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Forex Today

Forex_USD-bounces_FXPIG

Broad-based US dollar recovery was the main underlying theme that triggered a fresh selling-wave across the fx board in Asia this Thursday. The rebound in the greenback was mainly driven by a recovery in Treasury yields across the curve while the extension of the corrective slide in GBP/USD from the 2019 tops also added to the uptick in the buck. Markets resorted to profit taking on the GBP longs heading into the vote on Article 50 extension later today. The Euro tracked the correction in the Cable and marched towards the 1.13 handle.

Among the Asia-pac currencies, the Aussie was the biggest loser and headed for a test of the 0.7050 support following mixed Chinese data dump, followed by the Yen and the NZD. The USD/JPY pair clinched for-day tops at 111.61 on reports of Japanese growth downgrade while the Kiwi returned below 0.6850 levels.

On the related markets front, the Asian equities traded mixed, led by the declines in the Chinese stocks while both crude benchmarks traded modestly flat, with WTI having eased-off multi-months near 58.50 levels. Gold futures on Comex slipped and edged back towards the 1300 levels.

Main Topics in Asia

US Pres. Trump: In no rush to complete China trade deal - Reuters

Gold Technical Analysis: Rejected at 4H 200MA, hourly RSI diverges in favor of bears

Japanese Govt considering a slight downgrade in its monthly report for March - Nikkei

UK Press: PM May is preparing a third meaningful vote on Brexit on March 20

China Jan-Feb data dump: Retail sales rise 8.2%, industrial output drop 5.3%

China NBS: China's economic growth in Jan-Feb within reasonable range

Tapering? BOJ's ETF purchases hits lowest since 2016

Sources: US aims to cut Iran oil exports to under 1 million bpd from May - Reuters

Ex-National Economic Council Head Cohn: US desperate to sign trade deal with China

Key Focus Ahead

Markets remain focused on the Brexit-related developments amid a no deal Brexit rejected by the UK lawmakers and the Brexit extension of 2 months seeming the most likely bet, as rumor mills talk of the third meaningful vote on the UK PM May’s Brexit deal next week. Meanwhile, the EUR calendar remains a thin-showing, with the German final CPI release dropping in at 0700 GMT, following the Swiss producers and import prices at 0730 GMT.

In the NA session, the US weekly jobless claims, import prices and the Canadian new housing price index are due at 1230 GMT. At 1400 GMT, the US new home sales data will be eyed for fresh dollar trades. In the American afternoon, at 1900 GMT, the UK parliamentary vote on Article 50 extension is scheduled while New Zealand’s business PMI and visitors arrivals data will be published at 2130 GMT and 2145 GMT respectively.

EUR/USD has reversed last week's post-ECB sell-off, whats next?

EUR/USD's drop to 21-month lows below 1.12 has been reversed, but the relief could be short-lived, as the US 10-year treasury yield has bounced up from three-month lows seen earlier this week.

GBP/USD revisits sub-1.3300 area as UK MPs eye deadline extension

Investors may concentrate on how the UK members of parliament (MPs) can agree over delaying Article 50 deadline today. On the data front, initial jobless claims for the week ending on March 04 and January month new home sales are on cards.

GBP Soars 2% on Brexit Vote, 1.35 Next?

Having had years to reach an agreement, expectations for a 2 month extension are low but if May puts in the request and the EU accepts it (and there's no reason for them not to), GBPUSD could extend its rally to 1.35.

WTI Technical Analysis: Ichimoku Cloud is bullish, double tops broken, eyes on $60.00bbls

The price is now testing the territory on the 58 handle, breaking the double-top highs. Bulls look to higher grounds while holding above the $57.93bbls and the horizontal prior resistance line going back to mid-Nov 2018.

Source: fxstreet

Broad-based US dollar recovery was the main underlying theme that triggered a fresh selling-wave across the fx board in Asia this Thursday. The rebound in the greenback was mainly driven by...

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EUR/USD remains bid and flirts

EURUSD_Remains-bid_flirts_Forex_FXPIG
  • The pair extends the upside beyond the 1.1300 handle.
  • EMU Industrial Production surprised to the upside in January.
  • Brexit vote on ‘no deal’ expected to be rejected later today.

EUR/USD keeps the rally well and sound for yet another session on Wednesday, probing fresh tops beyond the critical 1.1300 the figure although losing some shine afterwards.

EUR/USD bolstered by sentiment, looks to Brexit

The pair keeps the bid tone unchanged since last Friday, managing to regain the 1.1300 barrier and practically fully revert the ECB-led deep pullback to new 2019 lows around 1.1180 (March 7).

In the meantime, the continuation of the upbeat sentiment in the risk-associated universe keeps bolstering the rally in spot despite developments in the US-China trade front have cooled down as of late, particularly after US trade negotiator R.Lighthizer said yesterday that there are ‘major issues’ yet to be resolved in the dispute.

Data wise in Euroland, Industrial Production in the bloc had a promising start of the year, expanding at a monthly 1.4% in January, reverting at the same time December’s contraction. Moving forward, US Durable Goods Orders and Producer Prices are coming up next across the pond.

What to look for around EUR

Market participants appear to have already adjusted to the recent and renewed dovish stance from the ECB, focusing instead on the broad risk-appetite trends as the main driver of the price action in the near term. In the longer run, the performance of the economy in the region should remain in centre stage along with prospects of re-assessment of the ECB’s monetary policy. In this regard, it is worth mentioning that investors keep pricing in the first rate hike by the central bank at some point in H2 2019. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist option among voters.

EUR/USD levels to watch

At the moment, the pair is gaining 0.07% at 1.1294 and a break above 1.1304 (high Mar.12) would target 1.1311 (21-day SMA) en route to 1.1369 (55-day SMA). On the downside, the next support aligns at 1.1176 (2019 low Mar.7) followed by 1.1118 (monthly low Jun.20 2017) and finally 1.1021 (high May 8 2017).

Source: fxstreet

EUR/USD keeps the rally well and sound for yet another session on Wednesday, probing fresh tops beyond the critical 1.1300 the figure although losing some shine afterwards...

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FOREX Tech Targets

Bulls_bears-TechTargets_FXPIG_Forex

EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR has likely moved into a consolidation phase.

Despite dropping sharply last Thursday (07 Mar) and cracking several strong support levels, EUR has not been able to make much headway on the downside. The recovery from last Thursday’s low of 1.1174 moved above our 1.1290 ‘key resistance’ yesterday (12 Mar) and this indicates the weakness in EUR has stabilized (we previously expected EUR to decline further to 1.1120). From here, EUR is deemed to have moved into a consolidation phase and is expected to trade sideways for the next 1 to 2 weeks, likely within a broad range of 1.1200/1.1380.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Outlook unclear, further choppy and wild swings seem likely.

While we highlighted yesterday (12 Mar, spot at 1.3250) “despite the rapid and strong advance, it is unclear at this stage whether GBP could extend its up-move in the coming days”, the sudden and sharp reversal from the Tokyo hours high of 1.3290 came a surprise (GBP plummeted to 1.3005 before rebounding quickly). The volatile price action amidst a vastly expanded trading range has resulted in an unclear outlook and Brexit headlines could lead to further choppy and wild swings in the coming days. For now, the major levels to monitor are at 1.3350 and 1.2945. As highlighted yesterday, only a clear break of last month’s peak near 1.3350 would suggest that GBP is ready to tackle the next resistance at 1.3470. On the downside, a break of last week’s 1.2945 low would greatly increase the prospect for a drop to 1.2860.

AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is expected to trade sideways.

AUD edged slightly above our 0.7090 ‘key resistance’ yesterday (high of 0.7092) before easing off. As highlighted, a breach of the ‘key resistance’ would indicate that last Friday’s 0.7003 low is the extent of the current weak phase in AUD (we previously expected AUD to weaken further to 0.6970). From here, AUD is deemed to have moved into a consolidation phase and is expected to trade sideways in the coming days, likely within a 0.7000/0.7120 range. Looking forward, the expected consolidation phase is likely to be resolved with a downside break but 0.7000 is acting as a solid support now and is unlikely to yield so easily.

NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD has moved into a consolidation phase. No change in view from yesterday.

NZD touched a high of 0.6836 yesterday, just a few pips below the 0.6840 ‘key resistance’. The strong advance is enough to indicate that the recent mild downward pressure has eased. From here, NZD is deemed to have moved into a consolidation phase and is expected to trade sideways within a broad range, likely between 0.6750 and 0.6885.

USD/JPY: Neutral (since 09 Oct 18, 113.10): USD is under mild downward pressure, could grind lower and test 110.40.

There is not much to add as USD traded in a relatively quiet manner over the past couple of days. We continue to hold the same as last Friday (08 Mar, spot at 111.60) wherein USD is under mild downward pressure and could grind lower and test 110.40. On the upside, a break of 111.80 would indicate that the current mild downward pressure has eased.

Source: efxdata

Despite dropping sharply last Thursday (07 Mar) and cracking several strong support levels, EUR has not been able to make much headway on the downside. The recovery from last ...

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Gold adds to gains

Gold_Gains_FXPIG_FOREX

  •  The prevalent cautious mood underpins the commodity’s safe-haven demand.
  •  A modest USD rebound and positive US bond yields seemed to cap strong gains.
  •  Traders now eye US durable goods orders data for some meaningful impetus.

Gold held on to its positive tone through the early European session on Wednesday and remained within striking distance of 1-1/2 week tops set earlier today.

After a modest pull-back at the start of this week, a combination of supporting factors helped the precious metal to regain positive traction on Tuesday and decisively break through the key $1300 psychological mark.

Growing Brexit uncertainties, especially after the UK parliament rejected May’s withdrawal deal for the second time on Tuesday, was seen as one of the key factors underpinning the precious metal's relative safe-haven demand.

Adding to this, the release of softer than expected US consumer inflation figures led to some renewed weakness in the US Treasury bond yields and provided an additional boost to the non-yielding yellow metal.

The positive momentum extended through the Asian session on Wednesday and remained supported by the prevalent cautious mood, albeit a modest US Dollar rebound now seemed to cap any strong up-move.

With investors looking past Tuesday's weaker US CPI prints, a modest rebound in the US government bond yields helped revive the USD demand and kept a lid on any runaway rally for the dollar-denominated commodity.

Moving ahead, today's US economic docket, featuring the release of durable goods orders data and PPI figures, will now be looked upon for some fresh impetus later during the early North-American session.

Technical levels to watch

On a sustained move beyond $1306 immediate resistance now seems to lift the commodity further towards $1314-15 supply zone en-route the next major hurdle near the $1320 region. On the flip side, the $1300 handle now seems to protect the immediate downside, which if broken might turn the metal vulnerable to slide further towards the $1286-85 horizontal support.

Source: fxstreet.com

‍Gold held on to its positive tone through the early European session on Wednesday and remained within striking distance of 1-1/2 week tops set earlier today.After a modest pull-back at the start of this week...

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EUR: Shorts restrained

Eur_shorts_restrained_Forex_FXPIG

Analyst at Amplifying Global FX Capital, suggests that there are reasons to be restrained in setting EUR shorts.

Key Quotes

“Brexit may be moving towards a less disruptive outcome, Chinese policy stimulus may precede improved Chinese, global and European economic data.”

“The US may soon reverse some or most of its tariffs on Chinese goods, and trigger a rebound in confidence for European assets.  However, if the EUR has moved into a weaker regime over the last year; one where there is no overhang of Euro crisis era EUR hedges, and EUR is viewed as one of the best currencies for funding ‘risk-on’ or ‘carry trades’, then its upside may be limited, and it could retain a broader downtrend for the foreseeable future.”

Source: fxstreet

 However, if the EUR has moved into a weaker regime over the last year; one where there is no overhang of Euro crisis era EUR hedges, and EUR is viewed as one of the ...

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FOREX Tech Targets

Bulls_bears_forex_tech-targets12.03.2019_FXPIG

EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR is vulnerable now, focus is at 1.1120.

The recovery in EUR after last Thursday’s (07 Mar) steep decline has been more ‘resilient’ than expected as it closed higher for the second straight day yesterday (1.1247, +0.08%). For now, we view the price action as part of a short-term consolidation phase and we continue to hold the view that EUR is vulnerable and could weaken further to 1.1120. However, a break of the 1.1290 ‘key resistance’ (no change in level) would indicate that current weak phase in EUR has stabilized.

GBP/USD:  Neutral (since 21 Aug 18, spot at 1.2795): Near-term risk is on the upside but GBP has to clear the major 1.3350 level.

After opening on a weak note early yesterday morning and dropping to a low of 1.2945, GBP staged an abrupt and outsized rally that hit an overnight high of 1.3170 (+1.01%). Brexit optimism propelled it further as it hit 1.3290 after NY close before easing off. Our narrative for GBP to stay “under pressure but expect strong support at 1.2870” was proven wrong quickly. Despite the rapid and strong advance, it is unclear at this stage whether GBP could extend its up-move in the coming days. That said, the near term risk is on the upside but only a clear break of last week’s peak near 1.3350 would suggest that GBP is ready to tackle the next resistance at 1.3470. Overall, GBP is expected to stay underpinned in the coming days as long as the ‘key support’ at 1.3070 is intact.

AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is ready to tackle the 0.6970 support.

Despite overall negative indications, AUD has not been able to make much headway on the downside as it closed higher for the second straight day yesterday. While we continue to hold the view that AUD is “ready to tackle the 0.6970 support”, downward momentum has waned and a break of the 0.7090 ‘key resistance’ (no change in level) would indicate that last Friday’s 0.7003 low is the extent of the current weak phase in AUD. Meanwhile, in order to revive its flagging downward momentum, AUD has to move and stay below 0.7030 within these few days or a break of 0.7090 would not be surprising.

NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD has moved into a consolidation phase.

NZD touched a high of 0.6836 yesterday, just a few pips below the 0.6840 ‘key resistance’. The strong advance is enough to indicate that the recent mild downward pressure has eased. From here, NZD is deemed to have moved into a consolidation phase and is expected to trade sideways within a broad range, likely between 0.6750 and 0.6885.

USD/JPY: Neutral (since 09 Oct 18, 113.10): USD is under mild downward pressure, could grind lower and test 110.40. No change in view.

