Forex Technical Analysis 02.12.2016 (EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, USD/RUB, GOLD, BRENT)

Analysis for December 2nd, 2016

EUR USD, “Euro vs US Dollar”
The EUR/USD pair is still moving in the fifth ascending structure to reach the target at 1.0700. Possibly, the market may reach this target with the extension. The structure of the fifth wave implies that right now the price may be testing 1.0630. After that, the instrument may continue growing towards the above-mentioned target.

GBP USD, “Great Britain Pound vs US Dollar”
The GBP/USD pair has completed the descending impulse and right now is being corrected towards 1.2636. Later, in our opinion, the market may start falling to reach 1.2444.

USD CHF, “US Dollar vs Swiss Franc”
The USD/CHF pair is falling to reach the target at 1.0070. We think, today the price may return to 1.0136 and then fall towards the target. Later, in our opinion, the market may be corrected with the target at 1.0140.

USD JPY, “US Dollar vs Japanese Yen”
The USD/JPY pair is forming another descending impulse and reach 112.50 Later, in our opinion, the market may be corrected towards 113.50 and then continue falling to reach 106.50. An alternative scenario suggests that the instrument may grow to reach a new high.

AUD USD, “Australian Dollar vs US Dollar”
The AUD/USD pair has completed the ascending impulse and the correction . We think, today the price may continue growing towards 0.7550. In case the market reaches another low, the instrument may continue falling inside the downtrend with the target at 0.7100.

USD RUB, “US Dollar vs Russian Ruble”
The USD/RUB pair is expected to fall towards 62.00. After that, the instrument may return to 63.50 and then fall to reach the local target at 61.00.

XAU USD, “Gold vs US Dollar”
Gold is growing towards 1186. Later, in our opinion, the market may move downwards with the target at 1160 and then form another ascending structure to reach 1250.

BRENT
Brent is forming the third ascending wave with the target at 56.00. Possibly, today the market may fall towards 52.20 and then continue growing to reach the local target. After that, the instrument may be corrected towards 51.50 and then grow to reach 56.00.

 
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Forex Technical Analysis 01.12.2016 (EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, USD/RUB, GOLD, BRENT)

Analysis for December 1st, 2016

EUR USD, “Euro vs US Dollar”
The EUR/USD pair is forming the fifth ascending structure to reach 1.0700. After that, the instrument may be corrected towards 1.0604.

GBP USD, “Great Britain Pound vs US Dollar”
The GBP/USD pair is still growing towards 1.2592. Later, in our opinion, the market may start falling to reach 1.2067.

USD CHF, “US Dollar vs Swiss Franc”
The USD/CHF pair has reached a new high. Being under pressure, today the price is falling and may reach 1.0070. After that, the instrument may be corrected with the target at 1.0140.

USD JPY, “US Dollar vs Japanese Yen”
The USD/JPY pair hasn’t been able to continue its descending structure and reached a new high instead. We think, today the price may form another descending impulse and reach 112.50 Later, in our opinion, the market may be corrected towards 113.60.

AUD USD, “Australian Dollar vs US Dollar”
The AUD/USD pair is still forming the descending structure with the target at 0.7369. Later, in our opinion, the market may form another ascending wave towards 0.7550. After that, the instrument may continue falling inside the downtrend.

USD RUB, “US Dollar vs Russian Ruble”
The USD/RUB pair is forming another descending wave towards 63.20. We think, today the price may consolidate for a while, break the range downwards, and then fall to reach 61.00.

XAU USD, “Gold vs US Dollar”
Gold has reached new lows and right now is growing towards 1200. Later, in our opinion, the market may move downwards with the target at 1180.

BRENT
Brent is forming the third ascending wave. Possibly, the market may continue growing to reach 55.95 and then fall towards 51.50.

 
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Forex Technical Analysis 30.11.2016 (EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, USD/RUB, GOLD, BRENT)

Analysis for November 30th, 2016

EUR USD, “Euro vs US Dollar”
The EUR/USD pair is forming another ascending structure to reach 1.0700. After that, the instrument may be corrected towards 1.0604.

GBP USD, “Great Britain Pound vs US Dollar”
The GBP/USD pair is still growing towards 1.2592. Later, in our opinion, the market may start falling to reach 1.2067.

USD CHF, “US Dollar vs Swiss Franc”
The USD/CHF pair is forming another descending structure towards 1.0070. After that, the instrument may start growing with the target at 1.0133.

USD JPY, “US Dollar vs Japanese Yen”
The USD/JPY pair is forming the first descending wave with the target at 110.77. An alternative scenario suggests that today the market may grow to reach 113.55. Later, in our opinion, the market may continue falling.

AUD USD, “Australian Dollar vs US Dollar”
The AUD/USD pair is still forming the third ascending wave with the target at 0.7500. Later, in our opinion, the market may return to 0.7433 (at least) and then form the fifth structure, an ascending one, towards 0.7550.

USD RUB, “US Dollar vs Russian Ruble”
The USD/RUB pair has extended its ascending structure. We think, today the price may fall to reach 64.00 and then start consolidating again. After breaking this consolidation range downwards, the instrument may reach 63.00.

XAU USD, “Gold vs US Dollar”
Gold is consolidating at its lows; this structure may be considered as a reversal one. We think, today the price may grow reach 1212. Later, in our opinion, the market may move downwards with the target at 1190.

BRENT
Brent has reached the target of the descending wave. Possibly, today the market may start growing to reach 49.00 and then fall towards 48.15. After that, the instrument may form another ascending structure with the target at 51.50.

 
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Forex Technical Analysis 29.11.2016 (EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, USD/RUB, GOLD, BRENT)

Analysis for November 29th, 2016

EUR USD, “Euro vs US Dollar”
The EUR/USD pair is forming the fourth correctional structure; it has already reached the closest target of this correction. We think, today the price may return to 1.0552 and then form the fifth structure to reach 1.0700.

GBP USD, “Great Britain Pound vs US Dollar”
The GBP/USD pair is still trading around 1.2444. We think, today the price may form another ascending structure with the target at 1.2590. Later, in our opinion, the market may start falling to reach 1.2343.

USD CHF, “US Dollar vs Swiss Franc”
The USD/CHF pair has completed the ascending structure as the fourth part of the descending wave. We think, today the price may fall and form the fifth structure with the target at 1.0070. After that, the instrument may start another correction to reach 1.0133.

USD JPY, “US Dollar vs Japanese Yen”
The USD/JPY pair has finished the fourth structure of the descending wave with the target at 110.77. Possibly, today the market may form the fifth structure of this wave. Later, in our opinion, the market may be corrected to reach 112.55.

AUD USD, “Australian Dollar vs US Dollar”
The AUD/USD pair is forming the third ascending wave with the target at 0.7500. Later, in our opinion, the market may return to 0.7433 (at least) and then form the fifth structure, an ascending one, towards 0.7550.

USD RUB, “US Dollar vs Russian Ruble”
The USD/RUB pair has broken its ascending channel. We think, today the price may continue falling to reach 63.63 and then start consolidating again. After breaking this consolidation range downwards, the instrument may reach 61.75. However, considering that the oil prices are still falling, the market may grow to reach 65.00 and then resume falling inside the downtrend.

XAU USD, “Gold vs US Dollar”
Being under pressure, Gold is growing. We think, today the price may reach 1212. After that, the instrument may move downwards with the target at 1190 and then resume growing towards 1236.

BRENT
Brent is being corrected. Possibly, today the market may reach 47.30 and then form another ascending structure with the target at 51.50.

 
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Fibonacci Retracements Analysis 29.11.2016 (EUR/USD, EUR/GBP)

Analysis for November 29th, 2016

EUR USD, “Euro vs US Dollar”
The EUR/USD pair is still consolidating. It’s highly likely that in the nearest future the price may resume the ascending correction and test the retracement of 23.6%. If the market rebounds from this level, it may start a new descending movement.

