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Forex: EUR/USD backs away from highs

FXstreet.com (Córdoba) - The euro lost momentum after rallying to a fresh 2-month high against the greenback in the wake of disappointing US employment data. However, as investors assess the figures, risk aversion started to sharpen, allowing the USD to recover some ground.

EUR/USD peaked at 1.3242 but failed to break higher and pulled back to the 1.3205 area before finding support. At time of writing, the cross is quoting around 1.3210/15, where it posts a 0.4% daily gain.

Ahead of the Fed monetary policy decision, sour employment data adds to bank's case to maintain an ultra-loose policy and offers some downside risk to Friday's payroll number. ISM Manufacturing PMI is scheduled for 14:00GMT.

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May 01, 2013

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Forex: GBP/USD pulls back from highs after load of US data, capped just below 1.5600

FXstreet.com (Barcelona) - The GBP/USD failed to reach the 1.5600 mark on its upside attempts, for now, coming as high as 1.5996 after employment data by ADP. Relevant economic data in the US was already published, and now, investors are getting ready for the FOMC meeting. As of writing, the pair is correcting and trading at 1.5560 area.

TD Securities analysts believe that the minutes of today’s FOMC meeting may be more interesting than the actual outcome, “as the minutes will show that the weaker run of US data has shifted the debate away from the exit of QE”. Today’s statement should also give signs of what is to come: “We expect the assessment of the economic and inflation outlook to be downgraded, reflecting a shifting emphasis relative to March when the prospect of a labor market recovery was beginning to tilt the balance towards tapering. This time around the rising uncertainty about the impact of fiscal austerity on growth and further moderation in core inflationary pressures will likely shift the balance back to an easing bias. And even though we do not expect the dial to go all the way to increasing the size of purchases, the risk of this has increased, albeit one that remains quite low”, wrote analyst Alvin Pontoh.

The April update of the ISM manufacturing PMI dropped from 51.3 to 50.7, disappointing investors by coming below market consensus of 50.9. ISM prices paid fell from 54.5 to 50.0, below 53.0 consensus. Markit manufacturing PMI improved slightly, from 52.0 to 52.1 in April. The US ADP employment report came in lower than expected, at 119K in April instead of the 150K expected, also with the March figure being revised lower from 158K to 131K. Construction spending in the US contracted by -1.7% in March, according to the US Census Bureau, disappointing the market that was expecting a 0.7% rise. February data was revised higher from 1.2% to 1.5%.

“The hourly chart shows price finding support in its 20 SMA, currently around 1.5540, while indicators aim slightly higher above their midlines”, wrote FXstreet.com independent analyst Valeria Bednarik. “In the 4 hours chart indicators maintain a neutral stance in positive territory, as per turning flat over the past 2 days. A strong Fibonacci resistance is located around 1.5610 with a break above this last pointing for an acceleration in the pair’s gains”, she added.

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May 01, 2013

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US: EIA Crude Oil Stocks jumps to 6.696M in April-26

FXstreet.com (Barcelona) - EIA Crude Oil Stocks boosted its rising pace by adding 6.696M to its stocks in the week ending at April 26, following a 0.947M rise. Analysts were only expecting 0.800M.

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May 01, 2013

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Forex: AUD/USD falls 100 pips and erases weekly gains, at 1.0282

FXstreet.com (Barcelona) - The AUD/USD is plunging since the publication of US weak ADP employment, from 1.0350, and as went as low as 1.0275 low, falling by 100 pips on the day. The cross is currently trading at 1.0282, Friday’s close, which means it has fully retraced this week’s gains. The US ADP employment report came in lower than expected, at 119K in April instead of the 150K expected, also with the March figure being revised lower from 158K to 131K. Investors will now be eyeing the FOMC meeting.

