Daily Market Analysis by CapitalStreetFX

[CapitalStreetFX]

EUR/USD Finally Breaks the 1.1200 Barrier

The American dollar advanced sharply for a second day in-a-row, erasing all of its post-FED’s losses, and with the EUR/USD ending the day a handful of pips below the 1.1200 figure, for the first time in over two weeks.

The Euro/Dollar pair set a daily low at 1.1180, finding short term selling interest on recoveries towards the 1.1210/20 region.

Closing the day near the mentioned low, the short term picture supports additional declines for the upcoming hours, as in the 1 hour chart, the 20 SMA heads sharply lower after breaking below its 100 and 200 SMAs, whilst the technical indicators consolidate in oversold territory, with no signs of changing bias.

In the 4 hours chart, and early attempt to advance was contained by the 20 SMA, in the 1.1330 region, whilst the technical indicators have lost their downward strength, but remain below their mid-lines, also far from suggesting an up-turn. Should the price extend beyond 1.1160, the bearish momentum will likely accelerate, eyeing then 1.1050 as the next probable bearish target for the upcoming sessions.

Meanwhile FED officers hit the wires, most claiming the Central Bank was really close to raise its benchmark last week, which opened doors for a probable move during the upcoming meetings. US data did not supported the greenback, as US Existing Home sales fell 4.8% in August, after three straight months of gains, although the dollar maintained it positive tone for most of the last two sessions.

 

[CapitalStreetFX]

Dow Plunges Nearly 300 Points Amid Hawkish Statements from Fed

Wall Street edged sharply lower on Tuesday, weighed by a sell-off in global equities and a sharp decline in commodities. The DJIA traded almost 300 points lower intraday, although bounced before the closing bell, ending the day down 179 points or 1.09% a 16,330.47. The Nasdaq and the S&P also closed in the red.

The confusing message from the US Federal Reserve, that kept rates unchanged last week, followed by ultra-hawkish comments from different officials this week, vowing for a rate hike as soon as October, have pushed investors into profit taking.

Technically, the daily chart shows that the index closed at its lowest in two weeks, and below the 50% retracement of its latest weekly decline, also below its 20 SMA. In the same chart, the technical indicators have turned lower with the Momentum still above its 100 level, but the RSI heading south around 44, anticipating a downward continuation.

In the shorter term, the 4 hours chart, the index is below a bearish 20 SMA, although the technical indicators are correcting higher below their mid-lines, limiting the downside as long as the immediate support at 16,214 holds.

 

[CapitalStreetFX]

FTSE100 Eyes 6254 As Bulls Gain Strength

The FTSE 100 closed 151 points higher at 6,109.01, as market sentiment improved following FED’s chair late Thursday statement. Commodity-related equities advanced after being under pressure for most of the week, although the advances were quite limited compared to its latest decline.

Rip Tinto gained 1.44%, and BHP Billiton gained 0.74%, Glencore, however, closed down 1.4% ending the week 22.8% lower. The daily chart shows that the index closed below its daily high of 6,136 and below a mild bearish 20 SMA, whilst the Momentum indicator lacks directional strength around its mid-line, and the RSI indicator aims higher around 44, limiting the upside.

In the 4 hours chart, the index remains below a bearish 100 SMA, but above a horizontal 20 SMA, whilst the Momentum indicator edges higher above 100 and the RSI indicator hovers around 51. The immediate resistance comes at 6,150, the 38.2% retracement of its latest weekly decline, and it will take a clear break above it to confirm a bullish continuation for Monday, up to the 6,245 region.

 

[CapitalStreetFX]

EUR/USD Still Looks Very Bullish As Bulls Remain In Control

The EUR/USD pair ended the day with gains and near a daily high set at 1.1247 and the short term picture favors additional advances, as the 1 hour chart shows that the price is hovering around its 200 SMA after accelerating above the 20 and 100 SMAs, whilst the Momentum indicator heads slightly higher above the 100 level and the RSI indicator advances slowly around 64.

In the 4 hours chart the price advanced above its 20 SMA, now offering an intraday support around 1.1200, whilst the RSI indicator turned north and advanced beyond 50 supporting additional advances towards the 1.1335 region for this Tuesday, on renewed demand beyond the mentioned daily high.

