Suggestion FXTM Daily Market Analysis

Daily Market Analysis

Daily Technical Outlook - August 15-

EUR/USD

The Euro held the hourly support zone of 1.1120/40, and for the time being, prices keep fighting for another extension to the upside. Meanwhile, the recent rally attempt faded around 1.1200 psychological barrier, which keeps the short-term outlook neutral in this pair.

In the meantime, another attempt to overtake 1.1200 psychological barrier can be seen in the beginning of this week and a daily close above 1.1230 peak in the coming days will bring an additional positive signal for the future price action in the pair, and can expose 1.1300/20 zone. In the opposite, bulls are likely to protect 1.1045 low as it represents the bullish pivot in the hourly chart and only a clear break below this level, will put the single currency under pressure again.

Support: 1.1138-1.1115-1.1045

Resistance: 1.1230-1.1290-1.1320




Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Daily Technical Outlook - August 15-

GBP/USD

The Sterling turned sharply lower on Friday despite weaker retail sales data from the U.S.

The pair jumped above 1.3000 near-term barrier before to fail below 1.3095 peak and precisely at 1.3035 level, which represents 50% retracement of the recent drop in the hourly chart. Looking at the week ahead expected price action, we believe that the British pound may challenge 1.2875/50 support zone in the coming days and we will focus on inflation and employment change figures from the U.K later this week to confirm the next wave in this pair.

In the near-term, the pair is likely to remain capped below 1.3030/40 resistance zone and only a clear breakout above those levels, will warn about a potential larger correction to the upside.

While in the daily chart, the British pound remain bearish, consequently, recovery attempts are set to be short-lived below 1.3095 peak.

Support: 1.2900-1.2875-1.2850

Resistance: 1.2945-1.3036-1.3095




Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Daily Technical Outlook - August 15-

GOLD

Gold failed to overtake 1357 hourly resistance for the second time in a row and the yellow metal showed a strong negative rejection candle on Friday. As of now, we can see that momentum indicators are beginning to turn lower, which warns about a potential corrective wave during the beginning of this week.

Technically, a re-test of the yearly high around 1375 level still possible. However, gold has shown three consecutive lower highs (1375-1367-1357) from its yearly peak and we will focus on a daily close below $1328 support to confirm a bearish reversal in the next hours.

In the flipside, a break above 1367 zone will bring the bullish outlook in the short-term and should expose $1400 psychological barrier in the coming weeks.

To summarize, the positive trend started to show some signs of weakness in the hourly chart and traders should not be surprised if gold extend its losses soon as far as 1357 peak remain intact.

Support: 1328-1320-1312

Resistance: 1342-1357-1367





Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Daily Technical Outlook - August 15-

AUD/USD

The pair lost some of its bullish momentum by the end of last week as bears managed to push prices below 0.7700 handle.

Looking at the recent price action, the Aussie found strong resistance after reaching the daily resistance of 0.7760 , which is considered as the last barrier before to reach the yearly high of 0.7830 and by now, a deeper correction in the direction of 0.7625-0.7595 support zone remain possible.

This zone coincide with the 50-61.8% retracement of the entire bullish cycle that began from 0.7495 low, and therefore we may see some buyers around it.

Actually, we maintain the positive outlook for the pair in the daily chart and only a close below 0.7495 level, will confirm a bearish reversal. While in the hourly chart, the trend has turned neutral and prices should break above 0.7720 resistance to re-gain its strength.

Support: 0.7625-0.7595-0.7495

Resistance: 0.7720-0.7760-0.7830





Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Daily Technical Outlook - August 15-

USD/CAD

The pair has become strongly bearish after breaking below 1.3000 psychological support.

The pair has erased the entire gains posted after the recent NFP release, reinforcing the bearish outlook in the near-term. Actually, 1.3000 zone turned resistance in the hourly chart and as far as this level holds, we believe that the pair has found a temporary top at 1.3250 and should see further weakness in the week ahead, to reach as low as 1.2875/50 levels. In the other side, only a break above 1.3085 peak will cancel this negative view and should push prices into a larger correction to the upside.

Otherwise, USD/CAD will remain under pressure in the short-term.

