Daily Market Analysis by CapitalStreetFX

[CSFX.Support]

Daily Report on October 10, 2016 by Capital Street FX

Daily Report on October 10, 2016



Asian stocks were almost unchanged on Monday after the second U.S presidential debate between Hilary Clinton and Donald Trump. Financial markets continue to retain their view that Democrat Clinton holds an edge going into presidential election against her Republican rival. With major Asian markets including Tokyo, Hong Kong and Taiwan closed on Monday on account of local holidays, the MSCI Asia Pacific index gained less than 0.1%.

Chinese stocks rallied in the first session after a-week-long break, as the local currency dipped to a six-year low against the U.S dollar. The Chinese Yuan sold off on the back of the central bank's announcement last week that the country’s foreign exchange reserves dropped more than expected in September. This drop in reserves marked a decline for the third month in a row and once again rang alarm bells over capital outflows from the world's second-largest economy.

Downward pressure on the yuan also rose because the U.S. dollar has continued to strengthen on the back of labor market data that has been officially stated by some Fed officials to be strong enough to support a possible U.S. interest rate hike later this year. The US market is also closed on account of the Columbus Day holiday today.

Oil prices are paring early losses stemming from a statement by Russia's Energy Minister Alexander Novak. Minister Novak expressed his belief in a potential deal this November when OPEC and non-OPEC oil producers gather to discuss details over a new output ceiling, but stated that he was not expecting to reach an agreement with OPEC at the World Energy Conference, which is being held from October 9th to 13th this week in Istanbul.

Elsewhere, USDJPY reversed lower following a gap up on the market open on Monday. Speaking on Saturday, Bank of Japan Governor Haruhiko Kuroda stated that the central bank “will not hesitate” on monetary easing if necessary, but based on the moderate recovery witnessed recently, which has been supported by hefty fiscal stimulus, further easing is not warranted for the time being.



Technicals

USDCHF



Fig: USDCHF H4 Technical Chart

USDCHF has trimmed some of the losses from the slide on Friday and looks to be resuming the uptrend and getting back to trade above the 38.2% retracement level at 0.97800. The short-term MA20 continues to play an important role in containing the price fall and forcing the price action to reverse higher. With the RSI index bouncing back from the 50 line, we can observe that the market was restrained from entering into bearish territory. The market is likely to attempt a test of the resistance at 0.98170.

Trade suggestion

Buy Stop at 0.97900, Take profit at 0.98170, Stop loss at 0.97650



EURJPY



Fig: EURJPY H4 Technical Chart

EURJPY failed to breach the resistance at 116.000, the same level that had prevented the price from surging higher in the first half of September. The price action has penetrated the 20-peiod moving average from above, signaling a reversal into a downtrend. The RSI index has moved past the 50 threshold but we would need the index to fall deeper to confirm the downside as the index is currently swinging back and forth around the average line.

Trade suggestion

Sell Stop at 115.000, Take profit at 114.650, Stop loss at 115.450



AUDUSD



Fig: AUDUSD H4 Technical Chart

The Aussie has pulled back from the resistance at 23.6% level, which has turned into a new zone of resistance after the market fell through this zone towards the end of last week. This zone has served as a firm zone of support through September and therefore the breach becomes significant. The market opened with a gap up today, but gave up the gains in early Asian trade and fell back below the MA20. With downward pressure exerted by the two MAs placed above the price action and bearish sentiment visible in the RSI as well, the pair AUDUSD is expected to extend the down moves.

Trade suggestion

Sell Stop at 0.75850, Take profit at 0.75550, Stop loss at 0.76170



GOLD



Fig: GOLD H1 Technical Chart

Gold rose back above the 38.2% retracement level at 1249.91 after dropping below this level for the first time since late-May. As can be seen on the H1 chart, the short-term MA20 has converged with the long-term MA50 from below, indicating an upmove. Other indicators are also confirming the current up-move. While RSI has soared to 59.64, ADX is surging higher in the wake of the widening distance between the +DI line and the –DI line.

Trade suggestion

Buy Stop at 1265.00, Take profit at 1275.00, Stop loss at 1255.00



BRENT



Fig: BRENT H1 Technical Chart

Brent crude has been moving within a range between 51.30 and 52.00. The price action created a gap down on the opening today, but is paring earlier losses. A sharp down move on Friday pushed the market below the moving averages. However, considering the Stochastic chart where the %K line has crossed the %D line from below and is running ahead of the %D line, Brent may attempt a test of the upper boundary of the range at 52.00

Trade suggestion

Buy Stop at 51.60, Take profit at 52.00, Stop loss at 51.20



EURO50



Fig: Euro Stoxx 50 H4 Technical Chart

From the price chart, we can see a rebound in the Euro Stoxx 50 from the 38.2% Fibonacci level at 2996.36. The market is struggling with the 50-period moving average and is likely to break through this resistance level as the %K line has crossed over the %D line from below, which indicates a potential up-move coming up.

Trade suggestion

Buy Stop at 3010.00, Take profit at 3040.00, Stop loss at 2985.00

 

[CSFX.Support]

NZD/USD signal by Capital Street FX

NZD/USD signal by Capital Street FX

From GMT 07:15 10/10/2016

Till GMT 21:00 10/10/2016

Sell at0.71400

Take profit at0.71080

Stop loss at0.71700

 

[CSFX.Support]

Earnings Season Kickstarts In The U.S – Second Clinton-Trump Debate In The Spotlight

Earnings Season Kickstarts In The U.S – Second Clinton-Trump Debate In The Spotlight

U.S stocks closed lower on Friday as a weaker-than-expected jobs report failed to wipe out expectations of a rate hike by the Federal Reserve before the end of the year. The Dow Jones slipped by 0.15 percent, to 18,240.49, the SP500 lost 0.33 percent, to 2,153.74 and the Nasdaq Composite fell 0.27 percent, to 5,292.41. All three benchmark indexes registered the first weekly drop after three consecutive weeks of gains.

According to the Labor Department’s NFP report released on Friday, there were 156,000 jobs added in the US in September. This result was not only lower than market expectations for 172,000 new jobs added in September, but also indicated a trend towards decreasing numbers over the last four months. The unemployment rate rose to 5% from 4.9% as more Americans entered the labor market looking for work. The number of workers in the labor force surged by 444,000 last month.

