Industry News



S&P 500, Dow Jones: Can Stock Markets Predict Presidential Elections?

Friday 30th October, 2020

INTRODUCTION

Many factors can impact the outcome of US presidential elections, such as the shape of the economy, a voter’s background, turnout, outcomes in swing states and more. But what about returns in the stock market? This is a special report that will analyze the performance of the S&P 500 and Dow Jones leading up to the 22 presidential elections since 1932.

AUD/USD Selloff May Deepen With Stalemate on Fiscal Talks. Biden Leads

Friday 30th October, 2020

5 DAYS UNTIL THE US PRESIDENTIAL ELECTION

A new poll put out by BBC News shows former Vice President and Democratic nominee Joe Biden leading ahead of incumbent President Donald Trump by a 9-point margin five days ahead of the election. This is roughly 2 points higher than the 7-point average Mr. Biden has maintained for a few weeks apart from a brief convergence in September where betting odds showed almost a reversal of this dynamic.

ASX 200 and Nikkei 225 Vulnerable to Further Declines as US Stocks Tumble

Thursday 29th October, 2020

ASX 200 INDEX OUTLOOK

Australia’s ASX 200 index opened 1.7% lower on Thursday, following a broad selloff in the US equity markets overnight. France imposed a nationwide lockdown and Germany is likely to put stricter social distancing measures in view of a rapid increase in coronavirus cases across the region. Hospital capacity is one of the top concerns. Risk sentiment might remain downbeat until a clear tipping point is observed in the virus trend or an effective vaccine is developed and becomes available to the public.

How Societal and Economic Crises Impact US Presidential Elections

Thursday 29th October, 2020

DOES A RELATIONSHIP EXIST BETWEEN THE S&P 500 AND THE US ELECTION OUTCOME?

US voters will go to the polls in November, with Donald Trump and Joe Biden vying to become President. With the world battling a pandemic and economies struggling to recover from freefall, the race to the White House is one of the most unpredictable in recent history. Amidst the uncertainty of the 2020 US election, there’s value in looking back: how did President Bush and President Obama get into office? Did they face any particular challenges posed by world events? What was the impact of their policies on the US economy and the stock markets?

Japanese Yen Outlook: Wait-and-See Bank of Japan May Bolster JPY

Wednesday 28th October, 2020

BOJ EXPECTED TO RETAIN STATUS QUO

The Japanese Yen may continue to climb higher against its major counterparts in the coming days, as the Bank of Japan is expected to keep its monetary policy levers steady at its upcoming meeting on October 29. The BoJ’s highly anticipated Quarterly Outlook Report is expected to show Japanese policymakers revising down their growth and inflation outlooks for 2020, with Prime Minister Yoshihide Suga’s newly introduced “Go to Travel” campaign – offering government’s subsidies for domestic travel – probably cited as one of the major hinderances on consumer price growth.

Dow Jones Falls on Rising Virus Cases, Hang Seng Vulnerable to a Pullback

Wednesday 28th October, 2020

DOW JONES INDEX OUTLOOK

Dow Jones futures extend losses in early Asia trading hours after falling three days in a row. The downward momentum appeared to have gained traction amid a rapid rise in the number of new coronavirus cases in several major economies. Meanwhile, dwindling hopes for a US relief package to be inked before next week’s presidential election also weighed on sentiment. Even strong Microsoft earnings failed to lift investor confidence. Some 55 out of 62 S&P 500 index constituents, which released earnings on October 27th, have beaten analysts’ forecasts in terms of earning per share (EPS).

GBP, AUD, USD Volatility to Swell on Cross-Continental Geopolitical Risks?

Tuesday 27th October, 2020

BREXIT AND THE POUND

Implied volatility in the British Pound may rise throughout the week as EU and UK policymakers buckle down to finally hammer out a Brexit deal before mid-November. While the initial timeline was set for a month earlier, friction over fisheries has remained a key sticking point. Amid the delays, UK Prime Minister Boris Johnson has warned that businesses should start to prepare for a no-deal outcome.

Gold Prices Wilt as Virus Spike Spurs Haven Demand. Biden Leading in Polls

Tuesday 27th October, 2020

8 DAYS UNTIL THE US PRESIDENTIAL ELECTION

It is almost exactly one week until election day and the polls continue to indicate that Democratic nominee Joe Biden will take the White House. According to RealClearPolitics, the former Vice President is almost 8 points ahead of incumbent President Donald Trump. This figures falls in line with the rough 7-point average Mr. Biden has held for several months apart from a few brief interims of polling convergence.

Australian Dollar Capped By Resistance Ahead of Q3 Inflation Data

Monday 26th October, 2020

FALLING COVID-19 CASES TO BUOY REGIONAL SENTIMENT

A significant easing of restrictions in Victoria looks likely in the coming days and may underpin the Australian Dollar against its major counterparts, as the nation’s second most populous state recorded zero new infections of coronavirus for the first time since June 9. In fact, with the 14-day average of coronavirus cases across Melbourne falling to 3.6, and below the mandated threshold of 5, Premier Dan Andrews is expected to announce that retail and hospitality businesses can resume operations and reopen to customers from November 2.

US Dollar Still Struggling: USD/SGD, USD/IDR, USD/MYR, USD/PHP

Monday 26th October, 2020

US DOLLAR ASEAN WEEKLY RECAP

The haven-linked US Dollar traded little changed this past week against its ASEAN counterparts. The Philippine Peso and Indonesian Rupiah were notable outperformers while the Singapore Dollar and Malaysian Ringgit were more restrained. Pairs like USD/PHP and USD/SGD can be sensitive to external news flow driving market sentiment. On this front, back and forth in US fiscal stimulus talks kept investors on the edge.

Gold Price Uptrend at Risk Ahead of Third Presidential Debate?

Friday 23rd October, 2020

12 DAYS UNTIL THE US PRESIDENTIAL ELECTION

While former Vice President Joe Biden continues to maintain his approximate 7-point average spread over the incumbent President Donald Trump, polls have somewhat narrowed recently. Following the first presidential debate, betting odds surged in the Democratic nominee’s favor, but since then they have shown signs of convergence. What caused the initial widening? Post-debate polls showed that viewers generally held Mr. Biden in a more favorable light, and his popularity also rose as a function.

ASX 200 and Nikkei 225 Price Forecasts for the Week Ahead

Friday 23rd October, 2020

ASX 200 AND NIKKEI 225 PRICE FORECASTS FOR THE WEEK AHEAD

Last week we noted that the Australian ASX 200 has been trapped in a range since early June, fluctuating between resistance around 6,200 and support near 5,800. At the time, we outlined two potential scenarios, either a break out trade or a continuation of the trading range. Evidently, the ASX 200 remains at a crucial crossroad, holding within the band of resistance around the 6,200 level. Therefore, the same trading strategies are applicable at this stage as the Australian equity index awaits its next big move.

EUR/USD May Challenge 2-Year Resistance. Fiscal Talks Making Headway

Thursday 22nd October, 2020

13 DAYS UNTIL THE US PRESIDENTIAL ELECTION

It is officially less than two weeks until the November 3 election and polls continue to show Democratic nominee Joe Biden in the lead. However, the spread between him and incumbent President Donald Trump has somewhat narrowed after it burst open following the first presidential debate. Looking ahead, markets will be closely watching the third and final one on Thursday.

Nasdaq 100 Outlook: Tesla Beats Earnings Expectations, Shares Pop

Thursday 22nd October, 2020

NASDAQ 100 OUTLOOK: TESLA BEATS EARNINGS EXPECTATIONS, SHARES POP

Fan-favorite electric carmaker Tesla (TSLA) released its quarterly report after the close Wednesday, treating investors with an earnings beat and a quick rally in share prices. The reported outline a continuation of profitability for Tesla, despite a decline in the average price of vehicles sold. Still, the more affordable models should begin to pressure competitors in the increasingly competitive space.

Nasdaq 100 Climbs on Stimulus Hopes, Netflix Misses, Nikkei 225 May Rise

Wednesday 21st October, 2020

NASDAQ 100 INDEX OUTLOOK

Wall Street futures extended gains during early Asia trading hours, in anticipation of progression in the US relief package after House Speaker Nancy Pelosi set a deadline to approve the stimulus proposal. Netflix’s big earnings miss appeared to have little impact on the overall market sentiment, while a majority of corporate America smashed consensus forecasts’ with upbeat Q3 results.

NZD/USD Tracks Monthly Range Ahead of New Zealand Inflation Report

Wednesday 21st October, 2020

NEW ZEALAND DOLLAR TALKING POINTS

NZD/USD tracks the monthly range as the Reserve Bank of New Zealand (RBNZ) shows a greater willingness to boost its non-standard measures, but the update to New Zealand’s Consumer Price Index (CPI) may prop up the exchange rate as the headline reading for inflation is expected to recover in the third quarter.

British Pound Under Pressure as Brexit Talks Beleaguer UK & EU Officials

Tuesday 20th October, 2020

2020 ELECTION, BREXIT, BRITISH POUND, US PRESIDENTIAL DEBATE, CORONAVIRUS

The British Pound continues to be suspended in a fog of uncertainty as EU and UK policymakers attempt to hammer out the details of an agreement. As I’ve written before, fisheries are a major point of contention that have contributed to the impasse. EU chief negotiator Michel Barnier said bilateral talks will intensify this week so a deal can be reached.

New Zealand Dollar Outlook: NZD/USD, NZD/JPY Hinge on Inflation Data

Tuesday 20th October, 2020

NEW ZEALAND DOLLAR, NZD/USD, NZD/JPY, RESERVE BANK OF NEW ZEALAND

Upcoming inflation data will likely dictate the New Zealand Dollar’s near term outlook, after a slew of better-than-expected economic releases call into question the need for further stimulus from an ultra-dovish Reserve Bank of New Zealand. The RBNZ has stated that it is “actively preparing a package of additional monetary policy tools to use if needed [and] reaffirmed that a Funding.

AUD/USD Eyes September Low on More Detailed RBA Forward Guidance

Monday 19th October, 2020

AUSTRALIAN DOLLAR TALKING POINTS

AUD/USD extends the decline from the monthly high (0.743) as the Reserve Bank of Australia (RBA) offers more details regarding its forward guidance for monetary policy, and the Australian Dollar may continue to underperform against its major counterparts as it fails to retain the opening range for October. AUD/USD appears to be on track to test the September low (0.7006) as RBA Governor Philip Lowe pledges to not increase the official cash rate (OCR) “for at least three years,” and it seems as though the central bank will offer a more details over the coming months as officials plan to update the economic in “early November.”

Gold Forecast: Failure to Test Monthly Low Warns of Range Bound Prices

Monday 19th October, 2020

GOLD PRICE TALKING POINTS

The price of gold trades in a narrow range after failing to test the monthly low ($1873), but fresh remarks from Federal Reserve officials may influence the precious metal as it shows an inverse relationship with the US Dollar. The price of goldretains the opening range for October even though the US Dollar Index (DXY) appears to be reacting to a confluent zone of support, and the precious metal may continue to consolidate as the Federal Open Market Committee (FOMC) plans to unveil a “more explicit outcome-based forward guidance.”

Copper Price Forecast: Will Chinese GDP Push Copper to New Highs?

Friday 16th October, 2020

COPPER PRICES, CHINESE ECONOMIC GROWTH, COVID

Copper fell with the broader market earlier this month as the red metal sank to its lowest point since August 14 in the opening days of October. Yet, copper futures are faring better since and appears immune to recent risk aversion that is putting pressure on the equity space. Through Thursday afternoon, copper futures are trading 1.25% higher versus the 0.72% drop in the Nasdaq 100 index. As discussed in recent months, market imbalances appear to have driven much of the initial post-Covid rally. While the supply side is seeing some relief after LME warehouse levels for copper more than doubled in the last four weeks, copper futures remain near multi-year highs. This suggests demand may be outpacing the supply side.

S&P 500 Bolstered by VIX Compression as Election Fear Fades

Friday 16th October, 2020

S&P 500 PRICE OUTLOOK: STOCKS SEARCH FOR SUPPORT

The S&P 500 Index declined by 0.15% on Thursday as stocks extend lower for the third session in a row. S&P 500 price action fell by more than 1% following the New York opening bell, but equities clawed back downside as trading progressed. Stocks have recently faced selling pressure amid US fiscal stimulus whiplash and mounting coronavirus cases globally. Despite these headwinds still threatening to steer the S&P 500 even lower, VIX Index term structure compression highlights one reason to stay optimistic on stocks. The widening Biden-Trump presidential election spread, coupled with increased odds of a democratic sweep judging by recent polling data, seems to have eased investor concerns over a potential contested election this November.

Bitcoin Outlook Buoyed by Inflation Expectations, Biden Lead

Thursday 15th October, 2020

BITCOIN, BTC/USD, CONGRESSIONAL STIMULUS TALKS, US PRESIDENTIAL ELECTIONS

As mentioned in previous reports, the provision of extraordinary fiscal and monetary stimulus measures in response to the novel coronavirus pandemic has served to underpin anti-fiat assets, with the price of Bitcoin surging over 212% from the yearly low (4000) to set a fresh yearly high on August 17 (12490). Since then however, the notable stabilization of the Federal Reserve’s balance sheet and the prolonged stalemate in US fiscal aid talks seem to have capped the performance of the popular cryptocurrency.

NZD/USD Rate Eyes 2020 High Even as RBNZ Defends Negative Rate Policy

Thursday 15th October, 2020

NEW ZEALAND DOLLAR TALKING POINTS

NZD/USD tags a fresh monthly high (0.6682) even though the Reserve Bank of New Zealand (RBNZ) defends its dovish forward guidance, and the exchange rate may continue to retrace the decline from the yearly high (0.6798) as the Relative Strength Index (RSI) breaks out of the downward trend established in September. NZD/USD appears to be unfazed by a slew of dovish comments from RBNZ Assistant Governor Christian Hawkesby as key market trends largely remain in place.

USD/CAD Bullish Outside Day Price Formation Indicates Larger Rebound

Wednesday 14th October, 2020

CANADIAN DOLLAR TALKING POINTS

USD/CAD carves a bullish outside day (engulfing) candle formation as it bounces back from a fresh monthly low (1.3099), but recent developments in the Relative Strength Index (RSI) cast a bearish outlook for the exchange rate as the indicator establishes a downward trend in October. USD/CAD struggled to retain the advance from the September low (1.2994) as the rebound failed to produce a test of the August high (1.3451), with the RSI snapping the upward trend from September as the US Dollar weakened on the back of improving risk appetite.

Dow Jones Falls, SGD Gained on MAS Policy, Hang Seng Eyes Xi's Speech

Wednesday 14th October, 2020

DOW JONES, HANG SENG, STRAITS TIMES INDEX OUTLOOK

The Dow Jones Industrial Average (DJIA) came off from a six-week high as profit taking activities kicked in and corporate America unfolded their third quarter earnings results. Not surprisingly, six out of seven S&P 500 constituent companies, which released their profits on Tuesday, smashed analysts’ expectations (table below). This may set an upbeat tone for the earnings season. JPMorgan and Citigroup delivered 29.4% and 52.5% positive surprises respectively in terms of their earnings per share (EPS), thanks to lower loan-loss provisions.

Japanese Yen, British Pound Rally. USD/JPY Ready to Extend Losses?

Tuesday 13th October, 2020

JAPANESE YEN, USD/JPY, BRITISH POUND, S&P 500, NASDAQ

The anti-risk Japanese Yen gained over the past 24 hours despite a broadly optimistic day in global financial markets. Germany’s benchmark stock index, the DAX 30, gained 0.67%. In the United States, the S&P 500 closed 1.64% higher while the tech-heavy Nasdaq Composite soared 2.56% in its best day since early September. The haven-oriented US Dollar cautiously weakened. Gains in equities may have been due to rising hopes of fiscal stimulus in the world’s largest economy.

AUD/USD Unfazed by Ban on Australian Coal as Risk Appetite Improves

Tuesday 13th October, 2020

AUSTRALIAN DOLLAR TALKING POINTS

AUD/USD pulls back from the monthly high (0.7243) as the US Dollar recovers against most of its major counterparts, but the improvement in risk appetite may keep the exchange rate afloat as the Greenback reflects an inverse relationship with investor confidence. AUD/USD appears to be unfazed by headlines stating that China has banned coal imports from Australia as Trade Minister Simon Birmingham insists that “we do not have proof that this is occurring” during an interview with Sky News.

APAC Stocks Weekly Outlook: Dow Jones, Hang Seng Index, ASX 200

Monday 12th October, 2020

DOW JONES, HANG SENG, ASX 200 INDEX OUTLOOK

Dow Jones futures are trading slightly lower at Asia mid-day hours, as profit-taking activities ramp up following last week’s big gains. Market participants are perhaps shrugging off recent election-related uncertainty and look beyond for post-election stimulus hopes and the Q3 US earnings season. According to Factset reports, analysts have revised up S&P 500 earnings to now see a decline of -20.5% YoY in Q3 2020, compared to the -25.3% forecast seen in June. This is mainly due to upward revisions to EPS estimates and positive EPS surprises. Uncertainty still remains for the upcoming earnings season, as fewer companies have issued EPS guidance compared to the years before.

NZD/USD Weakness to Abate as RSI Breaks Out of Downward Trend

Monday 12th October, 2020

NZD/USD WEAKNESS TO ABATE AS RSI BREAKS OUT OF DOWNWARD TREND

NZD/USD pushed to a fresh monthly high (0.6673) amid growing hopes for another round of US fiscal stimulus, and recent developments in the Relative Strength Index (RSI) indicate a larger recovery in the exchange rate as the oscillator breaks out of the downward trend established in September. NZD/USD bounced back from the monthly low (0.6547) as US President Donald Trump tweets “Covid Relief Negotiations are moving along,” and the ongoing efforts by fiscal as well as monetary authorities may continue to drag on the US Dollar as the reserve currency reflects an inverse relationship with investor confidence.

S&P 500 Climbs to One-Month High, Nikkei 225 Breaks Key Resistance

Friday 09th October, 2020

S&P 500 INDEX OUTLOOK

The S&P 500 index climbed to a one-month high at 3,446 after the vice presidential debate, in which Democratic nominee Kamala Harris seemed to have outshined Republican nominee Mike Pence. Markets are perhaps pricing in a post-election fiscal stimulus package, even though chances for a near-term solution likely remains thin. Polls shows that Joe Biden is having a wider advantage over Donald Trump after the debates so far.

Indian Rupee, Nifty 50 Await RBI as USD/INR Downtrend Steadies

Friday 09th October, 2020

INDIAN RUPEE, USD/INR, NIFTY 50, RBI, TECHNICAL ANALYSIS

After being postponed to this week, the Indian Rupee and Nifty 50 are awaiting today’s Reserve Bank of India (RBI) monetary policy announcement at 6:15 GMT. The central bank is anticipated to maintain benchmark lending rates unchanged following recent upward pressures on inflation. The RBI will also offer updated estimates for growth in the new fiscal year. For a further analysis of the interest rate decision, check out my outline here. What are the technical circumstances USD/INR and the Nifty are facing?

Silver and Copper at Risk as Trump Pulls the Plug on Fiscal Aid Talks

Wednesday 07th October, 2020

COMMODITY PRICES IN PERIL AS CONGRESSIONAL STIMULUS TALKS GRIND TO A HALT

Donald Trump’s unexpected decision to pull the plug on fiscal stimulus negotiations could drastically undermine copper and silver prices in the near-term, as the President tweeted “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business”. Trump added that instead of continuing talks with House Speaker Nancy Pelosi he has “asked Senate Majority Leader Mitch McConnell not to delay, but to instead focus full time on approving my outstanding nominee to the United States Supreme Court, Amy Coney Barrett”.

Gold Price Rebound Unravels as Trump Seeks Post-Election Stimulus Bill

Wednesday 07th October, 2020

GOLD PRICE TALKING POINTS

The price of gold continues to reflect an inverse relationship with the US Dollar, with the precious metal giving back the advance from earlier this week while the Greenback appreciates against most its major counterparts, and bullion may struggle to retain the rebound from the September low ($1849) as the Relative Strength Index (RSI) continues to track the downward trend carried over from August. The price of gold pulls back from a fresh weekly high ($1921) as developments coming out of the US drag on investor confidence, and swings in risk appetite may continue to influence the precious metal as President Donald Trump tweets that “immediately after I win, we will pass a major Stimulus Bill.”

Australian Dollar Rises as RBA Holds Steady Ahead of Federal Budget

Tuesday 06th October, 2020

AUD/USD SPIKES HIGHER AS RBA RETAINS WAIT-AND-SEE STANCE

The Australian Dollar surged higher against its major counterparts as the Reserve Bank of Australia “decided to maintain the current policy settings, including the targets for the cash rate, the yield on 3-year Australian Government bonds, and the parameters for the expanded Term Funding Facility”. With the RBA retaining its wait-and-see approach to monetary policy in the near-term, the risk-sensitive local currency could continue its outperformance given that “the Australian Dollar remains just a little below its peak of the past couple of years”.

Crude Oil Outlook: OPEC World Outlook Report in Focus After Price Spike

Tuesday 06th October, 2020

CRUDE OIL, OPEC ANNUAL WORLD OIL OUTLOOK, US SUPPLY AND DEMAND

WTI crude oil prices soared 6.32% on Monday, the best performance over the course of 24 hours since the middle of May. Rising expectations of US fiscal stimulus likely boosted overall market sentiment, offering support to the growth-linked commodity. This also follows what has been dismal performance from crude oil since late August amid rising woes about the outlook for energy demand. On the chart below, a 14-day moving average of US oil demand and supply can be seen trending cautiously lower since late July. Together, these are fundamental forces that can provide a fairly neutral price setting.

British Pound at Risk on EU-UK Brexit Fissure, Trump Fights Covid

Monday 05th October, 2020

BREXIT PAIN TO INTENSIFY

The British Pound may be in for a rough week as EU and UK negotiators buckle down for intensified talks as the December 31 expiration date of the transition period nears. As I’ve written about in July, the dispute over economically-strategic and politically-sensitive fishing grounds continues to be a major wedge widening the rift between Brussels and London. UK policymakers warned that the gap on fisheries with their European counterparts risks being “impossible to bridge”. EU chief negotiator Michel Barnier later pointed out that “persistent and series divergences” are characterizing Brexit talks.

ASX 200 Index Outlook Dictated by RBA Rate Decision, Federal Budget

Monday 05th October, 2020

WAIT-AND-SEE RBA LIMITING ASX 200 UPSIDE

The ASX 200 index’s rebound from psychological support at the 5700 level could prove to be a mere short-term correction, as the Reserve Bank of Australia is expected to keep its monetary policy settings unchanged at its upcoming meeting on October 6. Although RBA Deputy Governor Guy Debelle appeared to suggest that the central bank could adjust its monetary policy levers in the coming months “given the outlook for inflation and employment is not consistent with the Bank’s objectives over the period ahead”, it seems relatively unlikely that this will eventuate ahead of the Australian Government’s update to the Federal Budget.

Nasdaq 100 Futures Erase Gains, DAX 30 Tests Support, Oil Falls

Friday 02nd September, 2020

NASDAQ 100 INDEX OUTLOOK

Wall Street had a turbulent trading session on Thursday with sentiment mixed. The Nasdaq surged 1.42%, while the S&P 500 and Dow Jones Industrial Average gained 0.53% and 0.13% respectively. Investors remained wary about a second US fiscal stimulus package, and rising coronavirus cases around the globe continued to weigh on risk sentiment. A 4% plunge in crude oil prices flagged demand risk as more countries are facing tough trade-offs between economic and virus situations. Energy was the worst performing sector on Thursday as a result.

AUD/USD Staging a Comeback as Joe Biden Surges in the Polls

Friday 02nd September, 2020

33 DAYS UNTIL THE US PRESIDENTIAL ELECTION

With almost exactly a month to go until voting day, polling data is showing former Vice President and Democratic nominee Joe Biden’s popularity gaining momentum. Meanwhile, the incumbent US President Donald Trump’s job approval of roughly 46-47 percent is adding to the widening gap of favorability between him and his opponent. The first presidential debatemay have played a role in this dynamic after post-debate polling stats showed overwhelming support for Mr. Biden. His popularity may have also grown as a result.

Will Trade Wars Persist After the US Election?

Thursday 01st September, 2020

DONALD TRUMP BECOMES PRESIDENT

If re-elected, President Donald Trump would likely double down on China and seek additional concessions through “Phase 2” of their long-awaited, comprehensive trade agreement. While “Phase 1” was signed, the coronavirus pandemic complicated what was an already-fragile situation. Domestic demand was hammered and as a result, China was unable to hold up its end of the bargain. There are an additional +30 key dates worthy of accounting, but the most recent developments at the time of writing are listed in this article.