Support: 1.2900-1.2875-1.2850

Resistance: 1.3000-1.3062-1.3085






Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Daily Technical Outlook - August 15-

USD/JPY

The pair found support around 101.00 level and rallied towards 102.30 level before to retreat sharply lower after the Greenback weakened across the board as retail sales data sank in July.

Looking at the hourly chart, prices managed to break above 102.00 handle but failed just few pips away from 102.70/80 resistance zone, which keeps the bearish structure intact in this pair. In the daily chart, the pair keep printing lower highs/ lower lows since 114.90 peak and consequently the upside potential is likely to remain limited.

For the time being, the pair may continue its path in the direction of 100.00 psychological support in the coming days especially if we see a 4hour close below 100.85 short-term support.

Support: 101.00-100.85-100.50

Resistance: 102.30-102.80-103.55






Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Daily Technical Outlook - August 15-

Dollar index

After bouncing from 95.00 psychological support, the U.S Dollar found strong resistance at the 61.8% Fibonacci retracement of the recent drop seen from 97.50 peak, which keep our view neutral in the near-term.

From a technical standpoint, we can see that the Dollar has failed to break above 95.90/96.00 hourly resistance for the third time this week, which signals a clear slowdown in the bullish momentum in the hourly chart.

In addition, the index has closed in the negative territory. Therefore, another re-test of 95.00 support remain possible during the week ahead while a daily close above 95.90/96.00 resistance area will confirm another extension to the upside.

Finally, the focus will be on inflation data from the U.S tomorrow, followed by the FOMC meeting minutes on Wednesday.

Support: 95.00-94.75-94.50

Resistance: 95.90-96.20-96.80







Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Sterling pressured as UK CPI looms



The rising expectations of further monetary stimulus from the Bank of England to quell the Brexit chaos has enticed bears to install repeated rounds of selling consequently leaving the Sterling vulnerable to heavy losses. Sterling remains under immense pressure with weakness becoming a dominant theme as uncertainty haunts investor attraction towards the currency. Sentiment is firmly bearish towards the pound, and the awful combination of soft domestic data coupled with heightened hopes of the BoE cutting UK rates to near zero should ensure prices remain depressed for an extended period.

Investors may direct their attention towards Tuesday’s CPI report for July which could offer further clarity on how the UK economy is faring post-Brexit. Inflation has been notoriously static in the UK and the pound could be left open to further losses if the pending CPI follows this negative pattern. From a technical standpoint, the GBPUSD is bearish as there have been consistently lower lows and lower highs. A decisive break down below 1.2900 could open a path towards 1.2800.









Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Global stocks driven by sentiment

Stock markets were elevated by oil’s resurgence on Monday with most major arena’s hovering around yearly highs as the renewed risk appetite attracted investors to riskier assets. This up move was short-lived on Tuesday as most Asian markets descended back into losses following Yen’s resurgence which weighed heavily on the Nikkei. Although European markets started the week on a solid footing, the combination of cooling oil prices and risk aversion could drag European stocks lower. The pattern of stocks wildly swinging between losses and gains is becoming a theme in the markets which raises questions over the sustainability of the stock market rally. It is becoming increasingly clear that the engine which is powering the impressive gains is sentiment, rather than fundamentals, and this should force investors to remain diligent.

Japan Q2 GDP nearly stalls

Sentiment towards the Japanese economy was dealt a frightening blow on Monday following the soft second quarter GDP of 0.2% which rekindled concerns over the health of the world’s third largest economy. Weak consumer spending and falling exports amid Yen’s resurgence heavily eroded Japan’s GDP while the ongoing global uncertainties continued to expose the nation to downside risks. With inflation following a tepid path, expectations have already mounted over the Bank of Japan implementing further monetary stimulus to revive economic growth.

The Yen could appreciate further if risk aversion from global growth concerns encourages bulls to pounce. From a technical standpoint, the USDJPY is bearish on the daily timeframe and a breakdown below 100.00 could open a path towards 99.00.










Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

WTI rebound towards $46

WTI Crude displayed an incredible rebound during trading on Monday with prices lurching towards $46 as expectations over a potential OPEC production freeze deal encouraged bulls to attack. Oil prices are becoming increasingly sensitive to production freeze talks with bulls exploited the sharp speculative boosts in prices. Although the current upside gains are impressive, WTI still remains fundamentally bearish with the oversupply concerns encouraging bears to drag prices lower. If the informal meeting in September concludes without a deal in place, then WTI Crude could trade towards $35. From a technical standpoint, bears need to break below $42 for a path towards $40.

