of the move.

Gold continued scaling higher through the early European session on Tuesday and touched over three-month tops, around the $1329-30 region in the last hour.

The precious metal added to its recent strong gains beyond the key $1300 psychological mark and traded with a bullish bias for the fourth consecutive session amid heightened global trade tension.

Meanwhile, the recent trade war jitters continued fueling fears of a sharp economic slowdown and now seemed to have forced investors to start pricing in a possible Fed rate cut by the end of this year.

The same was reinforced by St. Louis Fed President James Bullard's overnight comments that a rate cut may be warranted soon, provided an additional boost to the non-yielding yellow metal.

Adding to this, broad-based US Dollar weakness further underpinned the dollar-denominated commodity and remained supportive of the ongoing move to the highest level since late-February.

Bulls seemed rather unaffected by some signs of stability in the global equity markets, which tends to dent the precious metal's safe-haven status, and even shrugged off a goodish bounce in the US bond yields.

Moving ahead, Tuesday's scheduled speech by the Fed Chair Jerome Powell will be looked upon for the central bank's near-term monetary policy outlook and might eventually provide a fresh directional impetus.

Source: fxstreet

Gold continued scaling higher through the early European session on Tuesday and touched over three-month tops, around the $1329-30 region in the last hour...

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EUR/GBP could move towards 0.9

EURGBP_move-towards_FOREX_FXPIG

Analyst at Danske Bank, notes that the GBP weakened against EUR yesterday, on a day full of headwinds.

Key Quotes

“Softer UK PMIs, compression of Italian sovereign spreads and marginally negative but not too surprising comments from Boris Johnson combined to send the GBP lower. If indeed we are about to see a weakening of domestic data in UK combined with euro spread compression, the EUR/GBP could move towards 0.9., although this is not our main scenario.”

“Nonetheless, forecasters have been surprised by strong UK data and a turn towards weaker growth indicators could fuel some short-term headwind for the GBP, even if Brexit news is neutral.”

Source: fxstreet

Analyst at Danske Bank, notes that the GBP weakened against EUR yesterday, on a day full of headwinds.

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FOREX Week Ahead

Forex_week_ahead_Market-death-by -tariffs_FXPIG

Risk aversion ran wild as stock markets and other risk assets plummeted on global tariff escalation.  The US dollar’s early gains during the end of May market rout is starting to reverse course on expectations the Fed may cut rates twice this year.  Stocks are licking their wounds following a double dose of negative trade news.  The first bullet came from China’s retaliatory measures that will deliver a crippling blow to multi-nationals and likely further downgrade earnings forecasts as the Sino-US relationship appears to going towards a path of irreparable damage.  The second bullet came from the escalation in trade tensions between Mexico and US, which  pretty much came out of nowhere.  The trade spat with China has been brewing, but markets were taken back with the US actions towards Mexico.  The US, Mexico and Canada were in the process of getting the USMCA approved with their respective governments, but that may have hit a road block now.  President Trump’s attack to their southern neighbor saw a Mexican response that US exports of grains, pork, and apples may be hit with tariffs.  Tariff escalation is detrimental to global growth and the bond market saw Bunds fall to a record low and the 10-year Treasury yield dropped to a fresh 20-month low and fell further below the Fed’s fund target range.

Markets will continue to care about every incremental trade update, but they should also closely pay attention to a couple important rate decisions and a wrath of Fed speak, which includes Chair Powell’s discussion on policy strategy.  On Monday, President Trump will also make a state visit to the UK, where he will meet with Queen Elizabeth and PM May. Tuesday, the RBA is expected to cut rates and we hear from Fed Chairman Jerome Powell at a Fed Research Conference. Wednesday, the EIA releases their crude oil weekly report and the Fed releases the Beige book and members Clarida and Bostic speak. On Thursday, the ECB will keep policy steady and update their economic forecasts. Friday will see PM May step down as the leader of the conservative party and have the release of the US employment report, which expects to see hiring deliver 185,000 new jobs in May.