EUR/USD Bullish Price Sequence Pushes RSI Towards Trendline Resistance

Thursday 01st September, 2020

EUR/USD RATE

EUR/USD pulls back from a fresh weekly high (1.1755) ahead of the update to the US Non-Farm Payrolls (NFP) report, but the Relative Strength Index (RSI) may offer a bullish signal as it reverses ahead of oversold territory and approaches trendline resistance. EUR/USD extends the series of higher highs and lows from earlier this week to broadly track the advance in global equity prices, and swings in trader sentiment may continue to influence the exchange rate even though the European Central Bank (ECB) continues to endorse a dovish forward guidance for monetary policy.

USD Unfazed While SPX Set to Open Higher Following Presidential Debate

Wednesday 30th September, 2020

FIRST PRESIDENTIAL DEBATE OR GAME OF SCHOOLYARD INSULTS?

The first round of the 2020 US presidential debate between Democratic nominee Joe Biden and incumbent President Donald Trump proved to be more of a game of schoolyard insults, as both men continually insulted and talked over one another. However, Mr Biden’s composure and willingness to poke holes in his Republican counterpart’s response to the Covid-19 crisis could result in a more substantial widening in polling numbers.

Dow Jones Eyes First US Election Debate, Hang Seng Index May Rebound

Wednesday 30th September, 2020

DOW JONES INDEX OUTLOOK

Dow Jones Industrial Average index (Dow) futures oscillated ahead of the first presidential debate after registering small losses overnight. The debate will be closely watched by investors and traders around the world, and may have a relatively large impact on currencies, gold, crude oil and index futures, which are usually tradable 24 hours a day. Even though recent polls suggest that Joe Biden is a clear front-runner at the moment.

Dow Jones Climbs on Stimulus Hopes, ASX 200 and Nikkei 225 Advance

Tuesday 29th September, 2020

DOW JONES INDEX OUTLOOK

Dow Jones Industrial Average index (Dow) futures climbed during early Asia hours after registering a decent two-day gain. Stock market sentiment was revitalized by stimulus hopes after US House Speaker Nancy Pelosi painted a silver lining of the supposedly stalling fiscal package. House Democrats are working on a $2.4 trillion plan, which is $1 trillion lower than the initial proposal but probably higher than what the Trump Administration has signaled it will accept.

GBP, USD Eye Brexit, Presidential Debate & Outlook for Stimulus Talks

Tuesday 29th September, 2020

BREXIT NAUSEATING BRITISH POUND TRADERS

The British Pound continues to be held hostage by uncertainty over the future of the EU-UK relationship as the October 15 deadline – created by Prime Minister Boris Johnson – nears. He said that a trade agreement by that point needs to be reached in order to provide ample time for policymakers to debate and pass it before the end the of transition period on December 31.

Japanese Yen Outlook: AUD/JPY, CAD/JPY, EUR/JPY Levels To Watch

Monday 28th September, 2020

JAPANESE YEN TECHNICAL OUTLOOK, AUD/JPY, CAD/JPY, EUR/JPY

The Japanese Yen’s 5% rally from the yearly low set at the beginning of the month could prove to be a mere counter-trend correction, as key chart resistance appears to have stifled the haven-associated currency’s surge against its major counterparts. Although the Japanese Yen broke above Falling Wedge resistance and the trend-defining 50-day moving average, the inability of the RSI to scale into overbought territory is indicative of ebbing bullish momentum and could inspire a reversal back towards the yearly low, if the 200-DMA continues to stifle buying pressure.

NZD/USD Analysis: Bearish Price Sequence Sputters Ahead of August Low

Monday 28th September, 2020

NEW ZEALAND DOLLAR

NZD/USD snaps the series of lower highs and lows from the precious week as the recent weakness in investor confidence appears to be abating, and the exchange rate may consolidate going into October as the decline from the monthly high (0.6798) sputters ahead of the August low (0.6489). NZD/USD continues to reflect the inverse relationship between the US Dollar and risk sentiment as the exchange rate rebounds from the monthly low (0.6536) and mimics the recent recovery in global equity prices. NZD/USD may appreciate against its US counterpart even though the Reserve Bank of New Zealand (RBNZ).

USD/CAD Rate Searches for Resistance as RSI Tracks Upward Trend

Friday 25th September, 2020

CANADIAN DOLLAR TALKING POINTS

USD/CAD extends the advance from earlier this week to trade to a fresh monthly high (1.3418), and the exchange rate may continue to search to resistance as long as the Relative Strength Index (RSI) tracks the upward trend established in September. USD/CAD has pushed back above the former-support zone around the March/June low (1.3315) on the back of US Dollar strength, with the appreciation in the Greenback largely coinciding with the weakness in global equity prices as there appears to be shift in risk appetite.

AUD/USD at Key Support, Trump Popularity Edging Up Despite Virus Spike

Friday 25th September, 2020

40 DAYS UNTIL THE US PRESIDENTIAL ELECTION

40 days to go until the 2020 presidential election and the incumbent President Donald Trump’s popularity is slowing rising despite a growing number of coronavirus cases. While his disapproval rating briefly peaked at a 3-year high at around 56.4 percent, it has since retreated as his popularity rating slowly edges higher from a one-year low of 40.2 to now 42.8 percent. Coronavirus cases in the US currently stand at around 6.97 million with deaths approximating a little over 202k.

NZD/USD Forecast: Bearish Price Sequence Brings August Low on Radar

Thursday 24th September, 2020

NEW ZEALAND DOLLAR

NZD/USD struggles to retain the advance following the Reserve Bank of New Zealand (RBNZ) interest rate decision as the decline global equity prices props up the US Dollar, and the exchange rate appears to be on track to test the August low (0.6489) as it extends the series of lower highs and lows from earlier this week. NZD/USD may continue to reflect the inverse relationship between the US Dollar and investor sentiment as the exchange rate trades to a fresh monthly low (0.6536) and mimics the weakness in global equity prices.

S&P 500 Breaks 23.8% Fibonacci, Hang Seng and Straits Times Fall

Thursday 24th September, 2020

S&P 500 INDEX OUTLOOK

The S&P 500 index had a bloodbath day as multiple headwinds put traders on a defensive mode. Several Fed members warned a lengthy economic recoverywithout signaling further easing measures. Concerns remained on coronavirus resurgence in parts of the EU. Besides, President Trump said that the White House could veto final Food and Drug Administration (FDA) rules for issuing an emergency-use authorization for a coronavirus vaccine, according to Bloomberg News.

Copper Price Outlook Remains Bullish Despite Shift in Risk Appetite

Wednesday 23rd September, 2020

COPPER PRICES, XCU/USD, AVERAGE INFLATION TARGETING, VOLATILITY

As noted in previous reports, copper’s 56% surge from the March low is showing little signs of abating, after the price of the ductile metal soared to a fresh two-year high (3.0945) at the beginning of the month on the back of rebounding global manufacturing activity and soaring Chinese demand. However, the reimposition of coronavirus lockdown measures in several European nations and the lack of progress in Congressional stimulus talks may cap the potential upside for the global growth proxy, as British Prime Minister Boris Johnson urges residents to work from home if possible and introduces new restrictions that are likely to last for the next six months.

Market Outlook Ahead of the First Biden-Trump Presidential Debate

Wednesday 23rd September, 2020

ALL YOU NEED TO KNOW BEFORE THE FIRST PRESIDENTIAL DEBATE

The first presidential debate of the 2020 election between former Vice President and Democratic nominee Joe Biden and President Donald Trump will be held on September 29 from 9:00-10:30 P.M. ET. The event is set to take place at Case Western Reserve University in Cleveland. Fox News anchor Chris Wallace will be moderating the debate. The nonpartisan Commission on Presidential Debates (CPD) announced that the debate will be broken up into six 15-minute sections. Each candidate will be given two minutes to respond to each question at the start of every segment. To get additional details of future presidential and vice presidential debates, see the CPD’s official schedule here.

Gold and Silver Vulnerable on Stagnating Stimulus Talks, USD Resurgence

Tuesday 22nd September, 2020

GOLD, SILVER, AVERAGE INFLATION TARGETING, FEDERAL RESERVE, CONGRESS

The lack of progress in Congressional stimulus talks, escalating US-China tensions and the absence of additional monetary stimulus could weigh on precious metal prices in the run-up to elections in November, and could see gold and silver continue to retreat from their respective monthly highs. However, the Federal Reserve’s adoption of average inflation targeting (AIT) and recent comments from New York Fed President John Williams stating that “we’re not shy about doing whatever it takes to get this economy through this really difficult situation and hopefully back to that maximum employment goal.

Dow Jones Supported by 100-Day SMA, Strong US Dollar Sinks XAG/USD

Tuesday 22nd September, 2020

DOW JONES INDEX OUTLOOK

Dow Jones Industrial Average fell over 1.8% on Monday, dragged by materials (-4.88%), industrials (-4.2%) and healthcare (-2.54%) sectors (Table below). A whopping 86.7% of the components in the index ended lower, and all 9 sectors were in the red. Investors are weighing lockdown plansin Europe amid resurging coronavirus cases, which may hurdle the economic recovery. Meanwhile, a pending US fiscal stimulus and Fed’s reluctance to ease more after the FOMC meeting also dampened prospects of further fiscal and monetary support. As a result, Asia-Pacific equities may open broadly lower on Tuesday.

USD, GBP, EUR Volatility Ahead of Cross-Continental Geopolitical Risks

Monday 21st September, 2020

US DOLLAR MAY RETREAT ON MNUCHIN, POWELL TESTIMONIES

The US Dollar may retreat if congressional testimonies by Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin further amplify selling pressure in the haven-linked Greenback. While there remain several significant risks to the economic outlook, modest signs of stabilization appear to be bolstering risk appetite and punishing demand for anti-risk assets.

NZD/USD Outlook Hinges on RBNZ as Tilt in Retail Sentiment Persists

Monday 21st September, 2020

NEW ZEALAND DOLLAR

NZD/USD pulls back from a fresh yearly high (0.6798) ahead of the Reserve Bank of New Zealand (RBNZ) interest rate decision, but current market trends may carry into the end of the month as the bullish price action coincides with the tilt in retail sentiment. NZD/USD clears the monthly opening range following the Federal Reserve interest rate decision as the central.

Gold Price Continues to Rebound from 50-Day SMA Following FOMC

Friday 18h September, 2020

GOLD PRICE

The price of gold continues to trade within the monthly range following the Federal Reserve interest rate decision, and current market trends may keep the precious metal afloat as the crowding behavior in the US Dollar persists in September. The price of gold tagged the 50-Day SMA ($1935) for the second time this month as the update to the Fed’s Summary of Economic Projections (SEP) showed no change in the interest rate dot-plot, and it seems as though the central bank is in rush to alter the path for monetary policy as the longer run interest rate forecast remains unchanged from the June meeting.

EUR/USD Selloff Ahead? Biden-Trump Spread Narrows

Friday 18h September, 2020

47 DAYS UNTIL THE US PRESIDENTIAL ELECTION

With less than 50 days to go until the US presidential election, markets are tensing up ahead of the first debate between Democratic nominee Joe Biden and President Donald Trump on September 29. According to data from RealClearPolitics, the spread between the two candidates for the general election has moderately narrowed to a 5.8-point spread. This marks a notable deviation from the roughly 7-point lead Mr. Biden has been able to maintain over Trump for some time. Attention to how battleground states like Florida and Pennsylvania perform will be more crucial as campaigns put - in some cases as much as $30m.

Nasdaq 100 Falls Post-Fed Meeting, Hang Seng and Nikkei Eye BOJ, BoE

Thursday 17th September, 2020

NASDAQ 100 INDEX OUTLOOK

Nasdaq 100 index futures rebounded mildly after falling over 1.2% on Wednesday. This may set a mixed tone for Asia-Pacific open. The FOMC meeting was largely within expectations. The central bank signaled that it is likely keep the policy rate unchanged until at least 2023, without promising any further easing measures this time. The conditions for the Fed to raise interest rates include inflation stabilizing at the 2% long-term goal, and jobs market achieving full employment status – both are unlikely to take place in the near term.

NZD/USD Rate Outlook Unfazed by 12.4% Decline in New Zealand GDP

Thursday 17th September, 2020

NZD/USD RATE OUTLOOK UNFAZED BY 12.4% DECLINE IN NEW ZEALAND GDP

NZD/USD preserves the series of higher highs and lows from earlier this week amid the limited reaction to the Federal Reserve interest rate decision, and the update to New Zealand’s Gross Domestic Product (GDP) report may push the Reserve Bank of New Zealand (RBNZ) to the sidelines in September as the growth rate contracts less-than-expected in the second quarter of 2020. NZD/USD struggles to take out the weekly high (0.6759) as the Fed’s Summary of Economic Projections (SEP) show no change in the interest rate dot-plot.

USD/CAD Outlook Hinges on Fed Summary of Economic Projections (SEP)

Wednesday 16th September, 2020

USD/CAD OUTLOOK HINGES ON FED SUMMARY OF ECONOMIC PROJECTIONS (SEP)

USD/CAD trades in a narrow range following the failed attempt to test the March/June low (1.3315), but the Federal Reserve interest rate decision may sway the exchange rate as the central bank is scheduled to release the updated Summary of Economic Projections (SEP). USD/CAD pulled back from the monthly high (1.3259) as the Bank of Canada (BoC)pledged to carry out its “large-scale asset purchases of at least $5 billion per week,” and it seems as though the central bank will retain the current policy throughout the remainder of the year as Governor Tiff Macklem and Co. expect the “strong reopening phase to be followed by a protracted and uneven recuperation phase.”

Fed Meeting Preview: US Dollar Hinges on Guidance from Powell

Wednesday 16th September, 2020

FOMC RATE DECISION & QUARTERLY ECONOMIC PROJECTIONS TO SWAY USD PRICE ACTION

The US Dollar will likely be front and center on FX trader radars over the next 24-hours. This is considering high-impact even risk facing USD price action due to the Federal Reserve announcement scheduled to cross market wires this Wednesday, 16 September at 18:00 GMT. Periodic Fed meetings tend to leave the US Dollar vulnerable owing to heightened potential for outsized moves. FOMC officials are expected to reveal updated economic projections (SEPs) tomorrow and Chair Jerome Powell will hold a press conference shortly after the press statement release.

Nasdaq 100, ASX 200, Straits Times Forecast: Will This Rebound Last?

Tuesday 15th September, 2020

NASDAQ 100 INDEX OUTLOOK

The Nasdaq 100 index futures have retraced slightly at early Asia hours, after rising more than 1.8% on Monday. Sentiment has shown signs of improvement on Wall Street as Pfizer’s CEO signaled that a Covid-19 vaccine is “likely” to be deployed to the US public by the end of this year. Besides, US tech giant Oracle is in a potential deal to acquire TikTok’s US operations after Microsoft’s withdrawal. Oracle’s share price advanced 4% before a trading halt took place.

NZD/USD Outlook: Tilt in Retail Sentiment Persists Ahead of FOMC

Tuesday 15th September, 2020

NEW ZEALAND DOLLAR TALKING POINTS

NZD/USD struggles to extend the advance from the start of the week as consumer confidence in New Zealand weakens for three consecutive quarters, but the pullback from the yearly high (0.6789) may end up being an exhaustion in the bullish price action rather than a change in trend as the tilt in retail sentiment persists. NZD/USD slipped below the 0.67000 handle as the Westpac Consumer Confidence survey narrowed to 95.1 from 97.2 in the second quarter of 2020 to mark the lowest reading since 2008.

US Dollar Fundamental Outlook: USD/SGD, USD/IDR, USD/PHP, USD/MYR

Monday 14th September, 2020

US DOLLAR ASEAN WEEKLY RECAP

The haven-linked US Dollar cautiously rose against its ASEAN counterparts such as the Singapore Dollar, Indonesian Rupiah and Malaysian Ringgit. Gains occurred in tandem with rising volatility in financial markets as equities on Wall Street traded in the red for a second consecutive week. This may have been triggered by a combination of rising US-China tensions and concerns about loft valuations in tech shares. The former was in the minds of investors as President Donald Trump touted a ‘decoupling’ from China.

AUD/USD Rate Rebound Stalls Ahead of RBA Minutes with FOMC on Tap

Monday 14th September, 2020

AUD/USD RATE REBOUND STALLS AHEAD OF RBA MINUTES WITH FOMC

AUD/USD appears to be stuck in a narrow range after reversing ahead of the 50-Day SMA (0.7162), but fresh remarks from the RBA may rattle the rebound from the monthly low (0.7192) as the central bank warns that the economic recovery is “likely to be both uneven and bumpy.” Hints of additional monetary support may produce a bearish reaction in the Australian Dollar as the RBA insists that “the yield target will remain in place until progress is being made towards the goals for full employment and inflation.”

Dow Jones May Lead Hang Seng, Nikkei 225 lower Post ECB Disappointment

Friday 11th September, 2020

DOW JONES INDEX OUTLOOK

The Dow Jones Industrial Average (Dow) let go earlier gains and ended 1.45% lower. Prior to Wall Street open, the ECB set a neutral tone on its monetary policy, keeping its policy rate unchanged. ECB Chairwoman Christine Lagarde didn’t sound too alarmed about the currency’s recent strength. The euro let go earlier gains and swung lower as sentiment turned sour.

Silver Coils Up for Breakout as Biden Builds Lead vs Trump, Relief Bill Stalls

Friday 11th September, 2020

54 DAYS UNTIL THE US PRESIDENTIAL ELECTION

Former Vice President and Democratic nominee Joe Biden continues to maintain a lead in the polls over President Donald Trump. This is not only true of the general election but also of Mr. Biden’s popularity in key swing states. Having said that, investors should be cautious when assessing the outcome of the election even before the upcoming presidential debate on the 29th.

S&P 500 May Lead ASX 200 Higher, Gold Rebounds as US Dollar Falls

Thursday 10th September, 2020

S&P 500INDEX OUTLOOK

The S&P 500 index jumped over 2% as traders shrugged off a three-day selloff and started buying the dips. Encouragingly, over 78% of the index components ended the day higher. This contrasts an average of 30-40% stock gains observed before the recent market rout and suggests improving sentiment. New York City has planned to resume indoor dining at 25% capacity at the end of this month, painting a silver lining of the coronavirus situations.

USD/CAD Rebound Stalls as BoC Sticks to Current Policy Tools

Thursday 10th September, 2020

CANADIAN DOLLAR

The recent rebound in USD/CAD appears to have stalled ahead of the March/June low (1.3315) as the Bank of Canada (BoC) sticks to the sidelines at the September meeting and pledges to carry out its “large-scale asset purchases of at least $5 billion per week.” USD/CAD quickly pulls back from a fresh monthly high (1.3259) as the BoC insists that “the bounce-back in activity in the third quarter looks to be faster than anticipated in July.

Nasdaq 100 Lost 10% in 3 Days, Hang Seng and FTSE 100 May Fall

Wednesday 09th September, 2020

NASDAQ 100 INDEX OUTLOOK

Nasdaq 100 index futures extended losses at Asia open after falling over 4% on Tuesday. Tesla shares tumbled 21%, marking the worst single-day performance recorded, weighing on the broader tech sentiment. A significant retracement in technology shares came with no surprise, as warning signs were given – rich valuation, deviation from the other sectors, US-China trade spat, and rising volatility. For now, the tech pullback seems more like a technical correction in a mid-term bull market, as there are no material changes observed in the fundamental picture.

Bitcoin Price Outlook: Will Support At $10,000 Stifle BTC/USD Sellers?

Wednesday 09th September, 2020

BITCOIN, BTC/USD, AVERAGE INFLATION TARGETING, CRYPTOCURRENCIES

The provision of extraordinary fiscal and monetary stimulus measures in response to the novel coronavirus pandemic has served to underpin anti-fiat assets, with the price of Bitcoin surging over 212% from the yearly low (4000) to fall just shy of key resistance at the 2019 high (13764). However, a resurgence of risk-aversion in recent days, on the back of escalating US-China tensions and worrisome vaccine news, has notably weighed on the popular cryptocurrency and ignited a rather significant retreat from its highest levels since July 2019 (12490).

Japanese Yen Outlook: Bank of Japan Policy to Push JPY Lower?

Tuesday 08th September, 2020

ABENOMICS HERE TO STAY

Although Japanese Prime Minister Shinzo Abe’s time may be coming to an end, his multi-pronged economic program known as ‘Abenomics’ seems here to stay for the foreseeable future. Abe’s likely successor – Chief Cabinet Secretary Yoshihide Suga – stated that he wants to “inherit the current framework” and is “highly appreciative” of the Bank of Japan’s current approach to monetary policy.

NZD/USD Rate Remains Under Pressure as RBNZ Prepares Stimulus Package

Tuesday 08th September, 2020

NEW ZEALAND DOLLAR

NZD/USD continues to pullback from the yearly high (0.6789) as the Reserve Bank of New Zealand (RBNZ) considers “a package of options” to further support the economy, and the New Zealand Dollar may face headwinds ahead of the next central bank meeting on September 22 as Governor Adrian Orr insists “that it is better to risk doing too much too soon, rather than too little too late.”

USD/CAD Rate Trades in Defined Range Ahead BoC Interest Rate Decision

Monday 07th September, 2020

CANADIAN DOLLAR

USD/CAD trades in a narrow range following the limited reaction to Canada’s Employment report, and the exchange rate may continue to consolidate ahead of the Bank of Canada (BoC) interest rate decision on September 9 as the Relative Strength Index (RSI) bounces back from oversold territory. USD/CAD appears to have reversed course ahead of the January low (1.2957) as Canada’s Employment report shows a slowdown in job growth, with the economy adding 245.8K jobs in August versus forecasts for a 250.0K print, which compares to the 418.5K expansion the month prior.

Copper Prices Poised to Extend Gains Amid Global Manufacturing Rebound

Monday 07th September, 2020

COPPER PRICES, XCU/USD, COMMODITIES

Copper’s 56% surge from the March low is showing little signs of abating, after the price of the ductile metal soared to a fresh two-year high (3.0945) at the beginning of the month on the back of rebounding global manufacturing activity and soaring Chinese demand. With price now breaking out of several bullish continuation patterns on multiple timeframes, copper appears poised to continue its recent run higher as a strengthening fundamental backdrop begins to support positive price developments.

FTSE 100 Forecast: Technical Break Opens Door For Further Losses

Friday 04th September, 2020

FTSE 100 FORECAST: TECHNICAL BREAK OPENS DOOR FOR FURTHER LOSSES

The FTSE 100 was on pace for a relatively calm Thursday session until it joined the Nasdaq 100 and other US indices in their declines as selling pressure took hold of the major markets. While the technology sector seemed to be the root of the declines, the FTSE 100 was not immune to the shift in risk appetite. Further still, the FTSE 100 suffered an arguably worse outcome from a technical perspective.

US Dollar Drives Higher Ahead of NFP Report as Volatility Spikes

Friday 04th September, 2020

USD PRICE ACTION AWAITS NONFARM PAYROLLS

The US Dollar is catching bid during Thursday trade. USD price action is gaining ground on the back of broad-based risk aversion while market sentiment deteriorates. The anti-risk move also looks underpinned by a sharp spike in the VIX Index, or fear-gauge, which generally holds a strong positive relationship with the US Dollar Index. Generally speaking, this can be explained by the US Dollar’s posturing as a top safe-haven currency.

US Dollar Analysis: EUR/USD, AUD/USD, NZD/USD Outlook

Thursday 03rd September, 2020

EUR/USD ANALYSIS

EUR/USD appears to be climbing along a newly-sprouted, modest uptrend since late July after jumping above the older slope of appreciation dating back to mid-May. The intersection of the two – labelled as “Key Juncture 2” may be critical. Breaking below that could result in a short-term pullback, followed by a brief congestive period before the broader uptrend resumes.

S&P 500 Surges Despite Weaker ADP. Nikkei 225, Hang Seng May Rise

Thursday 03rd September, 2020

S&P 500 INDEX OUTLOOK

A much weaker-than-expected ADP employment report failed to contain the risk appetite in US stocks, which extended the record-scrapping rally into a fifth consecutive month. The ADP report showed 428k private jobs were added in August, compared to earlier forecasts of 950k. The reading will probably weigh on expectations of this Friday’s non-farm payrolls report, which foresees 1.4 million new jobs created in the month of August.

USD/CAD Rate Eyes January Low as RSI Flirts with Oversold Territory

Wednesday 02nd September, 2020

CANADIAN DOLLAR

USD/CAD extends the series of lower highs and lows from the previous week as the Federal Reserve plans to “achieve inflation that averages 2 percent over time,” and the exchange rate appears to be on track to test the January low (1.2957) as the Relative Strength Index (RSI) flirts with oversold territory. The decline in USD/CAD following the Federal Reserve Economic Symposiums appears to be sputtering as it bounces back from the weekly low (1.2994), but the recent rebound in the exchange rate may prove to be an minor pullback rather than a change in trend as key market themes look poised to persist in September.

