Analitics of NordFX

[fibos]

Analitics of NordFX

2016 has been marked by a number of events that strongly affected financial markets. First and foremost is, of course, Brexit, the election of Donald Trump as US President, as well as persistent rumours of a possible disintegration of the European Union, which have seriously changed the balance of forces in the struggle of major world currencies.

So what should be expected from the pound, dollar, euro and yen in the new 2017?

With respect to the European currency, the forecasts look rather pessimistic. Referring to the European Central Bank (ECB) data, The Wall Street Journal estimates that capital outflows from the euro area reached their highest level since the introduction of the euro in 1999, and the currency itself has updated 13 years’ lows.

According to analysts, chances of an ECB interest rate increase do not exist, while the US Federal Reserve (Fed) not only lifted the rate by 0.25% in mid-December 2016, but also foresees three other similar increases throughout 2017.

Citigroup specialists expect the US currency to continue to grow. Further to that, the bank's strategist Todd Elmer said in an interview with Bloomberg: “We might see a much more rapid appreciation of the dollar than many in the market expect." The reason for this, in the first place, lies in the fact that the Fed will raise rates at a faster pace than initially expected. The head of the Federal Reserve Janet Yellen has noted that the rise in rates is a sign of confidence in the American economy, and that the Fed will take into account a possible increase in tax incentives promised by President Trump.

"It is possible,” says the leading analyst of the NordFX brokerage company John Gordon, “that in the context of the events that may occur in Europe, Brexit will seem like a nuisance. For some reason, only the upcoming elections in Germany and France and the migrant crisis are usually talked about when listing risks. But in fact, the list of threats that the euro faces is far from exhausted by them. I can name at least another six or seven.”

“Someone has decided all of a sudden that the economic crisis in Greece reached its peak in the summer of 2015. But this is not true – it suffices to say that at the end of 2016, the tax debt of Greek residents reached an astronomical figure for the country of 94.2 billion euros. It is quite probable that this will very soon 100 billion, while there is no reason to expect opposite, positive dynamics.”

“Financial problems similar to the Greek ones can be seen in Italy and Spain. Only, unlike the Greek case, they are intensified by separatist sentiments amongst some parts of the respective populations in these countries. Recall the December referendum in Italy or the tension between the Madrid and the Catalan authorities in Spain.”

“Let's add to this the rise of the extreme right in Austria, the discontent with the migration policy in Hungary and the worsening of relations between Turkey and Europe, on the back of which President Erdogan has once again started to build up relations with Russia.”

“Only when we add to all this the local or parliamentary elections, which are scheduled for this year in a number of EU countries,” continues the NordFX analyst, “do we start realising what hard times are coming up for the EU as a whole and the euro in particular."

“If a few months ago major currency players retained some optimism about the future of the euro, now many of them have already revised their forecasts downwards.”

According to the British firm IHS Markit, the euro will reach parity with the dollar by the end of 2017. Royal Bank of Scotland analysts agree with this view. Due to the extension of the ECB's program to buy € 80 billion assets a month, they say, the EUR/USD pair will be able to stay in the range of 1.00-1.10. But the major investment bank Goldman Sachs has lowered its forecast below parity, from 1.00 to 0.90.

If we talk about the British currency, despite the Brexit (or indeed because of it), its future looks more optimistic than that of euro.

JPMorgan bankers believe that the rate of GBP may increase or decrease by 5-10%, depending on the UK government's actions with respect to accessing the single market. “The pound is facing periodic bouts of volatility and may change direction several times depending on political decisions,” says Paul Meggyesi of JP Morgan. As for the forecast, the bank's experts believe that the GBP / USD pair will be in the area of 1.26 by the end of 2017.

The currency strategists from ANZ Bank and ABN Amro believe that the pound will be weaker against the dollar, but will strengthen its position relative to the euro. “This is because”, says the ABN AMRO analyst Georgette Boele, “the political uncertainty in the euro area will put pressure on the euro across the board. Brexit is no longer the centre of attention in the financial markets, so the pound is likely to be relatively stable.”

The USD/JPY pair, according to the Royal Bank of Scotland, will be traded in the range of 110-120 throughout 2017, as the Bank of Japan will maintain monetary policy parameters stable and will continue to keep the yield on 10-year bonds (JGB) near zero. As for the experts from IHS Markit, they believe that thanks to the strengthening of the dollar, the pair will reach the 126 mark.

"The actions of Trump's administration and rate hikes by the Fed,” says John Gordon of NordFX, “will lead to the unwinding of inflation and the weakening of the national currency in a number of countries that are dependent on the US Dollar." At the same time, according to Bloomberg, the Russian rouble looks very promising for investors in 2017 when we consider emerging markets. According to the UBS Group AG estimates, the return on investment of the rouble on the carry trade strategy will be 26%, and this will be the best result among the markets of Europe, the Middle East and Africa.