Commodity spotlight – Gold

Gold has been placed on a chaotic roller coaster ride with prices sharply swinging between losses and gains as expectations fluctuate over the Fed raising US interest rates in 2016. The metal is engaged in a fierce tug of war with risk aversion keeping prices buoyed while Dollar’s resurgence hammers prices lower. Gold is searching for direction which could be provided this week ahead of the influx of US economic data. From a technical standpoint, bulls need to keep above $1315 to maintain the daily bullish uptrend.











Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Yen surges, Cable struggling near post Brexit lows




Yen attempting to breach the 100 psychological level against U.S. dollar

It seems that the record highs for Wall Street on Monday were not enough to boost risk appetite in Asia. The Yen is outperforming all major currencies today, strengthening by more than 1% against the dollar as investors continued to reduce their bets for a Fed rate hike in 2016. USDJPY is trading at 100.16 at the time of writing the report, this is the lowest level in 5 weeks and there is likely to be a high level of interest in buying the pair at current levels. However, a break below 99.90 could lead to triggering stop losses and send the pair even lower towards 99.08 (24-June low). Negative interest rates and ETF’s buying do not seem helping BoJ to drive the currency lower, so let’s see how creative they become in their next monetary policy meeting in September 21.

Pound recovering slightly, sentiments remain negative

Cable rebounded slightly on Tuesday, retracing some of Monday’s losses against the U.S. currency after approaching post-Brexit lows on the back of falling housing prices. According to Rightmove, average asking price fell by £3,602 in August, or 1.2% compared to July. Although a drop in property prices is common in summer time, traders are just finding excuses to short the pound.

GBP has been the weakest major currency in August, falling by more than 2% against the dollar and 3% against the Euro. Sentiment remain very negative, and this was clearly reflected in U.S. CFTC data showing hedge funds increased their bets on the falling pound with net short positions reaching a record high of 90,082 contracts in the week to August 9. Although risks are skewed to the downside, it might be very bumpy if speculators decided to take profits, suggesting that a recovery could be seen before trending lower again.

Hard data will start flowing from the U.K. with first employment, retail sales, and inflation reports post the referendum vote. Softer than expected readings will intensify fears that more QE will be required, which could send U.K. gilt yields to new record lows, adding more pressure on the weak sterling.







Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

UK inflation jumps to levels not seen since November 2014




Market headlines are continuing to focus on the UK economy after data earlier today showed that inflation accelerated in July with CPI rising to an annualised 0.6%.

This week represents the first true week of economic data from the United Kingdom following the unexpected conclusion to the EU referendum vote, but a few shocks are already being heard after the news that import prices increased at the strongest rate since 2011. The news that import prices have increased by such a staggering amount shows that the collapse in the Sterling is already having an impact on imports and should feed through and lift inflationary pressures over the upcoming months. There is now an emergence of expectations that headline inflation could overshoot the Bank of England’s (BoE) 2% target over the coming quarters, which would provide a dilemma for the BoE as the central bank is being forced into an easing bias as the UK growth outlook weakens. Usually when there is a risk that inflation could exceed a central bank target the respective central bank would find themselves under pressure to ease pressure by lifting interest rates higher, however this not an option for the BoE who are having to ease policy in the aftermath of the EU referendum outcome.

While the GBPUSD has moved higher throughout trading on Tuesday, this is more likely to be a short correction following a recent period of significant losses. The gains in the GBPUSD are likely to find themselves capped somewhere between 1.3020-50 at this point in time, while the risks for the pair remained skewed to the downside over the future as the UK economic outlook continues to deteriorate. The Sterling was unable to benefit from substantial weakness in the Dollar since the end of last week, which points out that the overall buying sentiment towards the British Pound remains very weak.

Dollar slump aiding EURUSD

Dollar weakness following a heavily disappointing US retail sales release and another resumption of crumbling US interest rate expectations have resulted in the Dollar drifting sharply lower against the majority of its trading partners. The crumbling of the USD has catapulted the Eurodollar to its highest level since late June at 1.1275. As US interest rates continue to be pushed back the Eurodollar can continue to drive higher, although any move between 1.1300 and 1.1320 could expose an over-extension and trigger the alert of sellers.