As we can see at the H1 chart, the target of the current correction is the retracement of 78.6%. If later the price rebounds from this level, the market may resume growing towards the target area at 1.0700.

EUR GBP, “Euro vs Great Britain Pound”
Possibly, the EUR/GBP pair may continue the correction as well. The closest target for bulls is the retracement of 50%. If later the price rebounds from this level, the market may start a new decline towards its downside targets.

As we can see at the H1 chart, the local correction is about to complete. In the nearest future, the price may grow towards the group of retracements at 0.8580. However, if the price rebounds from this area, the market may resume falling and break the low.

 
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Fibonacci Retracements Analysis 28.11.2016 (EUR/USD, EUR/GBP)

Analysis for November 28th, 2016

EUR USD, “Euro vs US Dollar”
It’s highly likely that the EUR/USD pair started an ascending correction. The closest target is the correctional retracement of 23.6%. If later the price breaks this level, the market may start a more significant ascending correction.

At the H1 chart, the local correction is taking place with the target at the retracement of 78.6%. If later the price rebounds from this level, the market may reach its closest target at 1.0700.

EUR GBP, “Euro vs Great Britain Pound”
The EUR/GBP pair is being corrected. The closest target for is the group of fibo-levels at 0.8415. If later the price rebounds from this area, the market may start a new ascending correction.

As we can see at the H1 chart, the pair rebounded from the retracement of 78.6%. If the price fixes below the retracement of 61.8%, the market may resume falling and break the local low.

 
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Forex Technical Analysis 24.11.2016 (EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, USD/RUB, GOLD, BRENT)

Analysis for November 24th, 2016

EUR USD, “Euro vs US Dollar”
The EUR/USD pair hasn’t been able to form another ascending impulse. The instrument has broken 1.0600 and right now consolidating around 10.550. This structure may be considered as a downside continuation pattern. The next target is at 1.0444.

GBP USD, “Great Britain Pound vs US Dollar”
The GBP/USD pair has formed another ascending impulse, which may be considered as a correction. We think, today the price may fall to reach 1.2345. After breaking it to the downside, the instrument may form the third descending wave towards 1.2222.

USD CHF, “US Dollar vs Swiss Franc”
The USD/CHF pair is still growing. Possibly, the market may form the ascending wave with the target at 1.0300.

USD JPY, “US Dollar vs Japanese Yen”
The USD/JPY pair has broken the consolidation range to the upside and right now is still growing towards 114.20. Later, in our opinion, the market may return to 112.50.

AUD USD, “Australian Dollar vs US Dollar”
The AUD/USD pair has completed the descending structure towards 0.7375. Taking into account that the USD continues strengthening, the pair may fall to reach 0.7314. Later, the price may reach 0.7160.

USD RUB, “US Dollar vs Russian Ruble”
The USD/RUB pair is trying to form the five-wave structure with the target at 65.00. After that, the instrument may continue falling to reach 63.63.

XAU USD, “Gold vs US Dollar”; BRENT
Gold and Brent aren’t trading today due to Thanksgiving Day in the USA.

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Fibonacci Retracements Analysis 23.11.2016 (EUR/USD, EUR/GBP)

Analysis for November 23rd, 2016

EUR USD, “Euro vs US Dollar”
The EUR/USD pair is consolidating. The closest target is the group of downside retracements at 1.0450. If later the price rebounds from this area to the upside, the market may start a new ascending correction.

As we can see at the H1 chart, the pair rebounded from the correctional retracement of 50% and is attempting to resume its decline. Possibly, in the nearest future the market may break the low. The closest target area is confirmed by local fibo-levels.

EUR GBP, “Euro vs Great Britain Pound”
After rebounding from the retracement of 78.6%, the EUR/GBP pair is still trying to fix above this level. Consequently, in the nearest future the market may grow towards local highs. If later the price breaks them, the pair may grow much higher.

As we can see at the H1 chart, the closest target for bulls is the group of retracements at 0.8630. If later the price breaks this area, the market may continue moving upwards.

 
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Forex Technical Analysis 23.11.2016 (EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, USD/RUB, GOLD, BRENT)

Analysis for November 23rd, 2016

EUR USD, “Euro vs US Dollar”
The EUR/USD pair is forming the third ascending impulse. We think, today the price may reach 1.0680 and then fall towards 1.0623. Later, after breaking the top of this wave, the market may start another correctional wave with the target at 1.0886.

GBP USD, “Great Britain Pound vs US Dollar”

Being under pressure, the GBP/USD pair is falling. We think, today the price may reach 1.2345 and then form another consolidation range. After breaking it to the downside, the instrument may continue falling to reach 1.22.

USD CHF, “US Dollar vs Swiss Franc”

The USD/CHF pair attempted to expand its consolidation range to the upside. Right now, the price is falling and expanding the range to the downside. Possibly, the market may form the first correctional wave downwards with the target at 0.9983.

USD JPY, “US Dollar vs Japanese Yen”

The USD/JPY pair is rebounding from the upside border of the consolidation range. We think, today the price may fall towards the downside border and break it. Later, in our opinion, the market may continue falling with the first target at 108.70.

AUD USD, “Australian Dollar vs US Dollar”

The AUD/USD pair has completed the first ascending wave, which may be considered as a correctional one. Possibly, today the price may fall to reach 0.7376.

USD RUB, “US Dollar vs Russian Ruble”

The USD/RUB pair is consolidating. We think, today the price may test 64.40 from below. After that, the instrument may continue falling with the target at 62.80.

XAU USD, “Gold vs US Dollar”

Gold is forming the third ascending impulse. We think, today the price may reach 1222. Later, in our opinion, the market may return to 1212 and then continue growing towards 1236.

BRENT

Brent is forming another wave with the target at 53.50 and right now is consolidating. Possibly, today the price may break this range to the upside and then continue growing to reach the above-mentioned target.

 
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Fibonacci Retracements Analysis 22.11.2016 (EUR/USD, EUR/GBP)

Analysis for November 22nd, 2016

EUR USD, “Euro vs US Dollar”
The EUR/USD pair is still being corrected. The closest target for bears is the group of retracements at 1.0450. If later the price rebounds from this area to the upside, the market may start a new ascending correction.

As we can see at the H1 chart, the pair rebounded from the local retracement of 50% and may resume moving downwards. Consequently, in the nearest future the market may break the local low.

EUR GBP, “Euro vs Great Britain Pound”
The EUR/GBP pair tested the retracement of 78.6% once again. Right now, bulls are attempting to rebound from this level. If the price fixes above it, the market may start a new ascending correction. The first target for bulls will be the area near the local highs.

As we can see at the H1 chart, the pair is moving above the retracement of 78.6%, but is testing this level again. If the price fixes above it during the day, the market may start a new correction very soon. Otherwise, the pair will continue falling much faster.

 
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Top Trade Idea For September 16th, 2016 Gold

 

We’ve talked before about many traders’ penchant for asymmetric risk. Market surprises can lead to large moves. The Brexit drove fifteen big figure fall is a good recent example. The market – and the bookmakers – expected a clear Remain majority. As the count progressed the ultimate result became clear, and GBP tanked.

Next week’s FOMC meeting may offer a similar risk profile. Market expectations that the Fed will lift interest rates were low before the release of soft IP and retail sales data yesterday and are even lower now. A lift in rates after the two-day meeting would surprise, offering a potentially larger market move. How can traders take advantage?

