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Macroeconomic Analysis And Trading Ideas

GBPJPY: BOJ MISS; BOE HIT? MORE SELLING ON THE HORIZONBOJ Miss: 1. BOJ deliver one of the biggest misses in history (vs expectations/ pressure) - only increasing ETF purchases and dollar funding by apprx $60bn annual in total vs 10-20bps of Depo and LSP cuts + 5-20trn in QE increase + ETF increase. *See attached post for in-depth detail on the BOJ situation and price action history/ Yen strength/ Safe havens* BOJ Miss Compounded with a BOE Hit: 1. BOE are expected to ease by 25bps and possibly add 50bn to their QE programme on Thursday - a BOJ miss combined with a BOJ hit should cause compounded losses for GBPJPY as there are two drivers - Yen should continue this week to get stronger (as BOJ easing expectations surpass and Yen strength increases) whilst GBP gets weaker as the BOE on Thursday likely takes action, reducing the value of Sterling - with both providing the optimal environment for downside. - Historically, when BOJ has delivered new policy/ missed GBPJPY has sold off aggressively between 2-8days and 700-1200pips. Now whilst I dont expect the same level of aggression in the near-term as the relative value is much lower now (135 vs 175) so moves lower should be smaller - I do expect that 400pips lower on the day is not the end of the selling rally for GBPJPY. - Initially at the start of the week i expect GBPJPY to move lower at least another day (satisfying historical moves), perhaps into the 133.5 level which would be 550pips, lower than the smallest sell-off but fair given the relative value changes - not that i would be surprised to see more. - Later into the week is when I expect the bulk of GBPJPY losses to come (e.g. Thurs/ Fri) - the reason for this is as 1) any Yen downside risk from the MOF releasing upside in the details of their stimulus package would have surpassed e.g. increased stimulus from 28trn-40trn (unlikely) or increased govt spending section - both of which devaluing yen moving gbpjpy potentially higher. Though I think the risks are more skewed to MOF delivering a package that strengthens JPY as it undershoots expectations as several MOF members have mentioned the package being over several years - the more years the less punch the package has (given some expected it (5% of gdp) to be spent in 1yr), equally the less direct govt spending portion of the package will also lessen the depreciative impact on yen (rumoured to be 13trn, if less then Yen could get considerably stronger). As mentioned I see the MOF release to be asymmetrically skewed to expectation downside for these reasons. 2) BOE GBP selling pressure would happen when they cut the rate and adjust their QE programme - this is a highly likely scenario as BOE MPC Minutes in July said "Most members expect to loosen policy in August" and recently the BOE's biggest hawk M. Weale switched stance in light of UK Business PMI/ Optimism prints at 10yr lows saying the BOE needs to act fast/ delaying policy further doesn't make sense. Trading strategy: Sell GBPJPY @mrkt 133.5TP1 130.5TP2 128.5TP3 - risk averse traders could wait for the 50-60% MOF/ general Vol bounce into 136-38 level before shorting - I would reshort here anyway.