We highlighted on Friday (08 Mar, spot at 111.60) that “time is running out for those who are anticipating a higher USD” and added, “a break of the 111.30 ‘key support’ would not be surprising”. USD subsequently cracked 111.30 and dropped to 110.77. The price action suggests that last week’s 112.12 high is a short-term top (note that we had held the view that USD would find it difficult to break the solid 112.00/20 resistance zone). From here, the bias is tilted to the downside but downward momentum is not strong and any weakness in USD is expected to be slow and grinding and could be limited to a test of 110.40. On the upside, a break of 111.80 would indicate that the current mild downward pressure has eased.

Source:efxdata

The recovery in EUR after last Thursday’s (07 Mar) steep decline has been more ‘resilient’ than expected as it closed higher for the second straight day yesterday (1.1247, +0.08%). For now, we view the price action as part of a short-term consolidation phase and...

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Brexit and US CPI amongst market movers

Brexit_US-CPI_Forex_FXPIG

According to analysts at Danske Bank, today's key event will be the vote in the House of Commons on Theresa May's Brexit deal at 20:00 CET.

Key Quotes

“As of now, we still expect May to suffer another defeat despite the new Brexit deal but it depends on how well it is received, especially by the supporting DUP party. We still assign a 15% probability of the deal passing today. If it is voted down, the next step will be for the UK parliament to vote on whether it can support a no deal Brexit tomorrow.”

“In the UK, we also get monthly GDP for January today. PMIs indicate growth remains subdued around 0.0-0.1% q/q in Q1.”

“On the other side of the Atlantic, the day brings February US CPI core numbers , which we expect rose 0.2% m/m, implying a core inflation rate unchanged at 2.2% y/y. Moreover, we will also keep an eye on the NFIB Small Business Optimism Index given the recession fears in financial markets.”

Source: fxstreet

According to analysts at Danske Bank, today's key event will be the vote in the House of Commons on Theresa May's Brexit deal at 20:00 CET...

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FOREX TECH TARGETS

Bulls_bears_Forex_FXPIG_tech-targets-11.03.2019_FXPIG

EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR is vulnerable now, focus is at 1.1120.

Despite the relatively robust recovery in EUR, there is no change to our view. As highlighted early last Friday (08 Mar, spot at 1.1195), “EUR is vulnerable and the focus is at 1.1120”. The current short-term movement is deemed as part of a consolidation phase that could last for a couple of days. Only an unlikely break of the 1.1290 ‘key resistance’ (no change in level) would indicate that the current weak phase in EUR has stabilized.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP is under pressure but expect strong support at 1.2870.

While we have held the view that a “short-term top is in place” since last Monday (05 Mar, spot at 1.3180), we expected GBP to “trade sideways” and the deep pull-back last Friday that moved below the bottom of our 1.3000/1.3260 range (low of 1.2990) came as a surprise (note that GBP extended its decline upon opening this morning). The price action suggests that the 1.3351 high registered on 27 Feb is a more significant top than previously expected. From here, we expect GBP to remain under pressure unless it can move back above 1.3120. That said, there are several strong support levels on the downside, notably at 1.2870 followed by 1.2800 and these levels may not be easy to crack. In the short-term, oversold conditions could lead to a couple of days of consolidation first.

AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is ready to tackle the 0.6970 support. No change in view from last Friday, see reproduced update below.

We indicated yesterday (07 Mar, spot at 0.7030) that “0.7010 is likely to come into the picture sooner than expected”. AUD subsequently dropped to 0.7005 before ending the day on a soft note (NY close of 0.7015, -0.24%). As highlighted, a “break of 0.7010 would suggest AUD is ready to tackle the next support at 0.6970”. On the upside, only a break of the 0.7090 ‘key resistance’ (level was at 0.7110 yesterday) would indicate that a short-term bottom is in place.

NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD to stay on the defensive but expect 0.6720 to offer solid support.

There is not much to add to our recent updates. As highlighted, “NZD is to stay on the defensive but expect 0.6720 to offer solid support”. In other words, downward momentum is not exactly strong and for now, the prospect of a break of 0.6720 is not high. On the upside, a break 0.6840 would indicate that the current mild downward pressure has eased.

USD/JPY: Neutral (since 09 Oct 18, 113.10): USD is under mild downward pressure, could grind lower and test 110.40.

We highlighted on Friday (08 Mar, spot at 111.60) that “time is running out for those who are anticipating a higher USD” and added, “a break of the 111.30 ‘key support’ would not be surprising”. USD subsequently cracked 111.30 and dropped to 110.77. The price action suggests that last week’s 112.12 high is a short-term top (note that we had held the view that USD would find it difficult to break the solid 112.00/20 resistance zone). From here, the bias is tilted to the downside but downward momentum is not strong and any weakness in USD is expected to be slow and grinding and could be limited to a test of 110.40. On the upside, a break of 111.80 would indicate that the current mild downward pressure has eased.

Source:efxstreet

Despite the relatively robust recovery in EUR, there is no change to our view. As highlighted early last Friday (08 Mar, spot at 1.1195), “EUR is vulnerable and the focus is at 1.1120”. The current short-term movement is ...

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USD/CAD struggles

USDCAD_struggles_Forex_FXPIG

 •  A goodish pickup in the US bond yields extends some support to the US Dollar.
 •  Positive crude oil prices underpin Loonie and partly offset the supporting factor.
 •  Traders now eye US monthly retail sales data for some meaningful trading impetus.

The USD/CAD pair struggled to build on its attempted intraday up-move and is currently placed in the neutral territory, albeit managed to hold well Friday's swing low.

The pair witnessed some profit-taking/long-unwinding trade on Friday in reaction to the diverging monthly jobs report from the US and Canada. The US Dollar lost some ground after the latest US monthly jobs report showed that the economy added only 20K new jobs in February.

Meanwhile, the commodity-linked currency - Loonie got an additional boost in wake of upbeat domestic employment details, though a sharp intraday slide in crude oil prices partly offset the negative factors and helped limit deeper losses for the major.

With investors looking past Friday's macro data, a combination of opposing forces failed to provide any meaningful impetus and led to a subdued/range-bound price action through the early European session on the first trading day of the week.

A goodish pickup in the US Treasury bond yields underpinned demand for the greenback and extended some support/provided a minor lift to the major. Meanwhile, oil prices held steady with modest intraday gains of 0.70% and kept a lid on any meaningful up-move.

Moving ahead, today's US economic docket, highlighting the release of monthly retail sales data, will now be looked upon for some meaningful impetus/short-term trading opportunities later during the early North-American session.

Technical levels to watch

Immediate support is pegged near the 1.3400 handle, below which the corrective slide could further get extended towards the 1.3370 horizontal support before the pair eventually drops to test the 1.3310-1.3300 support area. On the flip side, the 1.3440 area now seems to have emerged as an immediate resistance, which if cleared now seems to set the stage for further near-term up-move towards conquering the key 1.3500 psychological mark.

Source: fxstreet

The USD/CAD pair struggled to build on its attempted intraday up-move and is currently placed in the neutral territory, albeit managed to hold well Friday's swing low...

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EUR/USD: Bounce is likely

EURUSD_bounce_Forex_FXPIG

Analyst at Commerzbank, explains that the EUR/USD pair last week broke down from the base of the range at 1.1216 and sold off to the 61.8% Fibonacci retracement of the 2017- 18 advance at 1.1186, which held the initial test.

Key Quotes

“The bounce from here is likely to be fairly tepid as there is now a considerable amount of resistance above the market extending up to the 200 day ma at 1.1495. Below 1.1185/75 lies the 1.1110, the May 2017 low and the 1.0814/78.6% retracement.”

“Rallies will find initial resistance at 1.1315 the 20 day ma, which guards the 1.1420 end of February high and the 1.1438 downtrend.”

Source: fxstreet

Analyst at Commerzbank, explains that the EUR/USD pair last week broke down from the base of the range at 1.1216 and sold off to the 61.8% Fibonacci retracement of the 2017- 18 advance at 1.1186, which held the initial test...

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FOREX Week Ahead

British_pound_GBPUSD_FXPIG_FOREX

The US dollar is lower against most majors pairs on Friday after a massive miss in the U.S. non farm payrolls (NFP) report. The US economy only added 20,000 jobs when the forecast was calling for 180,000. Weather factors and for the most part the government shutdown had a lot to do with the disappointing data. The Trump administration was quick to point out the positives such as hourly earning beating the forecast at 0.4 percent. Revisions to the previous report were also upward changes. The size of the miss makes it likely that external factors contributed to the lower number.

The week had a dovish theme set by the Reserve Bank of Australia (RBA), followed by the Bank of Canada (BoC) and it was the European Central Bank (ECB) who further revised growth estimates. Central banks are getting worried, which is why despite the employment miss the US dollar was stronger on a weekly basis as investors see it as a safe haven.

Pound Drops Awaiting Vote as Brexit Anxiety Rises

The GBP/USD lost 0.56 percent on Friday. The currency pair is trading at 1.3008 after Theresa May’s Brexit package appears to be headed to another defeat on Tuesday, March 12. The European Union has shown some flexibility and offered to be open to an extension to the March 29 deadline and the definition of the Irish backstop.

The British Prime Minister has been pushing parliament to accept her proposal as a way to end the uncertainty of Brexit. Ms May has been publicly asking MPs to back the deal on the table, rather than await better terms with a no-deal deadline approaching. Though the no-deal exit is the worst case scenario due to the unknown factors, the parliament remains divided on how to exit, or if a divorce is the best solution in the first place.

The Brexit vote in the UK Parliament is the biggest risk event during the week, but also of note are the release of the US retail sales and inflation data. Sales have been under-performing despite job gains in the United States and although several inflation indicators keep hinting at pressures to the upside, the core CPI could show a minimal gain on Tuesday.

Bank of Japan to Join Choir of Doves

The Bank of Japan (BOJ) is expected to join the dovish choir of central banks on Friday, March 15. The CB headed by Kuroda has thrown the monetary policy handbook at the economy with stimulus measures that include bond buying and stock buying without much to show for it. The JPY remains strong given its status as a save haven.

The JPY rose 0.36 percent versus the dollar on Friday. The yen was able to capitalise on the stumble of the USD and was the only currency to score a weekly gain of 0.65 percent on a weekly basis versus the greenback. The appeal of the currency as a safe haven was the decisive factor as dovish rhetoric and growth forecast downgrades have increased the appeal of the dollar over other currencies.

European growth has cooled down, with growing concerns about Germany as its manufacturing sector, auto in particular, could be under threat if the US follows through its car tariff threats. Brexit concerns are on the rise as a amicable split was almost ruled out immediately and the market was presented instead with a long ugly divorce, that in the end could just bring the couple back together.

Source: marketpulse

The US dollar is lower against most majors pairs on Friday after a massive miss in the U.S. non farm payrolls (NFP) report. The US economy only added 20,000 jobs when the forecast was calling for...

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Gold clings to recovery gain

Gold_clings-to recovery_FOREX_FXPIG
  • European stocks post heavy losses on Friday.
  • US Dollar Index retreats from multi-month highs.
  • Coming up: February NFP report from the U.S.

Following yesterday's drop to a 6-week low of $1280 on Thursday, the XAU/USD pair rebounded decisively on Friday and erased the majority of this week's losses. As of writing, the pair was trading at $1293, adding $7.5, or 0.6%, on a daily basis.

The ECB's downward revision to 2019 growth outlook and the cautious tone about the European economy slowing at a faster pace than initially anticipated reminded investors of global growth concerns and weighed on the market sentiment on Friday. Japan's Nikkei closed the day 2% lower and European equity indexes started the day under pressure. At the moment, the UK's FTSE is down nearly 1% and Germany's DAX is dropping 0.6%, helping the precious metal find demand as a safe-haven.

Meanwhile, with investors booking their profits ahead of the critical NFP data from the U.S., the US Dollar Index, which was last seen down 0.15% on the day at 96.45, erased a small portion of yesterday's 0.75% upsurge and is making it easy for the pair to preserve its bullish momentum on Friday.

“Wage growth for full-time workers finally picked up to 1.8% YoY in January after seven months of consistent declines. On Friday, we’ll be seeing if this upward trend is sustained, as this would further support our case that monetary tightening will resume later this year,” ING analysts argued previewing today's labour market report.

  • US NFP Preview: 5 Major Banks expectations from February payrolls report.

Technical levels to consider

The initial resistance aligns at $1300 (psychological level) ahead of $1305.50 (50-DMA) and $1313 (20-DMA). On the downside, supports could be seen at $1285 (daily low), $1280 (Mar. 7 low) and $1276 (Jan. 24 low). With today's recovery, the CCI indicator on the daily chart rose toward the 0 level, suggesting that sellers have lost control over the pair's price action.

Source: fxstreet

Following yesterday's drop to a 6-week low of $1280 on Thursday, the XAU/USD pair rebounded decisively on Friday and erased the majority of this week's losses. As of writing, the pair was trading at $1293, adding $7.5, or 0.6%, on a daily basis...

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ECB: All focus on TLTRO announcement

ECB_Forex_FXPIG

Deutsche Bank analysts suggest that the markets have the ECB meeting to look forward to today, which although will likely be short of any policy changes, should be made all the more interesting by what is or isn’t said on TLTRO.

Key Quotes

“In terms of what our economists expect today, Mark Wall feels like any policy announcement would be a positive surprise. He notes that the latest comments from Council members imply that even the hawks have turned less optimistic. The “patience” mantra is consistent with extending the time commitment to unchanged policy rates for six months. However, the uncertain duration of the economic weakness has the centre of the committee signalling a wait and see approach, in particular with the TLTRO decision. Mark believes that one option for the Council would be to extend forward guidance as a down-payment to buy market goodwill while the ECB examines what it can do and needs to do on TLTROs.”

Source: fxstreet

In terms of what our economists expect today, Mark Wall feels like any policy announcement would be a positive surprise. He notes that the latest comments from Council members imply that even the hawks have turned less optimistic...

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US: Focus on Fed speak and trade data

Fed_Focus_FXPIG_Forex

Analysts at TD Securities point out that in the US, NY Fed President Williams speaks on "The Economic Outlook: The 'New Normal' Is Now" and is likely to repeat that no further rate hikes until inflation rises, which should get a dovish market reaction.

