Hiwayfx - Market News

[Guest HiWayFX]

IMF Unlikely to Bailout Greece

The bailout deal supposedly secured for Greece is in jeopardy because it is disqualified from receiving new bailout money from the IMF. This could mean that the entire bailout for Greece is at risk since Germany will not back any bailout with the participation of the IMF.

The Financial Times writes:

According to a four-page “strictly confidential” summary of Wednesday’s board meeting, IMF negotiators will take part in policy discussions to ensure the eurozone’s new bailout “is consistent with what the Fund has in mind”.

But they “cannot reach staff level agreement at this stage”. The Fund will only decide whether to take part after Greece has “agreed on a comprehensive set of reforms” and, crucially, after Eurozone bailout lenders have “agreed on debt relief”.

But the IMF has a good reason for backing out of this bailout, and it's because the deal is bad for Greece and it's bad for Europe.

The IMF rightly believes that any new bailout money for Greece should come with debt relief as well. The debt mountain Greece is currently saddled with is impossible to pay back, and it ensures Greece's failure because investors and financial markets will never have confidence in Greece while it is essentially in debt enslavement.

This actually looks like the first time someone is taking Greece's side besides Greece. It seems that all of the brinksmanship and stubbornness of the Syriza party and Yanis Varoufakis, the former Greek finance minister, has paid off in garnering some attention to the fact that Greece can only become viable if some of it's debt is forgiven and/or restructured.

The IMF will likely force the Troika's hand in the coming months by holding up any bailout for Greece by requiring debt relief. We don't believe that this development will throw Greece into default somewhere down the line. It's almost certain that the Troika will come to an agreement if the IMF continues to demand debt relief, but expect to see another drama play out when negotiations begin again and an agreement is made at the last possible minute.

- See more at: https://www.hiwayfx.com/market-news/imf-unlikely-bailout-greece#sthash.wKn5eRCt.dpuf

[Guest HiWayFX]

Technical Analysis 31/07/2015

EURUSD

The EURUSD continued its bearish momentum yesterday bottomed at 1.0892 but traded higher earlier today hit 1.0946. The bias remains bearish in nearest term retesting 1.0892. A clear break below that area could trigger further bearish pressure testing 1.0820 key support. Immediate resistance is seen around 1.0950. A clear break above that area could lead price to neutral zone in nearest term testing 1.1000 area. Potential daily range today is seen between 1.0890 – 1.1000. My major technical outlook remains neutral.

GBPUSD

The GBPUSD was indecisive yesterday formed a Doji on daily chart. The bias is neutral in nearest term probably with a little bullish bias testing 1.5675 area. Immediate support is seen around 1.5540. A clear break below that area could trigger further bearish pressure testing 1.5500 or lower. Potential daily range today remains between 1.5540 – 1.5675. My major technical outlook remains neutral.

USDJPY

The USDJPY attempted to push higher yesterday slipped above 124.50 but closed lower at 124.12 and hit 123.91 earlier today. The bias is bearish in nearest term testing 123.00. Immediate resistance is seen around 124.25. A clear break above that area could lead price to neutral zone in nearest term retesting 124.50. Potential daily range today remains between 123.00 – 124.50. My major technical outlook remains neutral.

USDCHF

The USDCHF was indecisive yesterday. The bias is neutral in nearest term probably with a little bearish bias testing 0.9600. Immediate resistance is seen around 0.9720. A clear break above that area could trigger further bullish pressure testing 0.9750 – 0.9800 region. Potential daily range today is seen between 0.9600 – 0.9720.

[Guest HiWayFX]

The U.S Nonfarm Payroll Report

The U.S Nonfarm payroll Report is put together and released on the first Friday of each month by the Bureau of Labour Statistics and it offers a complete illustration of the country’s economic state. The numbers released in the report include the unemployment rate, job growth, average hourly earnings and the manufacturing subcomponent of the report which shows specific growth or contradiction in the manufacturing sector every month. Excluded from the report are all general government and household employees, as well as non-profit organization and farm employees.

- See more at: https://www.hiwayfx.com/forex-hub/us-nonfarm-payroll-report#sthash.qIDgmYy7.dpuf

[Guest HiWayFX]

EUR / USD

The EUR declined 0.09% against the USD and closed at 1.0905 .

EUR/USD rose slightly on Wednesday halting a three-day losing streak, amid mixed economic data in the U.S. ahead of Friday's critical jobs report for the month of July.

The pair is expected to find support at 1.0856 . and a fall through could take it to the next support level 1.0806 .

