Daily Markets News From FBS

[⭐ kaito kid]

AUD/USD: daily update

AUD/USD rose above $0.9200 today. Aussie strengthened as the Reserve Bank of Australia said in the minutes that the inflation outlook is affected by lower AUD. The bears might have gotten very nervous and some short positions got squeezed.

We’ve noted long ago that there’s a daily MACD divergence on the daily chart – a bullish signal. We still recommend selling AUD on rallies.

Resistance lies at $0.9250, $0.9305, $0.9325 and $0.9400. Support is at $0.9070, $0.9145, $0.9037 and $0.9000.

Chart. Daily AUD/USD

[⭐ kaito kid]

EUR/USD: range-bound trade

On Tuesday EUR/USD attempted to rally, but was capped by the $1.3100 resistance (50% Fibo from the June decline). The pair spiked down to $1.3050 on a weaker-than-expected German Zew economic sentiment index (36.3 vs. forecasted 39.8). Meanwhile, euro zone economic sentiment improved to 32.8 (forecast: 31.8).

As can be seen from the 4-hour chart, the $1.3100 level is acting as a strong resistance. Meanwhile, the downside is limited by the $1.3000 handle: both on Friday and Monday bears tried to push the pair lower, but closed the day above $1.3050. A daily close above $1.3100 would be a bullish sign and would open the way to the $1.3200 area. However, a close below $1.3000 would open the way for a further decline.

The week is expected to be quite interesting for EUR/USD traders. The main risk event of the week will be the Fed’s Ben Bernanke testimony on Wednesday. Market wants to get a clearer answer on the QE tapering question: the recent US comments were quite contradictive. Confirmation of a “dovish stance” could push EUR/USD higher.

Chart. H4 EUR/USD

[⭐ kaito kid]

GBP/USD holds above 1.5100

On Tuesday GBP/USD is consolidating in the $1.5145/5045 range. The cable is sitting at $1.5100 following the release of a lower-than-expected UK CPI (2.9% y/y vs. forecast 3.0% and previous 2.7%).

Support for the cable is seen at $1.5030/5000 (Friday’s low, 23.6% Fibo from the recent decline). Slide below will mean a return to the bearish channel. Next support will be seen at $1.4815.

However, the $1.5000 level looks quite resilient for now. Last week the pair formed a strong bullish candle, supported by the dovish Ben Bernanke comments. Watch the next Bernanke’s speech on Wednesday for new market-moving signals. Resistance is seen at $1.5150, $1.5200 and $1.5220.

GBP: factors to watch (July 15-19)

Chart. Daily GBP/USD

[⭐ kaito kid]

July 17: Asian session

US dollar rose against a majority of its peers with the Fed’s Chairman Ben Bernanke due to testify to Congress today at 14:00 GMT. Bernanke’s prepared remarks for his congressional appearance will be released at 12:30 GMT. In addition, the central bank will release Beige book (18:00 GMT), a report on the current economic conditions. Also watch American housing data due today at 12:30 GMT.

EUR/USD is correcting a bit down after it rose to $1.3174 yesterday. In Europe Germany will sell 10-year debt today. GBP/USD opened around $1.5160, but then moved closer to $1.5100. UK will release unemployment data today at 08:30 GMT and the results of the MPC’s vote on the benchmark rate and asset purchase facility.

USD/JPY strengthened to 99.55. The Bank of Japan’s June meeting minutes showed the members see the Japan’s economy to return to moderate recovery path. USD/CHF recovered from the yesterday’s low of 0.9380 to 0.9415.

USD/CAD rose from 1.0363 to 1.0390. The Bank of Canada is meeting today and is expected to keep the benchmark interest rate unchanged at 1%. The BOC will conduct press conference at 15:15 GMT.

AUD/USD slipped from the yesterday’s high of $0.9260 to $0.9230. NZD/USD declined to $0.7875. The currencies are drifting a bit lower on ahead of the today’s Bernanke testimony. Data showed China FDI for June rose by 20.1% y/y (vs. +0.7% expected and +0.3% in May).