Key Quotes

“If Williams again advocates "average inflation targeting" as part of the Fed's framework review, markets would react even more dovish.”

“The shutdown-delayed December trade balance data will be released on Wednesday, with the market consensus expecting another widening of the trade gap to $57.9 billion.”

“The publication of the Federal Reserve's Beige Book will also garner attention as market participants look for further clues regarding the evolution of economic activity at the start of the year.”

Source: fxstreet

Analysts at TD Securities point out that in the US, NY Fed President Williams speaks on "The Economic Outlook: The 'New Normal' Is Now" and is likely to repeat that no further rate hikes until inflation rises, which should get a dovish market reaction...

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Forex Tech Targets

Forex_tech-Targets-06.03.2019-FXPIG

EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR has moved into a consolidation phase and is expected to trade sideways.

There is not much to add to the update from yesterday (04 Mar, spot at 1.1375). As highlighted, “the recent mild upward pressure has eased and from here, we expect EUR to trade sideways, likely between 1.1310 and 1.1425”. However, the bottom of the expected range at 1.1310 was ‘tested’ sooner than anticipated as EUR dropped to an overnight low of 1.1307. For now, we continue to hold the view that EUR is trading sideways but after yesterday’s price action, a clear break of 1.1310 would not be surprising. That said, any further weakness is still deemed as part of a ‘broader range’ and we see low odds of EUR breaking last month’s bottom near 1.1230 (note that there is another strong support at 1.1270).

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Short-term top in place; GBP is expected to trade sideways.

GBP cracked our 1.3170 ‘key support’ on the second attempt (low of 1.3172 last Friday, 01 Mar) as it hit 1.3167 during NY hours. The break of the key level indicates that the ‘positive’ phase in GBP that started about 2 weeks ago (20 Feb, spot at 1.3070) has ended. To put it another way, the 1.3351 peak registered last Wednesday (27 Feb) is deemed as a short-term top (we previously expected further GBP strength but were of the view that 1.3365 may not come into the picture so soon). From here, GBP has likely moved into a correction/consolidation phase and is expected to trade sideways for the next 1 to 2 weeks. However, the immediate bias is tilted to the downside but any weakness from here is viewed as part of 1.3070/1.3300 range and a sustained decline in GBP is not expected

AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD has moved into a consolidation phase. No change in view from yesterday.

There is not much to add to last Friday’s (01 Mar) update. As highlighted, despite the uptick in downward momentum, it is too soon to expect the start of sustained directional move in AUD. We view the current price action as ‘part of a consolidation phase’ and expect AUD to trade sideways within a 0.7055/0.7170 range. Looking forward, only a break of last month’s low near 0.7055 would suggest AUD is ready to move lower in a sustained manner.

NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD is expected to trade sideways. No change in view from yesterday.

There is not much to add to last Friday’s update (01 Mar, spot at 0.6815). Upward momentum has waned as NZD failed to break clearly above 0.6900 convincingly. From here, NZD is expected to trade sideways, likely between 0.6740 and 0.6870.

USD/JPY: Neutral (since 09 Oct 18, 113.10): USD is expected to advance but may find it difficult to break solid 112.00/20 zone.

After 3 straight days of relatively strong gains, USD traded in a quiet manner yesterday and registered an ‘inside trading day’ before ending slightly lower at 111.74 (-0.14%). The price action reinforces our view that “USD is expected to advance but may find it difficult to break the solid 112.00/20 zone” (see update from last Friday, 01 Mar, spot at 111.40). That said, USD is expected to continue to stay underpinned as long as the ‘key support’ at 111.10 is intact (level was at 110.95 yesterday). Looking ahead, a clear break of the strong resistance zone would suggest that USD is ready to tackle at 112.60. For now, the prospect for such a scenario is deemed as ‘medium’.

Source:efxdata

As highlighted, “the recent mild upward pressure has eased and from here, we expect EUR to trade sideways, likely between 1.1310 and 1.1425”. However, the bottom of the expected range at ...

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BoC: Policy rate

CAD_Boc_policy rate_Forex_FXPIG

Christian Lawrence, analyst at Rabobank, expects the BoC policy rate to remain unchanged at 1.75% today, which is also unanimously expected by the 21 analysts surveyed by Bloomberg.

Key Quotes

“CAD OIS implies almost no chance of either a hike or a cut at this meeting and only around a 15% chance of a 25bp hike by the October meeting. Although a more dovish tone than January can be expected, the BoC isn’t likely to discuss easing and the door will be left open for further rate hikes and a move towards ‘neutral’.”

“We do not expect any further rate increases this cycle and expect the BoC to cut rates 25bp in 2020 Q2. This call is partly reliant on Rabo’s forecast for no further Fed hikes this cycle.”

“We remain particularly concerned about the outlook for household consumption but we also expect business investment and trade to remain lacklustre. This week’s decision will not be accompanied by a new Monetary Policy Report (MPR). We favour USD/CAD primarily trading in a 1.32-1.34 range this year but see some room for a short-lived move down to 1.31 in April.”

Source: fxstreet

CAD OIS implies almost no chance of either a hike or a cut at this meeting and only around a 15% chance of a 25bp hike by the October meeting. Although a more dovish tone than January can be expected, the BoC...

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GBP/USD slides back

  •  Quickly surrenders upbeat UK services PMI led uptick to 1.3200 neighbourhood.
  •  Investors looked past the latest Brexit optimism and continue unwinding GBP longs.
  •  A modest USD uptick adds to the bearish pressure ahead of Carney’s testimony.

The GBP/USD pair faded an early European session uptick and quickly retreated around 50-pips from the vicinity of the 1.3200 round figure mark.

The British Pound got a minor lift after the UK services PMI print came in much better than expected, albeit was quickly sold into as the finer detail of the report were less encouraging and showed that activity remains subdued amid Brexit uncertainty.

As James Smith, developed markets economist at ING, points out: “Probably the most alarming detail – if perhaps not the most surprising – is that employment numbers are slipping at their fastest rate in seven years as firms put the brakes on hiring ahead of Brexit.”

The pair drifted back into bearish territory for the fourth consecutive session and was further weighed down by a modest pickup in the US Dollar demand, which remained supported by the latest leg of an upsurge in the US Treasury bond yields.

Moving ahead, a scheduled meeting between UK Brexit Secretary Barclay, Attorney General Cox and the European Union's Chief Brexit negotiator Michel Barnier, which coupled with the BoE Governor Mark Carney’s testimony will now be looked upon for some fresh impetus.

In the meantime, the US economic docket, highlighting the release of ISM non-manufacturing PMI and pending home sales data, might also produce some meaningful short-term trading opportunities during the early North-American session.

Technical levels to watch

Yohay Elam, FXStreet's own Analyst offers important technical levels to watch for and writes: “The Technical Confluences Indicator shows that cable faces fierce resistance in the area between 1.3197 to 1.3218. The next cap is quite close as well: around 1.3245.”

“The good news for GBP/USD is that it also enjoys significant support. 1.3135  is the convergence of the Fibonacci 38.2% one-month and the Pivot Point one-day Support 1. Yet if it falls further, the next cushion is only at 1.3053,” he added further.

Source: fxstreet

The GBP/USD pair faded an early European session uptick and quickly retreated around 50-pips from the vicinity of the 1.3200 round figure mark...

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Gold consolidates

Gold_consolidates_FXPIG _ FOREX

  •  The prevalent USD buying interest continues to exert some downward pressure.
  •  Global growth concerns/cautious mood seemed to help limit further downside.
  •  Traders now eye US ISM non-manufacturing PMI for some short-term impetus.

Gold extended its bearish consolidative price action on Tuesday and remained within striking distance of near six-week lows set in the previous session.

The precious metal failed to capitalize on the overnight attempted rebound, led by a sharp fall in the US equity markets and remained under some selling pressure for the fifth consecutive session on Tuesday.

Persistent US Dollar buying interest, supported by the recent upsurge in the US Treasury bond yields, was seen as one of the key factors driving flows away from the dollar-denominated/non-yielding yellow metal.

The downside, however, remained cushioned amid the prevalent cautious mood around equity markets amid global growth concerns, especially after China lowered its GDP growth target to 6.0%-6.5% for 2019.

It would now be interesting to see if the commodity is able to find any support at lower levels or continues with its recent sharp corrective slide from multi-month tops, around the $1346-47 region touched on Feb. 20.

Today's US economic docket, highlighting the release of ISM non-manufacturing PMI and new home sales data will now be looked upon for some short-term trading impetus during the early North-American session.

The key focus, however, will be on Friday's closely watched US monthly jobs report, popularly known as NFP, which might help determine the commodity's next leg of a directional move.

Technical levels to watch

Immediate support is pegged near the $1278-77 region, below which the commodity could extend its downward trajectory further towards $1265 support area. On the flip side, the $1294-95 region, followed by the key $1300 psychological mark now seems to act as an immediate resistance, above which a bout of short-covering could lift the metal further towards $1310-12 resistance zone.

Source: fxstreet

Gold extended its bearish consolidative price action on Tuesday and remained within striking distance of near six-week lows set in the previous session.The precious metal failed to capitalize on the overnight attempted rebound...

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Forex Today

Forex-Today-05.03.2019

Forex today witnessed broad-based US dollar strength in Tuesday’s Asian trading, mainly driven by moderate risk-aversion on fading US-China trade optimism as China slowdown worries resurfaced following softer Chinese GDP target and dismal services PMI. Most majors traded in the red zone, with the Kiwi having emerged the main laggard followed by the Aussie and the Sterling. The Aussie managed to find some respite following the RBA’s status quo, but remained capped below the 0.71 handle. Meanwhile, rising bets of a hard Brexit ahead of the Parliamentary approval of the EU-UK deal next week added to the negative bias in the Cable. The Yen also remained on the back foot, as the USD/JPY pair continued it struggle to regain the 112 handle.

Among the related markets, the Asian equities traded lower, led by the losses in the Japanese stocks amid recent Yen weakness. Both crude benchmarks traded nearly 0.50% lower, with WTI holding above the 56 level. Meanwhile, gold prices on Comex attempted a minor bounce near 1290 levels amid subdued Treasury yields.

Main Topics in Asia

China softens GDP target to a range of between 6-6.5%

Australian Account Balance Q4 2018 deficit AUD -7.2bn vs AUD -9.2bn

China NPC: Will keep leverage stable in the economy

WTI: Buyers struggle around $56.70 in spite of positives to cherish

US Pres. Trump: Will remove India and Turkey from GSP beneficiary companies

China's Caixin services PMI drops to 51.1 in February, a negative surprise

China’s Guo: China did not engage in competitive devaluation of the Yuan

Reserve Bank of Australia leaves rates on hold, as widely expected

RBA: Trade tensions remain a sense of domestic uncertainty

China’s CommerceMIn Zhnogn: US-China trade talks have been 'difficult'

UK Trade Minister Fox’s department cancels business Brexit briefings - FT

Russian Energy Minister: Russia to speed up oil out cuts this month - TASS

Key Focus Ahead

Tuesday’s EUR macro calendar is a heavy-showing, kicking-off with the Swiss February CPI report at 0730 GMT. The February services PMI reports from across the Euro area economies and the UK will dominate the session ahead while the Eurozone retail sales and Italy’s Q4 final GDP data will be also closely followed. Among the services PMI readings, the one from Germany and entire bloc will have a major impact on the EUR trades.

Moving on, the NA session sees the releases of the services PMI from both Markit and ISM due later at 1445 GMT and 1500 GMT respectively. Ahead of the PMIs, the US building permits will drop in at 1230 GMT and New Zealand’s GDT price index around 1400 GMT. The main highlight remains the BOE Governor Mark Carney’s testimony (due at 1535 GMT) on Brexit, inflation, and the economy before the House of Lords Economic Affairs Committee, in London.

EUR/USD: On the defensive ahead of Eurozone services PMIs

A big miss on the German services PMI data, due today, could trigger expectations of a dovish turn, leading to deeper losses in the common currency ahead of the ECB.

GBP/USD drops toward 1.3110 ahead of UK Services PMI, Carney's testimony

Looking forward, February month release of the UK Services PMI, crucial to the British GDP, is up for release at 09:30 GMT today. The headline sentiment index may join Monday’s construction PMI and slip beneath the 50.00 mark …

Gold Technical Analysis: Minor bounce likely

The yellow metal is looking south, having established a bearish lower high and lower low pattern in the last few days.  That said, the 14-hour relative strength index (RSI) has diverged in favor of the bulls.

US Non-Manufacturing Purchasing Managers' Index Preview: Following manufacturing down

The non-manufacturing purchasing managers’ index is predicted to rise to 57.2 in February from 56.2 in January. The business activity index is expected to increase to 59.9 in February from 59.7.

Australia: Q4 GDP likely to have risen by a soft 0.2% - ANZ

Felicity Emmett, senior economist at ANZ, are expecting Australia’s Q4 GDP to have risen a soft 0.2% q/q, following the 0.3% q/q rise in Q3, which would see annual growth decline to 2.4%.

Source: fxstreet

Forex today witnessed broad-based US dollar strength in Tuesday’s Asian trading, mainly driven by moderate risk-aversion on fading US-China trade optimism as China slowdown worries resurfaced following softer Chinese GDP target and...

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USD: Prohibitive?

USD_prohibitive_Forex_FXPIG

Jane Foley, senior FX strategist at Rabobank, points out that the US President Trump has stated over the weekend, that he does not want “a dollar that’s so strong that it makes it prohibitive for us to do business with other nations”.

Key Quotes

“Once again Trump appeared to be expressing his preference for a softer exchange rate.  This would be consistent with comments he made in January 2017 that the dollar was “too strong”.  He reiterated this position in April 2017 and in July of that year when he said he favoured a unit that was “not too strong”.  Trump’s preferences for the USD have not all been one way.  After a sell-off in the value of the greenback in January 2018, he reiterated the strong USD policy.  Either way, the President appears to have little qualms about verbal intervention in the FX market.”

“The recent gains of the USD can be easily explained in terms of last year’s fiscal expansion initiated by Trump himself and the response of the Federal Reserve in tightening policy to prevent the economy overheating.”

