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Helenrush

Pound Is Bound For Rise We knew it from the moment the MPC uttered: “…some withdrawal of monetary stimulus is likely to be appropriate over the coming months” - the pound was bound to rise. Cable managed to jump to 1.3616 hitting fresh 14-month high on the comments of the BOE member. Gertjan Willem Vlieghe commented that bank rates will have to rise soon and may need more than one increase. He even hinted on the term, saying the appropriate time “might be as early as in the coming months.” The comments added fuel to the fire after the BOE meeting drove GBPUSD two figures higher. The cumulative appreciation during the last two days is almost 15%. And it looks like it’s not the end. The break above 1.33 started the new era for the pair – long-term uptrend supported by strong fundamentals, and more hawkish BOE stance. Until Brexit woes arise again, the pair may reach 1,38 area. And weak US data will only speed up the move.
by HelenRush
When USD Falls…USDJPY has gone high during the last 4 days. And it looks like the time for profit taking is not far away. To understand when to wait for it, we need to understand the key drivers for the pair at the moment. First, Treasury yields keep rising and pushing USD higher, and we need just watch the trend. Second, Trump promises. Now we have second round of hopes – corporate tax reduction that business has been waiting for so long. But as usual, it’s just words. Additional details of the future bill are planned for announcement on September, 25th. And it sound familiar. Somewhere in early January Trump announced of new reforms, then announced of the time of the detailed plan, and then just forgot about all that. The conclusion – we need to wait till market optimism fades away, and everybody understands that there is a long way between the words and deeds. Most likely, USDJPY profit taking will start by the end of Friday. Especially if the scheduled for today CPI and scheduled for tomorrow retail sales reports prove to be worse than expected. The nearest target for USDJPY is at 109.70.
by HelenRush
Pound Superstar UK reported stronger than expected retail price index, PPI, CPI and DCLG House Price index. Moreover, Consumer Price Index showed the gathering pace rising to 2.9%. We need to mention that whenever CPI number exceeds 3.0% target, the BOE chairman is have to write a letter to Prime Minister to explain the situation. And the regulator won't like this tendency at all. So, the chances the BOE dares to tighten monetary policy soon are growing. And in such a case the first pair to rise is GBP/USD. It already touched 1.3297 high nearing strong resistance level around 1.33. And on Wednesday, we may get another reason to buy pound, as labor data is released. Better than expected number may help GBPUSD to break the round level higher with initial target at 1.3370, not seen since July, 2016.
by HelenRush
It’s Time to Buy Euro Yesterday, EURUSD more than 80 pips on nothing. We mean there are no major economic data from euro zone this week, and it turns investors focus to US reports. The pair moves will depend on market sentiment towards USD, and for now it gains popularity. North Korean woes have not come true, and Irma was downgraded to tropical storm leaving most populated areas intact. It gave the market hope that damages would not be so devastating, leaving the chance to see the Fed rate hike before the year end. But it’s all only hope. This week we are going to see the reports on inflation and retails sales, and the chances to get stronger than expected are not that high. Under this scenario EURUSD looks very attractive for buys at current levels with potential to rise up to 1.2050 by the week end.