  • RBA to cut rates and signal more are coming
  • ECB to downgrade forecasts and give details on next round of TLTROs
  • Fed’s Speakers to address recent trade war escalation and possible capitulation on cuts

RBA

On Tuesday, the Reserve Bank of Australia (RBA) is widely expected to cut the cash rate by 25 basis points to 1.25%, with investors focusing on how many more cuts will be queued up.  Only 5% of economists, two specifically, see the RBA keep rates steady.  At the last meeting, the RBA surprised many when they kept policy following disappointingly weak first-quarter inflation.

The RBA may decide on holding off on confirming any additional rate cuts, preferring to see how the global growth slowdown hits their domestic economy. The recent global bond rally took the Australian 10-year yield below the RBA’s cash rate of 1.5%, for the first time since 2015.  Analysts are piling on the rate cut bets, JP Morgan sees rates falling to 0.50% by mid-2020 while Westpac and Capital Economics see cuts targeting 0.75%.  With tame inflation, the RBA’s easing decision should be an easy one.

The Australian dollar remains near the lows of the year, as the recent escalation in trade wars dims global growth outlooks, and while data points in the Asia-Pacific continue to deteriorate.  With China’s May manufacturing PMI falling back into contraction, expectations remain high the PBOC will come to the rescue. While the market begins pricing in further RBA rate cuts, we could limited Australian dollar downside as the greater driver could be the Fed’s capitulation with delivering their own rate cuts.

Fed

A wrath of Federal Reserve members will speak next week, with investors waiting to see further confirming signals that the Fed will provide further accommodation shortly.  On Tuesday, Fed Chair Jerome Powell will discuss monetary policy strategy, tools, and communication practices at the Fed’s framework review conference in Chicago.  Markets have not heard from Powell since the trade war went on steroids and he could use this as his stage to begin capitulate and signal accommodation is needed.  The Fed’s preferred core price measure in April stayed steady at 1.6%, but still comfortably below the Fed’s 2% target.  The US trade war escalations with China and Mexico will likely dominate the Fed’s concerns here and while the data-dependent script may suggest they need to see further data confirm weakness, they might agree that is not necessary.

ECB

The ECB rate decision is expected to see no change with rates and possibly minor downgrades with their economic forecasts.  The central bank will also deliver more details on the expected launch of its third round of targeted long-term refinancing operations in September.  Economists are expecting them to use TLTROs as a backstop, which could provide insurance in times of heightened uncertainty.  With most of the other G7 central banks on the verge of providing stimulus, expectations are rising for the ECB to also provide fresh support to the ailing economy. Global trade wars are raising the risk for a euro zone recession, but that is still not the base case.  The current implied interest rate probabilities see a 53% chance that the ECB cuts rates at the January 23rd 2020 meeting.

The upcoming meeting should see the ECB provide a slight adjustment to forward guidance becoming more accommodative.  Economists however still are not abandoning a rate hike in the near future and that should provide some support for the euro.  A Reuters poll showed 47% of the 60 contributors expect a rate hike at some point between now and the end of 2020, while 3% saw a cut and the rest expect no change in rates.

The euro remains stuck in very tight range and we should see 1.11 remain formidable support, while 1.1250 provides initial resistance.

Oil

The month of May was a disaster for crude prices, the worst May performance in seven years, as unabrupt escalation with global trade war saw the global growth outlook crumble.  Oil prices have now given up the lion share of the effects of the OPEC + production cuts.  Geopolitical risks remain in place but right now demand growth is in freefall and oil remains vulnerable.  The US – China trade war remains most critical to the global growth outlook, but the addition of trade tensions between the US and Mexico raised the slower demand picture for the Americas.

West Texas Intermediate crude’s selloff is now around 20% lower from the April 23rd high of $66.60.  With rising expectations that OPEC will be less effective in signalling continued production cuts going forward, crude will need to rely on some positive outcomes on the trade front for prices to begin stabilising. 