[⭐ kaito kid]

Key currency options

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).

Here are the key options expiring today:

EUR/USD: $1.3000, $1.3055, $1.3070, $1.3100, $1.3175, $1.3200;

GBP/USD: $1.5000, $1.5100, $1.5150;

USD/JPY: 97.00,97.75, 98.50, 99.00, 99.25, 99.50, 100.00, 100.25, 101.50;

USD/CHF: 0.9500;

AUD/USD: $0.9050, $0.9200;

USD/CAD: 1.0400, 1.0490;

EUR/JPY: 131.00.

[⭐ kaito kid]

First comments from Bernanke

Here are the points the Fed’s Chairman Ben Bernanke outlined ahead of its testimony to the Congress:

- The Fed may taper bond purchases in 2013 and stop QE around the middle of 2014.

- As asset purchases depend on economic and financial developments, they are ‘by no means’ on a preset course.

- Bond buying could be reduced at a faster pace, slower pace, or even increased for a time depending on the outlook.

- According to the FOMC, risks to the economy reduced since last autumn, labor market conditions are gradually improving.

- Sees highly accommodative policy in foreseeable future

There isn’t much of news so far, so no reasons to buy USD.

[⭐ kaito kid]

Bank of England: CHANGE in votes!

The Bank of England released the minutes of its July meeting. The members of the Monetary Policy Committee (MPC) voted on 2 things:

Official bank rate – here the distribution of votes is unchanged: all MPC members want to keep the rate at the record low of 0.5%.

Asset purchase facility – here comes the change: earlier 3 members wanted to increase the amount of bond purchases, now all want to keep APF unchanged.

The news is bullish for British pound. GBP/USD jumped to $1.5246 before easing to $1.5200.

[⭐ kaito kid]

HSBC: sell EUR/USD

HSBC strategists recommend selling EUR/USD from $1.3045 and with a target of $1.2880. In their view, the forthcoming Bernanke testimony in Congress (Wednesday and Thursday) will confirm the Fed’s QE tapering plans.

Chart. H4 EUR/USD

[⭐ kaito kid]

GBP/USD broke above 1.5200

Cable is trading around $1.5230. Pound’s rally on hawkish UK meeting minutes and a big drop in unemployment claims was capped at $1.5250.

Morgan Stanley strategists remain bearish and recommend selling the pair on the current rallies above $1.5200, targeting $1.4975 and than $1.4815.

We remain cautious and will get ready to short the cable only on a break below $1.5075. A rise above $1.5280 (50% Fibo, July highs) could open the way for a further growth.

Chart. H4 GBP/USD

[⭐ kaito kid]

July 22: Asian session

US dollar has weakened versus the most of its counterparts. EUR/USD rose from $1.3135 today, but was capped by the $1.3170 area. GBP/USD edged up almost reaching $1.5200. There are no releases scheduled in the euro area and Britain on Monday. The market players are waiting for the UK BBA Mortgage approvals data at 08:30 GMT tomorrow. The US will publish existing home sales at 14:00 GMT.

USD/JPY was a big mover in the Asian trade: the pair opened at 100.40, rose to 100.60 and then plummeted to 99.60. As of writing, the pair recovered to 100.00. Yen initially strengthened as Japan’s ruling party failed to win an independent majority in upper-house elections. USD/CHF dipped to 0.9385 before recovering to 0.9400.

AUD/USD opened the week with a gap down at $0.9180 and strengthened to $0.9230. According to the Australian press, the Treasury is expected to revise down Australia’s forecast growth rate, and to make upward revision to the budget deficit. NZD/USD rose to $0.7940. USD/CAD slid to 1.0350.

[⭐ kaito kid]

Key currency options

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).