Risk sentiment was again the main market driver, with safe-haven currencies outperforming. US data was far from encouraging, as the PCE figures for August showed that personal income shrank to 0.3%, while spending rose to 0.4%.

On monthly basis, the PCE price index came out at 0.0%, but advanced to 1.3% from previous 1.2% yearly basis. Pending home sales retreated in the same month, down 1.4% against expectations of a 0.5% advance.

FED’s officers fueled uncertainty, with Dudley stating that he expects the FED to hike later this year, but saying that will depend on upcoming data. Chicago FED’s Evans on the other hand, resulted quite dovish, saying that he prefers a later lift-off to avoid the risk of lowering inflation.

 

[CapitalStreetFX]

Cable Plunges On 10th Consecutive Day, What Next?

The British Pound edged lower for a tenth day in a row against its American rival, with the pair extending its decline to a fresh 4-month low of 1.5106.

Earlier on Wednesday, the UK released the latest review of its Q2 GDP, which came as expected at 0.7%. Yearly basis, growth reached 2.4%, missing expectations of 2.6%. A positive surprise came from the current account deficit that narrowed to £16.8B from a revised £24B in Q1.

Following the release, the GBP/USD pair advanced up to its daily high of 1.5213, where once again, selling interest contained the advance. The downward movement seems overdone, but there is no technical signal of a change in the ongoing bearish trend.

In short term, the 1 hour chart shows that the price is now below a mild bearish 20 SMA, whilst the technical indicators have recovered some from oversold territory, but turned flat well below their mid-lines.

In the 4 hours chart, the 20 SMA maintains its bearish slope above the current level, whilst the technical indicators have been rejected from their mid-lines, and head lower, supporting further declines on renewed selling interest below the 1.5130 level.

 

[CapitalStreetFX]

EUR/USD Holds Off Daily Triangle

Having traded as high as 1.1317, the EUR/USD pair closed the day around the 1.1200 level, maintaining its latest range on Friday. On daily basis, the pair has been developing within a triangle and approaches to its vortex, diminishing the validity of the figure.

On Friday, the pair tested both extremes of the figure, before settling midway, maintaining its latest range. In the same chart, the price is between its 20 and 100 SMAs, both horizontal, whilst the technical indicators are also flat, slightly below their mid-lines.

In the 4 hours chart, the price is holding above its 20 SMA, but below its 100 and 200 SMAs, the Momentum indicator is aiming slightly higher from its 100 level, whilst the RSI indicator turned south around 51, all in line with the ongoing neutral technical stance.

An upward continuation will be confirmed with a technical break above the 1.1320/30 price zone, where the pair met selling interest during the last two weeks.

Earlier the US employment data disappointed big on Friday, with the country adding just 142,000 new jobs in September and wages holding unchanged monthly basis at 0.0%.

The worse-than-expected data led to speculation the US Federal Reserve will delay a rate hike beyond this 2015, which sent the American dollar sharply lower intraday, although the currency recovered most of the ground lost, particularly against the EUR, the GBP and the JPY.

 

[CapitalStreetFX]

Gold Eyes $1159 Amid Strong Fundamentals

Gold held just below a one-week high on Tuesday, eyeing $1159 in the near term, as investors bet sluggish US nonfarm payrolls data would deter the Federal Reserve from hiking rates this year, although some cautioned that profit taking could hurt the metal in the near term.

Spot gold was little changed at $1,136 an ounce by 0337 GMT. Prices had risen to $1,141.80 in the previous session, the highest since September 28, before closing down 0.2 per cent.

The metal is still largely holding on to Friday’s 2.2 per cent jump, the biggest one-day rise since January 15 following data that showed US employers slammed the brakes on hiring over the last two months.

Non-interest-paying gold had benefited from ultra-low US rates. But expectations that the Fed will move to hike rates for the first time in nearly a decade has seen the metal lose about 4 per cent of its value this year.

However, recent US data has not been robust. After last week’s soft jobs report, data on Monday showed the pace of growth in the US services sector decelerated in September as new orders and business activity slowed.

