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MARKET NEWS

23 July 2014

 

Key takeaways from the BOE minutes

 

As it was expected, GBP/USD weakened below the $1.7060 mark post the MPC minutes release.

 

The document brought no surprises with all the 9 Commitee members voting to leave rates unchanged. There was no inspiration for the hawks in the document, but market particpants know that the July meeting was held before the upbeat UK inflation release.

MPC has no preset view rate rise terms, it will be data-dependent;

Indications of inflationary pressures areincreasing;

BOE expects Q2 GBP growth of 0.9% before slowing modestly in Q3 & Q4. UK Q1 GDP will be revised up to to 0.9%. (Don't forget that Q2 GDP will be released on Friday).

Waiting for the BoE Governor Carney speech at 11:45 GMT. Given the upbeat GDP forecast, we expect cable to remain supported at 1.7040.

 

http://fxbazooka.com/upload/tiny/Analytics/2014/July/23/gbpusdh1.png

 

Chart. H1 GBP/USD

 

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MARKET NEWS

23 July 2014

 

BOE Carney speech: quotes

 

The BoE Governor Carney increased selling pressure on GBP/USD, dampening expectations of an early rate hike.

 

Key Carney's quotes:

 

UK economy is still in extraordinary times

There is no clear timing on rate hikes, they will be gradual

The BOE is balancing inflation implications from sustained economic momentum versus conflicting signals of labour market slack

Expensive currency weighs on the economy

Government needs to be careful that household indebtedness doesn’t pull the economy back into recession

UK economy is currently producing as much as in did at the pre-crisis time

"Next inflation report will provide the next opportunity to update our thinking on these important questions" (next report is August 13th)

GBP/USD slipped to $1.7020 as of writing.

 

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23 July: American session

 

http://fxbazooka.com/upload/tiny/News/america1.png

Tatiana Norkina, an analyst at FBS

 

There are mixed feelings in the markets today in early U.S. session. Yesterday's strong growth in the dollar has been transformed into a protracted outset in the absence of important economic indicators. The dollar index remains in 80.85 (-0.01%), but with some probability of further recovery. Trading in the stock markets opened in opposite directions. Thus DJIAna is currently losing 0.15% and S & P500, on the contrary, adds about +0.20%.

 

The similar situation is spotted in the currency markets - trades are conducted relatively quietly. The EUR / USD is consolidating in the range of 1.3455-1.3470. Obviously, the pair remains under bearish pressure. The USD / CHF currency pair updated its maximum of 10 pips, reaching the 0.9030 level, but then went under the figure of 0.9020. The USD / JPY is trading below the Ichimoku cloud time, in the area of ​​101.40, which gives grounds to predict its imminent decline to the 101.20 figure. The GBP / USD, pulled out of the common context sfter M.Carney's speech and a number of negative statistics having been released, collapsed to the 1.7030 support area. Bulls are trying to regain lost ground, but the major bearish trend still remains in force.

 

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July 24: Asian session

 

http://www.fxbazooka.com/upload/tiny/Asia_eng.jpg

 

Asian shares traded near a 6-year high after a Chinese manufacturing gauge rose to its strongest reading in 18 months. MSCI Asia Pacific Index outside of Japan added 0.4%. Nikkei 225 is down by 0.34% as Japanese trade deficit widened more than expected. USD/JPY rose to 101.57, but then dipped below the opening level of 101.47.

 

NZD/USD fell by 120 pips in the Asian trade, hitting a one-month low of $0.8575. Despite the interest rate was raised again by 0.25% to 3.5%, RBNZ Governor Wheeler signaled a pause to the tightening cycle at least until December, as the regulator now needs time to access the impact of higher rates. June NZ trade balance came out better than expected with a 247M surplus, but the market didn’t pay much attention to that. AUD/USD consolidates in a narrow $0.9470/35 range. The price has initially spiked on upbeat China PMI, but is now below the yesterday’s high.

 

EUR/USD is trading a bit on the downside, but almost flat in the $1.3460/55 area. GBP/USD edged down to $1.7030.