Commenting on the jobs report, Cleveland Federal Reserve President Loretta Mester said that the economy is at full employment and therefore gradual rate hikes are needed. Echoing the same point of view as Cleveland Fed President Mester, Federal Reserve Vice Chairman Stanley Fischer also stated on Friday that the result was strong enough to reflect an economy that is moving ahead but not too fast to pose risks.

Prior to Friday’s Non-farm Payrolls, most of the U.S economic data released earlier in the week posted much-better-than-expected results. Institute for Supply Management (ISM) said on Monday that the purchasing managers’ index for the manufacturing sector rose to 51.5 in September from 49.4 the prior month. The reading pointed to an expansion last month after shrinking in August.
In a separate report on Wednesday, the ISM’s services index was also reported to shoot up to the highest reading in 11 months at 57.1 in September from 51.4 in August. Data on the country’s new orders for factory goods, which was also released on Wednesday by the Commerce Department added further evidence of a healthy US economy. Orders for manufactured goods rose 0.2 percent in August after a downward revision to the July data, suggesting that the manufacturing sector is gradually regaining some steam.

The greenback will remain in focus in the week ahead. The FOMC minutes from the Fed’s September meeting are scheduled to be released on Wednesday. U.S. retail sales and University of Michigan Consumer Sentiment index are also on the calendar, and due to be released on Friday. Furthermore, U.S. policymakers including FED President Janet Yellen and FOMC Vice Chairman William Dudley are scheduled to speak in the coming week. The main focus will be on Yellen – who is scheduled to speak at the Boston Annual Research Conference on Friday.
Another major source of market guidance for the next four weeks until November 8th, shall be the US quarterly earnings season. This earnings season becomes even more critical given that it is coinciding with the final leg of the US presidential election season. A batch of big names including Alcoa, Citigroup and JPMorgan Chase report results in the coming week. Prior to the release of these earnings reports, the second 90-minute-long presidential debate between Democrat Hillary Clinton and Republican Donald Trump will take place at 9 pm Eastern shall become the focus of attention on Sunday night.

GBPUSD

Over in the UK, the Sterling plunged to around $1.20000 in early Asian trade on Friday after French President Francois Hollande stated that the U.K had to suffer the consequences of a departure from the single market, otherwise, other countries would follow Britain and attempt to leave the EU.

Explaining the free-fall in the market, traders supposed that it was largely due to computer-driven orders that triggered and exacerbated the plunge, especially when the market was in a period of low liquidity. No matter what the cause, sterling recorded the biggest weekly loss versus the U.S dollar, among major currencies, and the steepest one-day decline since the June referendum.
The British Pound had continued to tick lower since the start of last week, following comments by Prime Minister Theresa May that she would begin the two-year period of exit negotiations by the end of March. A fall in the Cable boosted U.K’s FTSE 100 index to surpass the 7000.00 threshold as a weaker currency tends to support exporters which account for a large part of the index.
Under downward pressure from the uncertainty tied to the departure of the U.K from the European Union, the Pound could not find support from encouraging economic data that reflected an expansion in all three core sectors – manufacturing, construction and services. Economists claimed that consequences of the hard “exit” are yet to come, as the U.K is expected to experience a tough negotiation process with the EU vis-a-vis its departure from the bloc. In the week ahead, there is no important data on the U.K economy that could cause any significant data driven moves in the GBP.

EURUSD

Out on the mainland, the Euro ended higher against the dollar on Friday, but finished the week in the red. Bloomberg reported on Tuesday that the ECB will probably gradually taper down the asset-buying program before the conclusion of its quantitative easing program. That triggered a jump in EURUSD but the effect did not last long as the European Central Bank President Mario Draghi was quick to deny the statement. Draghi said that there had not been such discussion within the ECB. The next policy meeting of the ECB is scheduled to be held on September 20th.

German ZEW Economic Sentiment for October is the highlight of the upcoming week. Economists expect a rebound to 4.2 point after three months in a row that the number has disappointed markets.

USDCAD

Moving onto Canada, the USDCAD rose strongly in the past week despite rising oil prices and strong Canadian jobs data. According to Statistics Canada, more than 67k jobs were created in September, the largest increase since April 2012. The unemployment rate was unchanged at 7.0%, as more people participated in the labor market, boosting the participation rate to 65.7%.

As stated by the Richard Ivey School of Business’s report, manufacturing activity also accelerated with the IVEY PMI index jumping to 58.4 from 52.3, the highest level since January. Considering these reports, the weakness in the Canadian dollar is considered to have resulted partly from the fall in oil prices on Friday, but was mostly due to the strength of the U.S dollar even after the weaker than expected payrolls report. With no Canadian economic reports scheduled for release next week, CAD flows will dictated by oil.

AUDUSD

Out in Australia, The RBA, led by new Governor Philip Lowe, maintained the benchmark rate at an unchanged level, at a record-low of 1.5 percent at its monetary policy meeting in the early part of last week. The bank cited an unexpected rebound in commodity prices as a boost to the economy, helping it grow at an above-average pace. Additionally, the housing boom in Australia is an area of rising concern and the real estate sector is in a situation that may not be suitable for further cuts, especially when the unemployment rate is falling and international trading conditions are favorable for Australia.

Next week is expected to be a quiet one for the AUD as there is no important data release scheduled, except the NAB Business Confidence Index on Tuesday. AUD/USD will be taking its cue from general risk appetite and the moves in the U.S dollar, as well as an increase in trading volumes as the Chinese markets reopen after a week of holiday. China’s trade balance will be out on Thursday and may have a significant impact on the AUD – given the size and significance of China-Australia trade flows.

NZDUSD

To round up on the markets, the New Zealand dollar reversed lower in the past week, as stumbling dairy prices added pressure on the commodity dependent currency. Composite Dairy Prices fell for the first time since July at the Global Dairy Trade auction on Wednesday. The GDT price index declined by 3 percent to US$2,880, down from US$2,975 at the previous auction two weeks ago. In the coming week, the New Zealand Business manufacturing index is scheduled for release on Thursday. NZD/USD is currently forecast to remain under downward pressure.