by HelenRush
Yen Gets Ready To Fall North Korean “Foundation Day” holidays have not brought havoc to the markets. Investors feared that Kim Jong-un could launch an attack or provocative missile test On September,9 in a symbolic show of force against South Korea, Japan and America. And these fears supported the demand on safe heavens, pushing USDJPY down to 10-month low at 107.31. However, nothing scary happened, and it recovered the demand on US Dollar. The pair opened Monday with a gap higher at 108.19, and is ready to do more. This week promises a lot of market movers, including US CPI and retail sales data. If American data shows stronger than expected numbers, it may trigger profit taking on such pairs like USDJPY. The pair has lost around 6% during the last two months, and the Bank of Japan hardly likes the trend. It would step in with verbal interventions rather sooner than later. And the market understands that. Besides, USD weakness on geopolitics and slower rate hike expectations may ran out of steam these days, sending USDJPY to the nearest target at 109.00
by HelenRush
Brent May Test 55 Brent started the day at 54.50 and looks ready to go further targeting strong resistance at 55.00. As we expected the market was closely monitoring the EIA crude oil stock changes report. And it did confirm the more significant than expected draw of crude inventories as a result of Harvey storm damages. The storm hit the Gulf two weeks ago, initially triggering oil prices slide, as refineries reduced the capacities slowing the demand on crude. However, later on the restarting activity of the refineries returned back the demand on oil, while production is still under pressure. According to EIA data, the output reduced by 8%, from 9.5 mln barrels to 8.8 mln barrels per day. By the way, oil shipments suffered as well. The crude import to the Gulf slid to 1990s lows. And it will take not less than two weeks to recover the production and shipments to the previous levels, giving Brent all the chances to go higher. Now the focus turns to Irma hurricane that is forecasted to bring even more damages this Saturday. Every coming EIA weekly crude report will be scrutinized by the market, and every significant inventories draw may bring new splashes of demand on Brent. Brent is ready to test 55.00 resistance today, however, we don’t expect the level will surrender from the first time given the strength of the barrier, and the coming weekend triggering take profit in the market.
TVC:UKOIL
by HelenRush
Draghi Helps Euro, or Not? Thursday has come, and all the eyes of forex market is now on the ECB meeting. On Wednesday, EURUSD showed shy attempts to go higher coming closer to 1.20 area. And we see it even though the market understands the ECB is in no rush to taper QE too soon. Last week we got the headlines on possibility the ECB may move only in December. Now we need to confirm Draghi is in the same stance. If he fails to disappoint the market and turns out to be just a bit more aggressive than the market expects, it will be enough for the euro to break through 1.20 area. Besides, the US economy stance may be another argument on favor of EURUSD rise. Given the strength of Irma hurricane that may bring devastation to Florida cost, we do not rule out the huge loss the economy will face. The consequences of such catastrophe could be seen one-two months later by economic indicators. And in such environment the Fed will have hard time hiking the rate. And it means that USD has fewer arguments for appreciation. And thus, EURUSD has all the chances to touch 1.2070 once the strong resistance is broken.
by HelenRush
Oil Gets Ready For New Highs Brent is nearing strong resistance around 53.60, failing to break the level from the first time yesterday. The level already was tested on August, 10, but the breakthrough has not succeeded triggering the further 7.2% plunge of Brent prices. Will it be the same scenario this time? Not a sure thing. Harvey played its role in Brent rise – it make take time before the refineries, pipelines and ports knocked out by the hurricane restore the normal capacity. By the time of writing, about 20% of daily refining capacity was shut. And there is another test for American refineries in store, as Hurricane Irma of Category 5 is moving towards the Caribbean and Florida with potential to knock out some more refineries. Today, the American Petroleum Institute (API) storage data is released, and it may prove that Harvey had a disastrous impact on the fuel reserves. If the number is sharply below expectations, it may drive Brent higher above 53.60 resistance targeting 54.30 initially.
TVC:UKOIL
by HelenRush
AUD May Reverse The moves of AUDUSD this morning are indicative. The Reserve Bank of Australia monetary meeting confirmed the regulator is not happy with the recent sharp rise of AUD. Moreover, the central bank claimed rising aussie would lead to slower economic growth. However, the pair tried to move higher on the comments touching 0.7958 this morning. The market expected from the RBA more clear hints on interventions in case of stronger AUD. Mild comments made investors focus on positive economic forecasts, and supported the AUD move higher. However, we believe it’s an initial “rumors-facts” reaction, and there fewer fundamental reasons for further AUD appreciation. Every new RBA meeting may bring more aggressive comments concerning the rise of national currency, and this will be pressuring Australian dollar in the long run. In such environment we do not rule out AUDUSD reversal. The pair bumped into strong 0.7980 resistance, and the following retracement may send the pair to 0.79 in the nearest future.
