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Helenrush

The Kiwi Is In Trouble New Zealand finally made it. After more than three weeks of blandishments, NZ First leader, Winston Peters, made his choice and announced a coalition government with the NZ Labor Party. NZD has already been under some pressure since the 25th of September when the markets opened with a gap lower on the day after elections. During the European morning today, NZD/USD touched 5-day lows around 0.7801. News about the new government triggered NZD selloff driving the currency to May,26 lows near 0.7014, and the pair lost almost a figure for the day. Why did Kiwi bulls give a hostile reception to the new government? First, uncertainty. The Labor party leader untested, and there is no understanding if it’s good or bad for economy. Second, recent comments of Peters again reminded of the overvalued kiwi, and made the market await for more dovish stance on the RBNZ. AUD/NZD played its cards right and grew to the 1.1215 area. Some Aussie-positive news may push the pair through key resistance at 1.1300 last seen in 2013. What we saw today was just the tip of the iceberg. The aftermath of this coalition seems to have more long-term impact on NZD.
by HelenRush
USD/JPY: Time To Take Profit? Yesterday USD/JPY hardly gave any signs of life. The pair touched 112.47 high, but finished the day back around the open levels. Both Japanese calendar and US docket failed to impress the market. On Monday, USD weakness sent USD/JPY to the 3-week lows. Anyways, USD still has its three trumps – rates, tax reform and the next Fed chairman. Trump may announce the new Fed Head by November,3. There are 5 candidates for this position. Two of them – Kevin Warsh and John Taylor - are “dollar-positive options” since they both are considered to be the hawks. Another one, Jerome Powell, has a more dovish stance on monetary policy. If Janet Yellen gets a second chance, it triggers the dollar rally. And the last but not the least, Gary Cohn, is a dark-horse candidate. USD almost ignored today’s housing data and is still making its way to the north. The bulls now are struggling around 113.00 mark. If USD/JPY takes this level, will it threaten the 114.00 round figure? Unlikely. Now we’re waiting for Japanese export and import data. We expect USD/JPY to return to the mid-112.00 area and wait for some really good triggers.
by HelenRush
GBP Is Galloping Along…Towards The South Despite quite hawkish commentaries by Mark Carney, GBP/USD started falling. What's wrong with the pound? The UK CPI index matched estimates at 3.0% yoy and 0.3% mom. Core inflation index, excluding food and energy, came in at 2.7% yoy. This data has not impressed the markets. However, GBP/USD made a good move touching today’s highs at 1.3280, but later retreated to 1.3258 area. This was just the beginning of the pound’s selloff. Also noteworthy is the fact that two of the MPC members made really dovish remarks on monetary policy. Silvana Tenreyro said the MPC was far from the point when it would unwind QE. Her colleague sir David Ramsden emphasized no QE reduction should be expected until the bank rate reaches a higher level. Still, the markets looked at Mark Carney who, on the one hand, told the rate hike would be appropriate in the upcoming month, but on the other highlighted that the depreciation of GBP was the sole reason for the rise in inflation. So, the regulator is painted into a corner and will have to make a choice between inflation and further economy stimulus. The GBP has already reached the 1.3180 levels where the pair may find some bids. If not, the next target is September, 11 lows near 1.3160. And only a clear break of 1.33 will erase the current bearish sentiment.
by HelenRush
Oil Made The Day Oil broke higher to open the week with a gap. During the weekend the governmental forces of Iraq entered the city of Kiruk and took under control minefields in the region. The disputed city of Kirkuk has always been a ‘bingo’ for the Kurdish region. They regarded it as an integral part of Kurdistan. But Bagdad regards it with similar intensity. Kirkuk has always had the unresolved status. The current conflict may not only move the oil prices but also deep the turmoil in this region. Iraq supplies about 14% of total OPEC production. A conflict in the north of the country had an immediate impact on oil markets. The fear of disruptions in supply sent Brent crude 1.7% higher to September, 28 highs at $57.90 for a barrel in the morning. The commodity is unstoppable and is nearing September, 22 highs at $58.40. Another positive factor for oil is US unilateral potential sanctions against Iran. Given the current bullish trend there are good chances the benchmark will break the $60 round figure till the end of the year.
