Daily Market Analysis by CapitalStreetFX

[CapitalStreetFX]

Longs Favoured On Natural Gas As Weak USD, Strong Demand Data Supports

According to a report released earlier today, US demand for airconditioning is lower this year, relative to last year, but overall consumption levels remain strong. The demand is much higher than the long-run average so far this year, coming in with a differential of 30 Bcf on weekly injection figures, due to rising temperatures all over the world.

Average consumption for the week ending on June 15, as estimated by the PointLogic, rose by 2%. Demand was driven by an increase of 5% in consumption of natural gas for electric power generation, which offset a fall of 2% in the residential and commercial sectors.

Meanwhile, on the supply side, according to Baker Hughes, the natural gas rig count in the US rose by 3 in the week ending on June 10, raise the total number of rigs to 85. The Energy Information Administration (EIA) on June 07 also predicted that US production of natural gas is likely to surpass domestic consumption soon.

Early last week, data from China showed that Chinese natural gas output increased at an annualized rate of 4.3% in May, to 10.8 billion cubic meters

For the last several days, the US dollar has plunged significantly, due to dovish comments from the Federal Reserve Bank on rate hikes and the overall economy. Concluding remarks from the FED’s June meeting indicated that the central bank would not raise the benchmark rate this summer and no accurate timing for another rate hike was indicated. James Bullard, a voting member of the FOMC also commented on Friday that the odds of increasing interest rates this year were pretty low as most key economic indicators were only around acceptable levels.

The dollar index DXY, which measures the strength of the greenback against a basket of its rivals, declined to 93.68 in today’s trading session, far below the last close of 94.32.

Currently, investors are turning their focus onto the “Brexit” referendum on June 23, which may create significant volatility and uncertainty in the global markets for most of this week.

Fig. NAT.GAS D1 Technical Chart

Natural gas opened this week with a small gap-up, extending its up-move from the bottom of 1.663, which was formed on March 04. ADX (14) is heading up to the level of 53.2271 with a large distance between DI+ and DI-, indicating that the bullish power is very strong. A long position on this commodity is signaled by the trend indicator.

Trade suggestion
Buy stop at 2.745, Stop loss at 2.614, Take profit at 2.876

 

[CapitalStreetFX]

Buyers Laughing To The Bank As Gold Surges Strongly After “Exit” Triumph

Buyers Laughing To The Bank As Gold Surges Strongly After “Exit” Triumph

The price of the precious metal continues to gain support as risky assets are still heading down after Britain’s decision to leave the European Union last Friday. On Monday (27/6), gold prices rocketed to 1335.26 only an hour after the markets opened, up more than 0.9% from the last settlement.

Despite opinion polls before the referendum that showed either side in a position to win, the outcome has stunned much of Britain, Europe and the whole world. More seriously, after the vote, British Prime Minister David Cameron decided to resign. The results immediately rattled global financial markets and prompted investors to flock into safe haven assets like gold.

The U.S Dollar rose sharply on Friday in response to the win of the“Leave” campaign, as money flowed into the perceived safe-havens. Nevertheless, further increases could put pressure on the Fed’s plan of tightening its monetary policy. Since a strong currency would be likely to pressurize U.S exports and reduce inflation – which is already below the Fed’s objective of 2%, the expectations are that the Fed may go slow on any planned interest rate hikes. Moreover, the stronger dollar would also bring financial volatility into emerging markets due to their large stocks of dollar-denominated debt.

Later today, the U.S. Department of Commerce is scheduled to publish the goods trade balance for May, which indicates the difference between exports and imports. The data is estimated to come in at minus 59.5 billion, falling deeper into negative territory than the statistics in April. On the other hand, the U.S flash services PMI for June reported by Markit is expected to come in at 52.0, suggesting an expansion in comparison with the previous month.

The dollar index .DXY, which tracks the greenback against a basket of six major currencies, rocketed to 95.88, a 0.36% tick-up from the previous close.

According to the daily chart, the yellow metal’s price is rallying strongly towards a retest of the high of 1358.24 from Friday. RSI (14) has been ticking up to 67.23, nearing the overbought territory, indicating that the bullish trend is quite strong. Two moving averages moving under the prices still support the long position. The commodity is anticipated to climb for some time.