Meanwhile, SPDR Gold Trust, the top gold-backed exchange-traded fund, saw a small outflow of 0.22 tonnes on Monday. That is the fund’s first outflow in two weeks.

 

[CapitalStreetFX]

EUR/USD Hits 1.1278, What’s Next?

The EUR/USD pair surged to a daily high of 1.1278, trading within a range and still confined in a daily triangle.

In short term, the upward momentum is fading in the 1 hour chart, as despite the price is well above its moving averages, the technical indicators are beginning to show signs of exhaustion near overbought territory.

In the 4 hours chart the 20 SMA is now aiming higher around 1.1200, whilst the Momentum indicator turned south and is crossing now below its 100 level, whilst the RSI indicator stands flat around 58, all of which limits chances of additional gains, during the upcoming hours.

Elsewhere the dollar edged sharply lower across the board, led by a sharp advance in commodities prices, as gold hovered in the 1,150 region, whilst WTI surged above $48.00 a barrel, for the first time in over a month.

Additionally, the price is getting too close to the vortex of the figure, and it will be invalidate if it’s not broken during the next couple of days. For this Wednesday, the roof of the figure is set at 1.1285, whilst the base stands now at 1.1160.

Data showed that in Germany, Factory orders were down 1.8% in August compared to July, and that the US trade balance deficit that widened to $48.3B in the same month, the largest expansion in US deficit in five months. The news boosted local share markets as sagging exports should put additional pressure on a FED’s possible rate hike.

 

[CapitalStreetFX]

Crude Oil Inches Higher In Asia Amid FOMC Minutes

Crude oil futures rose in early Asian trade on thin volumes after an influential forecaster predicted that a market rally was not far off and U.S. Federal Reserve minutes suggested there was no hurry to raise rates.

The gains added to a surge in prices on Thursday, with Brent crude, the global benchmark, on track for a near 11-percent gain this week, the biggest weekly rise since early 2009.

Brent was up 25 cents at $53.30 a barrel at 0306 GMT. The contract rose $1.72 to close at $53.05 a barrel on Thursday.

U.S. crude was 23 cents higher at $49.66 a barrel, after climbing 3.4 percent to close at $49.43 a barrel.

U.S. crude is heading for a gain of about 9 percent this week, the biggest weekly increase since August. The contract rose to above $50 on Thursday, the highest since July 22.

PIRA Energy Group, a closely watched forecaster that predicted the slump in oil prices a year ago, said on Thursday it expected crude prices to rise to $70 per barrel by the end of 2016 and $75 a barrel in 2017.

 

[CapitalStreetFX]

Wall Street Closes the Best Week for 2015

Wall Street closed with tepid gains on Friday, with the Dow Jones adding 33 points and ending the day at 17,084.49. The Nasdaq and the S&P added 0.41% and 0.07% respectively, in what has been one of the best weeks for this 2015.

The indexes extended their advance as investors weighed the latest FOMC’ dovish Minutes, and more poor US data, as on Friday, news showed that import and export prices both fell in September, while wholesale sales slid 1.0% in August, far beyond expected.

Technically, the daily chart for the index shows that its stalled its advance a few points below its 100 DMA, while the technical indicators have lost their upward strength and turned flat near overbought levels, far from signaling an upcoming retracement.

In shorter term, the 4 hours chart shows that the index is still well above a bullish 20 SMA, whilst the RSI indicator turned slightly lower around 69 and the Momentum indicator heads slightly lower, but well above its mid-line.

Friday’s low at 17,003 is the level to watch as pullbacks towards it should attract buying interest to keep the upside favored.

 

[CapitalStreetFX]

Gold Hits Fresh 7-Week High, What’s Next?[/

Gold prices surged strongly during London trading hours, with spot gold reaching $1,169.04 a troy ounce, a fresh 7-week high.

The commodity extended its advance on speculation the US Federal Reserve will maintain its rates at record lows for the rest of this 2015, whilst a weaker dollar is also supportive of gold.