Expectations over the US Federal Reserve being able to raise US interest rates in 2016 seem to be being pushed back by the minute, while investors will be awaiting for further clues around the intentions of the Federal Reserve in 2016 when the US central bank releases its latest meeting minutes tomorrow. Although the Federal Reserve are trying to maintain a public stance towards raising US interest rates, you just have to monitor the ongoing resumption of crumbling rate expectations to gain an understanding that investors are not confident at all that the Federal Reserve will realistically carry through with the pledge to raise interest rates.

Japanese Yen remains trader’s choice

The Bank of Japan (BoJ) are likely to wake up to concerns on Wednesday morning after the USDJPY fell below the highly psychological 100 level just moments ago. There is a lot of speculation that the BoJ are ready to intervene in the markets as the USDJPY approaches 100, but the real concern for the central bank must be that traders are constantly attracted towards the Yen despite everyone knowing that a strong Yen is the complete opposite to what the BoJ desires. The correlation between such consistent buying demand for the Yen and equity markets is very unusual and in fact, the relationship should be moving in the opposite direction.

Such consistent buying demand for the Yen just shows that investors are still attracted towards the currency as a safe-haven in light of the uncertain external environment that is weighing on global growth prospects. This is also going to be a problem for the BoJ if the central bank does press the panic button on aggressive stimulus in an attempt to weaken the Yen, because traders could reject the stimulus and continue backing the currency as a safety asset.




Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

NZD lifts on dairy boost




The New Zealand dollar continues to find traction in the global market place as the USD struggles to gain and as economic conditions give of a mixed signal for the NZ economy. Recent data from the Global Dairy Trade Index show a rise of 12.7% (6.6% prior) which will be welcome news to the primary industry based economy. After a spate of recent low returns and falling dairy prices this will be welcome news as the dairy industry is the number one export for the NZ economy. This comes at an interesting time as the RBNZ has recently cut interest rates as well in attempt to help the economy and cause the dollar to shift lower. It will now be interesting to see how the market not only reacts to the dairy boost, but if expectations around inflation also start to lift, which is something the RBNZ has been keen to see and criticized on recently.

The NZDUSD continues to be a big trade for many, and it's not expectation with all the volatility as of late in the marketplace. Once again the NZDUSD has pushed up and just come up short before resistance at 0.7311 and we may continue to see the market look to push harder on the charts. Recent drops have also lacked momentum and support at 0.7163, has so far looked lacklustre when it comes to volatility and bearish aggression. For myself the trend is still your friend and with the 20 day and 50 day moving average all giving of bullish signals it may be a case of seeing how high the NZDUSD can run in the short term, before markets get a little spooked and look to take profit.

The EURUSD continues to find traction on the charts despite the Brexit shock that sent waves across the markets. German economic sentiment was low as it came in at 0.5 (exp 1.9), but at the same time this was a large lift after the previous reading of -6.8. I would expect this to continue to rise as markets stabilise regarding the Brexit and the shock factor wears off and it becomes a negotiation process that markets will have to wait for two years for. US core CPI has also had an impact on the EURUSD today as it came in weaker than expected (0.1% m/m) giving a boost to the Euro against the dollar. The US CPI data will be a little concerning for the FED as it looks to boost inflation in the medium to long term.

For the EURUSD it was the bulls that took charge, but they were pushed back sharply at the trend line on the daily chart which has been in play for a number of months; first acting to support the bulls against the bears and now stopping bullish momentum getting out of control. I would expect that this trend will continue to act as resistance for bullish movements higher, but in the event of breakthrough it could also return to acting as dynamic support. Support however for further falls can be found at 1.1154 but is looking unlikely unless we see a strong showing of data from the USA.







Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Dollar sensitivity seizes centre stage




The Dollar displayed extreme signs of sensitivity on Tuesday with prices left vulnerable to heavy losses as expectations fluctuated over the Federal Reserve raising US interest rates in 2016. Conflicting data such as the strong NFP and poor retails sales have placed the Dollar in a fierce tug of war with investor anxiety mounting ahead of Wednesday’s FOMC meeting minutes. Although US CPI for July remained unchanged at 0%, hawkish comments from the New York Federal Reserve President William Dudley on the possibility of a September hike successfully elevated the Dollar higher. With Dollar sensitivity becoming a dominant theme, further explosive movements could be expected ahead of September’s FOMC meeting.

Investors may direct their attention towards the FOMC meeting minutes which could provide some direction on when the Fed may break the trend of central bank caution by raising US rates. In July financial markets were offered a breath of fresh air from the hawkish statement which amplified expectations over the Fed taking action. The central bank acknowledged the stabilisation of US labour while domestic economic activity expanded at a moderate pace. If Wednesday’s minutes illustrate a similar stance, then Dollar bulls could be provided a lifeline to install a heavy round of buying.

From a technical standpoint, the Dollar Index is turning bearish on the daily timeframe as there have been lower lows and lower highs. Prices are trading below both the 20 and 50 SMA while the MACD has crossed to the downside. Previous support around 95.50 could transform into a resistance which could encourage a steep decline back towards 94.00.






Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Sterling on standby ahead of Employment data




Sterling bulls were installed with inspiration during trading on Tuesday following July’s positive CPI of 0.6% which reduced some concerns over the health of the UK economy. Although the CPI figure was the highest seen since November 2014, the eye-catcher was the shocking 6.5% rise in imports which was the most seen since 2011. Sterling vulnerability is becoming a recurrent theme with concerns potentially elevating in the coming months as the weaker currency feeds into higher import prices.

Investors may direct their attention towards the UK employment report which could offer some clarity on how the Brexit may have impacted UK employment. If the release displays a decline in employment and earnings post Brexit then the Sterling could be left vulnerable to further losses. Despite the rise in July’s CPI, sentiment still remains somewhat bearish towards the Sterling with further declines expected as speculations mount over the BoE cutting UK rates to near zero in 2016. With uncertainty still haunting investor attraction towards the pound, most upside gains could be capped.

The Sterling/Dollar surged ferociously towards 1.3050 on Tuesday and this has nothing to do with an improved sentiment towards the Sterling but Dollar weakness. This relief rally could entice bears to attack the pair with the divergence in monetary policy between the Fed and BoE sending the currency lower. From a technical standpoint, previous support at 1.3100 could act as a dynamic resistance that encourages sellers to send the GBPUSD lower towards 1.2900.










Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

WTI breaks above $46

WTI Crude has surged sharply on with prices cutting above $46 as optimism grew over a potential production freeze deal in September’s unofficial OPEC meeting. Oil is becoming highly sensitive to production freeze expectations with talks of freezes producing sharp speculative boosts in oil prices. Although the current upside gains could be commended, the fundamentals of oversupply still linger in the background and this questions the sustainability of the current rally. Concerns over the excessive oversupply remain elevated while fears of a decline in demand continue to weigh on oil prices. Crude oil inventories data will be released on Wednesday and if such displays a further build up, then WTI could be open to steep losses. As long as the fundamentals of over oversupply and soft demand are presents, bears have a stable foundation to install repeated round of selling.


Gold searches for direction

Gold displayed erratic characteristics on Tuesday with prices violently vibrating between losses and gains as expectations continued to swing over the Fed raising US interest rates in 2016. The precious metal lurched to the highs $1357.90 on Tuesday before declining back lower following hawkish comments from New York Federal Reserve President William Dudley on the possibility of a September hike. Gold remains trapped in a fierce tug of war and Wednesday’s FOMC minutes could provide the metal some direction. Risk aversion has kept the metal buoyed but US rate hike expectations continue to pressure prices lower. From a technical standpoint, bulls need to keep above $1315 to maintain the daily bullish uptrend.







Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Subdued reaction following UK employment claims




There is a subdued reaction following the release of the UK employment claims moments ago where the claimant count unexpectedly fell by 8,600 and the UK unemployment rate remained steady at 4.9% for the month of July, which contradicts expectations that the EU referendum outcome would hit the domestic labour market. It does need to be taken into account that this week represents the first real week of economic data from the UK following the EU referendum outcome, therefore it is still going to be difficult to truly access what impact the Brexit result has had on the UK economy at this stage. To be honest, it is likely going to require a few more months to access how the vote is impacting UK businesses hiring on a consistent basis. A dramatic decline in the Sterling is already feeding through to increase import costs, but economists needs to continue analysing business confidence readings to then search for a correlation that should in theory lead to a decline in UK job vacancies.