by HelenRush
Game Not Over For Euro EURUSD is in market’s focus again. Weak Non-Farm Payrolls data from the USA made a favorable environment for the pair move higher. If it were not for the ECB, that came out 10 minutes after the NFP release with comments on QE. This is how it happened. The number of new jobs grew only 156K vs 180K, employment inflation was tiny 0.1% higher coupled with downward revision of previous number to 0.1% from 0.3%. The unemployment rate rose higher to 4.4% from 4.3% previously. It sent EURUSD higher to 1.1979, but not for long, as we saw headlines hinting the ECB was not ready to make a decision on next year’s QE program until December. It means, neither September, nor October meeting will bring changes to the monetary policy. And it made euro fall. But note that this negative factor is already priced in. And that’s why we see a potential for further euro appreciation. If in case with the USA there is obviously weak data, in euro zone case there is a hope and unpredictable factors. Any comment of the ECB official with hints on QE tapering may push the pair higher. And it means the current levels are not that bad for buying. The next target for EURUSD may stay at 1.1970 followed by 1.2030.
by HelenRush
Do You Believe in CAD?USDCAD resumed the downtrend, as Q2 GDP of Canada showed 4.5% rise exceeding 3.7% forecast, and pushing the odds for September rate hike to 41% from 27.5% just a day ago. The pair closed Thursday below 1.25 again, and there are some arguments in favor of further selloff of the pair. The Canadian currency is supported by the sharp rise in Brent, as 30% of Canadian budget is dependent on oil&gas sector. The crude oil reacted to the consequences of hurricane Harvey. It has paralyzed at least 4.4 million barrels per day (bpd) of refining capacity, sending Brent to 52.89 high. And it may support the demand on Brent further, driving CAD higher as well. And take in mind Friday's Non-Farm report that is not expected to be really strong after July positive surprise. Besides, the statistics is against USD: during last 20 years August NFP data was lower than expected in 16 cases. In this environment we expect further depreciation of USDCAD with the next target at 1.24 area.
by HelenRush
EUR Looks Tasty EURUSD unexpectedly slid to 1.1866 low, although just a couple of days ago it had tried to beat new highs above 1.20. The drivers of USD popularity were positive sentiment regarding new tax reforms from Trump, and better than expected American data. ADP report showed the largest private payroll growth in 5 months, adding 237K vs. 185K forecasted. Q2 GDP was also revised higher more than expected to 3% from 2.6%. And that was enough to make the market to believe in USD again. However, we need to be cautious in the current environment, as tax reform optimism may disappear in a minute, and labor data on Friday may show a sad picture. After ADP report the sentiment about Non-Farms is overheated, and if it’s not confirmed by the real data, the selloff may be huge. Besides, take in mind that market expects the ECB to announce QE tapering during its meeting next week. And it’s the argument in favor of EUR appreciation. Given the above mentioned, the current levels look very attractive for buying EURUSD with the next target at 1.1960 followed by 1.20.
by HelenRush
Kiwi Will Not Recover After That NZDUSD failed to break 0.7330 resistance level a week ago, and since that time we saw only shy attempts of recovery. It means the market doesn't believe in NZD, and even the recent USD weakness won't be able to help the pair to rise again. And this case was confirmed today by fundamentals. Despite quite positive comments from Reserve Bank of New Zealand governor, there was one negative factor for NZD. Wheeler said that a lower New Zealand dollar is needed to increase inflation and support the stable growth. That's not a hint, it's a clear call-to-action and message to the market - there is no use buying NZD now. And if the target is not reached, RBNZ may go even further with monetary policy changes in order to weaken the national currency. In this environment we expect further weakness for NZDUSD with initial target at 0.7170 followed by 0.7130.
by HelenRush
JPY Reached New Highs –For How Long? USDJPY came closer to strong support area around 108.30. And now the key question whether it’s ready for a breakout? First, we need to understand the trigger behind the move. This morning it was all about geopolitics. We got to know North Korea had launched a missile test. And this time everything was different, as we saw an overflight of Japanese airspace! And it is already a violation of sovereignty, and escalation of tensions between North Korea and the rest of the world. Japanese government issued an emergency alert. What does it mean for currencies? It means that safe heavens are of interest again, and the demand for JPY and CHF may be rising in the nearest future. But is it enough to trigger the breakout of really strong support in the pair with USD? It remains to be seen, as Japanese government is not happy with the appreciating yen hitting the export sector of the country. There is a big chance to see a reversal of the downtrend or, at least, a deep correction. If confirmed, USDJPY next target may be at 108.90 followed by 109.50.