The commodity has eased some from its highs, but closed the day above the 1,160.00 level, which maintains the bullish trend in place. Daily basis, the has extended further above its 20 and 100 DMAs, while advancing briefly above the 200 DMA, before closing the day a few cents below it.

In the same time frame, the technical indicators recovered their bullish slopes above their mid-lines, supporting additional gains for the upcoming sessions.

Shorter term, the 4 hours chart shows that the price is well above a bullish 20 SMA, whilst the Momentum indicator heads higher well above its mid-line, and the RSI indicator hovers around 64, also supporting a continued advance, particularly if the price holds above 1,150, a key psychological support.

 

[CapitalStreetFX]

Could Euro Resume Upside Rally This Week?[

The EUR/USD pair closed the week unchanged around 1.1350, as the greenback advanced on Friday. The dollar surged amid a general positive tone in local data, as the number of job openings decreased to 5.4 million in August, a little weaker than expectations, but still at high levels.

Consumer sentiment climbed more than forecast in October, with the University of Michigan’s preliminary consumer sentiment index up to 92.1, the first advance in four months. In Europe however, inflation fell into negative territory yearly basis, resulting at was -0.1% in September 2015, down from 0.1% in August. Monthly basis, it come out at 0.2% against previous 0.0%.

The ECB will have an economic policy meeting this week, and market talks point for an extension in its Q3 program, given that inflation remains at record lows. Also, the EU will release its latest PMI figures, a neat barometer of the economic situation. Should the Central Bank refrain from changing its policy, the common currency may get a nice boost and return towards the 1.1500, as long as it previously holds above 1.1280.

For this Monday, the EUR/USD pair maintains a positive technical tone daily basis, although failure at 1.1500 earlier in the week suggests a limited upward potential ahead. Nevertheless, the price holds well above its moving averages, with the 20 DMA acting as a critical support around 1.1280 for the upcoming days, whilst the technical indicators hold well above their mid-lines, albeit lacking upward momentum at the time being.

In short term, the 4 hours chart presents a bearish tone, with the price having been unable to advance beyond its 20 SMA since last Wednesday, and the technical indicators maintaining strong bearish slopes in negative territory. Friday’s low at 1.1330 provides an immediate support, with a break below it required to confirm a bearish continuation for this Monday.

 

[CapitalStreetFX]

EUR/USD Plunges For Fourth Straight Day

The EUR/USD pair extends its overnight side-trend, although remains better bid in the early European trades, with trading expected to remain light amid lack of relevant economic data.

The EUR/USD pair trades modestly flat at 1.1330, oscillating in a 20-pips range during most of Asia. The major keeps its range-trade intact and appears to consolidate before next leg lower as the USD bulls are expected to resume its upstreak, riding higher on the recent upbeat US fundamentals.

Moreover, mixed sentiment on the Asian indices also failed to provide any impetus to the shared currency. However, the falling US treasury yields somewhat keep the EUR/USD supported. The benchmark 10-year treasury yields drop -0.61% to 2.016% while the 2-year yields on the US notes decline -1.40% to 0.593%.

In the day ahead, markets shift their attention towards the US calendar and subsequent Fed speaks as the European session holds nothing relevant in terms of macro data on the cards.

The pair struggles below the daily pivot located near 1.1340 which acts as the immediate resistance, beyond which 1.1362/1.1368 (h1 200-SMA & 10-DMA) would be tested and from there to 1.1386 (h1 100-SMA). While the immediate support is located at 1.1300 (psychological levels), a breach of the last would expose 1276 (50-DMA), below which floors open for a test of 1.1260 (daily S2).

 

[CapitalStreetFX]

EUR/USD Looks Vulnerable As Downside Risk Accelerates

Majors traded within its recent ranges, with the traded volumes still at their lowest in over two months. Attention has turned now to the upcoming ECB meeting next Thursday, and seems little can be expected ahead of it from currency pairs.

Data released this Tuesday failed to trigger interesting moves, although things continue worsen in Europe, given that German producer prices index fell by 2.1% in September, compared to a year before, much worse than the previous -1.7%.