A higher interest rate regime is supportive of the USD. A surprise lift could see it break away from current levels. One of the challenges in selecting a market to express this view is the competing interests of other central banks and their currencies. The Bank of Japan is meeting at the same time as the Fed, and could announce measures that affect currencies, and the ECB or PBoC could also act. However, there is no central bank for gold.

trade-1

Gold is nearing key support just above $1300. Note the AXDR confirms the downtrend. A surprise rate rise could push the USD higher, and gold through support. This, in turn, could spark technical selling in gold, potentially spurring a large fall.

Selling at $1298, with a stop loss around $1306, the initial profit target is between $1252 and $1272. Gold bears may hang on to shorts for a longer term move towards $1200.

 

WTI/USD – US Crude Under Pressure as Oversupply Concerns Continue

 

US crude has ticked higher on Thursday, following sharp losses in the Wednesday session. In the North American session, WTI/USD futures are trading at $44.02 per barrel. Brent futures are trading at $46.78, as the Brent premium has widened to $2.76. In economic news, it was a data-heavy session. In the US, retail sales came in at -0.3%, weaker than the estimate of -0.1%. Unemployment Claims were close to the forecast, and the Philly Fed Manufacturing Index easily beat expectations. On Friday, the US releases PPI and UoM Consumer Sentiment.

On Wednesday, Crude Oil Inventories posted a slight drawdown of 0.6 million, well short of the forecast of a surplus of 2.8 million. This figure follows the shock reading last week of -14.5 million, compared to the forecast of +0.6 million. Oil prices have fallen 4.1 percent since Tuesday, in response to an International Energy Agency (IEA) report that the oil oversupply could extend into the middle of 2017. This assessment surprised the markets, as the IEA veered sharply from its report a month ago, when it projected that the market would not show any surplus for the rest of the year. The revised IEA report comes on the heels of an OPEC report, which projected the oil glut to continue into 2017 due to an increase in production from non-OPEC members.

With a crucial Federal Reserve policy meeting on September 21, the Fed has imposed a blackout period on public comments from FOMC members. Recent comments from FOMC members have done little to clarify what are Fed’s monetary plans for the remainder of the year. As things currently stand, a September hike has been priced in at 15%, while the likelihood of a December move is 43%. These numbers could drop after unimpressive data from US retail sales reports on Thursday. Retail Sales declined 0.3% in August, marking its first decline in five months. There was no relief from Core Retail Sales, which fell 0.1% and missed expectations. The weak retail sales numbers point to softness in consumer spending, a key driver of economic growth. Next up are consumer inflation and confidence reports, which will be released on Friday. Inflation numbers have been very soft for months, and little change is expected in the August releases.

WTI/USD Fundamentals

XAU/USD – Gold Dips to 2-Week Lows on Mixed US Data

 

Gold has posted slight gains on Thursday, as the metal trades at a spot price of $1316.74 per ounce in the North American session. On the release front, Thursday was a data-heavy session after an uneventful few days. In the US, retail sales came in at -0.3%, weaker than the estimate of -0.1%. Unemployment Claims were close to the forecast, and the Philly Fed Manufacturing Index easily beat expectations. On Friday, the US releases PPI and UoM Consumer Sentiment.

Gold prices have dropped one percent this week, as the markets continue to speculate about a Federal Reserve rate hike. Will the downward trend continue? Gold prices are sensitive to interest rate moves, so we can expect some movement from the base metal in the days ahead of the Federal Reserve policy meeting on September 21. Recent comments from FOMC members have done little to clarify what are Fed’s monetary plans for the remainder of the year. As things currently stand, a September hike has been priced in at 15%, while the likelihood of a December move is 43%. These numbers could drop after unimpressive data from US retail sales reports on Thursday. Retail Sales declined 0.3% in August, marking its first decline in five months. There was no relief from Core Retail Sales, which fell 0.1% and missed expectations. The weak retail sales numbers point to softness in consumer spending, a key driver of economic growth. There was also some positive news, as unemployment claims remained steady at 260 thousand, slightly below the forecast. As well,the Philly Fed Manufacturing soared with a reading of 12.8 points, crushing the estimate of 1.1 points. This marked the indicator’s highest monthly gains since June 2015. Next up are consumer inflation and confidence reports, which will be released on Friday. US inflation numbers have been very soft for months, and little change is expected in the August releases. If US inflation numbers disappoint the markets, the odds of a rate hike in 2016 will decrease, and this could boost gold prices.

 

 

Certain about Uncertainty

 

Overnight, US economic data disappointed as retail sales fell for second consecutive month, nudging the December US interest rate hike probability to fall below 50%. The focus now shifts to tonight CPI which could have a significant impact on rate hike expectations, even more so in the wake of the tepid Retails Sales print. A benign inflation print will likely reverse much of the recent yield curve damage and put the USD on the defensive. The Atlanta Fed GDPNow indicator plumbed to only 3% from 3.3% Sept 9.

Japanese Yen
The market looks as if it is giving up on the long USDJPY as US economic data points south, and with a minuscule chance the BOJ will reach a mandate consensus from their policy review, it would suggest that downside risk is gaining favor. The bar is always high for the BOJ and traders are now distressed over an another headline that the BOJ is split over the mechanisms for providing additional stimulus. But given the BOJ’s penchant for a surprise, the only certainly is to expect more uncertainty in the build-up to next week’s BOJ meeting. Indeed, the market is more anxious about the BOJ decision rather than the Fed decision, which at this stage is all but priced out for a September rate hike. There’s a growing consensus that the BOJ will refrain from moving deeper into NIRP this meeting, but will keep all options open for November and will forward guide that choice at next week’s meeting. There’s a severe lack of confidence over BOJ policy brewing this morning.

Coupled with the lack of confidence in the BOJ and with the Feds likely sitting tight due to political uncertainty regarding the US presidential election, USDJPY is very vulnerable, which brings intervention options back to the fore.


Australian Dollar 
Yesterday’s domestic data had little influence on price action and while we should have expected some downside follow through on the mixed domestic employment data, with risk stabilizing, the recent sell-off ran out of gas as the AUD found near term support. Last night, disappointing US economic data propelled the AUDUSD through .7515 as carry trade momentum picked up with the September US rate hike probability dropped to 12% and December moved below 50% for the first time since the “lollygagger” of hawkish Fed Speak filled the airwaves last week.

Also, as US election polls suggest Donald Trump is gaining momentum, with heightened political uncertainty it plays into the notion the Feds will remain lower for longer,  underpinning the Australian Dollar.

Regardless, I expect commodity currencies to trade heavy, but the Carry Aspect for the Aussie will likely take its cue from tonight’s US CPI print.160916gYuan
If there was any doubt that the PBOC iron hand was taking hold, with the release of the PBOC Yuan positions, foreign currency holdings plummeted to its lowest level since August 2011, which indicates that the PBOC was active selling USD in defense of the Yuan.

Apparently, this overt intervention is designed to keep the Yuan on an even keel before the SDR inclusion. Holiday thinned trading conditions are keeping traders sidelined, even more so ahead of next week’s crucial Central Bank meetings.

 

U.S Data to Influence Fed Hike Chances

 

Five things the markets are talking about
Capital markets are unusually keyed into Fed decisions and for as long as they remain so, investors should be expecting pockets of volatility to be somewhat plentiful ahead of next week’s FOMC rate announcement (Sept 20-21).

But, that is next week, now, the market has a few other central bank decisions to prepare for and to react to – the BoE and BoJ being the most important.

(Note: Overnight, the Swiss National Bank (SNB) delivered what was expected, keeping rates on hold at -0.75% and said it would intervene in currency markets as needed – its the same rhetoric, just a different meeting).

This morning, the Bank of England (BoE) is not expected to change policy, but Governor Carney could signal further easing in months to come. This would not be a good news story for the already under pressure pound (£1.3207).