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by HelenRush
USD: Inflation Is Answer The dollar got up on the wrong side of the bed. Its last chance is the CPI release. Let’s be honest: even the positive data could hardly help USD to move to the green zone this week. It is not surprising. Trump’s tax reform has proven to be just a distraction, as expected. And the mystery around the next Fed Chair has also disappointed the USD bulls. Although Nikkei hit a 2-decade high, JPY leads in the markets. USD/JPY touched its daily highs just above its open level at 112.30 and started moving lower. The current low is at the 111.85 area but the key support at 112.00 is still a challenge for JPY, as the breakout is not confirmed. The pair may test 111.50, especially, if the USD CPI data disappoints the traders. Otherwise, the buck may struggle for this Wednesday highs at 112.50. The low inflation therein lies the rub. That is why some FOMC members may hesitate over a choice on December’s meeting. Yesterday’s PPI data was fine, but CPI report may bring some surprises. Especially, considering the tough weather conditions in September.
by HelenRush
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GBP Dealing With Divorce “Brexit talks have reached deadlock”, told Barnier today. These are probably the last words one wants to hear when discussing any negotiations. At the beginning of the day, GBP/USD advanced to 1.3265. But, no news on Brexit negotiations is bad news for the Pound. The British currency plummeted 100-pips and now is struggling near the support area at 1.3130. The bears need a piece of luck (and also a trigger) to push the pair towards its next relevant support around 1.3030 seen early September. FOMC minutes were generally bullish. It’s better to say, there was nothing exciting there. The markets have already priced in the rate hike, and now only something special may surprise them. The only problem is the subdued inflation – some of the policymakers think that this “illness” is not just provisional. Will have a chance to check it when the USA release the PPI figures. Dollar-positive data, i.e. stronger index, will help the pair to break through the mentioned support area. If the Fed’s worries on weak inflation are wrong, GBP will try to recover the ground and continue its short-term bullish trend towards 1.3250, early August highs.
by HelenRush
USD And Its Sword Of Damocles The key event for today is the FOMC minutes. The markets have already priced in the rate hike before the year-end. Under these circumstances, the traders will be very interested in the central bank's stance over the coming months. FYI, in the last meeting 12 of 16 FOMC’s members were ready for at least one more rate hike in 2017. The Fed will probably discuss the risks for the financial stability, the inflation rate and the shrinkage of a balance sheet. What we have now is the lowest unemployment in 16 years but a subdued inflation. Almost all the majors keep their ranges today. During these last days, USD lost some ground against EUR. The pair refreshed 2-week highs at 1.1850. To our surprise, actually. Well, probably the reason is Catalonia left the door open for negotiations yesterday, which made the life easier for euro. One never knows. The area 1.1850-1.1900 is a good opportunity to start buying the buck. But be careful since only the close above this last mark will diminish the dollar’s bullish stance.
by HelenRush
EUR/USD Is Between Scylla And Charybdis USD started its fall today at the end of the Asian session. There were no specific fundamentals behind the pull-back. The exhaustion of the bulls and the plunge of the treasury yields did their modest bit. Besides, the risk-aversion triggered by North Korea that declared its possession of ballistic missile that would be able to reach the US territory soon. EUR has its own troubles. In spite of the fact the pair surged up to 1.1788 today, the situation is quite shaky. It seems like the markets don’t know what to do and what to expect at the moment, so they just go with the stream. Euro may receive a painful kick from the parliamentary meeting in Catalonia. By hearsay, Spain prepares forces in order to rein in Puigdemont, if he does declare independence. Under these circumstances, USD positions are stronger than euro’s. Yes, North Korea offered one more reason to worry about. But hasn’t the markets already got used to it? Catalan crisis, if aggravated, will make the pair break through the key support level at 1.1730. This will probably depend on the reaction of Madrid, which may be tough.
by HelenRush
GBP: In The Middle of Game Of Thrones Today is good opportunity to take advantage of thin liquidity amid some holidays in USA and Canada. GBP finally received a much-needed respite. Last week the pair lost almost 3 figures and tested 1.30 handle. There was a reason to worry - Theresa May’s unstable political position. It seems that today the clouds dissipated for the prime minister, as the jitters on a potential Cabinet reshuffle appeared. Mrs. May may now “brush off” Boris Johnson from the Secretary of State for Foreign and Commonwealth Affairs. That’s sad, but at least better than uncertainty. Most of all, the inflation in the UK has been growing since the end of 2016 from the zero and is now nearing 3% mark. Finally, there is a good possibility of a rate hike from Bank of England. So, the sterling may see the light at the end of the tunnel. But, let’s wait for today’s Theresa May’s speech. Any positive commentaries from the PM will help the pair to test the September 8th highs at 1.3220. If Mrs. May disappoints the markets, investors will send GBP to test the critical support area 1.3000.