The EU Current Account surplus for August, hardly a market mover, shrunk to €17.7B, while July data was revised higher, from €22.6B to €25.6B. In the US, housing starts rose by 6.5% in September to an annual rate of 1.21M, following two months of declines, and approaching the 8-year high reached past June.

The EUR/USD pair retreated from a daily high set at 1.1386 in the European session, ending the day around the 1.1340 level, where it closed last week. From a technical point of view, the pair continues lacking directional strength, although the risk is turning towards the downside in the short term, as the 1 hour chart shows that the early rally was capped by the 100 SMA, while the technical indicators have retreated from near overbought levels and stand now around their mid-lines.

In the 4 hours chart, a brief advance beyond the 20 SMA was quickly reversed, and the indicator maintains a bearish slope, whilst the Momentum indicator has retreated from its mid-line and the RSI hovers around 46, limiting chances of a stronger rally for this Wednesday.

 

[CapitalStreetFX]

Dollar/Yen Rallies After Trade Balance News

The USD/JPY pair advanced up to 120.08, ending the day around the 120.00 level, extending its tepid rally for a fifth day in-a-row. Ever since bottoming at 118.05 last week, the pair has been advancing slowly, but steadily, mostly as latest disappointing Japanese data suggest the BOJ will extend its stimulus in its upcoming meeting by then ends of October.

Wednesday’s rally came after the Japanese September trade balance posted a deficit of ¥114.5B against market’s expectations of a ¥84.4B surplus. Imports resulted better than expected, falling by 11.1% against market’s forecast of an 11.7% decline, while exports grew by 0.6%.

The 1 hour chart shows that the price has advanced further above its moving averages whilst the 100 SMA accelerated its advance, but remains below the 200 SMA. In the same chart however, the technical indicators have lost their early strength and turned flat around their mid-lines.

In the 4 hours chart, the price stalled its advance around the 200 SMA, whilst the technical indicators are also losing their upward strength but holding well above their mid-lines.

 

[CapitalStreetFX]

Crude Oil Rises In Asia Ahead of Rig Count Data

Crude gained in Asia on Friday ahead of rig count data in the U.s. that will set the tone on supply.

On the New York Mercantile Exchange, WTI crude for December delivery rose 0.43% to $45.58 a barrel.

Last week, Baker Hughes (N:BHI) said that the number of rigs drilling for oil in the U.S. decreased by 10 last week to 595, the seventh straight weekly decline. Over the prior six weeks, drillers had cut 70 rigs.

A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future.

Overnight, crude futures ticked up on Thursday during a choppy day of trading, as investors continued to react to bearish supply data from a massive stockpile build last week.

On the Intercontinental Exchange (ICE), Brent crude for December delivery wavered between $47.70 and $48.72 a barrel, before closing at $48.11, up 0.26 or 0.54% on the day. Brent futures are still down by approximately 1.5% over the last month of trading.

Meanwhile, the spread between the international and U.S. domestic benchmarks of crude stood at $2.82, above Wednesday’s level of $2.41 at the close of trading.

 

[CapitalStreetFX]

EUR/USD Loses 400 Pips In Two Days, What’s Next?

Central Banks led the way last week, and will continue doing so during the upcoming days. After the ECB tip toed further easing for the upcoming December, the PBoC slashed its rates on Friday, reducing its benchmark lending rate by 25 bps and the reserve requirements ratio for banks by 50 bps during the European morning, leading to a strong recovery in European and American stocks, which ended up boosting the greenback across the board.

This week, the US Federal Reserve and the Bank of Japan will have monthly economic meetings, and while the first is expected to remain on hold, the market will be looking for any tip on the date of a US rate hike. As for the BOJ, investors are expecting some extension of the ongoing stimulus, and a continued JPY decline.

The EUR/USD pair lost almost 400 pips in two days, falling as low as 1.0995 on Friday, before posting a shallow bounce and ending the week barely above the 1.1000 mark. The pair has broken below a long term ascendant trend line coming from April low at 1.0519, and the break has strong bearish implications, regardless whatever the US FED announces this week in its Thursday´s policy meeting. As long as upward corrective movements meet selling interest around 1.1120, the downside remains favored.