Stateside, the forecasts for a Fed rate hike will be mightily influenced by this morning’s August figures for U.S industrial output, producer prices and retail sales.

1. Equities relief rally or what?
All asset classes, in particular stocks and bonds, have whipsawed in recent sessions in response to growing unease over the direction of future rates and stimulus.

So its somewhat a relief that Asian stocks were treading water overnight, as traders pulled back positions ahead of a long weekend and with key monetary decisions in Japan and the U.S. due next week. A stronger yen (briefly traded under ¥102.00 in the session) pressured Japanese stocks.

Japan’s Nikkei Stock Average slid -1.4%, taking its week-to-date loss to -3.5%. Australia’s S&P/ASX 200 edged -0.2% lower but Hong Kong’s Hang Seng Index rose +0.6%. Elsewhere, South Korea, China and Taiwan were closed for a public holiday.

In Europe, the Stoxx Europe 600 has inched up +0.1% in early trade following five consecutive sessions of declines. Bank stocks are leading the way while the energy sector continues to underperform. The FTSE 100 is looking for direction from the Bank of England (BoE) rate announcement while futures point to a +0.2% opening gain for the S&P 500.

Indices: Stoxx50 -0.1% at 2,967, FTSE +0.2% at 6,685, DAX +0.1% at 10,386, CAC-40 -0.1% at 4,367, IBEX-35 +0.2% at 8,722, FTSE MIB -0.2% at 16,500, SMI -0.1% at 8,155, S&P 500 Futures +0.2%


2. Commodities mixed performance
Black gold or crude oil has found some stamina in early trading, following a two-day slide of almost -6% which was mostly provoked by the market getting a little more conservative about when the balance between supply and demand would return.

Brent crude is up +0.6% to +$46.11 a barrel after dropping -2.6% yesterday when the EIA report revealed large weekly builds in petroleum products offset a surprise draw in crude stockpiles. Light crude or WTI is up +0.46% to +$43.76 a barrel.

Expect gains to be somewhat capped as Libya and Nigeria both come back on line to add hundreds of thousands of barrels to world markets within weeks.

Gold prices are trading lower mostly on the back of a steady dollar and equity in the black.

Spot gold prices are down -0.19% at $1,323.30 an ounce. The yellow metals prices have been largely influenced by the “big” dollar moves and comments from Fed officials in recent weeks. Investors can expect trading to remain somewhat subdued until next weeks Fed rate decision.160916b3. Global yields stay close to home
For most of this week, both corporate and sovereign yield curves have been trading like a “hot” commodity on the back of central bank rhetoric. Whether it was BoJ or Fed members, dealers seem to be somewhat satisfied with how they have shaped their yield curves ahead of next weeks BoJ and Fed’s rate announcements. However, that may all change after the BoE announcement this morning as the markets concern is that the central bank support is going to be different going forward.

U.S 10-year treasury’s have backed up +1bps to +1.71%, after falling -3bps in yesterdays session. German bunds have increased +2bps to +0.04%. U.K 10-year gilts are little changed ahead of BoE rate announcement, trading at +0.92%.

Elsewhere, Aussie 10-year notes declined for a sixth day, pushing their yield to this quarter’s high of +2.11% on the back of the country’s jobless rate unexpectedly falling to new three-year low of +5.6% last month. It seems that dealers down-under are pricing out any further cuts by the RBA this year.160916c4. Big Dollar steady
Early morning focus is on the pound (£1.3207) ahead of the BoE meeting.

Investors expect sterling to come under renewed pressure if Governor Carney suggests that he may cut interest rates further in coming months. However, recent solid U.K. data has seen expectations for a -15bps rate cut in November drop to around +20%.

The USD will be focusing on a deluge of data at 08:30am EDT (U.S industrial output, producer prices and the biggie – U.S retail sales).

Retail sales have been somewhat soft this year and many expect the August print to be no different (forecast -0.1%, ex- auto to have risen +0.2%). A headline print close to expectations should not be enough to change next weeks expectations on a rate mov

 

Analysis of Japanese candlesticks for EUR/USD, and USD/JPY on 16.09.2016

Analysis of Japanese candlesticks on September, 2016

EUR/USD “Euro vs US Dollar”

 

Analysis of Japanese candlesticks for EUR/USD, and USD/JPY on 16.09.2016

On 4 hours chart for Euro-US Dollar pair, a correction at level of middle Window is going on, bearish Harami and Shooting star candles show the way downwards. Bearish indication still can be seen on 3 lined of breakage chart and Heiken Ashi candles.

 

On 1 hour chart for Euro-US Dollar there is a side trend, candle models are still mixed, bearish Gravestone doji points downwards. On 3 lined of breakage chart there is a bullish movement, however, Heiken Ashi candles hint on a bearish indication.

USD/JPY “US Dollar vs Yen”

Analysis of Japanese candlesticks for EUR/USD, and USD/JPY on 16.09.2016

On 4 hours chart for US Dollar-Yen we see a bullish Hammer model, which indicates possible upwards correction, middle Window may play as support. On 3 lined of breakage chart there is still bullish indication, Heiken Ashi candles confirm downward movement.

 

Fibonacci Retracements Analysis for EUR/USD, and EUR/GBP on 16.09.2016

Fibonacci Retracements Analysis September 16, 2016

EUR/USD “Euro vs US Dollar”

 

АFibonacci Retracements Analysis for EUR/USD on 16.09.2016

Euro is still traded in the flat shape boundaries. Earlier market was unable to settle above correction point at 78.6% and there was bouncing from the bunch of local fibo-levels (1.1315). Consequently, in the short term perspective, we should expect price descending towards the area near 1.1180.

 

As we can see from 1 hour chart, yesterday price has bounced from correction point at 61.8%. So that we can expect this pair to move towards lower goals and break those minimums. Afterward, if there was a bouncing from anticipated price area, then we would expect current consolidation to be going on.

EUR/GBP “Euro vs British Pound”

 

Pair cross is still stuck in the local flat shape. Earlier, when the pair has been done with lower targets, there was a rapid bullish rally. In the short term we might expect a further upwards movement towards the bunch of upper fibo-levels near the price area at 0.8570.

 

On 1 hour chart we can see the nearest bearish goal that is the correction mark at 38,2%, which has been strengthened by the bunch of daily fibo-levels. Consequently, if there was an upwards bouncing from that price area, then we would consider further ascending as quite possible.

 

Technical analysis for EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD, USD/RUB, GOLD on 16.09.2016

Currency pair Euro-US Dollar demonstrates another rapid uptick and continues to be traded under the pressure leading this pair downwards. For today, we expect the pair to be out of consolidation range to follow the wave with the target at the level 1.1100. Then we would consider new consolidation range development for possible downward trend.

EURUSD

Currency pair Pound-US Dollar is traded within fifth downward wave figure. For today, we consider a chance for testing the level at 1.3030. Then there should be correction towards 1.3244.

 

 

Analysis of Japanese candlesticks for EUR/USD, and USD/JPY on 15.09.2016

Analysis of Japanese candlesticks on September 15, 2016

EUR/USD “Euro vs US Dollar”

 

Analysis of Japanese candlesticks for EUR/USD, and USD/JPY on 15.09.2016

On 4 hours chart Euro-US Dollar keeps going with correction on the level of the middle Window, bearish Harami points downwards. On 3 lined of breakage chart and Heiken Ashi candlesticks we see the signs of bearish indication.

Analysis of Japanese candlesticks for EUR/USD, and USD/JPY on 15.09.2016

On 1 hour chart for Euro-US Dollar pair we see further side correction, candles models are still mixed, bearish Tweezer Top and Harami show the way downwards. On 3 lined of breakage chart we see bullish movement, on Heiken Ashi candles we see signs of bearish indication.