“Relatively to early November, the Fed’s position in recent months has become far more dovish. While this will likely have pleased the President, there has been sufficient weakness in US activity and price data to justify the Fed’s policy and indicate that policy has not been politically motivated.”

“Looking ahead to March, the market will be looking for signals as to how policy will be positioned through the rest of the year.  Crucially, even if the Fed is judged to be dovish this may not have a lasting impact on the value of the greenback.  Insofar as the value of a currency is gauged against that of another, the USD is at risk of remaining firm if other central banks take an even more dovish tack.  Given downside risks to growth in Europe and in Asia, we expect the USD to retain a relatively firm tone this year.  The implication is that further outbursts from Trump on the USD remain probable.”

Source: fxstreet

Once again Trump appeared to be expressing his preference for a softer exchange rate. This would be consistent with comments he made in January 2017 that the dollar was “too strong...

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GBP/USD drops to session low

GBPUSD_drops_session- lows_Forex_FXPIG
  • EUR/USD remains under pressure below the 1.1400 handle today, extending the leg lower following the rejection of last week’s tops near 1.1420.
  • While capped by the short-term resistance line at 1.1454, there is still room for a test of the key 200-day SMA at 1.1330 ahead of the 1.1300 neighbourhood.
  • Further south emerges January lows around 1.1280 ahead of YTD low in the vicinity of 1.1230 seen in mid-February.

The GBP/USD pair quickly reversed an early European session spike to 1.3255 area and dropped to fresh session lows in the last hour, filling the weekly bullish gap.

After consolidating through the Asian session on Monday, the pair ticked higher and remained supported by firming expectations of a possible delay to the fast-approaching Brexkt deadline on March 29/softer Brexit.

The uptick, however, lacked any strong bullish conviction, rather remained capped on the back of today's disappointing release of UK construction PMI print that fell to an 11-month low level of 49.5 in February.

Adding to this, a modest pickup in the US Dollar demand, supported by the NY Times report that Huawei is preparing to sue the US government, further collaborated towards exerting some downward pressure on the major.

Meanwhile, the latest leg of a sudden drop over the past hour or so could further be attributed to some technical selling below the 1.3230-25 horizontal support, with bears now eyeing a break below the 1.3200 handle.

In absence of any major market moving economic releases, the USD price dynamics might influence the price action amid relatively lighter Brexit-related news-flow ahead of Barnier -Cox -Barclay meeting on Tuesday.

Technical outlook

Mario Blascak, FXStreet's own European Chief Analyst: “The technical oscillators including Momentum and the Relative strength index are elevated and pointing upwards while Slow Stochastics made a bearish crossover within the Overbought territory. The most important technical feature though is the golden cross of the 50-day moving average crossing over the 100-day moving average (DMA).”

“The golden cross is a strongly bullish technical signal that is expected to push Sterling higher long-term. In the short-term, the GBP/USD though is in corrective mode around mid 1.3200s before testing 1.3215, previous cyclical high. On the upside, the immediate target is at 1.3390 representing 61.8% Fibonacci retracement of post-Brexit recovery from 1.1800 to 1.4374,” he added.

Source: fxstreet

The GBP/USD pair quickly reversed an early European session spike to 1.3255 area and dropped to fresh session lows in the last hour, filling the weekly bullish gap...

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Forex Today

Forex_today_04.03_FXPIG

The US-China trade deal hopes induced optimism boosted risk-sentiment across Asia on the first trading day of the week, as traders cheered the recent WSJ report. Across the fx board, the risk-on action in the Asian equities combined with the US President Trump’s currency jawboning left the US dollar broadly lower.

Amongst the G10 currencies, the Pound was the top gainer amid increased odds for a Brexit delay, followed by the Antipodeans that cheered the upsurge in the Chinese stocks and higher commodities prices while markets digested mixed Australian macro news. The Canadian dollar traded a shade firmer vs. the greenback below 1.3300, helped by higher oil prices. The USD/JPY pair retained its bullish momentum around the 112 handle, but the bulls lacked follow-through amid a softer buck. Meanwhile, the common-currency traded on the back foot near 1.1360 levels, unfazed by the recovery in gold prices as the focus shifted to into the key ECB monetary policy decision due later in the week ahead.

Main Topics in Asia

Trump says strong dollar hurting US competitiveness – Reuters

WSJ report: U.S. / China "agreement is taking shape"

Irish PM says Brexit delay is very likely – The Independent

Australia: Disappointing Q4 profits, inventories and wages data – ANZ

BOJ's Kuroda: Will debate policy normalization at an appropriate time - Reuters

PBOC Adviser: China growth to be >6% through 2020 – MNI

New Zealand's Treasury: Consumption growth supports forecast of 0.6% growth in Q4

UK’s Fox: EU offering long Brexit delay "not possible"

Oil bid in Asia on US-China trade optimism

China: Substantial progress made in trade talks with the US - Bloomberg

China’s ForeignMin: Moving towards better IP protection in China

China’s Zhang: US focus on security issues of Chinese goods 'unfair'

Shanghai Composite hits 8.5-month high, 50- & 100-day MA bull cross confirmed

Key Focus Ahead

Markets brace for a slew of second-tier macro releases from the EUR calendar today, as the Brexit-related headlines and US-China trade developments will continue to drive the overall risk trends. At 0930 GMT, the UK construction sector activity report for the month of February will be reported that is expected to arrive at 50.2 vs. 50.6 previous. Parallely, the Eurozone Sentix investor confidence numbers will be released, followed by the bloc’s factory gate price measure at 1000 GMT.

The NA session also lacks first-liner economic news and hence, the focus will be on the US construction spending data (due at 1500 GMT) and sentiment on the Wall Street for fresh dollar trades.

EUR/USD remains in the red despite trade optimism and Trump's bearish comments on USD

The EUR hasn't picked up a bid and could be offered in Europe despite potential risk-on in equities as any normalisation of ties between the US and China will likely pave way for more Fed rate hikes.

GBP/USD: Optimism surrounding delayed Brexit and US dollar weakness highlights 1.3270

The developments concerning the Brexit issue will be on the top watch-list for the Cable traders. However, February month British construction PMI could also offer intermediate moves. The UK construction PMI is likely to slip towards 50.2 from 50.6 registered in January.

Gold Price Forecast: Below $1,300 as expected, what's next?

Technical charts are also pointing to deeper losses, albeit after a minor bounce. That said, the yellow metal could pick up a strong bid, irrespective of dollar strength if Indo-Pak tensions escalate to full-blown war.

GBP/USD Weekly Forecast: Sterling set to correct lower as Brexit delay euphoria recedes

In the UK, the set of construction and services PMIs are scheduled for the next week together with the Bank of England Governor Mark Carney’ s testimony in the House of Lords.

Week Ahead – March Geopolitics Madness begins with China

The focus this week will however be heavily on China, the US nonfarm payroll number and a few key rate decisions from the Reserve Bank of Australia (RBA), ECB and Bank of Canada (BOC).

Source: fxstreet.com

Markets brace for a slew of second-tier macro releases from the EUR calendar today, as the Brexit-related headlines and US-China trade developments will continue to drive the overall risk trends. At 0930 GMT, the UK construction sector activity report for...

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FOREX WEEEK AHEAD

China-big-week-Forex_FXPIG

Mixed economic data, a rollercoaster ride in trade, and fresh geopolitical risks saw US equities edge higher on the week, while the dollar was little changed.  With the data dependent Fed likely to be on hold for at least the first half of the year, financial markets will closely focus on China’s policy summit for clues on their goals for the year. Many will focus on the economic growth target, but what could be just as important, if not more, are any announcement on stimulus, plans for reform and opening up their markets. The trade war also remains a hot button as expectations grow for a Trump – Xi meeting to occur in the middle of the month.  Special counsel Robert Mueller is also nearing completion of his report on whether the Trump campaign colluded with Russia.  Once the report is submitted to Attorney General Bill Barr, it could be days or weeks before we find out his ruling.

A busy week filled with interest rate decisions might see key rates unchanged, but investors will closely watch to see if growth forecasts are slashed by the ECB, will the RBA’s fears of global risks and housing weakness grow and will the Bank of Canada become slightly less hawkish and more worried about slowing growth. The US February nonfarm payrolls number will be released on Friday and the employment situation is expected to return closer to trend with 185,000 jobs created, many would not be surprised if the January reading of 304,000 is revised down.

• RBA, ECB and BOC rate decisions could see lower outlooks
• China Policy Summit to outline annual growth target and fiscal/monetary policies
• Trade deal crunch time and Mueller report watch

USD

The US dollar continues to struggle to breakout as mixed data confirms the data-dependant Fed’s stance on being patient. The US economy delivered better than expected growth in the fourth quarter, but fresher data suggests housing remains weak, personal income is soft, inflation is muted, while consumer confidence is rebounding. The greenback’s gains have been strongest to the yen and Canadian dollar.

The month of February saw Treasuries trade in the narrowest range since 1979 (2.62% to 2.74%). The yield on the benchmark 10-year Treasury yield did however steadily climb higher this week from 2.66% to 2.75%. Falling expectations that the Fed’s next move will be a rate cut helped push yields higher. The markets will closely await the updated Fed’s projections on March 20th. The Fed downgraded their forecast to 2 hikes for 2019 at the December meeting. Recent economic data suggests the Fed could downgrade their rate hike forecast down to one hike.

Rate Decisions

The Reserve Bank of Australia (RBA) is unanimously expected to keep policy steady at 1.50% .  How concerned the RBA is with the housing sector could unveil clues as to whether they are going to start to have a more accommodative stance.

The Bank of Canada (BOC) is also expected to keep rates unchanged at 1.75% and they will they likely ease up on their hawkish outlook following softer inflation and the recent deterioration in GDP and retail sales.

The ECB will keep policy steady unchanged as inflation continues to struggle.  They will downgrade their inflation forecasts and expectations for a rate hike could fall to 2020.

Stocks

Geopolitical events and a wrath of testimonies dominated headlines this week. Stocks heavily reacted to the tensions from India and Pakistan, a failed Trump-Kim summit, and testimony from US Trade Representative Lighthizer that suggested a lot of work still needs to be done before we see an agreement on trade with China.

Earnings season is approaching the end and we will see several key reports from consumer discretionary stocks. Key results will be released from Target, Salesforce.com, Kohls, Dollar Tree, Costco and Kroger. The performance in US stocks for the first two months of the year delivered the best performance seen in almost three decades.

Oil

West Texas Intermediate crude appears to be at an inflection point as the OPEC + production cuts appear to have run their course while US production is expected to increase in the coming months. Softer economic data from the largest economy in the world also put a damper on demand, but that may not matter much in the short-term if China signals major policy changes that will help stabilise growth. The supply-side will likely keep any rallies in oil capped, but any disappointment with the demand side could keep the prices under pressure.

Gold

The precious metal lost its luster after fading expectations for the Fed’s next move to be a rate cut saw the psychological $1,300 level penetrated. Technical traders are focusing on the key break of the bullish trend line that started back in October and the close below the 50-day SMA.

Source:marketpulse

Mixed economic data, a rollercoaster ride in trade, and fresh geopolitical risks saw US equities edge higher on the week, while the dollar was little changed. With the data dependent Fed likely to be on hold for at least the first half of the year, financial markets will...

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Gold Technical Analysis

Gold_Tech_Analysis_Forex_FXPIG

  •  The precious metal remained under some heavy selling pressure for the third consecutive session on Friday and dropped to challenge one-month-old trend-line support.

  •  Sustained weakness below 200-period SMA on the 4-hourly chart - for the first time since Nov. 30, was seen as a key trigger for bearish traders and prompted some technical selling.

  •  Moreover, oscillators on the daily chart have just started gaining negative momentum and support prospects for an extension of the ongoing slide from 10-month tops set on Feb. 20.

  •  Meanwhile, indicators on hourly charts have started drifting into the oversold territory and turned out to be the only factor that helped limit deeper losses, at least for the time being.

  •  Traders, however, are likely to wait for a convincing break through the mentioned support before positioning for any further slide towards testing the key $1300 psychological mark.

XAU/USD

Overview:
   Today Last Price: 1308.86
   Today Daily change %: -0.32%
   Today Daily Open: 1313.1
Trends:
   Daily SMA20: 1319.67
   Daily SMA50: 1300.1
   Daily SMA100: 1264.15
   Daily SMA200: 1235.92
Levels:
   Previous Daily High: 1327.1
   Previous Daily Low: 1312.9
   Previous Weekly High: 1346.85
   Previous Weekly Low: 1320.72
   Previous Monthly High: 1346.85
   Previous Monthly Low: 1300.1
   Daily Fibonacci 38.2%: 1318.32
   Daily Fibonacci 61.8%: 1321.68
   Daily Pivot Point S1: 1308.3
   Daily Pivot Point S2: 1303.5
   Daily Pivot Point S3: 1294.1
   Daily Pivot Point R1: 1322.5
   Daily Pivot Point R2: 1331.9
   Daily Pivot Point R3: 1336.7

Source: fxstreet

The precious metal remained under some heavy selling pressure for the third consecutive session on Friday and dropped to challenge one-month-old trend-line support...

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EUR/JPY Technical Analysis

EURJPY-tech-analysis_Forex_FXPIG
  • EUR/JPY has regained fresh upside traction and surpassed the key barrier at 127.00 the figure, coincident with later December 2018 peaks.
  • The continuation of the up move should meet the next significant hurdle above the 128.00 mark, where is located the critical 200-day SMA.
  • On the broader picture, the constructive outlook in the cross remains unchanged while above the short-term support line, today at 124.55.

EUR/JPY

Overview:
   Today Last Price: 127.14
   Today Daily change: 78 pips
   Today Daily change %: 0.29%
   Today Daily Open: 126.77
Trends:
   Daily SMA20: 125.36
   Daily SMA50: 125.07
   Daily SMA100: 126.85
   Daily SMA200: 128.12
Levels:
   Previous Daily High: 126.92
   Previous Daily Low: 125.88
   Previous Weekly High: 125.94
   Previous Weekly Low: 124.7
   Previous Monthly High: 126.92
   Previous Monthly Low: 124.16
   Daily Fibonacci 38.2%: 126.52
   Daily Fibonacci 61.8%: 126.28
   Daily Pivot Point S1: 126.13
   Daily Pivot Point S2: 125.49
   Daily Pivot Point S3: 125.1
   Daily Pivot Point R1: 127.16
   Daily Pivot Point R2: 127.55
   Daily Pivot Point R3: 128.19

Source:Fxstreet

EUR/JPY has regained fresh upside traction and surpassed the key barrier at 127.00 the figure, coincident with later December 2018 peaks...

