Daily Financial News & Fundamental Analysis

candle7779

Banned
Sep 27, 2012
352
0
0
EUROPEAN SESSION UPDATE: USD/JPY rebounds back above 100 as Nikkei closes up 2%; Aussie sustains losses despite RBA rate hold…
Attention during today’s European session in the Forex markets may have remained focused in Asia and Australasia, as the Yen and Aussie continued to make significant moves while the Pound and Euro stayed relatively quiet.
The Japanese equities index closed 2.05% higher today, which was accompanied by an unwinding of nearly all of the Yen gains seen in yesterday’s session. Japanese Prime Minister Abe said that he sees recovery signs in production, consumption, and GDP, but he said that there are unstable movements in the financial markets. He added that a strong Yen made companies less willing to invest.
 

candle7779

Banned
Sep 27, 2012
352
0
0
Central Banks are Feeding the Next Crisis: A Bond Bubble

It is often said that every crisis is created in the aftermath of the prior one. The Federal Reserve and other central banks response to the 2007-2009 financial crisis has been to drive interest rates to extremely low levels by engaging in unprecedented balance sheet expansion . The intention of these policies has been to force investors out of cash and back into paper assets. In this narrow regard they have succeeded, spawning a bubble in bonds as investors have been forced to take on more credit risk in search of unobtainable yields in an artificially ultra-low rate environment. But how long can such a dynamic last? History shows that at some point in the not too distant future focus will quickly shift away from return on capital and back to the return of capital. In this article we will analyze further the yield bubble and its impact on the global macro environment.
 

Coleen

Banned
Sep 27, 2012
81
0
0
EUROPEAN SESSION UPDATE: The German Zew survey rose more than expected despite Bundesbank expectations for a summer economic slowdown; Yen declines along with Nikkei…
The German Zew Survey of analysts’ and investors’ expectations rose to a three month high of 38.5 in June, beating expectations for 38.1 and up from 36.4 in May. The Zew survey of current sentiment unexpectedly fell back to 8.6 in June, while the Euro-zone economic sentiment survey rose to 30.6.
The higher expectations for an improved German economy contradicted the Bundesbank’s prediction yesterday that the German economy will slow in the summer. In April, the German government cut its growth prediction to 0.4% in 2013, and the economy expanded by 0.1% in the first quarter of this year.
 
Last edited:

Coleen

Banned
Sep 27, 2012
81
0
0
The Euro-zone calendar this week picks up today with the market moving June ZEW Survey due for both the broader Euro-zone and Germany. The recent improvement in growth data in May is likely to be reflected in the June sentiment surveys, with German Economic Sentiment notably expected to improve back to 38.1, after having fallen off from the yearly highs set in March at 48.5.
Overall, the three-month averages for both components of the German ZEW Survey – Current Situation and Economic Sentiment – remain near their lowest levels since mid-2010, underscoring the fragility of growth prospects in the region. Accordingly, given the recent sustained elevated exchange rate of the Euro relative to its major peers, risk is weighted to the downside as the ‘good news’ has thus far been priced in; a miss on a significant report such as the ZEW Survey would likely lead to selling pressure anew.
 

Coleen

Banned
Sep 27, 2012
81
0
0
Crude Oil, Gold to Rise if FOMC Downgrades QE Taper Risk
The Federal Reserve monetary policy announcement is in focus. Traders are looking to the outing as a defining moment when the FOMC unveils critical guidance on the timing of a reduction in QE3 asset purchases and the strategy to be used to execute it.

Ben Bernanke and company have surely taken note of the uneasy mood around financial markets associated with a possible near-term stimulus cutback. In fact, central bank officials have floated the idea of tapering QE in commentary over recent weeks, suggesting they may have been deliberately stress-testing investors’ likely response to such an outcome.
 

Coleen

Banned
Sep 27, 2012
81
0
0
Euro May Find Support in PMI Data, SNB Rate Decision on Tap
The preliminary set of June’s Eurozone PMI figures headlines the economic calendar in European trading hours. Expectations call for the composite gauge to edge higher for the third consecutive month, showing manufacturing- and service-sector activity shrank at the slowest pace since January. Such an outcome stands to underpin consensus forecasts suggesting that growth in the currency bloc is on the mend having bottomed in the first quarter. That may downgrade bets on a near-term expansion of ECB stimulus efforts, offering a lift to the Euro as prices continue to track the front-end yield spread.
 