Investors will now turn their attention towards the release of the latest FOMC Minutes on Wednesday evening. The Dollar is gradually attempting to recover its momentum after New York Federal Reserve President William Dudley made headlines on Tuesday by suggesting that a US interest rate rise could occur as early as September. These comments fit the ongoing narrative over the Federal Reserve wanting to maintain a public stance towards raising US interest rates in 2016, however you just need to monitor the ongoing reversal of interest rate expectations to understand that there is very little confidence from investors that the Federal Reserve will actually carry through with their intention to raise interest rates this year.







Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

FOMC minutes send mixed message




FOMC was the main news for the day today, and it seemed a rather weak message from the Fed which was unusual for the market, but it sent the dollar drifting lower as a result. So far the labour market has strengthened and retail sales have been relatively stronger than anticipated, which has been strong positives for the US market. The Fed was also quick to note that the labour market was approaching maximum employment conditions, which has always been a large policy for the Fed since 2008 when the market collapsed in the wake of the financial crisis. However, the elephant in the room still remains, and that is inflation, which has remained weaker than expected in the US market and has so far held back any increase in interest rates. While the Fed has been advocating further interest rate rises and the possibility of one in September, it seems unlikely that it will happen if inflation continues to remain deflated and below the forecasted levels set out by the Fed.

For the S&P 500 it was a case of a brief drop in the market in the back of the FOMC minutes, but it looked to recover during the course of the day as the dovish tone that came out of the FOMC helped drive further bets that they made hold of rate rises during September. The 50 day moving average also was acting as dynamic support for the S&P and it will be one to watch when it comes to market movements in the coming week to see if it can contain further drops. For now any further highs will come under pressure at 2185 which is looking like a strong level of resistance in a very careful market as it looks to push higher highs. However bullish momentum has been strong on the H1 and I would look to watch momentum there for indicators for further rises and to see if there is enough to actually crack through resistance.

Oil was also the other surprise in the market as it looked to buck the three week trend and showed a drawdown in oil inventories of -2.15M barrels. There is anticipation that this will continue in the coming season as gasoline demand picks up, and this will obviously weigh on the oil inventory reading as we start to move towards winter. Oil markets are likely to find further pressure off-shore eventually, but no one is currently looking to cut supply as global oil consumption forecasts are barely moving and markets are still overstocked when it comes to supply.

On the charts oil has been looking very bullish in the lead up to today's report as the USD weakness has also helped prop up prices. Previous movements on the H1 had been supported by 20 period moving average which acted as dynamic support. A brief breakdown of the volatility today saw it touch the 50 period moving average before being forced back. This pullback shows that bullish momentum is still very much strong in the market and the trend is very much your friend until we see a total breakdown of these key moving averages on the H1.








Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

Greenback slide resumes on disappointing Fed minutes; Japan’s verbal intervention falling on deaf ears



Dollar bulls were clearly uninspired by July’s Federal Reserve’s minutes released on Wednesday as participants remained divided over when to move interest rates.

According to the minutes, “Some participants viewed recent economic developments as indicating that labor market conditions were at or close to those consistent with maximum employment” suggesting that one of the Fed’s mandate is being met and May’s employment report was just an anomaly. However on price stability, the minutes said “Inflation continued to run below the Committee’s 2%longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports.” A justification that will continue to be used against rising rates. Meanwhile all members seemed to have agreed that Brexit is no longer creating an imminent threat to the U.S. economy.

Although doors were kept opened for a September rate hike, markets are no longer convinced that monetary tightening will happen any time soon, with terms such as “several, some, and few participants” were all over the release, indicating that there’s a clear division in opinions within the 17 members.

Investors reacted to the Fed minutes by sending the dollar and yields on treasury bonds lower, while U.S. stocks reversed early losses to close slightly higher.The utilities sector leading the S&P 500 rising 1.49% for the day, is another sign of investors disbelieve that a rate hike will happen in September.