The pair is expected to find its first resistance at 1.0947 , and a rise through could take it to the next resistance level of 1.0988 .

GBP / USD

The GBP declined 0.15% against the USD and closed at 1.5602 .

BNP Paribas recommends long GBP exposure heading into Thursday's Bank of England (BoE) meeting.

The pair is expected to find support at 1.5533, and a fall through could take it to the next support level of 1.5464 .

The pair is expected to find its first resistance at 1.5662 , and a rise through could take it to the next resistance level of 1.5722.

- See more at: https://www.hiwayfx.com/market-news/market-outlook-6082015#sthash.BCewZnzq.dpuf

[Guest HiWayFX]

Buying with USD/CHF Trend Is a Wise Bet

A very expensive Swiss Franc has driven Swiss citizens to neighbouring countries for shopping and local consumption has fallen. Economic fundamentals for Switzerland are looking down due the combines crises of Franc appreciate and European deflation, which will be naturally balanced out by a gradually devalued Franc.

This has led Barclays Capital to recommend buying USD/CHF this week, saying it's a macro-technical driven trade.

We think poor Swiss fundamentals continue to support CHF depreciation from still-overvalued levels. Even if concerns about Greece or China escalate, we think the CHF is likely to underperform higher-quality safe havens such as the USD.

Our technical strategist is also bearish CHF and expects further underperformance against the USD and EUR. The rising USDCHF trend of the past eight weeks points higher toward initial targets in the 0.9865/0.9905 area. A move above the latter would encourage our bullish view toward the 1.0130 March recovery high.

- Barclays Capital

The uptrend exhibits a steady trend of value-building higher and higher, which suggests that the high is not in yet in USD/CHF. The two swing highs at 1.0130 and 1.0240 therefore make good target for longs in this pair.

[Guest HiWayFX]

Brent: important level of $50 per barrel

Despite the growing USD, Brent crude oil also strengthened today and the price returned to the opening level for the week at $50 per barrel.

Today oil prices received support from the IEA publication, where the agency stated that the prices are growing at their fastest pace for 5 years, after they fell below $50 mark.

Oil prices were also supported by the US EIA release on Wednesday that showed a decrease in crude oil reserves by 1.682 million barrels.

In the medium-term, the main factor affecting the price is going to remain an excess of supply over demand. Oil is going to keep falling and can reach the level of $45 per barrel.

Today, a bunch of news is due from the US, between 3:30 pm and 8 pm (GMT +3), of which the most important is the data on Retail Sales for July.

Support and resistance

The prices is heading towards year lows at 47.00-45.00.

On the 4-hour chart, OsMA and Stochastic give buy signals, but the further growth is restricted by the resistance levels at 50.50, 50.20 (EMA50). On the daily chart, the indicators remain in the neutral zone.

Support levels: 48.10, 47.00, 46.75.

Resistance levels: 50.20, 50.50, 51.70, 52.50, 53.50, 55.00.

[Guest HiWayFX]

EUR/USD: wave analysis

A growth possibility remains. Assumingly, the third wave of the senior level 3 is forming. Locally, the first wave i of 3 in a shape of a diagonal seems to be forming. If the assumption is correct the growth towards 1.1300, 1.1400 continues after a small correction. A critical for this scenario is the level of 1.0840, the breakdown of which would allow the pair to fall to 1.0700.

[Guest HiWayFX]

EUR/USD: euro remains under pressure

This week the EUR/USD pair continued moving down amid the recovering demand for the US currency after the Yuan devaluation. During the week, no important macroeconomic publications are expected from the eurozone, thus, the pair dynamics is likely to be determined by US statistics and the situation in Chinese economy and further decline of the Yuan.

On Monday, macroeconomic releases caused a mixed reaction. Thus, positive dynamics in EU Trade Balance (21.9 bln from 21.3 bln euros earlier) failed to support the single currency.

At the same time, negative US statistics were also ignored. NY Fed Empire State manufacturing index dropped from 3.86 to -14.92 against the expected growth to 5.00 points.

Support and resistance

Bollinger Bands on the daily chart continue growing despite the recent downward dynamics. The current decline fits within the “bearish” signal. MACD has turned down and is approaching the zero line. The histogram is below the signal line giving a sell signal. Stochastic is also declining.

The indicators recommend keeping and opening short positions in the short and very short run.

Support levels: 1.1035 (the nearest target), 1.1000 (strong psychological level), 1.0970, 1.0914/00, 1.0865 и 1.0808 (20 July low).