Coleen

Banned
Sep 27, 2012
81
0
0
Dollar’s Best Week in 3 Years Spark for 110 USDJPY, 1.2000 EUR/USD?
The Fed delivered the global financial markets its biggest shock this past week since the US default brinkmanship resulted in the loss of country’s triple-A rating back in August of 2011. And, the central bank didn’t even change policy. The group’s massive $85 billion-per-month QE3 stimulus program survived the FOMC meeting this past week, yet the 10-year Treasury note was sold heavily enough to drive its yield over 40 basis points higher for the biggest weekly increase in a decade. Meanwhile, the Dow Jones FXCM Dollar Index (ticker = USdollar) rallied 2.4 percent – the strongest move in three years- and the S&P 500 dropped 2.1 percent for its worst performance this year. This revival of risk-appetite based correlations suggests a current of eroding sentiment is carrying us on a market-wide delevering effort that has enough weight to develop a lasting bull trend for the dollar. Yet, does this broad volatility have the necessary elements to send EURUSD back towards 1.2000 or USDJPY up to 110. It is highly unlikely we see both. To send EURUSD plunging 1,000 pips, we will likely need a combination of Euro-area financial risk and general risk aversion (the latter usually instigates the former). Yet, the level of risk aversion to carry the world’s most liquid pairing that far would spur a carry trade unwind for the stimulus-laden yen crosses that sent USDJPY tumbling alongside AUDJPY.
 

Coleen

Banned
Sep 27, 2012
81
0
0
Australian Dollar May Find Fuel for Recovery in Bond Yield Shift
The Australian Dollar faced renewed selling pressure last week, touching the lowest level in close to three years against its US namesake, after the Federal Reserve monetary policy announcement added fuel to speculation about a cutback in asset purchases emerging on the horizon. This sparked a widespread reversal in trends dependent on the presumption of continued Fed money-printing, sending the US Dollar broadly higher against the majors as dilution fears unraveled.
 

Coleen

Banned
Sep 27, 2012
81
0
0
Dollar Rallies BoE, ECB Surprise

After leaders at both the Bank of England and the European Central Bank surprised markets with monetary policy stances that were more dovish than previously, the U.S. Dollar broadly rallied during the Asian session. It appears that the Federal Reserve is now the only one of the world’s key central bank with any intent to take a more hawkish stance. Analysts believe that if today’s release of labor data supports an imminent Fed move, it could increase the upside momentum for the greenback though even a downside surprise is likely to have little enduring effect on the Dollar’s relative strength.
 

Coleen

Banned
Sep 27, 2012
81
0
0
Caution Ahead for Dollar Bulls as NFP Looms
With financial markets in the U.S. closed today for the Independence Day holiday, the U.S. Dollar held steady in overnight Asian trade after investors cut back their long positions ahead of Friday’s market moving data release, namely the monthly non-farms payroll report. Markets are also awaiting monetary policy decisions from both the European Central Bank and the Bank of England, so cautiousness prevails. Mario Draghi, the ECB head, is expected to caution investors that the loose monetary policy in place is likely to remain in place for sometime as downside risks to growth are still abundant. The new head of the Bank of England, Mark Carney, is also unlikely to stray from existing policy but market watchers believe he may make a personal statement following the policy decision announcement, nonetheless.
 

Coleen

Banned
Sep 27, 2012
81
0
0
USDOLLAR Continues to Search for Resistance- JPY to Face BoJ

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is 0.67 percent higher from the open as U.S. Non-Farm Payrolls increased 195K in June amid forecasts for a 165K print, and the bullish sentiment surrounding the reserve currency should gather pace over the near to medium-term as the data adds to the argument for the FOMC to start tapering its asset-purchase program. Nevertheless, the dollar may face a short-term pullback following the European close as the 30-minute relative strength index falls back from resistance (84), but we should see the upward trend continue to take shape as the fundamental outlook for the world’s largest economy improves. In turn, we will continue to buy dips in the greenback, and we may see the reserve currency mark fresh highs in the week ahead should a growing number of Fed officials adopt a more hawkish tone for monetary policy.
 