Here are the key options expiring today:

EUR/USD: $1.2930, $1.3000, $1.3050, $1.3110, $1.3300;

GBP/USD: $1.5100, $1.5230, $1.5235;

USD/JPY: 98.50,99.00, 99.80, 100.00, 101.00, 101.20, 101.25, 102.00, 102.35;

AUD/USD: $0.9150, $0.9200, $0.9210;

USD/CAD: 1.0500;

EUR/GBP: 0.8525, 0.8800;

EUR/CHF: 1.2380;

EUR/AUD: 1.4165.

[⭐ kaito kid]

G20 meeting outcome

According to the closing communique from the G20 meeting, finance ministers and central bank governors of the world's 20 biggest economies agreed to focus on boosting employment and economic growth and continue the policy of monetary support where needed.

In order to ensure this growth, the officials agreed to develop an action plan to be presented at the summit of the G20 leaders in September. The plan will include "a comprehensive series of structural reforms that will increase productivity, labor force participation and employment".

Among such reforms is a major tax move proposed by the Organization for Economic Cooperation and Development and aimed at increasing the transparency of taxation systems globally.

[⭐ kaito kid]

European news in brief

SNB resident Thomas Jordan: the central bank has no intention to change or scrap a franc ceiling of 1.20 versus euro.

Bundesbank: German economy grew strongly in Q2. More moderate growth expected in Q3.

Portugal: President Anibal Cavaco Silva earlier ruled out elections and gave support to Prime Minister Coehlo saying that “the government has the support of an unequivocal majority in parliament.”

[⭐ kaito kid]

GBP/USD: Elliot wave analysis

Weekly. On the weekly chart there’s a global Zigzag A-B-C. The pair keeps forming the wave С which aims at the level 1.1 where the pair was last seen in 1985.

Chart. Weekly GBP/USD

H12. The wave (II) is still forming. Let’s examine its structure in detail.

Chart. H12 GBP/USD

H4. The upside impulse a may now be over. So, in the near term we expect corrective wave b to form, which may take a form of the long horizontal correction. The pair will likely spend the whole week forming this wave. After that we may see upside movement in the wave C.

Chart. H4 GBP/USD

Roman Petuchov for FBS

[⭐ kaito kid]

USD/JPY: Elliot wave analysis

Daily. Wave 1 of the rising wedge is close to an end.

Chart. Daily USD/JPY

H4. We are probably witnessing the wave IV of the final rising impulse wave (V).

Chart. H4 USD/JPY

H1. The detailed marking on H1 shows the pair’s at a complicated area of the marking. We have adopted an assumption that the wave IV is taking the form of the double Zigzag. If this assumption turns out to be correct, in the near term we’ll see a decline in the wave [Y] of IV as it’s shown on the picture.

Chart. H1 USD/JPY

Roman Petuchov for FBS

[⭐ kaito kid]

AUD/USD: Elliot wave analysis

Weekly. The pair keeps forming the wave III of the downside impulse. This wave looks powerful, stretched and rapid – just as it has to be.

Chart. Weekly AUD/USD

Daily. The marking on the daily chart shows that the pair keeps forming the wave [3] of III.

Chart. Daily AUD/USD

H8. In line with our forecast Aussie has formed the wave (4) of [3] of III. When this wave is complete, the decline in the wave (5) will resume. The decline will probably last during the whole week.

Chart. H8 AUD/USD

Roman Petuchov for FBS

[⭐ kaito kid]

EUR/USD: Elliot wave analysis

Monthly. The pair may have finished forming the wave B of the rising Zigzag А-В-С. Wave B is in the form of the Triple Three [w]-[x]-[y]-[x]-[z]. EUR/USD currently keeps forming wave C. Let’s analyze the wave’s structure in detail.

Chart. Monthly EUR/USD

Daily. The pair keeps forming corrective wave II in line with our forecast.

Chart. Daily EUR/USD

H4. The wave II is probably taking a form of an upward Zigzag. Euro’s currently forming the wave of this Zigzag. In the next few days we’ll likely see the continuation of this wave and the upside move will resume in the wave [C].

Chart. H4 EUR/USD

Roman Petuchov for FBS

[⭐ kaito kid]

July 23: Asian session

UD dollar weakened yesterday as data showed residential sales unexpectedly fell. Today America will release home prices and Richmond manufacturing index at 13:00 and 14:00 GMT respectively.