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Forex Today

Forex-today_FX_ FXPIG

A renewed risk-on wave gripped the financial markets across Asia on the final trading day of the week, as markets cheered upbeat US growth numbers and Chinese Caixin factory sector activity report that calmed global economic slowdown fears. Hence, investors flocked to the risk assets at the expense of the safe-havens.

Among the Asia-pac currencies, the safe-haven Yen was the biggest loser, with USD/JPY having extended its recent upsurge to ten-week tops near 111.80 levels. The JPY bulls were unimpressed by above estimates Japanese CPI and capital spending data released in early Asia. The Aussie rallied briefly above the 0.71 handle following better Chinese manufacturing PMI but failed to resist above the last amid the latest leg up in the US dollar across its main competitors. The USD bulls got a boost from the Fed Chair Powell’s upbeat remarks on the US economy. Meanwhile, the Kiwi held onto gains above the 0.6800 level amid firmer oil prices and a solid rise in New Zealand’s building permits data.

Looking at the related markets, the Asian markets traded broadly higher, led by the rally in the Japanese indices. Both crude benchmarks traded with moderate gains, with WTI well above the 57 barrier. Gold prices on Comex refreshed two-week lows near 1312 levels, having faded its recovery at 1316.45.  

Main Topics in Asia

US said to ready final China trade deal as hawks urge caution – Bloomberg

Fed's Powell: Fed patient and watching risks

Gold recovers toward $1315 as Fed’s Powell speaks

China's Caixin manufacturing PMI rebounds to 49.9 in Feb, a big beat - Aussie regains 0.71

S. Korean FinMin: Result of Hanoi Summit could increase volatility in financial market

Senior US State Department Official: N. Korea asked for all sanctions lifted except for armaments

Brent oil: Bounce stalled near $66.60 on surging US supply and global economic slowdown

WH Econ Adviser Hassett: US made enormous progress in trade talks with China

USD/INR Technical Analysis: Range breakdown confirmed, cautiously bearish

US Secretary of State: North Korea asked for full sanctions lifting

Asian stocks strengthen as buyers cherish latest data, US-China trade and MSCI news

Key Focus Ahead

The German retail sales report at 0700 GMT is expected to kick-in a data-busy EUR calendar today, soon followed by the Swiss retail trade and manufacturing PMI reports at 0730 GMT and 0830 GMT respectively. Also, a raft of final manufacturing PMI reports will be published from across the Euro area economies, starting from 0815 GMT to 0900 GMT. The key highlight in Europe is likely to be the manufacturing PMI from the UK docket due at 0930 GMT and Eurozone flash CPI release at 1000 GMT among other minority reports.

The NA session is equally busy, as the traders see a fresh batch of US economic news, including the core PCE price index and personal spending at 1330 GMT. Parallely, the Canadian Q4 GDP report is slated for release. At 1430-1445 GMT, the Markit manufacturing PMI reports from both the US and Canada will be published. However, the US ISM manufacturing PMI and UoM consumer sentiment data (due at 1500 GMT) will hog the limelight. Next of relevance remains the speech by the FOMC member Bostic  and Baker Hughes US oil rigs count data that will drop in at 1800 GMT.

EUR/USD: Rally paused ahead of German jobs and Eurozone inflation data

A re-test of 1.1407 cannot be ruled out, especially if the German jobs data, due at 08:55 GMT and the Eurozone preliminary CPI number, scheduled for release at 10:00 GMT, beat estimates by a big margin.

GBP/USD: Bears await fresh clues heading into UK manufacturing PMI

February month readings of the UK Markit manufacturing purchasing manager’s index (PMI) and the US ISM Manufacturing PMI should gain immediate market attention. Among them, the British Markit manufacturing PMI will be the first one to appear with forecast favoring 52.0 figure against 52.8 prior.

Canada GDP Preview: Canadian GDP is expected to decelerate with slowdown seen temporary

Even with Canadian growth stagnating in December and decelerating to 1.2% quarterly annualized rate in the fourth quarter of 2018, the Canadian Dollar is still relatively cheap to the shift in growth expectations.

RBA to remain patient - Bank of America Merrill Lynch

Analysts at Bank of America Merrill Lynch believe that a potential rebound for fourth-quarter growth rate, increased focus on the first quarter data and upcoming Federal Elections will likely allow the Reserve Bank of Australia (RBA) to remain patient on policy guidance.

Source: fxstreet

A renewed risk-on wave gripped the financial markets across Asia on the final trading day of the week, as markets cheered upbeat US growth numbers and Chinese Caixin factory sector activity report that...

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Gold bears looking for a break

gold-looking-break-FOREX_FXPIG
  • Gold is headed for a test of the 23.6% Fibo retracement of the mid-August swing lows to recent swing highs.
  • Bears are testing below the ascending channel's support.
  • Gold is trading at $1,314/oz, down from the day's highs of $1,327/oz having printed a daily low of $1,313.11oz.

Gold prices have been steadily declining since last week's highs of $1,343/oz and has made a fresh reversal low today following the unexpected uptick in US GDP Q4. The advanced read on Q4 US GDP came in stronger than expected at 2.6% saar vs the market's expectations of 2.2%, vs Q3 3.4%. The data superseded the risk-off mood on the news of an abrupt end to the U.S.-North Korea denuclearization talks.

News that Trump walked out of his meeting with Kim Jong Un because the two sides couldn’t reach an agreement over North Korea’s nuclear disarmament dashed hopes for an easing in geopolitical tensions," analysts at ANZ explained.

"After the meeting Trump said Kim wanted US sanctions lifted “in their entirety” in exchange for partial denuclearisation. However, North Korean foreign minister Ri Yong-Ho later disputed this claim saying they were only after a partial removal of sanctions and that they offered a realistic proposal. The summit’s abrupt end saw global equities slip. There’s been no indication from the US of whether it will consider another summit."

Gold levels

The price of gold is at a critical juncture, albeit oversold on the hourly charts and trading above its ATR of 11.01. Bears are targeting the 23.6% Fibo down at 1302 while daily stochastics lean bearish and near-term stochastics offer some wiggle room before sellers will likely come up for a breath of air. Bears will look to guard the trend line support area around 1318/20 for prospects of a break of the 1300 handle and onto the 38.2% fibo located at 1275, with the confluence of the late Jan support area.

Source: fxstreet

Gold prices have been steadily declining since last week's highs of $1,343/oz and has made a fresh reversal low today following the unexpected uptick in US GDP Q4. The advanced read on...

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EUR/USD turns flat

eurusd=turns_flat-FOREX_FXPIG
  • Today's strong data from the U.S. helps greenback gather strength.
  • US Dollar Index remains on track to close second straight day higher.
  • Annual CPI in Germany rises to 1.6% in February.

The EUR/USD pair rose to its highest level since February 5 at 1.1420 earlier in the day but failed to preserve its momentum in the second half of the day. As of writing, the pair was virtually unchanged on a daily basis at 1.1372.

The broad USD weakness during the European trading hours allowed the pair to puısh higher above the 1.14 handle. However, with the U.S. Bureau of Economic Analysis in its initial estimate announcing that the real GDP is seen expanding 2.6% in the fourth quarter and the ISM-Chicago's PMI rising to its best level in 14 months, the dollar started to outperform its rivals and forced the pair to retrace its daily advance. At the moment, the US Dollar Index is up 0.1% on the day at 96.20 and looking to close the second straight day in the positive territory.

Additionally, following impressive upsurge, the 10-year US T-bond yield extended its rally and climbed to its highest level in more than three weeks to provide additional support to the buck.

On the other hand, Destatis today reported that the annual CPI (preliminary) in February in Germany rose to 1.6% from 1.4% in January and surpassed the market expectation of 1.4%, but was largely ignored by the market participants.

Technical outlook by FXStreet Editor Pablo Piovano

The ongoing bull move in EUR/USD is expected to meet quite a tough hurdle in the 1.1440/50 band, where are located a Fibo retracement (of the September-November drop) and the short-term resistance line (off September highs beyond 1.1800). This is considered the last defence for a potential re-visit to the 1.1500 neighbourhood and beyond. On the downside, recent lows in the mid-1.1300s appear reinforced by another Fibo retracement (at 1.1356), the 21-day SMA (at 1.1350) and the 10-day SMA (at 1.1342). On a broader picture, the critical 200-week SMA (at 1.1335) is a strong support and is expected to hold the downside on a resumption of a bearish move. As long as this area caps, the near term outlook for the pair should remain constructive.

Source: fxstreet

The EUR/USD pair rose to its highest level since February 5 at 1.1420 earlier in the day but failed to preserve its momentum in the second half of the day. As of writing, the pair was virtually unchanged on a daily basis at 1.1372....

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FOREX Tech Targets

Bulls_bears_28.02_Forex_FXPIG

EUR/USD: Neutral (since 21 Aug 18, 1.1485): Odds for a break of 1.1440 is slightly more than even. No change in view from yesterday.

We have held the same view since last Wednesday (20 Feb, spot at 1.1345) wherein the “immediate risk is on the upside but it is too soon to expect a sustained rise in EUR”. We highlighted the strong resistance levels at 1.1410 and 1.1440 and expected EUR to ‘struggle’ to break above 1.1440. After trading in a muted manner for several days, EUR finally stirred to life as it rose to a 3-week high of 1.1402 during late-NY hours. Upward momentum has perked up and the risk is still clearly on the upside. That said, 1.1440 continues to loom as a solid resistance and in order for EUR to break this level, it could not afford to ‘dither’. In other words, the price action within these few days is crucial in determining whether EUR can move above 1.1440. For now, the odds for a move above 1.1440 appear to be slightly more than even. Looking ahead, a ‘clean’ break of this level would suggest that EUR is ready to tackle the last month’s top at 1.1515. Overall, EUR is expected to stay underpinned until there is a break of the ‘key support’ at 1.1310 (level was at 1.1270 previously).

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Further GBP strength is still likely but 1.3365 may not come into the picture so soon.

The pace of the expected GBP strength continues to surprise us as it closed higher for the fourth straight day and tacked on a gain of +0.46% (NY close of 1.3311). As highlighted yesterday (27 Feb, spot at 1.3255), the ‘positive’ outlook for GBP that started last Wednesday (20 Feb, spot at 1.3070) is still intact even though we were the view that “1.3365 may not come into the picture so soon”. GBP subsequently touched 1.3351 during NY hours before easing off. Severely overbought short-term conditions could lead to a couple of days of consolidation first but as long as the ‘key support’ at 1.3170 remains intact (level was at 1.3120 yesterday), we expect GBP to move above 1.3365 eventually. The next significant resistance above 1.3365 is at 1.3470.

AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD has moved into a consolidation phase.

AUD snapped its 3-day winning streak as it plummeted after touching 0.7200 and closed on a weak note (NY close of 0.7141, -0.65%). The price action reinforces our view that “AUD has moved into a consolidation phase” (see update on Tuesday, 26 Feb). As highlighted, there is no clear directional bias for AUD and from here, we continue to expect AUD to trade sideways, likely within a broad 0.7090/0.7230 range.

NZD/USD: Neutral (since 07 Dec 18, 0.6880): Odds for a sustained move above 0.6900 have increased.

For the third day in a row, NZD peeked above 0.6900 (yesterday’s high was 0.6902) before pulling-back sharply. While we indicated on Tuesday (26 Feb, spot at 0.6880) that the “odds for a sustained move above 0.6900 have increased”, we warned, “overbought short-term conditions suggest NZD could consolidate and trade sideways for a few days first”. We continue to hold the same view for now even though the weakness in NZD yesterday was more pronounced than expected. Overall, NZD has to start moving higher within these 1 to 2 days or a break of 0.6820 would indicate that NZD could continue to trade sideways within a broad range.

USD/JPY: Neutral (since 09 Oct 18, 113.10): USD has moved into a consolidation phase. No change in view from yesterday.

After hitting a 2-month high of 111.23 on Monday (25 Feb), the sudden and sharp drop in USD yesterday came as a surprise. The break of the 110.45 ‘key support’ indicates that the upward pressure that started about 2 weeks ago has eased (we held the view yesterday that USD is ready to challenge the 111.40 resistance). In other words, USD has likely moved into a consolidation phase and is expected to trade sideways in the coming days, likely within a 110.00/111.05 range. Looking forward, the price action near the bottom/top of the expected range should provide a better clue on the likely directional of the next move.

Source:efxdata

We have held the same view since last Wednesday (20 Feb, spot at 1.1345) wherein the “immediate risk is on the upside but it is too soon to expect a sustained rise in EUR”. We highlighted the strong resistance levels at 1.1410 and 1.1440 and expected EUR to...

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Oil: Prices stabilising

OIl-rices-stabilising_Forex_FXPIG

Analyst at Danske Bank, notes that the oil prices has stabilised somewhat after sources said that US crude oil inventories (to be disclosed today) will show a drop of some 4.2m barrels compared to a median estimated forecast of +3m barrels.

Key Quotes

Also, Russia saying that it follows a previous agreement with OPEC to lower production by having cut production by 140,000 barrels per day since December. Markets seem to put great emphasis on the fundamental ongoing supply constraints following in part the Venezuelan crisis. Oil prices were down 3% in Monday’s trading session following Trump’s comments that ‘oil prices are getting too high’ and that ‘OPEC should relax’.”

Source: fxstreet

Oil prices has stabilised somewhat after sources said that US crude oil inventories (to be disclosed today) will show a drop of some 4.2m barrels compared to a median estimated forecast of +3m barrels...

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Brexit to remain in focus

Brexit_in-focus_Forex_FXPIG

MUFG analysts are expecting that the main focal point for markets this week will be on Wednesday’s votes in UK parliament on fresh Brexit amendments.

Key Quotes

“Most notably, the updated Cooper-Letwin amendment which seeks to force the government to extend Article 50 if they can’t pass a Brexit deal by the 13th of March.”