 

[CSFX.Support]

Nasdaq Trade Idea By Capital Street FX

Nasdaq 100 Hits New Peak – Mylan And Crude Oil Power Market – Buying Looks Promising

In an interesting and rare coincidence today, U.S Presidential Candidate Hillary Clinton and Incumbent Russian President Vladimir Putin came together to support Wall Street higher. U.S stocks including Nasdaq 100 index registered gains today as bulls were powered by the rally in oil prices and brightening prospects of Hillary Clinton becoming the 45th president of the U.S.

Crude prices took off after president Putin, delivered a speech at the energy conference in Istanbul, pledging Russia’s participation in international efforts to limit oil production to stabilize the market and prop up prices.

The Nasdaq 100 index recorded a new record high at 4905.17, led by a 9% increase in Mylan N.V shares. The pharmaceuticals company stated that its subsidiary Mylan Inc. had reached a $465 million settlement with the Justice Department and other government agencies in the case related to its mis-classification and mis-pricing of anti-allergy treatment EpiPen.

Advancing issues outnumbered declining issues by 70 to 30. Maxim Integrated Products Inc topped the list of worst performers, losing over 3%.

Trade suggestion

Buy Stop at 4897.50, Take profit at 4907.00, Stop loss at 4885.00

 

[CSFX.Support]

Natural Gas Market Outlook by Capital Street FX

Natural Gas Corrects After Last Week’s Powerful Rally – Whats Next?

Natural gas tumbled on Monday on profit taking by traders, after NG reached the highest levels since June 2015. Supported by news from the demand side, natural gas closed higher in every single session last week and rallied over 12%.

Bullish sentiment was partly buoyed by weather forecasts that have predicted unseasonably warm weather in most parts of the U.S from October 12th to 21st, which is anticipated to increase air-conditioning usage and boost natural gas demand for power generation as a result.

The U.S Energy Information Administration on Thursday reported that net supplies of the commodity added 80 billion cubic feet (bcf) for the week ended September 30th, topping analysts’ forecasts for a rise of 69 bcf. Total natural gas stocks in storage rose to 3.68 trillion cubic feet (Tcf), up 74 bcf from a year ago and 205 bcf above the five-year average.

Another possible factor behind the recent rise rise in natural gas can be found in the report from the World Energy Council which has forecast that global per capita demand for energy would continue rising and peak in 2030. The findings are part of a larger report on energy production and consumption, which was released ahead of the 23rd World Energy Congress in Istanbul. The report predicts that technological innovation and government policies will have a significant impact on the demand for energy including transport fuels, heating and electricity.

In a separate report by the U.S EIA, natural gas production and consumption in the U.S were reported to have increased in 2015. According to the EIA’s 2015 Natural Gas Annual Report, the market for natural gas continues to grow as the U.S. currently produces and consumes more gas than ever before.

Domestic production reached 27.1 Tcf, a 4.5 percent increase above 2014 levels, while total demand increased 2.8 percent to 25.1 Tcf in 2015. Net imports also continued their steady downward trend as higher imports were offset by higher exports, the report said.

Another factor contributing to the short term pull-back in natural gas today can be attributed to Hurricane Matthew. The category-1 hurricane had been expected to cause massive disruptions to the areas under its coverage with potential effects on Natural Gas production, supply and transportation, helping push natural gas futures up on Friday, before the hurricane made landfall in the US, over the weekend. The hurricane did cause significant power outages which reduced demand by power plants for NG. However, the damage caused was significantly lower than expected and the supply side seems to bee unaffected for the most part. The markets have subsequently cooled off somewhat.

Natural Gas Technical Analysis

Fig: Natural Gas D1 Technical Chart

As can be observed from the daily chart, natural gas prices pulled back after failing to break out of the 38.2% retracement on Friday. Bullish sentiment that fueled the commodity for five trading days in a row pushed the market into the overbought zone and sellers stepped in to cool the market, as indicated in the stochastic chart. The %D line and the %K lines have caught up with each other and whether the market corrects much further from here or continues the up-move after a brief correction remains to be seen. With the two MAs placed below the price action, currently prices are expected to re-attempt a test of the 38.2% resistance at the 3.210 level.

Trade suggestion

Buy Stop at 3.210, Take profit at 3.330, Stop loss at 3.000

 

[CSFX.Support]

Daily Report on October 11, 2016 by Capital Street FX

Daily Report on October 11, 2016

Having rallied sharply on Monday, crude price went sideways in the morning session of Asian trade. Brent crude price hit one-year high at $53.72 per barrel, while U.S light, sweet crude WTI re-attempted the highest in six months at $51.58 per barrel. The rally came from comments from top leaders of Saudi Arabia and Russia, who reinforced the possibility of a global deal to curb production being reached in the next OPEC’s formal meeting in November.

However, Goldman Sachs, in a note to clients dated October 10th, supposed that the oil market is not likely to re-balance in 2017, even OPEC and other oil exporters can unleash an agreement to freeze or cut output. It is not only because any reduction will not be deep enough to trim the currently global surplus, but also since higher prices would allow U.S. shale drillers to raise output.

Moving on to China, Premier Li Keqiang said on Tuesday that Chinese economy had shown positive changes in last quarter, and the country's debt risks have been under control. Li also claimed that the world’s second largest economy is fully capable of maintaining medium- to high-speed growth and the government will take action to stabilize the property market.

Commenting on the case of the U.S Federal Reserve to raise rate in December, Fed Chicago President Charles Evans said on Tuesday he "could be fine", but he would prefer to see more evidences of the economy and especially inflation making progress before deciding. Evans said last Friday's non-farm payrolls report was a "pretty good number", which indicated the U.S. economy was on a solid footing, therefore, a hike in December would not be a surprise.



Technicals

EURCHF



Fig: EURCHF H4 technical chart

EURCHF has generally been on a steady rally as the pair has been supported by two moving averages placed below the price action. As can be observed from the price chart, since the start of this month, the pair has never dropped below the lower dynamic support which is the long-term MA50. The market remains in the bullish zone with RSI once again rebounding from the 50-line. The target at 61.8% level is within the sight.

