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Old 09-13-2017, 12:59 AM   Nav to Top  #11
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What are the prospects for the British pound?

The British pound rose sharply against the US dollar and other world currencies after the release of good inflation data, which again "awakened" the talks about raising interest rates by the Bank of England.

Although such prospects, of course, are quite lengthy, judging by the latest data, with inflation in the UK, after a disastrous July month, everything is in order in August.

According to the report of the National Bureau of Statistics of Great Britain, both monthly and annual inflation grew. Remarkably, the two indicators were much better than the economists' forecasts. So, the consumer price index of Great Britain in August this year increased by 2.9% compared to the same period of the previous year, while economists expected growth of only 2.7%. The growth was due to a sharp jump in prices for clothing and footwear.

Compared to July 2017, the consumer price index rose by 0.6%, while economists forecast an increase of 0.5%.

The country's factory gate prices in August rose by 3.4% compared to the same period of the previous year, while purchasing prices jumped by 7.6%. The increase in purchasing prices was directly related to the rising prices of crude oil.

Such good performance is unlikely to affect the decision of the Bank of England this Thursday, when it is expected that the regulator will leave the key interest rate unchanged at 0.25%, as the economic growth remains moderate.

The most positive forecasts of economists indicate an increase in the cost of borrowing at the beginning of next year, although the optimal period is mid-2018.

As for the technical picture of the GBPUSD pair, majority will depend on how the new buyers show themselves at the level of 1.3260, because an unsuccessful consolidation above this level can trigger a gradual selling of the pound in the medium term. The high that buyers can expect in this scenario is the update of 1.3330 and 1.3370. If, after the decision of the Bank of England, the trade moves below the level of 1.3260, then it is likely that the pound will be sold quickly to the larger support levels 1.3190 and 1.3090.

According to The Retail Economist and Goldman Sachs, the US retail sales index for the week of September 3-9 fell by 3.0% compared to last week, which is generally related to seasonality before the start of the academic year. Compared to the same period in 2016, the sales index in the US retail chains grew by 2.3%.

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Old 09-18-2017, 02:29 AM   Nav to Top  #12
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US Dollar: bulls ready for revenge

The US dollar was sold at the close of the week on Friday after an unexpectedly weak report on retail sales and industrial production for the month of August. The data cast doubt on the prospects for the recovery of the US economy.

Retail sales decreased by 0.2% compared to July. Moreover, the July growth of 0.6% was revised downwards to 0.3%. Meanwhile, the report for June was a;so revised from + 0.3% to -0.1%. Thus, the dynamics of retail sales over the past three months was significantly worse than the market expected, casting doubt on the ability of the US consumer sector to maintain demand at the same level.

For the first time since January, the volume of industrial production has decreased. The decline in August was 0.9%, which is the maximum monthly decline since May 2009, causing the manufacturing industry fell by 0.3%. The reason for such a weak data, according to experts, is the consequences of hurricane "Harvey", which broke out on the southern coast of the United States and contributed to a decline in the oil refining and chemical industries.

The GDP growth rate in the third quarter was now under attack. The GDPNow model from the Atlanta Federal Reserve forecasts an increase of 2.2% in the third quarter, which is noticeably worse than the 4% growth expectations of just 6 weeks ago. Meanwhile, weak economic growth casts doubt on the Fed's plans to normalize monetary policy.

The failed report on retail sales was unexpected given the acceleration in consumer price growth. In August, inflation rose by 0.4% against a growth of 0.1% for the month of July. Year-on-year growth reached 1.9%. The results were better than forecasts and, it would seem, gave a strong argument for the bulls on the dollar. Good dynamics on consumer activity would add credibility to the leaders of the Fed. This is because after the start of the program to reduce the balance sheet following the meeting on September 20, the market considered the matter resolved,and the dollar should have receive the long-awaited impetus for a turn.

However, the dollar's fate is again in question. Of course, the dynamics of retail sales is unpleasant news for the Fed but it will not affect its position. The plan to reduce the balance sheet was announced in advance and the impact of the hurricane will have be temporary. However, the increase in inflation is a much stronger argument, and it will give an opportunity in the updated forecast of September 20 to indicate higher figures than the market expects.

The weakening of the dollar by the end of the week was also caused by the unexpectedly aggressive position of the Bank of England, which announced the imminent start of the rate hike cycle, and fixing profits before the weekend. At the same time, there is a noticeable recovery in the markets, which is reflected in the growth in demand for risky assets with stock indices growing. The dollar is experiencing a clear deficit of good news, and the beginning of the week before the Fed meeting will be held in anticipation of the positive outcome of the meeting.

