Market news and trade recommendations by FBS

FBS

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Jul 24, 2013
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FX BAZOOKA: technicals (Dec. 23)

AUD/USD


AUD/USD recovered to $0.8950.
The pair returned to the upper Bollinger band and approached 55-period MA.
All MAs keep declining that indicates that a medium-term downtrend is well in place.
The prices are below the bearish Ichimoku Cloud. However, the Cloud stopped expanding, while Tenkan and Kijun formed a golden cross, weak as it is below the Cloud. Still these lines provide support ($0.8900).
MACD has reached the 0 area on its way up. RSI rose almost to 60.
There will be no news from Australia to help Aussie extend upward correction.
Resistance: $0.8970, $.8990/9000, $0.9040
Support: $0.8900, $0.8820, $0.8800, $0.8755

audusdh4.png

Chart. H4 AUD/USD

Upcoming events
USD - 13:30 GMT - Core PCE Price Index
USD - 13:30 GMT - Personal Spending
USD - 14:55 GMT - Revised UoM Consumer Sentiment
 

FBS

Active Trader
Jul 24, 2013
115
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32
FX BAZOOKA: technicals (Dec. 23)
AUD/USD


As expected, USD/CAD corrected down to 1.0635.
The pair is supported at the current level (100-period MA, Ichimoku Cloud top).
200-period MA is still going up, so the medium-term uptrend continues. 55-period MA is horizontal though and below the 100-period one.
MACD is going down and approaching 0 from. RSI (14) declined to 45.
The bullish Ichimoku Cloud stopped expanding. Tenkan-sen turned down.
The loss of 1.0660 allows downside scope for 1.0600, the lower Bollinger band.

Support: 1.0635, 1.0615, 1.0600, 1.0560
Resistance: 1.0685, 1.0700, 1.0725, 1.0745

usdcadh4.png

Chart. H4 USD/CAD

Upcoming events
USD - 13:30 GMT - Core PCE Price Index
USD - 13:30 GMT - Personal Spending
CAD - 13:30 GMT - GDP
USD - 14:55 GMT - Revised UoM Consumer Sentiment
 

FBS

Active Trader
Jul 24, 2013
115
0
32
Dec. 24: Asian session

Asian stocks rose boosted by the gains in the American session as the upbeat US spending data showed that US economic recovery gaining momentum. In addition, China’s central bank moved to ease a cash crunch by making its first market-wide money injection in three weeks.

Japan’s Nikkei went up by about 0.8% to 6-year high above 16,000 after Tokyo markets opened after a holiday. USD/JPY rose to 104.41.

AUD/USD declined to $0.8907 after peaking to $0.8960 yesterday. NZD/USD edged down to $0.8176. Gold dipped below the $1,200 level yesterday and is heading for its biggest annual loss in three decades.

EUR/USD slid to $1.3675 after it tested $1.3716 on Monday. GBP/USD is consolidating around $1.6345.
 

FBS

Active Trader
Jul 24, 2013
115
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32
EUR/USD: how do the banks trade?

There’s a choice among various shorts.

BoA/Merrill: Short at $1.3764 with stop at $1.3834 and take profit at $1.3479

Credit Agricole: Short at $1.3780 with stop at $1.4160 and take profit at $1.3300

Credit Suisse: Short at $1.3800 with stop at $1.3860 and take profit at $1.3415

Commerzbank: Short at $1.3750 with stop at $1.3815 and take profit at $1.3405

Commerzbank: Short at $1.3665 with stop at $1.3815

Morgan Stanley: Short at $1.3600 with stop at $1.3750 and take profit at $1.2700
 

FBS

Active Trader
Jul 24, 2013
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Nomura: trajectory for USD/JPY

Analysts at Nomura have outlines a scenario for USD/JPY using Elliott waves. The specialists expect the pair to trade sideways in the 102.50/104.50 during the next month in the wave (4) and then rally to 106.00 in the wave (5).

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FBS

Active Trader
Jul 24, 2013
115
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Credit Agricole: Q1 GBP forecasts

GBP/USD

GBP/USD to weaken to $1.6200 in the stronger USD environment. Britain's officials will try to talk the pound down in Q1 2014.


eurgbpweekly.png

Chart. Weekly GBP/USD

EUR/GBP

As for EUR/GBP, the pair is expected to fall towards 0.8200 by end-March. Pound will gain some ground vs. the euro on a wave of EUR sales.

gbpusdweekly.png

Chart. Weekly EUR/GBP
 

FBS

Active Trader
Jul 24, 2013
115
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Dec. 27: Asian session

Most Asian stocks went up after big gains at Wall Street where Dow Jones made a record high close. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.25%. Chinese shares rose as money rates eased and China set its yuan at an historic high.