Trade suggestion

Buy Stop at 1.09500, Take profit at 1.09775, Stop loss at 1.09300



USDCAD



Fig: USDCAD H4 technical chart

USDCAD has just pulled back from the upwards slopping trend line that has connecting higher lows since September 07th. The pair peek out of the support yesterday but failed to sustain the bearish momentum. The U.S dollar is anticipated to surge back above the two moving averages. As can be seen from the stochastic chart, the % K line penetrating the %D line from below has consolidated the upside.

Trade suggestion

Buy Stop at 1.32000, Take profit at 1.32310, Stop loss at 1.31750



USDCHF



Fig: USDCHF H4 technical chart

For the third time of this month, USDCHF surpassed the resistance at 0.98170. The currency pair had to give up its rally and reversed downwards back below this level two times before as market had been close or in the oversold territory. This time, even the U.S dollar has already made a breakout, RSI index has only surged to 65.44, which indicated that there is more room for the pair to soar higher. Higher lows and higher highs also reflects stronger bulls, not to mention the divergence between +DI and –DI lines of the ADX chart.

Trade suggestion

Buy Stop at 0.98400, Take profit at 0.98840, Stop loss at 0.98000



SILVER



Fig: SILVER H4 technical chart

Silver has been trading under indecisive mood following some corrective moves last Friday. Silver market has escaped from the overbought zone but is still in favor of sellers, as indicated by the RSI chart. The grey metal is expected to return to the downtrend as it remains challenging for silver price action to cross over the short-term MA20.

Trade suggestion

Sell Stop at 17.600, Take profit at 17.400, Stop loss at 17.800



COPPER



Fig: COPPER H4 technical chart

Copper has fell into a consolidation after soaring strongly since last Friday. Recent candles that showed short bodies suggested an equal force between buyers and sellers. However, bulls are expected to regain strength to boost price higher. Not only does RSI remain above 50 but the large gap between +DI and –DI line suggest upbeat moves.

Trade suggestion

Buy Stop at 2.1980, Take profit at 2.2150, Stop loss at 2.1845



DOW JONES



Fig: DOW JONES H4 technical chart

For the last month, U.S Dow Jones index has been moving in a shrinking range with lower highs and higher lows. The index breached the upper boundary yesterday but could not go far from the down trend line and eventually fell back into the range. As consolidated by stochastic indicator with %K line crossed over the %D line southwards, Dow Jones may fall further.

Trade suggestion

Sell Stop at 18.29500, Take profit at 18.20000, Stop loss at 18.40000

 

[CSFX.Support]

GBP/JPY signal by Capital Street FX

From GMT 07:45 11/10/2016
Till GMT 21:00 11/10/2016

Sell at 127.950
Take profit at 126.800
Stop loss at 129.000

 

[CSFX.Support]

Alcoa Trade Idea by Capital Street FX

Alcoa Earnings Fall Short of Estimates – Shorts Favored On Weak Results And Company Break Up

Shares of Alcoa Inc. dropped more than 10% on Tuesday after the metals manufacturer disappointed markets by reporting a worse-than-anticipated quarterly earnings result.

Kicking off the third-quarter earnings season, Alcoa reported net profit of $166 million, or 33 cents per share. Profits were up from $44 million, or 6 cents per share in the same period one year ago, but missed expectations calling for earnings per share of 35 cents.

Alcoa’s revenue fell to $5.21 billion from $5.57 billion in the same quarter a year ago, as a result of lower production in its traditional smelting operation. The advance in profits at the New York-based company resulted from cost-cutting measures and lower income tax provisions.

This is Alcoa’s last quarterly report before it splits into two separate entities – one focussing on the traditional smelting business, and the other on higher-end aluminum and titanium alloys.

Alcoa Trade suggestion
Sell Stop at 28.25, Take profit at 26.00, Stop loss at 30.00

 

[CSFX.Support]

FTSE100 Market Outlook by Capital Street FX

FTSE100 to Set a New Record – Buying Looks Attractive As Pound Continues To Weaken

U.K stocks swing between gains and losses on Tuesday morning as multinationals continued to benefit from a continuing slide in the pound, but energy companies were weighed down by lower oil prices.

The British Pound extended its slide versus the U.S dollar for the fourth consecutive trading day amidst concerns over the potentially tough negotiation between the U.K and the European Union regarding the UK’s exit from the single market. According to Treasury documents, which were leaked to The Times, Britain will lose up to £66 billion a year if it goes for a hard Brexit.

The cost of leaving the single market and the EU customs union, and to switch to World Trade Organization (WTO) rules will be between £38bn and £66bn per year after 15 years, the documents said. The country’s GDP is also forecast to fall by as much as 9.5% compared to the GDP numbers the UK economy would register, were it to remain in the EU. This projection is based on the scenario where Britain leaves the EU without a successor arrangement.

GBPUSD broke through the $1.23000 threshold today and has played a critical role in cheering most of the FTSE 100’s constituents as these companies generate the bulk of their revenues overseas.

Among top movers, fashion brand Burberry Group PLC added 2.10%, reveling in the positive sentiment towards European luxury brands, after French luxury giant LVMH reported that its nine-month revenue rose by 4% compared with the same period last year.

Other retailers including Travis Perkins PLC and Next PLC also witnessed a rise. Shares of Travis Perkins PLC – the builders’ merchant and home improvement company – gained 2.24% after its “outperform” rating was maintained by Credit Suisse Group AG and JPMorgan Chase & Co. Meanwhile, Leicester-based apparel and accessories seller Next PLC topped the market – jumping 3.64%.

Hospitality and hotel group Whitbread PLC added to the upside, rising 2.73%.

On the downside, Informa PLC led the list of worst performers. Shares of the publishing and events company dropped around 8% due to the dilution effect of the admission of nil-paid rights on the stock. The rights were tendered due to the acquisition of U.S based Penton Information Services.

With a decrease of 3.34%, insurance, and banking group Old Mutual Wealth became the runner-up on the list of losers. Old Mutual Wealth reported net client cash flows fall in the third quarter by 0.9 billion pounds ($1.12 billion). Cash flow fell from 2.3 billion pounds a year earlier, due to pension reforms that prompted clients to withdraw cash.

Energy stocks drifted lower as oil ticked down after the International Energy Agency, in its monthly report, said that OPEC’s total crude production rose by 160,000 barrels per day (bpd) to a record 33.64 million bpd in September. This implies that OPEC needs to slash its current output by between 640,000 and 1.14 m bpd, to reach the ceiling range agreed by the cartel in Algiers which is from 32.5 million to 33 million bpd.