At the moment, the dollar is ready to resume growth. All the catalysts for its decline in the current year are already played by the market. There are no new catalysts and there are very few reasons for further weakening. The problem with the level of public debt and government funding is removed from the agenda. The fate of the tax reform is in the hands of the democrats with whom Trump, according to recent data, has managed to find a solution that suits everyone. Any announcement of support for reforms by the Congress will serve as a powerful driver for the growth of the dollar, as it will potentially contain the factor of a rapid inflow of investments into the US economy.

The dollar has good chances, primarily against the yen and the franc. The Central Bank of Japan and the NBS continue to adhere to a soft monetary policy, which, against the backdrop of growing interest in risk, will be an additional argument in favor of sales. Against the euro, the dollar does not yet have strong positions, as the ECB is also preparing to wind down the buyback program. However, the euro's rise before the Fed meeting is virtually ruled out. Trade in the Australian and Canadian dollars will be cautious, with greater chances to go into the lateral range, at least until the support from rising commodity prices ceases.

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Old 09-19-2017, 02:32 AM   Nav to Top  #13
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Pound defeated a strong opponent

The British pound was marked by the best weekly dynamics against the basket of major world currencies over the past nine years, strengthening against the US dollar by 3% after the Bank of England signaled it was ready to tighten monetary policy. It is interesting to note that the US dollar did not look like a whipping boy either. The reduction of geopolitical risks around North Korea and the growth of the probability of the Fed's monetary restriction against the acceleration of inflation to 1.9% allowed the "dollar" to finish the five-day session in positive territory against the majority of competitors from the G10. The bigger the gains of sterling!

It's one thing when the market pushes the date of the rate hike and then brings it closer, as in the case of the Fed. It is quite another when the chances of tightening monetary policy grow dramatically, as in the case of the Bank of England. Guided by the need to implement its own inflation projections, the regulator made it clear that it was going to raise the repo rate in the near future. And if someone did not believe him, then the speech of Gertjan Vlieghe forced them to do it.

The most serious "dove" of the Committee on Monetary Policy said that the increase in wages, the growth of the world economy, and the household expenditures make it possible to expect the first increase in rates in the next few months. The derivatives market believes that this will happen in November.

The probability of raising the repo rate



Source: Bloomberg.
When an ardent opponent of monetary restriction speaks the language of the "hawk", it becomes the best driver for currency growth. The pound proved it, having strengthened during the day by 1.5% against the US dollar.

The minutes of the last meeting of the Bank of England and Gertjan Vlieghe proved that the "doves" remained in the minority. Meanwhile, the pound's sensitivity to upcoming releases of macroeconomic statistics should increase. It seems that the BoE is now less worried than before about the problem of reducing real wages. However, if retail sales show a decline in purchasing power, then the problem will remind it of itself. The release of the indicator is scheduled for September 20.

For the US dollar, the key event of the week will be the FOMC meeting. The open market committee can lower inflation forecasts and change the expected trajectory of the federal funds rate, which will affect the long-term outlook for the USD index. The Fed continues to be concerned about the dynamics of personal consumer spending, and the acceleration of the August CPI may eventually turn out to be the usual market noise. It is hardly to be expected that the signal from Janet Yellen and her colleagues about the act of monetary restriction in December will be the reason for buying the "dollar". The futures market thus pawns 59% of the probability that this will happen.

Technically, the bulls managed to achieve a target of 161.8% in the AB = CD pattern very quickly, after which the correction risks increased in the direction of 1.34-1.345. To continue the northern trend to 1.377 (targeting 200% on AB = CD), customers need to update the September maximum.

GBP / USD, daily chart



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Old 09-20-2017, 02:12 AM   Nav to Top  #14
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Does Brent feel the ceiling?

Oil continues in its northern trend, inspired by the increase in the forecast of global demand by 1.7% from the International Energy Agency, the reduction of Saudi Arabia's exports to the lowest levels over the past three years, and the decline in production of Iraq's second-largest OPEC producer by 260 bpd. Baghdad said that it exceeded its plans brought by the cartel, which is a "bullish" factor for black gold. Moreover, another role in its successes is played by the suspended state of the American dollar.