Australian Dollar Spiked Lower as Australia Enters First Recession in 29 Years

Wednesday 02nd September, 2020

AUSTRALIAN DOLLAR, RECESSION, AUSTRALIAN 2Q GDP, RBA

The Australian Dollar spiked sharply lower after second quarter GDP figures confirmed the local economy’s first recession in 29 years. The 7% contraction clearly disappointed market participants and could call the Reserve Bank of Australia into action, given the central bank forecast a quarterly decline of 6.7% in its August Statement on Monetary Policy. Moreover, Australia’s early emergence from lockdown restrictions didn’t seem to have the expected impact on economic growth, with household spending falling 12.1% and the household savings ratio climbing to 19.8%.

Euro Rate Outlook: RSI Indicator to Validate EUR/USD Breakout

Tuesday 01st September, 2020

EUR/USD RATE

EUR/USD is on the cusp of breaking out of last month’s range as it comes up against the August high (1.1966), and the Relative Strength Index (RSI) may offer a bullish signal as the indicator approaches overbought territory. EUR/USD carves a series of higher highs and lows following thekneejerk reaction to the Federal Reserve Economic Symposium, and the RSI may indicate a further appreciation in the exchange rate as it appears to be breaking out of the downward trend established in August and pushes towards overbought territory.

Japanese Yen May Fall Post Abe Resignation, AUD/USD Eyeing RBA

Tuesday 01st September, 2020

JAPANESE YEN, S&P 500, US DOLLAR, AUSTRALIAN DOLLAR, RBA

The anti-risk Japanese Yen was the worst-performing major currency over the past 24 hours. This is despite weakness in most stock sectors during the Wall Street trading session. The Dow Jones Industrial Average and S&P 500 closed -0.78% and -0.22% on Monday while the tech-heavy Nasdaq 100 managed to clock in a 0.68% increase. Weakness in the Yen may have been as a consequence from the end of last week when Japanese Prime Minister Shinzo Abe resigned for health reasons. The markets may be betting on Abe’s successor to continue his ‘Abenomics’ stimulus plan. The Nikkei 225 outperformed its APAC peers on Monday.

Nikkei, Hang Seng May Rebound with ASX 200, NBS PMI Misses

Monday 31st August, 2020

NIKKEI 225 INDEX OUTLOOK

Japanese stocks took a dive on Friday afternoon following PM Shinzo Abe’s surprising announcement of his resignation, due to ill health reasons. PM Abe is Japan’s longest servicing prime minister in recent years, and he pushed through massive monetary and fiscal stimulus together with BOJ Governor Kuroda Haruhiko since 2012, leading to a nearly three-fold rally in the Nikkei 225 stock index over the past eight years.

Markets Week Ahead: Gold, Dollar, Dow, Euro, AUD, PMIs & Job Data

Monday 31st August, 2020

Markets Week Ahead

Financial markets endured brief episodes of volatility this past week as the US Dollar gyrated against major FX peers during the Jackson Hole Symposium. A commanding risk-on tone prevailed nonetheless with US stock indices like the S&P 500 and Nasdaq advancing to new all-time highs. This was likely driven in large part by the Fed communicating a shift to average inflation targeting and an openness to ‘running things hot.’

S&P 500 Gains on Dovish Fed, Asia-Pacific Stocks May Follow

Friday 28th August, 2020

S&P 500 INDEX OUTLOOK

Fed Chairman Jerome Powell’s speech at the Jackson Hole economic policy symposium painted an accommodative monetary policy outlook, as the central bank may allow inflation to overshoot before stabilizing at a long-term target of 2%. Therefore, the Fed is likely to keep its monetary policy accommodative, in the years to come, even if the economy faces overheating and rising inflation in the recovery phase. This may lead to stronger stocks and a weaker currency. A clear cut message has also removed uncertainties in investors’ mind.

Gold Price Outlook: XAU/USD Consolidating Ahead of Day 4 of RNC

Friday 28th August, 2020

67 DAYS UNTIL THE US PRESIDENTIAL ELECTION

The spread between President Donald Trump and Democratic nominee Joe Biden has narrowed as we head into the final day of the RNC. Polling data generally shows Mr. Biden in the lead, though the difference among various agencies ranges from as low as 1 point to as high as 9. RealClearPolitics general election polling data as of August 26 shows that the spread between Trump and Biden has narrowed to around 7 points.

Canadian Dollar Outlook: CAD/JPY, CAD/CHF, USD/CAD Levels to Watch

Thursday 27th August, 2020

BOC FLAG MONETARY POLICY LIMITATIONS, CAD MAY BENEFIT

The Canadian Dollar may continue to outperform its haven-associated counterparts into the tail-end of the year, buoyed by the loosening of coronavirus restrictions, relatively resilient oil prices and the Bank of Canada’s suggestion that monetary policy may be at its effective limit. The BoC’s Deputy Governor Carolyn Wilkins warned that “central banks are likely to run out of conventional firepower if we see an economic downturn in a low-interest-rate world” at the central bank’s Monetary Policy Framework review on August 26.

Nikkei 225, Hang Seng Defensive Before Powell Speech. Nifty 50 Up

Thursday 27th August, 2020

NIKKEI 225 INDEX OUTLOOK

Japan’s Nikkei 225 index stock market is set to open higher on Thursday, following another strong US trading session. The Nasdaq 100 jumped 1.7% and S&P 500 advanced 1%, both reaching their fresh records led by a massive tech rally. This ‘Tech Fever” showed no sign of ending thus far, but the fact that the majority (56%) of the S&P 500 components failed to join the party may warrant a bit of caution. Fed Chairman JeromePowell’s speech tonight will be in the spotlight, as traders around the globe are eyeing the monetary policy guidance in light of recent changes in the inflation and job market outlook.

NZD/USD Consolidation to Persist as RSI Negates Downward Trend

Wednesday 26th August, 2020

NEW ZEALAND DOLLAR

NZD/USD appears to be stuck in a narrow range as it clings to the rebound from the August low (0.6489), and the exchange rate may continue to consolidate ahead of the Federal Reserve Economic Symposium scheduled for August 27-28 as the Relative Strength Index (RSI) looks to negate the downward trend established earlier this month. NZD/USD continues to trade within the July range as itpares the decline following the Federal Open Market Committee (FOMC) Minutes, and it remains to be seen if Chairman Jerome Powell and Co.

Nasdaq 100 Soars, but Asia-Pacific Stocks Fail to Catch Up. Gold Rises

Wednesday 26th August, 2020

NASDAQ 100 INDEX OUTLOOK

The Nasdaq 100 index shrugged off weaker-than-expected US consumer confidence data overnight and extended its record-scrapping rally. Similarly, the S&P 500 index also hit a fresh high. Despite these, the Dow Jones Industrial Average closed mildly lower. The US indices are looking overstretched from both a valuation and a technical point of view, rendering them vulnerable to a technical pullback should sentiment turn sour.

AUD/USD Pullback From 2020 High Fizzles as Fed Balance Sheet Widens

Tuesday 25th August, 2020

AUSTRALIAN DOLLAR

AUD/USD trades in a narrow range following the failed attempt to test the 2019 high (0.7295), but the Australian Dollar may continue to outperform its US counterpart as the Federal Reserve’s balance sheet climbs back above $7 trillion ahead of the Economic Symposium scheduled for August 27-28. AUD/USD has appreciated approximately 30% from the March low (0.5506) as the Reserve Bank of Australia (RBA) sticks to a yield-target program.

New Zealand Dollar Outlook: AUD/NZD, NZD/USD, NZD/JPY Levels to Watch

Tuesday 25th August, 2020

NEW ZEALAND DOLLAR, NZD/USD, NZD/JPY, AUD/NZD, TECHNICAL OUTLOOK

The New Zealand Dollar may continue to come under pressure in the near term against its major counterparts, as AUD/NZD rates consolidate in a bullish chart formation while NZD/JPY and NZD/USD eye fresh monthly lows. AUD/NZD rates kicked off August with a run of 11 consecutive up-days, as price rose just over 3% to breach key downtrend resistance extending from the 2015 high (1.1429) and push to a fresh 2-year high (1.1043).

British Pound at Risk on Brexit Gridlock, Jackson Hole Symposium in Focus

Monday 24th August, 2020

BRITISH POUND GROANS AS BREXIT TALKS FAIL

The British Pound may face heightened liquidation pressure following another unsuccessful round of EU-UK Brexit negotiations. On Friday, European chief negotiator Michel Barnier said that at this stage, an agreement with London appears unlikely. His counterpart David Frost reinforced this message, adding that “little progress” had been made with their European partners. The geopolitical complication could jeopardize early signs of economic stabilization in the UK. On Friday, markets were caught off-guard after preliminary manufacturing and services PMI data for August printed better-than-expected figures.

EUR/USD Analysis: RSI Establishes Down Trend Ahead of Fed Symposium

Monday 24th August, 2020

EUR/USD RATE

EUR/USD attempts to retrace the decline following the Federal Open Market Committee (FOMC) Minutes, but recent developments in the Relative Strength Index (RSI) warn of a potential shift in market behavior as the indicator establishes a downward trend in August. EUR/USD struggles to retain the advance from the start of the month as Federal Reserve officials discuss an outcome-based approach versus a calendar-based forward guidance for monetary policy, and the pullback from the yearly high (1.1966) may turn into a more pronounced correction as the RSI snaps the upward trend established in March after failing to produce the extreme readings seen in July.

Dow Jones Struggles to Hold Gains. Nikkei 225, Hang Seng May Rebound

Friday 21st August, 2020

DOW JONES, NIKKEI 225, HANG SENG INDEX OUTLOOK

The Dow Jones Industrial Average had a V-shaped rebound on Thursday, following the release of a worse-than-expected weekly US jobless claims figure. The data came in at 1.106 million, higher than a 0.925 million forecast. This underscores a fragile jobs market and adverse impact brought by the Covid-19 pandemic. The US Dollar index fell to 92.67 from 93.26 as investors likely adjusted the inflation prospects on the employment data, which may lead to a more dovish-biased Fed in the month to come. As the Dollar fell, precious metals and the Treasuries climbed.

AUD/USD Outlook: 2019 High Remains on Radar After RBA & FOMC Minutes

Friday 21st August, 2020

2019 HIGH REMAINS ON RADAR AFTER RBA & FOMC MINUTES

AUD/USD attempts to retrace the decline following the Federal Open Market Committee (FOMC) Minutes as it bounces back from the weekly low (0.7136), and current market conditions may keep the exchange rate afloat as the crowding behavior in the US Dollar looks poised to persist over the remainder of the month. AUD/USD pulled back from a fresh 2020 high (0.7276) as the FOMC Minutes foreshadowed a change in the monetary policy outlook, with the Federal Reserve mulling an outcome-based approach versus a calendar-based forward guidance as “a number of participants noted that providing greater clarity regarding the likely path of the target range for the federal funds rate would be appropriate at some point.”

AUD/USD Rates May Rise as Iron Ore Prices Soar to Multi-Year High

Thursday 20th August, 2020

TAPERING COVID-19 CASE NUMBERS BUOYING SENTIMENT

The Australian Dollar looks set to continue outperforming its major counterparts on the back of falling Covid-19 case numbers in Victoria, Australia’s second-most populous state, as well as surging commodity prices and the Reserve Bank of Australia’s wait-and-see approach to monetary policy. Victoria appears to be “going in the right direction” in its battle against the highly infectious coronavirus, according to Chief Health Officer Brett Sutton, as the state recorded its lowest daily case increase in more than five weeks on August 19.

Nasdaq Falls After Fed Minutes. ASX 200, Straits Times May Open Lower

Thursday 20th August, 2020

NASDAQ INDEX OUTLOOK

The Nasdaq Composite fell from its record high following disappointing Fed meeting minutes, in which the central bank painted a challenging picture of the economic recovery while refrained from taking immediate control of the Treasury yield curve. The US Treasury yield curve rose across all maturities, leading to a surge in the US Dollar Index. As the USD tends to exhibit negative correlation with the US stock market, shares on the Wall Street fell from their all-time highs. Furthermore, weakness in equities boosted demand for haven-linked assets such as the US Dollar.

AUD/USD Eyes Key Ceiling as US Dollar Slides Deeper into 2-Year Low

Wednesday 19th August, 2020

AUD/USD, AUSTRALIAN DOLLAR, US DOLLAR, STOCK MARKETS

Wall Street equity markets mostly closed higher, with the S&P 500 and Nasdaq indexes up 0.23 and 0.73 percent, respectively. The latter closed at another all-time high and helped cement the narrative that the technology sector has disproportionately outperformed its peers in the pandemic. Meanwhile, the industrial-leaning Dow Jones closed 0.24 percent lower, with the overwhelming majority of losses in the energy sector.

NZD/USD Rates Poised to Rise Despite Extension of Covid-19 Restrictions

Wednesday 19th August, 2020

COVID-19 OUTBREAK THREATENS ECONOMIC RECOVERY

After 102 days coronavirus-free, a fresh outbreak of the highly infectious virus in Auckland, New Zealand’s largest city, has forced Prime Minister Jacinda Ardern to reimpose economically devastating lockdown measures and delay the general election by four weeks. The island-nation’s response to the initial outbreak in March was touted as one of the best in the world and had allowed New Zealanders to return to a level of normalcy over the past three months.

Silver Price Outlook: Bull Flag Pattern Emerges Amid Rebounding Bond Yields

Tuesday 18th August, 2020

SILVER, XAG/USD, COMMODITIES, MONETARY POLICY, FOMC, US TREASURY

I think its fair to say that 2020 has proven to be a breakout year for silver as it stepped out of the shadows of its more-popular gold counterpart, surging as much as 150% from its yearly low in comparison to bullion’s 43% climb. Record low interest rates, accommodative monetary policy and extraordinary fiscal stimulus have buoyed precious metal prices and created the perfect environment for non-yielding assets to outperform.

Gold Prices Try to Reclaim $ 2000, DAX and Hang Seng Higher

Tuesday 18th August, 2020

GOLD, DAX 30, HANG SENG INDEX OUTLOOK

A weakening US Dollar is sending gold prices higher, after an extremely volatile week. Gold prices surged fiercely on Monday to US$ 1,989 before cooling off slightly to US$1,980 this morning. The overall trend remains bullish on the daily chart, with the 20-, 50- and 100-Day Simple Moving Average (SMA) lines trending up nicely.

EUR/USD Rate Approaches 2020 High as RSI Retains Upward Trend

Monday 17th August, 2020

EUR/USD RATE APPROACHES 2020 HIGH AS RSI RETAINS UPWARD TREND

EUR/USD preserves the range from earlier this month as it failed to test the August low (1.1696) during the previous week, and current market conditions may keep the exchange rate afloat as the Relative Strength Index (RSI) continues to track the upward trend established in March. EUR/USD retraces the pullback from the 2020 high (1.1916) even though the RSI showed a textbook sell signal last week, and recent price action suggests the move below 70 was indicative of a potential exhaustion in the bullish behavior rather than a change in trend as the oscillator bounces back from trendline support.

US Dollar Fundamental Outlook: USD/IDR, USD/PHP, USD/SGD, USD/MYR

Monday 17th August, 2020

US DOLLAR ASEAN WEEKLY RECAP

The haven-linked US Dollar generally traded lower against ASEAN currencies this past week as the Singapore Dollar, and Philippine Peso gained ground. The Malaysian Ringgit was little changed as well as the Indian Rupee. Global market sentiment improved, though by what is appearing to be at an increasingly slower pace. The S&P 500 struggled to maintain a push into all-time high territory, rising 0.68%. A notable standout this past week was the Indonesian Rupiah, which weakened 1.16% against the US Dollar. Currencies from emerging markets can be sensitive to capital flows.

Dow Jones Hits Key Resistance, Nikkei 225 Clears its Own. Dax 30 Ranges

Friday 14th August, 2020

DOW JONES INDEX OUTLOOK

Better-than-expected US weekly jobless claims failed to lift the Wall Street equities overnight, with energy (-1.47%), financials (-0.96%), communication services (-0.43%) and industrials (-0.37%) among the worst performers. The share price of Cisco Systems plunged 11.2% after the release of disappointing 2Q results. Some 963k people filed jobless claims last week, marking a second weekly decline since end July. This is also the lowest reading seen since 13th March 2020. Improving job market sentiment points to perhaps a brighter inflation outlook, which may explain rising longer-dated Treasury yields over the past two weeks.

USD/JPY Price Analysis: Dollar-Yen Shorts Surge, Yields Eyed

Friday 14th August, 2020

US DOLLAR TO JAPANESE YEN OUTLOOK

USD/JPY has been on a tear higher since last Friday. In addition to a stretch of broad-based JPY weakness, the US Dollar appears to be rallying on the back of an upbeat July 2020 NFP report, as well as surging Treasury yields. Spot USD/JPY price action now trades higher by about 100-pips month-to-date. That said, retail FX traders have ramped their short positioning on the Dollar-Yen over the last 24-hours. This is indicated by the latest IG Client Sentiment Report, which details a 16% rise in USD/JPY shorts on the day as discussed in the webinar recording above.

Australian Dollar Dips Lower Despite Better-Than-Expected Employment Data

Thursday 13th August, 2020

AUD/USD, RBA, STAGE-FOUR RESTRICTIONS, COVID-19, AUSTRALIAN UNEMPLOYMENT RATE

The Australian Dollar rose against its major counterparts after the unemployment rate nudged 0.1% higher, beating expectations of a 0.4% increase. This is as the local economy added 114,700 jobs in July and the participation rate jumped to 64.7%. The surprising increase in employment suggests that the fallout from the re-imposition of stage-three lockdown restrictions in Victoria may not have been as adverse as first thought.

AUD/USD & ASX 200 Forecast: Can Aussie Stocks Break Higher?

Thursday 13th August, 2020

AUD/USD & ASX 200 FORECAST: CAN AUSSIE STOCKS BREAK HIGHER?

AUD/USD and the ASX 200 have witnessed unequal recoveries since the covid crash, with the currency pair establishing gains well above February levels while the equity market remains ensnared at resistance. While both share a notable correlation with US indices, the current state of the two Aussie markets reveals the Dow Jones and AUD/USD are more in tune than that of the Dow and ASX, leaving the latter with some catching up to do.

New Zealand Dollar Plunges As RBNZ Boosts Large-Scale Asset Purchase Program

Wednesday 12th August, 2020

NZD/USD, NEW ZEALAND DOLLAR, RBNZ INTEREST RATE DECISION, LSAP

The New Zealand Dollar capitulated after the Reserve Bank of New Zealand announced the expansion of “the Large-Scale Asset Purchase (LSAP) programme up to $100 billion” and flagged the potential deployment of “additional monetary instruments”. Inclusive of foreign asset purchases and a negative OCR. Although the RBNZ kept the official cash rate steady at 0.25%, it seems as though this could be but temporary in nature as committee members “agreed any move to negative rates could be effective”.

Dow Jones, Nasdaq 100, S&P 500 Forecast: Stocks Slip As Biden Announces VP

Wednesday 12th August, 2020

DOW JONES, NASDAQ 100, S&P 500 PRICE OUTLOOK

The Dow Jones, Nasdaq 100 and S&P 500 fell sharply into the close to round out an unusual day of price action. Slipping gold and silver prices, a US Dollar whipsaw and rising yields were some of the other notable developments, all of which took place earlier in the session. The catalyst behind these moves was widely argued, but an announcement from Democratic Presidential nominee Joe Biden may take center stage heading into the latter half of the week.

Natural Gas Price At Risk Of Pullback Amid European Storage Concerns

Tuesday 11th August, 2020

NATURAL GAS, OPEC+, EIA, COMMODITIES

Natural gas prices have surged over 23% since the start of the month, erasing yearly losses and registering overbought readings on the RSI for the first time since November 2019. Warmer medium to long-term weather forecasts and a record US natural gas power burn at the end of last month helped underpin the commodity, alongside resilient crude oil prices and a significantly weaker US Dollar. The US Energy Information Administration (EIA) reported that “natural gas consumed by electric power plants (power burn) set a record high of 46.7 billion cubic feet on Monday, July 27” on the back of “high electricity demand for space cooling” and relatively high levels of nuclear power plant outages.

S&P 500 Faces Key Chart Barrier, Hang Seng Index Looks for Support

Tuesday 11th August, 2020

S&P 500 INDEX OUTLOOK

The S&P 500 index stock benchmark ended higher on Monday, lifted by cyclical-sensitiveenergy(+3.08%), industrials (+2.43%) and materials (+0.99%) sectors, whereas communication services (-0.46%), healthcare (-0.34%) and information technology (-0.33%) were lagging behind. Boeing surged 5.52% last night to US$ 179.41, sending Dow Jones 1.3% higher. Boeing alone contributed 1% of Dow’s total gain. The US Transportation Security Administration announced that over 831k travelers were passed through US airports on Sunday – nearly a tenfold compared to the April level. Airline companies and energy firms were largely underpinned by favorable news.

NZD/USD Outlook Hinges on RBNZ Amid Failure to Test January High

Monday 10th August, 2020

NEW ZEALAND DOLLAR

NZD/USD appears to be stuck in a narrow range following the failed attempts to test the January high (0.6733), and the exchange rate may continue to consolidate ahead of the Reserve Bank of New Zealand (RBNZ) interest rate decision as the central bank is expected to keep the official cash rate (OCR) at the record low of 0.25%. NZD/USD struggles to retain the advance from the start of the month even though the crowding behavior in the US Dollar persist, and lack of momentum to take out the July high (0.6716) may keep the exchange rate under pressure as the Relative Strength Index (RSI) appears to be deviating with price, with the indicator establishing a bearish trend following the extreme reading in June.

Markets Week Ahead: US Dollar, Gold , Nasdaq 100, US-China Woes. Stimulus?

Monday 10th August, 2020

Markets Week Ahead: US Dollar, Gold , Nasdaq 100, US-China Woes. Stimulus?

Market sentiment ended on a somewhat cautious note Friday as the tech-heavy Nasdaq 100 fell about 0.9%. The Dow Jones and S&P 500 erased losses however. The sentiment-linked Australian and New Zealand Dollars came under selling pressure as the haven-linked US Dollar and Japanese Yen managed to rise. Even gold prices succumbed to selling pressure after pronounced gains. All eyes have lately been on technology companies for driving some of the most aggressive gains in global equities since late March. Last week, US-China tensions may have played a key role. The former moved to ban transactions with key Chinese tech companies WeChat and TikTok. Tencent, the owner of WeChat, saw its share price at one point decline as much as 10.5% on Friday.

Nasdaq 100 Extends Rally, AUD/USD at Key Level Ahead of RBA Statement

Friday 07th August, 2020

Australian Dollar, RBA, Nasdaq 100, AUD/USD

Wall Street stocks closed again in the green, with the Dow Jones, S&P 500 and Nasdaq indices up 0.68, 0.64, and 1.00 percent, respectively, for the day. The information technology and communication services sub-categories in the S&P 500 and Dow Jones benchmarks contributed the most to each respective index’s rise. This may help explain why the tech-leaning Nasdaq was the best performing benchmark among its peers.

EUR/USD Rally Continues to Be Accompanied by Extreme RSI Reading

Friday 07th August, 2020

EUR/USD RALLY CONTINUES TO BE ACCOMPANIED BY EXTREME RSI READING

EUR/USD trades to fresh 2020 high (1.1916) ahead of the update to the US Non-Farm Payrolls (NFP) report, and the extreme reading in the Relative Strength Index (RSI) is likely to be accompanied by a further appreciation in the exchange rate like the behavior seen in June. EUR/USD extends the series of higher highs and lows from earlier this week as RSI sits in overbought territory, and it remains to be seen if the update to the NFP report will influence the exchange rate as the US economy is anticipated to add nearly 1.6 million jobs in July.

USD/CAD Breaks Down From June Range While RSI Approaches Oversold Zone

Thursday 06th August, 2020

CANADIAN DOLLAR

USD/CAD takes out the March low (1.3315) ahead of the key data prints coming out of both the US and Canada, and an oversold reading in Relative Strength Index (RSI) is likely to be accompanied by a further depreciation in the exchange rate like the behavior seen in June. USD/CAD carve a series of lower highs and lows as it breaks down from the June range, but it remains to be seen if the bearish price action will persist as Canada is expected to add 400K jobs in July, while the US Non-Farm Payrolls (NFP) report is anticipated to show a 1.6 million jump in employment during the same period.

Euro at Risk on EU Digital Sovereignty Stance, USD Eyes Stimulus Talks

Thursday 06th August, 2020

EURO AT RISK ON EU DIGITAL POLICY STANCE

The Euro may endure the brunt of the European Union’s policy stance on digital sovereignty as the bloc risks angering China and the United States, resulting in fighting a digital war on two fronts. The latter last year expressed discontent over France’s attempt to implement a digital tax that subsequently led to threats of tariffs against goods ranging from porcelain to luxury handbags. The Euro subsequently suffered with local stocks. The EU has also experienced frequent run-ins with technology giants like Google, Apple, Facebook and Amazon – shorthanded as GAFA – that have damaged cross-Atlantic relations.