by HelenRush
It’s All About NFP Today USD has been demonstrating its strength recently. Probably, today is going to be its Day of Retribution. Of course, there is a probability of Fed’s rate hike in December, possibility of tax reform and some good macroeconomic data behind the dollar’s upsurge. And, yes, USD got an additional boost after the House of Representatives passed the budget for 2018 on to Senate. But was the growth really justified? We’ll see today after the NFP data. EUR doesn’t feel so well. The blame lies with the uncertainty around Catalonia issue and also with the dovish comments of ECB’s officials. Actually, EUR/USD is bearish. Under this scenario, if the NFP data disappoints the markets, the pair will probably test 1.1780 handle. But it would hardly mean the pair changed the track, anyways. In case the headline reading surprises to the upside, EUR/USD may break below the August lows at 1.1661 with high probability of continue its “decadence” in the beginning of the next week.
by HelenRush
AUD: Anti-Star Of The Day All the majors entered their consolidation ranges today ahead of the NFP report except AUD/USD. In spite of the fact the dollar is not in its best shape, AUD/USD is inching south. The Aussie has been under pressure ever since the Asian session, when Australia published the retail sales report with highly disappointing results. Sales fell 0.6% to 2.1% m/m. Here we are. The steepest decline since March 2013 and the weakest annual growth in sales since July 2013. This week RBA has left rates on hold at its record low 1.50%. That was quite a surprise… to no one. But the fact is that too-strong Aussie may have damaging effects on the economic growth. So, the Central Bank firstly will try to talk AUD down. If this measure doesn’t work, RBA may pull the trigger. And as a result, we may see a broader slide. AUD found support around August, 15 lows at 0.7807/16. In case it breaks the level, next bearish target will be the 0.7790 area.
by HelenRush
USD Is Struggling To Prove Its Power The dollar finally returned to the Earth and USD-bulls are retreating across the board. USD lost almost all its key drivers. The markets don’t cheer the high chance of a rate hike in December, Trump’s tax reform is not an open and shut case and most of all J. Powell is now the main candidate to replace for Federal Reserve Chair Janet. Why is it not dollar-positive? Because Powell is considered to be a dove. EUR took advantage of the dollar’s infirmity. Investors don’t see any danger in Catalan crisis, at least for the time being. EUR/USD wasn’t able to break through the round figure and psychological support at 1.1700 and returned to the mid-1.1700 area. If the EUR-bulls want to rule the show they’ll need to surpass the local resistance of 1.1780. A hefty jump in the ISM non-manufacturing index has pushed the dollar higher and EUR/USD is struggling at 1.1750. The decline, however, will probably be short term because the markets are waiting for the central banks' heads Draghi and Yellen speeches to decide where to go next.
by HelenRush
GBP Is Lying Low A very calm day for the markets. To some extent because of holidays, to some extent because of strikes. The UK provided the markets with some macro- and economic news. GBP/USD posted a session low at 1.3230 in the morning. Some buyers were waiting for the pair at these levels and it moved towards the 1.3300 handle before the soft data on construction PMI was published. The uncertainty around Brexit talks is still negative for the Pound. The EU continued talking about the deadlock in “the divorce process”. EU's Barnier said a sufficient progress on Brexit issues had not been achieved yet while EU's Juncker said Brexit speeches wer not negotiating positions hinting at Theresa May's hyped speech in Florence. So, no light at the end of the tunnel for GBP at the moment. At the same time, the dollar's positions are quite stable because of tax reform jitters and the high odds of a rate hike in December. Under this scenario, GBP/USD may follow its way towards the resistance-support area of the mid-September around 1.3160-80.
by HelenRush
EUR Has No Time To Rest Euro got hit again. This time from the results of the referendum on Catalan independence. Yesterday 90% of Catalans voted for independence but the turnout was 42.3%. After the German elections last weekend with the contradictory victory of Angela Merkel's party, another sign of separatism is the last thing EU and euro need at the moment. In the morning EUR/USD lost almost 0.45% and touched the session lows at the 1.1730 area. The pair has its local support here and it seems that for now the level can hold the pressure. Another political turmoil may push the euro currency through the round figure 1.1700 and after that towards the August lows at 1.1662. It's hard to say whether the bears may count on the breakout of this area. But, in case it happens we can say goodbye to the medium term bullish trend and wish EUR a nice trip to the 1.14s. Besides there is one more thing to consider. During the last weekend, Trump interviewed Fed´s Jerome Powell and Kevin Warsh as possible candidates to replace Janet Yellen as head of the FOMC. They both distinguished by being hawkish on monetary policy. So, this may work in dollar's favour as well.