Trade suggestion
Buy stop at 1330.00, Take profit at 1358.20, Stop loss at 1319.41

 

[CapitalStreetFX]

Buyers Piling Into Nikkei 225 As BOJ Talks Intervention

After Britain’s vote to opt out of the European Union stunned financial markets, Nikkei 225 shares immediately plunged viciously to as low as 14812.90 – the lowest price since February 13, 2016. Yet, the Japanese N225 has experienced a sharp turnaround thanks to Bank of Japan’s intervention warnings.

The Japanese benchmark closed higher on Tuesday although the declining stocks outnumbered the rising ones by 131 to 83, and 11 ended unchanged. The increasing stocks gains more ground, led by gains in materials shares.

On Sunday (26/6), China’s top economic planner announced that the Chinese authorities aimed to cut 45 million tons of Chinese steel capacity this year, along with a further 280 million tons of coal production. This plan would help solve overcapacity and uneconomic production slack across the industrial sector and boost the steel price higher. Accordingly, steel and mining companies in the Nikkei 225 shares experienced a rise in their stocks.

The Nikkei 225 shares also witnessed a big climb from the gains in pharmaceutical industry sector after a torrent of investment into regenerative medicine in Japan. Japan’s Ministry of Economy, Trade and Industry estimated that the regenerative medicine sector would become a $950 million industry by 2020 and grow ten times to $10 billion by 2030. The potential growth of this field has attracted investor interest towards the pharmaceutical industry sector, supporting its stocks higher.

The fallout from Brexit on Friday (24/6), swayed global financial markets and prompted investors to flock into safe haven assets including the Japanese yen. Consequently, the benchmark Nikkei 225 had tumbled 7.92% on the back of the strength in the Japanese yen on Friday.

Nevertheless, on Monday (27/6), an emergency meeting was held by the BOJ before its scheduled July 28-29 gathering. Japanese Prime Minister Shinzo Abe instructed Finance Minister Taro Aso to closely monitor currency markets and take appropriate measures with a view to stabilizing the financial markets and the economy.

Additionally, the government is reported to be expanding its monetary stimulus to more than $98.03 billion in total. BOJ’s warnings of market intervention to stem excessive yen strength have eased investor concerns about recent market uncertainties.Later today, the Ministry of Economy, Trade and Industry is due to publish the retail sales report in May. The data is estimated to come in at -1.6%, lower than the reading of minus 0.9% in April.

Fig. Nikkei 225 D1 Technical Chart

On the daily chart, the index is moving upwards after nearly hitting the support at 14771.07, formed on February 12, 2016. However, the two moving averages moving above the price chart indicates that a bearish market is in the making. The trend indicator encourages a short position with a red arrow casting a shadow on the price since June 13, 2016. The market is anticipated to tick up slightly to the level of 15605.32 before falling back.


Trade suggestion

Sell limit 15605.32, Take profit at 15416.65, Stop loss at 15635.51

 

[CapitalStreetFX]

Bears Dominating EURUSD, Draghi Indicates Slower Growth Due To Brexit

On June 24th , the unexpected vote by 52% of Britons in favor of leaving the 28-nation trade bloc has pushed the global markets into a turbulent situation. The common currency, euro, dived in a brutal selloff as investors priced that a significant slowdown would engulf the eurozone economy as a result of Britain leaving the EU.

The commercial relationship between the UK and the 27 other EU nations is relatively close as exports to EU account for about 45% of UK’s total exports while the proportion of imports is around 53%, in volume terms. Hence, the “divorce” with the UK may cast a shadow on growth in the euro area.

However, since the start of this week, selling has slowed as traders take profits on positions initiated in the wake of UK referendum. This has been supporting the euro to recover slightly after a “never-seen before” decline.

At the first day of the EU economic summit, European Central Bank (ECB) Governor Draghi announced that the growth in the EU could be slower, between 0.3% to 0.5% over the next three years. The preliminary forecast for Eurozone growth, released at the beginning of June was was at 1.6% in 2016 and 1.7% in the 2 years to follow.

The two-day EU Summit will end on June 29. Further details and statements from the meeting are awaited. The greenback is falling for a second day today, after rising sharply on Friday, as investors rushed their cash from risky assets into safe-have ones amid rising concerns on a potential crisis following the results of the British Referendum.

In the first comment from FED officials since the shock vote in Britain last week, Fed Member Powell indicated that the US economy could face a drag on growth for some time as the job market has remained weak since April and strong recovery has still not been seen. Judging from his comments, markets are pricing that the FED may keep the US benchmark rate on hold until late this year. The odds of another rate hike in September or November are currently at 10.5%.