As a rule, autumn is not the best period for Brent and WTI. The completion of the automotive season in the US leads to a reduction in inventories. In addition, the Energy Information Administration reports that there is an increase of production to 6.08 million bpd in October, encouraged by rising prices of producers of shale oil. Nevertheless, hurricanes allowed for adjustments to the seasonal factor. For a long time, black gold finally felt relief under pressure from the growth of drilling rigs from Baker Hughes. The decline of the indicator for two consecutive weeks reached 749 (-7 on the results of the five-day period by September 15).

As the US refineries restart, the demand for oil should gradually increase and support prices because of optimistic forecasts for the global index from the IEA and OPEC. At the same time, $50 per barrel for WTI is a very dangerous figure. It attracts hedgers like honey bears, so it will be extremely difficult to gain a foothold above this mark.

As the value of black gold rises, the question is returned to the market: what are the limits? It is obvious that the end of the hurricanes "Harvey" and "Irma" and the transition of the market to a normal state will return it to the idea of increasing American production with parallel insurance of price risks. This combination of drivers has repeatedly provoked attacks of "bears." I do not think that something will change in the fall. You can talk endlessly about the fulfillment of the obligations to reduce production by OPEC members. You can also discuss about the extension of the agreement beyond March 2017. However, the fact remains: Americans continue and will continue to use the favorable conjuncture for them.

Dynamics of the US dollar is of no small importance. Since Brent and WTI are quoted in this currency, the growth of the USD index leads to a rise in the cost of imports in the largest consumer countries, and vice versa.

Dynamics of the USD Index and Brent



Source: Trading Economics.

In this regard, the expectations of the start of the process of normalizing the balance of the Fed and a rise in the probability of an increase in the rate for federal funds from 33% to 58% is of special joy to "bulls" that black gold is not able to bring. On the other hand, the positions of the euro against the backdrop of the ECB's desire to roll back QE look strong. After all, it has the largest share in the USD index. Thus, consolidation in EUR / USD does not put obstacles on the way of black gold to the upward trend.

Technically, a resistance break at 55.95 will allow Brent bulls to continue the rally in the direction of the following targets (by 200% and 224%) in the AB = CD pattern. On the contrary, the inability of buyers to take an important level by storm will testify to their weakness and will increase the risks of correction to $ 54.7 and $ 53.1 per barrel.

Brent, daily chart



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Old 09-25-2017, 01:29 AM   Nav to Top  #15
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EUR/JPY dropping nicely, remain bearish

The price continues to test our major resistance at 134.15 (Fibonacci extension, horizontal swing high resistance) and we expect to see a drop form this level to at least 132.01 support (Fibonacci retracement, horizontal pullback support). Do take note of the bullish ascending channel we're seeing as we might see the price bounces off this level and only a break of the channel would see a stronger drop towards our profit target.

Stochastic (34,5,3) is seeing major resistance at 96% and we expect a drop from this level. It also displays good downside potential for our drop.

Sell below 134.15. Stop loss is at 134.92. Take profit is at 132.01.



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Old 09-26-2017, 12:24 AM   Nav to Top  #16
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Elections in the Bundestag hold back the euro

Over the past week, despite the fact that the market is pretty polychromic, the euro and the pound remained virtually unchanged. The main event of the week was the meeting of the Federal Commission for Open Markets. The meeting saw the Fed leaving the refinancing rate unchanged. It was quite expected so the market almost ignored this event. The strongest influence was caused by the words of Janet Yellen, which was said during the subsequent press conference. The head of the Federal Reserve did not disappoint investors. She stated that the issue of raising the refinancing rate would be considered during the December meeting. Of course, when making a decision, the Fed will rely on the state of the labor market, as well as inflation. So the chances for another rate increase this year are quite high. After all, the labor market is in fairly good condition and inflation has resumed growth. However, the effect was short-term with the dollar literally losing all its gains within a day. Although, Mario Draghi was partly to blame. The head of the ECB said that there is no reason to continue the program of quantitative easing after December this year.

In fact, there were no other significant events for the week. The final data on inflation in Europe coincided with a preliminary estimate, and inflation accelerated from 1.3% to 1.5%. Apparently, this was the reason for the statements of Mario Draghi. However, such a result was expected so the market did not pay attention to it. Also, the growth rate of retail sales in the UK accelerated from 1.4% to 2.4%. Despite the clearly positive nature of the data, they also did not have a significant impact on the market.