[Guest HiWayFX]

Euro Is a Really Boring Currency to Trade

It's been 8 months now, and the world's most liquid currency seems to be driving Forex traders crazy. It's just not moving much, and there haven't been any cues as to what trend it will be following in the near term.

Ever since the ECB started QE, and the Fed has threatened to raise rates, it's been a ping-pong of back and forth trading in EUR/USD, most of the time with seemingly no direction.

Yes, it's not a very exciting trade, but actually a steady range trade can be a lot easier to trade and have more risk-reward than trend-trading, as long as one has patience.

Looking at the long-term daily chart, it's quite clear that the best level to avoid any trading is 1.10, the fair value for the last 8 months, or the price which has traded the most.

Instead, a much safer approach would be placing some pending orders to sell around 1.12 and take profits around 1.10.

[Guest HiWayFX]

Fed Officials in July Saw Rate Rise Conditions Approaching

Federal Reserve officials said last month that while conditions for raising interest rates were approaching, they need more confidence inflation is moving toward their goal, according to meeting minutes that prompted investors to reduce bets for a September liftoff.

Most meeting participants “judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point,” according to minutes of the July 28-29 Federal Open Market Committee session, released Wednesday in Washington.

A headline on the minutes was inadvertently released by Bloomberg 24 minutes before a 2 p.m. embargo set by the Fed.

The details come four weeks before the Fed’s September meeting, when most economists forecast the central bank will raise its benchmark interest rate for the first time since 2006. Policy makers say a decision to raise rates will hinge on continued improvement in the labor market and confidence that inflation will move higher.

“Almost all members” indicated that “they would need to see more evidence that economic growth was sufficiently strong and labor markets conditions had firmed enough for them to feel reasonably confident that inflation would return to the Committee’s longer-run objective over the medium term,” the minutes show. “Members” refers to meeting participants who are voting on FOMC policy this year.

Investors reacted to the news by reducing the probability the Fed would tighten next month to 38 percent, based on pricing of federal funds futures contracts at around 2:30 p.m. in New York, compared to 50 percent earlier Wednesday.

Inflation Confidence

“My immediate reaction is that it should reduce the probability of a September rate hike a little bit,” said Guy LeBas, managing director at Janney Montgomery Scott LLC in Philadelphia. “The biggest point to me is that there’s no evidence of confidence of rising inflation.”

Economists prior to the release of the minutes had been more confident of September liftoff. According to a Bloomberg survey taken Aug. 7-12, 77 percent said the Fed will act next month.

Source: Bloomberg

- See more at: https://www.hiwayfx.com/market-news/fed-officials-july-saw-rate-rise-conditions-approaching#sthash.ogsXq3T1.dpuf

[Guest HiWayFX]

EUR/USD: Euro continues growing

The Euro continues growing against the USD, the weakening of which was a result of the latest FOMC Minutes, published on Wednesday. The regulator lowered its inflation forecasts for the year amid the world economy slowdown and a significant fall in oil prices. Thus, a possibility of the interest rate hike in the US in September shrank.

The Euro was supported by the news that the European Stability Mechanism approved the third program of the financial aid to Greece, a first tranche of which was transferred to Athens.

Support and resistance

Bollinger Bands on the daily chart is moving upwards, while the price range is widening. The indicator is giving a sell signal as the price has left the upper border of the range. MACD is growing and giving a buy signal. Stochastic is also growing but is approaching the overbought zone, which indicates a possibility of the correction.

The indicators recommend waiting for the rebound and consider short-term long positions.

Support levels: 1.1279, 1.1245, 1.1200 (psychologically important level), 1.1150, 1.1129, 1.1100, 1.1035, 1.1000 (psychologically important level).

Resistance levels: 1.1300 (local high), 1.1330, 1.1360, 1.1400 (end of June high).

[Guest HiWayFX]

The Market Chaos Is All Because of China

First, on Monday, US stocks had a flash crash-like open where the S&P 500 plunged out of the gates, only to recover for the rest of the regular trading session, and plunge further near the close. Today most media outlets and stock analysts were optimistic with headlines such as "Stocks Have Their Biggest Rally This Year," before the Dow and S&P crashed at the close again.

15-minute chart of S&P 500 Index

Given the lower and lower trading volumes on US exchanges since 2008 and the start of QE, the closing price action must be considered as the most important price action of the day. Day after day the market shows it's hand only in the last hour of trading and sometimes even the last minutes. This is why analysts are constantly getting it wrong, because the market usually does something entirely different at the end of trading, and also because futures markets stay open an additional 15 minutes past the cash market close.

