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USD/JPY follows Treasury yields ahead of Fed minutes


FXStreet (Mumbai) - The USD/JPY pair is slowly rising towards the 5-DMA located at 119.68 levels, tracking the hardening of the 10-year Treasury yields in the US as markets brace up for the December Federal Reserve minutes.

The pair extended gains post the release of an upbeat December month ADP report to clock a high of 119.55 levels. Moreover, the Treasury yield curve has steepened, indicating relatively resilient yields at the long-end 10yr and 30yr of the treasury market curve. The USD/JPY is known to have a direct correlation to the yields at the long-end. Thus, the pair is slowly inching higher tracking the 10-yr treasury yield, which currently trades 3.2 basis points at 1.995%.

USD/JPY Technical Levels

The pair has an immediate resistance located at 119.65 (5-DMA) and 119.83 (10-DMA). Meanwhile, support is seen at 119.24, under which the pair could re-test 118.79 (50-DMA) levels.



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NZD/USD drops to 0.7720


FXStreet (Córdoba) - NZD/USD dropped below 0.7730 after the release of the ADP report in the US and bottomed at 0.7721, hitting a fresh daily low.

The pair is moving off session lows, currently trading at 0.7737, down 0.47% for the day so far. The kiwi erased most of yesterday's gains when it rose supported by higher diary prices.

Today the US dollar gained momentum across the board after ADP reported that the US private sector created 241.000 jobs in December; above expectations. Commodity currencies are falling modestly versus greenback buy climbing against its European counterparts, as crude oil prices recover ground.



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Gold under pressure ahead of Fed minutes


FXStreet (Mumbai) - Gold prices decline ahead of the December Federal Reserve (Fed) minutes release, tracking the strength in the Treasury yields in the US.

The yellow metal trades 0.61% lower at USD 1212/Oz levels, compared to the previous session’s close at USD 1219.40/Oz levels. The metal is taking cues from the strength in the US treasury yields. The 10-year yield is up 2.4 basis points at 1.987%, while the 30-yr yield is up 3.1 basis points at 2.554%. Interestingly, the 2-yr yield, a barometer of short-term interest rate expectations, is trading largely unchanged at 0.633% amid widespread belief the minutes would hint at policy tightening in 2015. Gold may extend decline if the 2-year yield starts rising as we move closer to Fed minutes release.

Gold Technical Levels

Gold has an immediate support located at 1209.76 (50-DMA), under which prices may fall to 1205.50 levels. Meanwhile, resistance is seen at 1214.18 (10-DMA) and 1218.4 levels.



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FOMC minutes outlook: Dependent on data — CA


FXStreet (Guatemala) - Analysts at Credit Agricole take a view on the FOMC minutes.

Key Quotes:

"In the December FOMC meeting minutes, the discussion behind the forward guidance changes will provide a better gauge of the balance of views on the dove-hawk scale with regard to economic conditions and the rate lift-off. We will look for additional clues on the dove-hawk balance in the December FOMC minutes”.

“While the December FOMC statement offered a hawkish tone in introducing “patience” in policy normalization the Fed dampened such sentiment by stressing that its guidance remains consistent with the previous statements’ “considerable time” characterisation".

"We find that the altered guidance does not signal a change in the policy outlook, which remains dependent on the data. Yet, somewhat unsurprisingly, it prompted two hawks to dissent”.

"Further insight on the Fed’s views on the labour market improvement and disinflationary pressures will be useful in understanding the introduction of “patience”. Downward movement in the median fed funds rate projections added a dovish angle and implies a slower pace in rate hikes, so any more information on postlift-off normalisation will be helpful as well. Discussion about the impact of declining energy prices on domestic inflation and financial stability will be of particular interest, given recent oil price movements and financial market volatility”.

"As Chair Yellen noted in her press conference that the normalisation process is unlikely to begin for “at least the next couple of meetings,” any additional comments on the timing may be offered in the minutes. Finally, the minutes likely offered more discussion on segregated accounts, other interest rate tools and the Fed’s balance sheet normalization process".



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EUR/USD threatens 1.1800


FXStreet (Córdoba) - EUR/USD made marginal new lows and continues to move toward the 1.1800 area as strong US data and negative Eurozone CPI weighed further on the pair.