Gold Price Blasts Through $2000 to Mark Fresh Record High

Wednesday 05th August, 2020

GOLD PRICE BLASTS THROUGH $2000 TO MARK FRESH RECORD HIGH

The price of gold blasts through the psychologically important $2000 mark to tag a fresh record high ($2026), and the extreme reading in the Relative Strength Index (RSI) may continue to be accompanied by higher gold prices like the behavior seen earlier this year. The price of goldcontinues to trade to fresh yearly highs during every single month so far in 2020, and the bullish price action may persist over the remainder of the week as the extreme reading in the RSI coincide with the crowding behavior in the US Dollar.

New Zealand Dollar Rallies on Stellar Jobs Data, AUD/NZD to Reverse?

Wednesday 05th August, 2020

NEW ZEALAND DOLLAR, AUD/NZD, NEW ZEALAND JOBS DATA

Wall Street traded ended on a happy note with the Dow Jones, S&P 500 and Nasdaq indices up 0.62, 0.36 and 0.35 percent, respectively. The cycle-sensitive Australian and Canadian Dollars rallied with stocks at the expense of the haven-linked US Dollar. The risk-on mood may be the result of hope surrounding ongoing congressional discussions about another coronavirus stimulus package. However, investors pricing of what appears to be the expectation of another timely ratification and implementation creates an asymmetrical risk if talks are delayed by a stalemate.

US Dollar Fundamental Outlook: USD/SGD, USD/IDR, USD/MYR, USD/PHP

Tuesday 04th August, 2020

US DOLLAR ASEAN WEEKLY RECAP

The haven-linked US Dollar extended losses against its ASEAN counterparts last week, with the Singapore Dollar, Malaysian Ringgit and Philippine Peso seeing some of the best performance. The Indonesian Rupiah and the Indian Rupee were little-changed – see chart below. Market sentiment spent most of the past five trading sessions broadly improving, and this is what ASEAN FX paid most attention to – as expected. All eyes were on the Federal Reserve as the central bank left interest rates at near-zero levels while Chair Jerome Powell hinted for the need in a prolongment of accommodative policy measures. The Fed highlighted that this is due to the considerable risks the coronavirus poses.

ASX 200 May Rise on Strong US Leads, RBA Meeting in Focus

Tuesday 04th August, 2020

ASX 200, STRAITS TIMES INDEX OUTLOOK

Futures markets point to a rosy start of Australia’s ASX 200 index stock benchmark, which may open 1.4% higher on Tuesday. A couple of positive signs were seen in the Wall Streets last night, including a significant decrease in Covid-19 positivity rates in California and Arizona. The Nasdaq 100 surged 1.47% to a fresh high after President Trump imposed a September 15 deadline for the sale of TikTok, a popular social networking service owned by a Chinese firm, to an American company. On the macro front, the US, Europe and China posted a string of better-than-expected manufacturing PMI readings. Caixin China manufacturing PMI jumped to 52.8 in July, reaching its highest level seen in nearly a decade.

Bitcoin, Ethereum Outlook Bullish as US Dollar Demand Fades

Tuesday 28th July, 2020

BITCOIN, ETHEREUM, US DOLLAR, BTC/USD, ETH/USD

BTC/USD has surged over 12 percent in one-day, the largest rise in a 24-hpur period since March 19. Bitcoin prices traded sideways for a little over a month after breaking below the mid-March uptrend. The cryptocurrency is now trading above two key technical swing-highs at 10540.49 and 10953.00, which if met with follow-through could inspire additional buyers to enter the market.Beyond this range lies another formidable two-tiered resistance range marked by the 11975.03-12320.40 parameters. Friction at the lower bound could cause BTC/USD to retreat to 10953.00.

ASX 200 Attempts 6100 as Mining Stocks Rise, Nikkei 225 Edging Higher

Tuesday 28th July, 2020

ASX 200 Attempts 6100 as Mining Stocks Rise, Nikkei 225 Edging Higher

Australia’s ASX 200 (ASX) index stock market benchmark may open mildly higher on Tuesday, according to the futures market. As US technology stocks led a decent rebound in US local equity indices overnight, that may send index futures prices higher across the Asia-Pacific region. As the ASX 200 index lingered around a key resistance zone in the 6,000 – 6,100 area, with Covid-19resurgence risks serving to contain risk appetite. A strong rally in gold prices this week so far propelled Australia’s mining sector, which gained 1.70% on Monday. Gold mining stocks jumped 4.27% on average.

EUR/USD Rate Trades to Fresh 2020 High Ahead of Fed Rate Decision

Monday 27th July, 2020

EUR/USD RATE

EUR/USD trades to a fresh 2020 high (1.1699) ahead of the Federal Reserve interest rate decision on July 29, and current market conditions may keep the exchange rate afloat as the Relative Strength Index (RSI) sits in overbought territory. EUR/USD has taken out the March high (1.1495) as a bull flag formation panned out in July, with the RSI helping to validate the continuation pattern as the oscillator bounced along trendline support to preserve the upward trend from March. In turn, EUR/USD may continue to carve a series of higher highs and lows as long as the RSI holds above 70, and the bullish price action may persist going into the Federal Open Market Committee (FOMC) meeting as the appreciation in the exchange rate continues to be accompanied by crowding behavior in the US Dollar.

USD, SGD, IDR, MYR, PHP Brace for Tech Earnings, Eyeing Nasdaq 100

Monday 27th July, 2020

US DOLLAR, SINGAPORE DOLLAR, INDONESIAN RUPIAH, MALAYSIAN RINGGIT, PHILIPPINE PESO

The anti-risk US Dollar extended its slide against ASEAN currencies such as the Singapore Dollar, Indonesian Rupiah, Malaysian Ringgit and the Philippine Peso last week. In Southeast Asia, the Indian Rupee also managed to gain ground against the USD – see chart below. It was a relatively light week for economic event risk, both in the ASEAN region and externally. As such, the focus for the Greenback against currencies from developing markets remained on risk trends. A deterioration in market mood into the end of last week likely trimmed weakness in the US Dollar. External factors, such as worse-than-expected US initial jobless claims and escalating US-China tensions, may have played a role here. The latter two nations exchanged threats to close consulates in Houston and Chengdu.

Gold Rally Eyes Record High Price as RSI Pushes Into Overbought Zone

Friday 24th July, 2020

GOLD RALLY EYES RECORD HIGH PRICE AS RSI PUSHES INTO OVERBOUGHT ZONE

The price of gold extends the series of higher highs and lows from earlier this to trade to a fresh 2020 high ($1898), and the bullish price action may persist ahead of the Federal Reserve interest rate decision on July 29 as the Relative Strength Index (RSI) pushes deeper into overbought territory.

S&P 500 Slips, Nasdaq Tumbles as Stocks Wince at Jobless Claims

Friday 24th July, 2020

S&P 500 INDEX, NASDAQ PRICE EDGE LOWER AS RISING JOBLESS CLAIMS PUTS PRESSURE ON STOCKS

Stocks came under pressure on Thursday and finished the trading session near intraday lows. Investors tapped the breaks on the risk rally as market sentiment seemingly waned in response to disappointing weekly jobless claims released prior to the New York opening bell. The S&P 500 slid 1.2% while the Nasdaq spiked 2.7% lower gauged by e-mini futures prices.

Yen Price Forecast: USD/JPY, AUD/JPY, CAD/JPY Charts & More

Thursday 23rd July, 2020

JAPANESE YEN FORECAST: USD/JPY, AUD/JPY, CAD/JPY – CHARTS TO WATCH

The Japanese Yen has traded sideways in wide range over the last several weeks judging by the JXY Index. On the surface, this appears owed to a recent consolidation in spot USD/JPY even as the US Dollar implodes. Looking beyond USD/JPY performance, however, a narrative underscoring broader Japanese Yen weakness emerges. This largely follows sustained selling pressure across safe-haven currencies, like the Yen, as investor sentiment and risk appetite continue to improve. That said, what might steer the direction of JPY price action going forward?

NZD/USD Rate Approaches 2020 High as Net Short Exposure Persists

Thursday 23rd July, 2020

NEW ZEALAND DOLLAR

NZD/USD trades to a fresh monthly high (0.6689) as the US Dollar continues to weaken against all of its major counterparts, and current market conditions may produce an extreme reading in the Relative Strength Index (RSI) as the indicator now flirts with overbought territory. NZD/USD appears to be on track to test the 2020 high (0.6733) as the New Zealand Dollar outperforms most of its major counterparts in July, and the crowding behavior in the US Dollar may keep the exchange rate afloat as the IG Client Sentiment report shows retail traders are still net-long USD/CHF, USD/JPY and USD/CAD, while the crowd remains net-short GBP/USD, NZD/USD, AUD/USD and EUR/USD.

New Zealand Dollar Analysis: EUR/NZD, NZD/CAD, NZD/JPY

Wednesday 22nd July, 2020

EUR/NZD OUTLOOK

EUR/NZD has been on a downtrend since late March and appears to now be trading in a compression zone between descending resistance and stubborn support at 1.7172. The pair recently just brushed up against the slope of depreciation, potentially opening the door to retesting the floor. Breaking below the latter may amplify bearish sentiment and accentuate EUR/NZD’s losses.

Copper Price Outlook: XCU/USD May Fall as RSI Diverges with Price

Wednesday 22nd July, 2020

COPPER, XCU/USD, COMMODITIES, CHILEAN EXPORTS, CHINESE DEMAND

The price of copper has long been used as a gauge of world economic growth, with rising prices tending to suggest an increase in global manufacturing and construction. However, glancing at the most recent manufacturing PMI numbers from the United States (49.8), the Euro-zone (47.4), the United Kingdom (50.1), Canada (47.8) and Australia (51.5) hardly reflects a robust recovery in global manufacturing activity.

ASX 200 Faces Resistance at 6100, Nikkei 225 Edging Higher

Tuesday 21st July, 2020

ASX 200, NIKKEI 225, HANG SENG INDEX OUTLOOK

Australia’s ASX 200 (ASX) index stock market benchmark may climb on Tuesday, according to the futures market. As strong rally in US technology stocks overnight underpinned market confidence, sending index futures prices higher across the Asia-Pacific region. As the ASX 200 index lingered around a key resistance zone in the 6,000 – 6,100 area, growing Covid-19 concerns may serve to cool down risk appetite in the short term. Victoria had 275 new cases and one death, and NSW added 20 new cases. This points to perhaps tighter border control and stricter social distancing measures in the weeks to come, which is unfriendly to an economic recovery.

Indian Rupee Gains on US Tariff Rollback Proposal, Nifty 50 to Follow?

Tuesday 21st July, 2020

INDIAN RUPEE, USD/INR, NIFTY 50, US-INDIA TRADE, CORONAVIRUS

The Indian Rupee, like most currencies, has been capitalizing on weakness in the haven-linked US Dollar as global market sentiment continues to rebound. The Nifty 50, India’s benchmark stock index, is also no exception. Yesterday, it extended the rebound from earlier this year, closing at its highest since early March. Recent gains may have been compounded by US-India trade news. On Monday, India reportedly asked the US for concessions on generic drugs it ships there. In exchange, it offered to roll back tariffs on certain US agricultural products.

Euro in Limbo on EU Summit. GBP & USD Brace for Brexit & US Fiscal Debate

Monday 20th July, 2020

EURO GROANS ON FISCAL DIVIDE AT EU SUMMIT

Last week, 27 EU leaders convened to discuss the implementation of a EUR750 billion stimulus package with 500b coming the form of grants and 250b in loans. Heading into the meeting, the Euro continually rose throughout the week against its G10 peers on what appeared to be the assumption that a consensus will be reached in time. While Europe has been afflicted with division, history has shown that when the stakes are high enough, differences will be put aside for the sake of political preservation.

AUD/USD Rate to Stay Afloat as RBA Refrains from Bond Purchases

Monday 20th July, 2020

AUD/USD RATE OUTLOOK MIRED BY FAILURE TO TEST 2020 HIGH

AUD/USD trades near the monthly high monthly high (0.7001) ahead of the Reserve Bank of Australia (RBA) Minutes, and the statement may keep the exchange rate afloat as the “Bank has not purchased government bonds for some time.” AUD/USD appears to be stuck in a narrow range following Australia’s Employment report, which showed the rebound in job growth largely driven by part-time positions (+249.0K), while full-time jobs narrowed (-38.1K) for the fourth consecutive month in June.

US Dollar May Reclaim Lost Ground vs AUD as Haven Demand Spikes

Friday 17th July, 2020

AUSTRALIAN DOLLAR, US DOLLAR, AUD/USD, CORONAVIRUS

Stocks on Wall Street ended the day on a gruesome note with the Dow Jones, S&P 500 and Nasdaq indices closing 0.50, 0.34, and 0.73 percent, respectively. Technology-leaning stocks were hit the hardest, which helps explain why the Nasdaq index was deepest in the red relative to its benchmark peers. In the S&P 500, information technology led in losses by sector, specifically under Software & Services.

BTC Price Outlook: Bitcoin Chart Coiled, Pennant Breakout Eyed

Friday 17th July, 2020

BITCOIN FORECAST: BTC PRICE ACTION COILED LIKE A SPRING SET TO SNAP

Bitcoin performance is on pace for another strong year with BTC prices trading more than 25% higher since January’s opening level. After succumbing to a sharp selloff alongside practically all asset classes late February and early March, which came amid peak market turmoil induced by the coronavirus pandemic, the price of Bitcoin staged an incredible 100% rally.

AUD/USD, ASX 200 Plunge as Jobless Rate Surges to 22-Year High

Thursday 16th July, 2020

AUD/USD, ASX 200 PLUNGES ON LOCAL EMPLOYMENT DATA

The Australian Dollar plunged as the unemployment rate jumped to 7.4% - the highest levels since 1998 - despite the economy adding 210,800 jobs in June. Although local employers hired at a record clip in June, full-time roles notably decreased (-38.1K) at the hands of part-time jobs (+249K), suggesting the uncertain economic outlook is forcing businesses to remain relatively fluid as a ‘second wave’ of coronavirus infections threaten to halt reopening efforts.

USD/CAD Rate Eyes June Low on Wait-and-See BoC Policy

Thursday 16th July, 2020

USD/CAD RATE EYES JUNE LOW ON WAIT-AND-SEE BOC POLICY

USD/CAD extends the pullback from the monthly high (1.3646) as the Bank of Canada (BoC) retains the current policy in July, and the exchange rate may continue to give back the advance from the June low (1.3315) as the central bank largely endorses a wait-and-see approach for monetary policy. USD/CAD approaches the July low (1.3491) as the BoC pledges to “hold the policy interest rate at the effective lower bound,”

Gold Price Forecast: Extreme RSI Reading to Offer Bullish Signal

Wednesday 15th July, 2020

GOLD PRICE FORECAST: EXTREME RSI READING TO OFFER BULLISH SIGNAL

The price of gold appears to be stuck in a narrow range after trading to a fresh 2020 high ($1818) earlier this month, but the Relative Strength Index (RSI) may offer a bullish signal if the indicator produces the extreme readings seen in February. The price of goldhas traded to fresh yearly highs during every single month so far in 2020, and the bullish behavior may persist even though the Federal Reserve’s balance sheet slips below $7 trillion in July as the RSI clings to the upward trend from June and continues to flirt with overbought territory.

Silver Price Eyes Fresh 2020 Highs on US Dollar Weakness

Wednesday 15th July, 2020

SILVER PRICES, COMMODITIES, FOMC, FEDERAL RESERVE BALANCE SHEET, M1 MONEY STOCK

2020 may prove to be a breakout year for silver prices as an unprecedented amount of fiscal and monetary stimulus fuels the metal’s surge to fresh yearly highs. The injection of liquidity into financial markets over the last 6 months has been extreme, with a measure of the money supply – M1 money stock – surging above $5 trillion, off the back of an extraordinary response from the Federal Reserve.

EUR/USD Rates to Watch Ahead of ECB Interest Rate Decision

Tuesday 14th July, 2020

EUR/USD RATES TO WATCH AHEAD OF ECB INTEREST RATE DECISION

EUR/USD trades to a fresh monthly high (1.1375) ahead of the European Central Bank (ECB) interest rate decision, and a bull flag formation appears to be unfolding as the Relative Strength Index (RSI) continues to track the bullish trend from earlier this year. EUR/USD appears to be on track to test the June high (1.1423) as the ECB is expected to retain the current policy on July 16, and the central bank may endorse a wait-and-see approach for the second half of 2020 as fiscal authorities attempt to draw up a COVID-19 recovery fund.

US Dollar, USD/SGD Gain. Singapore Enters Recession on Record GDP Drop

Tuesday 14th July, 2020

SINGAPORE DOLLAR, USD/SGD, US DOLLAR, GDP, STRAITS TIMES INDEX

Singapore’s economy has officially entered a technical recession, whereby a nation (or in this case city-state) experiences two consecutive quarters of negative GDP. The Singapore Dollar reacted negatively, depreciating against the US Dollar as the data crossed the wires. Singapore saw its economy shrink -41.2% quarter-over-quarter in Q2, following a -3.3% reduction in the first quarter. This is as year-on-year GDP clocked in at -12.6% in Q2 versus -0.3% prior.

US Dollar Fundamental Outlook: USD/SGD, USD/MYR, USD/IDR, USD/PHP

Monday 13th July, 2020

US DOLLAR ASEAN WEEKLY RECAP

The anti-risk US Dollar traded lower against its ASEAN counterparts last week such as the Singapore Dollar, Malaysian Ringgit, Indonesian Rupiah and Philippine Peso. This is market mood cautiously improved globally and around the Asia Pacific region. The latter was particularly bolstered as China cheerlead local stock markets.

USD/CAD Rate Outlook Hinges on Bank of Canada (BoC) Forward Guidance

Monday 13th July, 2020

CANADIAN DOLLAR

USD/CAD trades within the June range as it snaps the ascending channel formation carried over from the previous month, and the exchange rate may continue to consolidate ahead of the Bank of Canada (BoC) interest rate decision on July 15 as the central bank is expected to retain the current policy.

Macro Matters: Gold, USD, Equities Pullback - More in Store?

Friday 10th July, 2020

S&P 500, USD, GOLD PRICE ANALYSIS

We’re now just over a week into Q3 and already some items of interest have begun to show around global markets. While headlines remain a mess with heavy politicization of the coronavirus, which can bring a massive impact onto market expectations, the trends across risk markets have remained fairly clear. Stocks have been very strong since the March lows, and given the expectation for the FOMC to remain very loose and passive in the effort of offsetting coronavirus-slowdown risks, Gold prices have driven up to a fresh eight-year-high.

Stock Market Third Quarter Forecast: Covid Concerns & Fed Policy to Clash

Friday 10th July, 2020

STOCK MARKET THIRD QUARTER FORECAST: COVID CONCERNS

Equity markets enjoyed a remarkable recovery in the second quarter, recouping much of the ground they lost in the initial coronavirus crash. As the third quarter begins, many of the same themes that dominated stock market price action over the last three months look poised to continue their reign for the time being. Therefore, market sentiment and, in turn, stock prices will continue to monitor coronavirus cases, lockdown procedures and the resultant policy adaptations from the Federal Reserve.

NZD/USD Eyes Yearly High, AUD/NZD Reversal Pattern May MArk Top

Thursday 09th July, 2020

ARDERN’S BALANCING ACT WITH CHINA MAY PROVE FRUITFUL

New Zealand’s economic dependence on China has seen Prime Minister Jacinda Ardern break ranks with her fellow members of the “Five Eyes” Alliance – Australia, Canada, the United Kingdom and the United States - refusing to sign the joint statement condemning Beijing’s imposition of the national security law in Hong Kong. Although the Prime Minister released a separate statement condemning the encroachment, it is becoming increasingly evident that New Zealand wants to ensure the relationship with its biggest trading partner remains fruitful and robust.

EUR/USD Rate Eyes June High as Bullish RSI Trend Remains Intact

Thursday 09th July, 2020

EUR/USD RATE EYES JUNE HIGH AS BULLISH RSI TREND REMAINS INTACT

EUR/USD extends the advance from earlier this week to trade to a fresh monthly high (1.1352), and a bull flag formation may unfold over the coming days as the Relative Strength Index (RSI) continues to track the bullish trend from earlier this year. EUR/USD approaches the June high (1.1423) even though the European Commission downgrades the economic outlook for the Euro Area, with the group now forecasting an 8.7% contraction in 2020 versus an initial forecast for a 7.7% decline.

ASX 200 Outlook Hinges On Fiscal Support As Covid-19 Cases Surge

Wednesday 08th July, 2020

MELBOURNE PLACED UNDER STAGE 3 LOCKDOWN AS COVID-19 CASES SURGE

An explosion of coronavirus cases in Melbourne’s inner suburbs has forced the hand of Victorian Premier Daniel Andrews, re-imposing state-wide stage 3 lockdowns on Australia’s second biggest city, for the next six weeks. Estimated to cost the local government $1 billion a week, these measures were certainly not taken lightly as Andrews apologized for finding “ourselves in this position” whilst stressing that “getting this virus and dying from it is very onerous too”.

New Zealand Dollar Analysis: NZD/CHF, NZD/CAD, AUD/NZD

Wednesday 08th July, 2020

NZD/CHF OUTLOOK

NZD/CHF is struggling to stay above the upper layer of a narrow but fortified congestive zone between support at 0.6052 and resistance at 0.6165. The pair had previously attempted to break higher in early June but was rejected by resistance at 0.6280 with a myriad of ceilings above it still left to clear. Failure to break above 0.6165 may only reinforce a bearish outlook considering how many layers of resistance NZD/CHF would have to break through before signaling a meaningful trend change.

S&P 500 Up as Virus Growth Slows, Asia-Pacific Stocks to Open Higher

Tuesday 07th July, 2020

S&P 500, NIKKEI 225, HANG SENG INDEX OUTLOOK

The S&P 500 index climbed to 3,184 on Tuesday morning, approaching a key resistance level which it failed to break above in early June. Investors are cheering a big rally in China and Hong Kong, and US-listed China technology firms. Alibaba (+7.33%) and Baidu (+7.81%) outperformed. Tesla’s whopping 13.48% gain led the Nasdaq Composite to hits an all-time high of 10,433. Investors are also shrugging off the virus situation as the Covid-19 case growth rate in the Sun Belt states – Florida, Arizona and Texas – fell below its seven-day average.

EUR/USD Bull Flag Still on Radar as RSI Preserves Bullish Trend

Tuesday 07th July, 2020

EUR/USD BULL FLAG STILL ON RADAR AS RSI PRESERVES BULLISH TREND

EUR/USD breaks out of a narrow range to trade to a fresh monthly high (1.1345), and a bull flag formation may unfold over the coming days as the Relative Strength Index (RSI) continues to track the bullish trend from earlier this year. EUR/USD appears to be on track to test the June high (1.1423) following the limited reaction to the US Non-Farm Payrolls (NFP) report as the US Dollar depreciates against all of its major counterparts since the start of July.

NZD/USD Rate Approaches June High while Net-Short Interest Jumps

Monday 06th July, 2020

NZD/USD RATE APPROACHES JUNE HIGH WHILE NET-SHORT INTEREST JUMPS

NZD/USD appears to be on track to test the June high (0.6585) as it extends the advance from the start of July, with the appreciation in the exchange rate fueling a jump in net-short positions. The New Zealand Dollar trades to a fresh monthly high (0.6549) against its US counterpart as the IG Client Sentiment report continues to show crowding behavior in the currency market, with the retail crowd net-short NZD/USD since May.

ASX 200, AUD/JPY Outlook Dictated By COVID-19 Lockdown Measures

Monday 06th July, 2020

ASX 200, AUD/JPY, COVID-19, AUSTRALIA

A ‘second wave’ of coronavirus infections in Australia’s second most populous state, Victoria, may lead to the imposition of further lockdown restrictions as 12 suburbs within the greater-Melbourne area were placed under strict stay-at-home orders on July 1. Recording a further 74 cases overnight, the state is single-handedly holding back the nationwide easing of restrictions with the Australian Medical Association (AMA) urging local premiers to halt their roll-back plans until the outbreak in Victoria is brought under control.

S&P 500 Rallies as Key Insiders Dump Stock, Traders Add Shorts

Friday 03rd July, 2020

S&P 500, MARKET SENTIMENT, INSIDER ACTIVITY, RETAIL TRADER POSITIONING

The S&P 500 has recovered nearly all losses since the COVID-19 pandemic sent markets into a tailspin earlier this year. Since the stock market bottomed back in March, the S&P 500 has gone on to climb over 40%. However, the current rally across risk assets seems untrusted by some investors as awareness of equity fundamentals appears lacking – or largely ignored. Regardless, the S&P 500 index continues to tick highereven as COVID-19 infection rates jump higher in the United States. Perhaps the relentless uptrend is owed primarily to the flurry of support from monetary and fiscal authorities.