“Reports indicate more optimism that Cooper-Letwin amendment may pass this time, after having been rejected at the end of Jan in its first iteration.”

“It could help lift cable towards 1.3300 level if passed. But, if MPs pass up opportunity to “take No Deal off the table” for the second time by voting down the amendment, market participants may not as forgiving with time quickly running out. It could see cable quickly falling back towards support from its 55-day moving average at 1.2850.”


Source: fxstreet

MUFG analysts are expecting that the main focal point for markets this week will be on Wednesday’s votes in UK parliament on fresh Brexit amendments...

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Gold edges lower

gold-edges-lower_Forex_FXPIG

•  Trades with modest losses for the second consecutive session.
•  Bulls fail to capitalize on the risk-off mood/subdued USD demand.
•  The Fed Chair Jerome Powell’s testimony eyed for fresh impetus.

Gold extended its steady decline from intraday highs, around the $1330 area, and is currently placed at the lower end of its daily trading range.

Having failed to capitalize on Friday's attempted bounce, the precious metal traded with a mild negative bias and has now moved within striking distance of last week's swing low. The commodity did get a minor lift during the Asian session on Tuesday amid reviving safe-haven demand in wake of rising geopolitical tensions in the Asian continent, albeit lacked any strong follow-through.

The latest optimism over the US-China trade negotiations, especially after the US President Donald Trump said that he will extend a deadline to escalate tariffs on Chinese imports, kept a lid on any further up-move. Meanwhile, bulls seemed rather unimpressed by a subdued US Dollar price action, which tends to underpin demand for the dollar-denominated commodity, rather preferred to wait on the sidelines ahead of today's key event risk.

The Fed Chair Jerome Powell's two-day testimony to Congress will be closely scrutinized for the central bank's view on monetary policy and might provide a fresh directional impetus for the non-yielding yellow metal. This coupled with a slew of important macro data, including Chinese PMI prints and the revised US Q4 GDP growth figures, will further contribute towards determining the commodity's near-term trajectory.

Technical levels to watch

Immediate support is pegged near the $1321 area, below which the metal is likely to accelerate the slide towards the $1315-14 region en-route the next major support near the $1305 horizontal zone. On the flip side, the $1331-33 region now seems to have emerged as an immediate hurdle, which if cleared might lift the commodity back towards $1340 supply zone.

Source: fxstreet

Gold extended its steady decline from intraday highs, around the $1330 area, and is currently placed at the lower end of its daily trading range. Having failed to capitalize on Friday's attempted bounce, the precious metal...

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EUR/USD within a tight range

eur-range-Forex_FXPIG
  • The pair extends the sideline theme in the mid-1.1300s.
  • German GfK climate gauge came in unchanged in March.
  • Attention remains on Powell’s testimony later in the day.

EUR/USD is extending the consolidative theme in the upper end of the current range around 1.1350 amidst thin trade conditions and scarce volatility.

EUR/USD now looks to Powell

Further upside in spot has been so far capped by the key 55-day SMA in the 1.1380 area, while the 1.1350/60 band represents the ongoing congestion area, where converges the 21-day SMA and a Fibo retracement.

As usual, the exclusive driver behind the better mood in the riskier assets remains the rising optimism on the US-Sino trade negotiations, all in response to the recent progress made in Beijing and Washington. In this regard, President Trump and China’s Xi Jinping are expected to meet once again in March.

In the data space, German Consumer Climate remained unchanged at 10.8 for the month of March. Moving forward, all the attention will be on the testimony by Chief Powell before the Senate Banking Panel, where a dovish tone is largely anticipated by market participants.

What to look for around EUR

The European currency continues to look to developments from the US-China trade talks for near term direction, while the effervescence on the US-EU trade front appear somewhat relegated so far. Recent poor prints from the euro docket and a ‘reality check’ from the ECB minutes appear to have exacerbated concerns over the deterioration in the bloc’s fundamentals and casted further shadows over the probability of any action on rates from the ECB later this year.

EUR/USD levels to watch

At the moment, the pair is losing 0.03% at 1.1353 facing the next up barrier at 1.1371 (high Feb.20) seconded by 1.1381 (55-day SMA) and then 1.1391 (100-day SMA). On the other hand, a break below 1.1320 (10-day SMA) would target 1.1275 (low Feb.19) en route to 1.1234 (2019 low Feb.15).

Source: fxstreet

EUR/USD is extending the consolidative theme in the upper end of the current range around 1.1350 amidst thin trade conditions and scarce volatility....

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Gold drops below $1330

gold-drops-forex-FXPIG
  • Greenback pares early losses to move into the positive territory.
  • Risk-on mood weighs on safe-havens on Monday.

The XAU/USD pair failed to hold above the $1330 mark on Monday and came under modest bearish pressure in the second half of the day. As of writing, the troy ounce of the precious metal was trading at $1327.50, losing 0.05% on the day. Despite that recent drop, however, the pair's price action doesn't hint at a sustained movement in either direction with the CCI indicator on the daily chart moving sideways a little above the 0 mark.

Heightened optimism about the possibility of the U.S. and China reaching a trade deal made it difficult for safe-havens to find demand on Monday after U.S. President Trump announced that he delayed the increase in tariffs on Chinese imports that was originally scheduled to go into effect on March 1. The risk-on mood allowed investors to focus on risk-sensitive stocks and all the three major indexes in the U.S. were last seen adding around 0.4% - 0.5%.

Additionally, the upsurge seen in the T-bond yields supported the greenback in the second half of the day and helped the US Dollar Index pull away from its daily lows around 96.30. With markets quieting down toward the last hours of the NA session, the DXY was moving sideways near mid-96s where it closed the previous week.

Source: fxstreet

The XAU/USD pair failed to hold above the $1330 mark on Monday and came under modest bearish pressure in the second half of the day. As of writing, the troy ounce of the precious metal was trading at...

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EUR/JPY challenges 2-day highs

EUJPY-challenges-hoghs_FOREX_FXPIG
  • The cross moves higher on risk-on sentiment.
  • The upside momentum now targets the 126.00 area.
  • JPY-selling behind the up move.

The continuation of the upbeat mood around the riskier assets is bolstering today’s buying pressure in EUR/JPY to the current 125.70/80 band.

EUR/JPY looks to risk trends

The cross is extending the consolidative theme in the upper end of the range, although a breakout of the critical 126.00 neighbourhood still remains elusive.

Positive sentiment on the trade front remains the exclusive driver for the up move in the cross and the rest of the riskier peers, particularly after President Trump delayed the tariff deadline in response to recent progress in the US-Sino trade talks. According to latest news, Trump and Xi Jinping could meet once again at some point in the next month.

In the weekly docket, Chief Powell’s testimonies on Tuesday and Wednesday should keep investors vigilant on the views of the Federal Reserve regarding the balance sheet and the potential reassessment of QT. In Japan, Industrial Production, Retail Sales and unemployment figures are also due later in the week. In addition, flash inflation figures in the euro area and Germany should also keep investors entertained ahead in the week.

EUR/JPY relevant levels

At the moment the cross is gaining 0.35% at 125.84 and a surpass of 125.93 (high Feb.20) would expose 125.94 (high Feb.4) and finally 127.02 (100-day SMA). On the other hand, the next support lines up at 125.24 (10-day SMA) seconded by 124.22 (low Feb.15) and then 124.17 (low Feb.8).

Source: fxstreet.com

The continuation of the upbeat mood around the riskier assets is bolstering today’s buying pressure in EUR/JPY to the current 125.70/80 band...

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FOREX Tech Targets

Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 25.02.2019

EUR/USD: Neutral (since 21 Aug 18, 1.1485): Immediate risk is on the upside but too soon to expect a sustained rise in EUR.

EUR spent another day ‘going nowhere’ as it closed little changed last Friday (NY close of 1.1341, +0.06%). Despite the lackluster price action, we continue to see scope for EUR to move higher. However, as highlighted in recent updates, it is too soon to expect a sustained rise in EUR and any advance is expected to struggle to break above 1.1440. On a short-term basis, 1.1410 is already quite a strong level. On the downside, EUR has to move below 1.1270 in order to indicate that the current mild upward pressure has eased.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Outlook for GBP is positive but expect 1.3160 to offer solid resistance.

GBP dropped briefly to a low of 1.2970 last Friday before rebounding strongly to end the day slightly higher (1.3056, +0.14%). The 1.2970 low was not far above our ‘key support’ at 1.2960. As highlighted since last Tuesday (20 Feb, spot at 1.3070), the outlook for GBP is deemed as positive as long as the ‘key support’ is intact. However, while we expect GBP to strengthen, 1.3160 is acting as a solid resistance and for now, the prospect for a break of this level is not high (this level is followed by another solid resistance near 1.3220, the high in late-January).

AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): Risk is on the downside but too early to expect a sustained decline in AUD.

After the outsized decline in AUD last Thursday (21 Feb), we indicated in our Friday (22 Feb, spot at 0.7100) update that the “risk is the downside but it is too early to expect a sustained decline”. That said, the subsequent strong rebound from a low of 0.7082 on Friday came as a surprise. However, only a break of the 0.7170 would indicate that the current downward pressure has eased. A break of 0.7170 would suggest that AUD is likely to trade sideways in the coming days. Meanwhile, we continue to see downside risk in AUD but the prospect for further AUD weakness has clearly diminished.

NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD is expected to trade sideways.

We indicated last Friday (22 Feb, spot at 0.6810) that NZD is “ready to test the bottom of the expected 0.6750/0.6900 range in the coming days”. However, the quick drop to 0.6758 and the equally rapid rebound from the low came as a surprise. While we continue expect NZD to trade sideways (same view since 13 Feb, spot at 0.6810), the strong daily closing in NY (0.6843, +0.60%) has increased the risk of a break of 0.6900. A break of this level this level would suggest NZD is ready to tackle the 0.6942 high seen earlier this month. This scenario seems likely if NZD can hold above 0.6815 within the next few days.

USD/JPY: Neutral (since 09 Oct 18, 113.10): Diminished odds for further USD strength.

USD traded within a narrow range last Friday and ended the day unchanged in NY (110.68, 0.00%). We have held the same view that there is room for further USD strength even though the odds for such a scenario have diminished. The muted price action over the past few trading days offers no additional clue. For now, as long as 110.25 is not taken out, we continue see chance for a higher USD but time appears to be running out (further consolidation would suggest USD could continue to trade sideways for a protracted period).

Source:exfdata

EUR spent another day ‘going nowhere’ as it closed little changed last Friday (NY close of 1.1341, +0.06%). Despite the lackluster price action, we continue to see scope for EUR to move higher. However, as...

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FOREX Week Ahead

USDCAD_higher_Forex_FXPIG

Canadian Dollar rose 0.47 percent on Friday despite retail sales falling unexpectedly in December. Trade optimism offset the data miss as the US dollar remains on the back foot following lower than expected manufacturing data points published on Thursday.

The softness of the US dollar boosted oil prices which in turn supported the loonie. The Bank of Canada (BoC) remains hawkish in the near term, setting it apart from the Fed which had to make a sudden stop to reassess its monetary policy going forward.

Next week will be busy for CAD traders as inflation data will be published on Wednesday, the current account on Thursday and monthly GDP data on Friday. Analyst forecast are for a mixed bag as the momentum is lacking on Canadian growth, but with steady inflationary pressures the central bank could step in before the first half of the year.

The US dollar is lower across the board against major pairs on Friday.

The greenback was higher on Thursday despite disappointing data and positive news regarding trade talks between the US and China, but as more information is being reported the market has moved back to a risk on mode putting downward pressure on the dollar. Stocks and commodities have moved up on dollar softness and the optimism that even if the March 1 deadline approaches it will not immediately trigger new tariffs.

Financial headlines will be full of trade talk and Brexit speculation as negotiations continue on both fronts. Fundamentals will be released at the same time with Inflation hearings in the United Kingdom and Fed Chair Jerome Powell two testimonies in Washington. The US central bank paused its tightening monetary policy and investors will be following what Powell says to lawmakers this week.

OIL – Crude Rises as Energy Demand Boosted by Trade Optimism

Oil prices rose on Friday as the US and China appear to be close to an agreement ending a tariff spat that had a negative impact on global energy demand. Although there might not be a huge announcement even as the March 1 deadline is a week away, the US has signalled that the date is not a hard deadline leaving more room for negotiations.

The market remains caught in a tug of war between the OPEC+ supply cuts and the rising output from the US. Disappointing US economic data has offset the balance with a softer dollar pushing the price of crude higher.

Saudi Arabia remains committed to cutting production, but it remains to be seen how long the other major producers could agree to limit their revenue specially as their market share is threatened by the rise of US and Brazilian production.

GOLD – Gold Higher on Soft Dollar and Risk Events on the Horizon

Gold bounced back on Friday and is on track to a 1 percent gain on a weekly basis. The yellow metal fell close to 1.5 percent on Thursday after global disappointing data points were taken as a good signal to take profits by investors resulting in a stronger dollar as assets were liquidated.

The Fed was seen as less dovish on the minutes released this week, but the fact remains that with mixed data a rate hike could be pushed to the second half of the year putting less pressure on gold. Risk events will continue to keep gold on investors’ portfolios as breakthroughs and possible breakdowns in the US-China and Brexit negotiations are still plausible.

STOCKS – Global Stocks Rise as US-China Close to an Understanding

The meeting between US President Donald Trump and Chinese Vice Premier Liu He is seen as another important signal that talks are headed in the right direction a week away from the deadline set during the G20 meeting.

The market quickly digested the disappointing US data and is moving on to the potential positive impact to global growth if the two largest economies sort out their trade dispute.

Markets around the globe rose as the US and China could give more details on their negotiations, although as per the comments from high level US officials it doesn’t have to be ahead of March 1, as they are now treating it as a very soft deadline.

Source: marketpulse

Canadian Dollar rose 0.47 percent on Friday despite retail sales falling unexpectedly in December. Trade optimism offset the data miss as the US dollar remains on the back foot following lower than expected manufacturing data points published on Thursday...

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EUR/USD eases from tops

EURUSD_eases-from-tops_FOREX_FXPIG
  • The pair fades the uptick to daily highs beyond 1.1350.
  • The greenback finds support in the mid-96.00s so far.
  • German IFO survey missed expectations in February.