EUR/USD tested levels above $1.3200 both yesterday and today. However, on Monday euro didn’t manage to close above this handle and finished the day at $1.3184 after reaching $1.3218. Today the single currency visited $1.3207, but then retreated to $1.3290. Demand for EUR is supported ahead of data tomorrow forecast to show services and factory output in the region contracted at the slowest pace in more than a year.

GBP/USD is little changed in the $1.5360 area after adding almost 100 pips yesterday. Watch BBA mortgage approvals at 08:30 GMT. USD/JPY returned to 99.50 after a dip to 99.15. According to the BoJ governor Kuroda, the yen is weak because of differing Fed and BoJ policies, and that the Japanese regulator would continue its easing stance. USD/CHF is consolidating around 0.9360.

AUD/USD rose to $0.9290 in the Asian trade, but then corrected lower to $0.9260. NZD/USD tested the levels above $0.8000. According to the New Zealand prime minister Key, the country is on track to budget surplus in 2014/15 and the government is planning to cut net debt to 20% of GDP by 2020. USD/CAD found support at 1.0321 after sliding from 1.0360 yesterday. Canada will release retail sales at 12:30 GMT.

[⭐ kaito kid]

Key currency options

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).

Here are the key options expiring today:

EUR/USD: $1.3000, $1.3050, $1.3100, $1.3150, $1.3160, $1.3235;

GBP/USD: $1.5200, $1.5300;

USD/JPY: 99.00, 99.25, 99.50, 99.75, 100.00, 100.25, 100.50, 101.00;

USD/CHF: 0.9385;

AUD/USD: $0.9165, $0.9170, $0.9250, $0.9265, $0.9400;

USD/CAD: 1.0320 1.0400;

EUR/CHF: 1.2350;

AUD/JPY: 92.60.

[⭐ kaito kid]

USD/JPY jumped above 100 yen

USD/JPY jumped above 100.00 from a 1-week minimum at 99.14 hit earlier today. The greenback was encouraged by higher US yields (2-year Treasury yields are up by 2.65%; 10-year yields are up by 1.44%).

Resistance: 100.60, 100.85.

Support: 99.14, 99.00, 98.75.

Chart. H1 USD/JPY

Edited July 23, 2013 by kaito kid

[⭐ kaito kid]

July 23: European session

News:

Bloomberg survey showed that more economists are predicting that Chairman Ben Bernanke will trim the Fed’s monthly bond buying by $20 billion in September.

China’s premier Li Keqiang said 7 percent growth is the minimum policy makers will tolerate, damping demand for the safest assets.

The Bank of Japan reported that the foreign central banks’ holdings of yen rose to the maximal level in 10 years. It means that JPY is still popular as a safe haven.

Stocks:

· Nikkei closed up by 0.82%;

· Euro Stoxx 50 is up by 0.53%.

Economic releases:

GBP. BBA Mortgage Approvals: 37.3K vs. 38.5K (prev.: 36.3K).

CAD. Core Retail Sales m/m: 1.2% vs. 0.1% (prev.: -0.2%).

CAD. Retail Sales m/m: 1.9% vs. 0.4% (prev.: 0.2%).

Upcoming releases: US HPI (13:00 GMT), EU Consumer Confidence and Richmond manufacturing Index (14:00 GMT)

Currencies:

EUR/USD is fluctuating around $1.3190. GBP/USD declined by 40 pips to $1.5340. USD/JPY is at 100.00 handle after jumping to 100.18.

[⭐ kaito kid]

NAB: risks for AUD

Analysts at NAB say that there are many risk factors for AUD at present:

Australian CPI (watch the release tomorrow at 01:30 GMT);

Excessive short positions;

Economic situation in China;

The speculation about US Fed’s policy.