USD/JPY “US Dollar vs Yen”

Analysis of Japanese candlesticks for EUR/USD, and USD/JPY on 15.09.2016

On 4 hours chart for US Dollar-Yen pair we see side correction, bearish Doji model shows the way downwards. On 3 lined of breakage chart we see bullish indication, Heiken Ashi candles confirm pullback in a downwards direction towards the middle Window.

 

All Eyes on Europe for next Big Currency Moves

A volatile week of US economic data did little to answer key questions for FX markets. Attention turns to Europe for the next big market moves.

Euro Forecast – All Eyes on ECB: Extension of QE, or just More Wait-and-See?

The European economy continues to flail, that much can be widely agreed upon without further debate. Unemployment throughout the bloc remains stubbornly above the 10% threshold, and this week, more evidence contributed to the mounting case that the March ‘bazooka’ of stimulus triggered by the ECB has yet to show any additional signs of promise for the European economy.

Australian Dollar Forecast – Aussie to Stage Larger Recovery on Wait-and-See RBA, Strong 2Q GDP

The near-term series of higher highs & lows inAUD/USDmay gather pace next week as the Reserve Bank of Australia (RBA) is widely anticipated to retain its current policy in September, while the regions 2Q Gross Domestic Product (GDP) report is projected to highlight the fastest pace of growth since 2012.

Japanese Yen Forecast – Yen Becomes Defensive As Central Banks Expected To Act Soon

The Japanese Yen finished last week lower against the majority of G10 FX as traders anticipate the dual Central Bank meeting of Federal Reserve and the BoJ on September.

Chinese Yuan Forecast – Yuan Volatility Elevates on G-20, Heavy Data

The USD/CNH held above 6.6832 as support despite a weaker-than-expected U.S. August Non-Farm Payrolls print released on Friday. In terms of the upper band, the pair touched 6.7026 on Monday, the highest level in over a month, but failed to hold above the key resistance of 6.7000.

Gold Forecast – Gold Prices to Face Central Bank Volatility as Sentiment Stretches

Gold prices softer this week with the precious metal off 0.17% to trade at 1318 ahead of the New York close on Friday.

All Eyes on Europe for next Big Currency Moves

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Aussie to Stage Larger Recovery on Wait-and-See RBA, Strong 2Q GDP

Aussie to Stage Larger Recovery on Wait-and-See RBA, Strong 2Q GDP

Fundamental Forecast for the Australian Dollar: Bullish

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The near-term series of higher highs & lows in AUD/USD may gather pace next week as the Reserve Bank of Australia (RBA) is widely anticipated to retain its current policy in September, while the regions 2Q Gross Domestic Product (GDP) report is projected to highlight the fastest pace of growth since 2012.

According to a Bloomberg News survey, all of the 26 economists polled forecasts the RBA to keep the benchmark interest rate on hold at the record-low of 1.50%, and the board may largely endorse a wait-and-see approach for monetary policy especially as Governor Glenn Stevens prepares to depart from the central bank. Even though the RBA warns ‘the latest data on inflation and labour costs confirm that domestic cost pressures remain subdued,’ the central bank may stick to the sidelines throughout the remainder of the year as ‘low interest rates and the depreciation of the Australian dollar exchange rate since early 2013 are continuing to support the rebalancing of economic activity towards non-resource sectors.’ With that said, Australia’s 2Q GDP report may further the case for the RBA to adopt a more neutral outlook for monetary policy as the region is expected to grow an annualized 3.2% following the 3.1% expansion during the first three-months of 2016, and the aussie may continue to outperform its U.S. counterparts as the mixed data coming out of the world’s largest economy dampens bets for a September Fed rate-hike.

The weaker-than-expected U.S. Non-Farm Payrolls (NFP) print accompanied by the slowdown in household earnings may encourage the Federal Open Market Committee (FOMC) to retain the current policy at the September 21 interest-rate decision as central bank officials persistently warn ‘most survey-based measures of longer-run inflation expectations were little changed, on balance, while market-based measures of inflation compensation remained low.’ The low-inflation environment across the major industrialized economies may encourage the FOMC to follow a similar path to 2015, but we may see a growing rift within the central bank as 2016-voting member Loretta Mester argues that there’s a ‘pretty compelling’ case for higher borrowing-costs. Nevertheless, the limited U.S. docket for the week ahead leave the U.S. dollar vulnerable to narrowing expectations for an imminent rate-hike as Chair Janet Yellen appears to be in no rush to further normalize monetary policy.

Aussie to Stage Larger Recovery on Wait-and-See RBA, Strong 2Q GDP

The near-term outlook for AUD/USD remains mired as the pair preserves the downward trending channel carried over from the previous month, but a series of positive developments out of Australia may threaten the bearish pattern as the pair carves as series of higher highs & lows coming into September. In turn, a break of trendline resistance along with a break/close back above former support around 0.7650 (78.6% retracement) may generate a larger advance in the exchange rate, with the next topside target coming in around 0.7740 (78.6% retracement).

Gold Prices to Face Central Bank Volatility as Sentiment Stretches

Gold Prices to Face Central Bank Volatility as Sentiment Stretches

Fundamental Forecast for Gold:Neutral

Gold prices softer this week with the precious metal off 0.17% to trade at 1318 ahead of the New York close on Friday. Heading into the holiday weekend the near-term risk remains for further losses before making a more significant low in early September trade.

Non-Farm Payroll figures released on Friday showed the U.S. economy gained 151K jobs in the month of August, slightly missing expectations for a print of 180K. Although we did see an upward revision to last month’s already stellar number, the unemployment rate held steady at 4.9% (expected 0.1% drop) with wage inflation figures also coming in well below consensus estimates. Interest rate expectations remain broadly unchanged with Fed Fund Futures continuing to price the first material expectations for a rate hike to be in December.

The initial reaction saw gold rally into near-term resistance at the July low-day reversal-close before pulling back sharply in early U.S. trade. With a quiet week for U.S. data, traders will be closely eyeing central bank rate decision from the RBA, ECB & BoC. Price action around these events can often times offer surges in volatility and a washout lower in price on one of these releases could offer favorable long-entries.

Gold Prices to Face Central Bank Volatility as Sentiment Stretches

A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net long Gold- the ratio stands at 1.70 (63% of traders are long)- bearish reading. Long positions out-paced shorts on building open interest this week with long exposure 44.7% above levels seen last week while shorts are up just 11.1%. Although the SSI does keep the focus lower, it’s important to note that the last time SSI approached these extremes (high then was 2.14) was back in May just days before prices bottomed.

Gold Daily

Gold Prices to Face Central Bank Volatility as Sentiment Stretches

The broader outlook remains unchanged from last week and from a technical standpoint, heading into September trade seasonal tendencies favor strength after next week so we’ll be looking for a low as the monthly opening range takes shape. Price turned higher this week from confluence support where the 50-line of the descending median-line formation converges on the May high and the 100% extension at 1303. Friday’s rally failed just ahead of the July low-day reversal close at 1330 and the risk remains lower near-term while below this mark.

A break lower targets more significant structural support next week around 1296 backed by 1287– both areas of interest for possible exhaustion / long-entries. A breach above the upper median-line parallel is needed to validate a breakout targeting the high-day close at 1355 & 1380. Bottom line: looking lower to get long heading into September trade.

Looking longer-term?