 

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Key option levels (July 24)

 

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: $1.3440, $1.3450 (large), $1.3475 $1.3500 (large), $1.3520/30 (large);

 

GBP/USD: $1.6900, $1.7000, $1.7020, $1.7095;

 

USD/JPY: 101.50/55 (large), 101.65/75 (large), 101.80/90 (large);

 

AUD/USD: $0.9300/25 (large), $0.9340, $0.9400 (large), $0.9450;

 

USD/CAD: 1.0680, 1.0700, 1.0725, 1.0790 (large);

 

NZD/USD: $0.8600, $0.8625, $0.8640, $0.8700, $0.8740;

 

EUR/GBP: 0.7800 (large), 0.8000;

 

EUR/JPY: 136.75.

 

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24 July 2014

 

GBP/USD hit $1.7008 on retail sales

 

June retail sales rose by 0.1% m/m and 3.6% y/y vs. 0.2% and 3.9% y/y growth expected. However, despite the June stagnation, the overall Q2 retail sales volumes were the strongest in 10 years.

 

June data added to yesterday's market pessimism, pulling GBP/USD down to $1.7008. Buy orders for the pair are clustered at $1.7000/10, while sell stop orders lie below $1.6990.

 

Meanwhile, EUR/GBP extended the upside to 0.8926. Combination of upbeat euro zone data and weak UK figures is very supportive for the cross.

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MARKET NEWS

24 July 2014

 

EUR is cheered up by PMIs

 

EUR/USD recovered to $1.3485 as the euro area released mainly better than expected PMIs from the euro area. European stocks rose with Euro Stoxx 50 index adding 0.6%.

 

The preliminary euro zone’s manufacturing PMI rose to 51.9 in July from 51.8 in June. Services PMI jumped to 54.4 from 52.8, against forecasts of dropping to 52.7. German PMI came out above expectations with a strong reading of 52.9 vs. 52.0 expected. France lagged as its manufacturing PMI fell from 48.2 to 47.6. Negative news came from Italy where retail sales contracted by 0.1%.

 

Resistance is at $1.3500 and $1.3525, while support is at $1.3450 and $1.3425.

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July 24: American Session

 

http://fxbazooka.com/upload/tiny/US_eng.jpg

 

Tatiana Norkina, analyst at FBS

 

U.S. dollar shows strength after the release of labor market data. The number of unemployment benefits applications for the past week has fallen to 284 thousand, from 303 thousand. Analysts had predicted an increase to 308 thousand. This encouraged strenghtening of the dollar index which is now adding about 0.10%. Stock markets have opened not that positively. DJIA and S&P500 have gone into the red zone, losing about 0.03%.

 

Currency pairs are trading rather nervously today. Thus, the EUR/USD pair was consolidsating to 1.3485 after the release of positive statistics on eurozone, but then corrected to the 1.3460 area. The USD/CHF currency pair has found support at 0.9010 and is now consolidating around 0.9020. USD/JPY fixed above 101.40, then rose to the 101.80 resistance. Corrective fall of the GBP/USD pair has continued today: the bears have lowered the rate to 1.6970.

 

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http://fxbazooka.com/en/news/show/1514

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MARKET NEWS

 

July 25: Asian session

 

http://fxbazooka.com/upload/tiny/Asia_eng.jpg

 

US dollar headed for a second weekly gain versus euro before data today may show durable goods orders rebounded in June, adding to signs the economy is gathering momentum.

 

USD/JPY is trading under resistance in the 101.80 area. Japanese CPI data that came out somewhat higher than expected (+3.6% in June vs. +3.5% expected), but Japanese economy minister Amari reassured the markets that the QE end is nowhere near.

 

AUD/USD consolidates in a narrow $0.9425/00 range, retracing from the yesterday's $0.9470 high. NZD/USD trades in a tight $0.8550/85 range following the yesterday’s sharp selloff. New Zealand business confidence came below the forecast at 39.7. Gold price consolidates at the monthly lows a bit above $1290.

 

EUR/USD is trading a bit on the upside, in the $1.3460 area. GBP/USD is trying to recover after it slid to $.1.6965 yesterday.