Gold

It took a while, but gold prices finally broke out higher after the trade war escalation led to a code red for global growth.  A devastating month for equities, the worst one since December, and other risk assets saw a global bond rally lead the way for safe-haven assets.  The yellow metal is once again becoming an attractive safe-haven as markets will remain sceptical on any trade progress after seeing how fast we could see Trump deliver a new tariff threat.

Source: marketpulse

Risk aversion ran wild as stock markets and other risk assets plummeted on global tariff escalation. The US dollar’s early gains during the end of May market rout is starting to reverse course on expectations the Fed may cut rates twice this year...

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EUR/USD holds steady

EURUSD_holds-steady_Forex_FXPIG
  • Sell-off in Treasury yields offset the German yields slide amid risk-aversion.
  • Downside remains compelling ahead of German/ US inflation data.  

The EUR/USD pair extends its side trend near 1.1130 region in early trades, unperturbed by the intensifying risk-off moods amid the US-led protectionism and the resulting global growth worries.  

A part of the pair’s resilience can be attributed to the sell-off in the US Treasury yields across the curve, with the benchmark 10-year yields sitting near 2-month lows of 2.170%. The weakness in the Treasury yields drags the US dollar off the two-week tops v. its main peers.

However, the bulls remain cautious and keep the upside attempts restricted, in the wake of the slide in the German 10-year bond yields to near record lows of -0.205% reached July, 6th 2016. Moreover, a sharp drop in the German retail sales also continues to weigh on the shared currency. Germany retail sales drop -2.0% m/m in April vs. +0.1% expected.

The immediate focus now remains on the German preliminary CPI figures that are expected to come in softer. Hence, the upside bias in the spot remains limited ahead of the German Prelim CPI, US Core PCE Price Index and UoM Consumer Sentiment data.

Source: fxstreet

The EUR/USD pair extends its side trend near 1.1130 region in early trades, unperturbed by the intensifying risk-off moods amid the US-led protectionism and the resulting global growth worries.

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Forex Tech Targets

Bulls-and-bears_forex_FXPIG

EUR/USD:

24-HOUR VIEW: EUR could dip below the major 1.1100 level but a sustained decline is not expected. We expected EUR to weaken yesterday but held the view “a break of 1.1100 is unlikely”. EUR subsequently dipped to 1.1114 before recovering to end the day little changed (1.1130). Despite the recovery, the underlying tone remains soft and for today, EUR could test the major 1.1100 level. A dip below this level would not be surprising but a sustained decline is not expected (next support is at 1.1070). On the upside, only a move above 1.1170 would indicate the current soft patch in EUR has stabilized (minor resistance is at 1.1150).

1-3 WEEKS VIEW: EUR is expected to trade with downside bias and test 1.1100/05. There is not much to add to the update from yesterday (30 May, spot at 1.1135). As highlighted, the underlying tone in EUR has weakened but EUR has to register a daily closing below the major 1.1100/05 support level in order to indicate that a move to 1.1050 has started. In view of the lackluster momentum, the prospect for such a scenario is not high but EUR has to move above 1.1190 (level was at 1.1205 yesterday) in order to indicate that the current mild downward pressure has eased. Meanwhile, EUR is expected to trade with a downside bias and test 1.1100/05.

GBP/USD:

24-HOUR VIEW: GBP could retest the low near 1.2580 but next support at 1.2555 is not expected to come into the picture. We highlighted yesterday “there is room for GBP to test 1.2600 first before a rebound can be expected”. However, GBP cracked 1.2600 and dropped to 1.2581 but the weakness was short-lived. While downward momentum is beginning to wane, it is too soon to expect a sustained recovery. From here, barring a move above 1.2650, GBP could retest the low near 1.2580. For today, the next support at 1.2555 is not expected to come into the picture.

1-3 WEEKS VIEW: GBP is expected to trade with a downside bias. We shifted our narrative to “GBP is expected to trade with a downside bias” yesterday (30 May, spot at 1.2630) and added, “1.2600 is acting as an ‘attraction’”. Unsurprisingly, GBP moved below 1.2600 (overnight low of 1.2581) but the decline clearly lacks momentum. As highlighted yesterday, GBP has to register a daily closing below 1.2600 in order to indicate the start of a ‘negative phase’ towards 1.2530. The risk for such a scenario is not high for now but would continue to increase unless GBP can move back above 1.2685 (level was at 1.2720 yesterday).