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—Written by Michael Boutros, Currency Strategist with DailyFX

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Yuan Volatility Elevates on G-20, Heavy Data

Yuan Volatility Elevates on G-20, Heavy Data

Fundamental Forecast for the Yuan: Neutral

The USD/CNH held above 6.6832 as support despite a weaker-than-expected U.S. August Non-Farm Payrolls print released on Friday. In terms of the upper band, the pair touched 6.7026 on Monday, the highest level in over a month, but failed to hold above the key resistance of 6.7000. Looking into the coming week, event risk from China will be key drivers to Yuan rates. One major theme is the on-goingG-20 meetings. China’s top regulators including the PBOC’s governors have already begun to address the country’s policies at the meetings. Also, the Chinese President Xi Jinping is scheduled to deliver a keynote speech at the G-20 Leaders Summit, which may give more clues on the outlook of the broader economy. With additional remarks from G-20 finance ministers, central bank governors and presidents, the volatility in FX markets is expected to elevate. Next week, China will have a heavy economic calendar as well with foreign reserves, exports and imports, consumer price index, monetary supply and new Yuan loans reported for the month of August.

In regards to the question that many traders want to ask – ‘whether China’s Central Bank would consider intervention if large volatility in Yuan rates is seen’, the Deputy Governor of the PBOC Yi Gang offered a response at one G-20 session. Mr. Yi said that “we will surely use multiple policy tools [to intervene] if abnormal moves in exchange rates are seen. We want to keep Yuan rates stable around reasonable levels.” Based on Yuan’s moves and the PBOC’s guidance over the past four weeks, reasonable levels appear to be levels below 6.7000. This level is likely to continue as key resistance as no sufficient changes have been seen from the Yuan’s major counterpart. The expanding yet lower-than-expected U.S. Non-Farm Payrolls read released on Friday failed to boost the odds of Fed rate hikes in September. We have discussed that without a clear outlook of Fed rate hikes, Dollar/Yuan rates will likely maintain within its current range and less likely to break the level of 6.7000.

Deputy Governor Yi also commented on the outlook of China’s monetary policy, which is another key driver to Yuan rates. A moderate policy will best facilitate China’s on-going reforms according to him: too loose monetary policy may reduce the pressure on private sectors that push them to reform; at the same time, too tight monetary policy may make the reform process too painful for private sectors to bear. Mr. Yi told that he is satisfied with the current combination of moderate monetary policy and proactive fiscal policy. This could help the Yuan to avoid sharp devaluation driven by internal forces.

Although the PBOC’s monetary policy is moderate in general, their next move may depend on key economic indicators. The soaring housing prices, mortgages, and real estate companies’ borrowing have elevated the risk of asset price bubbles.The July New Yuan Loans read shows that mortgages have become the sole driver to bank credit.The August prints to be released next week could give us some clues on the development of the housing sector. The PBOC as well as other financial regulators may respond accordingly to the figures as curbing price bubbles has been set as one primary target of the country.

Yen Becomes Defensive As Central Banks Expected To Act Soon

Yen Becomes Defensive As Central Banks Expected To Act Soon

Fundamental Forecast for the Japanese Yen: Bearish

The Japanese Yen finished last week lower against the majority of G10 FX as traders anticipate the dual Central Bank meeting of Federal Reserve and the BoJ on September. A quick glance at 1-month implied volatilities, which covers the central bank meetings, show anticipation of the BoJ possible weakening the JPY through new easing or the Federal Reserve carrying on their tune from Jackson Hole with discussions of another possible rate hike.

A failure for the BoJ to expand asset purchases later this month or to fail to indicate future easing would likely result in a stretch of JPY strength. However, we could continue to see Yen weakness over the coming months as traders anticipate the next big move from the BoJ to help argue that Abenomics has not been a waste of Trillions of Yen. In the near term, be on the watch for BoJ speakers talking down anticipated stimulus to prevent the market from selling JPY. Recently, BoJ’s Sakurai told Reuters that the discussion of Helicopter Money is off the table for now, which was one form of QE speculated.

Equally important to the direction of USD/JPY is the anticipated actions by the Federal Reserve. Should the belief of a Fed rate hike in 2016 gather steam we could see the USD take the pair higher as it becomes bid across the board. According to Bloomberg data, the current chances for a September or December hike are 32% & 60.3% respectively.

Next week, the finalized print for 2Q GDP for the Japanese economy is expected to see an upward revision to a seasonally adjusted 0.4% q/q up from the preliminary reading of 0.2%. The GDP print will be combined with the Balance of Payments reading that will help traders see how the export-dependent economy is faring in an environment of a rather strong JPY. Next Friday will provide the

USD/JPY Longs Leave For The Short Side As 104 Is Cleared

Yen Becomes Defensive As Central Banks Expected To Act Soon

The ratio of long to short positions in the USDJPY stands at 1.42 as 59% of traders are long. As you can see on the chart above, the position bias is shifting rather aggressively. Yesterday the ratio was 1.87; 65% of open positions were long. Long positions are 12.9% lower than yesterday and 31.4% below levels seen last week. Short positions are 14.7% higher than yesterday and 55.6% above levels seen last week. Open interest is 3.3% lower than yesterday and 3.3% below its monthly average.

We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long gives a signal that the USDJPY may continue lower. The trading crowd has grown less net-long from yesterday and last week. The combination of current sentiment and recent changes gives a further mixed trading bias.

All Eyes on ECB: Extension of QE, or just More Wait-and-See?

All Eyes on ECB: Extension of QE, or just More Wait-and-See?

Fundamental Forecast for Euro: Neutral

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The European economy continues to flail, that much can be widely agreed upon without further debate. Unemployment throughout the bloc remains stubbornly above the 10% threshold, and this week, more evidence contributed to the mounting case that the March ‘bazooka’ of stimulus triggered by the ECB has yet to show any additional signs of promise for the European economy. Inflation numbers for the Euro-zone were released on Wednesday, and in what’s become a common occurrence, printed below expectations with a meager .2% print; furthering the concern that the recently unveiled package of measures may not be enough to move the economy towards the banks 2% inflation target.

This continued lack of growth and failure to produce inflation has led many economists to the expectation that the ECB might go for even more stimulus at their upcoming meeting on Wednesday-Thursday of next week; either through a deeper cut of the deposit rate into further negative territory (low probability, less likely after recent PMI’s), or perhaps through an extension of the bank’s €80 billion-per-month bond buying program beyond its currently designed March 2017 end-date.

And while an extension of the bond-buying program appears to be highly-likely ahead of March 2017, it may make more sense for Mr. Draghi and company to save such an announcement for later in the year in the event that extreme risk aversion begins to again show within the European economy. When Mr. Draghi last took the podium in July, we had the potential for such a situation with the recently-triggered Brexit referendum. There was a lot of uncertainty; nobody really knew what was going to happen, but the threat of an adverse event to an already fragile economy teetering with the hope that positive impacts from QE would begin to show; and there was a very real reason to be on guard. But, at least at this point, that risk appears to be contained as it doesn’t appear that we’re going to see Article 50 triggered anytime soon.

While it may seem more sensible for the ECB to continue to throw money after the problem of persistently-high unemployment and nearly non-existent inflation as they did in March, a larger debate has begun to rage about the efficacy of QE given the potential risk of longer-term side-effects. To be sure, markets haven’t seen the extreme negative aspect of those side-effects just yet, but that doesn’t mean that we’re out of the woods. The rate cut(s) into negative territory from the ECB have created absolute distortion in bond markets across Europe. Yields are abysmally low, prices are outrageously high, and to this day – we have struggling economies like Spain, Italy and Portugal yielding far less than comparable U.S. debt. And the past two years have shown how challenging it can be for a major economy to move from an ultra-dovish, QE-braced stance into a more normalized-environment; as the United States is still struggling to ‘normalize’ policy after the Fed’s concerted efforts to do so over the past 12+ months.

We’re starting to hear members of the ECB openly voice such concerns, as we heard from Benoit Coeure at the Jackson Hole Economic Symposium. As the most high-ranking ECB official attending last week’s events, Mr. Coeure warned of the potential side effects of over-use of ‘unconventional monetary policy’ for too long.