by HelenRush
Time To Dump Euro Last week the market was busy awaiting Jackson Hole's speeches from key monetary officials. This week the market will be digesting the consequences of the speeches. The surprising rise of euro was not about ECB's Draghi. He kept silence on the sensitive issues, though confirmed the positive momentum in Eurozone. It was all about Janet Yellen. She was quite optimistic, but she didn't say anything the market would like to hear. No comments on balance sheet reduction, not a word on December rate hike. And given the exaggerated investor expectations it was enough to dump USD. So what is next? US Non-Farm Payrolls of course, scheduled for release this Friday. This time the reports will be scrutinized even more closely than usual, as it's the last piece of labor data before the September FOMC meeting. And there are all the chances USD will sink even deeper, as hardly we may see two strong labor report in a row. The market may start to price in such odds from the beginning of the week, meaning EURUSD has the potential to reach strong resistance level at 1.20 sooner rather than later.
by HelenRush
Draghi vs. Yellen – EURUSD wins EURUSD will be the key player today, as the market awaits for any new hints on monetary policy stance from Draghi and Yellen in Jackson Hole. For now the basic scenario is the following: 1. The Fed confirms the balance sheet changes are coming soon. 2. The ECB will give no hints on the terms of QE tapering, meaning announcement at September meeting is not a done deal. This is practically priced in, and initial selling of EURUSD won't last long. In a couple of hours the pair may recover all the losses. However, during this week we got more hawkish comments from various ECB officials starting with Schauble who said the central bank should tighten policy sooner rather than later, and ending with Weidmann saying he “sees no acute need to extend QE into 2018.” If Draghi turns out just a little bit more optimistic on economy stance and a little bit more hawkish on monetary policy that will be enough to trigger broad-based buying of EUR. In this case EURUSD may sharply jump higher to 1.1890, and show some attempts to break it. if succeeded, the next target is at 1.1960.
by HelenRush
USD Fell But Not For LongIt looked like everything was over, and we may have a sigh of relief, as North Korea issue is out of the table, and there are no more topics to pressure USD for a moment. However, Trump keeps providing the market with new reasons to worry. The other night he said: “If we have to close down our government, we’re building that wall. One way or the other, we’re going to get that (Mexico) wall.” What does it mean? It means it's too early to buy USD, as Mr. President keeps bringing new worrying issues to the table. And investors voted for it by selling USDJPY to 108.84. However, this morning the pair shows the attempts to recover, and this is very important, as even in this unstable environment the market realizes that the pair has gone too low, and the current levels look very attractive given the BOJ easy monetary stance, and the Fed more aggressive stance. One of the reasons USDJPY may resume the rise to 109.70 today, is that investors expect from Jackson Hole speeches the confirmation of the Fed readiness to start balance sheet reduction soon. And up to the moment we get that confirmation the pair may keep going up.
by HelenRush
Kiwi Ready for Breakout NZDUSD came under selling pressure this morning, as Pre-Election Economic and Fiscal Update (PREFU) came out less optimistic than expected. On the whole the economy state of New Zeland is quite robust, however, there were hints on slower growth in future. NZ finmin revised lower GDP growth outlook from 3.7% to 3.5%. And it may be related with a strong national currency which appreciated from May till July by more than 10%. Moreover, according to Global Dairy Auction, the dairy prices have not shown any increase during the last 5 weeks. And we must say that dairy industry plays a big role in New Zealand economy. The country exports about 95% of its dairy production. In 2016, dairy was New Zealand's largest export sector (18% of total goods and service exports), meaning the lower dairy prices may have negative impact on country’s budget. In this environment the Reserve Bank of New Zealand will most probably keep talking down NZD hinting on neutral or easier monetary stance. The pair is trading around 0.72 area and is ready to break the key support level in the nearest future. If broken, the next target is at 0.7140.