USD/JPY tested briefly levels 105.00 today and EUR/JPY – 144.00. Yen hit 5-year lows versus the greenback and euro. Japanese data showed that the nation’s manufacturing activity is expanding at the fastest clip in more than 7 years, while Japanese firms added workers at the quickest pace in over 6 years. Japan’s core consumer price inflation in November rose to a 5-year high. This means that the country’s making progress in its fight against deflation.

Australian and New Zealand dollars have both strengthened in the late Asian session. AUD/USD has recovered above the $0.8900 mark. However, the Monday bearish gap still remains open. NZD/USD rose to $0.8170. The pair is supported by the 200-day moving average.

EUR/USD rose to $1.3745. GBP/USD went up to $1.6447.
 

FBS

Active Trader
Jul 24, 2013
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EUR/USD: Ichimoku analysis (Dec. 27)

Daily. In the week ahead the New Year the US dollar is losing ground versus almost all major world currencies. EUR/USD recovered to 1.3740 by the end of the week. Bullish sentiment strengthened: prices have gone through resistance of the Tenkan-sen, and will soon be fixing above it. The Ichimoku Cloud also points to the strengthening of the bulls, but in the longer term.

eurusdd1.png

Chart. Daily EUR/USD

H4. Here EUR/USD is leaving the Cloud. The pair’s supported by the short-term Golden Cross (C). The Cloud itself looks positive. It started widening up due to the growth of Tenkan-sen. The position of the bulls is strengthening. Note though that there’s a serious resistance at $1.3755. In addition Chinkou Span shows that the market is overbought. So, when the market reaches the level mentioned above, the market can either begin consolidation or make a corrective decline to the lower edge of the Cloud.

eurusdh4.png

Chart. H4 EUR/USD
 

FBS

Active Trader
Jul 24, 2013
115
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32
GBP/USD: Ichimoku analysis (Dec. 27)

Daily. During the past week the pair has settled above Tenkan-sen (TS). This allowed the bulls to resume rebound. However, growth is only in the short term. All lines of the Indicator are horizontal, so there’s no dominating trend. At the same time, the pair’s once again approaching the yearly highs as it’s trading in the $1.64460 area. In the coming days the bulls may attempt to break the December range to the upside. This will open the way towards $1.6600.


gbpusdd1.png

Chart. Daily GBP/USD

H4. At H4 the pair was consolidating just below the lines Tenkan and Kijun which have formed the Dead Cross. However, in the second half of the weeks the buyers re-appeared and resumed rebound. The pair formed a Golden Cross (С), and both lines are rising now. Senkou Span A and B are going up as well. Bullish sentiment is strengthening, so the odds that the uptrend will continue are high.


gbpusdh4.png

Chart. H4 GBP/USD
 

FBS

Active Trader
Jul 24, 2013
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32
USD/CHF: Ichimoku analysis (Dec. 27)

Daily. During the past week the currency pair has been trading inside the Tenkan-Kijun channel. The prices were mostly drifting to the lower border of this range. All lines of the Indicator remain horizontal, so the sideways move may continue. Note that the odds that the downtrend will resume are high as the Cloud remains bearish and the Dead Cross (С) is still in place.


usdchfd1.png

Chart. Daily USD/CHF

H4. Here the trend is sideways as well. Here the pair has also been trading inside Tenkan-Kijun channel which itself is inside the Ichimoku Cloud. However, on Friday the sellers livened up and the pair fell to the lower border of the Cloud. As Chinkou Span went below the price chart, we expect downtrend to develop in the near term.


usdchfh4.png

Chart. H4 USD/CHF
 

FBS

Active Trader
Jul 24, 2013
115
0
32
USD/JPY: Ichimoku analysis (Dec. 27)

Daily. USD/JPY is setting new highs. The pair has reached 105.00. So, the bullish rally continues supported by all lines of the Indicator at the daily timeframe. The Golden Cross (С) and the bullish Cloud confirm the positive sentiment. But after the prices test resistance at 105.20, the pair may start corrective decline to Tenkan-sen.