The list of attractive countries less dependent on the risks associated with the actions of the USA also includes Mexico, Brazil, Chile, South Africa, India and Indonesia.

The details HERE
 

[fibos]

Forecast for the coming week:

Summarizing the views of a number of analysts from leading banks and brokerage firms, as well as the forecasts made on the basis of a wide variety of technical and graphical analysis methods, we can say the following:

Speaking about the near future for the EUR/USD, 60% of analysts believe that the level of 1.0525 should become the resistance for the pair, fighting from which the pair will occasionally go down to the 1.0350 support zone. The 1.0400 horizon should become a Pivot Point in this side channel. Having said that, graphical analysis on D1 does not exclude that, before going down, the pair can try again to climb to the height of 1.0650 at the start of the week.

It should also be borne in mind that certain adjustments in the formation of the medium-term trends can be made by the ECB meeting, press conference by Donald Trump in the middle of the week and the speech of the US Federal Reserve Chair Janet Yellen at the end of the week. As for the long-term outlook, most analysts expect the pair to decrease by the end of 2017 to the level of 1.0000 and even below parity, to 0.9000;

Regarding the behaviour of GBP/USD, there is no consensus either among experts or among trend indicators and oscillators. About one third of them vote for an increase, a third support a fall and the rest believe the pair will move to the east. When it comes to the readings of graphical analysis, on D1 it points to the side corridor in the range of 1.2270-1.2430 for this week. If it succeeds in breaking the upper border of the channel, the pair may rise by another 100 points: to the level of 1.2530. As for the forecast for the coming months, about 70% of experts vote for the decline of the pair to last year's lows in the area of 1.1950-1.2000;  

USD/JPY. As the Bank of Japan is likely to maintain a similar direction in monetary policy, the behaviour of this pair will largely depend on the actions of the new US administration. That is why, as in the case with the GBP/USD, it is impossible to compile some sort of consensus from analysts opinions. However, in the medium term bullish sentiment prevails associated with the strengthening of the dollar and the pair’s efforts to reach 120.00 and beyond. As for graphical analysis, on H4 it suggests a movement of the pair in the 115.00-118.60 channel, and on D1 it does not preclude its temporary decline to the 113.00 area;    

Finally, the last pair of our review: USD/CHF. Despite the discord of indicators more inclined to sell, the vast majority of experts (75%) believe that the pair will eventually go up to the 1.2000-1.3000 area and even higher - to the December highs at the height of 1.3400. The reason for such expectations is understandable. Namely, it is the strengthening of the dollar due to Trump administration's actions and interest rate hikes planned by the US Fed in 2017.

The details HERE

[fibos]

Forecast for the coming week:

Summarizing the views of a number of analysts from leading banks and brokerage firms, as well as the forecasts made on the basis of a wide variety of technical and graphical analysis methods, we can say the following:

• Regarding the near future of EUR/USD, 60% of analysts, supported by indicators on H4, believe that the pair may rise to the 1.0700-1.0800 area. An alternative view is represented by 40% of experts, graphical analysis on W1 and 90% of oscillators. According to them, the pair will strive towards the support in the area of 1.0480-1.0510, and then even further to the December lows at 1.0350–1.0370. Meanwhile, graphical analysis on D1 does not exclude the possibility that before going down, the pair may once again try to climb to the height of 1.0650, which would happen at the start of the week.
• As for the behaviour of the GBP/USD pair, experts still cannot come to an agreement. About half of them are backing the bulls, believing that the pair will move to northwards. Graphical analysis agrees with this view of events as well, with H4 drawing the corridor of 1.2100-1.2315 for the pair. D1 sets targets that are even more ambitious, being in the area of 1.2400-1.2500. The remaining 50% of experts, as well as trend indicators and oscillators, disagree with such a forecast, believing that the pair should test the second support zone of 1.2000-1.2035;
• USD/JPY. When it comes to forecasting the next few days, the majority of experts and indicators on H4 and D1 believe that the pair has not yet reached the local minimum in the area of 113.00. In the medium term, the picture is quite different - about 70% of analysts, graphical analysis on D1 and indicators on W1 vote for the strengthening of the dollar and the rise of the pair to the resistance at 118.65. In the case of a breakthrough through this resistance, they believe the pair will rise even higher to the 121.00 level;

• We can observe a pattern similar to the one for USD/JPY with USD/CHF. 65% of experts, trend indicators and graphical analysis on H4, as well as oscillators on H4 and D1 strongly advise to sell the pair, believing that it will reach the 0.9950-1.0000 area. As for the medium term, the forecast remains the same: the vast majority of experts (75%), with the full support of technical and graphical analysis, are convinced that the pair will eventually rise again to the 1.2000-1.3000 area or even higher: to the December highs at 1.3400.