AUD/USD:

24-HOUR VIEW: AUD could dip below the overnight low of 0.6898 but the next support at 0.6880 is likely out of reach. AUD traded between 0.6898 and 0.6936 yesterday, relatively close to our expected 0.6900/0.6940 range. The underlying tone has weakened somewhat and from here, AUD could dip below the overnight low of 0.6898 but the next support at 0.6880 is likely out of reach. On the upside, 0.6940 is expected to be strong enough to cap any intraday AUD strength.

1-3 WEEKS VIEW: Short-term bottom in place, AUD is expected to trade sideways. AUD spent another day ‘going nowhere’ as it closed little changed at 0.6911 (-0.08%). The quiet price action is line with our expectation from Monday (27 May) wherein AUD is “expected to trade sideways” for a couple of weeks. Note that for the past few days, the daily change in AUD has been less than 0.10%. Looking ahead, the ‘sideway-trading phase’ is more likely to be resolved with the start of fresh ‘negative phase’ but this is only upon a clear break of 0.6860. Meanwhile, a 0.6860/0.6985 range is expected to be more than enough to contain the price action in AUD for another week or so.

NZD/USD:

24-HOUR VIEW: NZD is expected to consolidate, likely within a 0.6495/0.6525 range. We held the view yesterday that NZD “could dip below 0.6500 but last week’s low of 0.6482 is unlikely to come under threat”. NZD subsequently dipped briefly to 0.6495 before recovering. Downward pressure has waned somewhat but it is too early to expect a sustained recovery. NZD is more likely consolidate at these lower levels, expected to be within a 0.6495/0.6525 range.

1-3 WEEKS VIEW: Short-term bottom is in place; NZD is expected to trade sideways. No change in view from yesterday, see reproduced update below. After trading in a subdued manner for a couple of days, NZD staged a relatively sharp drop that came close to the bottom our expected 0.6500/0.6610 range (low of 0.6504). While the underlying tone has clearly weakened, it is too soon to expect the start of a fresh ‘negative phase’. Only a daily closing below 0.6470 would indicate that NZD is ready to move to 0.6425. Meanwhile, the current price action is still deemed as a ‘sideway-trading phase’ but after yesterday’s price action, we have lowered the expected range to 0.6480/0.6570 (from 0.6500/0.6610).

USD/JPY:

24-HOUR VIEW: Immediate risk is for more USD weakness but prospect for a break of the solid 109.00 support is not high. We highlighted yesterday the “advance in USD could extend further but the strong 110.00 resistance is unlikely to crack”. In line with expectation, USD touched 109.92 before easing off to end the day at 109.60. Trump’s tariff on Mexico early this morning sent USD tumbling and the immediate risk is for more USD weakness. That said, 109.00 is a solid support and from here, the prospect for a break of this level is not high. On the upside, the 109.92 is not expected to come into the picture; 109.70 is already a strong level.

1-3 WEEKS VIEW: USD has moved into a sideway-trading phase. USD rose to 109.92 yesterday before dropping back quickly. While Trump’s imposition of tariff on Mexico earlier this morning sent USD tumbling, the current ‘sideway-trading phase’ is still intact. In other words, USD is expected to continue to trade between 109.00 and 110.30 for now. Looking ahead, the current consolidation is expected to be resolved by a downside break but 109.00 is a solid support and this level may hold for a while more. That said, if USD were to register a daily closing below this level, it would indicate the start of a sustained decline to 108.45 (and possibly lower).

Source:eFXdata

EUR could dip below the major 1.1100 level but a sustained decline is not expected. We expected EUR to weaken yesterday but held the view “a break of 1.1100 is unlikely”...