 

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http://fxbazooka.com/en/news/show/1515

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Key option levels (July 25)

 

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: $1.3400 (large) $1.3420 $1.3500/10 (large);

 

GBP/USD: $1.7000 (large) $1.7150;

 

USD/JPY: 101.00, 102.00;

 

AUD/USD: $0.9375, $0.9425, $0.9445;

 

USD/CAD: 1.0695 (USD 600m), 1.0720, 1.0800;

 

NZD/USD: 0.8610, 0.8720;

 

EUR/GBP: 0.7800, 0.8100.

 

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http://fxbazooka.com/en/news/show/1516

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July 28: Asian session

 

http://fxbazooka.com/upload/tiny/Asia_eng.jpg

 

Asian shares rose, while Treasuries and oil slipped as investors await data on US services before the Federal Reserve meets this week. MSCI Asia Pacific Index is up by 0.27%. Japanese Nikkei 225 is up by 0.41%.

 

The dollar index, a gauge of its strength against a basket of key currencies, stood little changed at 81.026 after striking a near six-month high of 81.084 on Friday. USD/JPY is once again fighting with resistance in the 101.80 area. AUD/USD is trading below $0.9400 touching the levels in the $0.9380 region on the downside. NZD/USD slid to $0.8530.

 

EUR/USD is trading in the $1.3430/25 area, near 2014 low at $1.3420 which was hit on Friday. GBP/USD is little changed in the $1.6880 zone.

 

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http://fxbazooka.com/en/news/show/1519

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MARKET NEWS

 

Key option levels (July 28)

 

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: $1.3475;

 

GBP/USD: $1.6975, $1.7035;

 

USD/JPY: 102.00/10, 102.45;

 

AUD/USD: $0.9350;

 

EUR/GBP: 0.7910/15, 0.8000.

 

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http://fxbazooka.com/en/news/show/1520

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MARKET NEWS

28 July 2014

 

CFTC: USD net longs at 6-week high

 

According to the latest CFTC report, released on July 26, large traders and speculators slightly increased their US dollar bullish bets on the week ended July 22. The overall USD long position went up from $9.94 July 15 to a 6-week high at $14.12 billion.

 

http://fxbazooka.com/upload/tiny/Analytics/2014/July/28/cot-values2.png

 

During the past week large speculators bet in favor of JPY and CAD, while there were weekly decreases for EUR, GBP, CHF, AUD and NZD.

 

http://fxbazooka.com/upload/tiny/Analytics/2014/July/28/Cot-Standings.png

 

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MARKET NEWS

28 July 2014

 

Hilsenrath: the Fed is divided on rates

 

Jon Hilsenrath, Wall Street Journal columnist and the Fed expert, has written an article about the Federal Reserve’s next meeting which will take place on Wednesday.

 

According to Hilsenrath, all the FOMC members agree that the central bank should continue tapering QE and this time they will announce another cut in monthly bond purchases from $35 to $25 billion. As a result, QE3 may end in October.

 

In addition, the expert says that the Fed’s officials will discuss when and how to raise interest rates – here there’s no single opinion about the FOMC members. The hawk Richard Fisher, president of the Federal Reserve Bank of Dallas, predicted the Fed could start raising rates by early 2015 “or potentially sooner.” However, there are doves like Chicago Fed President Charles Evans who thinks that the short-term rates should stay near zero until well into next year for the Fed could be sure that the economy’s really getting stronger and that inflation is going to be at the central bank’s target and now below.

 

The Fed’s Chair janet Yellen has emphasized that the timing of rate hikes will depend on the economy. As the Federal Reserve has said since March it will keep rates near zero for a “considerable time” after the bond program ends and as QE is likely to end in October, the Fed will need to renew its forward guidance and tell the markets more about when it plans to raise the interest rates.

 

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http://fxbazooka.com/en/news/show/1522

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MARKET NEWS

29 July 2014

 

BOJ Ishida on additional stimulus

 

The Bank of Japan board member Koji Ishida warned on Tuesday that domestic structural factors may further delay a rebound in export performance even despite the fact that global growth picks up. This makes Japanese economic recovery fragile.

 

Ishida also made the case for a more flexible view of the BOJ’s 2% price goal suggesting that the central bank won’t automatically expand stimulus simply because inflation fails to hit the target within a given timeframe. Japanese CPI has risen steadily, although its growth slowed to 1.3% in the year to June from 1.4% in May.