The details HERE

 

Edited January 16, 2017 by fibos

[fibos]

Forecast for the coming week:

Summarizing the views of a number of analysts from leading banks and brokerage firms, as well as the forecasts made on the basis of a wide variety of technical and graphical analysis methods, we can say the following:

It is clear that, speaking of the near future of EUR/USD, the vast majority (80%) of trend indicators look northwards. Meanwhile, one third of the oscillators indicates that the pair is overbought. About 60% of analysts together with graphical analysis on D1 expect it to descend to the level of 1.0500. After that, in their view, the pair will be able to return to the 1.0650 resistance;

A similar picture emerges with respect to the behaviour of the GBP/USD as well. Most indicators on H4 vote for the growth of the pair, whilst on D1 they do not exclude the beginning of a fall. 65% of experts are also in agreement with the bears. The nearest support level is 1.2300, with the next one being 1.2200. The bottom is in the area of the minimum of October 2016 at 1.1950-1.2000. As for graphical analysis, it draws a corridor with a relatively large range on D1, the low being 1.2000 and the high being1.2420. The next resistance is 1.2550;
USD/JPY. Trend indicators in this case, have taken a neutral position. The readings of oscillators differ: on H4 they insist on buying, and on D1 they insist on selling. There is no unity among the experts and graphical analysis either. The majority of the former (60%), insist that the pair will go up to the 116.00-117.50 area. The latter, both on H4 and D1, believe that it must first once again test the January lows of 113.00 and 112.55; 
As for the last pair of our review, USD/CHF, 75% of the experts along with graphical analysis expect a sideways trend within 0.9995-1.0200. An alternative view sees the pair going down to the level of 0.9900. However, this can only happen in the event of any significant economic or political developments in the EU and the USA, which are not expected next week.

 

The details  HERE

 

 

[fibos]

Forecast for the coming week:

Summarizing the views of a number of analysts from leading banks and brokerage firms, as well as the forecasts made on the basis of a wide variety of technical and graphical analysis methods, we can say the following:

• Speaking about the near future of EUR/USD, the vast majority (70%) of experts continue to expect the pair to decline to the level of 1.0600 and further to the area of 1.0500. As for technical analysis, the findings of oscillators differ: one would need to sell the pair if they follow H4, and to buy on D1. 15% of analysts and graphical analysis on H4 also talk about buying, indicating the height of 1.0775 as the target and the next resistance level as 1.0890. The remaining 15% of experts, together with trend indicators, have taken a neutral position;
• A similar picture emerges with respect to the behaviour of GBP/USD. The majority of experts (55%) and the indicators on H4 expect the pair to initially fall to the support at 1.2415, and then further on to 1.2255. As for the remaining analysts, indicators on D1 and graphical analysis on H4, they suggest that the pair will first reach resistance in the 1.2730-1.2775 zone. Only then will it start descending southwards. The next resistance to which graphic analysis on D1 indicates is located at the level of 1.2875;

• The opinions of the experts on the future of the USD/JPY are almost equally divided: 30% expect its growth, 40% expect it to fall and 30% take a neutral position. Trend indicators, oscillators and graphical analysis on D1 also remain neutral. But their "colleagues" on H4 are set to purchase. The Pivot Point is 115.12. The nearest resistance is 115.60, with the subsequent levels being 116.35 and 117.00. The support levels are at 114.40, 113.85 and 112.50. Regarding the medium-term forecast, it should be noted that about 70% of analysts expect the pair to grow;
• As for the last pair of our review, USD/CHF, all 100% of experts believe that the pair will not be able to stay in such a narrow sideways channel for the second week in a row. However, the views differ as to where it will go: 35% expect its growth, 65% believe it will fall. Indicators also tend to believe it will fall to the 0.9900 zone. But graphical analysis both on H4 and on D1 shows that a correction may take place before the downwards trend continues, implying that the pair may rise to the resistance in the 1.0085-1.0100 area;

Summing up our weekly review, it is important to remember that the upcoming week will be filled with numerous events, which traditionally attract the attention of currency traders. To be precise, a decision by the Bank of Japan on interest rates is expected on Tuesday, 31 January, a similar decision by the US Federal Reserve is expected on Wednesday, 1 February, and the Bank of England is expected to announce its decision on Thursday, 2 February. In addition, at the end of the week on Friday, 3 February the ECB will hold a meeting, important economic data from China will be published, and employment data (NFP) from the United States will be released. 

Details on the website