EUR/USD remains on downtrend, printing lower highs and lower lows on daily basis pressured by divergent monetary policies outlooks in the US and the Eurozone, with the euro having scored a fresh 9-year trough of 1.1802 so far today. If EUR/USD breaks below the 1.1800 psychological level, next target would be 1.1777, which is Dec 30 2005 low.

At time of writing, EUR/USD is trading at 1.1805, recording a 0.69% loss on the day, as investors also await for clues from the FOMC meeting minutes, to be published at 19:00 GMT.



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USD/JPY bulls taking the 119 handle in its stride


FXStreet (Guatemala) - USD/JPY currently trades 119.44 with a high at 119.66 and a low of 118.36, currently up on the US shift by 0.81%.

USD/JPY remains in a wide range overall while risk aversion threatens the bulls down to 115.50 vs the grain that is to the upside and targets the 120 psychological handle. The price action has been on the bid and pairing back recent losses that tested the less committed bulls down to the 118 handle.

The Yen will remain supported due to the heightened growth concerns, one of which remains with the price of oil. It is the sheer momentum and steepness of the decline that has heightened investor concerns that displays a lack of global demand for the black stuff and thus implies slower global expansion ahead.

Technically, USD/JPY has moved back into a neutral formations in the short term and moves back into the territory of the Dec formed cloud. 118.00 is key and guards the outlook for a breaths run down to test Dec lows of 115.50. Next up to test the commitment of the bulls are the FOMC minutes - looking for signals within the language around the proposed first rate hike.



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USD/JPY bulls taking the 119 handle in its stride


FXStreet (Guatemala) - USD/JPY currently trades 119.44 with a high at 119.66 and a low of 118.36, currently up on the US shift by 0.81%.

USD/JPY remains in a wide range overall while risk aversion threatens the bulls down to 115.50 vs the grain that is to the upside and targets the 120 psychological handle. The price action has been on the bid and pairing back recent losses that tested the less committed bulls down to the 118 handle.

The Yen will remain supported due to the heightened growth concerns, one of which remains with the price of oil. It is the sheer momentum and steepness of the decline that has heightened investor concerns that displays a lack of global demand for the black stuff and thus implies slower global expansion ahead.

Technically, USD/JPY has moved back into a neutral formations in the short term and moves back into the territory of the Dec formed cloud. 118.00 is key and guards the outlook for a breaths run down to test Dec lows of 115.50. Next up to test the commitment of the bulls are the FOMC minutes - looking for signals within the language around the proposed first rate hike.



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US data coming in mixed of late - watch for volatility - BTMU


FXStreet (Guatemala) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ noted that the data from the US has become a little more mixed of late.

Key Quotes:

“This may well fuel speculation that the drop in crude oil prices will show up in a slowing of US economic growth. We maintain that the overall net impact for the US economy is certainly positive and the boost to real incomes for US consumers will be far more important than the impact of knocked out shale production in key energy-intensive states."

“But how that plays out in the flow of economic data releases is admittedly more uncertain”.

"It is feasible that the data flow becomes more volatile that may mean a period of monetary policy expectations being pared back before we see the clear net benefits of the boost to real incomes from the fall in crude oil prices."


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Non-farm Payrolls increase by 252k, December revised upwards, unemployment rate declines to 5.6 percent


FXStreet (London) - Total non-farm payroll employment rose by 252K in December, and the unemployment rate declined to 5.6 percent, the U.S. Bureau of Labor Statistics reported today.

The BLS reported that job gains occurred in professional and business services, construction, food services and drinking places, health care, and manufacturing.

The unemployment rate declined further than expected - down 0.2 percentage point to 5.6 percent in December, and the number of unemployed persons declined by 383,000 to 8.7 million. Over the year, the unemployment rate and the number of unemployed persons were down by 1.1 percentage points and 1.7 million, respectively.

In December, average hourly earnings for all employees on private nonfarm payrolls decreased by 5 cents to USD24.57, following an increase of 6 cents in November. Over the year, average hourly earnings have risen by 1.7 percent. In December, average hourly earnings of private-sector production and nonsupervisory employees decreased by 6 cents to USD20.68.

The change in total nonfarm payroll employment for October was revised from +243K to +261K, and the change for November was revised from +321K to +353K. With these revisions, employment gains in October and November were 50K higher than previously reported.