usdjpyd1.png

Chart. Daily USD/JPY

H4. At H4 there are yet no problems for further rebounding. All lines of the Indicator are rising as well. The Cloud is bullish. Tenkan and Kijun have once again formed the Golden Cross (С). If the pair managed to hold above support at 104.65 in the coming days, the pair will start the year by testing 105.20 and maybe even 106.00.


usdjpyh4.png

Chart. H4 USD/JPY
 

FBS

Active Trader
Jul 24, 2013
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32
Dec. 30: Asian session

USD/JPY edged up to 105.40. Asian stocks strengthened, curbing demand for haven assets. MSCI Asia Pacific Index of shares advanced 0.2%.Yen declined on a mix of improving sentiment on the global economy, rising investor risk appetite and expectations of more Bank of Japan stimulus.

EUR/USD declined to $1.3730 after spiking to $1.3890 on Friday. Euro rose by the end of the year as the European banks tended to repatriate funds ahead of an asset review by the ECB. Mario Draghi said that he saw no urgent need to cut the euro zone’s main interest rate further and no signs of deflation. GBP/USD declined to $1.6474 after spiking to $1.6578 yesterday.

Commodity currencies are all trading under pressure, but have reversed the early-session drop. AUD/USD found support at $0.8835, holding a bit above the key $0.8820 support (Dec. 10 low). NZD/USD bounced from the $0.8115 low.
 

FBS

Active Trader
Jul 24, 2013
115
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32
FX BAZOOKA: gold 2014 outlook
FX BAZOOKA analyst Kira Iukhtenko

gold%20bazooka1.jpg


Gold prices drop in the year 2013 caught many investors by surprise. The yellow metal hit a historical high of $1920 per ounce in September 2011 and there was a wide-spread expectation for the price to continue the rally after some correction. However, bullion has depreciated by 26% since the beginning of the year and by 33% from the 2011 peaks. Gold has been trading slightly above the $1200 mark since summer 2013.

Global economy has substantially recovered since 2011, giving a boost to risk appetite. Safe, but boring gold has become less attractive for investments. This kind of logic has pressured XAU in 2013 and is expected to stand in the year 2014, if nothing catastrophic happens to the market sentiment.

Tapering - bearish for gold

The Fed has unexpectedly (or not?) announced the $10 billion QE3 tapering in December. Why haven’t we seen any immediate market reaction on the announcement? The answer is very simple; tapering is not really equal to tightening: monetary stimulus is still in place and is still huge.

However, the US monetary policy change will definitely impact the gold prices in 2014. Everyone understands that the era of loose monetary policy and cheap US dollar comes to an end. Real interest rates are gradually rising – the US 10-year Treasury yield has already recovered substantially. What’s more, when the bond-buying program is over, markets will switch to the expectations of a rate hike. Gold will become less and less attractive for investments as it will bring lower yields than the financial assets.

Subdued inflation

Demand for gold is traditionally high in times of a high inflation. Investors turn to the yellow metal as a store of value in an attempt to mitigate the inflationary risks.

This year we’ve seen a different situation: the major central banks have faced deflationary pressures. We are living in a time of subdued global inflation – there are no visible reasons for a significant money supply increase. Liquidity is not excessive even despite the central banks’ easing: the “newly-printed” money doesn’t reach the real economy, staying in the banking sector. Gold price is unlikely to increase in a period of a low inflation.

Demand patterns

gold%20proportion.png


According to the World Gold Council report, Q3 physical demand for gold dropped by 26% year-on-year. In 2013 investment demand for gold contracted significantly, while demand for jewellery stagnated. Improvement of the global economy is generally good for metals, but the percentage of gold usage for industrial purposes is relatively small (see the diagram above). Central banks are still buying gold with diversification purposes, but this demand also doesn’t offset the slowdown in other areas.

All in all, the analysis doesn’t unveil any implications for gold appreciation in 2014.

Forecast

At the end of the year 2013 gold is trading a little bit above the June 3-year low of $1180.0. The wide bullish monthly Ichimoku cloud has narrowed and is ready to turn negative - this is a strong bearish signal.