 

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http://fxbazooka.com/en/news/show/1525

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MARKET NEWS

29 July 2014

 

European yields are falling

 

Spanish and Italian bond yields hit the latest in a series of record lows on Tuesday with investors looking to 60 billion euro of coupon and debt repayments from the two countries this week to return to the market.

 

Yields on 10-year German bonds, the benchmark for euro zone borrowing costs, also touched all-time lows with the prospect of a fresh round of long-term loans to banks from the ECB (TLTRO) from September also supporting demand for euro zone bonds.

 

Italy is the only euro zone country selling bonds this week, so there may be enough cash to keep the euro zone yields subdued at or near historic lows.

 

Green line – Italian 10-year bond yield

 

Orange line – Spanish 10-year bond yield

 

Yellow line – German 10-year bond yield

 

http://fxbazooka.com/upload/tiny/Analytics/2014/July/29/ger%20in%20spa.png

Source: Bloomberg

 

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http://fxbazooka.com/en/news/show/1526

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29 July 2014

 

IMF: GBP is overvalued

 

The International Monetary Fund warned that British pound is overvalued by 5-10% and this may hamper efforts to rebalance the British economy, reports the UK Telegraph. According to the IMF, high sterling may hit exporters and take some of the steam out of the improving economy which has the fastest growth pace among advanced economies.

 

The fund claimed that the Bank of England’s ultra-loose monetary policy was the right course at present, but warned that interest rates may have to rise if inflation starts to increase. The IMF also said that the BoE Governor Mark Carney should improve his controversial “forward guidance”.

 

The BoE’s Deputy Governor Broadbent said today that the IMF’s view on pound was fuelled by weak global growth. According to him, UK has had sharp bounce in economic activity and current account deficit doesn't threaten British economy.

 

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http://fxbazooka.com/en/news/show/1527

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July 30: Asian session

 

http://fxbazooka.com/upload/tiny/Asia_eng.jpg

 

Asian shares are a bit on the upside with MSCI Asia Pacific Index up by 0.2%. US dollar is consolidating versus its counterparts after yesterday’s gains. The greenback remains near the highest in almost eight weeks against major peers amid prospects jobs numbers will add to indicators of stronger economic growth, prompting the Fed to further taper stimulus at a meeting that concludes today.

 

USD/JPY is trading in the 102.10 area after it closed above 102.00 yesterday. Japanese industrial production contracted by 3.3%.

 

AUD/USD is in the $0.9380 area. NZD/USD is just above $0.8500. New Zealand’s building concerts rose by 3.5%. According to the data released today, the RBNZ made no currency interventions in June. EUR/USD is trading just above $1.3400. GBP/USD is in the $1.6945 area.

 

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http://fxbazooka.com/en/news/show/1529

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Key option levels (July 30)

 

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: $1.3400, $1.3415, $1.3470, $1.3500;

 

GBP/USD: $1.6800;

 

USD/JPY: 101.70/75, 102.50;

 

AUD/USD: $0.9400, $0.9425, $0.9450, $0.9475;

 

USD/CAD: 1.0780, 1.0800;

 

EUR/GBP: 0.7800, 0.7900, 0.7950 (large), 0.8000.

 

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http://fxbazooka.com/en/news/show/1533

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MARKET NEWS

30 July 2014

 

New coordinated sanctions against Russia

 

Russia keeps getting penalized for backing of armed rebels in eastern Ukraine. The United States and Europe have made a joint effort on Tuesday. The new sanctions are designed to hit major pillars of the Russian economy, including oil and gas supplies and technology, banking and finance, and arms sales. Close associates of Putin are also targeted.

 

The US sanctioned three Russian banks and a state-owned shipbuilder that serves Russia’s navy and oil and gas industry.

 

The EU curbed Russia’s access to bank financing and advanced technology in its widest-ranging sanctions, including an arms embargo and limits on access to European capital markets for Russian state-owned banks. Details of the EU sanctions are expected to be published Thursday and the measures are supposed to kick in on Friday.

 

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http://fxbazooka.com/en/news/show/1534

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MARKET NEWS

30 July 2014

 

Spanish GDP beat expectations

 

Spanish growth in Q2 turned out to be higher than the Bank of Spain has expected: the nation’s GDP increased by 0.6% q/q versus the anticipated growth of 0.5%. At the same time, Spanish consumer prices fell by 0.3% y/y, while the economists expected an increase.