Oil major BP PLC inched 0.18% lower while Royal Dutch Shell pared earlier gains as oil prices headed lower.

FTSE 100 Technical Analysis

Fig: FTSE 100 D1 Technical Chart

FTSE 100 retested the record high logged last week at 7126.95. The steady rally, which has continued since June 27th, has pushed the market into the overbought zone, as indicated by the RSI chart. The bullish momentum seems to be maintaining its strength with a large divergence between +DI and –DI line created in the ADX indicator window. The Index is expected to attempt creation of new all-time highs.

Trade suggestion

Buy Stop at 7130.00, Take profit at 7150.00, Stop loss at 7110.00

 

[CSFX.Support]

Daily Report on October 112, 2016 by Capital Street FX

Daily Report on October 12, 2016



Asian shares declined for a fourth day after a Wall Street’s sell-off on Tuesday. Not only did a stronger dollar weigh on multinational companies, but a gloomy start of the earnings session knocked down investor confidence in stock markets. The Dow Jones fell 1.09%, to 18,128.66, the S&P 500 lost 1.24%, to 2,136.73 and the Nasdaq Composite dropped 1.54%, to 5,246.79, led by 11.4% decline in Alcoa’s shares.

Lower oil prices were also one of factors dragging down equity markets yesterday. Crude oil finished lower on Tuesday amidst concerns that Russia will not be fully committed to an OPEC deal to curb oil output, even after Russian President Putin had pledged to join the cartel to re-stabilize the oil market.

Topping up to comments by Russia’s Energy Minister Alexander Novak that his country is currently only considering output freeze option, not production cut, Igor Sechin - the Executive Chairman of oil giant Rosneft - said his company will not trim or freeze output as part of a possible agreement with OPEC.

All major Asian benchmarks ticked lower today. The MSCI Asia Pacific Index dropped 0.4%. Hong Kong’s Hang Seng Index and the Shanghai Composite Index declined 1.1% and 0.3%, respectively. The British Pound bounced back 1.5% against the greenback on the news reported by Bloomberg that Prime Minister Theresa May had accepted the participation of Parliament in the decision on when to trigger the two-year period of negotiation with the EU regarding the departure of the U.K.

Britain’s Parliament will debate on Wednesday to gain the right to “properly scrutinize” the government’s plan for leaving the EU before PM May begins formal talks. If it wins, the triggering of Article 50 of the Lisbon Treaty, which starts the exit process, may be delayed compared to May’s initial plan as most parliamentarians are in favor of remaining within the EU.



Technicals

USDJPY



Fig: USDJPY H4 Technical Chart

As can be observed from the chart, the pair USDJPY has resumed its uptrend after crawling back from near 104.100 handle. Recent candles have long lower shadows and nearly no upper shadows, which suggested that the pair may have bottomed out. Bulls which are still dominating the market, have stepped in to support the pair from lows. The fact that %K line has crossed over the %D line from below has consolidated upbeat moves.

Trade suggestion

Buy Stop at 103.650, Take profit at 104.100, Stop loss at 103.300.



AUDUSD



Fig: AUDUSD H4 Technical Chart

The Aussie pulled back from near 38.2% retracement but the upside seem limited as the pair is struggling with two MAs lingering above the price action. Lower lows since the end of September and consistent reversals upon coming up against the moving averages have indicated strengthening bears. RSI is close to the 50 line and is likely to pull back like it did on Monday. The support at 38.2% level is within sight.

Trade suggestion

Sell Stop at 0.75750, Take profit at 0.75300, Stop loss at 0.76100



GBPNZD



Fig: GBPNZD H4 Technical Chart

GBPNZD has been under heavy downward pressure exerted by the two MAs placed above the price action. The short-term MA20 that forced the pair to reverse lower yesterday, continued to push the pair lower today. With the RSI remaining in bearish territory and pointing towards the oversold zone, GBPNZD is expected to test the low at 1.71400 again.

Trade suggestion

Sell Stop at 1.73050, Take profit at 1.71400, Stop loss at 1.74000



BRENT



Fig: BRENT H4 Technical Chart

Brent crude extended its rally after the price fell from one-year highs at around 53.72. Thanks to the dynamic support from the MA20, the market pulled back again and is heading upwards to re-attempt the resistance at 53.36 which is the 61.8% Fibonacci level where it had to give up its strength and reverse lower. Along with the stochastic chart that has shown the convergence of the %K line and %D line, the ADX chart where ADX index surged above 20 are factors consolidating the uptrend.

Trade suggestion

Buy Stop at 52.70, Take profit at 53.35, Stop loss at 52.00



Natural Gas



Fig: Natural Gas H4 Technical Chart

Having soared above the 38.2% retracement at 3.187 to as high as 3.300, Natural gas trimmed its rally as the one way move may have exhausted bulls for now. Too many buyers created an overblown market vulnerable to reversals, as everyone who wanted to buy may have already bought. Sellers, therefore, jumped in and pushed the price back down. But as can be seen from the chart, all of the recent candles have closed at the same/similar levels, which suggested that bears could not dampen the price lower. Hence, this may be a possibility for a reversal back into an uptrend.

Trade suggestion

Buy Stop at 3.230, Take profit at 3.300, Stop loss at 3.200



EURO50



Fig: Euro Stoxx 50 H4 Technical Chart

Euro Stoxx 50 has generally been following an uptrend supported by a couple of moving averages hovering below the price action. The index has reversed consistently after hitting highs, but we can observe higher highs and higher lows, which suggests that buyers are the overwhelming force currently. As the RSI index has bounced back from the dividing line between bullish and bearish territory, Euro Stoxx 50 may re-attempt the high at 3061.00 logged on September 22nd.