by HelenRush
GBP/USD Is Heading To South Who is under bad luck these days? Who showed wild dances today in the morning? Right, it is the Sterling. One may think what could be the problem since Carney's commentaries should have benefitted the GBP growth. The Bank of England governor told raising interest rates might be appropriate if the economy stayed on track. Even though he added that tightening would be limited and gradual that was enough to start opening longs. GBP/USD posted highs at 1.3442 but the happiness resulted to be short-lived. A little after the UK published its GDP third estimate. In a nutshell: bad news. Slow pace of growth in the 2nd quarter and the worst data in the last 4 years. Traders harried up with locking profits in. After 3,5% growth in September GBP/USD plunged to the 1.3353 lows. The pair, however, managed to recover some points to the 1.3380 levels. Yet, it seems that GBP may continue its way south because real data reflects the current situation way better than words. Most of all, the markets have already priced in the hawkish BoE, so, nice try, Marc.
by HelenRush
USD/CAD Is Surrounded By Unknown Loonie, one of the markets’ favorites, is probably going to change the course. Yesterday, Bank of Canada governor Poloz told that an appropriate path for rates is very difficult to know because of a number of unknowns around inflation outlook. He also assured the Bank would not be mechanical in policy approach since economy may act differently than in previous cycles. That said, the regulator expresses more cautiousness now. CAD, which has been growing for at least 5 months, is like a pain in the neck for the Central Bank. A strong currency may cause problems for the export activity and weight in on the economic growth. So, the regulator will try to discourage CAD. Under these scenario, we expect USD/CAD to struggle in the range of 1.2470-1.2510. This has been quite a strong support and resistance area since mid-July. In case of a breakout, the next bullish target will be the 1.26 level.
by HelenRush
USD Runs Things USD is unstoppable this week and especially today. Many strong triggers has been supporting the dollar since the beginning of the week. Yesterday, the head of FOMC Yellen told that “gradual approach to hikes particularly appropriate in light of subdued inflation”. Mrs. Yellen also made a very important hawkish comment: Fed should be wary of moving too gradually. So, dollar is rolling in buyers’ love. USD Index formed a local highs at the August, 23 levels at 93.50. The yield for the two-year Treasury note surged to its maximum from November, 2008 at 1,47%, also providing support to USD. Considering that today’s durable goods orders were pretty good with revisions to the upside we expect dollar to continue working his way forward against all the majors and gold. Markets are waiting for Trump and the long-awaited news on the tax reform. But, the US President used to make much sound but little actions in the past. Anyways, we expect the retracement in case of disappointments from Mr. Trump to be short-lived and the current strength of the dollar may become a sustained trend.
AMEX:USD
by HelenRush
Black Oil Is Looking For New Triggers Yesterday the president of Turkey Tayyip Erdonag warned he might cut off the pipeline that carries oil from Northern Iraq to other parts of the world. It happens sometimes when someone wants to vote for the independence there are always those who don’t. Kurds didn’t lose courage and had their referendum. But oil bears were scared and decided to run. Yesterday Brent ripped through two psychological areas and surged by 5% having touched July 2015 highs at $58. WTI added 4% and now holds above the $52 level. In spite of the today’s correction we think that some positive factors will support oil’s general bullish trend. Firstly, the markets now are almost sure about the start of rebalancing of the oil market. Secondly, traders believe OPEC will extend cuts beyond the March 2018 deadline. Yet, the US crude supplies data this week might make the markets be on the watch and make them lock some profits. Brent should find the support near the January, 1st lows 57.30. WTI will unlikely make a clear break of the support area, previous 24th, May resistance, at 51.85. At least until any strong bearish trigger appears.