by HelenRush
EUR Watches Draghi On Monday, EURUSD managed to close above 1.18, but it is sliding down Tuesday morning. The pair feels unstable, as the ECB hinted last week that President Draghi will not reveal any new policy paths during the Jackson Hole symposium, It means QE tapering may come not earlier than October, although before the market priced in September as the start of tapering process. And this will be the main factor for EURUSD to be capped by 1.1800 for now. Although strong euro is damaging for export oriented German economy, there is still a hope that Draghi may be a little bit more hawkish during his speech in Jackson Hole, just because economy is doing quite well. We saw significant fall in unemployment to lowest level since February 2009 (it was 9.1% in June). We also saw strengthening price pressure: from 0.2% yoy in July, 2016 it rose to 1.3% currently. And if we hear any positive comments from Draghi this week, it may fuel the EURUSD rally. The nearest target for the pair may become 1.1850 followed by 1.1890.
by HelenRush
Gold Breakout of $1,300 Just a Matter of TimeGold has gained 2.5% during the last month touching $1,300.77 high last Friday - the level not seen since November, 2016. But will it have courage to move further? There are all the chances to see the breakout if some conditions are met. First, we don’t need strong USD. The lower the chances of a more aggressive monetary policy tightening from the Fed, the better for yellow metal. Second, low inflation globally. The weaker the price pressure all over the world, and especially in the US, the stronger arguments for gold buying. Right now Euro zone, and US CPI is staying below the 2% target level, and UK CPI has slowed down to 2.6% from 2.9% in June. Third, geopolitics. North Korea issue is still on the table, and every time we see tensions escalation, risk-off sentiment will be triggering the demand on gold. And the last, but not the least. Recently, gold ETF’s has shown a modest build, and large investors are favoring gold once again. And it’s a good sign of market sentiment changes. Thus, the breakout of $1,300 may be just a matter of time, and once the deal is done, it opens the way to next strong resistance area around $1,300.
TVC:GOLD
by HelenRush
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All You Need To Know About USDJPYWhat happened to USDJPY? It broke strong support around 109.00 and slid to 4-month low at 108.60. And now look at 10-year yields that hit 2.17% beating a double bottom at Thursday’s low and the August, 11 low, standing at 2.18%.The bond market is hinting it doesn’t trust Fed, and doesn’t believe in tightening. Meanwhile, gold reached $1,300.77, again confirming market doubts about rate hikes. But later we saw a reversal both in gold and yen prices, showing the market is not ready to totally discount the Fed hawkish stance. The area around 108.60/70 is a strong support. And it’s not easy to break. We saw the low of 108.68 last week. And we also saw the low of 108.69 in June. Most probably the conflict in Washington will keep pressuring the pair, and we may even see the slide to April,2017 lows around 108.30. However, any attempts to break that level will be followed by deep corrections, so be careful!
by HelenRush
It’s Time to Sell AUD AUDUSD has gained 150 pips during a couple of days. But what war the trigger, and is it really the start of a new rally? It’s always worth watching the market sentiment, and its reaction to economic events. If an indicator came out above expectations, and the currency was not able to show a strong appreciation, it’s the sign of a looming retreat. Today we saw better than forecasted labor data out of Australia, and AUDUSD is not able to hold its initial gains. If there is a single trigger driving the currency up, wait for correction. Yesterday, the only driver of AUDUSD jump was large option expiry. That’sit. If an asset having strong correlation with a currency is going up, and the currency lags behind, it’s time for retracement. Today Gold, playing a big role in lives of both Australian economy and Australian currency, added 0.22% during the day. And AUD is tittering around 0%. I think it’s time to sell AUDUSD with initial target at 0.7880, followed by 0.7840 if broken.
by HelenRush
Euro is Ready to Jump EURUSD is in wait-and-see mode after US retail sales release, and is ready to make a breakthrough. It’s not the data that matters. It’s all about the reaction of the asset. And the USD behavior speaks itself. The significantly better than expected retail sales data (0.6% mom vs 0.4%) coupled with sharp rise of Empire State Manufacturing PMI were not able to trigger broad base long term rally on USD. What does it mean? It means market doesn’t think that single positive report may be enough to convince the FOMC to switch to a more hawkish stance on monetary policy. Today the market will focus on FOMC minutes. The statement most probably won’t show anything surprising, and it will be enough to disappoint the market, triggering USD selloff. That’s what EURUSD needs to show strong rally. The nearest target may be seen at 1.1790 followed by 1.1850.
by HelenRush