China’s PMI below the 51.0 consensus, easing to 50.6 in April from 50.9 in March, didn’t help the AUD mood either: “The details reveal steady indices for output and raw material inventories, but broad based declines across other components, with the biggest fall recorded in input prices (-10.5pt). At face value, today’s PMI suggests ~7¾% growth in Q2, a similar pace to Q1 and consistent with our view that China’s growth will print sub-8% GDP for 2013”; wrote TD Securities analyst Alvin Pontoh.

The April update of the ISM manufacturing PMI dropped from 51.3 to 50.7, disappointing investors by coming below market consensus of 50.9. ISM prices paid fell from 54.5 to 50.0, below 53.0 consensus.

“In the medium-term, AUD/USD is moving within the horizontal range defined by the support at 1.0177 (25/07/2012 low) and the resistance at 1.0613 (09/08/2012 high). The direction of the break of this range is expected to give the next medium-term trend”, wrote MIG Bank analysts Bijoy Kar and Luc Luyet.

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May 01, 2013

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Forex Flash: Gilts engage in range-bound trading – RBS

FXstreet.com (Barcelona) - Gilts remain range-bound after meeting the 119.93 target, but failing to reach the 120.52 wave projection and reversing some of the gains after forming an outside session. According to Technical Strategist Dmytro Bondar at RBS, “The price however found a decent support at 119.56 and 119.27, where several Fibonacci retracement coincide, which overall suggest the worst might be over and the price should recover to 120.52 and potentially 121.00/26 after sitting in a 119.27 – 120.00 range for a while.”

Moreover, the caveat would be a sustained break below 119.27. 20-day MA is also a good trailing support and pivot point.

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May 02, 2013

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Forex: USD/CAD climbs to 1.0080/85

FXstreet.com (Barcelona) - The renewed strength of the greenback is pushing the cross to the area of 1.0080/85 on Thursday, just pips below session highs in the vicinity of 1.0090 and reverting the negative start.

“Short-term patterns continue to suggest some consolidation/basing price action in USD/CAD. The market has pushed through hourly trend resistance off last week’s high and price signals are modestly constructive around the 1.0050 area… Above 1.0105 should allow for a decent short-term bounce to the 1.0140/60 range”, suggested FX Strategists G.Moore and S.Osborne at TD Securities.

At the moment, the pair is losing 0.03% at 1.0080 with the next support at 1.0060 (low May 2) ahead of 1.0051 (low May 1) and then 1.0045 (low Mar 28).

On the upside, a break above 1.0100 (high May 1) would aim for 1.0173 (50% of 1.0295-1.0051) and finally 1.0178 (MA21d).

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May 02, 2013

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Forex: GBP/USD bounces from lows

FXstreet.com (Córdoba) - After dipping below the 1.5500 mark and hitting a 2-day low, the Cable managed to bounce and has recovered some ground within the last hours as investors now position for the NFP report.

GBP/USD rebounded from a low of 1.5495 following the European close and climbed back to the 1.5530 zone, where it is currently trading, still 0.1% below its opening price.

In terms of technical levels, GBP/USD could find next resistances at 1.5535 (intraday level) and 1.5590 (daily high) ahead of 1.5605. On the other hand, supports line up at 1.5495 (daily low), 1.5465 (low Apr 30) and 1.5420/17 (200-hour SMA/low Apr 26).

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May 02, 2013

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Forex: US Dollar Index upside capped around 82.40

FXstreet.com (Barcelona) - The US Dollar Index, which gauges the greenback against its major competitors, is advancing firmly on Thursday after the ECB left the door open for negative interest rates on deposits in its last meeting.

“Renewed vulnerability in commodities has aided USD but the US economy remains in its “spring swoon”. EUR vulnerability should limit downside on DXY”, commented Sean Callow, Strategist at the Australian Westpac.

As of writing, the index is up 0.90% at 82.26, and according to tradingcentral.com, the next resistance levels line up at 84.05 (horizontal resistance), 85.60 (horizontal resistance) and 86.85 (horizontal resistance); while support levels align at 80.85 (medium-term pivot point) followed by 78.95 (horizontal resistance) and 76.70 (horizontal resistance).