Trade suggestion

Buy Stop at 3030.00, Take profit at 3061.00, Stop loss at 3010.00

 

[CSFX.Support]

CAD/JPY signal by Capital Street FX

CAD/JPY signal by Capital Street FX

FromGMT 07:25 12/10/2016
TillGMT 21:00 12/10/2016

Buy at 78.360
Take profit at 78.860
Stop loss at 78.000

 

[CSFX.Support]

OPEC Output Report Dilutes Prospects of A Production Deal – Powerful Opportunity For

OPEC Output Report Dilutes Prospects of A Production Deal – Powerful Opportunity For Sellers

WTI crude oil plunged on Wednesday, extending losses after hitting six month highs at around $51.58 per barrel recorded on Monday. Crude prices plummeted after the OPEC published its production data for September. On top of the fact that the cartel’s oil output last month reached eight-year highs, the report sapped investor confidence in a potential production cut/freeze deal by reporting data that conflicts with information provided by individual member countries.

While some members such as Saudi Arabia, Iraq and Venezuela said they pumped more oil last month than what has been reported, Nigeria said its production was lower and Iran declined to report its numbers. Markets are showing concerns over the possibility of any real agreement on a production ceiling, and the details of the specific quota for each member, which will be discussed next month.

The question is how can OPEC reach a consensus on how much each country should pump if the cartel cannot accurately estimate the production of each member?

Trade suggestion
Sell Stop at 49.95, take profit at 49.10, stop loss at 50.20

 

[CSFX.Support]

Gold Market Outlook by Capital Street FX

Gold Moves Indecisively Ahead of FOMC Meeting Minutes – Will 1250.00 Threshold Be Broken?

Gold rose in the early part of the Asian trading session in the wake of a retreating U.S dollar, but has been edging lower in early European trading hours as the greenback claimed back its strength ahead of the release of the minutes from the September FOMC meeting, which are due to be released later today.

The precious metal has lost about 10% compared to the 28 month peak level of $1375.00 per ounce recorded in early July this year. Particularly, since September 28th, gold has dropped more than 6.7% amid signs of improving U.S. economic data and hawkish comments from Fed officials that have fueled expectations that the U.S Federal Reserve will raise interest rates by the year end.

Minutes from the September meeting of the Federal Reserve Open Market Committee (FOMC) are scheduled to be released at 18:00 GMT on Wednesday. At the last meting, policy makers left the federal funds rate target unchanged and maintained the target range of 0.25% to 0.5%. However, 3 of the 10 voting members of the FOMC including Boston Fed President Eric Rosengren had dissented the decision, and voted for a rate increase instead.

Rosengren has been considered as being dovish for a long time, as he has supported ultra-low rates in order to push down unemployment. With the number of new jobs added remaining steady month after month, and the jobless rate at or below 5 percent so far this year, Rosengren urged his colleagues to tighten policy to avoid overheating the labor market and triggering inflation.

The minutes are expected to provide markets with more details about the division within Fed officials. A hawkish leaning within the Fed, may cement the likelihood of a hike in December and consequently push up the U.S dollar. Traders have priced in only an 8.3% probability that the Fed will raise rates at its November meeting, but the chance of such a move by mid-December has risen to nearly 70%, according to the CME’s Fed Watch Tool.

The yellow metal is highly sensitive to U.S. interest rates. Not only will a strengthening greenback reduce gold’s appeal as it makes the dollar-denominated asset more expensive for investors holding other currencies, but higher yields from interest-bearing assets such as bonds will also dampen the metal’s competitiveness.

As stated by the Associated Chambers of Commerce of India, the country’s gold imports declined by 58.96% to 270 tons in the period January to September 2016, from 658 tons that were imported during the same period last year. According to the research report, gold imports declined partly due to a prolonged strike by jewelers in March and April to demand a roll back of the 1% excise duty that was imposed on gold and silver jewelry.

Another reason for the downturn in Indian gold imports is the continuation of the 10% customs duty on import of gold bars, which has spurred smuggling of gold, leading to a decline in official imports and reported numbers.

GOLD technical analysis

Fig: GOLD D1 Technical Chart

Gold has been trading sideways for five trading days in a row above the 38.2% retracement level at around 1250.00. With the cautiousness on the fundamental side, and the fact that the gold market has entered the oversold zone, sellers have restrained the downward push and are simply waiting it out. If the minutes are not in favor of the precious metal, gold can breach the 38.2% level and collapse to as low as the 50.0% level.

Trade suggestion

Sell Stop at 1249.50, Stop loss at 1265.00, Take profit at 1235.00

 

[CSFX.Support]

Daily Report on October 13, 2016 by Capital Street FX

Daily Report on October 13, 2016

Asian shares slumped for the fifth trading session in a row, stumbling to three-week lows after an unexpected decline in Chinese exports raised fresh concerns about the health of the world’s second biggest economy. MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1% to the lowest since mid-September. Other Asian stock indices such as Hong Kong’s Hang Seng index, and the Japanese Nikkei 225 also fell today.

According to the General Administration Customs - China, the country’s exports diminished by 10% in September from a year earlier while imports also witnessed a decline of 1.9% after a pickup in August. Worse-than-expected data left China with a trade surplus of $41.99 billion for the month – a level that missed the forecast for a surplus of $53.1 billion.

Minutes of the U.S. central bank’s September meeting, released on Wednesday reinforced the case for tighter monetary policy before the end of the year.

Against the background of weak Chinese reports suggesting tepid domestic and foreign demand, increasing expectations of a U.S. interest-rate hike and uncertainties spurred by Britain’s efforts to leave the European Union, the Japanese Yen has been rising in a knee-jerk reaction. A fall in equities gave a lift to the yen – one of the safe haven currencies which investors seek in times of market stress.

Oil extended losses following the report by the American Petroleum Institute that U.S. crude inventories rose by 2.7 million barrels to 470.9 million barrels in the week to Oct. 7. This would be the first rise in oil stocks following five straight weeks of declines. The U.S. Energy Information Administration (EIA) is due to publish official inventory data later on Thursday.



Technical

AUDUSD



Fig: AUDUSD H4 Technical chart

The Aussie is following a steady downtrend that has pushed AUDUSD to break below the 38.2% retracement level at 0.75255. The currency pair pulled back yesterday after encountering the resistance zone between two moving averages. These two MAs are expected to cast downward pressure on the pair for the near future and may send AUDUSD to as low as the 50.0% level.

Trade suggestion

Sell Stop at 0.75000, Take profit at 0.74550, Stop loss at 0.75300



NZDUSD



Fig: NZDUSD D4 Technical chart

NZDUSD dropped below the 38.2% level on Monday and continues to head southwards through this week. After some correction yesterday, the Kiwi resumed the down moves today and is anticipated to find support at around 0.69600. The RSI index has neared the oversold zone and the ADX has soared as high as 51.83. Therefore after hitting this level, a pullback could come about.