The only chance left to prepare markets for tightening next month is Chair Janet Yellen’s speech at the annual Jackson Hole monetary policy conference on August 26. However, I believe she will remain on the dovish side.



Japan will respond to speculative FX moves

Japanese authorities continued to struggle with the strong Yen, and for the second time this week, Vice Finance Minister of International Affairs intervened verbally by saying they will respond to speculative market moves as needed. However, it seems these verbal interventions are falling on deaf ears with USDJPY falling below 100 key psychological level. Earlier today data showed Japanese imports and exports suffered their biggest monthly fall in 7 years, which is likely to put more pressure on BoJ to take action. I believe the ability of direct intervention in currency markets is quite limited especially after the U.S. issued several warnings against competitive currency devaluations. The central bank which failed to deliver in the past two meetings should prepare something big to convince FX markets on their willingness to implement further aggressive easing measures, or Yen strength will likely resume in the foreseeable future.



Aussie benefits from robust employment report

The Australian dollar is the top performing major currency today, rising by more than 0.8% against the dollar. The commodity linked currency received a boost from today’s Australian labor report showing that the economy added 26,200 jobs in July, versus expectations of 11,000, while the unemployment rate unexpectedly dropped to 5.7%, indicating that the Reserve Bank of Australia is likely to keep monetary policy unchanged in the next two meetings. Commodity currencies are also benefiting from higher oil prices with Brent approaching the $50 benchmark for the first time since late June.







Source : http://www.forextime.com/market-analysis

 

Daily Market Analysis

GBPUSD advances and Yen rebounds again




The GBPUSD is rebounding significantly higher up the charts following an impressive UK retail sales release moments ago which has followed the path of yesterday’s jobless claims and contradicted concerns that the EU referendum outcome would have an immediate impact on the UK economy. The GBPUSD has already spiked to its highest level in nearly two weeks at 1.3163 at the time of writing, with investors enticed towards purchasing the Pound following another indication that the EU referendum outcome is not having a negative impact on the UK economy. This of course is in contradiction to previous PMI releases in the lead up to the referendum and a preliminary GDP report suggested the UK economy contracted last month. Onlookers should keep in mind that it will take time to truly access how the UK economy is performing on a consistent basis following the historic vote.

As mentioned yesterday following the employment data, economists need to be monitoring business confidence readings to then look for a possible correlation in search of a decline in future UK job vacancies. However at a time where many are expecting external investments to enter a decline, the news of an impressive retail sales shows consumers are spending and should support GDP in the meantime. Domestic consumption is going to be vital for the UK economy in the period ahead if international investment is set to drop in the uncertainty of the EU referendum outcome.

Yen rebounds once again despite alarming data

In other news, the Yen is once again showing indications of further buying demand on Thursday despite alarming trade data being released from the Japanese economy overnight. This persistent demand for the Yen has simply nothing to do with any improved confidence in the global economy, but everything to do with investors being consistently drawn towards the Yen as a safe haven as the external environment remains uncertain. The Bank of Japan (BoJ) would have certainly woke up to concerns again on Thursday following the USDJPY dropping below the heavily psychological 100 level once again, which is where expectations are high that the Japanese central bank are readily intervening in the FX market.

The trade data released from Japan overnight was alarming to say the least, I would personally add that it is only going to fuel the ongoing expectations that the Bank of Japan (BoJ) will need to launch additional monetary stimulus.

Exports collapsed by around 14% with this reportedly representing the worst decline on headline in seven years for Japan, which will only continue to strengthen concerns over global trade as a whole. Many institutions have repeatedly aired their concerns over a forthcoming slowdown in global trade, and seeing exports collapse by such an extent is only going to validate these concerns and align with similar figures being noticed across the emerging markets in recent months.

There will also be additional shocks at the news that imports collapsed at levels close to 25%. This is an astonishing decline when you not just look at the headline, but also consider that the Japanese Yen has strengthened dramatically in recent months and this should have contributed towards importing goods into Japan becoming more attractive. To briefly sum up, this appalling headline will continue to stress concerns over the ongoing weak spending across the Japanese economy and put even further pressure on the Bank of Japan (BoJ) into adding further stimulus.







Source : http://www.forextime.com/market-analysis