After briefly testing the 1.1350/60 band earlier in the session, EUR/USD came under some selling pressure in the wake of the publication of key German data.

EUR/USD offered on poor data

Spot erases initial gains after the key German IFO survey came in below expectations in all of its components for the month of February.

In fact, Business Climate dropped to 98.5, Current Assessment ticked lower to 103.4 and Business Expectations receded to 93.8, all of them missing previous estimates.

In the meantime, markets remains vigilant on any developments from the US-Sino trade negotiations, which appear as the main driver for the near term mood in the global markets.

Looking ahead, final EMU inflation figures are expected to come in line with preliminary readings.

Across the pond, Fed speaker should grab all the attention with the buck in centre stage.

What to look for around EUR

The shared currency continues to look to developments from the US-China trade talks for near term direction as well as any headlines from the effervescence on the US-EU trade front. Disappointing advanced prints from manufacturing PMIs in Germany and the euro bloc plus a ‘reality check’ from the ECB minutes appear to have exacerbated concerns over the deterioration in the bloc’s fundamentals and casted further shadows over the probability of any action on rates from the ECB this year.

EUR/USD levels to watch

At the moment, the pair is gaining 0.05% at 1.1340 facing the next up barrier at 1.1371 (high Feb.20) seconded by 1.1382 (55-day SMA) and then 1.1392 (100-day SMA). On the other hand, a break below 1.1310 (10-day SMA) would aim for 1.1234 (2019 low Feb.15) and finally 1.1215 (2018 low Nov.12).

Source: fxstreet

After briefly testing the 1.1350/60 band earlier in the session, EUR/USD came under some selling pressure in the wake of the publication of key German data...

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FOREX Tech Targets

Bulls-and-bears-Forex_FXPIG_tech-analysis_22.02

EUR/USD: Neutral (since 21 Aug 18, 1.1485): Immediate risk is on the upside but too soon to expect a sustained rise in EUR. EUR closed unchanged in NY (1.1334, 0.00%) and there is no change in view (see reproduced update below).

There is not much to add to the update from yesterday (21 Feb, spot at 1.1345). As highlighted, the immediate risk for EUR is on the upside but lackluster momentum suggests that it is too soon to expect a sustained rise. In other words, while we continue to see scope for EUR to move higher, we expect any advance to struggle to break above 1.1440. On a short-term basis, 1.1410 is already quite a strong level. On the downside, EUR has to move below 1.1270 in order to indicate that the current mild upward pressure has eased

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): Outlook for GBP is positive but expect 1.3160 to offer solid resistance.

GBP traded in a quiet manner yesterday (within an ‘inside day) before ending the day slightly lower (NY close 1.3037, -0.10%). The price action is deemed as a short-term consolidation phase that could last for another 1 to 2 days. Looking ahead, as long as the ‘key support’ at 1.2960 remains intact, we continue to hold a positive view and see chance for GBP to extend its strong up-move from earlier this week. That said, we expect 1.3160 to offer solid resistance (in other words, the prospect for a break of this level is not high).

AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): Risk is on the downside but too early to expect a sustained decline in AUD.

We have held the same view since Monday (18 Feb, spot at 0.7140) wherein AUD is expected to “trade sideways to slightly higher in the coming days, likely between 0.7080 and 0.7200”. The volatile price action yesterday that resulted in AUD exceeding the expected 0.7080/0.7200 range within a single day was clearly unexpected (AUD popped to a high of 0.7208 during early-Asian hours before plummeting to hit 0.7070 during late-NY hours). While the subsequent weak closing in NY (0.7088, -1.04%) has shifted the immediate risk to the downside, it is too early to expect a sustained decline. All in, we expect AUD to stay under pressure in the coming days unless it can reclaim 0.7170. On the downside, a break of the 0.7054 low seen earlier this month would not be surprising but for now, the odds for a move below 0.7000 is deemed as low. Meanwhile, AUD could consolidate and trade sideways for the next few days.

NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD is expected to trade sideways.

We have held the same view since last Wednesday (13 Feb, spot at 0.6810) wherein the current movement in NZD is viewed as part of a broad sideway trading range between 0.6750 and 0.6900. When NZD rose to 0.6893 on Monday (18 Feb), we indicated that the ‘prospect for a break of 0.6900 is not high”. The relatively sharp drop of -0.77% yesterday (NY close of 0.6802) reinforces our view. After coming close to the top of the expected 0.6750/0.6900 range, NZD is likely ready to ‘test’ the bottom of the range at 0.6750 in the coming days. For now, we do not anticipate a sustained drop below this level.

USD/JPY: Neutral (since 09 Oct 18, 113.10): Diminished odds for further USD strength. No change in view.

While USD moved higher and closed on firm note in NY (110.85, +0.21%), there is no significant improvement in momentum. That said, we continue to hold the same view that there is room for further USD strength even though the odds are not high. Only a break of 110.25 would indicate that a short-term top is in place. Meanwhile, USD could continue to trade in a lackluster manner between 110.25 and last week’s 111.12 peak.

Source: efxdata

EUR/USD: Neutral (since 21 Aug 18, 1.1485): Immediate risk is on the upside but too soon to expect a sustained rise in EUR. EUR closed unchanged in NY (1.1334, 0.00%) and there is no change in view (see reproduced update below)...

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EUR/GBP flirting with highs

EURGBP-flirting-with-hights-FXPIG_FOREX
  • The cross adds to Wednesday’s gains near the 0.8700 handle.
  • UK officials practically ruled out a deal next week.
  • House of Commons will debate Brexit motion on February 27.

The offered bias around the Sterling is helping EUR/GBP to advance to the area of daily highs in the 0.8700 neighbourhood.

EUR/GBP looks to Brexit

The European cross is up for the second session in a row today on the back of quite a volatile performance around the British Pound, always gyrating around the Brexit negotiations.

Speaking about the devil, the House of Commons will discuss a Brexit motion next week (February 27), although UK officials have already commented that a deal in the next days appears unlikely.

In Euroland, the single currency stays under pressure following poor prints from the manufacturing sector in both Germany and the euro area, where advanced PMIs are expected to submerge further into the contraction territory in February.

EUR/GBP key levels

The cross is gaining 0.06% at 0.8691 and a breakout of 0.8739 (21-day SMA) would aim for 0.8744 (10-day SMA) and finally 0.8840 (high Feb.14). On the flip side, the next support aligns at 0.8666 (low Feb.21) seconded by 0.8655 (low Nov.13 2018) and then 0.8616 (2019 low Jan.25).

Source: fxstreet


The offered bias around the Sterling is helping EUR/GBP to advance to the area of daily highs in the 0.8700 neighbourhood...

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EUR/USD struggles for direction

EURUSD-struggles_FOREX_FXPIG
  • The pair exchanges gains with losses in the 1.1330/40 band.
  • The greenback remains sidelined in the 96.60 region.
  • Advanced PMIs in Euroland, ECB minutes next on tap.

EUR/USD seems to have found some strong resistance in the area of weekly peaks in the 1.1330/40 band for the time being.

EUR/USD looks to data

Spot is trading within a tight range early in the European morning following yesterday’s doji-like performance and a sideline theme in the greenback following yesterday’s FOMC minutes.

In fact, the FOMC revealed its recent shift to a more patient stance was due to the growing uncertainty in the outlook, although further rate hikes should remain on the table as long as the economy keeps the solid pace.

Data wise in Euroland, February preliminary PMIs will grab all the attention later ahead of the publication of the ECB minutes. Across the Atlantic, the Philly Fed is due along with Durable Goods Orders, Existing Home Sales and weekly Initial Claims.

What to look for around EUR

The shared currency continues to look to developments from the US-China trade talks for near term direction as well as any headlines from the effervescence on the US-EU trade front. Today’s release of advanced PMIs should shed further light on the health of the fundamentals in the region amidst the current broad-based slowdown, although the likeliness that positive surprises could move the monetary policy dial of the ECB remains flat.

EUR/USD levels to watch

At the moment, the pair is losing 0.01% at 1.1334 and a break below 1.1308 (10-day SMA) would aim for 1.1234 (2019 low Feb.15) and finally 1.1215 (2018 low Nov.12). On the flip side, the next hurdle emerges at 1.1371 (high Feb.20) seconded by 1.1382 (55-day SMA) and then 1.1394 (100-day SMA).

Source: fxstreet

EUR/USD seems to have found some strong resistance in the area of weekly peaks in the 1.1330/40 band for the time being.EUR/USD looks to data...

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Forex Today:

Forex-today_aussie_Asia_FXPIG

Forex today was dominated by the ongoing Yuan upsurge and sharp moves in the Aussie-dollar, as the US-China trade deal expectations heightened ahead of the 2-day meeting between the top US diplomats and China’s Vice-Premier Liu in Washington, starting later today.  The Aussie dollar was a big mover, having risen to 0.7207 highs on stellar Australian jobs report before falling sharply below 0.7100 levels on Westpac’s RBA rate cut call and amid the latest headlines, citing that the Chinese Dalian port banned Australian coal imports. The Kiwi was also dragged lower sharply in tandem with its OZ neighbour, as the bears look to test the 0.68 handle. The Yuan eased-off 7-month tops against US counterpart, having sent the UD/CNY cross back above the 6.7000 level. The USD/JPY pair consolidated near 110.70, trapped in a tight range amid dismal Japanese manufacturing data and neutral FOMC minutes.

Among the related markets, the Asian equity markets traded with moderate gains, as markets await the outcome of the US-China trade talks. Meanwhile, both crude benchmarks kept its range near multi-month tops.  Gold prices on Comex extended the correction from YTD tops and hovered near 1340 levels.

Main Topics in Asia

WTI slips toward $57 as API reports surprise increase in crude stocks

Australia labor market stays solid in January, employment change blows past expectations

The risk of a no-deal Brexit has risen - UK's Home Secretary

Fed’s Daly: There's nothing on the radar that says US is slipping into recession

Fed’s Daly: Need patience on rates until inflation rises faster

China’s Foreign Min: China won't resort to Yuan depreciation for competitive purposes in trade

Scottish Govt Chief Economist: No deal Brexit sees Scottish GDP fall up to 7%

RBA to cut cash rate by 25bps in August and November this year - Westpac

Offshore Yuan hits fresh 7-month high against the US dollar

Sources: US and China are drafting multiple alternative MOUs on trade talks - Reuters

Australia's 10-year government bond now yields 60 basis points less than its US counterpart

USD/INR Technical Analysis: 100-day MA is again reversing the bounce

Key Focus Ahead

Today’s EUR macro calendar is an eventful one, with a flurry of flash manufacturing and services PMI reports from across the Euro area economies dropping in from 0815 GMT. The German and Eurozone PMI readings will be closely watched for fresh hints on the Eurozone economic outlook. From the UK docket, we have the public sector net borrowings data due at 0930 GMT. Also, of note remains the ECB January monetary policy meeting accounts due at 1230 GMT.

The NA session sees the US jobless claims, durable goods orders and Philly Fed manufacturing index, all releasing at once at 1330 GMT. At the same, the Canadian ADP jobs and wholesale sales data will be reported. From 1445 GMT, the traders will closely eye the US Markit manufacturing and services PMI reports and existing home sales data for fresh dollar trades.

The focus will also remain on the developments surrounding the Brexit issue, the US-China trade talks and the EIA weekly crude stocks data for fresh trading impetus.  

Besides, the speeches from the BOC Governor Poloz and RBA Governor Lowe will also remain in spotlight later in the American session.

EUR/USD picks up a bid ahead of Eurozone PMIs and ECB minutes

The bid tone around the common currency will likely strengthen further if the preliminary German and Eurozone PMI indices for February beat estimates, alleviating recession fears to some extent.

GBP/USD remains under pressure near 1.3050, Brexit, US data in spotlight

For now, developments surrounding Brexit and upcoming monthly prints of the US durable goods orders and manufacturing indices will be closely observed for fresh impulse.

Gold Technical Analysis: Pullback to ascending 5-day MA likely

On the 4-hour chart, the RSI has diverged in favor of the bears. Therefore, the yellow metal could fall back to the ascending 5-day moving average (MA) support, currently lined up $1,335.

Eurozone Feb PMI to be among the most closely watched figures today - ING

Analysts at the ING bank offer brief insights on what to expect from today’s Eurozone flash manufacturing and services PMI readings due at 0900 GMT.

US Durable Goods Preview: Shutdown reporting vs the trend

The US Census Bureau will issue its delayed Durable Goods report for December on Thursday February 21st at 8:30 am EST, 13:30 GMT.  New orders for durable goods are predicted to increase 1.7% in December following November’s 0.7% gain and the 0.8% rise in October.

Source: fxstreet

Forex today was dominated by the ongoing Yuan upsurge and sharp moves in the Aussie-dollar, as the US-China trade deal expectations heightened ahead of the 2-day meeting between the top...

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FOMC Minutes Preview: Major Banks expecting a reiteration of a dovish message

FOMC_Major-Banks_dovish_FXPIG_FOREX

Today, we have an all-important release of the Minutes of the Federal Open Market Committee (FOMC) January meeting, which is due at 1900GMT.

As we head closer to the release timings, the economists and researchers of major banks are expecting that the Fed minutes should reiterate an overall dovish message, after a range of Fed speakers have shown their support for patience, since the January meeting.

Barclays

“Look to the minutes for insights as to whether FOMC participants see the rate hike cycle as essentially complete or members still expect further rate hikes as part of the baseline outlook.”

“We expect the minutes to signal that the committee is prepared to release its plan for the end of the runoff of its balance sheet "soon", which we believe will come at the March meeting.”

Nordea Markets

“All eyes are on the Fed this week, when the meeting minutes of the big U-turn FOMC meeting are out on Wednesday.

“We look for clues on whether the Fed will be more concrete on a potential timing for the end of QT. For technical reasons, we know that quantitative tightening cannot run forever. The system probably needs at least USD 1,000bn in excess reserves, which could already be reached before the end of 2019 on our projections.”

“Consensus has moved towards an October stop to QT (Fed’s Brainard said that she favoured a late 2019 QT-end on Thursday), so the Fed will have to hint at an earlier stop than that to really surprise dovishly now. We don’t put a large probability on that. The earlier a QT stop, the worse a scenario for the USD, the better a scenario for risky assets. We wouldn’t bet on dovish surprises though.”