AUD/JPY, EUR/JPY, GBP/JPY Levels to Watch As Risk Appetite Returns

Friday 03rd July, 2020

JAPANESE YEN INDEX** DAILY CHART – JPY SEEMINGLY CAPPED BY 3-MONTH DOWNTREND

Waning market sentiment was a primary driver of the haven-associated Japanese Yen’s surge in June, climbing back from post-crisis lows to test the downtrend that has encapsulated price action since the highs of March. Both the RSI and Momentum indicators seem to suggest a more sustained pull-back as price rests precariously atop its 200-day moving average. Sellers may be encouraged by the steep decline of the 50-DMA which could see price penetrate support at the 38.2% Fibonacci retracement. A break below may open up a path for further JPY losses against its major counterparts and could be indicative of strengthening market optimism.

AUD/NZD May Turn Lower as Dairy Prices Boost NZ Dollar

Thursday 02nd July, 2020

TALE OF THE TAPE: RBA VS RBNZ

The differing views between the Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ) have been a major driver in the Australian Dollar’s recovery against its Trans-Tasman counterpart.From a policy standpoint the RBNZ seems more open to the implementation of alternative monetary policy programs, with the central bank in ongoing “discussions with financial institutions about preparing for a negative OCR”.

USD/CAD Rate Reversal from March Low Keeps June High on Radar

Thursday 02nd July, 2020

USD/CAD RATE REVERSAL FROM MARCH LOW KEEPS JUNE HIGH ON RADAR

USD/CAD consolidates after failing to test the June high (1.3801), but the reversal from the March low (1.3315) may continue to evolve over the coming day as the Relative Strength Index (RSI) breaks out of the bearish formation carried over from May. USD/CAD slipped to a fresh weekly low (1.3546) as the monthly update to Canada’s Gross Domestic Product (GDP) report showed a smaller-than-expected contraction, with the growth rate narrowing 11.6% in April versus forecasts for a 12.2% decline.

Copper, Silver Driven By US Dollar. Risk Aversion May Fuel Selling

Wednesday 01st July, 2020

YEAR-TO-DATE CORRELATIONS FOR SILVER AND COPPER

Commodity prices have bounced back substantially since collapsing in early March, benefiting from a combination of stabilizing fundamentals and a weak US Dollar. However, the re-imposition of lockdown measures in several states in the US, as global cases of the novel coronavirus surge past 10 million, threatens to destabilize the 3-month rally in metal prices.The negative correlation between the haven-linked US Dollar and the price of copper and silver highlights the sensitivity of commodities to overall market sentiment. In essence, positivity and certainty drive metal prices higher whilst risk aversion puts a premium on safe-haven assets, discounting the price of silver and copper.

How to Trade the Euro, NOK and SEK Using the Core-Perimeter Model

Wednesday 01st July, 2020

EURO ANALYSIS, EUROZONE ECONOMY, SWEDISH KRONA, NORWEGIAN KRONE, UNDERSTANDING THE CORE-PERIMETER MODEL

The business cycle sensitivity of Nordic assets, which makes them riskier but also offers higher rates of return, tends boost their appeal relative to safer EU-based counterparts in an optimistic market environment. This typically results in a weaker Euro/Nordic exchange rate because investors are prioritizing profits over capital preservation. This flow of capital is underpinned by the interconnected economic network that the Eurozone, Norway and Sweden all share. An overwhelming majority of Swedish and Norwegian exports flow to the heart of Europe. Therefore, when investors are buoyant and have a positive outlook on growth, this trading relationship leads to capital running from the core (EU) to perimeter (Nordic) countries.

GBP, USD & AUD Brace for Cross-Continental Geopolitical Risks

Tuesday 30th June, 2020

BRITISH POUND, US DOLLAR, BREXIT, POWELL, MNUCHIN, HONG KONG TENSION

US Dollar traders will be closely watching the release of the FOMC meeting minutes from the rate decision earlier this month. An underlying somberness in the text could further dispel notions of a speedy recovery. If that in turn catalyzes a risk-off tilt in market mood, it could put a premium on haven-linked assets like the US Dollar and Treasuries and a discount on their growth-oriented peers like AUD, NZD, NOK and SEK. Federal Reserve Chairman Jerome Powell will also be testifying with Treasury Secretary Steven Mnuchin in front of the House Financial Services Committee. Hints at another fiscal stimulus could help support risk appetite and alleviate the pain cycle-sensitive assets have been suffering through recently. Having said that, continuous spikes in Covid-19 cases could overwhelm optimism in the fiscal arena and push USD higher.

ASX 200 Perched at Support as Iron Ore Price Pulls Back

Tuesday 30th June, 2020

ASX 200, IRON ORE, COPPER, COMMODITIES, RBA

The ASX 200 has underperformed its major global counterparts despite climbing as much as 41% from the March low (4,387), and the index may continue to lag behind in July as coronavirus concerns along with the dependency on global trade appear to be weighing on Australian shares. Although Reserve Bank of Australia (RBA) Governor Philip Lowe believes that health and “economic outcomes so far have been relatively good,” the spike of coronavirus cases in Australia’s second most populous state could jeopardise the already fragile economic recovery. Furthermore, the recent pull-back in iron ore prices may be contributing to the weakness seen in the ASX 200 as Vale, the world’s largest producer, restarts its operations in Brazil.

Japanese Yen Outlook: AUD/JPY Dictated by Coronavirus Volatility

Monday 29th June, 2020

JAPANESE YEN, VIX, AUD/JPY, COVID-19, RISK AVERSION

Haven demand has fuelled the recent strength in the Japanese Yen as coronavirus cases continue to climb, and trade tensions escalate. The situation in the United States is becoming increasingly concerning, with local cases accounting for 25% of the global outbreak and several states delaying the easing of lockdown restrictions. Withcases of Covid-19 surpassing 10 million and a staggering 500,000 deaths recorded globally, the pandemic is re-exerting itself as a dampener on the so-called ‘V-shaped’ recovery.

NZD/USD Consolidation Generates Drop in Net-Short Interest

Monday 29th June, 2020

NZD/USD CONSOLIDATION GENERATES DROP IN NET-SHORT INTEREST

NZD/USD consolidates following the bearish reaction to the Reserve Bank of New Zealand (RBNZ) interest rate decision, but the exchange rate may struggle to preserve the advance from the start of the month as the Relative Strength Index (RSI) snaps the upward trend carried over from March. The range bound price action in NZD/USD appears to be generating profit-taking behavior as the decline from the previous week stalls ahead of the June low (0.6185), with the IG Client Sentiment report revealing a drop in net-short interest.

AUD, NZD May Cautiously Extend Gains Despite Rising Virus Cases

Friday 26th June, 2020

AUSTRALIAN DOLLAR, NEW ZEALAND DOLLAR, AUD/NZD, EURO, CORONAVIRUS

Wall Street trade had a rocky start but ultimately ended on a happy note with the S&P 500 index closing 1.10 percent higher. The sector with the greatest gains within the benchmark was financials which was given a boost by news of regulatory rollbacks by the Federal Deposit Insurance Commission. One of them included making it easier for banks to direct large investments into funds like venture capital. The other was not making it a requirement for banks “to set aside cash for derivatives traders between different affiliates of the same firm, potentially freeing up more capital”. This helped to shake off the pessimism from another higher-than-expected jobless claim figure at 1480k, far above the 1320k estimate. Having said that, concern about rising coronavirus cases in the US does continue to rattle already-fragile investor confidence.

Fed Stress Test: Bank Stocks Trim Gains on Dividend Restrictions

Friday 26th June, 2020

FED STRESS TESTS, BANK STOCKS, RECESSION

The Federal Reserve released its annual stress tests results Thursday afternoon, following a green day on Wall Street for big banks as certain provisions of the Volcker rule were rolled back to allow banks to invest in private markets more easily and lower margin limits for derivative trading. Overall, the Fed’s analysis concluded capital levels will hold up under several modeled scenarios. In Thursday's Wall Street session, before the stress tests results were released, the Financial Select Sector SPDR ETF (XLF) rose 2.65% in Thursday’s session, while the S&P 500 index gained 1.10%. A portion of those gains are pulling back in after-hours trading. Still, financials continue to lag the S&P 500 index year-to-date as investors worry over depressed interest rates and increased loan losses amid the virus-induced economic fallout.

EUR/USD Levels to Watch as Bull Flag Formation Takes Shape

Thursday 25th June, 2020

EUR/USD LEVELS TO WATCH AS BULL FLAG FORMATION TAKES SHAPE

EUR/USD struggles to extend the series of higher highs and lows from earlier this week amid concerns surrounding the EU-US trade truce, but a bull flag formation may unfold over the coming days as the Relative Strength Index (RSI) preserves the bullish trend from March. EUR/USD pulls back from the weekly high (1.1349) as European Commissioner for TradePhil Hogan reveals that the Trump administration has “stepped back” from negotiations, with the official emphasizing that “we must acknowledge that the U.S. is now in a pre-election phase” during a conference with EU trade officials.

Asia-Pacific Stocks Set to Fall on Virus Concern; Crude Oil Prices Tumble

Thursday 25th June, 2020

S&P 500 INDEX, CRUDE OIL, STRAITS TIMES INDEX OUTLOOK

The futures market points to a sharp decline across Asia-Pacific equities, following a heavy selloff in the Wall Street session overnight. In the FX market, the growth-geared Australian and New Zealand Dollars as well as the oil-linked Norwegian Krone were among the worst performing in G10 currencies. This suggests clear ‘risk off’ sentiment at the open. The S&P 500 index fell 2.58%, registering its biggest loss seen in two weeks. All sectors ended lower, with energy (-5.54%), industrials (-3.51%), financials (-3.51%) and materials (-2.59%) among the worst performing sectors (chart below).

New Zealand Dollar Dips Lower on Dovish RBNZ Forward Guidance

Wednesday 24th June, 2020

RBNZ, INTEREST RATE DECISION, NZD/USD

The New Zealand Dollar plunged 0.8% after the RBNZ said it remains “prepared to provide additional stimulus as necessary”. Keeping the official cash rate (OCR) steady at 0.25%, the committee maintained “the balance of economic risks remains to the downside”. As the central bank “continues to prepare for the use of additional monetary policy tools”, uncertainty remains as to “whether the monetary stimulus delivered to date is sufficient to meet its mandate”.

Hang Seng Index Challenges Key Resistance, Gold Prices Climb

Wednesday 24th June, 2020

HANG SENG INDEX, STRAITS TIMES INDEX, GOLD PRICE OUTLOOK

Hong Kong’s Hang Seng Index stock market benchmark surged 1.6% yesterday, marking it one of the best performing indices across the Asia-Pacific region. The rally was mainly driven by technology giant Tencent (+4.89%), which accounts for around 11.2% of the index’s weight (table below). Financial stocks AIA (+2.46) and HSBC (+2.04%) were doing well too. As discussed in an earlier report, the draft of Hong Kong’s security law is unlikely to bring a material impact to the Hang Seng Index, which is heavily weighted toward mainland corporations.

EUR/USD Bull Flag Formation in Focus as RSI Tracks Bullish Trend

Tuesday 23rd June, 2020

EUR/USD BULL FLAG FORMATION IN FOCUS AS RSI TRACKS BULLISH TREND

EUR/USD reverses ahead of the June low (1.1101) despite little progress for a European recovery fund, and a bull flag formation may unfold over the coming days as the Relative Strength Index (RSI) preserves the bullish formation from March. EUR/USD carves a series of higher highs and lows even though the European Council meeting on June 19 offered no new details for a COVID-19 recovery fund, and the exchange rate may stage a larger advance ahead of the update to the Euro Zone Consumer Price Index (CPI) as the European Central Bank (ECB) appears to be taming speculation for additional monetary support.

Mexican Peso Outlook at the Mercy of US Economic Trends

Tuesday 23rd June, 2020

HOW THE UNITED STATES-MEXICO RELATIONSHIP IMPACTS USD/MXN

The United States and Mexico have a close economic relationship that is underpinned by their geographical proximity. Cross-border regional trade agreements like NAFTA– now replaced by the USCMA – reinforce their inter-connectedness. However, the disparity in economic development between the core (US) and perimeter (Mexico) creates an asymmetric relationship. The US economy is the world’s largest economy and is overwhelmingly consumer-driven, making it is less vulnerable to the ups and downs of the global business cycle than an export-oriented one like Mexico. Furthermore, the latter’s growth trajectory is in large part predicated on robust demand from the former. Indeed, the US accounts for approximately 86% of Mexico’s cross-border sales.

APAC Stocks Walk a Tightrope as Investors Eye Virus Resurgence

Monday 22nd June, 2020

APAC STOCKS WALK A TIGHTROPE AS INVESTORS EYE VIRUS RESURGENCE

Asia-Pacific stocks rebounded after opening the week on a sour note but rising concerns about a second virial wave in the US threatens the prospect of an economic recovery and risk sentiment. US index futures traded lower on Monday morning, setting a sour tone to Asia-Pacific markets’ opening. Sentiment has since recovered, but investors still seem to be increasingly wary about the US stock market rally as it seems to have diverged too far from the real world, resulting in a market correction. Signs of a possible resurgence of coronavirus in parts of the US, after easing of lockdown measures, further dampened the prospect of a smooth economic recovery.

AUD/USD Rate Rebounds Even as RBA Jawbones Australian Dollar

Monday 22nd June, 2020

AUD/USD RATE REBOUNDS EVEN AS RBA JAWBONES AUSTRALIAN DOLLAR

AUD/USD fills the gap from the start of the week even though Reserve Bank of Australia (RBA) Governor Philip Lowe jawbones the Australian Dollar, but recent developments in the Relative Strength Index (RSI) warn of a larger correction in the exchange rate as the indicator falls back from overbought territory and snaps the upward trend from earlier this year. AUD/USDattempts to retrace the decline following Australia’s Employment report, which showed the economy shedding 227.7K jobs in May, and the exchange rate may face range bound conditions going through the last full week of June as it bounces back ahead of last week’s low (0.6777).

US Dollar May Rise Versus Rupiah, Bank of Indonesia Could Intervene

Friday 19th June, 2020

US DOLLAR, INDONESIAN RUPIAH, USD/IDR, BANK OF INDONESIA, JAKARTA COMPOSITE

The US Dollar lost slight ground to the Indonesian Rupiah over the past 24 hours. This is despite the Bank of Indonesia (BI) cutting its benchmark 7-day reverse repurchasing rate to 4.25% from 4.50%. As anticipated, the central bank continued to stress that its currency is undervalued. Governor Perry Warjiyo mentioned that he sees scope for IDR to gain further as the BI continues market intervention. In practice, this could mean that the Bank of Indonesia steps up efforts to lessen IDR selling pressure in the near term. This may arise from capital outflows should risk aversion engulf financial markets as it did earlier this year during the coronavirus outbreak. Then, ASEAN central banks stepped up efforts to mitigate FX depreciation by selling foreign exchange reserves, opening the door to greater scrutiny from investors.

AUD/JPY Slide Continues, ASX 200 Rally Stalls as Unemployment Surges

Friday 19th June, 2020

AUD/JPY, ASX 200, RBA, COVID-19

Recent employment data has taken the shine off the Australian economy, as the unemployment rate jumped to its highest level in 19-years and the participation rate fell to 62.9%, the lowest since January 2001. With the economy shedding a staggering 835,000 jobs in the past two months Reserve Bank of Australia board member Ian Harper has called for an extension of the current JobKeeper and JobSeeker initiatives beyond the September 27 deadline. Alluding to RBA Governor Philip Lowe’s comments that the success of the economic recovery “will depend on the confidence that people and businesses have” Harper stresses that cessation of fiscal stimulus would be the “strongest form of Cold Turkey” and “would have a significant negative effect on consumer confidence”.

AUD/USD Plunges as Australia Unemployment Rate Jumps to 19-Year High

Thursday 18th June, 2020

AUD/USD, AUSTRALIAN DOLLAR, EMPLOYMENT DATA, IRON ORE

The Australian Dollar collapsed after employment data shattered the relatively positive outlook portrayed by the Reserve Bank of Australia in its most recent meeting, as the unemployment rate climbed to 7.1% and the participation rate declined from 63.6% to 62.9% in May. With the data portraying a more negative outlook than expected, market participants may begin to doubt the statement from RBA Governor Philip Lowe that it may be possible “the downturn could be shallower than expected”.

NZD Falls on GDP Data, Australian Dollar Braces for Key Jobs Report

Thursday 18th June, 2020

ZEALAND DOLLAR, AUSTRALIA EMPLOYMENT CHANGE, NZ GDP DATA

Wall Street trade ended on a somewhat gloomy note, with the Dow Jones and S&P 500 down 0.65 and 0.36 percent, respectively. The tech-leaning Nasdaq index was up for the day, but only managed to register a meager 0.15 percent gain. Foreign exchange markets were somewhat of a mixed bag with the petroleum-linked Norwegian Krone as the session’s winner, while CAD, GBP and EUR were the biggest losers. Federal Reserve Chairman Jerome Powell engaged in another congressional testimony, though this time it was in front of the House Financial Services Committee.

Euro Stoxx 50 Forecast: Bulls Aim Higher on Improving Global Risk Appetite

Wednesday 17th June, 2020

EU50 INDEX PRICE FORECAST

The Euro Stoxx 50 index appears to be in a strong position headed into the rest of this week as global risk appetite returns on news of a proposed infrastructure stimulus bill out of the United States. Price action since Monday’s open is nearly 3% higher for the index and appears set to take advantage of the bullish risk-on environment seen across global markets.
Currently, the index sits at 3236.74, directly under its 61.8% Fibonacci retracement level. This follows Monday’s price action where the index pivoted higher after touching its 50% retracement level intraday before price action rallied to close Monday’s session higher. Bulls will look to continue probing higher in the coming days and aim for the recent multi-month high recorded last Monday at 3399.04 when the index briefly rose above its 200-day moving average.

USD Rose on Powell Speech & May Extend Gains on Asian Political Risks

Wednesday 17th June, 2020

US DOLLAR, BEIJING CORONAVIRUS CASES, POWELL, INDIA-CHINA TENSION

Wall Street ended the day on a happy note with the Dow Jones, S&P 500 and Nasdaq indices ending 2.0, 1.9 and 1.8 percent higher, respectively. The upbeat tune in North American equity markets was supported by better-than-expected retail sales data, which saw a 17.7 percent increase on a month-on-month basis for May. The difference between the actual figures and the estimate at 8.4 percent buttressed the notion of a recovery.
Federal Reserve Chairman Jerome Powell also spoke on the subject of an economic bounce back during his testimony in front of the Senate Banking Committee. He acknowledged that while the outlook remains uncertain, preliminary data seems to suggest that the US is in the recovery phase. Monetary authorities expect unemployment to decline and employment to increase over time.

Silver Prices & Copper at Key Cross Section Ahead of Powell Testimony

Tuesday 16th June, 2020

SILVER PRICE OUTLOOK

Silver prices have enjoyed a 45 percent ride after bottoming out in March, though recent price action suggests the pair’s remarkable ascent may be showing early signs of a broader pullback. In late-May, silver prices -re-entered a congestive ranging back to late-2019 between 17.440 and 18.110 and have remained constrained by those bands once again.
This puts the precious metal at an important crossroads as it trades between the lower tier and the March uptrend. If 17.440 holds, the invalidation of the slope of appreciation could catalyze an aggressive pullback. In this scenario, XAG/USD could encounter some downside friction at an inflection range marked by the 16.541-16.177 price parameters.

AUD/USD Unfazed by RBA Minutes with Employment Report on Tap

Tuesday 16th June, 2020

RESERVE BANK OF AUSTRALIA, RBA, AUDUSD, ASX 200

The Australian Dollar drifted slightly lower after the release of the minutes from the Reserve Bank of Australia’s June 2 meeting as the central bank kept the official cash rate and the target for 3-year yields at 0.25%. The ASX 200 surged as payroll figures showed a 1% increase in the month of May.
The Reserve Bank of Australia continues to maintain a relatively more positive outlook, in comparison to its major counterparts as Governor Philip Lowe, and the committee, recognized that although the “Australian economy was experiencing the biggest economic contraction since the 1930’s” it is possible that the “downturn will be shallower than earlier expected”.

NZD/USD RSI Sell Signal in Focus Despite Forecast for V-Shape Recovery

Monday 15th June, 2020

NZD/USD RSI SELL SIGNAL IN FOCUS DESPITE FORECAST FOR V-SHAPE RECOVERY

NZD/USD continues to pull back from the monthly high (0.6585) following the Federal Reserve interest rate decision, and the Relative Strength Index (RSI) may highlight a potential shift in market behavior as the oscillator offers a textbook sell signal and appears to be on track to threaten the bullish formation from March.
NZD/USD carves a fresh series of lower highs and lows as the Federal Open Market Committee (FOMC) insists that “some indicators suggest a stabilization or even a modest rebound in some segments of the economy,”and the central bank may continue to scale back the pace of its asset purchases as “market functioning has improved since the strains experienced in March.”

Nikkei 225 and ASX 200 Break Uptrends, HSI Reverses At Resistance

Monday 15th June, 2020

ASX 200 DAILY PRICE CHART

A significant bearish reaction at the key 61.8% Fibonacci retracement (6,124), of the yearly range, catapulted the ASX 200 through the 12-week uptrend from the March low (4,387), as the RSI dipped just prior to registering its first overbought readings since early-January.
The 2009 trend resistance zone looks to be a formidable obstacle for buyers as the convergence of key technical indicators may continue to exert downside pressure on the Australian benchmark.
The exponential increase in volume confirms the Bearish Engulfing candle on June 11 and may signal an impending reversal, as the momentum indicator bounces away from yearly resistance and the RSI snaps its 3-month trend.

AUD/USD Outlook Mired by RSI Sell Signal Ahead of Fed Testimony

Friday 12th June, 2020

AUD/USD OUTLOOK MIRED BY RSI SELL SIGNAL AHEAD OF FED TESTIMONY

AUD/USD extends the pullback from the yearly high (0.7064) following the failed attempt to test the July 2019 high (0.7082), and the exchange rate may face a larger correction as the Relative Strength Index (RSI) falls back from overbought territory and offers a textbook sell signal. The Australian Dollar has outperformed against all of its major counterparts in May, but the bullish behavior has started to abate following the Federal Reserve interest rate decision as the central bank appears to be on track to retain the current policy in the second half of 2020.

Hang Seng Index: Bulls Stumble on Recent Gains as Global Risk Appetite Recedes

Friday 12th June, 2020

ASX 200, AUSTRALIA, OECD TALKING

The Hang Seng Index surrendered its recent bullish energy on Thursday, dropping over 2%, as waning global risk appetite dragged on global equities. Before Thursday’s drop, bulls appeared to be making ground upwards into highs not seen since March with the Hang Seng appearing set to overcome COVID-19 worries, mass protests, and political tensions between the United States and China. However, market participants may have been premature in pricing in the “V-shaped” global recovery which likely contributed much of the fuel driving the index higher, despite the previously mentioned headwinds for the index.

NZD/USD Rate Vulnerable to Textbook RSI Sell Signal

Thursday 11th June, 2020

NEW ZEALAND DOLLAR TALKING

NZD/USD appears to be stuck in a tight range after taking out the February high (0.6503), but the Relative Strength Index (RSI) may offer a textbook sell signal as the oscillator appears to be on track to push below 70.
NZD/USD trades near the monthly high (0.6585) as the Federal Reserve retains a dovish forward guidance for monetary policy, but it seems as though Chairman Jerome Powell and Co. are in no rush to deploy more non-standard measures after expanding the scope of the Main Street Lending Program“to allow more small and medium-sized businesses to be able to receive support.”

ASX 200 Rally in Jeopardy as OECD Suggests Fiscal Stimulus Extension?

Thursday 11th June, 2020

ASX 200, AUSTRALIA, OECD TALKING

The return of Australian consumer confidence to pre-crisis levels was unable to fuel the ASX 200’s rally to fresh-monthly highs as it followed its US counterparts lower overnight.
Investors may be spooked by the Organization for Economic Cooperation and Development (OECD) bi-yearly report suggesting an extension of the fiscal support measures provide by the Australian government “beyond their September expiry date” to continue to support the local economy.

Bitcoin Price Chart: Will BTC/USD Fall With S&P 500 Index?

Wednesday 10th June, 2020

BITCOIN ANALYSIS: WILL BTC FALL WITH EQUITY MARKETS?