Short
by QuantumLogicTrading
11
LONG USDJPY: ANOTHER BOJ OUTPERFORM CASE - 28TRN GOVT STIMULUSAnother argument for the BOJ outperform case - Post BOJ Buy $Yen @MRKT 111tp: 1. We know BOJ and JPY Govt Abe/ Aso have had many meetings post-brexit and as it follows the JPY Govt have announced today that they will deliver a fiscal stimulus package of 28trn - which was to the very right of the curve (10-30 was talked about). - This in mind, imo it is rational to extrapolate that 1) surely if the JPY govt are choosing a tail end stimulus package (aggressive), BOJ will be inclined to do also? Given that it is the BOJ remit for economic targets like inflation, not the governments - BOJ wouldnt want to be seen as dropping the egg would they e.g. govt does as much as it can but BOJ only midly eases - doesnt make sense? Especially given the relationship between kuroda/ aso/ abe it would almost be impossible. - 2) The BOJ will know/ see that the JPY Govt are taking the "extreme" side of measures, so once again this puts the BOJ under-pressure to do the same as they dont want to be seen as "letting the side down" especially as it is the BOJ who really has the power to change things - the Fiscal package is rather an indicative/ nice gesture of the govts willingness to help - rather than any real hard easing when you consider the Govt package is likely to be 28trn a year but the BOJ purchases/ injects 80trn A MONTH to its monetary based in JGBs - thats 960trn a year. So 27trn govt vs 960trn BOJ - is the govt really making an impact or are they instead signalling their commitment/ putting pressure on the BOJ? I think so. Under-performance case: 1. Perhaps less meaty, but nonetheless a valid point - Japan, JPY Govt and BOJ have lived with low inflation/ deflation for the past several decades and no "extreme" action has been taken to resolve it (well not enough to fix the problem anyway) so this pressure on the BOJ we talk about above - is it real? or is it a theoretical pressure that they "Must" hit their targets? - If history predicts the future then yes, it is a theoretical economic pressure - they haven't hit the target for 20yrs so why would they do measures to hit it now? There's no public pressure, im sure theyre happy consuming at lower prices - unlike with high unemployment. - Off topic but it would be interesting to see a Japan with high Unemployment - an economic indicator that causes civil unrest (Greece riots) and is a necessity to be solved for the wellbeing of any nation - thus my bets are if unemployment was at 15-20% (similar comparison to deflation) for the past 15yrs something drastic WOULD have been done a long time ago, or be done on Friday to fix it. After all, theres no driver to fix something that doesnt really need fixing is there? Think about the last time you went to extreme measures to fix something that wasn't much of an issue...
Long
by QuantumLogicTrading
11
Fed preview: What to expect of EUR/USD?EUR/USD pair is trading around 1.10 handle a few hours away from the FOMC rate decision. No one expects the Fed to hike rates today, but experts believe the Fed is way behind the curve and is under pressure to acknowledge the improvement in the data. Marc Ostwald, Strategist at ADMISI discussed Fed preview in detail on our Finance show today. The show is available on youtube here – www.youtube.com Experts are right in stating that actually there is no valid reason for the Fed to hold back. In my view, record high stock markets are screaming rate hike. But it is unlikely the Fed may move today. Coming back to EUR/USD, a neutral FOMC would be a non-event for the markets. If Fed drops rate hike hint, the pair could head lower to sub 1.09 levels. On the other hand, a dovish talk (very low probability) could push the pair higher towards 1.1080 levels. Now let us look at what the chart has to say Daily chart has classic bearish structures – Rising trend line breached Falling channel established Bearish symmetrical breakout inside falling channel If charts are to be believed, the one must be ready for a hawkish FOMC statement!
by TipTVFinance
1
ECB - wait & watch mode, Draghi could talk down EuroDraghi takes center stage 45 minutes after the European Central Bank releases its latest monetary policy statement later today. Almost no one in the markets expect the ECB to move rates today. London city experts on our today’s London open finance show are quite confident that ECB would remain on a wait and watch mode, while Draghi as usual may make an attempt to talk down the Euro. (The link to today’s Finance show titled “ Market Roundup: ECB’s next move depends on what BoE does - TipTV - www.youtube.com ) No reason for the ECB to move rates or expand asset purchase program as - Bond yields are at record lows, 10-yr German bund yield is negative World has not come to an end after Brexit vote. There is no evidence yet of a significant deterioration in the economy Financial markets are doing well; US stocks are at record highs China published upbeat Q2 GDP and monthly retail sales, industrial production figure Oil prices are steady