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Gold technical analysis

Gold-tech-analysis_Forex_FXPIG-31.05.2019

  •  Gold built on the overnight sharp intraday rebound from one-week lows and a subsequent break through the $1287-88 supply zone, coinciding with 50-day SMA.

  •  The follow-through momentum lifted the commodity beyond a descending trend-line barrier, extending from yearly tops through March/May monthly swing highs.

The precious metal has now moved closer to another confluence resistance - comprising of 100-day SMA and 38.2% Fibonacci retracement level of the $1347-$1266 downfall, which if cleared should pave the way for a further near-term appreciating move.

Meanwhile, technical indicators on the daily chart have just started gaining positive traction and support prospects for an extension of the positive move back towards monthly high, levels just beyond the key $1300 psychological mark and nearing 50% Fibo. level.

On the flip side, the $1292 horizontal level now becomes immediate support to defend. Any subsequent slide might now be seen as a buying opportunity and should remain limited near the confluence resistance break-point, around the $1288 region.

Source: fxstreet

The precious metal has now moved closer to another confluence resistance - comprising of 100-day SMA and 38.2% Fibonacci retracement level of the $1347-$1266 downfall, which if cleared should pave the way for a...

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BoE's Ramsden

BoE_pessimistic_Forex_FXPIG

BoE Deputy Governor Dave Ramsden, during a scheduled speech on Thursday, was noted saying that he is a little more pessimistic about the GDP growth that the latest BoE forecasts.

Additional quotes:

  •  Expect growth to pick up if Brexit goes smoothly.
  •  That will make further monetary tightening appropriate.
  •  Does not expect investment will recover as much as BoE forecasts.
  •  Sees more downside risks to UK productivity.
  •  Interest rates would need to go up or down after no-deal Brexit.
  •  Would want to wait and see before changing policy after no-deal Brexit.

Source: fxstreet

BoE Deputy Governor Dave Ramsden, during a scheduled speech on Thursday, was noted saying that he is a little more pessimistic about the GDP growth that the latest BoE forecasts...

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Forex Tech Targets

Bulls-and-bears_forex_tech-analysis-30.05.2019_FXPIG

EUR/USD:

24-HOUR VIEW: Decline in EUR has scope to extend further but oversold condition suggests a break of 1.1100 is unlikely. We highlighted yesterday the soft underlying tone could “lead to a lower EUR but 1.1130 is unlikely to be challenged”. The subsequent weakness exceeded our expectation as EUR touched 1.1122 before ending the day on a soft note (closed at 1.1130). While the decline yesterday appears to have scope to extend further, it is approaching oversold territory and a break of the major 1.1100 support would come as a surprise. On the upside, only a move above 1.1175 would indicate that a short-term bottom is in place (minor resistance is at 1.1155).

1-3 WEEKS VIEW: EUR is expected to trade with downside bias and test 1.1100/05. While EUR dipped below our expected 1.1130/1.1230 sideway trading range (low of 1.1122), the decline lacks momentum and EUR does not appear to be ready to move into a ‘negative phase’. The underlying tone has weakened but EUR has to register a daily closing below the major 1.1100/05 support level in order to indicate that a move to 1.1050 has started. The prospect for such a move is not high for now but would continue to increase unless EUR can move back above 1.1205. Meanwhile, EUR is expected to trade with a downside and test 1.1100/05.

GBP/USD:

24-HOUR VIEW: Downward momentum is still patchy but there is room for GBP to test 1.2600 first before a rebound can be expected. While we expected GBP to weaken yesterday, we were of the view “the next support at 1.2600 is not expected to come into the picture”. The subsequent price action was in line with our view as GBP briefly touched 1.2612 before staging a mild recovery. Downward momentum remains patchy at best but from here, there is room for GBP to test the solid 1.2600 level before a more sustained rebound can be expected. Resistance is at 1.2655 but only a move above 1.2685 would indicate that the current soft patch in GBP has stabilized.