Since bottoming out at a 12-month low, Bitcoin has risen over 100 percent and has been carried higher by a modestly-stable uptrend – at least when compared to the S&P 500, but more on that later. The pair recently crossed the highly-watched 10,000 checkpoint, though BTC/USD subsequently retreated and has been trading sideways ever since. However, looking at a weekly chart shows that Bitcoin is approaching a critical price juncture where the integrity of the uptrend may be tested as BTC/USD comes up against resistance at 10168.35.
Failure to clear that obstacle and the tier above it at 10540.49 could lead to BTC/USD invalidating the slope of appreciation. That break could mark a shift in the pair’s short-term trajectory and lead to a broader pullback.

NZD/USD, NZD/JPY Rally At Risk Despite Easing Restrictions

Wednesday 10th June, 2020

NZD/USD, NZD/JPY, NEW ZEALAND TALKING POINTS

It’s safe to say that recent market optimism and US Dollar weakness has greatly benefitted the New Zealand Dollar, as it recovered from the fresh 5-year lows it set in March. However, this recent surge has stalled despite Prime Minister Jacinda Ardern lifting coronavirus restrictions on Monday in response to the eradication of active COVID-19 cases. With NZD sitting at a pivotal level, Wednesday’s FOMC meeting may define the future direction of the risk-sensitive asset.
The New Zealand Dollar has had a tremendous run against its major counterparts since plunging to fresh five-year lows in March, climbing as much as 15% to fall just shy of the yearly high (0.7776).

WTI Crude Oil Turns to Growth Trends as OPEC Bounce Fades

Tuesday 09th June, 2020

CRUDE OIL, OPEC, ASIA PREVIEW

Wall Street ended the day in the green with the S&P registering 1.70 percent gains and is now less than five percent away from its pre-selloff high. Energy shares were the best performers in the index when broken down by sector, ending the day 4.32 percent higher on average. Foreign exchange markets were somewhat mixed. The anti-risk Japanese Yen rose with AUD and NZD while the US Dollar and HKD ended in the red. The World Bank’s Global Economic Prospects report casts a deep and dark shadow over global growth and financial stability, thought it failed to generate significant volatility. Analysts anticipate for global growth to shrink over five percent in 2020, marking the deepest contraction since World War II. The report also warned that:

Canadian Dollar Forecast: USD/CAD Attacks Support Ahead of FOMC

Tuesday 09th June, 2020

CANADIAN DOLLAR (USD/CAD) PRICE OUTLOOK

US Dollar weakness continued to start the week, a theme that has become fairly common since the Dollar peaked in mid-March and volatility began its return to more normal levels. More recently, however, USD weakness has been more consistent and the US Dollar Basket (DXY) has suffered days of consecutive losses since late May as a result. In turn, USD/CAD fell significantly as the Canadian Dollar claws back lost ground to return to levels that were common prior to the outbreak. Just last week we highlighted an area of potential support around 1.3368 which seems to have provide a modicum of influence, but not enough to halt the broader decline. That being said, price activity may slow somewhat prior to Wednesday’s FOMC rate decision as traders shy away from exposure in the lead up to significant event risk.

Crude Oil Prices Yawn at OPEC+ Cuts, World Bank Outlook Eyed

Monday 08th June, 2020

CRUDE OIL & GOLD TALKING POINTS

Crude oil prices rose alongside stocks while gold prices plunged as US employment data topped analysts’ forecasts (as expected). The economy added 2.5 million jobs in May, smashing estimates calling for an 8 million drawdown. The unemployment rate fell to 13.3 percent, marking a stark contrast with baseline projections calling for a rise to 19.8 percent. An OPEC+ agreement to extend the coordinated output cut scheme helped the WTI benchmark gap higher at the weekly trading open but lasting momentum has not materialized, at least so far. Furthermore, bellwether S&P 500 stock index futures are trading flat even as Asia-Pacific bourses play catch-up to Friday’s buoyant Wall Street showing, hinting that risk-on capital flows may be struggling for follow-through.

Nikkei 225 Surge Triggers Overbought RSI Reading

Monday 08th June, 2020

NIKKEI 225, JAPAN, BOJ TALKING POINTS

The Nikkei 225 continues to outperform its major Asia/Pacific counterparts, with the index surging 50% from its March low as it pushes back to pre-crisis levels. Even though Japan enters its first recession since 2015, the injection of over ¥ 200 trillion in fiscal and monetary stimulus to support the pummelled economy continues to drive the Japanese benchmark index higher. With Prime Minister Shinzo Abe announcing a further ¥117 trillion of stimulus on the 27th of May, while the Bank of Japan (BoJ) implementing a new ¥30 trillion small business lending facility, the cooperation between the government and central bank shows the determination to protect the local economy during a crisis, described by Deputy Prime Minister Taro Aso, “that goes beyond the scale of the Lehman shock”.

USD/CAD Continues to Eye March Price Gap Ahead of Canada Employment

Friday 05th June, 2020

CANADIAN DOLLAR TALKING POINTS

USD/CAD holds near the monthly low (1.3468) as the Bank of Canada (BoC) keeps the benchmark interest rate at the “effective lower bound of ¼ percent” in June, but the update to Canada’s Employment report may influence the exchange rate as the economy is expected to shed 500K jobs in May.
USD/CAD extends the series of lower highs and lows from the start of the month as the BoC announces that the “Bank is reducing the frequency of its term repo operations to once per week, and its program to purchase bankers’ acceptances to bi-weekly operations.”

NFP: Nonfarm Payrolls Drives the US Dollar & Forex Volatility

Friday 05th June, 2020

HOW NONFARM PAYROLLS (NFP) IMPACTS THE US DOLLAR & USD PRICE VOLATILITY

The US Dollar typically exhibits heightened volatility around the monthly release of nonfarm payrolls data and places USD price action at risk of experiencing outsized moves.
Realized volatility in the US Dollar Index and its major currency pairs around NFP reports tends to run above-average as forex traders reassess the US economy and jobs market.
Currency volatility, which is characterized by the frequency and magnitude of changes in a currency’s value, tends to rise during times of heightened market uncertainty.

US Dollar & Volatility Swoon as Fed Achieves V-Shape Recovery

Thursday 04th June, 2020

US DOLLAR INDEX CRUMBLES AS STOCKS SURGE & VOLATILITY PLUMMETS THANKS TO FED-FUELED MARKET RECOVERY

The US Dollar has slid lower steadily over the last several trading session. US Dollar downside appears fueled by many fundamental forces, but unprecedented Fed action and the lasting wave of coronavirus optimism stand out as primary drivers.
Largely thanks to the FOMC backstop and coordinated measures by the Fed with other global central banks to ease USD funding pressure, trader sentiment has improved remarkably. Appetite for risk has flourished and demand for safe-haven assets has evaporated in turn.

Gold Prices Sink, Crude Oil Risks Falling with OPEC+ Meeting in Doubt

Thursday 04th June, 2020

GOLD, XAU/USD, CRUDE OIL, OPEC+

Gold prices fell -1.51 percent over the past 24 hours, the worst performance in a day since April 17. The anti-fiat yellow metal was under selling pressure as US government bond yields climbed during Wall Street’s trading session. The Dow Jones also rallied +2.05% as the ‘risk-on’ tone depressed the haven-linked US Dollar. As such, XAU/USD likely focused on falling Treasury prices as demand for safety relaxed further.
What seemed to inspire the optimistic tone in traders was a relatively less dismal estimate for local job losses from Automatic Data Processing Inc. (ADP). The company anticipates about a 2.7 million reduction in private positions last month. 

Australian Dollar Dips as 1Q GDP Contraction Ends Record Growth Period

Wednesday 03rd June, 2020

AUSTRALIAN DOLLAR, GDP, AUDUSD

The Australian Dollar lost ground after trading at its highest levels since January as Australia’s 1Q Gross Domestic Product (GDP) report signals the end of a 28-year run of economic expansion. Despite beating market expectations for a 0.4% contraction, the 0.3% decline in the growth rate is almost certainly to be followed by a drastic contraction in the second quarter of 2020, which would push Australia into a technical recession. So far, this news has only dampened the recent surge in AUD/USD, with the exchange rate appreciation as much as 27% from the March low (0.5506).

New Zealand Dollar Technical Outlook vs Japanese Yen & British Pound

Wednesday 03rd June, 2020

NEW ZEALAND DOLLAR, JAPANESE YEN, BRITISH POUND, NZD/JPY, NZD/GBP

NZD/JPY is up over 11 percent after bottoming out at a multi-year low at 61.974. In the past day, the pair surged over two percent and is now within touching distance of a key former support-turned-resistance range between 69.897 and 70.030. If that zone is cleared, NZD/JPY may aim to shatter resistance at 71. 247. If the ceiling here is broken with follow-through, it could inspire additional bullish price action. Looking to develop your trading skills? Discover a wide range of free resources at IG Academy. Choose from online courses, webinars and seminars – all designed to help you become a more successful trader.

S&P 500 Forecast: Stocks Face Peril as Day of Reckoning Looms

Tuesday 02nd June, 2020

STOCK MARKET FORECAST – S&P 500, DOW JONES, NASDAQ TARGET RECORD HIGHS DESPITE UNEMPLOYMENT SOARING

Stocks in the S&P 500, Dow Jones and Nasdaq have ripped higher by about 35% since bottoming mid-March. The relentless stock buying bonanza over recent weeks has propelled popular US equity benchmarks within striking distance of their all-time highs notched earlier this year. For instance, the tech-heavy Nasdaq now rests a mere 1.3% away from its 18 February 2020 close at the 9,720-price level after an astonishing recovery from one of the sharpest stock market selloff in modern history. This compares to an equally impressive, though not as strong, rebound notched by the S&P 500 and Dow Jones, which trade about 9% and 13% below their record highs, respectively.

Silver & Copper Prices Enjoyed a Nice Ride - Is it Time to Get Off?

Tuesday 02nd June, 2020

SILVER PRICE FORECAST

Silver prices have surged over 50 percent after bottoming out at a multi-year low at around 11.90. The precious metal continues to trade well above the mid-March uptrend and has cleared the upper tier of the 17.440-18.110 congestive range. However, XAG/USD may experience a pullback as negative RSI divergence shows upside momentum slowing down. In this scenario, silver prices may retreat to the steep slope of appreciation, but it is unclear whether it will hold. Breaking below it could signal the beginning of a cool-down period before silver prices resume their recovery. However, if the uptrend holds, XAG/USD may seek to crack the ceiling at 18.944, one level below the September 2019 swing-high at 19.647.

Australian Dollar Trades Near Pre-COVID Levels Following Caixin PMI

Monday 01st June, 2020

AUDUSD, CAIXIN PMI TALKING POINTS

The Australian Dollar has pushed back above the March high (0.6685) as the Caixin Manufacturing PMI update for May beat market expectations (50.7 vs 49.6 forecast) and signaled growth within the hard-hit sector. NBS Non-Manufacturing (53.6) and Manufacturing PMIs (50.6) released over the weekend, although slightly missing forecasts, were also upbeat and may provide some light at the end of the tunnel for those economies still restricted due to the COVID-19 outbreak. With export orders registering five consecutive months of contractionary prints (below 50.0), focus will turn to the fiscal response announced at the National People’s Congress and whether Beijing’s largest stimulus package since the 2008 global financial crisis (GFC) will be enough to continue supporting the local economy as global demand remains at historically low levels.

USD, GBP, EUR & AUD Brace for Cross-Continental Political Peril

Monday 01st June, 2020

US DOLLAR, EURO, BRITISH POUND, AUSTRALIAN DOLLAR – TALKING POINTS

The British Pound may fall as Brexit deliberations continue to drag the politically-sensitive GBP through the mud. This week, per the government’s authorization, lockdown measures will start easing as a reflection of Prime Minister Boris Johnson’s policy shift from “Stay at Home” to “Stay Alert”. Children are scheduled to be returning to primary school, though some lawmakers openly dissented against the easing measures. Concern about internal fragmentation threw Sterling off-balance, but the primary political catalyst will likely continue to be Brexit. The government has made it clear that it does not intend on asking to extend the transition period beyond December 31 of this year. The ability to make such a request expires at the end of this month and there is little confidence an agreement can be made before the deadline.
Friday 29th May, 2020

AUD/USD Price Outlook: Australian Dollar Risk Reversals Slump

AUSTRALIAN DOLLAR OUTLOOK: AUD/USD PRICE ACTION FACES HEADWINDS AS RISK REVERSALS STALL AMID CHINA TENSION

Australian Dollar bulls have kept the Aussie bid since the sentiment-linked currency bottomed out roughly two months ago. Spot AUD/USD price action has surged nearly 20% off its March 28 swing low as trader appetite for risk continues to recover from the recent coronavirus panic. Relentless strength in the Australian Dollar over the last several trading sessions, which looks largely fueled by coronavirus vaccine hope, has essentially erased the 1,000-pip plunge against its US Dollar peer notched earlier this year.
A daunting confluence of technical resistance near the 0.6700 handle presents a notable obstacle for spot AUD/USD price action, however. This potential area of opposition is underpinned by the 200-day moving average and 76.4% Fibonacci retracement of its year-to-date trading range.

Dow Rallies as Nasdaq 100 Drops - Swapping Trends or Topping Out?

Thursday 28th May, 2020

DOW, DJIA, NASDAQ 100, NDX PRICE ANALYSIS

It’s been a fairly amazing past two months across US equity markets. After US equity indices lost more than a third of their value in a little over a month, an onslaught of government stimulus programs have helped to not only reverse the trend but to push US stocks right back towards those prior all-time-highs. And with low rates for the foreseeable future combined with a Central Bank that’s very willing to do what’s needed to keep financial markets running smoothly, such as Jerome Powell highlighting that there’s ‘no limit’ to what the Fed can do with the lending programs available – it appears that the fear that had driven into markets so aggressively just a couple of months ago has now faded away. And to be sure, there’s much to be optimistic about. In the, US a number of areas are beginning to reopen in anticipation of the summer. The recent Memorial Day weekend went through without any nasty headline surprises, as we’d become accustomed to over the past couple of months; and there’s even hope for a vaccine sooner rather than later, given investors and traders a number of reasons to continue driving stock prices higher.

US Dollar Eyes Rising China Tension as Jobless Claims Mount

Thursday 28th May, 2020

US DOLLAR FINDS SUPPORT, ESCALATING TENSION OVER HONG KONG AUTONOMY COULD CATALYZE BREAKDOWN IN CHINA TRADE DEAL

The US Dollar gained ground on Wednesday and showed strength against its pro-risk AUD peer in particular. US Dollar found support as tension with China escalated further after Secretary of State Mike Pompeo testified to congress that Hong Kong is no longer independent from Beijing. According to the latest statement from Pompeo, China’s security law looks to “fundamentally undermine Hong Kong’s autonomy and freedoms.” This also follows the recently-passed Senate oversight bill and increasingly hawkish rhetoric from the White House as Trump talks tariffs. Traders steered safe-haven currencies higher in response to the developments seeing that this could jeopardize Hong Kong’s special trade status with the United States and perhaps undermine the phase one US-China trade deal. China trade friction heating up with Australia – its largest trading partner as highlighted in this analysis by Dimitri Zabelin – likely contributed to the plunge in spot AUD/USD price action as well.

S&P 500 Forecast: Break Out or Fake Out?

Wednesday 27th May, 2020

S&P 500 FORECAST: BREAK OUT OR FAKE OUT?

The S&P 500 crossed the 3,000 mark on Tuesday, trading above the level for the first time since March 6. To be sure, the price-point possesses notable psychological significance and its failure to keep price beneath may suggest the index is headed higher still. That being said, risks to the rally remain and false breaks have occurred before. First and foremost is the growth-shattering effects of coronavirus. By this time, investors and economists have become well acquainted with the slowdown in economic activity, but the market is still recognizing new shocks almost daily as dominoes continue to fall.

AUD/USD Rate Faces Key Test as March High Sits on the Radar

Wednesday 27th May, 2020

AUD/USD RATE FACES KEY TEST AS MARCH HIGH SITS ON THE RADAR

The Australian Dollar has outperformed against all of its major counterparts so far in May, and AUD/USD may continue to exhibit a bullish behavior as governments across Australia continue to roll back the lowdown laws. In response, the Reserve Bank of Australia (RBA) may retain the current policy at the next meeting on June 2 as “members agreed that the Bank's policy package was working broadly as expected,” and the central bank appears to be on track to carry out a wait-and-see approach over the coming months as “members assessed that the best course of action was to maintain the current policy settings and monitor economic and financial outcomes closely.”

US Dollar May Rise as SGD Falls on US-China Woes, Indian Rupee at Risk

Tuesday 26th May, 2020

US DOLLAR ASEAN WEEKLY RECAP

The US Dollar experienced a broadly neutral week against its ASEAN counterparts such as the Singapore Dollar, Philippine Peso and Malaysian Ringgit. As anticipated, ASEAN currencies spent most of their time following investors’ risk appetite. Optimism for a coronavirus vaccine from Moderna earlier in the week was then overshadowed as China imposed more stringent control over Hong Kong, plunging the Hang Seng. A notable standout was the Indonesian Rupiah, which managed to gain about one percent against the US Dollar. The Bank of Indonesia unexpectedly left rates unchanged as it reiterated the need for market intervention to defend its currency. 

USD/CAD Rate to Face Record Decline in Canada GDP

Tuesday 26th May, 2020

USD/CAD RATE TO FACE RECORD DECLINE IN CANADA GDP

USD/CAD continues to track the April range even though Bank of Canada (BoC) Governor Stephen Poloz endorses a dovish forward guidance ahead of his departure, but Canada’s 1Q Gross Domestic Product (GDP) report may influence the exchange rate as the update is expected to show the biggest contraction since the data series began in 1961. USD/CAD appears to be stuck in a narrow range as Governor Poloz defends the response to COVID-19, with the central bank head insisting that “a well-functioning financial system is a necessary precondition for effective monetary policy.”

AUD May Fall on Australia-China Tensions, Euro Eyes €500b Proposal

Monday 25th May, 2020

AUD TENSES UP AS AUSTRALIA-CHINA RELATIONS DETERIORATE

The Australian Dollar may face higher-than-usual selling pressure in the week ahead as economic data continues to underline the impact of the coronavirus pandemic. As a major commodity exporter, shifts in sentiment frequently impact the cycle-sensitive AUD. In addition to an unfavorable global backdrop, the export-oriented country is now experiencing growing tension with China – its largest trading partner.

S&P 500 Struggling at Resistance, Volatility Risk Ahead Elevated

Monday 25th May, 2020

S&P 500, US DOLLAR, AUSTRALIAN DOLLAR, HONG KONG – ASIA PACIFIC MARKET OPEN

The S&P 500 and Dow Jones ended Friday +0.24% and -0.04% respectively in what was a rather mixed session for global equities. The haven-linked US Dollar and similarly-behaving Japanese Yen trimmed some of their gains during the North American trading session. This is also as the sentiment-linked Australian Dollar and New Zealand Dollar regained some lost ground from early on.

IBEX 35 Price Sluggish, Spain Stock Index Lags Euro Area Peers

Friday 22nd May, 2020

IBEX 35, DAX, EURO AREA, TECHNICAL FORECAST

The IBEX 35 index continues to lag its Euro Area counterparts since March, when the Spanish index recorded its lowest level since 2003, as the COVID-19 pandemic sent global markets into a tailspin earlier this year. Since that March low, the index has rallied 13.4%. However, Germany’s DAX index is nearly 40% higher from the index’s multi-year low set on March 19.

British Pound Price Outlook: GBP/USD Bounces - Will Sellers Respond?

Friday 22nd May, 2020

GBP, BRITISH POUND, STERLING PRICE ANALYSIS

It has so far been a brighter outlay this week for the British Pound as the currency has bounced against both the US Dollar and the Japanese Yen. Last week was marked by weakness in Sterling as sellers pushed each of those pairs down to fresh monthly lows; but at least a portion of that has been offset this week as both GBP/USD and GBP/JPY have thus far put in net gains, even as talk of negative interest rates from the BoE began to circulate through the headlines.

Australian Dollar Lower, Trump Tweets Against Xi Stoke Risk Aversion

Thursday 21st May, 2020

AUSTRALIAN DOLLAR, US-CHINA TENSIONS, RESERVE BANK OF AUSTRALIA GOVERNOR PHILIP LOWE SPEECH, TALKING POINTS:

The Australian Dollar drifted lower on Thursday as risk aversion grew in the Asia-Pacific session on what appeared to be a ramping up of tensions between China and the United States. US President Donald Trump directly criticized his Chinese counterpart, Xi Jinping, in a series of Tweets suggesting Xi’s direct responsibility for a “disinformation and propaganda attack on the United States and Europe.”

BTC/USD Analysis After Halving, Ethereum Technical Update

Thursday 21st May, 2020

BITCOIN PRICE CHART, ETHEREUM ANALYSIS, BTC/USD, ETH/USD – TALKING POINTS

BTC/USD recently experienced the highly-anticipated so-called “halvening” and is now trading above a compression zone marked by the multi-week uptrend and resistance at 9140.00. After bottoming out at a one-year low at 4857.84 , BTC/USD has since risen over 90 percent. The pair may now challenge a point of resistance at 10,540.49 where it had previously stalled in November 2019 and February of this year

CAD Outlook vs British Pound and New Zealand Dollar

Wednesday 20th May, 2020

CANADIAN DOLLAR OUTLOOK VS BRITISH POUND

GBP/CAD recently fell over 3.40 percent following a false breakout above descending resistance dating back to early-March. However, recent price action suggests the pair may be bottoming out at 1.7006 and could once again challenge the slope of depreciation. If the pair manages to clear it with follow-through, the next point of resistance could be a ceiling at 1.7276 (purple-dotted line).
On the other hand, if bold price action becomes more timid as the pair approaches descending resistance and capitulation ensues, it could cast a bearish shadow on the pair. This may in turn catalyze an aggressive selloff and cause GBP/CAD to shatter several layers of support. In this scenario, selling pressure could start abating at 1.6851.

New Zealand Dollar Stalls? Dow Jones Turns, Stat Flaks Moderna Vaccine

Wednesday 20th May, 2020

NEW ZEALAND DOLLAR, NZD/USD, BREXIT, MODERNA, VIRUS VACCINE – ASIA PACIFIC MARKET OPEN

The growth-linked New Zealand Dollar managed to hang on to most of its gains over the past 24 hours despite a downturn in sentiment during the final hours of the North American trading session. That sent the Dow Jones and S&P 500 -1.59% and -1.05% respectively as my Wall Street index rejected critical resistance from April. The anti-risk Japanese Yen trimmed losses as the haven-linked US Dollar ended relatively flat. Equities and the British Pound received a boost in late Asia Pacific trade when reports crossed the wires that the United Kingdom announced a new post-Brexit tariff regime. The plan would cut about GBP30 million in tariffs after the nation leaves the European Union following the 11-month transition period.

Silver May Still Lose Out To Gold Once Covid Effects Fade

Tuesday 19th May, 2020

SILVER PRICES, GOLD/SILVER RATIO, TALKING POINTS

The gold/silver ratio has risen sharply as Covid ravaged global markets and national economies but investors betting for any near-term reversal could be disappointed. The ratio itself simply represents the number of ounces of silver it takes to buy a single ounce of gold at current prices. It reached 112.82 on March 2. Now, it’s very difficult to talk of all-time highs when it comes to assets valued by humans before recorded history, but this is certainly as high as the ratio has been for more than a century.

S&P 500 Forecast: Crude Oil Price Rebound Sees Energy Gains Pace Tech

Tuesday 19th May, 2020

S&P 500 FORECAST: CRUDE OIL PRICE REBOUND SEES ENERGY GAINS PACE TECH

US equities rocketed higher to start the week as the S&P 500 reached its highest level since early March. Hopes of a coronavirus vaccine and commentary from Fed Chairman Jerome Powell were touted as drivers behind the surge and a similarly bullish move in crude oil and other growth-linked assets would suggest robust risk appetite. More specifically, the rebound in crude oil saw the commodity climb to its highest level since March 13 which has likely bolstered the performance of some S&P 500 stocks in the energy sector.