Danske Bank

“We will be interested to hear the different stances within the Fed on further hikes now it has hinted it is ‘patient’ about raising rates again. Furthermore, we will monitor any insights it might have on how it plans the balance sheet reduction.”

HSBC

“The release of FOMC’s 29-30 January meeting minutes should give investors a better read on how policymakers reached their decision to shift to a more “patient” approach. The minutes should also provide an update on the US Federal Reserve’s current policy framework review.”

Nomura

“We expect more clarity regarding the FOMC's plans for balance sheet normalization from the minutes of the January FOMC meeting. The minutes from the two preceding meetings - November and December - included important sections on the balance sheet.”

“We believe the corresponding section of the January minutes will confirm the Committee's plans to end balance sheet normalization by end-2019.”

“The Committee has been clear that rates are on hold for the time being. A key issue is the set of circumstances that would drive the FOMC to raise rates.”

“It will also be interesting to see if there was discussion of what would drive the Committee to lower interest rates.”

TD Securities

“Minutes from the January FOMC meeting will be published at 14:00 ET. Given the range of speakers since the January meeting who support "patience," the Fed minutes should reiterate a dovish message overall — but could risk highlighting some disagreements on the FOMC.”

Source: fxstreet

As we head closer to the release timings, the economists and researchers of major banks are expecting that the Fed minutes should reiterate an overall dovish message, after a range of Fed speakers have shown their support for patience, since the January meeting...

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EUR/USD: Range preserved

EURUSD-range-preserved_FOREX_FXPIG

According to Karen Jones, analyst at Commerzbank, for the EUR/USD pair, recovery from here is currently being seen and this preserves the range and leaves the 1.1520 200 day ma back in the picture.

Key Quotes

“It has managed to regain 1.1342 (last weeks high) and this should alleviate immediate downside pressure. Below 1.1216 will target the 61.8% Fibonacci retracement of the 2017- 18 advance at 1.1186.”

“Above the 200 day ma will re-target the 1.1623 mid October high and slightly longer term we look for gains to 1.1702, the 55 week ma.”

Long term trend (1-3 months): A rise above the recent high at 1.1623 would confirm a trend reversal and put the 55 week moving average at 1.1723 back on the cards.”

Source: fxstreet

For the EUR/USD pair, recovery from here is currently being seen and this preserves the range and leaves the 1.1520 200 day ma back in the picture...

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BoJ’s Kuroda:

BoJ-Kuroda_BoJ-policy_Forex_FXPIG

The Bank of Japan (BoJ) Kuroda is on out on the wires now, via Reuters, making a parliamentary appearance again today.

On Tuesday, Kuroda sparked a sharp Yen sell-off across the board after he said that the BoJ is ready to ease further if there is any difficulty in achieving the 2% price target.

Main Headlines:

Currency rate is decided by various factors.

No one thing decides currency levels.

Yield spreads can affect currency moves.

Doesn't believe current BoJ policy is weakening the Yen.

BoJ policy doesn't target currency levels.

BoJ policy is aimed at stabilising prices.

Believes that this view is understood by the US.

Source:fxstreet.com

The Bank of Japan (BoJ) Kuroda is on out on the wires now, via Reuters, making a parliamentary appearance again today.On Tuesday, Kuroda sparked a sharp Yen sell-off across the board after he said that the BoJ is ready to ease further if there is any difficulty in achieving the 2% price target...

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Fed’s Mester:

fed-mester-balance-sheet-decision-forex-FXPIG

More color may come Wednesday as FOMC minutes released

Cleveland Fed President Loretta Mester on Tuesday became the latest U.S. central banker to support ending the balance sheet run-off this year.

The Fed has been allowing as much as $50 billion per month of maturing securities to roll off its balance sheet. As a result, since 2017, the overall size of the Fed’s balance sheet has fallen to $4.1 trillion from $4.5 trillion.

After her speech in Newark, Del., Mester backed ending the balance sheet run-off this year, according to Bloomberg. Mester also said there was no need to “taper” the balance sheet runoff before halting the program.

At his press conference following the Federal Open Market Committee meeting last month, Fed Chairman Jerome Powell announced the U.S. central bank would not return to a “small” balance sheet. Powell also suggested the balance sheet would be higher than previously thought.

Last week, Fed Governor Lael Brainard said what Powell had only hinted at -- that the balance sheet shrinkage program may end this year.

Mester’s comments Tuesday shows she is also on board with Powell’s plan, said Lewis Alexander, chief U.S. economist at Nomura Securities.

“I assume that Powell would not have been as explicit in the press conference if there was not some sort of broad consensus on those points,” Alexander said.

Alexander said he expected more “color” on the balance sheet in the minutes of the January FOMC meeting released Wednesday at 2 p.m. Eastern.

The Fed has still not decided on what the ultimate size of the amount of bank reserves held on its balance sheet.

That could be decided as soon as the FOMC’s next meeting in March, based on Mester’s comments, Alexander said.

Alexander said reserves are likely to end up at $1.1 trillion from the current level of $1.6 trillion. That suggests a total balance sheet of around $3.6 trillion, as the balance sheet also includes currency in circulation and the Treasury’s cash balance.

Yield on the 10-year Treasury notes TMUBMUSD10Y, -0.74%   slipped a bit to 2.646% on Tuesday, well below the 52-week high of 3.232% hit in early November.

Source: marketwatch

Cleveland Fed President Loretta Mester on Tuesday became the latest U.S. central banker to support ending the balance sheet run-off this year...

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Gold bulls seeking out a run

Gold-bulls-seeking-out-a-run_Forex_FXPI
  • Spot gold has bounced off trend line support and is at 10-month highs.
  • Gold looks set on strong overhead resistance up at $1,360/75/oz.
  • DXY on the way down after charting a key day reversal on Friday and extending losses on Tuesday as North American traders join the party.

Gold, as a safe haven asset, (the other currency), has been raising the market's eyebrows of late and its rally is somewhat concerning, and not just to the bears. Often, when the price of gold rallies, it is a sign that markets are on alert, fearing the worst. We have global banks downshifting gears, from the Fed to the ECB and the RBA all showing their concerns for domestic and global growth. All of their concerns have one thing in common and that is China.

The world's second-largest economy's growth is expected to slow to 6.3 percent this year, which would be the weakest in 29 years, from an expected 6.6 percent in 2018, according to a median forecast of 85 economists Reuters recently polled. There has been an underbelly of bearishness brewing for some months, and when the Fed suddenly flagged such concerns and switch to neutral, gold started to perk up, extending the upside recovery from its late summer 2018 lows down at $1,160oz.

Sino and US trade wars were an additional factor that had been supporting safe haven assets, including the greenback, but now that there is growing optimism over talks that have been taking place between key officials on both sides of the Pacific, the dollar is falling yet gold keeps rising which could be a fundamental shift taking place and a potential buy the rumour sell the fact play in the stock markets - This week should offer more updates on how those talks are going as Beijing delegates meet with US officials in Washington to iron something more concrete out - Many analysts are expecting an extension of Trump's tariff deadline that is due to kick in at the start of next month,  a sure positive to risk for the near term at least.

For the meanwhile, traders will also pay close attention to this week's FOMC minutes that will help provide additional context to the Fed's recent dovishness.

"At the same time, the yellow metal could be set to receive substantial CTA buying, as prices remain anchored to key trigger levels that would imply massive length,"

analysts at TD Securities argued.

DXY on the way down

US Dollar Index charted a key day reversal on Friday coupled with a divergence of the daily RSI. If the dollar continues to slide, then the only way is up for the precious metal. In the DXY, the 200-day ma at 95.50 is a key level to watch for on the downside.

Gold levels

Analysts at Commerzbank explained that the gold market has eroded the 1326.17 May high and in doing so has broken into 10-month highs:

"We continue to target the 2015-2019 resistance line at 1360. The bull flag offers an additional target of 1396.33. Provided that the market holds over 1276.56, the early January low, immediate upside pressure will be preserved. Initial support is the accelerated uptrend at 1305. Support at 1276.56 guards 1246.17 the 200-day moving average. Here we would expect to see the market stabilise and recover if reached at all."
"A fall below the 1243.55 October 2018 peak would target the 1180.84 September low and would put the 1160.24 August low on the cards,"

the analysts wrote to the contrary.

Source: fxstreet

Gold, as a safe haven asset, (the other currency), has been raising the market's eyebrows of late and its rally is somewhat concerning, and not just to the bears. Often, when the price of gold rallies, it is a sign that markets are on alert, fearing the...

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EUR/USD returns to 1.1300

  • The pair exchanges gains with losses around the 1.1300 handle.
  • EMU Economic Sentiment improved to -16.6 in February.
  • German Current Conditions dropped to 15.0 this month.

After a brief adventure to daily highs beyond 1.1320, EUR/USD has now receded to the 1.1300 neighbourhood in the wake of mixed results from the ZEW Survey.

EUR/USD fades the spike to 1.1320/25

The European currency has given away part of its earlier gains after the ZEW Survey came in on a mixed tone for the current month.

In fact, Economic Sentiment in Germany improved a tad to -13.4 while Current Conditions dropped to 15.0, missing consensus. On the broader euro area, the Economic Sentiment also surprised to the upside, coming in at -16.6.

Earlier in the day, EMU Current Account shrunk at a seasonally adjusted €16.2 billion in December from €22.7 billion in the previous month.

Spot keeps the trade within the familiar range for the time being, always looking to headlines from the US-China trade talks for near term direction.

What to look for around EUR

US-China trade talks will be in centre stage this week and are expected to drive the sentiment in the risk-associated complex. Following recent progress in earlier talks, market participants are now looking at the possibility that both parties could clinch a deal sooner than later. On another direction, EUR should closely follow comments from ECB members regarding the ongoing slowdown in the euro bloc and potential guidance from the ECB in the next months, at a time when speculations that the central bank could refrain from acting on rates this year remain on the rise.

EUR/USD levels to watch

At the moment, the pair is losing 0.02% at 1.1305 and a break below 1.1234 (2019 low Feb.15) would target 1.1215 (2018 low Nov.12) en route to 1.1118 (monthly low Jun.20 2017). On the upside, the next hurdle is located at 1.1339 (high Feb.18) seconded by 1.1356 (23.6% Fibo of the September-November drop) and then 1.1399 (100-day SMA).

Source: fxstreet

After a brief adventure to daily highs beyond 1.1320, EUR/USD has now receded to the 1.1300 neighbourhood in the wake of mixed results from the ZEW Survey...

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EUR/USD eases from 3-day highs

EURUSD-eases_Forex_FXPIG
  • The offered bias in the greenback leads the recovery in spot.
  • US-China trade talks due to resume later in the week.
  • Risk-on sentiment continues to prevail in the global markets.

EUR/USD keeps the positive performance well and sound at the beginning of the week and is now navigating the upper end of the range in the 1.1330/35 band, or new session highs.

EUR/USD looks to trade, ECB

Optimism on an eventual deal in the US-China trade negotiations remains on the rise and keeps the sentiment in the risk-associated universe well propped up for the time being.

Further support for the riskier assets comeS from the markets’ view than some G10 central banks could postpone any intentions of start some sort of tightening in the next months, all against the backdrop of a generalized perception of a global slowdown.

Data wise in Euroland, the ZEW survey is coming up tomorrow, advanced February PMIs on Thursday as well as the publication of ECB minutes. Across the pond, the FOMC minutes are expected on Wednesday.

What to look for around EUR

US-China trade talks will be in centre stage this week and are expected to sustain the improved mood in the riskier assets, as markets are looking at the possibility that both parties could clinch a deal sooner than later. On another direction, EUR should closely follow comments from ECB members regarding the ongoing slowdown in the euro bloc and potential guidance from the ECB in the next months, at a time when speculations that the central bank could refrain from acting on rates this year remain on the rise.

EUR/USD levels to watch

At the moment, the pair is gaining 0.29% at 1.1323 facing the next hurdle at 1.1333 (high Feb.18) seconded by 1.1356 (23.6% Fibo of the September-November drop) and then 1.1403 (100-day SMA). On the other hand, a break below 1.1248 (2019 low Feb.14) would target 1.1215 (2018 low Nov.12) en route to 1.1118 (monthly low Jun.20 2017).

Source: fxstreet

EUR/USD keeps the positive performance well and sound at the beginning of the week and is now navigating the upper end of the range in the 1.1330/35 band, or new session highs...

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Gold bulls take a breather

gold_breath_Forex_FXPIG

•  The prevalent USD selling bias helped gain traction for the third straight session.
•  US-China trade optimism-led risk-on mood seemed to keep a lid on further gains.

•  This week’s release of FOMC meeting minutes to provide a fresh directional impetus.

Gold held on to its positive tone at the start of a new trading week, albeit trimmed a part of its early gains back closer to multi-month tops.

The precious metal built on last week's goodish up-move from the $1300 neighbourhood and continued gaining positive traction for the third consecutive session amid the prevalent US Dollar selling bias.

The greenback held on the defensive after Both the US and China reported progress in trade negotiations last week and was seen as one of the key factors benefitting the dollar-denominated commodity.

Meanwhile, dovish Fed expectations remained supportive of the momentum, though the prevalent risk-on mood seemed to dampen the precious metal's safe-haven demand and kept a lid on any strong follow-through.

The USD price dynamics might continue to act as an exclusive driver of the commodity’s move on Monday amid absent relevant market moving economic releases on the back of the Presidents' Day holiday in the US.

Moving ahead, this week's important release of the FOMC meeting minutes might provide fresh hints on the Fed's 2019 rate hike path and eventually provide some fresh directional impetus for the non-yielding yellow metal.

Technical levels to watch

On a sustained move beyond multi-month tops, around the $1326 area, the commodity is likely to accelerate the up-move towards $1333-35 intermediate supply zone en-route the next major hurdle near the $1340-41 region. On the flip side, the $1317 level now seems to protect the immediate downside and is followed by support near $1313 area, which if broken might accelerate the fall towards $1305 horizontal support.

Source:fxstreet

Gold held on to its positive tone at the start of a new trading week, albeit trimmed a part of its early gains back closer to multi-month tops. The precious metal built on last week's ...

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