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May 02, 2013

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Forex: EUR/USD accelerates de downside, around 1.3045/50

FXstreet.com (Barcelona) - The selling pressure in the shared currency has intensified on Friday, dragging the cross to fresh weekly lows in the vicinity of 1.3025/30 as better-than-expected April Payrolls are renewing the idea that the Fed may tamper its ongoing QE programme sooner that estimated.

Recall that the us economy created 165K jobs during April, beating forecasts at 145K and March’s print at 138K (revised from 88K). The unemployment rate also bettered estimates, falling to 7.5% vs. 7.6% expected.

The cross is now retreating 0.13% at 1.3047 with support levels at 1.3037 (low May 2) and then 1.3015 (low Apr.29).

On the flip side, a surpass of 1.3220 (high May 2) would open the door to 1.3231 (daily cloud top) and then 1.3243 (high May 1).

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May 03, 2013

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Forex: EUR/JPY rises to 130.00 handle on US session

FXstreet.com (Barcelona) - While the USD/JPY made a quick rally to 90.00 area, staying sideways since then, and the EUR/USD plunged to 1.3034 before pulling back to its highs at 1.3150, the EUR/JPY reaction to the US nonfarm payrolls during the US session has been more of a steady rise towards the 130.00 mark. The pair jumped 100 pips to 129.50 first, and then extended higher to 130.34 high slowly. The market is currently +1.50% up on the day, just below the 130.00 handle.

The US nonfarm payrolls surprised investors as the March weakness was revised higher by 50K, from 88K to 138K. Also, April data came in above market consensus, at 165K instead of 145K.

Market consensus was already suggesting a contraction, but by -2.6% in March, not what actual Factory Orders data showed: -4.0%. Also, the February figure was revised lower, from -3.0% to -1.9%. The non-manufacturing PMI by ISM fell from 54.5 to 53.1 in April, disappointing investors that were expecting a figure around 54.0.

The European Commission granted a 2-year extension to achieve the deficit deadlines in Spain and France, placing it in 2016 and 2015 respectively.

“Above 130 will target the 131.12 recent high. Our slightly longer term target is 136.71, the upside measurement from a wedge”, wrote Commerzbank analyst Karen Jones.

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May 03, 2013

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Forex Flash: High dividend stocks retain luster – Goldman Sachs

FXstreet.com (Barcelona) - According to the Economics Research Team at Goldman Sachs, “We continue to like high dividend yield stocks and with more easing of global financial conditions, bond yields are close to their cycle lows and credit spreads remain tight as the search for yield intensifies.”

10-year Treasuries have rallied to below 1.75% on the back of QE in Japan and weaker global growth data – credit spreads are likely to remain tight as a result. With the yield opportunity set in fixed income shrinking further, investors are pushed up the risk curve and within equities high dividend yield stocks are often their first choice due to their attractive yield compared to other asset classes and as they are more bond-like, with more total return upfront and less from future growth.

“They are also perceived to be less risky and more defensive – this move up the risk curve has probably also contributed to the outperformance of defensives vs. cyclicals year-to-date in Europe and the US.” the team adds.

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May 03, 2013

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Canada: Building Permits rose 8.6% MoM in March

FXstreet.com (Barcelona) - Canadian building permits rose 8.6% on a monthly basis during March, crushing estimates at 0.9% and up from February’s raise of 1.5% (revised).

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May 06, 2013

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Forex: USD/JPY aims 99.70/100.00 and then 101.27/67 – Commerzbank

FXstreet.com (Barcelona) - The USD/JPY remains sidelined above the 96.99 late April low, but dips lower should find support at 96.71, the March high, and at 95.67, the mid-April low, while key support remains trend and cloud support at 95.40/94.13. “We look for this to hold the downside and provoke recovery, if reached at all that is”, wrote Commerzbank analyst Axel Rudolph. Provided this holds the downside, the USD/JPY targets the 99.70/100.00 resistance area (recent high, Fibonacci retracement and psychological resistance):

“This resistance zone is being targeted at present but is likely to cap once again, before eventually being breached. Above here will see an extension to 101.27/67 (the 1999 and 2005 lows). This resistance area is expected to hold the initial test”, he added.