Draghi would want to watch BOE and BOJ’s next move Draghi would want to watch what the Bank of England does in August and act accordingly – Is the message that comes through from today’s Finance show. The only big difference in the post Brexit world is that – earlier ECB had to keep an a eye on BOJ, now after Brexit ECB would have to keep an eye on BOJ and BOE. Markets put the probability of a BOE rate cut in August at 63%. Meanwhile, a double barreled (fiscal + monetary) stimulus is expected from Japan. Whether or not BOE and BOJ/Japanese government deliver is a different debate. But for now Draghi would want to wait on the sidelines. We may see minor tweak to the asset purchase program like – drop in the threshold for bond purchases and/or extending the maturity of asset purchase program. However, these moves are unlikely to result in a major sell-off in the common currency. Draghi could push dovish button via comments on the post Brexit world and situation in Italian banks and European banks at large. EUR/USD – Play the trend line From technical perspective, the EUR/USD pair is heading into the ECB event on a weaker footing, courtesy of bearish price action as discussed here - EUR/USD prepared for a break below 1.10 and here - EUR/USD eyes 1.0940 As of now, the pair is back above the falling trend line seen on the hourly chart, but is having a tough time holding above 1.1033 (23.6% of 1.1428-1.0911). Euro’s failure to sustain above 1.1033 followed by a break below yesterday’s low of 1.0981 could yield a quick fire drop to 1.0937 (61.8% of 1.0517-1.1616) – 1.0911 (Brexit day low). On the higher end, we need a daily closing above 1.1088 to signal short-term bearish invalidation. Another view on ECB and monetary policy impact on FX markets worth watching - www.youtube.com
by TipTVFinance
SELL AUDUSD - JUNE RBA MINUTES HIGHLIGHTS - DOVISH/ CUT POSSIBLEOn the margin RBA remained in line with previous meetings, adding little but still keeping it on the dovish side imo. Once again, as in previous minutes (and from several other central banks) RBA continued to communicate the necessity of "watching key data" to drive future policy decisions. Interestingly though, they also mentioned the negative impact of a strong AUD which in turn supports RBA doves out there as a cut is the remedy to stop a deflationairy currency in its tracks. Further, RBA notably were under no illusions regarding their inflation situation stating " inflation set to stay low for some time" - another encouraging stimulus for doves given inflation's important position/ weight for setting future policy. As per the attached post, i remain dovish/ bearsh on aussie$, and i continue to expect a cut to 1.50% (25bps) this year given i expect their inflation to remain stagnant. Clear targets are 0.73 when probability of a cut is higher - though i would enter shorts regardless if AUD$ could find its way to its 12m highs at 0.78, though unlikely. I like USD strength in the medium term too hence supporting the short Aussie dollar view RBA Minutes Highlights: RBA MINUTES: BOARD TO WATCH KEY DATA, WILL MAKE ADJUSTMENT TO RATES IF NEEDED; REVIEW OF FORECASTS IN AUG WILL HELP STEER POLICY - Inflation set to stay low for some time, employment mixed, retail sales look set to pick up - Stronger AUD would complicate economic rebalancing - Economic transition is now well advanced
Short
by QuantumLogicTrading
3
LONG USD VS JPY, EUR, GBP: HAWISK FED BULLARD - FED FUNDS RALLYBullard is the lone Fed official forecasting just one additional rate increase, and expects modest growth over the next two and a half years. But he reiterated Tuesday he's not expecting the economy to head south. However, did go out of his way to mention a relatively dovish point "We Have Some Ammunition if We Need it During Next Recession". Nonetheless he remained hawkish net on the margin, reiterating FED Georges hawkish comments regarding the labour market "About as Good as It's Ever Been", whilst using the June NFP print to flatten any questions regarding the low May print saying "Strong June Jobs Gains Showed May Report Was 'An Anomaly'". Similarly Bullard continued with Georges sentiment of the US's post-brexit robustness stating that the "Market Reaction to Brexit Shock Was 'Satisfactory,' 'Orderly'" - and infact surprisingly pushed this hawkish brexit sentiment on to new levels of "Ultimately the Brexit Impact on U.S. Economy Will be 'Close to Zero'". This is perhaps the most hawkish/ upbeat statement i have heard form a key Fed member since the decision which is positive given Bullard's naturally dovish stance. Bullard also stressed the need for a solid US Fiscal package to boost demand, where i have to say fiscal stimulus has almost gone forgotten about in the last 7-years post crash, given the dominance of the central banks, quoting "U.S. Badly Needs Fiscal Agenda for Boosting Economic Growth". Once again todays "FED speaker tracker" continues to add to my long $ view in the medium term. Today already we have seen front end rates continue their aggressive recovery this week, with the fed funds rate implied 25bps hike probability now trading for Sept/ Nov at a whopping 18% vs 11.7%Mon, with Dec trading at 36.3% vs 29.2%Mon . 