Mohamed El-Erian summed it up well on his Facebook page today;

Today’s reversal in US stocks was particularly worrisome because it came after a seemingly perfect sequential setup: (i) Stabilization in Asian stock markets (outside of China); (ii) monetary policy stimulus by the PBoC, China’s central bank; (iii) a strong bounce in Europe; and (iv) a solid start and mid-session for US markets.

Basically the same thing is happening in China's economy as happened in 2008 with the US economy. And back then, when the US caught the flu, the whole world caught a cold. With China being the world's second biggest economy after the US, we will likely see European and US markets continue to roughly follow the situation in China.

Today, China is having the long-awaited hangover of a credit fuelled boom which was aided and spun higher by the Chinese government itself. In 2008, this is the same thing that happened in the US. What followed was a desperate and quickly conceived plan to prop up the economy with further credit stimulus (quantitative easing and interest rate cuts).

If history is rhyming, then the next chapter in this story is for the communist party in China to take similar steps, and cut borrowing costs and stimulate credit markets with cheap money. Given the current experience of quantitative easing in the West, this is a process which will likely stretch out years into the future and will distort and manipulate markets for years to come.

[Guest HiWayFX]

Brent climbs by over $1 on crude stock draw, US economic data

Brent crude climbed by more than $1 a barrel on Thursday on an unexpected fall in U.S. crude inventories and a rally in global equity markets, but a stronger dollar capped gains.

Front-month Brent, the global oil benchmark, had gained $1.03 to $44.17 a barrel by 0225 GMT, having ended down 7 cents at $43.14 on Wednesday.

U.S. crude's front-month contract rose 91 cents to $39.51 a barrel, after settling down 71 cents, or 1.8 percent, at $38.60 a barrel.

"The local region is ... shrugging off some of the currency impact, instead pricing in the draws on inventory and a better than expected industrial outlook," said Michael McCarthy, chief market strategist at CMC Markets in Australia.

U.S. crude inventories fell 5.5 million barrels in the week to Aug. 21, the biggest one-week decline since early June, data from the Energy Information Administration showed on Wednesday. That was in line with the industry group the American Petroleum Institute's late-Tuesday report.

Analysts had expected an increase of 1 million barrels.

Wang Tao, a Reuters market analyst for commodities and energy, said Brent crude may approach resistance at $44.64 per barrel again, as its bounce from the Aug. 24 low of $42.23 seemed to be incomplete.

In other financial markets, a rebound on Wall Street helped soothe investors' tattered nerves, while the dollar rallied as risk aversion eased.

Regaining confidence after a sharp rebound on Wall Street where investors had been hit by worries over China's faltering economy, London copper futures also strengthened on Thursday.

Data released on Wednesday showed U.S. non-defence capital goods orders excluding aircraft, which is a proxy for business investment, increased 2.2 percent in July, the biggest rise since June last year and handily beating expectations.

"This suggests that business investment has continued to pick up at the beginning of the third quarter following a solid finish to the second quarter," ANZ said in a morning note on Thursday, referring to the U.S. core capital goods order data.

[Guest HiWayFX]

EUR/USD: wave analysis

The euro is correcting, a growth in the pair is expected. Assumingly, the third wave of the senior level 3 continues forming. Locally, the first wave of the junior level i of 3 in a form of a diagonal with extended fifth wave seemed to have finished, and a correction within wave ii of 3 started, which at present reached 50% Fibonacci (1.1260). If the assumption is correct, the pair continues growing towards 1.1850, 1.2000 after the correction ends. A critical for this scenario is the level of 1.0804, the breakdown of which would allow the pair to fall to 1.0600, 1.0500.

[Guest HiWayFX]

Asian Currencies Record Biggest Monthly Decline in Three Years

Malaysia's ringgit dropped more than twice as much as peers

Selloff in regional currencies spurred by yuan devaluation

Asia’s currencies posted their biggest monthly loss in three years, led by Malaysia’s ringgit, after a yuan devaluation heightened the risk of a currency war in the region as the U.S. prepares to raise interest rates.

- See more at: https://www.hiwayfx.com/market-news/asian-currencies-record-biggest-monthly-decline-three-years

[Guest HiWayFX]

GBP/USD: waiting for important news

Today, starting from 11:30 am (GMT +3) a bunch of important news for July – August is due in the UK. If positive forecasts are confirmed, the Pound is going to continue its upward dynamics, yet correctional. Later in the day, from 3:55 pm (GMT +3) important news are due in the US. The most important publication for this week, however, is the data on NFPR, which is due on Friday.