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US Dec labour report, something for everyone, but weak wages dominate – ING


FXStreet (Barcelona) - Rob Carnell of ING, notes that the US NFP print came in at 252k, better than consensus, but hourly earnings dropped to 1.7% from previous 1.9%, further sharing that the strong unemployment rate and payroll numbers might provide the necessary ammunition for a Fed rate hike.

Key Quotes

“There was, as is often the case, something for everyone in the latest US labour report for December. Non-farm payrolls were slightly stronger than the consensus at 252K (240K consensus) though with substantial upward revisions to the previous months’ data, it does now look as if the payrolls trend is beginning to lift a little.”

“There was, in addition, a bigger than anticipated decline in the unemployment rate, which fell 0.2pp to 5.6%, helped by a 111K bounce in the household survey of employment and a drop in labour force participation.”

“But hourly earnings were a real disappointment. Just when it looks as if the US is about to see a step up in the wages figures, not only do you get a weak figure (-0.2%mom) but large revisions to past data, and the wages growth rate has plunged back to 1.7%YoY from 1.9% (2.1% unrevised last month).”

“If you want to raise rates, these numbers provide the ammunition you need in terms of payrolls and the unemployment rate. Historically, the Fed always thought full employment was at about a 5.3% rate. So we are insignificantly higher than that now. The rate of payrolls jobs growth is also lending weight to the “hikers” arguments.”

“Against this, with even less wage inflation than was apparent last month, the doves can argue that the unemployment figures are biased and giving a misleading steer, and argue against any near-term increase in rates.”


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CNB might not devalue the Koruna more – KBC


FXStreet (Barcelona) - The KBC Bank Research Team expects CNB to refrain from any more devaluation of the Koruna in the event of another fall in demand and inflation, meanwhile it might wait for further euro data and ECB’s action.

Key Quotes

“Our baseline scenario still envisages that the CNB will not eventually resort to more devaluation and, in the event of another unexpected fall in demand and inflation, as a first step the Bank Board would rather be another extension of its commitment to intervene against the koruna.”

“It is also possible that the CNB Board will be satisfied with weakening the koruna through verbal communication as was recently delivered by CNB’s vice‐governor Tomšík in his commentary for the Czech business daily.”

“In the meantime, the CNB might wait and watch for more macroeconomic data from both the Czech Republic and the euro area and for another ECB’s policy action.”

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Consensus on US Job growth met, but big earnings disappointment - BBH



FXStreet (Guatemala) - Analysts at Brown Brothers Harriman explained that the US created 252k new jobs in December, while the October-November series was revised up by 50k.

Key Quotes:

"The participation rate ticked down to match the cyclical low seen last September of 62.7% (from an upwardly revised 62.9% in November). This was behind the decline in the unemployment rate to 5.6%".

"Hourly earnings were an important disappointment. Not only did they fall by 0.2% m/m in December, but the 0.4% rise in November (that was seen as a preliminary sign that the improvement in the labor market was finally seeing upward pressure on wages) was halved to 0.2%. The year-over-year rate slumped to 1.7%, the lowest since October 2012. This will become problematic for the Fed if it persists. As the FOMC minutes suggested, if the labor market continues to improve, which includes broader measures than simply the unemployment rate such as earnings, the Fed could still raise rates even if there is no further progress toward the inflation target".

"The manufacturing sector added 17k jobs, and construction added 48k. These points to a healthy increase in industrial output in December. Business services, leisure, and health care continue to post strong jobs growth. Recent data suggests the US economy may have grown around 3% in Q4".

"The US dollar traded higher across the board in response to the employment figures that we would read a bit more cautiously. The move in the December Eurodollar futures implying the lowest yield since mid-December is more in line with our cautious assessment than the knee-jerk gains in the dollar".



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Fed member Voting right rotations - Danske



FXStreet (Guatemala) - Analysts at Danske Bank noted the rotations of Fed member voting tights.

Key Quotes:

"With the upcoming rotation of voting rights at the January FOMC meeting, Evans (dove) and Lacker (hawk) will become voting members, while Kocherlakota (dove) will lose his voting right".




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GBP/JPY to test 180.90 before further sell-off resumes FXStreet



FXStreet (Barcelona) - FXStreet Editor and Analyst, Omkar Godbole, shares that soft Yen and recovering UK Gilt Yields might support gains in GBP/JPY, anticipating the pair to test 180.90 before further sell-off resumes.