TVC:UKOIL
by HelenRush
Merkel And EUR Are Shell-Shocked On the weekend Angela Merkel proved her might having won German elections one more time. It’s hard to say that it feels like a victory, with the worst result since 1949 at 32,9%. Merkel must now find coalition partners. And we already know that Martin Schulz, the head of center-left Social Democratic Party, won’t join Angela’s party and go into opposition. EUR/USD greeted new week with strong bearish gap and touched the lows at 1.1895 after the opening bell. Markets thought the results of the elections promise certain degree of uncertainty and risks. That said, euro may suffer short term but only till the markets recover from the blow. During the European session the pair has been trying to recover some ground but hasn’t succeeded. To fill the gap completely euro has to move back to the resistance area at the 1.1950 handle. We don’t expect a lot of triggers for EUR for today though. If it breaks below September, 20th lows at 1.1862 bears will be happy to push it towards next support at 1.1837.
by HelenRush
Markets Knocking On Heaven’s Door D. Trump announced a new round of financial sanctions against North Korea on Thursday. And the «hermit kingdom» wasted little time in responding. The leader of North Korea can’t help but bothering markets. This time the menace is quite serious since we may be talking about hydrogen bomb test in Pacific. It’s obvious that the traders’ attention is now far from FOMC and its monetary policy. Geopolitics is the major issue for today. Friday is passing by under the egis of safe-heavens. JPY, CHF and gold grew across the board. USD/JPY lost almost 100 points, dropped below the strong support line at 112.00 and touched session lows near 111.65 in the European morning. During the last couple of hours the pair has been trying to get back the psychological mark 112.00 which seems unlikely for today. Further slide might open the door to the intermediate support near 111.43. But, usually the entire story with the nuclear tests ends with stabilization. So, it’s quite possible that USD/JPY will make a U-turn and surge towards the fresh highs.
by HelenRush
Fed Turned It All Upside Down Yesterday evening the Fed delivered …nothing specials. . Nothing that should have triggered so much volatility in the markets. Yet traders for some reason saw in the FOMC decision something surprising and sent the dollar up across the board. Probably, it was the dots plot that made so much noise. predictions showed that Yellen and Co. are still ready to raise the rate one more time this year.The Fed also starts shrinking its $4.5 trillion balance of assets in October. Actually,this one was also quite predictable and had been chit-chatted for some time among the markets. EUR/USD dropped below strong support at 1.19 on the hawkish FOMC. The probability of a December rate hike is now neither more nor less 60%. That means USD bulls can’t count on the tightening policy from the Fed anymore. And if markets understand soon they overestimated the Fed hawkishness, that means EUR has formed the bottom at the area of yesterday’s lows and will start its way back to the September,8th highs at 1.2092. Still, the pair will have to be well-armed to break the area of tough resistance at 1.20.
by HelenRush
EUR/USD: Playing A Pushmi-Pullyu Waiting for the Fed Today it’s all about waiting again. The key event of the week is the Fed decision on monetary policy. This Central Bank’s decision will be quite a significant one. Of course, it’s almost for sure the Fed will keep its monetary policy on-hold. But, there may be some announcements on the trimming of the massive balance sheet stored up during the last 10 years. Yesterday, EUR/USD ended the day a few pips below the 1.2000 threshold on the news that the ECB may delay decisions on QE tapering. Someone may think that the regulator wants to keep the currency below the 1.2000 mark, as it had already happened earlier in the month. The pair is still ready to go further, and strong resistance at 1.20 may be broken with a help of really strong trigger. For today, all the hopes are on the FED – more dovish comments on the monetary policy or less optimistic assessment of US economy outlook may help to confirm the breakout and go higher. Under this scenario, EUR/USD may test 1.2100 level.
by HelenRush
It’s All About Cable Again The Pound is alive and kicking, although monetary officials are not satisfied with its appreciation. Yesterday, the Bank of England governor tripped up Cable by saying that monetary policy may have to "move in order to stand still" due to possibility that global equilibrium interest rates are rising. Despite the possibility of rate hike is looming somewhere in the future the markets obviously didn’t like the idea that monetary tightening might be just a compulsory measure. Also, the question about Brexit’s impact on inflation “concerns the extent to which this adjustment has been brought forward”. The comments shaded the scope started after the BOE meeting when GBP/USD jumped two figures higher. Carney sent Cable towards 1.3464 low which may become a strong support for now - today pair tried to break it through but haven’t succeeded yet. For now, the market is trying to understand whether it’s time to take profit and sit on the fence, or this is favorable environment for entering the long-term bullish trend. Personally I think there is much in store for Cable, and the current levels look very attractive for bulls with the nearest target at 1.3560.
by HelenRush