Markets are expecting the Fed to increase its interest rates this month. At the same time, a possible delay in the interest rates hike in the UK due to low inflation in the country would increase the pressure on the GBP/USD pair.

Today, a high volatility is expected, which should be taken into consideration when making trading decisions.

Support and resistance

The pair broke down important support levels at 1.5600 (38.2% Fibonacci), 1.5550 (ЕМА200 on the daily chart), 1.5520 (ЕМА144). On the daily, weekly and monthly charts OsMA and Stochastic turned to sales. On the 4-hour chart, the indicators give a buy signal confirming the correction continuation, which can last to the levels of 1.5500, 1.5550. If fall continues, the next targets can be the levels of 1.5230 (23.6% Fibonacci), 1.5100, 1.4600 (2015 lows).

Support levels: 1.5350, 1.5230.

Resistance levels: 1.5500, 1.5520, 1.5550, 1.5600.

Source: Claws&Horns

[Guest HiWayFX]

The Best And Worst Performing Assets In August

At the end of July, the WSJ compared gold to a pet rock. Just over a month later, a lot of professional investors would have loved to be invested in the said pet rock (Loeb down 5%, Einhorn down 5%, Cooperman a decrease of 11%, Ackman has been established for the year) instead of all of which are grouped in the same “levered beta” names that have left many of them down for the year. Reason: DB summarizes the August performance,

- See more at: https://www.hiwayfx.com/market-news/best-and-worst-performing-assets-august

[Guest HiWayFX]

Will the Global Economy Ever Return to Growth?

The ECB announced yesterday not only that the growth of the Eurozone will remain subdued and inflation will remain below target, but also that they will increase quantitative easing and may extend the end of the program as well.

The Euro of course tanked on the news, but this is most alarming because of how there is nothing anyone can do in the world to promote growth and inflation. Not one central bank has been successful at it. And many believe that the Fed will err by raising rates this month even though the US economy is not that strong.

There is a whole list of factors contributing to a renewed financial crisis, with China's collapse being the most obvious one. The recent huge movements in global stocks are one sign that something is wrong in the global economy.

In his monthly letter to investors, Bill Gross shows little confidence that there is anywhere safe to hide in the financial world, not stocks and not even bonds. Your best bet, he says, is staying in cash and getting a return of your capital than getting a return on your capital.

Finance based capitalism with its zero bound interest rates has now produced global imbalances that impair productive growth and with it the chances for “old normal” prosperity. Whether you are tall or short, or your portfolio big or small, they’re not going up as much as you hope they would over the foreseeable future.

Besides this, there are other factors that mean the current market volatility will stay around for longer:

Fiscal policies

Sovereign debt levels (Greece)

Financial bubbles (elevated equity prices due to QE)

FX volatility (due to distorted money markets)

[Guest HiWayFX]

EUR/USD languishes near lows, 1.1200 in sight

EUR/USD pair failed at 1.13 barrier in the European session and accelerated losses thereon, as the subdued Euro zone CPI and the broad based US dollar rebounded weighed on the major.

EUR/USD back near 1.1200 levels

The EUR/USD pair trades -0.32% lower at 1.1233, testing fresh session lows struck at 1.1227 shortly after EZ CPI data. The main currency pair snapped its recovery and extends its downslide for the third straight session as the common currency was sold into the sluggish Eurozone price pressures print.

The latest CPI figures from the euro zone for August posted a sharp rise from -0.6% to 0.0% month-on-month, while the yearly change decreased from 0.2% to 0.1%. The same applied for the core gauge on a yearly basis, which also shed 0.1% to 0.9%.

Moreover, a major turnaround in risk conditions during the European session, with the appetite for riskier assets improving, favoured the US currency at the expense of the euro.

Meanwhile, the main focus today remains on US CPI figures for August, which are expected to have risen a mere 0.2% over the year.

However, markets are likely to remain cautious as the Fed meeting commences later today, with final verdict on the rates due to be announced tomorrow.

EUR/USD Technical Levels

The pair has an immediate resistance at 1.1299 (Today’s High), above which gains could be extended to 1.1328 (Sept 15 High) levels. On the flip side, support is seen at 1.1204 (Sept 1 Low) below which it could extend losses to 1.1170 (Sept 10 Low) levels.