Key Quotes

The GBP/JPY pair fell to a 2-month low today after the data in the UK showed CPI in December at 0.5% year-on-year, which is well below the estimate of 0.7% and down from the Novembers print of 1.0%.

The cable weakened to a three-day low of 1.5076 following the weak data, although losses have been recovered since the Gilt yields in the UK recovered post the release of the data

The recovery in the UK Gilt yields, along with relative weakness in the Yen on recovery in Treasury yields is likely to support gains in the GBP/JPY pair.

Technically, the GBT/JPY pair is oversold on daily charts as indicated by the RSI. Plus a technical buying is likely to set-in since the pair has recovered after dipping below the support at 178.70.

We can also see a positive price-RSI divergence on the 4-hour chart.

Thus, the pair is likely to test 180.90 (100-DMA) levels before resuming further sell-off.




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UK CPI falls, Swedish CPI boosts the krona – BBH



FXStreet (Barcelona) - The BBH Team note that two inflation reports and two trade reports dominate today's macro-economic developments, with UK CPI falling below consensus (0.7%) to 0.5%YoY, and Swedish CPI remaining firm at 0.2% MoM, boosting the Swedish krona.

Key Quotes

“The UK reported a 0.5% year-over-year increase in CPI. This was below the 0.7% consensus and is half the pace seen in November.”

“BOE Governor Carney has to write a letter to Chancellor of the Exchequer Osborne to explain the undershoot. Energy and food prices are the key drivers.”

“We note that the core rate actually ticked up from 1.2% to 1.3%. The December short-sterling futures firmed to test the contract high set last April at 99.32 (implied yield 68 bp) as the market all but gives up on the idea of a rate hike this year.”

“Sweden also reported December CPI figures. It was surprisingly firm at 0.2% on the month. The market had expected a 0.1% decline. The year-over-year rate did slip into more negative territory (-0.3% from -0.2%) but was not as low as had been feared/expected (-0.5%). The underlying rate did tick up to 0.2% from 0.0%, but caution is advised here. The underlying rate is calculating using a fixed mortgage interest rate rather than excluding food and energy.”

“The Swedish krona rallied on the news and is the strongest of the major currencies today, gaining 1% against the US dollar.”

“The Riksbank meets on February 12, and an adoption of aggressive action seems somewhat less likely now. It may still adjust its forward guidance, pushing out the timing of the first rate hike and perhaps lengthening some repo operations, but negative rates or bond purchases seems unlikely.”





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Slump in Copper not enough to trigger deep production cuts



FXStreet (Mumbai) - With the London Copper trading below USD 6000 for the first time since October 2009, a tenth of world’s top miners are likely to suffer losses despite which the production cuts may not be significant.

The metal’s 16% slide since July is the biggest since 2003. As per Robert Edwards, managing consultant for mining costs at consultancy CRU, “the pain would be more acute and unsustainable at USD 5,000 per tonne. At that point “tangible cutbacks” can be expected.”

However, some incremental projects have been affected reports Reuters. Antofagasta will shutter its small Michilla operation in Chile this year because it has become uneconomic.

Moreover, a prolonged low price may force to scale back their production. As per Bruce Allway, analyst at GFMS, owned by Thomson Reuters, “If, as we expect, copper prices remain under pressure in coming months, other producers at the upper end of the cost curve may opt to follow suit. “




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Silver flirts with USD 17/Oz level



FXStreet (Mumbai) - Silver prices extended gains in line with Gold prices, after having breached the 100-DMA located at USD 16.56 to trade at USD 17/Oz levels.

The metal struggled near the 50-DMA for six consecutive sessions before rising well above the same during the European session today. The rise in Silver is more or less in line with the gains witnessed in the yellow metal. However, being utilized in industries, gains in Silver may be capped due to gloomy outlook of the global economy. Nevertheless, prices are likely to remain well supported due to its semi safe haven status. A correction in the US dollar coupled with continued risk aversion in the equities may push Silver prices to December 2014 high of USD 17.33/Oz levels.

Silver Technical Levels

The immediate resistance is seen at 17.03, above which prices could test 17.33(Dec 2014 high). Meanwhile, support is seen at 16.78 and 16.56 (100-DMA) levels.



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UAE oil minister: Sudden rise in oil unlikely – KBC



FXStreet (Barcelona) - The KBC Bank Team notes UAE’s oil minister commented that it could take year to adjust oil production and that a sudden rise in oil prices is unlikely.

