Daily Report on August 29, 2016

CapitalStreetFX

Active Trader
Aug 6, 2015
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The U.S dollar held on to its strength against most of its peers on Monday, as the monetary divergence between the U.S and other parts of the world has been reinforced by comments from central bank officials, after the annual economic policy symposium in Jackson Hole, Wyoming.

However, it was not Yellen’s words that supported the greenback, but the comments from Fed Vice Chairman Stanley Fisher that actually fueled the U.S dollar rally. The Fed’s top deputy, in an interview with CNBC, which was conducted after Yellen’s speech, said that Yellen’s remarks was consistent with the possibility of as many as two rate hikes by the end of 2016, and did not forget to stress on the importance of upcoming data in contribution to any Fed’s decision.

While Federal Reserve leaders spurred the speculation of at least one interest rate increase this year which could be as soon as September, Bank of Japan Governor Haruhiko Kuroda and European Central Bank Executive Board member Benoit Coeure expressed their eagerness to deploy further necessary measures to boost the potential growth of their economies.

Kuroda stated that “there is ample space for additional easing in each of the three dimensions”, referring to the BOJ’s three options of topping up asset purchases, buying more bonds and deepening interest rate. The BOJ Governor showed his readiness in boosting monetary stimulus if needed, reiterating that “The bank will carefully consider how to make the best use of the policy scheme in order to achieve the price stability target”.

Benoit Coeure, the ECB board member responsible for market operations, said that “We may see short-term rates being pushed to the effective lower bound more frequently in the event of macroeconomic shocks”, warning about the possibility of more frequently unconventional monetary policy deployed if governments don’t act to wrestle with unpleasant factors which are hampering the region’s recovery such high unemployment and banking systems loaded with bad loans.



Technicals

EURUSD
EURUSD opened the new week with a 15-pip gap down which sent the currency pair to below 38.2% Fibonacci retracement level at 1.11894. But the euro once again pulled back as a corrective move because the market has entered the oversold territory. The sharp plunge last Friday caused the pair to move past two MAs and a strong support at 1.12440. With the short-term MA crossing over the long-term MA from above, EURUSD is under a downward pressure which may refrain the current up moves.

Trade suggestion

Sell Limit at 1.12200, Take profit at 1.11780, Stop loss at 1.12500



USDCHF
USDCHF has broken above the downward sloping trading range which has been formed for one month. After surging more than 150 pips from the support at 0.96300 on Friday, the pair has entered a consolidating period as a result of an overblown market. As RSI (14) has still been moving in the overbought zone, the ongoing retreat in the price is expected to last until the pair hit the key support at 0.97500.

Trade suggestion

Buy Limit at 0.97500, Take profit at 0.97915, Stop loss at 0.97280



CADJPY
CADJPY is on its track to reach the psychological resistance at 78.760 after a period of moving sideways within a shrinking range. With the downward trendline having been broken and the convergence of two moving averages, the pair seems to be on a firm rally. Nonetheless, the market has stepped in the overbought zone, signaling a pullback may come in. The level at 78.760 should be watched as a threshold for the pair to retreat.

Trade suggestion

Sell Limit at 78.760, Take profit at 78.185, Stop loss at 78.900



SUGAR
Sugar prices continuously rebound after each time hitting the 20-period moving average. Even when the price peeked out of the short-term MA, it barely fell too far from the long-term MA. The RSI (14) has been remaining above 50 and is heading upwards, consolidating the up-wave.

Trade suggestion

Buy Stop at 20.60, Take profit at 20.92, Stop loss at 20.30



BRENT
Brent is trading indecisively around the average prices of the last 20 periods and 50 periods, showing that both sellers and buyers are cautious. However, RSI (14) index has dimmed to below the dividing line between bullish and bearish territory. The commodity is expected to trade lower today as the market seems to lean on the bear.

Trade suggestion

Sell Stop at 49.25, Take profit at 48.80, Stop loss at 49.45



FTSE
FTSE bounced back from the support at 6778.00 as the sellers took profit when the price fell below this level and prepared to penetrate the oversold market. The 6778.00 bar has been a solid stance which prevents the index from falling deeper after the price had successfully broken through this level on August 08. As the %D line and %K line are heading downwards, FTSE is expected to break below this handle today.

Trade suggestion

Sell Stop at 6778.00, Take profit at 6735.70, Stop loss at 6813.80.

http://capitalstreetfx.com/en/technical_analysis/20160829-2/