BoE Policy Decision - GBP Picks Up But Central Bank Warns of Slumping Q2 GDP

Thursday 07th May, 2020

BANK OF ENGLAND (BOE) UNCHANGED BUT Q2 GROWTH AND UNEMPLOYMENT LOOK DIRE

The latest Bank of England (BoE) policy meeting saw all policy measures left unchanged but the accompanying MPC warned of a potential slump in Q2 GDP and rising unemployment. Interest rates were left untouched at 0.1% while the bond buying program, QE, remained at GBP645 billion.Two MPC members, Michael Saunders and Jonathan Haskel, voted to increase QE by GBP 100 billion. Bank of England governor Andrew Bailey is scheduled to speak about today's decision at 10:00 UK.
‘While there are wide bands of uncertainty around any estimates of activity at the present time, UK GDP is expected to be close to 30% lower in 2020 Q2 than it was at the end of 2019 (Chart 1.2). UK GDP is expected to have fallen by around 3% in 2020 Q1 and then to fall by a further 25% in Q2’

GBP/USD May Fall as the Bank of England Strikes a Gloomy Tone

Thursday 07th May, 2020

BRITISH POUND, BANK OF ENGLAND – TALKING POINTS

A monetary policy announcement from the Bank of England (BOE) headlines the economic calendar on Thursday. In addition to the latest decision from the rate-setting MPC committee and the minutes of its meeting, the markets will get an updated quarterly Inflation Report (QIR) laying out the central bank’s latest economic forecasts and the latest guidance on what actions it may take in the months ahead.
UK economic data has echoed the sharp deterioration elsewhere amid the Covid-19 outbreak. News flow has dramatically deteriorated relative to baseline expectations and PMI surveys flag an ‘unprecedented’ downturn. Nevertheless, financial conditions have eased a bit since the Federal Reserve leaned in to arrest credit crisis risk last month, so the BOE may opt to hold back further action of its own for now.

S&P 500 Jumps, VIX Sinks Amid Volatility Squeeze; Will it Last?

Wednesday 06th May, 2020

S&P 500 PRICE OUTLOOK: STOCK MARKET BOLSTERED BY VOLATILITY COMPRESSION, BUT VIX INDEX FUTURES SIGNAL FEAR STILL LINGERS

The S&P 500 has rebounded more than 30% since the popular stock market index bottomed on March 23. Stocks recovered sharply following a series of unparalleled efforts from global governments and central banks – like unlimited QE from the Fed and $2.3 trillion coronavirus stimulus bill from US Congress. A retracement lower in measures of volatility, such as the S&P 500 VIX Index, likely encouraged the improvement in trader sentiment as well. Generally speaking, there is a strong inverse relationship observed among the direction of risk assets, like stocks, and level of market volatility. This is indicated by the negative correlation typically held between S&P 500 price action and the VIX Index.

Nasdaq 100 Forecast for the Week Ahead, Unemployment to Soar?

Wednesday 06th May, 2020

NASDAQ 100 FORECAST FOR THE WEEK AHEAD

The Nasdaq 100 continues to show strength in comparison to other stock markets, even its Dow Jones and S&P 500 counterparts. Still, the tech-heavy index is not out of the woods and although quarantine restrictions appear to be easing in some parts of the country, further gains will have to negotiate a looming non-farm payrolls report.
As it stands, many Federal Reserve officials – including Chairman Jerome Powell – have warned that the upcoming data release may reveal an unemployment rate well into the double digits. White House Economic Adviser Kevin Hassett issued a more specific projection, saying April unemployment will be “north of 16%.”

How to Trade the Impact of Politics on Global Financial Markets

Tuesday 05th May, 2020

ANALYZING GEOPOLITICAL RISKS

Against the backdrop of eroding fundamentals, markets become increasingly sensitive to political risks as their capacity for inducing market-wide volatility is amplified. When liberal-oriented ideologies – that is, those favoring free trade and integrated capital markets – are being assaulted on a global scale by nationalist and populist movements, the frequent results are violent volatility stemming from uncertainty.
What makes political risk so dangerous and elusive is the limited ability investors have for pricing it in. Traders may therefore find themselves hot under the collar as the global political landscape continues to unpredictably shift. Furthermore, much like the spread of the coronavirus in 2020, political pathogens can also have a similar contagion effect.

Stock Market Forecast: Should I Sell in May and Go Away?

Tuesday 05th May, 2020

STOCK MARKET FORECAST

The Dow Jones recorded an astonishing 34% climb from its March 23 low to April 30. Since investors flipped their calendars to the new month, however, US stocks and global equities have started to slide. This brings the sell in may and go away stock market anomaly into focus – a narrative explaining abnormally poor Dow Jones performance throughout May and summer months.
Sell in May and go away might look like a statistical phenomenon on the surface, and contradiction of the efficient market hypothesis, but taking a deeper dive into macroeconomic history, and drawing upon context of major financial crises, reveals fundamental catalysts often explain why the Dow Jones and broader stock market have experienced lackluster returns during May and summer months.

US Dollar and Yen Aim Higher as Stocks Drop, Trump Talks Tariffs

Monday 04th May, 2020

US DOLLAR, YEN, STOCKS, TRUMP, TRADE WAR – TALKING POINTS

Financial markets started the trading week in a downbeat mood. Futures tracking the bellwether S&P 500 stock index gapped lower, with sentiment-linked assets including the Australian and New Zealand Dollars down in tandem. The anti-risk US Dollar and Japanese Yen tracked higher.
The move seems to echo Friday’s dour tone on Wall Street, where shares faced the heaviest selling pressure in a month. It is difficult to ignore that the about-face in sentiment occurred at the April-to-May handoff. I am typically dubious of seasonal “patterns”, but a kind of monthly reset is perhaps not so outlandish.

Japanese Yen May Rise as CLO Market Faces Credit Downgrades

Monday 04th May, 2020

JAPANESE YEN MAY RISE ON CREDIT DOWNGRADES RISKS

The Japanese Yen may extend its gains versus its peers if stress in the market for collateralized loan obligations (CLOs) is amplified in the current environment. The almost $700 billion market is the biggest part of the broader $1.2 trillion market for so-called ‘leveraged loans’. These are debt obligations typically belonging to borrowers on the lower end of credit ratings but whose higher level of risk offers comparatively more generous returns.
The appeal of leveraged loans and the lower tranches of CLOs is the double digit returns they offer, which has been particularly magnified in an environment of falling interest rates. The negative-yielding bond market almost topped $17 trillion in 2019.

Euro Stoxx 50, IBEX Price Forecasts: Bulls Eye Trend Higher

Friday 01st May, 2020

Euro Stoxx 50 Price Analysis

European stocks closed out April on a sour note Thursday, with the Euro Stoxx 50 index declining over 3 percent. The downward price action follows grim economic data in the Eurozone along with new stimulus measures announced from the ECB. While the European index, representing the 50 largest companies in Europe, is down 24 percent year-to-date, April closed out a 4.35 percent gain in USD pricing, despite the weak finish Thursday.
Swinging from the March low, the index recently failed to clear its 50.0% retracement level. The trend higher remains intact, however. A move lower may find assistance from an earlier area of resistance, later turned support near the 38.2% retracement zone. Bulls will look to clear the psychological price level at 3000, and then the April high of 3050.19, set Thursday.

Apple and Amazon Earnings Highlight Detachment from Real Economy

Friday 01st May, 2020

Apple and Amazon Earnings Highlight Detachment from Real Economy

Two of the most important stocks on the S&P 500 and Nasdaq 100 reported earnings Thursday afternoon, delivering key insight for equity investors. The mega-cap corporations possess significant weighting in both indices and have notable influence over sentiment in the technology sector. Therefore, the strong financial results from both companies is an encouraging sign for further equity gains but a closer look reveals a detachment of corporate performance and economic activity.
Unlike much of the corporate world, Apple not only delivered a strong quarter with both revenue and earnings per share beating expectations, but also laid out plans to buyback another $50 billion in AAPL stock.

Japanese Yen May Rise as CLO Market Faces Credit Downgrades

Thursday 30th April, 2020

Japanese Yen May Rise on Credit Downgrades Risks

The Japanese Yen may extend its gains versus its peers if stress in the market for collateralized loan obligations (CLOs) is amplified in the current environment. The almost $700 billion market is the biggest part of the broader $1.2 trillion market for so-called ‘leveraged loans’. These are debt obligations typically belonging to borrowers on the lower end of credit ratings but whose higher level of risk offers comparatively more generous returns.
The appeal of leveraged loans and the lower tranches of CLOs is the double digit returns they offer, which has been particularly magnified in an environment of falling interest rates. The negative-yielding bond market almost topped $17 trillion in 2019. At the end of that same year, 51 percent of all new investment grade bonds were rated BBB. Put another way, a majority of comparatively safer debt issues wereright on the cusp of being designated “noninvestment grade” or “junk”.

Australian Dollar Slide Halts As China PMI Holds Above 50 But Misses Forecast

Thursday 30th April, 2020

Australian Dollar, Official China Purchasing Managers Index Talking Points

The Australian Dollar’s Thursday slide was slowed by news that China’s economy continues to recover well from the ravages of coronavirus, even if not quite as well as expected on all counts.
The official April Purchasing Managers Index for the manufacturing sectors came in at 50.8, which was below both the 52.0 seen in March and the 51.0 expected. However, it was above the important 50 point and that seems to have been enough for the market.
In the logic of PMI data, it takes a reading above 50 to signify expansion. The manufacturing series hit a low of 35.7 in February, as coronavirus shuttered the economy, but has bounced back into expansion territory with astonishing speed.

Dow Jones, FTSE 100, DAX 30 Outlook: Retail Investors Selling Again?

Wednesday 29th April, 2020

What Does Trader Positioning Say About Global Stock Market Trends?

Upside momentum in global equity indexes such as the Dow Jones, FTSE 100 and DAX 30 has been cautiously reinvigorated since I discussed them last week. Short exposure in these from retail traders has been slowing climbing since. Will this continue and what can that mean for global markets ahead?
According to IG Client Sentiment (IGCS), about 36.39% of traders are net long the Dow Jones at the time of this writing. This is down from about a 65% net long standpoint when prices bottomed last month. Yet those biased to the upside are up 6.03% from yesterday while down 4.91% over a weekly basis. The combination of current sentiment and recent changes gives a further mixed Wall Street trading bias.

Australian Dollar Ticks Up As Inflation Rises, Virus likely Blunts Impact

Wednesday 29th April, 2020

Australian Dollar, First Quarter Consumer Price Inflation Talking Points

The Australian Dollar rose a little on Wednesday as inflation in its home nation rose above expectations even though the prospect of higher interest rates remains a distant one at best thanks to the impact of coronavirus.
Official data showed the Consumer Price Index up by 0.3% on the quarter and 2.2% on the year. The annualized rise was well ahead of expectations, which had looked for a 1.9% rise, and also pushed price rises back into the Reserve Bank of Australia’s target band for the first time since the second quarter of 2018.

Copper Prices Could Offer Best Coronavirus-Recovery Steer

Tuesday 28th April, 2020

COPPER PRICES, GLOBAL CORONAVIRUS RECOVERY PATH, TALKING POINTS

As the world staggers out of induced economic coma forced on it by the coronavirus, crude oil prices may offer on overly gloomy prognosis of its chances. Copper could rather promise the better steer.
While no one thinks that contagion will be anything other than a hammer blow to the global economy, it probably isn’t as hard a one as you might pardonably think if you merely eyed crude oil’s collapse.
While an obvious global bellwether, the oil market has its own dynamics. And the actions of producers since March, when production cuts could not be agreed, to the present day, when they have been but too late to stop a petroleum glut sloshing round a locked-down world with no use for it, are playing a huge part in the daily oil market fire sale.

New Zealand Dollar Slips, Ardern's Virus Caution Adds To Risk-Off Tone

Tuesday 28th April, 2020

NEW ZEALAND DOLLAR TALKING POINTS

The New Zealand Dollar slipped markedly on Tuesday as the country’s Prime Minister Jacinda Ardern reportedly cautioned people to remain at home if possible, reminding investors that the struggle against coronavirus will be long even in countries where it has been most successful so far.
Further falls for crude oil, despite this month’s heavy production cuts, have also weighed on growth correlated assets like the Kiwi, Australian Dollar and equities.
NZD/USD nosedived after reported comments from Ardern, although they were in themselves hardly shattering, urging continued vigilance against the disease.

Japanese Yen Up, Nikkei 225 Down After BOJ Expands Policy Support

Monday 27th April, 2020

BANK OF JAPAN, YEN, NIKKEI 225, COVID-19, STIMULUS - TALKING POINTS:

Financial markets were seemingly underwhelmed as the Bank of Japan attempted to boost stimulus efforts in the face of headwinds from the global Covid-19 outbreak. The Japanese Yen rose against an average of its major counterparts (white candles on the chart below) while its local benchmark for stocks – the Nikkei 225 index (turquoise candles) – traded lower.
BOJ Governor Haruhiko Kuroda and company expanded its lending facilities to more banks, scrapped limits on purchases of government bonds while increasing the size of planned commercial paper and corporate debt uptake to ¥20 trillion. Policymakers said they will not hesitate to take additional steps to ease credit conditions, if that is judged to be necessary.

US Dollar, ASEAN Fundamental Outlook: SGD, IDR, MYR and PHP

Monday 27th April, 2020

US DOLLAR ASEAN WEEKLY RECAP

The US Dollar was on average a little lower versus ASEAN currencies such as the Indonesian Rupiah, Malaysian Ringgit and Philippine Peso last week – see chart below. Volatility was subdued as aggressive upside momentum on Wall Street ebbed. After a rough start to the week as crude oil prices temporarily turned negative, the Dow Jones declined -1.93% over the past 5 trading days. Equities trimmed losses on Friday.
As I mentioned in last week’s ASEAN fundamental outlook, the focus for pairs such as USD/SGD, USD/IDR, USD/MYR and USD/PHP by and large remain on development in global market sentiment. This may have been why the Singapore Dollar struggled to achieve notable gains after local industrial production surged 16.5% y/y in March versus -4.9% anticipated. That was the sharpest reinvigoration since January 2018.

USD/CAD Rate Breakout Flops Ahead of April High

Friday 24th April, 2020

CANADIAN DOLLAR TALKING POINTS

USD/CAD consolidates despite the break of the descending channel, and the exchange rate may trade within a more defined range amid the failed attempt to test the monthly high (1.4298).
USD/CAD continues to pullback from the weekly high (1.4265) amid the limited reaction to Canada’s Consumer Price Index (CPI), and the exchange rate appears to be on track to revisit the monthly low (1.3855) as it initiates a fresh series of lower highs and lows.
However, the update to Canada’s CPI warns of a more pronounced slowdown in economic activity as the headline reading for inflation narrows to 0.9% from 2.2% in February amid forecasts for a 1.1% print.

How Do Politics and Central Banks Impact FX Markets?

Friday 24th April, 2020

MARKETS HAVE PASSED THE POLITICAL EVENT HORIZON

For foreign exchange (“forex” or “FX”) traders, the constant background noise that politics represents is an inescapable blackhole. Traditional media drowns in punditry, while social media drowns in puns. It doesn’t matter what asset class you’re trading either.In recent years, even a single tweet from a politician has had the capacity to move not only currencies but also bonds,commodities, and equities.
In an increasingly fractious landscape, traders need a framework by which to interpret information and understand political developments as they happen. After all, politics can become policy after enough time and effort. To this end, FX traders need a way to interpret information and political developments in the context of how fiscal policy could change and how that might impact their portfolios.

Silver, Palladium Outlook Bearish as Prices Cross Key Threshold

Thursday 23rd April, 2020

PALLADIUM PRICES FORECAST

Palladium has struggled to recover from the over 40 percent drop after peaking at 2855.00, and may now be on the verge of suffering additional losses. XPD/USD bottomed out at the September 2019-low at 1596.00 and spiked over 20 percent. The fundamental catalyst behind the precious metal’s recovery may have had to do in large part from the prospect of virus-induced disruptions to key mining operations in South Africa.
This supply shock temporarily alleviated the downside pressure being exerted on the growth-anchored precious metal after the virus catalyzed a market-wide selloff in risk-oriented assets across the world. However, palladium recently suffered its biggest one-day loss on April 21 and is now trading below a key inflection point at 1950.50. If the breach is met with follow-through, XPD/USD may retest support at 1596.00.

Euro Fell, US Dollar May Rise if Asia Stocks Look Past Wall Street

Thursday 23rd April, 2020

EURO SINKS AS US DOLLAR GAINS, AUSTRALIAN DOLLAR BENEFITS FROM WALL STREET RISE

The Euro was one of the worst-performing G10 currencies on Wednesday. EUR/USD sold off ahead of today’s summit between European Union leaders where members will be discussing the next steps in handling the coronavirus pandemic. In particular, there may have been some pessimism over a US$2.2 trillion plan to support regional economic growth.
This window of opportunity allowed the haven-linked US Dollar to trim most of its losses during a relatively optimistic day in global equities. The S&P 500 and Dow Jones closed 2.29% and 1.99% to the upside respectively, bringing a halt to two days of consecutive losses. This upbeat mood benefited the growth-linked Australian Dollar while also boosting the similarly-behaving New Zealand Dollar.

Hong Kong Dollar Curbed By HKMA as Covid-19 Measures Weaken USD

Wednesday 22nd April, 2020

HONG KONG DOLLAR, HANG SENG, HONG KONG MONETARY AUTHORITY, FX INTERVENTION - TALKING POINTS:

Investors all over the world may have cheered the massive stimulus programs put in place to combat the economic drag of coronavirus, but they’ve caused some headaches for emerging markets, with Hong Kong a case in point.
Lower US interest rates have increased the charms of the Hong Kong Dollar, already a market darling thanks to Chinese investors’ fondness for the local stock market, the Hang Seng. Higher rates at the city’s banks have attracted inflows as US borrowing costs have fallen back to zero, pushing the Hong Kong Dollar to the top of its permitted trading range against the greenback.

How to Trade the Impact of Politics on Global Financial Markets

Wednesday 22nd April, 2020

ANALYZING GEOPOLITICAL RISKS

Against the backdrop of eroding fundamentals, markets become increasingly sensitive to political risks as their capacity for inducing market-wide volatility is amplified. When liberal-oriented ideologies – that is, those favoring free trade and integrated capital markets – are being assaulted on a global scale by nationalist and populist movements, the frequent results are violent volatility stemming from uncertainty.
What makes political risk so dangerous and elusive is the limited ability investors have for pricing it in. Traders may therefore find themselves hot under the collar as the global political landscape continues to unpredictably shift. Furthermore, much like the spread of the coronavirus in 2020, political pathogens can also have a similar contagion effect.

Euro Trembles Ahead of EU Leaders Summit as Regional Recession Looms

Tuesday 21st April, 2020

EURO MAY CRACK UNDER PRESSURE AS POLITICAL FISSURES GROW

The politically-sensitive Euro continues to be held hostage by intra-regional negotiations over how to combat the coronavirus. While covid-19 has affected the entire region, economies with pre-existing debt issues – most notably those bordering the Mediterranean like Italy and Spain – have been hit asymmetrically. Their economically-precarious situations have made them more vulnerable than their Northern neighbors.
Consequently, the approach on how to address the virus-induced slowdown is divided along similar lines, though it should be noted that this fissure always existed – the virus merely exacerbated it. Distressed member states in the South have pushed issuing so-called “coronabonds”, a frequently-broached debt mutualizing proposal that has failed to gain a wide-spread consensus.

Australian Dollar Steady As RBA Minutes Show Bank Content To Wait

Tuesday 21st April, 2020

AUSTRALIAN DOLLAR, RESERVE BANK OF AUSTRALIA MONETARY POLICY MINUTES, TALKING POINTS:

The Australian Dollar was steady on Tuesday following the release of minutes from the last Reserve Bank of Australia monetary policy meeting, on April 7.
The central bank left its key Official Cash Rate at 0.25% after it. declining the quarter-point reduction that markets narrowly expected. The OCR fell twice in March, however, to its current record low of 0.25%, with an extra cut added as part of measures to mitigate the economic effects of the coronavirus.
The minutes left the perhaps predictable impression that. considerable monetary and fiscal stimulus having been applied, the central bank was now content to wait and see what more was needed.

Bitcoin Price: How Will Halving, Coronavirus Affect BTC?

Monday 20th April, 2020

WHAT IS BITCOIN HALVING?

Bitcoin halving is the process in which so-called “miners” – covered in the section below – are rewarded 50% fewer BTC for verifying transactions in the blockchain network. This is scheduled to occur every 210,000 blocks and is designed to help preserve Bitcoin’s allure as a store of value. The cap for Bitcoin is set at 21 million, thereby keeping the supply finite. There is no Bitcoin central bank that can simply print more BTC. In fact, the guiding purpose of the cryptocurrency and the very thing underpinning its broad appeal is that it operates on a decentralized network that cannot be controlled by a single person or institution.

Oil Price Collapse Claims Scalp as Major Trader Files for Bankruptcy

Monday 20th April, 2020

MAJOR OIL TRADER’S COLLAPSE, RISK APPETITE. TALKING POINTS:

In every major crisis there comes a point at which weakening economic numbers translate into corporate scalps and the nodal Singapore energy market has reached that point. Its biggest oil trading firm Hin Leong Trading has filed for bankruptcy protection, seeking to restructure nearly $4 billion in debt.
If course, the energy sector has taken an unprecedent hit. The coronavirus has shredded energy-demand forecasts even as major producers saturate the market with cheap oil. Oil prices have collapsed to lows not seen since 2001, even after major production cuts which have so far done nothing to revive it.

US Dollar & VIX Index Climb, Stock Market Rally at Wits End?

Friday 17th April, 2020

STOCK MARKET FORECAST – US DOLLAR & VIX ‘FEAR-GAUGE’ ON THE RISE AS EQUITY RECOVERY LOSES MOMENTUM

US Dollar stretches higher as unemployment continues to mount, FX volatility snaps back and the recent wave of coronavirus optimism stalls. S&P 500 price outlook grows increasingly bearish along with the Dow Jones, Nasdaq and Russell 2000 owing to the latest coronavirus update. The VIX Index ‘fear-gauge’ pops on news the SBA Payroll Protection Program ran out of funding while stock market earnings season disappoints and crude oil remains under pressure.
The US Dollar is back in the driver seat as the DXY Index spikes higher following the return of currency volatility. US Dollar upside recorded so far this year has been driven largely by demand for safe-haven assets.

Australian Dollar Struggles As China GDP Falls More Than Expected

Friday 17th April, 2020

AUSTRALIAN DOLLAR, CHINA FIRST QUARTER GROSS DOMESTIC PRODUCT DATA, TALKING POINTS:

The Australian Dollar backtracked a little Friday on news that China’s economy shrank in the first quarter of this year, and by more than the markets had expected, as coronavirus exacted its toll.
Official Gross Domestic Product was down by 6.8% on the year, worse than the 6.5% expected and the 6% rate seen at the end of 2019. March industrial production was released at the same time. It slipped by a relatively modest 1.1%, much better than the 7.3% feared and hugely better than February’s 13.5$ collapse. Retail sales plunged, however, falling by 15.8% last month when a slide of only 10% had been expected.

Copper Prices May Bounce Back on China GDP After Virus-Induced Selloff

Thursday 16th April, 2020

COPPER PRICES, IMF GDP PROJECTION, CHINESE ECONOMIC RECOVERY - TALKING POINTS:

Copper prices continue to struggle as the keystone industrial metal collapses under the economic fallout from the COVID-19 pandemic. The price for the red metal is down nearly 18 percent year-to-date, and more than 50 percent from highs set in 2011.
However, a recent bounce may reflect growing confidence for the world to stage an economic comeback, particularly in China. As a staple industrial metal, copper is especially sensitive to secular trends to demand-side drivers in the economy such as construction, particularly in high-growth major economies, like China. Given that, the slowdown in Chinese economic activity, measured through GDP, helps to explain the downtrend from the 2011 highs in copper.

Mexican Peso Price Drops on Fitch Downgrade, Australian Dollar at Risk

Thursday 16th April, 2020

MEXICAN PESO SINKS AS FITCH DOWNGRADES CREDIT RATING, AUSTRALIAN DOLLAR WEAKENS

The Mexican Peso fell over one percent against the US Dollar after Fitch downgraded Mexico’s credit rating to ‘BBB-‘ from ‘BBB’. This is one notch above non-investment grade which places the nation on the precipice of junk status. The outlook remained stable however. Mexico’s economy, like most nations, is under pressure as growth, trade and output slow amid the coronavirus outbreak. It’s top trading partner, the US, is no exception.
USD/MXN - broadly speaking - was already aiming higher prior to this announcement due to the pessimistic shift in financial markets on Wednesday. The Dow Jones and S&P 500 closed -2.20% and -1.86% to the downside respectively.

Dow Jones, DAX 30, CAC 40 Outlook: Short Bets Hint Prices May Be Lifted

Wednesday 15th April, 2020

WHAT DOES TRADER POSITIONING SAY ABOUT GLOBAL STOCK MARKET TRENDS?

Global equities have extended their bounce off last month’s low as investors continued broadly selling into their uptrends. These indexes include the Dow Jones, DAX 30 and CAC 40. Now, overall net-short positioning seems to be sitting at levels prior to the outbreak of the coronavirus. What can this mean for the outlook ahead? I discuss it in this week’s session on IG Client Sentiment (IGCS) – see recording above. According to IGCS, about 27.67 percent of traders are net long the Dow Jones at the time of this writing. That is down from about a 65% upside bias when prices bottomed in March. Since then, the Dow climbed over 30 percent as traders attempted to pick the next top. From here,

Stock Markets Rise Even As Coronavirus Remains Unconquered. Why?