Key Quotes

“The oil price slumped by more than 5% yesterday. Today in early trading, Brent is even seen at 45.8 USD/bbl.”

“Regarding news, Suhail Al Mazrouei (a UAE oil minister) reiterated today that the OPEC will stick to its strategy and will keep its production unchanged. He also said that it could take years to adjust oil production to appropriate levels and that it was unlikely we would see a sudden rise in oil prices.”

“Though we acknowledge risks related to the June OPEC meeting, we also do not expect the cartel will change its policy.”

“All in all, Mazourei’s comments are in line with our view that there may be only a handful of reasons for oil price to go up significantly in the short-term.”

“On the other hand we still see current prices are too low from the longer term perspective. As usual this view is of course based on many additional assumptions such as on steady growth of oil demand.”




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US small business optimism rises in December



FXStreet (London) - The US Small Business Optimism Index rose to 100.4 in December, beating expectations of a rise to 98.5, according to the National Federation of Independent Businesses.

According to the survey carried out by the NFIB 16 percent of employers think it is a good time to expand and the percentage of employers anticipating job creation rose to 15 percent.

Employers with jobs not able to fill rose to 25 percent. Firms seeing easier credit conditions rose to -5 percent. Firms expecting positive earnings trends rose to -15 percent. Firms expecting compensation to grow rose to 25 percent.

However, Percentage of firms expecting a better economy fell to 12 percent.




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GBP/JPY makes another run at 180.00 levels



FXStreet (Mumbai) - The GBP/JPY pair made another attempt at 180.00, the level which it failed to take out twice since the yesterday’s US session.

The gains in the US stock markets coupled with the recovery in the US Treasury yields pushed the USD/JPY pair 0.30% higher at 118.71 levels. The 10-year yield has recovered losses to trade almost one basis points higher for the day at 1.919%. Meanwhile, the DJIA advanced 1.59% to trade at 17,921.50 levels, while the S&P futures are up 1.31% at 2048.95 levels. Sustained strength in the equities and the Treasury yields may see GBP/JPY rising above 180.00 levels.

GBP/JPY Technical Levels

The immediate resistance is seen at 180.07, above which the pair may re-test 180.52 levels. Meanwhile, support is seen at 179.14 and 178.46 levels.




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N Farid,

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JOLTS: Job openings rose to 4.97 million in November



FXStreet (London) - There were 5.0 million job openings on the last business day of November, little changed from 4.8 million in October, the U.S. Bureau of Labor Statistics reported today. Hires (5.0 million) were little changed and separations (4.6 million) declined in November. Within separations, the quits rate (1.9 percent) was unchanged and the layoffs and discharges rate (1.2 percent) was little changed.

According to the BLS report, there were 5.0 million job openings on the last business day of November. The job openings rate was 3.4 percent. The number of job openings was little changed for total private and increased for government in November. Job openings increased for non-durable goods manufacturing and for state and local government. The number of job openings was little changed in all four regions.

There were 5.0 million hires in November, little changed from October. The hires rate in November was 3.6 percent. The number of hires was little changed for total private and government. Hires decreased over the month in professional and business services and in the West region.




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Jan 13,2015
OctaFX.Com News Updates





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N Farid,

OctaFx Support Team!

[email protected] | +32 2792 4855

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USD/CHF rises above 1.0200, nears 4-year high



FXStreet (Córdoba) - The dollar extended gains versus European counterparts and climbed above the 1.0200 level versus the franc, stalling a couple of pips ahead of last week’s 4-year high scored at 1.0216.

USD/CHF pierced the 1.02 mark to peak at 1.0213 and continues to trade within a touching distance of its multi-year high, mirroring EUR/USD moves. If USD/CHF breaks above 1.0216, next resistance could be found at 1.0277 (Sep 10 2010 high) and 1.0300 (psychological level) followed by 1.0319 (Aug 26 2010 high).

On the other hand, immediate supports are seen at 1.0117 (Jan 12 low) and 1.0100 (psychological level) ahead of 1.0083 (10-day SMA).




OctaFX.Com - Please click here to see Financial News/Forex News on OctaFx official page


Jan 13,2015
OctaFX.Com News Updates





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N Farid,

OctaFx Support Team!

[email protected] | +32 2792 4855

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