Trade suggestion

Sell Stop at 0.70400, Take profit at 0.69600, Stop loss at 0.71000.



EURJPY



Fig: EURJPY H4 Technical chart

As can be seen from the chart, EURJPY has re-entered the trading range between a lower boundary at 114.000 and the upper boundary at 116.000, where it had been trapped from late-August to mid-September. The pair is heading towards the support at 114.000 and may break through this level as the bearish signals are quite strong. The two MAs are very likely to converge and are placed above the price action, the RSI index is pointing downwards, and there is wide divergence between the %K line and the %D line in the stochastic charts. All of this combines to suggest a powerful downtrend.

Trade suggestion

Sell Stop at 113.900, Take profit at 113.000, Stop loss at 114.500



GOLD



Fig: GOLD H1 Technical chart

As can be observed from the hourly chart, the gold market has received a signal suggesting a reversal into an up-move as the 20-period MA has penetrated the 50-period MA from below. With the RSI indicator surging above the 50 line yesterday and heading upwards to the overbought zone, the yellow metal can soar as high as 1265.00.

Trade suggestion

Buy Stop at 1260.00, Take profit at 1265.00, Stop loss at 1253.00



Sugar



Fig: Sugar H1 Technical chart

Sugar had to give up its strength after coming up against a couple of moving averages which are placed above the price action. The sugar market has been floating in bearish territory, as indicated by the RSI index that has inched down to as low as 44.36. The support at 22.50 can be where we take profit.

Trade suggestion

Sell Stop at 22.90, Take profit at 22.50, Stop loss at 23.20



NASDAQ 100



Fig: NASDAQ 100 H4 Technical chart

The NASDAQ 100 index created a gap down at the market open on Wednesday. The index has fallen back into the trading range between 4840.00 and 4750.00 and might pay a visit to the lower boundary at 4750.00 as the short-term MA20 has crossed over the long-term MA50 from above, indicating bears overshadowing the market.

Trade suggestion

Sell Stop at 4780.00, Take profit at 4750.00, Stop loss at 4800.00

 

[CSFX.Support]

EUR/GBP signal by Capital Street FX

From GMT 07:30 13/10/2016
Till GMT 21:00 13/10/2016

Buy at 0.90500
Take profit at 0.91300
Stop loss at 0.90000

 

[CSFX.Support]

CSX Market Outlook by Capital Street FX

Cost Cutting Helps CSX Third-Quarter Results beat Expectations – Sells Suggested

Shares of CSX Corporation rose more than 3% in after hours trading on Wednesday after the transportation services company reported better-than-expected quarterly earnings after the closing bell.

CSX’s third-quarter earnings fell to $455 million, or 48 cents a share, from $507 million, or 52 cents a share, a year earlier. Net profit for the railroad operator was hurt by the drop in revenue and freight volumes. During the three-month period through September, CSX’s revenue shrank 8% to $2.71 billion compared to the same quarter one year ago. Still, the results came in above market expectations of 45 cents EPS, on revenue of $2.69 billion.

The U.S’s third largest railroad transportation company observed a total decline of 8% in shipping volume across most of its goods categories including metals, equipment business and coal. Among decliners, coal shipments posted the worst performance, slipping 21% as a result of oversupply in the world market and a stronger U.S. dollar that made U.S. exports more expensive overseas.

Additionally, plunging fuel prices and increasing use of natural gas that is being encouraged by the government are putting pressure on coal demand and coal shipments. As natural gas produces less carbon dioxide than coal when burned, the U.S government has planned to get off coal used by power plants, to reduce emissions.

However, the Florida-based company’s third quarter’s data still bettered forecasts thanks to strong cost performance and productivity measures. The bottom line was helped by 6.8% cut in expenses, driven by $112 million of efficiency gains and $53 million of volume-related cost reductions.

Fig: CSX D1 Technical chart

Shares of CSX Corp have been on a decline after reaching 15-month highs at around 31.28. In general, the shares are trading above the 20-day and 50-day MAs and the market is still in favor of buyers, as indicated by the RSI chart. Share prices are expected to reverse today, partly due to fundamental factors, but also because the price action has neared the short-term DMA20.

CSX Trade suggestion
Sell Stop at 31.00, Take profit at 30.50, Stop loss at 30.00

 

[CSFX.Support]

Natural Gas Trade Idea By Capital Street FX

Natural Gas Screams to Record Highs On Smaller-than-expected Rise in U.S. Stocks– Buy Call Options

Natural gas prices turned sharply higher Thursday following a two-day slide. The commodity hit the highest since December 2014 at $3.347 per million British thermal units after the U.S. Energy Information Administration reported that natural gas supplies rose 79 billion cubic feet for the week ending Oct.7th.

The increase in stocks was below analyst estimates that had called for a rise of 87 billion cubic feet.

According to the report, total stocks now stand at 3.759 trillion cubic feet, up 56 billion cubic feet from a year ago and 192 billion cubic feet above the five-year average.

Trade suggestion

Buy Stop at 3.350, Take profit at 3.380, Stop loss at 3.320

 

[CSFX.Support]

NZD/USD signal by Capital Street FX

NZD/USD signal by Capital Street FX

From GMT 07:05 14/10/2016
Till GMT 21:00 14/10/2016

Sell at 0.70900
Take profit at 0.70400
Stop loss at 0.71300

 

[CSFX.Support]

Copper Market Outlook by Capital Street FX

Copper Plunges As Demand Falls, Risk Of Supply Glut Rises – Short Positions Encouraged

Copper has been slumped for the most part of the week, collapsing nearly 4% after reaching intra-week high at $2.2018 per pound on Monday. The commodity market is forecast to witness more decline as it is going to confront with significant supply glut and dropping demand in the coming months.

Copper witnessed the biggest one-day loss on Thursday since June 07th, after the Chinese General Administration Customs reported worse-than-expected exports and imports data for September. According to the report, China’ exports diminished by 10% in September from a year earlier while imports also witnessed a decline of 1.9%, which spurred concerns over weak demand for goods both in China and many other parts of the world such as the U.S., Europe and much of Asia.