In terms of Neo-Keynesian economics, we’re treading in uncharted territory here. Before 2016 the ECB had displayed a pattern of relative prudence, often preluding a major announcement a meeting or two before it was actually announced. This happened ahead of both ‘major’ QE announcements out of the ECB in the past few years. In May of 2014, Mario Draghi mentioned that an announcement would likely be forthcoming in regards to QE. And after the bank did nothing in June, they delivered in July 2014 and this kick-started the 3,000+ pip run that drove the Euro to the current zone of support against the US Dollar. This happened again in November of 2015 ahead of the ECB’s December meeting. Disappointment reigned supreme when the bank moved lightly in December; but they came back in a very big way with a gargantuan plan that blew away even the most aggressive expectations in March.

Under this pattern, it would be highly unlikely to see the European Central Bank make any moves that may prove to be too provocative given that portions of the recently triggered package are still on their way to being filtered through the economy, and, frankly, the ECB may be nearing a dearth of ammunition, at least in the near-term. This may simply be a case where the bank sees the risks of any ‘big actions’ far outweighing the potential pay-offs.

So – do not expect any ‘big’ announcements from Mr. Draghi on Thursday. We may hear of an extension of the bond-buying program, but even that could (and perhaps, given range of options, should) be delayed until December. For the week ahead, we’re holding a neutral forecast on the Euro.

EUR/USD Outlook Mired by Bets for ECB Adjustment

Talking Points:

EUR/USD Outlook Mired by Bets for ECB Adjustment; Disappointment on Tap?

USDOLLAR Risks Further Losses as Slowing Job/Wage Growth Drags on September Expectations.

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EUR/USD

EUR/USD Daily Chart

Chart – Created Using FXCM Marketscope 2.0

  • Following the kneejerk reaction to the weaker-than-expected U.S. Non-Farm Payrolls (NFP) report, the near-term pullback in EUR/USD may gather pace in the week ahead amid growing speculation for the European Central Bank (ECB) to further adjust its non-standard measures and extend the duration of its quantitative-easing (QE) program.
  • Failure to retain the bullish patterns from the end of July casts a near-term bearish outlook for EUR/USD, but the single-currency may face a similar reaction to the ECB’s March 10 interest-rate decision, where the exchange rate snapped back from a low of 1.0821 to end the day at 1.1176, should the Governing Council fail to meet market expectations.
  • Failure to hold/close above 1.1220 (61.8% retracement) may generate range-bound conditions going into the first full-week of September, with initial support coming in around 1.1110 (50% retracement), which sits just below the 200-Day SMA (1.1120).

EUR/USD SSI

  • The DailyFX Speculative Sentiment Index (SSI) shows the FX crowd remains net-short EUR/USD since July 27, with the ratio hitting a 2016-extreme back in May as it slipped to -2.67.
  • The ratio currently sits at -1.25 as 45% of traders are long, while short positions are 19.8% lower from the previous, with open interest flat against the monthly average.

Why and how do we use the SSI in trading? View our video and download the free indicator here

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11973.80

11991.02

11921.08

0.07

129.40%

EUR/USD Outlook Mired by Bets for ECB AdjustmentEUR/USD Daily Chart

Chart – Created Using FXCM Marketscope 2.0

  • Despite the sharp rebound ahead of the holiday weekend, the USDOLLAR continues to carve a series of lower highs & lows, with the greenback at risk at facing near-term headwinds as the 151K expansion in U.S. Non-Farm Payrolls (NFP) accompanied by the larger-than-expected slowdown in household earnings dampens bets for a September Fed rate-hike.
  • The September 21 interest-rate decision may reveal a growing dissent within the Federal Open Market Committee (FOMC) as 2016 voting-member Loretta Mester argues that there’s a ‘pretty compelling’ case for higher borrowing-costs, but the central bank may continue to reiterate ‘most survey-based measures of longer-run inflation expectations were little changed, on balance, while market-based measures of inflation compensation remained low’ as Chair Janet Yellen appears to be in no rush to further normalize monetary policy.
  • Need a closing price below 12,049 (78.6% retracement) to 12,064 (61.8% retracement) to favor a further decline in the USDOLLAR, with the next downside hurdle coming in around 11,898 (50% retracement) to 11,914 (38.2% retracement).

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Read More:

S&P 500: Yellen Sparks Volatility, Market Starts Week at Pivotal Area

USD/JPY Technical Analysis: Implied Vol Shows Trader’s Nerves

EUR/JPY Technical Analysis: Sticking to the Range

EURUSD: Waiting for the Dip & Rip- Key Resistance at 1.1400

— Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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Top Trade Idea For September 2nd, 2016 EUR/GBP

cmc

Reversing Brexit Sentiment

The conventional wisdom when the British voted to leave the European Union was that the UK economy would suffer much more than the continent. Naturally, this saw the EUR make strong gains against GBP. Despite a lack of clarity around the exit mechanism, EUR/GBP is showing signs that those initial fears could be overblown.

Frankly, there’s little change in the UK’s situation since the Prime Minister resigned and Theresa  May was sworn in. How and when the UK will separate from the EU is not clear.  However, the charts are pointing to an easing of concerns about the impact on the UK – or possibly gathering worries about the effect on Europe.

2

CMC’s pattern recognition scanner identifies a double top on the daily chart. The uptrend line is breached, and the MACD is showing increasing negative momentum, as well as an approach to the zero line. Tick. Tick. Tick.

Selling at current levels, a stop loss is easily placed above the trend line, at say 0.8495. There is possible support between 0.8200 and 0.8250, but a breach at that level may mean an eventual return to a swing target a5t 0.7650.

US Dollar Tanks as August NFPs Miss, Unemployment Rate Holds Steady

Talking Points:

Job growth came in below expectations, enough to knock a September rate hike off the table.

– Softer wage growth signals weaker inflation pressures – giving the Fed less of a reason to hike immediately.

GBP/USD spikes higher as greenback weakens on the news; USD/CAD falls.

August jobs growth, as has seasonally been the case, was slower than that in recent months, but with the headline figure of +151K, compared with expectations of +180K, putting this at the low end of what could be considered the ‘Goldilocks’ zone. While job growth is certainly “slower” on a month-to-month basis, it is still showing a strong trend and that April and May were only slight disruptions. It’s important to keep in mind that, while markets psychologically hold +200K as the threshold, Fed officials, including Fed Chair Janet Yellen and FRB of San Francisco President John Williams have both said that breakeven jobs growth is only around +100K per month.

The rest of the report painted a mixed picture of labor force strength. The unemployment rate and labor force participation rate held steady at 4.9% and 62.8%, respectively. Wage gains were the biggest disappointment, as it slowed down to +2.4% from a revised higher +2.7% on a yearly basis. The underemployment rate held steady at 9.7%. Putting this in context of the recent slide in energy prices in the last weeks of summer, it’s evident there are few signs of strong inflation. Accordingly, this is the type of jobs report that will lead the Fed to a hawkish hold in a few weeks: the data isn’t strong enough to justify a rate hike now, but we’re close.

While almost every headline jobs growth read has been dubbed “most important NFP” for the last year and a half, this one certainly held importance. This report comes on the heels of Fed Chair Janet Yellen saying that recent economic data have supported the case for a rate hike and Vice Chair Stanley Fischer saying that the Fed cannot afford “one and done.” Immediately following the report, Fed funds futures contracts were implying a 20% chance of a rate hike in September, down from 34% ahead of the jobs data. Let’s not mince words: after forecasting four rates hikes in 2016 at their December 2015 meeting, the Fed needs to hike at least once this year – December, most likely, when their last SEP of the year comes out – to save face.

Here are the data hurting the US Dollar this morning:

USD Unemployment Rate (AUG): 4.9% versus 4.8% expected, from 4.9%.