Coleen

Banned
Sep 27, 2012
81
0
0
Dollar Sets Sights on New 3-Year High, S&P 500 Gains Corrective
US DOLLAR TECHNICAL ANALYSIS – Prices narrowly edged above resistance at 10980, the 100% Fibonacci expansion, opening the door for a move higher to challenge the 123.6% level at 11101. The 10980 mark has been recast as near-term support. A reversal back beneath that aims for the 76.4% expansion at 10859.
 

Coleen

Banned
Sep 27, 2012
81
0
0
EUR/JPY Technical Analysis- Prices pulled back from resistance at 130.72, the 38.2% Fibonacci expansion, to challenge the 23.6% levelat 128.51. This barrier is reinforced by a rising trend line at 128.74. A drop beneath that eyes the 14.6% Fib at 127.15. Alternatively, a move above resistance aims for the 50% expansion at 132.50.
 

Coleen

Banned
Sep 27, 2012
81
0
0
Yen Rises Further Against the Dollar in an FOMC Focused Trading Day

In Japan, the consumer confidence index for June was reported today at 44.3, lower than expectations for 45.6. The Yen has been trading higher against the US Dollar following weak trade data from China. USD/JPY is trading a few points below 100.00 at the time of this writing, and the pair may see resistance by that key figure. Support may be provided by a rising trend line from February, currently at 97.50.
 

Coleen

Banned
Sep 27, 2012
81
0
0
US DOLLAR TECHNICAL ANALYSIS – Prices broke above resistance at 10946, the 100% Fibonacci expansion, opening the door for a move higher to challenge the 123.6% level at 11016. Early signs of negative RSI divergence warn of ebbing bullish momentum however and hint a turn lower may be ahead. The 10946 mark has been recast as near-term support, with a move back beneath that aiming for the 10848-77 area (marked by the late-May top).
 

Coleen

Banned
Sep 27, 2012
81
0
0
GBPUSD
The rally that commenced last week has already erased half (exactly…1.5281 is also the rolling 13 week midpoint) of the decline from the June top. Don’t forget, the high for the year was made on the first trading day of the year (significant when one considers the distribution of highs and lows within a calendar year). Ultimately, the long term triangle break portends a return to 1.3500 although 1.4225/58 is a level to keep in mind as support.
 

Coleen

Banned
Sep 27, 2012
81
0
0
AUDUSD and NZDUSD
I have cited pattern, momentum and sentiment as reasons to look for an AUDUSD reversal in recent weeks but it hasn’t happened so one must consider alternatives. Since June, each tradeable top has been marked by divergence with NZDUSD (NZDUSD exceeds a pivot high and AUDUSD does not). That happened again today and is in place as long as AUDUSD is below .9343.
Markets correct extremes in sentiment and momentum (which go hand in hand) through a combination of time and price. Sometimes more price…sometimes more time. The AUDUSD has corrected almost exclusively through time. Consider that since May 1st, price has declined nearly 14 big figures (1383 pips) from high to low and the largest rally since then has been 340 pips (6/11-6/14). Similar rallies occurred from 5/29-6/3 (263 pips) and 7/12-7/17 (294 pips). Introduce time into the equation and the momentum extremes that were evident through June have moderated. 20 day rate of change is just -.23.
 

Coleen

Banned
Sep 27, 2012
81
0
0
EURUSD
BUY

If the price breaks through the level 1.3156 bullish movement will start. Targets of the bullish movement: 1.3226.
 

Coleen

Banned
Sep 27, 2012
81
0
0
Forex: Dow Threatens Collapse, But Will the Dollar Be So Lucky?

Even the most optimistic bull is concerned that the technical break from US equities this past week could evolve into a full-scale sell off. Given global investors' leverage and exposure, that can redefine our markets and provide particularly lucrative trades for the dollar and yen crosses. And yet, we have seen too many false starts on the 'risk aversion' theme fall apart to call this systemic shift just yet. In this weekend video, we discuss what to look for to measure the balance of sentiment as well as the many trade opportunities for 'risk on', 'risk off' and even balanced.