Demand for copper imports of China was also reported to decelerate last month to the lowest in more than a year. China’s imports of the red medal fell by 26 percent from a year ago to 340,000 tons in September, which is the lowest since at least August 2015. On a monthly basis, imports to the world’s leading copper consumer dropped by 2.9%.

On the supply side, commodity analysts at Goldman Sachs said that considering the rise of supply, copper prices would be under downward pressure over the next three to six months.

In a separate report by BMI Research, the research firm forecast Iran’s mining industry will resurge after years of Western sanctions. According to BMI, foreign investment will help accelerate Iran’s mining sector as the Middle-Eastern nation possesses vast underdeveloped reserves but is still looking for modernization and new technology.

Iran’s copper output is expected to outperform in the coming years and reach the growth rate of 13% each year top 500,000 tons by the end of the decade.

Fig: COPPER D1 technical chart

In a week, copper has breached through two important Fibonacci levels - the 38.2% and 50.0% , to fall as low as 2.1120. The price action also has also crossed below both the long-term DMA50 and short-term DMA20 from above. The market is under pressure from two MAs placed overhead, and the overwhelming strength of sellers in the market. Copper prices are approaching the 61.8% handle at 2.0860. The RSI is also heading towards bearish territory, providing further confirmation for the down-move.

Trade suggestion
Sell Stop at 2.1120, Take profit at 2.0860, Stop loss at 2.1400

 

[CSFX.Support]

Daily Report on October 14, 2016 by Capital Street FX

Daily Report on October 14, 2016

Asian stocks bounced back on Friday, but were still heading for the biggest weekly decline in almost a month. Shares erased some losses from the start of this week, thanks to the rally in oil prices that boosted energy sector stocks, and stronger-than-expected Chinese inflation data which helped ease concerns about the health of world's second-biggest economy.

After triggering chaos in global stock markets by reporting a steep drop in exports and imports in data released yesterday, China once again set the tone for the markets, but in the opposite direction. Chinese producer prices unexpectedly rose in September for the first time in nearly five years, thanks to stronger commodity prices.

Meanwhile, China’s consumer inflation also beat expectations, accelerating more than expected to 1.9 percent in September compared to the same month last year. The price rise was mainly due to higher food prices. On a yearly basis, Chinese food prices added 3.2 percent in September, topping a 1.3 percent gain (year-on-year) in August.

Oil turned higher even though the U.S. Energy Information Administration on Thursday reported that U.S. crude stocks rose for the first time in six weeks. Crude stockpiles in the U.S swelled by 4.9 million barrels in the week to Oct. 7th .Total inventories rose to 474 million barrels, but distillates, which include diesel and heating oil, dropped by 3.7 million barrels and gasoline fell by 1.9 million barrels.

Also in the U.S, filings for unemployment benefits were reported to be at a four-decade low over the past two weeks. According to the weekly report by the U.S Department of Labor, jobless claims were 246,000 in the week ended October 8th, remaining below 300,000 for 84 straight weeks and indicating a healthy labor market.



Technicals

EURCHF



Fig: EURCHF H4 Technical chart

EURCHF pulled back from two-week lows at 1.08687 on Thursday but failed to surpass the 50.0% retracement level at 1.09093. The currency pair crawled back to the downside as it is still under the downward pressure of the two moving averages placed above the price action. Down moves are being supported by indicators. As can be observed from indicator windows, while stochastic lines are pointing downwards, the RSI index has also retreated to as low as 38.42.

Trade suggestion

Sell Stop at 1.08900, take profit at 1.08520, stop loss at 1.09100



EURUSD



Fig: EURUSD H4 Technical chart

EURUSD broke out of the recent trading range on Tuesday and fell below the 50.0% retracement at 1.10573 on the same day. The pair plummeted to as low as 1.09847 yesterday, before buyers stepped in and liberated it from the oversold zone. However, a brief correction was not enough to support the pair back above the 50.0% level again. In the event of a continual downtrend, the pair may find support at the 61.8% handle.

Trade suggestion

Sell Stop at 1.10200, take profit at 1.09800, stop loss at 1.10600



AUDUSD



Fig: AUDUSD H4 Technical chart

We have seen a strong rally in the Aussie that lifted the market from the 38.2 level to near the 23.6% level. Nonetheless, those rapid up moves also sent AUDUSD into the overbought territory and prompted bears to jump in and push the pair down back below the long-term MA50. The %K line has reversed lower to penetrate the %D line from north to south, but we may need to wait for a confirmation from the RSI index which has reached but not surpassed the 50 line yet.

Trade suggestion

Sell Stop at 0.75650, take profit at 0.75250, stop loss at 0.76000



SILVER



Fig: SILVER H4 Technical chart

Silver has been trading sideways to lower above the 50.0% Fibonacci level since the start of this week. The metal has consistently been pressurized by the short-term MA20 placed above the price action. However, bears have failed to make a breakout below the 50.0% retracement level at 17.416. With U.S data coming out later today, the silver market is anticipated to escape out of the thin trading range it has been in recently. Better-than-expected numbers may push silver to retest last-week's lows at 17.090

Trade suggestion

Sell Stop at 17.390, take profit at 17.090, stop loss at 17.500



WTI



Fig: WTI H4 Technical chart

U.S crude prices have still remained within an overall uptrend, after having suffered losses earlier this week. Having bounced back from the lower band of the Bollinger range, the price action has moved towards the middle band and has just crossed over the middle band (which is also the 20-period MA20). WTI is expected to keep moving upwards since the market continues to enjoy bullish momentum, as indicated by the RSI chart. The upside may be contained by the 0.0% level which is very close to the upper band of the Bollinger range.

Trade suggestion

Buy Stop at 50.85, take profit at 51.55, stop loss at 50.30



FTSE 100



Fig: FTSE 100 H4 Technical chart

U.K’s FTSE 100 index surged above 7000.00 again following a drop below this level yesterday. The index extended Thursday’s gains and looks set to trade above the short-term MA20 after crossing over the long-term MA 50 from below, on Thursday. As can be observed from the stochastic chart, the %K line is moving far ahead of the %D line, suggesting further upside moves.

Trade suggestion

Buy Stop at 7020.00, take profit at 7075.00, stop loss at 6975.00