10y UST (TNX) rates trade up another 4% today after a 5% gain yesterday, whilst 30yrs trade 3% up on the day (TNY) - as global risk rallies. Whilst USD is trading a little weaker in the immediate term as it readjusts lower for risk-on USD selling, long USD/ DXY is my medium term view as we continue to see the US FOMC Rate curve aggressively steepen, which is likely to continue for the next week at least - steeper implied curve means hike is more likely - more likely or realised hikes = increased (in the medium-term) dollar strength. Further, we expect dovish/ easing BOJ BOE ECB over the same period, this monetary policy divergence compounds the long $ view against its 3 biggest crosses (hence the long DXY expression) Medium term trading strategy: 1. The best expression of this medium term USD view is long DXY - as above I hold 8/10 conviction views for a number of the heavily weighted USD basket crosses based largely on likely monetary policy divergence in the medium term (FOMC Hiking whilst BOE, BOJ & ECB ease/ cut) e.g. LONG USDJPY @104 - 106.3TP1 109.5TP2; SHORT EURUSD @1.11 - 109.3TP1 107.5TP2; GBPUSD @1.34 - 131.2TP1 128.5TP2
Long
by QuantumLogicTrading
8
BUY USDJPY @104 & SELL GBPUSD @1.33: RISK-ON, POLITICS, BOJ, BOEThe Federal Reserve's regulatory point man said work to address the lessons of the 2008 financial crisis won't be complete without better regulation of short-term funding both inside and outside the banking system. St Louis Fed President Jim Bullard may be the Fed's new super dove, but he's no pessimist, he says. Bullard is the lone Fed official forecasting just one additional rate increase, and expects modest growth over the next two and a half years. But he reiterated Tuesday he's not expecting the economy to head south. Trading Strategy 1. Given this I remain bullish on the $ in the medium term, despite this spike in risk-on which IMO is unlikely to last more than 2wks. In the immediate term I like long $yen as the best play ATM vs other expressions - with a target of 109, entry at 104 as 1) the markets have finally signalled they are ready for a recovery bull run, post the brexit risk-off/ safe haven rally - largley on the back of CB stimulus. I believe USDJPY has been the most sold risk-on asset, thus it is now ripe for buying; 2) JPY fiscal stimulus is likely to come; 3) BOJ is likely to deliver 10-20bps of cuts to its interest rate 4) we have broken the 104 "brexit seller resistance level" which has held since the vote - this break imo means we can now move to 109+ as the recovery leg before resuming lower; 5) the Fed Funds Rate curve continues to steepen across the curve but particularly aggressively in the front end (yesterday 10ys adding 5%) and as a result implied probabilities of hikes continue to rally across the 2016/17 tenors (Dec hike now 33.7% vs 29.2%Mon); 5) check the attached posts for long $jpy support 2. Secondly, short GBP$ is a trade i am closely eyeing.. I am a 70% seller at 1.32 (90% at 1.35) - short GBP rallies is the preferred trade as the BOE is likely to deliver easing in Aug that will drive us down to the 1.25 terminal rate that I have predicted - thus i am hoping we get some "poor information money" flows into GBP up to 1.34/5 going into Friday as 1) UK Political Uncertainty is eased - as Theresa May is the New PM starting Wednesday; 2) GBP buying on Thursday if the BOE doesn't cut rates, whilst I (and the market) believes an august cut is the likelihood instead, given the aggressive GBP selling these past weeks it is prudent to assume quite a large amount of money may/was be betting on a July Cut thus if this "disappoints" some of the market we could see cable trade higher to 1.34+; 3) Long GBP is the risk-on trade, so if risk holds up/ carries on rallying we could see GBP$ take us to 1.34+ - CB and Fiscal stimulus + the fact risk has been depressed for so long, i believe risk has the momentum to rally until the end of the week at least (next risk-rally then looks to 28th July for BOJ stimulus?) 3. The long $Yen and short GBP$ also acts as a dynamic hedge as the long UJ is the risk-on coverage, with the short cable the risk-off half - combining both semi-hedges your exposure, something i like to do when trading. FED Tarullo Speech Highlights - "the conditions for destructive runs that threaten financial stability could exist even where no institutions that might be perceived as too-big-to-fail are immediately involved" FED Bullard Speech Highlights - Bullard: An unemployment rate around 4.7%, gross domestic product growth of 2% and the Fed' preferred inflation gauge, the personal consumption expenditures index, at 2%. - "If there are no major shocks to the economy, this situation could be sustained over a forecasting horizon of two and a half years" - "we have no reason to forecast a recession given the current state of the US economy"
Long
by QuantumLogicTrading