Bullion price remained quite resilient for now, but we expect it to break below the $1180.0 support in the coming weeks and to extend the decline. Our bearish target for Q1 2014 lies at $1080.0 (50% Fibo). All the rebounds will be seen as corrective as long as the $1300 resistance holds.

gold%20weekly.png

Chart. Weekly XAU/USD
 

FBS

Active Trader
Jul 24, 2013
115
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32
ANZ: EUR/USD will continue uptrend

Analysts at ANZ point out that EUR gained 6% versus its main counterparts this year. This happened despite the fact that the ECB lowered interest rates to the record low, the euro zone’s economic recovery isn’t very convincing and the region’s unemployment remains extremely high.

ANZ concludes that the EUR depends not on comparative growth dynamics, but on a large current account surplus, improving fiscal position and the union’s progress in resolving the crisis and deepening economic integration. According to the specialists, this situation is unlikely to change in 2014. In their view, the uptrend will remain in place, especially against AUD and NZD. ANZ expects EUR/USD to trade in the $1.40/45 range.
 
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FBS

Active Trader
Jul 24, 2013
115
0
32
BoA: EUR/USD will make a top

Analysts at Bank of America Merrill Lynch have noticed that since 2008 EUR/USD was reversing down near the long-term resistance after completing a 3-legged advance from the previous cyclical low. This time such low is at $1.2041 (July 2012 low).

So, the specialists are looking for a top and turn down. Targets lie at $1.2745 (March 2013 low) and $1.2173.

eurusdweekly.png

Chart. Weekly EUR/USD
 

FBS

Active Trader
Jul 24, 2013
115
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32
Analysts on USD/JPY 2014 prospects

We’ve seen an impressive rally in USD/JPY in the year 2013 – the pair rose by more than 3000 pips, recovering 61.8% Fibonacci from the 2007/2011 decline. The gradual widening of the yield spread between the US and Japan should support the pair further, as the Fed’s monetary policy will become less dovish with time, while the BOJ is expected to ease further. Our next bullish targets lie at 107.35 (200-month MA) and 108.80.

JP Morgan strategists warn about a strong bearish correction in the year 2014. “JPY has high risk of mean reversion over the next year because positioning is so stretched (shorts more than 3-sigmas from average). This extreme positioning is why we have flagged USD/JPY as vulnerable to a correction in Q2 (target 100) if the economy fails to reaccelerate quickly from a contraction induced by the consumption tax hike”. However, by the year-end analysts expect the pair to recover to 106.00.

Analysts at Deutsche Bank are much more optimistic on the USD prospects: “We are only about half way through a move that will eventually push up to and probably through 120.00 yen”. DB puts its 2014 USD/JPY forecasts at 106 in Q1, 109 in Q2, 112 in Q3 and 115 in Q4.

usdjpymonthly.png

Chart. Monthly USD/JPY
 

FBS

Active Trader
Jul 24, 2013
115
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32
Jan. 9: Asian session

US dollar remains strong versus its main counterparts as the signs of improvement in the labor market (ADP said US private employers added a bigger-than-expected 238K jobs in December, the strongest increase in 13 months) support expectations the American economy will be strong enough for the Fed to end bond purchases this year. USD/JPY is trading in the 104.80 area after reaching 105.12 yesterday.

Asian shares wavered on Thursday after a lackluster performance on Wall Street overnight. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2% after snapping a five-day losing streak on Wednesday. Despite the yen's weakness, Japan’s Nikkei benchmark shed 1.4%, giving up some of its 1.9% bounce in the previous session.

Australian and New Zealand dollars are trading under pressure for a third consecutive day. AUD/USD dipped to $0.8865 before bouncing to $0.8880. AUD weakened in the Asian trade despite the strong retail sales figures (+0.7% m/m vs. forecasted +0.5%). Australia has also released pretty neutral building approvals data (-1.5% m/m). NZD/USD hit a daily low of $0.8240. New Zealand building consents rose above the forecast by 1.1%. China inflation figures came a little bit below the forecast with CPI rising by 2.5% y/y and PPI falling by 1.4%.

EUR/USD edged up to $1.3586, while GBP/USD is trading in the $1.6450 area.
 

FBS

Active Trader
Jul 24, 2013
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32
Soros: China is the biggest risk

George Soros remains pessimistic about the prospects of the Chinese economy. In his view, the growth model that caused its rapid rise has run out of steam. Soros believes China is the main destabilizing factor threatening the global economic recovery, and not other bleak assessments on the euro, the US political stalemate or a Japanese bubble.

Soros sees a worrisome disconnect between China's pledges to move away from excessive investment and overborrowing and toward a services-based economy without sacrificing rapid growth. “There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years," Soros wrote.