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May 06, 2013

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FXstreet.com (Barcelona) - Forex Flash: Inflation provides scope for central bank largesse to continue - Societe Generale

FXstreet.com (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale notes that inflation provides scope for central bank largesse to continue.

He begins by noting that with 2yr swap rates edging below 2.8% on Friday, a rate cut in Australia was largely priced in, even if it wasn’t widely expected amongst economists. He adds that that, along with a bounce in copper and some other commodity prices, is why AUD/USD is holding up and it needs to close decisively below 1.02 to make chart-drawers (and me) really happy. He writes, “The RBA was allowed to cut because recent inflation data are low. Away from that, the split between resources/domestic sectors of the economy is not new and growth hasn’t fallen off a cliff. But inflation may even allow further easing.”

Juckes sees that the currency is overvalued and supported only by risk-on (SPX), commodities and rates/yields. As two of the three pillars holding it up come down, it is only a matter of time before a return to the mid-90s is seen. Lack of inflation is evident in the UK BRC shop price index too, which fell to 0.4% y/y in April, its lowest level since 2009. He comments that the BRC measure may come in way below the CPI series, but the trends are similar enough that we might get better CPI news in the months ahead.

He writes, “Receiving 10yr/10yr GBP vs US still appeals to me, and with the MPC likely to do absolute nothing this week, I don’t see much wrong with short EUR/GBP trades, either. In Europe, yesterday’s dovish comments from Mario Draghi kept the peripheral bond mood buoyant. The sharp contrast between yesterday’s Fed loan officers’ survey and the ECB bank lending survey a couple of weeks ago won’t have any market impact, though EUR shorts and Euro receivers against dollar payers appeal for those with any patience. French industrial production data were weak too (-2.5% y/y, with manufacturing -4.9% y/y). German factory orders are the ‘highlight’; of the economic calendar. The US will watch slightly firmer commodities but after yesterday saw the S&P extend higher, a correction would come as no surprise at all.”

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May 07, 2013

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Forex: USD/CAD hovering over 1.0050/55

FXstreet.com (Barcelona) - The Canadian dollar is gaining ground against its neighbour on Tuesday, orbiting around the mid 1.0000s as markets remains tilted towards the risk appetite.

According to FX Strategists G.Moore and S.Osborne at TD Securities, the recent decline eclipses their bullish perspective on the cross after last week’s rebound from 1.0052. “Just how much more downside potential there is here in a broader sense is not clear though and we still rather think the low/mid 1.0000s will continue to provide support for the USD, ahead of the 200-day MA (0.9989). Ultimately, price action seen over the past few weeks may still be seen as part of a longer-term basing move (we remain long-term USD/CAD bulls)”, concluded the experts.

At the moment, the cross is down 0.18% at 1.0049 facing the next support at 1.0017 (61.8% of 0.9815-1.0343) followed by 0.9995 (high Feb.5&7) and finally 0.9971 (low Feb.8).

On the flip side, a break above 1.0083 (high May 7) would expose the psychological level at 1.0100 and then 1.0214 (high Apr.26).

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May 07, 2013

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Forex: AUD/USD consolidates losses below 1.0200

FXstreet.com (Barcelona) - Today’s decision by the central bank commanded by G.Stevens to lower the refi rate to 2.75% is still weighting on the Aussie, dragging AUD/USD well below the key mark at 1.0200 around 1.0160/65.

Next big event in Australia ahead in the week will be the Unemployment Rate and the Employment Change, expected at 5.6% and 12K, respectively.

“Notably the RBA notes the continued strength of AUD - a key issue for the non-resource sector. We look for at least one more 25bp cut from the RBA in H2 and for AUD to head more consistently below parity”, suggested Lars Christensen, Chief Analyst at Danske Bank.