RISK ON/ OFF PARADOX CORRECTION - SHORT SPX/ FTSE & USDJPY P2 Post Brexit SPX vs USDJPY 1. One had expected risk to sell off post brexit as global uncertainty increases, given the amount of volatility in the FX markets in the lead up, this was the rational expectation (whilst VIX traded subdued). However, instead, SPX recovered 6% whilst Yen also rallied 7% higher in the days following the vote. 2. This risk-on risk-off positive correlation rally is almost unseen in markets (especially not at the 75% correlation level) as JPY and SPX positively correlate for the first time in 4 years (as below). 3. As discussed previously this is either 1) because markets are unusually evenly split on sentiment, going against herd behaviour with the marco outlook trading as a non-consensus between participants; 2) CBs have given risk an artificial boost based on supportive statements/ measures. Trade the paradox 1. Short FTSE100 @6600-6800 resistance with a 5700TP (January lows) - once artificial BOE easing rally is finished, likely near 66-800 FTSE will plummet in the medium term as 1) This underlying risk-off bias which has gone un-priced as yet (safe havens up 21% in 2016) prices - not to mention reaching near ATHs, with 10y resistance.; 2) brexit (still not priced in equities)/ Political uncertainty drags on economy and stocks - especially financials, which has a knock-on effect of corp credit tightening; 3) this structural CNH deval prices and hits UK export stocks as it did in Jan 2. Short SPX @2100 with a 1985TP - SPX at these levels looks an attractive short 1) as discussed CNH depreciation which is a macro issue for all stock Exporters to China (biggest market/ growth market) hasnt priced any revenue downside yet like they did in January (-8-13% previously). 2) underlying risk-off bias is still yet to reprice risk lower (2016 safe havens up 21% av. Gold 28%) + only 2% away from ATH - favourable short lvls; 3) Earnings sell-off likely around the corner as investors derisk/ hedge against "shocks"; 4) Brexit induced CB easing/ dovish rally likely to fade soon as it isnt structural growth and FOMC rates are recovering in the back-end (Dec Hike looms). SPX has a more conservative target vs FTSE as less brexit downside & its a structurally stronger index with growth stocks 3. Id also suggest dynamically hedging these positions with 1) Long high growth and low China revenue individual stocks e.g. Goog, FB and/ or 2) shorting GBP index or a GBP cross , lower GBP hedges any potential BOE easing rallies that the FTSE short may negative experience, and also short GBP is a solid trade to have regardless of any FTSE risk you have on the table. *See part 1 for more information "RISK-ON RISK-OFF POSITIVE CORRELATION? SPX VS GOLD, JPY & UST P1"
TVC:SPXShort
by QuantumLogicTrading
BUY $YEN @ 107 PRICE & SD VOL RESISTANCE LEVEL$Yen dropped 150 pips following the $ employment report and I for one am confused... I had assumed JPY had been acting as a Risk-Off function against the FED hike e,g, $yen had been falling to these levels as the fed hiking risk caused safety flows into JPY... turns out this may not be the case. The market has absorbed the emp report at dovish, UJ shedding 150 pips, i actually expected JPY to weaken on a bad $ report as i expected risk-off money flows (that had been giving the jpy strength) to leave the yen as the chance of a hike in june is reduced and people looked to take more risk. The reaction we got was actually the opposite, the market priced the poor NFP like every other CCY, and USD weakened.. The play from here imp is still the same though, I still like buying USD against the JPY as monetary policy divergence is strife and JPY just seems to be expensive atm. JPY is even more expensive now that the probability of a fed hike is reduced, so there should be less "risk off" money in the ccy. I will engage in my long JPY at the support level of 107, where both price and 2SD volatility provide a high probability of a retracement back up. Buy limits placed at 107.050, 106.9, 106.4 106.2 - Spread risk out incase of further downside - bet on the idea NOT the single price
Long
by QuantumLogicTrading
1
Will the Australian central bank cut rates?Bolstered by a rally in commodities, improved manufacturing data and employment levels in Australia, the economy is doing very well. In fact, it has been the best performing economy among developed nations outside Europe. However, the appreciating AUD is undermining this strong economic performance, dragging the country down and hampering growth. It is in the Australian central bank's best interest to cut interest rates to allow the AUD to depreciate and the economy to grow with the strength it should be. As well as this, the inflation levels in Australia are still below the 2-3% target at 1.7%, giving room for a rate cut. I think that further appreciation of the AUD will cause central bankers to realise its unsustainability - for want of a better word - in undermining economic growth, and will go forward with a rate cut. Thus, if the AUD reaches the region indicated by a box on my diagram, I will consider shorting AUD, with a target price somewhere in the low 70 cents region.