Technically, the daily chart shows that the pair is currently below its moving averages, with the 200 DMA converging with the broken trend line around 1.1120, the mentioned critical resistance, whilst the technical indicators maintain their strong bearish slopes below their mid-lines. In the 4 hours chart, the technical indicators have lost their bearish potential, but remain in extreme oversold readings, far from suggesting the pair may correct higher. Renewed selling interest below 1.1000, should lead to a continued decline down to 1.0920 this Monday, with the ultimate bearish target for this week at 1.0840.

 

[CapitalStreetFX]

USD/JPY Finally Breaks the 121.00 Resistance Area

The USD/JPY pair erased most of its intraday losses, recovering from a daily low of 120.57 reached after the release of US disappointing data, recovering above the 121.00 level by the end of the day.

The Japanese Yen got a boost during the previous Asian session, after PM Abe adviser, Hamada, stated that there’s no need for the BOJ to ease, as long as market expectations for a FED rate hike keep the yen weak.

Nevertheless, investors are now convinced that the latest ECB decision may force the BOJ to act, to prevent further JPY appreciation.

The pair is still unable to overcome its 200 DMA, a major resistance level tested by the end of the last week around 121.45, but the 1 hour chart shows that the bullish potential is increasing, as the technical indicators are crossing their mid-lines towards the upside, whilst the price is clearly above a bullish 20 SMA.

In the 4 hours chart, the Momentum indicator retreated from overbought levels and continues heading lower above its 100 level, although the RSI has turned back higher after correcting extreme readings, now heading higher around 62, all of which supports further gains for this Tuesday. Support levels: 120.70 120.35 120.00 Resistance levels: 121.45 121.80 122.05

 

[CapitalStreetFX]

Wall Street Under Pressure Amid Low Oil Prices, Disappointing Earnings

US indexes closed slightly lower, with the DJIA down by 41 points and ending the day at 17,581.43. The Nasdaq lost 4 points, whilst the S&P closed 0.26% lower.

Lower oil prices and disappointing earnings reports dragged Wall Street lower, with investors already being in cautious mode ahead of the FED’s meeting outcome. Car maker Ford plunged over 4% after reporting quarterly earnings below market’s forecast, attributing the slide to higher taxes.

Also, weaker-than-expected US data weighed on investors sentiment, which stayed side-lined, ahead of any rate move clue. The Dow daily chart shows that, despite setting a lower low for the week, the index remains within its latest range, near the fresh 2-month high set late last week. Also, the index stands well above its 200 DMA, whilst the technical indicators have turned flat well above their mid-lines, maintain the risk towards the upside.

In the 4 hours chart, however, the upward potential has lost part of its steam, as the Momentum indicator heads lower below its 100 level, albeit the RSI indicator maintains a bullish slope around 66 and the index struggles around a bullish 20 SMA. The index needs to break above 17,682 the mentioned high, to be able to extend its rally, with buyers still seeing on dips towards the 17,550/70 region.

 

[CapitalStreetFX]

Asian Stock Markets Finally Halt Unprecedented Winning Streak

Asian stocks pared their biggest monthly advance in six years and the dollar held gains against most peers after the Federal Reserve bolstered prospects for a December interest-rate increase. The yen climbed with Japanese bond yields after a surprise jump in industrial production.

The MSCI Asia Pacific Index fell for a third day, trimming its first monthly advance since April. U.S. futures slipped after the Fed’s commentary helped drive the Standard & Poor’s 500 Index to the highest close since Aug. 18.

South Korea’s won led losses among emerging-market currencies. The yen was stronger for the third time in four days after output unexpectedly exceeded all 32 estimates in a Bloomberg survey, curbing speculation that the Bank of Japan will expand stimulus this week.

Odds the Fed will move on rates at their next meeting jumped to 46 percent from around 32 percent a week ago, after the central bank dropped a reference to global risks and asserted that economic growth remains “moderate.”

Underlining the divergence of U.S. policy from the rest of the world, China cut rates for a sixth time in 12 months last week, while New Zealand’s central bank governor said today that another reduction in borrowing costs is likely and Sweden expanded its bond purchase program Wednesday.