The cross is now losing 0.77% at 1.0172 with the next support at 1.0116 (2013 low Mar.4) ahead of 1.0100 (low Jul.12 2012) and then 1.0021 (low Jun.29 2012).

On the other hand, a breakout of 1.0221 (low Apr.23) would aim for 1.0245 (hourly highs May 7) and finally 1.0285 (MA10d).

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May 07, 2013

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Forex Flash: EUR/AUD supportive in the long term – ANZ

FXstreet.com (Barcelona) - “Based on that outlook the time is ripe to unwind short-term exposures. That being said, fundamental underpinnings remain supportive for longer-term strength in the EUR/AUD.” notes FX Strategist Andrew Salter at ANZ. The flip side to devastatingly high euro zone unemployment rates are moderating unit labor costs and increased productivity. Current account balances are reflecting this increase in competitiveness.

Trade flows are a buoy for endemic pessimism among investors. Australian dollar fundamentals are moving in the other direction. Throughout the recent mining boom, mining earnings were re-invested to pay for expanding production capacity. Because most of the industry is foreign owned, this method of financing also meant an absence of earnings flowing out of the economy and therefore limited downward pressure on the Australian dollar.

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May 08, 2013

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Forex: EUR/JPY eyes 132.00 on weaker yen

FXstreet.com (Barcelona) - The Japanese yen now intensifies its depreciation across the board, pushing the cross to the proximities of 132.00, levels last seen in January 2010. In the same tone, the yen is falling below the 100.00 mark against the greenback, lifting the cross to 4-year highs.

At the moment the cross is advancing 0.99% at 131.52 with the next resistance at 132.05 (50% of 2008-2012 drop) followed by 132.40 (high Jan. 15 2010) and finally 133.62 (high Jan.14).

On the downside, a dip beyond 130.25 (high May 9) would aim for 129.64 (low May 9) and then 129.29 (hourly low May 8).

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May 09, 2013

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Forex: EUR/USD extends losses on USD strength

FXstreet.com (Córdoba) - The EUR/USD continues to be dragged lower by an impressively strong USD, with the shared currency having recently printed a 2-week low.

EUR/USD slid below the 200 SMA in 4 hour charts and hit a low of 1.3010 before bouncing slightly. The pair is currently trading around 1.3020, posts a 1.0% loss on the day.

Below 1.3000, next support level could be faced at 1.2975 (200-hour SMA). The 1.3110/15 zone should hold bounces for now, followed by 1.3175 (daily high).

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May 09, 2013

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Forex: EUR/USD finds support at 1.3005

FXstreet.com (San Francisco) - After collapsing around 100 pips from 1.3110 in the latest hour, the EUR/USD has found support at the 1.3005 level, 1-week low. The pair is currently trading at 1.3030, 0.90% down on the day.

The pair's decline was "triggered by a strong upward momentum in greenback, as USD/JPY broke above 100.00," points Valeria Bednarik, FXstreet.com analyst. "Regardless the wild moves across the board, the EUR/USD manages to hold above the base of this past months range, respecting the 1.30/1.32 levels."

Support levels are at 1.3010 1.2970 1.2925. Resistances are at 1.3050 1.3080 1.3115

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May 09, 2013

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Forex: USD/CAD bounces off 1.0090

FXstreet.com (Barcelona) - The Canadian dollar is now trading in a softer tone against the greenback on Monday, giving away earlier gains on stronger-than-expected US retail sales.

“USD/CAD’s short-term rally has stalled in the mid-1.01 zone. Short-term trends appear a little softer, in fact. We think the cap on the USD in the mid 1.01 area may mean some modest corrective moves are in store for the USD in the early part of this week—perhaps back to the 1.0050/60 area”, assessed G.Moore and S.Osborne, FX Strategists at TD Securities.

USD/CAD is now losing 0.04% at 1.1010 with the next support at 1.0077 (MA10d) followed by 1.0064 (low May 10) and finally 1.0014 (low May 9).