Short
by olly_price
AUDNZD Long Fundamentally we have the Reserve Bank of Australia with a neutral stance and the Reserve Bank of New Zealand with a neutral stance after the latest rate cut. In fact the NZ CPI Figures are scheduled for this week before we head into the showdown of the RBNZ in the last week of January. I am expecting a drop in NZ CPI Figures of round about -0.5%, while the newest Dairy Auction should bring a negative result for milk price pouder what should force the RBNZ to act further this year and give up the neutral stance. Further the El Nino should have a much bigger Impact on NZ's Economy than on Australia Economy. The Reserve Bank of Australia should keep the Cash Rate unchanged throughout the year. The only thing i am worried about are the falling coal and iron ore prices what is more related to Australias ToT. Further the weakness surrounding about china is more bad news for the Land Down Under than for NZ because Australia Export round about 33 % to China, while NZ is only within the game with round about 20%. Technically we are also preparing for a big move higher. This does not mean it could happens this or next week. But should the NZ CPI Figures and Dairy Prices tank, than the RBNZ has to act again. Currently the RBNZ expects CPI to shrink to -0.2%. But as said earlier, I am expecting a drop to -0.5%. Anyway, in the weekly and monthly chart we are forming a nice head and shoulders reversal pattern. What i am also wanted to say is: The iron ore and coal prices what i am worried about has fallen significantly already and the AUD adjusted to them a lot already. Anyway, short term we still have space to go a bit down to my area, but i am not thinking about that the AUD/NZD could test the Parity again. Further when we scroll back in history, we are at one of the most important support zones for this pair, what makes me more confident about it. Please let me know what you think. Thank you! Have a great sunday
Long
by robert.zach.7543
5
Markets Shake with Impending Rate HikeThe bullish run for the markets appears to be slowing especially as the impending interest rate hike gets becomes more of a reality. Some bearish signs are especially prevalent for QQQ, as we see a relative vacuum area from below and lots of room before we hit any resistance from the Ichimoku cloud. Moreover, the RSI, MACD and OBV all indicate an unfortunate turn of momentum for this asset. For profit targets, consider the first fibonacci level at around 111.59, or the high of 10/22 at 109.82. Be especially wary of 115.52 as it corresponds to a recent high and a fibonacci level concurrently.