USD Change in Non-farm Payrolls (AUG): +151K versus +180K expected, from +275K (revised higher from +255K).

– USD Labor Force Participation Rate (AUG): 62.8% unch.

USD Average Hourly Earnings (AUG): +2.4% versus +2.5% expected, from +2.7% (y/y).

See the DailyFX economic calendar for Friday, September 2, 2016

Chart 1: GBP/USD 1-minute Chart (September 2, 2016 Intraday)

US Dollar Tanks as August NFPs Miss, Unemployment Rate Holds Steady

Following the data, the US Dollar weakened signifcantly against most major pairs. GBP/USD rose from $1.3255 to 1.3340 and by the time of writing had settled near $1.3318. Elsewhere, US Dollar losses were consistent, with USD/CAD falling from C$1.3096 pre-report to $1.3017 at the time of writing. With FX volatility edging higher again as summer ends, it’s the right time to review risk management principles to protect your capital.

Read more: Preview for August NFPs and Implications for USD-pairs

— Written by Christopher Vecchio, Currency Strategist and Omar Habib, DailyFX Research

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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Preview for August NFPs and Implications for USD-pairs

Talking Points:

USDOLLAR Index rebounds at former symmetrical triangle resistance.

USD/JPY primed to have an uninspiring day.

– As market volatility is set to rise with summer ending, it’s a good time to review risk management principles.

The key issue surrounding today’s August US Nonfarm Payrolls report is whether or not the US labor market is strong enough to justify a Fed rate hike in September. Current expectations for today’s data are modest, with the Unemployment Rate expected to edge slightly lower to 4.8%, and the headline jobs figure to come in at +180K. See the DailyFX economic calendar for today for the rest of the data previews.

Another modest print may prove to be better for the US Dollar rather than for risky assets (higher yielding currencies, equities, and high yield debt): a signs that the US labor market is still chugging along (albeit at a moderated pace as ‘full employment’ is reached’) means the Fed will be more likely to hike. Fed officials, including Fed Chair Janet Yellen and FRB of San Francisco President John Williams have both said that breakeven jobs growth is only around +100K per month, for what it’s worth.

After Fed Chair Janet Yellen’s speech at the Jackson Hole Economic Policy Symposium last Friday, it seems that markets are in agreement with the notion that the Fed will hike at least once this year: but there is only one rate hike being priced in, due in December (table 1 below).

Table 1: Fed Funds Futures Contract Implied Probabilities: September 2, 2016

Preview for August NFPs and Implications for USD-pairs

A stronger NFP print (>+200K) can help bring forward rate expectations, which should help the USDOLLAR Index establish itself back above the key 12000/05 area. A weaker or middling report will do little to convince markets that a hike is coming this month (and unlikely to be in November, when the Fed doesn’t release its updated SEP). The US Dollar just needs another ‘Goldilocks’ report (+150-199K) to convince market participants that a September hike is more likely than currently anticipated.

See the above video for a technical review of the USDOLLAR Index, EUR/USD, GBP/USD, AUD/USD, USD/JPY, and USD/CAD.

Read more: GBP in the Driver’s Seat Today, Giving USDOLLAR Pause Pre-NFPs

— Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

WTI/USD – US Crude Drops to 3-Week Lows, US Payrolls Report Next

marketpulse

US crude has posted sharp losses for a second straight day. In Thursday’s North American session, WTI/USD futures are trading at $43.41 per barrel. Brent crude futures are trading at $45.67, as the Brent crude premium stands at $2.26. On the release front, unemployment claims came in at 263 thousand, within expectations. However, the US ISM Manufacturing PMI posted a weak reading of 49.4 points, short of the estimate. On Friday, the US releases three key employment indicators – the unemployment rate, Average Hourly Earnings and the Nonfarm Employment Change.

Oil prices continue to slide this week. US crude slipped 3.0 percent on Thursday, and has plunged 11.0 percent since August 22, when it was trading just shy of $49. The commodity also posted sharp losses on Wednesday, courtesy of Crude Oil Inventories. The indicator surged with a surplus of 2.3 million barrels, well above the forecast of 1.1 million. US crude is currently trading at its lowest level since August 12. Will the downswing continue?

US numbers were a mix on Thursday, but have otherwise had a strong week. Unemployment Claims came in at 263 thousand, better than the forecast of 265 thousand. It marked the third straight week that the indicator has beat estimates. Earlier in the week, the ADP Nonfarm Employment Change was little changed in August, posting a gain of 177 thousand. This beat the forecast of 174 thousand, the third straight month the indicator has exceeded the forecast. This release precedes the all-important official Nonfarm Employment Change report on Friday. On the housing front, Pending Home Sales gained 1.3%, well above the forecast of 0.7%, marking a 3-month high. On Tuesday, CB Consumer confidence jumped to 1o1.1 points in August, above the forecast of 99.7 points. It marked the indicator’s highest level since September 2015 and points to strong confidence on the part of the US consumer. The only soft spot so far this week was from the manufacturing front, as the ISM Manufacturing PMI pointed to contraction, with an estimate of 49.4 points. This marked the first contraction from the PMI in six months.

After an upbeat speech from Fed chair Janet Yellen last week at the Jackson Hole summit, a September rate hike is back on the table. Yellen’s message to the markets was refreshingly clear, as she said that the case for a rate increase had “strengthened in recent months”. Yellen noted that the key economic indicators were performing well – the labor market was approaching maximum employment, inflation was steady, and consumer spending remained solid. Still, Yellen did not provide any timeline on a rate hike nor did she spell out what the Fed wants to see before pressing the rate trigger. The Fed’s signal to the markets has raised the odds of a rate move, according to the CME Group FedWatch tool, with a September hike priced at 30% in September and 57% for a December hike. However, given that any move by the Fed will be data-dependent, US numbers ahead of the Fed policy meeting on September 21 could significantly change the rate outlook.

WTI/USD Fundamentals
Thursday (September 1)

  • 7:30 US Challenger Job Cuts. Actual -21.8%
  • 8:30 US Unemployment Claims. Estimate 265K. Actual 263K
  • 8:30 US Revised Nonfarm Productivity. Estimate -0.6%. Actual -0.6%
  • 8:30 US Revised Unit Labor Costs. Estimate 2.0%. Actual 4.3%
  • 9:45 US Final Manufacturing PMI. Estimate 52.1. Actual 52.0
  • 10:00 US ISM Manufacturing PMI. Estimate 52.0. Actual 49.4
  • 10:00 US Construction Spending. Estimate 0.6%. Actual 0.0%
  • 10:00 US ISM Manufacturing Prices. Estimate 54.5. Actual 53.0
  • 10:30 US Natural Gas Storage. Estimate 38B. Actual 51B
  • All Day – US Total Vehicle Sales. Estimate 17.2M

Friday (September 2)

  • 8:30 US Average Hourly Earnings. Estimate 0.2%
  • 8:30 US Nonfarm Employment Change. Estimate 186K
  • 8:30 US Unemployment Rate. Estimate 4.8%

*Key events are in bold
*All release times are EDT

WTI/USD for Thursday, September 1, 2016020916lWTI/USD September 1 at 12:50 EDT
Open: 44.84 High: 45.07 Low: 43.29 Close: 43.37

WTI USD Technical
020916m

  • WTI/USD was flat in the Asian and European sessions. The pair has posted sharp losses in North American trade
  • 39.32 is providing support
  • 43.45 is under strong pressure as resistance. It could see further action in the North American session

Further levels in both directions:

  • Below: 39.32, 37.75 and 34.81
  • Above: 43.45, 46.69, 50.13 and 53.50

About Kenny Fisher

Kenny Fisher Currency Analyst, OANDA, Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years. Follow on and on his Google+ profile.