On the flip side a break above 1.0152 (high May 10) would bring 1.0155 (50% of 1.0295-1.0014) and then 1.0156 (MA21d).

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May 13, 2013

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Forex Flash: Short-term risk of USD/JPY spike - UBS

FXstreet.com (Córdoba) - USD/JPY rose above 100 last week for the first time since April 2009. "Given the decisive break above the psychological 100 level, we see upside risk of USDJPY testing higher levels in the short term", says the UBS analyst team. "However, we still don't see any fundamentals change to support a clear move higher and therefore would like to stick to our current medium term forecast range of 95-100 at this moment".

"A higher USDJPY range of 100-110 would require fundamental changes such as further easing by the BoJ, aggressive purchasing of foreign securities by Japan's investors for the portfolio rebalancing, or the Fed explicitly signalling to slow its pace of QE program", UBS adds. "At this stage, we do not expect any of these to occur in the coming months".

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May 13, 2013

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Forex: EUR/USD glued to 1.2970/75

FXstreet.com (Barcelona) - After quite a volatile session, the single currency seems to have stabilized in the area of 1.2970/75 at the end of the trading session on Monday against the backdrop of an increasing demand for the safe haven USD.

Interesting docket in the euro area on Tuesday, as German, Italian and Spanish consumer prices will be released ahead of 6-m and 12-m auction of Letras in Spain. EMU industrial production will precede the more relevant ZEW Survey in Germany. Across the Atlantic, import and export prices will be in the limelight.

As of writing, the cross is up 0.02% at 1.2974 with the next resistance at 1.3051 (high May 10) followed by 1.3075 (MA21d) and then 1.3100 (MA10d).

On the flip side, a drop beyond 1.2932 (61.8% of 1.2740-1.3243) would expose 1.2916 (daily cloud base) and finally 1.2850 (76.4% of Apr. range).

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May 13, 2013

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US markets advance on better US growth prospects, dollar rallies

FXstreet.com (Barcelona) - Shares in the US markets are extending recent gains, bolstered by the improving confidence amongst investors in the US economic growth. The greenback, gauged by the US Dollar Index, is resuming its upside, trading in session highs in the proximities of 83.60.

DowJones is advancing 0.60% followed by the Nasdaq and the S&P500, up 0.68% and 0.86%, respectively.

Bourses in Euroland shrugged off the poor results from the German ZEW Survey and edged higher on Tuesday, with indices closing in fresh record highs after a negative start. The FTSE100 was the best performer, advancing 0.82%, followed by the DAX, 0.72% and the CAC40, 0.53%.

After hitting intraday highs above 1.3020 overnight, the single currency initiated a correction lower to the current multi-week lows around 1.2930/35, as risk-off trade continues to weight on sentiment.

In the commodities realm, both the barrel of WTI and the ounce troy of gold are trading in the negative ground, losing 0.29% at $94.89 and 0.69% at $1,424.

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May 14, 2013

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Fitch upgrades Greece to B- with outlook stable

FXstreet.com (San Francisco) - Fitch Ratings upgraded Greece sovereign debt from CCC to B- on the back of progress in cutting budget deficit. The country's status is still junk but the outlook is stable according to a Fitch press release.

"The Greek economy is rebalancing," states DFitch. "Clear progress has been made towards eliminating twin fiscal and current account deficits and 'internal devaluation' has at last begun to take hold."

"The Economic Adjustment Programme (EAP) is on track amid a semblance of political and social stability." The agency adds that "the current account deficit has also shrunk from 10% of GDP in 2011 to 3% in 2012. The revised EU-IMF programme gives Greece two additional years (2015-16) to attain a primary surplus of 4.5% of GDP. This relaxation is reflected in Fitch's expectation of a milder economic contraction of around 4.3% in 2013 (-6.4% in 2012) and a weak recovery in 2014."

Fitch says that the outlook stable reflects that the "upside and downside risks to the rating are more broadly balanced than in the recent past."

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May 14, 2013

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