 

Economy Minister Luis de Guindos yesterday said that Spain raised economic growth forecasts from 1.25% to 1.3% for 2014 and from 1.75% to 2% for 2015. That will push unemployment lower than the 24.9% rate initially predicted for 2014.

 

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http://fxbazooka.com/en/news/show/1535

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MARKET NEWS

30 July 2014

 

FOMC meeting: main moments

- Fed tapers QE from $35B to $25B.

 

- Rates held at 0-0.25%.

 

- The odds of persistent inflation below 2% ‘diminished somewhat’.

 

- Inflation has moved “closer” to long-run objective.

 

- No more reference that the unemployment rate is elevated.

 

- Accommodative policy may be appropriate for “considerable time” after asset purchase program ends.

 

- Charles Plosser, the hawkish president of the Philadelphia Fed, dissented in a 9 to 1 vote because he thought the intention to keep rates low for a considerable time after the Fed stops buying assets does not reflect “considerable economic progress”.

 

USD bulls obviously wanted more.

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MARKET NEWS

 

July 31: Asian session

 

http://fxbazooka.com/upload/tiny/Asia_eng.jpg

 

US dollar held below a 10-month peak against a basket of major currencies on Thursday after soaring on upbeat US growth data (GDP increased by 4% in Q2), with mixed views from the Federal Reserve tempering the rally. The greenback has a good chance of further rising if US releases encouraging labor market data on Friday.

 

USD/JPY is trading in the 102.77 area after spiking to the levels above 103.00 on Wednesday. AUD/USD is trading on the downside, in the $0.9315 area after it hit $0.9302 yesterday. Australian building approvals slumped by 5%, while the nation’s import prices contracted by 3%. NZD/USD rose above $0.8500 after hitting $0.8461 yesterday.

 

EUR/USD is trading just below $1.3400 area after hitting $1.3366 yesterday. GBP/USD is trading in the $1.6920 region after dipping to $1.6888 yesterday.

 

Among other news: Argentina misses default deadline after talks with creditors collapse. The nation failed to make a $539 million interest payment to the holders of its restructured bonds in time, and Standard & Poor’s Ratings Services declared Argentina in default on some of its bonds.

 

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http://fxbazooka.com/en/news/show/1538

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MARKET NEWS

 

Key option levels (July 31)

 

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: $1.3382, $1.3400 (large), $1.3405, $1.3450, $1.3480 (large), $1.3500 (large);

 

GBP/USD: $1.6850;

 

USD/JPY: 101.00, 101.40, 101.45, 101.50, 101.75, 101.80 (large), 101.85, 101.95 (large), 102.00 (large), 102.20 (large), 102.25, 102.40, 102.50 (large), 102.60, 102.75, 103.00 (large);

 

AUD/USD: $0.9320, $0.9360, $0.9365, $0.9375;

 

USD/CAD: 1.0765, 1.0800;

 

EUR/GBP: 0.7850 (large), 0.7900 (large), 0.7920 0.7980.

 

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http://fxbazooka.com/en/news/show/1539

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MARKET NEWS

 

31 July: American session

 

http://fxbazooka.com/upload/tiny/News/america1.png

 

Tatiana Norkina, an analyst at FBS

 

The index of the dollar with session opening subsided a little, but is still in green zone, adding about 0.05%. The reason of the decline was disappointing data on the labor market. The number of applications for unemployment benefits over the past week has grown to 302 thousand, while analysts had forecast an increase to only 301 thousand. US stock markets opened with significant decrease by more than 0.80%.

 

In currency markets, meanwhile calm prevails. After a strong strengthening of the U.S. dollar in recent days, the pair consolidated on the important levels. Thus, the EUR / USD pair stays above 1.3370 after morning testing of the 1.3400 figure, the GBP / USD continues to decline again, creating a new low of 1.6860. The USD / CHF currency pair was reduced to the 0.9075 support after another attempt to break through the figure of 0.9100 and USD / JPY is trying to storm yesterday's highs just below the 103.00 figure.

 

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http://fxbazooka.com/en/news/show/1543

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