Wednesday 15th April, 2020

GLOBAL EQUITY GAINS DESPITE CORONAVIRUS, TALKING POINTS:

Since late March the world has been faced with the counter-intuitive site of rising global stock markets despite the continued spread of the coronavirus pandemic and the crippling economic blows it has dealt. Australia’s blue-chip ASX 200 benchmark can serve as a case in point. Battered by the virus down to lows not seen since 2012, the index has recovered by well over a thousand points since March 23. Gains of similar or even greater magnitude can be seen across major indexes. And yet, most national economies remain paralyzed, lockdowns prevent economic engagement while growth forecasts tank and joblessness soars. The coming corporate earnings season is viewed with trepidation.

Gold Price Rally to Persist If RSI Pushes Into Overbought Territory

Tuesday 14th April, 2020

GOLD PRICE TALKING POINTS

The price of gold clears the March high ($1704) as the Federal Reserve plans to provide $2.3T in loans to US households and businesses, and the precious metal may extend the advance from earlier this month if the Relative Strength Index (RSI) pushes into overbought territory.
The price of gold climbs to a fresh yearly high ($1724) as the Federal Reserve unveils the ‘Main Street Lending Program’ along with additional unconventional tools in order to “provide powerful support for the flow of credit in the economy.”

Australian Dollar Outlook Eyes Chart Setup, Crude Oil Looks Past OPEC

Tuesday 14th April, 2020

AUSTRALIAN DOLLAR GAINS, CRUDE OIL PRICES STRUGGLE AS WALL STREET EYES EARNINGS SEASON

The Australian Dollar gained on Monday and may continue to rise during Tuesday’s Asia Pacific trading session. Wall Street futures received a cautious bump during the White House daily press briefing after President Donald Trump said that they are “close to” a plan to open the country. This was followed by Treasury Secretary Steven Mnuchin saying that they are ahead of schedule in delivering direct deposit checks.
Market mood somewhat recovered during the North American trading session as local government bond yields climbed.

How Do Politics and Central Banks Impact FX Markets?

Monday 13th April, 2020

MARKETS HAVE PASSED THE POLITICAL EVENT HORIZON

For foreign exchange (“forex” or “FX”) traders, the constant background noise that politics represents is an inescapable blackhole. Traditional media drowns in punditry, while social media drowns in puns. It doesn’t matter what asset class you’re trading either.In recent years, even a single tweet from a politician has had the capacity to move not only currencies but also bonds,commodities, and equities.
In an increasingly fractious landscape, traders need a framework by which to interpret information and understand political developments as they happen. After all, politics can become policy after enough time and effort. To this end, FX traders need a way to interpret information and political developments in the context of how fiscal policy could change and how that might impact their portfolios.

US Dollar Outlook vs SGD, IDR, MYR Hinges on Foreign Exchange Reserves

Monday 13th April, 2020

USD/SGD, USD/IDR, USD/MYR CLOSELY EYEING FOREIGN EXCHANGE RESERVES

As the haven-linked US Dollar aggressively appreciated amid the coronavirus outbreak, ASEAN central banks stepped up FX intervention efforts to help stem selling pressure in their currencies. A great way to measure the vigor of their actions is by looking at foreign exchange reserves. Lately pairs such as USD/SGD, USD/IDR and USD/MYR have given back recent gains, perhaps suggesting that these efforts are working.
On the chart below, foreign exchange reserves have been declining in ASEAN nations such as Singapore, Malaysia and Indonesia. In fact those in Malaysia dipped to US$101.7 billion in March which was the lowest since the beginning of 2019. Indonesian FX reserves fell to US$120.97 billion last month which was the smallest since May 2019. Singapore levels have also turned cautiously lower.

Euro at Risk as North-South Political Rift Threatens Financial Stability

Friday 10th April, 2020

EURO AT RISK AS POLITICAL DIVIDE THREATENS REGIONAL GROWTH, COORDINATED POLICY

The Euro continues to suffer as typically fiscally-conservative officials from the North and their otherwise-inclined Southern counterparts bicker about a unified approach to address the economic impact of the coronavirus. A meeting on Thursday failed to yield meaningful results after a conference last week also ended with officials sticking to their positions. The debt-mutualizing “corona-bond” proposal continues to be the main point of contention. The friction is nothing new, but the urgency of the talks under the current economic conditions is unprecedented as the Eurozone faces the prospect of a deeper recession than it endured ten years ago. While Brussels has loosened the purse strings to allow more governments to deficit spend, the issue over additional aid and use of the crisis-era Emergency Stability Mechanism (ESM) is pressuring the Euro.

Dow Jones, Nasdaq 100, S&P 500 Forecast: An Earnings Season Like None Other

Friday 10th April, 2020

DOW JONES, NASDAQ 100, S&P 500 FORECAST: AN EARNINGS SEASON LIKE NONE OTHER

The Dow Jones, Nasdaq 100 and S&P 500 have recovered significantly from their March 19 lows as central banks and governments across the globe have acted to ward off a global recession in the wake of coronavirus. Despite remarkable central bank and government intervention, recent data has revealed a staggering increase in unemployment and growth forecasts appear similarly bleak. Until now, market participants have been largely reliant on broader economic metrics or forecasts which has made it difficult to ascertain the ramifications single stocks may be experiencing. Thankfully, the arrival of earnings season will look to inject information into the market – arguably the essence of investing. That being said, this earnings season is poised to be entirely unique and as a result, may be a stock-pickers dream.

USD/CAD Negates Pennant Formation Ahead of Canada Employment Report

Thursday 09th April, 2020

CANADIAN DOLLAR TALKING POINTS

USD/CAD consolidates ahead of Canada’s Employment report and the exchange rate may continue to face range bound conditions going into the Easter holiday as it fails to track the pennant formation carried over from the previous month. USD/CAD attempts to retrace the decline from earlier this week as the Bank of Canada’s (BoC) Business Outlook Survey reveals that “business sentiment had softened in most regions even before concerns around COVID‑19,” and the update to the employment report may produce headwinds for the Canadian Dollar as the economy is anticipated to shed 500K jobs in March.

Yen Falls as Wall Street and Crude Oil Prices Gain, AUD/USD May Rise

Thursday 09th April, 2020

JAPANESE YEN AND US DOLLAR SINK AS WALL STREET AND CRUDE OIL PRICES GAIN

The anti-risk Japanese Yen and similarly-behaving US Dollar were some of the worst-performing major currencies on Wednesday. Market sentiment broadly improved as the Dow Jones and S&P 500 closed 3.44% and 3.41% higher. The growth-linked Australian Dollar outperformed. This rosy session also contrasted starkly with Tuesday’s relatively dismal one, a reflection of elevated volatility levels around the coronavirus.

British Pound (GBP) Latest: Volatility Tumbles as GBP/USD Stabilizes

Wednesday 08th April, 2020

GBP VOLATILITY CONTINUING TO FALL

Directional trades in GBP/USD are becoming more difficult as Sterling volatility continues to fall. After trading close to the 1.24 level for most of last week, and its drop Friday, the pair has found a new level close to 1.23 and is relatively stable there despite the news that UK Prime Minister Boris Johnson is in a hospital intensive care unit suffering from coronavirus symptoms. While other currencies continue to be buffeted by risk-on/risk-off flows as optimism about the coronavirus pandemic ebbs and flows, GBP/USD volatility has dropped from a high above 25 on March 23 to its current level just above 14 according to the CBOE/CME Sterling volatility index.

US Dollar Up As EU Ministers Fail to Agree Corvid-19 Response

Wednesday 08th April, 2020

US DOLLAR, EURO, EUROPEAN UNION MINISTERS FAIL TO AGREE CORONAVIRUS RESPONSE TALKING POINTS:

The US Dollar rose sharply as Wednesday’s Asia Pacific session wound down on news that European Union finance ministers had failed to agree on a strategy to mitigate the economic impact of the coronavirus on the Eurozone. An emergency conference which ran for nearly sixteen hours saw no agreement on how to reconcile contrasting views. As usual France and the European south were up against Germany and its northern allies. The latter remain opposed to the issuance of joint debt, a long-time stumbling-block within the monetary union that many in the north are adamant will not be hastily removed by the exigencies of the virus.

AUD/USD Forecast: Wait-and-See RBA to Give Way to Bear Flag Formation

Tuesday 07th April, 2020

AUSTRALIAN DOLLAR TALKING POINTS

AUD/USD snaps a four day losing streak ahead of the Reserve Bank of Australia (RBA) meeting, but the interest rate decision may do little to alter the near-term outlook for the Australian Dollar as the central bank is expected to retain the current policy in April. AUD/USD attempts to retrace the decline from the previous week, with the exchange rate clearing the series of lower highs and lows, and the RBA meeting may help to prop up the Australian Dollar as the central bank appears to be on track to keep the official cash rate (OCR) at the record low of 0.25%.

Euro, Crude Oil May Suffer From OPEC & Eurozone Political Rifts

Tuesday 07th April, 2020

EURO MAY FALL ON EU FINANCE MINISTER MEETING AMID CORONAVIRUS PANDEMIC

The Euro will be closely scrutinizing another round of talks between Eurozone finance ministers this week after the prior meeting failed to achieve anything of substance. The ongoing deliberations reflect an internal conflict that has been a source of tension for over a decade. Specifically, between the Northern, fiscally conservative states – like Germany – and their more liberal counterparts – the Mediterranean members.

NZD/USD Rate Outlook Mired by Dovish RBNZ Forward Guidance

Monday 06th April, 2020

NEW ZEALAND DOLLAR TALKING POINTS

NZD/USD attempts to retrace the decline from the previous week following the limited reaction to the 701K contraction in US Non-Farm Payrolls (NFP), but the exchange rate may continue to give back the rebound from the yearly low (0.5469) as a bear flag formation unfolds. NZD/USD trades on a firmer footing as the Reserve Bank of New Zealand (RBNZ) tames speculation for a negative interest rate policy (NIRP), with Chief Economist Yuong Ha arguing that the central bank would need to “assess the effectiveness, efficiency and an impact on financial system soundness of doing so.” However, recent remarks from Governor Adrian Orr suggest the RBNZ stands ready to deploy more unconventional tools to support the economy as the central bank head pledges to “keep monetary support going for as long as necessary through QE and other tools.”

US Dollar Back on the Offensive? USD/SGD, USD/PHP, USD/MYR, USD/IDR

Monday 06th April, 2020

SINGAPORE DOLLAR, PHILIPPINE PESO, INDONESIAN RUPIAH, MALAYSIAN RINGGIT – TALKING POINTS

The US Dollar was generally back on the offensive against ASEAN currencies such as the Singapore Dollar, Indonesian Rupiah and Malaysian Ringgit last week. Meanwhile the Philippine Peso held its ground, cautiously rising – see chart below. Elsewhere in emerging markets, the Greenback also outperformed against the Indian Rupee as coronavirus cases picked up pace locally. Additional fiscal stimulus from Singapore as the MAS eased policy has thus far not bode well for SGD. Rather the focus for developing economy currencies remained on the flow of capital. The United States – the world’s largest economy – revealed worrying trends in the labor market last week as the nation lost the most jobs since 2009. This is as the country took the spot as the nation with the most confirmed cases of the coronavirus.

Indian Rupee May Fall as US Dollar, USD/INR Rise on Virus Cases

Friday 03rd April, 2020

INDIAN RUPEE DECLINES AS US DOLLAR GAINS, WHERE TO?

Indian Rupee selling pressure was reignited against the US Dollar in the aftermath of last week’s emergency rate cut from the RBI. In addition to cutting benchmark lending rates, the Reserve Bank of India dialed up long-term repurchasing operations in an effort to boost liquidity conditions amid the coronavirus outbreak. Earlier this week, the RBI also increased short-term funding limits by 30% across the country. These measures are certainly welcome. Moody’s – a credit ratings agency – downgraded the outlook for Indian banks to negative from stable. Prior to the virus pandemic, the country was attempting to overcome from a troubled banking sector. Meanwhile the latest Markit manufacturing PMI print showed local growth at its weakest since November after making a sharp U-turn following January – see chart below.

Bitcoin Price: How Will Halving, Coronavirus Affect BTC?

Friday 03rd April, 2020

WHAT IS BITCOIN HALVING?

Bitcoin halving is the process in which so-called “miners” – covered in the section below – are rewarded 50% fewer BTC for verifying transactions in the blockchain network. This is scheduled to occur every 210,000 blocks and is designed to help preserve Bitcoin’s allure as a store of value. The cap for Bitcoin is set at 21 million, thereby keeping the supply finite. There is no Bitcoin central bank that can simply print more BTC. In fact, the guiding purpose of the cryptocurrency and the very thing underpinning its broad appeal is that it operates on a decentralized network that cannot be controlled by a single person or institution. Halving is written into the Bitcoin algorithmic protocol, designed by the enigmatic person or group known only as Satoshi Nakamoto during the 2008 global financial crisis.

Palladium Decline May Be Offset by Virus-Induced Supply Shock

Thursday 02nd April, 2020

HOW HAS CORONAVIRUS IMPACT PALLADIUM PRICES?

As a cycle-sensitive commodity, palladium has been a victim of the market-wide liquidation in risk-oriented assets as the coronavirus undermines global growth prospects. In 2019, XPD was the best-performing precious metal; year-to-date it is up only 14% after recently recovering from seven-month lows. Having said that, the disruptive nature of Covid-19 may in fact be a hidden source of support for palladium prices. South Africa – the second-largest producer of the precious metal after Russia – recently announced a strictly-enforced 21-day lockdown and extended these measures to its mining operations. Following the government’s decree, XPD/USD registered its largest one-day increase since 1997 and rose almost 25 percent. This disruption to production amplified the precious metal’s structural undersupply and helped buoy prices. Palladium is typically extracted as a secondary product from mining operations targeted at other metals like nickel.

EUR/USD Levels to Watch as Rebound from 2020 Low Unravels

Thursday 02nd April, 2020

EUR/USD RATE TALKING POINTS

EUR/USD continues to give back the advance from the yearly low (1.0636) as there appears to be a rift within the European Central Bank (ECB), and the exchange rate may exhibit a more bearish behavior over the coming days as it extends the series of lower highs and lows from earlier this week. EUR/USD remains under pressure as ECB board member Yannis Stournaras insist that “now is the time for common action and solidarity,” with the official going onto say that “common issuance of debt is common action against the common enemy”during an interview with Bloomberg News. The comments suggest there’s a split within ECB as “there are proposals to use the European Stability Mechanism or the European Investment Bank,” and the Governing Council may merely buy time at its next meeting on April 30 as the central bank carries out the Pandemic Emergency Purchase Programme (PEPP).

Dow Jones, S&P 500, DAX 30 Outlook: Will the Bounce Last?

Wednesday 01st April, 2020

WHAT DOES TRADER POSITIONING SAY ABOUT GLOBAL STOCK MARKET TRENDS?

Global stocks have bounced after appearing to find a bottom towards the end of March. The Dow Jones, S&P 500 and DAX 30 are attempting to recover lost ground as they struggle to push above key resistance. Can upside momentum last? These topics are discussed in this week’s session on IG Client Sentiment (IGCS) where I discussed trader positioning, fundamental and technical analysis to uncover the prevailing trends.

AUD Steadies As China Caixin Manufacturing PMI Returns to Expansion

Wednesday 01st April, 2020

AUSTRALIAN DOLLAR, CHINA CAIXIN MANUFACTURING PURCHASING MANAGERS INDEX TALKING POINTS:

The Australian Dollar found only a brief respite in its trek lower Tuesday on news that China’s private manufacturing sector returned to expansion territory in March after a massive, coronavirus linked hit in February. The March Purchasing Managers Index from media company Caixin came in at 50.1, well ahead of both the 45.0 print expected and the previous month’s 40.3. In the logic of PMIs any reading above the 50 line signified expansion for the sector in question. The Caixin version covers smaller Chinese firms, usually those in private hands.

EUR/USD Rate Recovery Stalls as ECB Warns of Looming Recession

Tuesday 31th March, 2020

EUR/USD Rate Recovery Stalls as ECB Warns of Looming Recession

EUR/USD struggles to hold its ground as the ECB Vice President Luis de Guindos states that incoming data “indicate that a recession will take hold,” with the official going onto say that “each month will see a fall of approximately two percentage points in GDP” amid the lockdown in Europe. In turn, Mr. Guindos insists that the ECB “will do everything possible to keep the euro together and to provide the best funding possible,” and it seems as though the Governing Council will keep the door open to implement more non-standard measures as the central bank remains reluctant to remains reluctant to push the main refinance rate, the benchmark for borrowing costs, into negative territory.

Canadian Dollar Sank with Crude Oil as Health Care Steered Wall Street

Tuesday 31th March, 2020

Canadian Dollar, USD/CAD, Crude Oil, AUD/USD, Wall Street – Asia Pacific Market Open

The Canadian Dollar was one of the worst-performing major currencies to start the week, depreciating alongside crude oil prices. WTI declined -7.27% to an 18-year low amid ongoing bearish fundamental themes, the coronavirus outbreak and a global supply glut. The commodity is a key source of revenue in Canada, making the Loonie often sensitive to swings in oil depending on the latter’s impact on monetary policy bets. Sentiment-linked WTI was unable to capitalize on a “risk-on” tilt in equities towards the end of the day. The S&P 500 closed 3.35% to the upside, fueled by outperformance in health care securities. This is despite US President Donald Trump announcing an extension of virus guidelines until the end of April, backing down on hopes of starting to open the economy by the Easter holiday in about 2 weeks.

Gold Price Levels to Watch Following US Fiscal Stimulus Program

Monday 30th March, 2020

Gold Price Levels to Watch Following US Fiscal Stimulus Program

The price of gold appears to be stuck in a narrow range amid the wave of monetary and fiscal support, and it seems as though major central banks will continue to push monetary policy into uncharted territory as the Reserve Bank of New Zealand (RBNZ) unveils a new credit facility that “will provide liquidity in exchange for eligible Corporate and Asset-Backed securities.” At the same time, the Federal Reserve appears to be on track to implement more non-standard measures as the central bank prepares a“Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses,” and the Federal Open Market Committee (FOMC) along with its major counterparts may continue to push the limits of monetary policy as their benchmark interest rate sit near zero.

Euro May Rise on ESM, Crude Oil Selloff Deepens on OPEC Price War

Monday 30th March, 2020

Euro Eyes Eurozone Finance Minister Meeting: ESM in Focus

The Euro may rise following a meeting between Eurozone finance ministers on Monday where they are expected to discuss the possible use of the Emergency Stability Mechanism (ESM). The European-based agency was developed following the Eurozone debt crisis in 2012 as the shock from the 2008 financial meltdown asymmetrically hit the regional economy and pushed the Euro to the precipice of collapse. The fund has a little over 400 billion euros at its disposable and includes a number different levers policymakers can use to stabilize financial markets and restore confidence. Some of these include purchasing sovereign debt in order to help distressed member states get access to credit markets. However, seeing that interest rates remain low despite the considerably darker outlook, officials may advocate to use other policies.

Stock Market: now a days is Apple, Microsoft and Alphabet against everyone else.

Monday 20th January, 2020

The stock market travels on the currents of supply and demand.

That’s uncontroversial. Yet as the indexes have sped to new highs, plenty of observers have argued that a relative shortage of stocks combined with somewhat mechanical sources of demand explain everything from Dow 29,000 to the trio of trillion-dollar market-cap giants that tower above the rest of the market. The idea of an equity shortage usually hinges on the decline in the total number of U.S. public companies in recent decades, the relative dearth of initial public offerings and the consistent flow of share buybacks meant to reduce companies’ equity base. These are all features of this bull market, for sure. But it’s an oversimplification to focus on the absolute number of stocks or the background hum of stock buybacks as key drivers of the market’s historic run. There are plenty of stocks to go around and buybacks aren’t wagging the indexes – it’s just that everyone wants the same kind of stocks. What’s truly scarce are big, reliable cash flows that investors believe will endure economic wobbles and constant technological disruption.

US-China Deal is on the way

Monday 13th January, 2020

Final Preparations are being made from Both men US President Donald Trump and Chinese Vise - Premier Liu He

""Final Preparations are being made from Both men US President Donald Trump and Chinese Vise - Premier Liu He in order to sign the “stage 1 bilateral trade deal. Hence both countries warmly welcomed the agreement which it might be more than a brief respite in the US China tensions of Trump’s presidency. The reason the deal was finalised late last year, despite recent bilateral differences on a range of issues including Iran and Hong Kong, is that both sides decided even a truce, however temporary, is in their domestic interests. As Trump enters his re-election year, he is will claim — however far-fetched in reality — to have brought Beijing to heel. Meanwhile, the agreement provides a degree of stability in China’s most important economic bilateral relationship after some recent sub-par national economic data,

Johnson hails ‘new dawn’ after historic victory

Tuesday 17th December, 2019

Boris Johnson has promised to deliver Brexit and repay the trust of voters

"Boris Johnson has promised to deliver Brexit and repay the trust of voters after he led the Conservatives to an ""historic"" general election win. The PM, who has met the Queen to ask to form a new government, has a majority of 80 in the House of Commons - the party's largest since 1987. He said he would work ""flat out"" and lead a ""people's government"". Jeremy Corbyn said he would not fight another election as Labour leader, amid recriminations over the party's defeat.

Boris Johnson wins Tory contest to become UK prime minister

Thursday 25th July, 2019

Boris Johnson wins Tory contest to become UK prime minister

Boris Johnson was crowned leader of the Conservative party on Tuesday and is set to become prime minister, facing perhaps the most daunting challenge of any British politician in peacetime. Mr Johnson beat Jeremy Hunt in the race to succeed Theresa May as head of the Tory party, securing 92,153 votes to the foreign secretary’s 46,656.

No change to US dollar policy ‘as of now’, says Treasury chief

Thursday 25th July, 2019

Boris Johnson has promised to deliver Brexit and repay the trust of voters

US Treasury secretary Steven Mnuchin on Thursday said there was “no change” to Washington’s stance on the dollar “as of now”, amid mounting speculation over whether the Trump administration will act to weaken the dollar. Mr Mnuchin said the US “could consider” a change to its dollar policy “in the future” but there was no change at present.

Deutsche Bank to exit equities trading in radical overhaul

Thursday 25th July, 2019

Boris Johnson wins Tory contest to become UK prime minister

Deutsche Bank has unveiled one of the most radical banking overhauls since the financial crisis, closing swaths of its trading unit and hiving off €74bn of assets as the struggling German lender calls time on its 20-year attempt to break into the top ranks of Wall Street.
Thursday 25th July, 2019

Boris Johnson was crowned leader of the Conservative party on Tuesday and is set to become prime minister, facing perhaps the most daunting challenge of any British politician in peacetime. Mr Johnson beat Jeremy Hunt in the race to succeed Theresa May as head of the Tory party, securing 92,153 votes to the foreign secretary’s 46,656.
Thursday 25th July, 2019

US Treasury secretary Steven Mnuchin on Thursday said there was “no change” to Washington’s stance on the dollar “as of now”, amid mounting speculation over whether the Trump administration will act to weaken the dollar. Mr Mnuchin said the US “could consider” a change to its dollar policy “in the future” but there was no change at present.
Thursday 25th July, 2019

Deutsche Bank has unveiled one of the most radical banking overhauls since the financial crisis, closing swaths of its trading unit and hiving off €74bn of assets as the struggling German lender calls time on its 20-year attempt to break into the top ranks of Wall Street.
Monday 27th June, 2019

Clearing houses pose new perils for the global financial system. Grimstad, norway, is an unlikely setting for financial-market shenanigans. But the fishing town is home to Einar Aas, a trader who took huge bets on Scandinavian energy markets. His 15 minutes of infamy came in September 2018, when his bets went spectacularly wrong. Unable to cover his losses, he blew a €114m ($133m) hole in the capital buffers of Nasdaq Clearing, which handled his trades......

Monday 27th June, 2019

It is trying to manage expectations. “Most of america thinks the Federal Reserve is a national forest.” That reminder that the general public has little idea what a central banker does was offered by an incumbent governor of the Federal Reserve to Alan Blinder when he joined in 1994. He passed it on 25 years later, on June 4th, to a star-studded group of economists and policymakers gathered at the Federal Reserve Bank of Chicago to discuss the Fed’s first public review of its framework...

Monday 27th June, 2019

What will happen when interest rates eventually start to rise again? At the end of 1989, an American in London received a call from a friend back home. The caller had watched the fall of the Berlin Wall and the toppling of Nicolae Ceausescu in Romania with growing dismay. He was at the end of a four-year course in Russian Studies at an elite university with hefty tuition fees. He had learned all the Kremlinology a would-be cold...

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