NASDAQ:QQQShort
by quantguy
Bitcoin: A Commodity?Bitcoin has long been a favorite for those looking for an alternative to centralized fiat money. Although I always thought bitcoin was promising, the technological aspect always held safety and liquidity concerns. Due to the fact that it is hard to prove peer-to-peer transactions, financial institutions - especially in the U.S. - have strict policies and layers of purchase authenticity that make buyers wait from a few hours or longer to actually receive the bitcoin. Could the inception of other bitcoin trading products add to liquidity or the general acceptance of bitcoin? Recently, the Commodity Futures Trading Commission (CFTC) has designated that bitcoin is a commodity. By doing so, adding bitcoin derivatives is an attempt to regulate the bitcoin market. Some find it strange that the CFTC has said that bitcoin, among other digital currencies, has the same properties as physical commodities like gold or oil. It is true that there is a defined supply of bitcoin, but it is more than likely that the designation is more of an attempt to regulate than to legitimize bitcoin as a true commodity. Furthermore, the addition of bitcoin derivatives could simply open up the bitcoin market to more traders. Because let's face it, on a day-to-day period, trading bitcoin can be a snooze-fest. With futures trading being as digital as bitcoin, less than five percent of futures are ever exercised for delivery which may lead to more bitcoin speculation. One thing is certain: bitcoin could an alternative to traditional safe-haven assets. For the last year, I have been the only one, that I know of, that has noticed that bitcoin has been trading the inverse of the most traditional safe-haven - gold. Bitcoin's largest movements seem to stem from money flowing in and out of gold. Unfortunately, in a crisis situation, I believe gold would win because it is tangible and that is physiologically comforting. If gold garners support from another central bank led financial crisis, bitcoin could see dark days. Please follow me on Twitter @Lemieux_26 Check my posts out at: bullion.directory www.investing.com www.teachingcurrencytrading.com oilpro.com
BITSTAMP:BTCUSD
by CommoditiesTrader
3
GBPCAD 4 HOUR LONGPRICE AT AN IMPORTANT KEY LEVEL AND JUST BOUNCED OFF THE RESISTANCE TURNED SUPPORT FORMING A DOUBLE BOTTOM. ALSO THIS KEY LEVEL IS IN CONFLUENCE WITH THE 0.5 FIB LEVEL. GBP AVERAGE HOURLY EARNINGS IS EXPECTED TO COME OUT BETTER AT 2.2% AND THE REASON WHY THIS IS IMPORTANT IS BECAUSE THE BOE (BANK OF ENGLAND) SAID THEY'LL BE MONITORING HOURLY EARNINGS DATA. IF THIS DATA DOES COME OUT GOOD WE SHOULD SEE SOME DECENT STRENGTH IN THE POUND. A BREAK OF THE COUNTER TRENDLINE WE COULD EASILY REACH TO THE SWING HIGHS AS I BELIEVE THE UPTREND IS STILL VERY MUCH IN TACT.
Long
by remelthomas
Trading FundamentalsI personally follow 4 central banks in detail: FED (USD), ECB (EUR), BoJ (JPY) and BoE (GBP). Knowing the monetary policies of these banks and how they differ, helps me in trading the following 6 major pairs: EU, GU, UJ, EJ, EG and GJ. I also follow three other central banks, be it more at a distance and with less detail: SNB, RBA and BoC. The banks to follow would normally depend on your trading portfolio. Central banks monitor the following five economic areas: I) Growth. Referring to whether an economy is expanding or contracting. On the economic calendar, there are several indicators on the health of the economy such as (not a complete list): -Business climate -Gross domestic product -Personal spending index -Retail sales -Consumer confidence / sentiment II) Inflation. Referring to how costs of goods and services develop. On the economic calendar, you will find: -Consumer price index -Producer price index -Retail price index -Core price index III) Employment. Referring to a countries labour force. On the economic calendar, you will find: -Unemployment change -Unemployment claims -Jobless claims -Non farm payroll IV) Production. Simply put, this refers to the things a country makes. On the economic calendar, you will find: -Factory orders -Core machinery orders -Building permits -Industrial production -Purchasing managers' index V) Geopolitical. Referring to anything non-economic that could cause risk in the market. Think of things like elections, natural disasters and wars. Central banks watch these areas and have specific targets for them (for instance inflation 2%, unemployment 8%). If a central bank is focussed on an indicator and sees it´s off target, there are several tools it can use to affect the indicator. A) Changing interest rates. Raising them cuts inflation and encourages investors to come in, thereby increasing demand for the national currency. For example the FED is believed to plan a rate hike this year that will further strengthen the USD. B) Setting price limits. The value of a currency impacts exports, so banks can make sure a pair will not drop below a certain amount and will spent millions buying foreign currency the weaken their own. For example the SNB until recently had a cap on EURCHF to artificially weaken their currency. We all know what happened when that cap was suddenly removed. C) Quantitative easing. This is basically printing money to spur the economy and inflation. It weakens the currency by increasing the availability of it. Good example is the recently announced powerful QE programme by the ECB, leading to selling pressure for the Euro. D) Using certain language. With press conferences, minutes of meetings, speeches or written statements a central bank can influence the market and thereby the value of its currency. Good examples are public statements by Draghi, president of the ECB. The EU pair can move hundreds of pips while he speaks. The key to trading fundamentals, is understanding what a central bank might do to move the value of an indicator towards its target. So when news comes out, you can asses if it will make the central bank more or less likely to use a certain tool and consequently if that news event weakens or strengthens the currency. For example: towards the end of 2014, the inflation in the Eurozone had fallen to very low values. The ECB had tried several things (like lowering the rates) to up the inflation (for which it has a target of 2%), but to no effect. The only thing left to do, was a QE programme. So with every new Eurozone cpi that came out lower than expected, the probability of a QE program increased, so the euro weakened instantly upon the release of that cpi data.