According to the specialists, “if the Australian CPI comes in much weaker than expected, we could see a sharp AUD drop. However, with markets already pricing in 62% for an August RBA easing, the AUD/USD decline may find it difficult to push through the 0.90 support level which has held so far. The CPI risks are slightly asymmetric for the AUD, given the pricing for an RBA easing. A higher than expected outcome may see further AUD shorts to be unwound.” As the speculators are short on Aussie, “there is more near-term upside risk to AUD/USD than downside. Resistance is at 0.9350. International risks include further negative news on China and changing expectations for Fed QE tapering.”

[⭐ kaito kid]

July 23: USD after lower data

UD dollar weakened yesterday as data showed residential sales unexpectedly fell. Today America will release home prices and Richmond manufacturing index at 13:00 and 14:00 GMT respectively.

EUR/USD tested levels above $1.3200 both yesterday and today. However, on Monday euro didn’t manage to close above this handle and finished the day at $1.3184 after reaching $1.3218. Today the single currency visited $1.3207, but then retreated to $1.3290. Demand for EUR is supported ahead of data tomorrow forecast to show services and factory output in the region contracted at the slowest pace in more than a year.

GBP/USD is little changed in the $1.5360 area after adding almost 100 pips yesterday. Watch BBA mortgage approvals at 08:30 GMT. USD/JPY returned to 99.50 after a dip to 99.15. According to the BoJ governor Kuroda, the yen is weak because of differing Fed and BoJ policies, and that the Japanese regulator would continue its easing stance. USD/CHF is consolidating around 0.9360.

AUD/USD rose to $0.9290 in the Asian trade, but then corrected lower to $0.9260. NZD/USD tested the levels above $0.8000. According to the New Zealand prime minister Key, the country is on track to budget surplus in 2014/15 and the government is planning to cut net debt to 20% of GDP by 2020. USD/CAD found support at 1.0321 after sliding from 1.0360 yesterday. Canada will release retail sales at 12:30 GMT.

- See more at: http://www.fbs.com/analytics/2013-07-23/23109-july-23-usd-after-lower-data#sthash.iawW9Ies.dpuf

[⭐ kaito kid]

July 24: Asian session

EUR/USD is trading on the downside, just above $1.3200 after reaching $1.3280 yesterday. US dollar was weaker yesterday as lower US economic indicators bolstered the argument for the Fed to delay a reduction in QE. Euro was supported before data predicted to show services and factory output in the euro area contracted at the slowest pace in more than a year. Watch the releases at 07:00-08:00 GMT. GBP/USD is capped by the bottom of the daily Ichimoku Cloud at $1.5380.

Chinese HSBC flash manufacturing PMI disappointed the Asian markets, coming below the forecast at 47.7 and hitting at 11-month low (forecast: 48.6, previous: 48.2). AUD/USD dropped from $0.9320 to $0.9240. Australia Q2 CPI came unchanged at +0.4% q/q (vs. expected +0.5%), while the core reading came a bit above the forecast. NZD/USD fell from the high of $0.8010 to $0.7950. New Zealand June trade balance improved to $414M (vs. $105M expected). Tonight RBNZ holds its monthly monetary policy meeting.

USD/JPY strengthened by 40 pips to 99.90. Japan trade deficit for June rose to 180.8B yen (vs. expected is 155.7B). USD/CHF strengthened to 0.9360. USD/CAD recovered from 1-month low at 1.0280 to 1.0300. Canadian dollar strengthened yesterday after a report showed retail sales in May increased at the fastest pace in 3 years, fueling speculation the economy may be improving.

[⭐ kaito kid]

Key currency options

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).

Here are the key options expiring today:

EUR/USD: $1.3100, $1.3130, $1.3150, $1.3200, $1.3250;

GBP/USD: $1.5100, $1.5355;

USD/JPY: 99.00, 99.35, 99.40, 100.00, 100.25, 100.40, 101.00;

AUD/USD: $0.9180, $0.9250, $0.9300;

USD/CAD: 1.0260, 1.0335;

EUR/JPY: 131.00, 132.00;

GBP/JPY: 151.00.