1-3 WEEKS VIEW: GBP is expected to trade with a downside bias. When we indicated on Monday (27 May, spot at 1.2725) that a “short-term bottom is place”, we expected GBP to trade sideways for “a couple of weeks”. While GBP subsequently traded sideways, the underlying tone has weakened as it eased off quickly after touching 1.2754. That said, only a daily closing below 1.2600 would indicate the start of a fresh ‘negative phase’ towards 1.2530. The prospect for such a scenario is not high for now but is likely to increase unless GBP can move above 1.2720 within these few days. Meanwhile, GBP is expected to trade with a downside bias and 1.2600 acting as an ‘attraction’.

AUD/USD:

24-HOUR VIEW: AUD is expected to trade sideways, likely within a 0.6900/0.6940 range. AUD traded in a subdued manner between 0.6904 and 0.6931 yesterday, narrower than our expected range of 0.6910/0.6940. While the current movement is still viewed as part of sideway-trading phase, the weakened underlying tone suggests the immediate bias is for AUD to test the bottom of the expected 0.6900/0.6940 range.

1-3 WEEKS VIEW Short-term bottom in place, AUD is expected to trade sideways. No change in view from yesterday, see reproduced update below. AUD traded in a tight 19 pips range between 0.6917 and 0.6936 yesterday (28 May) before ending little changed at 0.6922 (+0.07%). The quiet price action reinforces our current view wherein last week’s 0.6865 is a “short-term bottom” and AUD is in “sideway-trading phase”. For now, the 0.6860/0.6985 range indicated on Monday (27 May) is expected to be enough to contain the movement in AUD for a couple of weeks. Looking ahead, the ‘sideway-trading phase’ is more likely to be resolved with the start of fresh ‘negative phase’ but this is only upon a clear break of 0.6860.

NZD/USD:

24-HOUR VIEW: NZD could dip below 0.6500 but last week’s low of 0.6482 is unlikely to come under threat. The relatively sharp decline in NZD that touched an overnight low of 0.6504 came as a surprise (we expected NZD to trade sideways yesterday). Downward momentum has improved and NZD could dip below the 0.6500 support. That said, last week’s low of 0.6482 is unlikely to come under threat. Resistance is at 0.6530 and yesterday’s peak near 0.6550 is acting as a very strong resistance level now.

1-3 WEEKS VIEW: Short-term bottom is in place; NZD is expected to trade sideways. After trading in a subdued manner for a couple of days, NZD staged a relatively sharp drop that came close to the bottom our expected 0.6500/0.6610 range (low of 0.6504). While the underlying tone has clearly weakened, it is too soon to expect the start of a fresh ‘negative phase’. Only a daily closing below 0.6470 would indicate that NZD is ready to move to 0.6425. Meanwhile, the current price action is still deemed as a ‘sideway-trading phase’ but after yesterday’s price action, we have lowered the expected range to 0.6480/0.6570 (from 0.6500/0.6610).

USD/JPY:

24-HOUR VIEW: Advance in USD could extend further but the strong 110.00 resistance is unlikely to crack. We highlighted yesterday “downward momentum has ticked up but a break of 109.00 is not expected”. The 109.00 level held as expected but the subsequent robust rebound from 109.13 came as surprise (overnight high of 109.69). While upward momentum has improved, it is too soon to expect a sustained rally. From here, the advance could extend further even though a crack of the strong 110.00 resistance is unlikely. Support is at 109.25 followed by the still rather strong level of 109.00.

1-3 WEEKS VIEW: USD has moved into a sideway-trading phase. USD dipped to 109.13 yesterday before staging a solid rebound. The price action reinforces our view that USD is in a “sideway-trading phase’ within an expected 109.00/110.30 range. However, the underlying tone still appears to be on the soft side but USD has to register a close below 109.00 in NY in order to indicate the start of a ‘negative phase’. Meanwhile, USD could continue to trade between 109.00 and 110.30.

Source: efxdata

Decline in EUR has scope to extend further but oversold condition suggests a break of 1.1100 is unlikely. We highlighted yesterday the soft underlying tone could “lead to a lower EUR but...

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