Education
by JazzForex
18
AUDUSD 4 HOUR SHORTPrice bounced off the 0.236 fib several times forming a evening star and then several bearish pinbar candlestick patterns in a row. This is indicating selling pressure, we could see price advance to the downside soon. My preference is a rally up to the 0.5 fib in confluence with some structure but advancing up to that level is looking less likely. RBA meeting on Tuesday so id advise to get in before the meeting because im confident RBA will be dovish which will weaken AUD causing AUDUSD to plummet
Short
by remelthomas
Higher rates thoughts push down EurStay short EurGbp or, if you prefear, long GBP! Since the macro economic data started to improve, the pressure on the exchange rate has became stronger. The beginning of rates normalization will make the UK's currency more expansive versus the Euromoney. At the same time, the chart seems to confirm the bearish view: It is unlikely (given also the macro-analysis) that the price will brake-up the current level @0.7895, looking also at the RSI oscillator (in 60 area), we have no signs of bullish trend beginnin. My view is that the price will continue its down trend, following the channel you can clearly see on the charts. Take care of 0.78 area that could be a strong point of inversion or continuation of the trend.
Short
by NicoS
Is Draghi going to rescue the EUR? ECB Pre-Analysis 7/8/14We saw that the uptrend from the end of 2013 got destroyed just by one sentence: "We are going to manage the strenght of the Euro against the Dollar in June." The market got in a really overextended selling rally. Additional to that "market panic" positive US ecenomy values got released and Ukraine crisis destroyed stocks and indices of the european countries. This summary of negative influence on the EUR pushed the EUR/USD to a new yearly low. But a big part of this rally was just a psychological reaction of the market participants after the statment of Mario Draghi. This baseless loss of value is a kind of movement which gets a correction shortly after its happening. But the fundamental status prevented this "correction" after the loss of ca.300 points from 1.3993 towards 1.37 the market never experienced the correction of this 300 point rally. Therefore I expect a correctional movement towards FIB 50% or towards the MA 200 just for the cause of giving the EUR/USD its fair price.
Long
by ali.se.18
5
Black swan events: How currencies react - YenApologies for the ominous chart title on a Monday morning, but having spent the weekend watching a few documentaries about the Japan earthquake, I was intrigued on how the currency markets react to black swan events. The Story (Japan Earthquake - Yen) ------------------------------------------------------------------------- The Tohoku earthquake hits Japan on 11th March. What we see is a sell off in USDJPY... In other words, people were selling USD to buy the Yen. Goes to show how strongly the markets believe in the Yen as a safe haven even if crisis comes to Japan. After a sharp drop, G7 central banks intervene in the markets to offer support. So they start buying USD and selling Yen, which forms an interim rally. On 04/07 BoJ announces a stimulus package, which triggers another sell off in the markets. Few days later, Fukushima nuclear alert is given which sparks a continuation of the sell off. This time it breaks the CB's support as well. I could go on but follow the notes on the chart backed up by the news sources that explains the currency moves. PS: For all those ECB QE addicts, I stumbled upon a very nice article which is worth reading and could possibly shed light on how European QE could work: Source: yhoo.it PPS: The chart is incomplete... There's just too much happening when it comes to the Yen.
Education
by justatrader
5