It's all about the German elections which took place on Sunday. The market was waiting for the results. Of course, no one doubted the victory of Angela Merkel and her CDU / CSU. However, the two most influential parties in Germany, the same CDU / CSU and SPD, received the worst result since 1949. Especially since the SPD announced the transition to the opposition. Because of this, Angela Merkel will now have to form a coalition with the Greens and FDP. All three parties have significant differences on a variety of issues, so the coalition is clearly shaky. The German press has already dubbed it "Jamaica". Moreover, the coalition itself does not seem to be the most reliable so the negotiations on its formation will be extremely tough. Obviously, the CDU / CSU will have to make a number of concessions. In such an uncertain situation, investors will not make hasty decisions. Therefore, the potential for strengthening the euro is rather small.

The macroeconomic calendar for the current week does not spoil us with significant news. The preliminary data on the inflation in Europe is worth paying attention to because it may show further acceleration to 1.6%. Given that these data will come out at the very end of the week when the outlines of the new ruling coalition in Germany may be known, the euro will have many reasons for optimism. However, before that, the euro will remain under pressure as the final data on US GDP in the second quarter would show the acceleration of economic growth from 2.0% to 2.2%. Similar data from the UK would confirm the fact of a slowdown in economic growth from 2.0% to 1.7%.

You can also expect a certain reaction to a number of other data. In particular, home sales in the primary market in the US may increase by 3.3% while orders for durable goods may add 1.0%. However, this is about positive news for the dollar. The data on personal incomes and expenses, which should grow by 0.3% and 0.1%, may become negative. Taking into account that the income growth is not ahead of the expense growth, this will be perceived as a signal for a rapid decline in consumer activity. This data will be released on Friday, immediately after the preliminary data on inflation in Europe. The pound has nothing to rejoice for, as a significant reduction in the number of approved applications for mortgages is projected.

In general, the dollar has every chance of strengthening. And only on Friday will it have to give up its position a little. During the week, the EUR/USD pair may fall to 1.1795.

The GBP/USD pair is also waiting for a decline to 1.3395.

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Old 09-27-2017, 01:45 AM   Nav to Top  #17
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AUD/JPY right on buying level, remain bullish

The price is now testing major support at 88.52 (Fibonacci retracement, Fibonacci extension, horizontal overlap support, bullish divergence) and we expect to see a bounce above this level to push price up to 89.66 resistance (Fibonacci extension, horizontal swing high resistance).

Stochastic (34,3,1) is starting to bounce nicely from our 5% support and ha good upside potential

Buy above 88.52. Stop loss is at 87.89. Take profit is at 89.66.

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Old 09-28-2017, 01:58 AM   Nav to Top  #18
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Daily analysis of USDX for September 28, 2017

USDX is testing upper Bollinger bands across the board and looks forward to testing the next resistance around 94.04. However, we're still expecting a corrective move towards the 200 SMA at H1 chart in a first degree. If the index manages to break above 94.04, we can expect another higher leg to test the 95.00 psychological level.



H1 chart's resistance levels: 93.09 / 94.04
H1 chart's support levels: 91.67 / 90.30

Trading recommendations for today: Based on the H1 chart, place sell (short) orders only if the USD Index breaks with a bearish candlestick; the support level is at 91.67, take profit is at 90.30 and stop loss is at 93.04.

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Old 09-29-2017, 01:58 AM   Nav to Top  #19
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Elliott wave analysis of EUR/NZD for September 29, 2017



Wave summary:
We continue to look for more upside pressure towards 1.6875, but we need a break above minor resistance at 1.6410 to get the next "GO" higher. As long as the minor resistance at 1.6410 is able to cap the upside, we should look for a minor dip to 1.6311 before turning up again.

R3: 1.6451
R2: 1.6410
R1: 1.6340
Pivot: 1.6300
S1: 1.6278
S2: 1.6222
S3: 1.6200

Trading recommendation:
We will buy EUR again at 1.6300 or upon a break above 1.6365.

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Old 10-02-2017, 02:04 AM   Nav to Top  #20
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EUR/USD approaching major resistance, prepare to sell



The price is approaching major resistance at 1.1841 (Fibonacci retracement, Fibonacci extension, horizontal overlap resistance) and we expect to see a strong reaction off this level to push the price down to at least 1.1728 support (Fibonacci extension, horizontal swing low support, Elliott wave theory).

Stochastic (34,3,1) is seeing major resistance from the 100% level and we're starting to see a nice reversal take place.

Sell below 1.1841. Stop loss is at 1.1890. Take profit is at 1.1728.

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