Later today, the Bureau of Economic Analysis will release core PCE Price index data in the US, with an expectation of an increase of 0.2% in May.

Fig. EURUSD D1 Technical Chart

On Friday, the Euro lost ground against the USD to hit a low of 1.09101 – the lowest since March 10. Currently, this pair is moving indecisively around the area of 1.10597 after two days of rises. However, a smaller-than-average reading on the RSI (14), along with the two MAs hanging over the price chart, indicates that the bear is still overwhelming. The level of 1.11125 is acting as a solid resistance for the price.

Trade suggestion

Sell stop at 1.10426, Stop loss at 1.10942, Take profit at 1.09967

 

[CapitalStreetFX]

EURCAD Languid Ahead of ECB Conference and OPEC Meeting

Data released on Monday reported that the EU economy remained pretty weak and signals for a strong recovery are not clearly evident yet.

The Federal Statistical Office (Destatics) today reported that the index of Germany import prices in April fell by 0.1% from the preceding month, instead of increasing 0.4% as expected by analysts. On a yearly basis, the index decreased by 6.6% while export prices dropped by 2.0%. The annual growth rates of both import and export prices have witnessed declines for the past three consecutive months.

In France, the consumer spending index (m/m) witnessed a plunge of 0.1% in April. This data was contrary to expectations for a 0.1% increase in household expenditure on goods. Meanwhile, the National Statistics Institute (INE) reported that flash Consumer Price Index (CPI) for May in Spain slumped by 1.0%, falling further from the previous drop of 1.1% in April.

Due to the slowdown in its member economies, the euro area does not seem to currently highlight any bright prospects of a recovery soon. Hence, the common currency seems to be gingerly before the ECB Press Conference on June 02.

Meanwhile, Canada’s economy has been suffering from the raging wildfires for several weeks now. Oil producers have not been able to operate, thus stealing away a large part of the economy’s exports. Also, ahead of OPEC meeting on June 02, oil prices have been moving in unclear fashion, after hitting a seven-month high, as concerns of whether any supply-cut can be implemented at all, remain on the radar. Being a commmodity reliant currency, the Canadian dollar has been affected adversely by the overall fall in oil prices over the past months and years.

The market is looking forward to the upcoming data releases from Canada that are on schedule. The Raw Materials Price Index (RMPI) in April is forecast to increase only 2.2%, well below the growth rate of 4.5% in the preceding month. Nevertheless, the Industrial Product Price Index is expected to inch up 0.2% in April, after sliding 0.6% previously.

Fig. EURCAD D1 Technical Chart

EURCAD has been fluctuating in an uncertain fashion for several days, after testing the resistance of 1.48253. Currently, the Loonie is weakening against the Euro, with the EURCAD at 1.45313. The stochastics chart shows that the pair may escape from the oversold zone as the %K line (blue line) has already reversed and crossed the %D line (red line). The price is expected to retest the current resistance at 1.48253.

Trade suggestion

Buy stop at 1.45915, Stop loss at 1.44493, Take profit at 1.47070

 

[CapitalStreetFX]

Rising Risk Aversion – Longs On German Bunds Recommended

Considered as safe-havens, bonds usually become more attractive when the markets experience instability. One of Europe’s benchmark sovereign securities, Germany’s 10-year bund, rose in Monday’s trading session as uncertainty resulting from the “Brexit” has not retreated completely.

As investors sought a safe place to park their cash, expecting market turmoil, yields on German government bonds turned negative once again post Britain’s EU Referendum and reached a record low of around minus 0.17%. For the last several days, yields have kept heading downwards and have not yet witnessed any strong bounce back. The head of euro rates strategy at Mizuho commented that the bank now anticipates that German Bund yields could decline to minus 0.2% this year, compared with previous estimates of zero percent.

The euro zone economy is completely exposed to the downside risks of Brexit. Hence, in order to relieve mounting pessimism over economic growth, the European Central Bank is expected to implement further reduction in its benchmark rates, as well as deploy additional quantitative easing measures in the upcoming months.

In a conference last weekend, ECB Executive Council member Coeure stated that the British decision in favor of leaving EU would cause further setbacks to global markets. However, he indicated and expectation that these impacts may be short-lived and stated that the central bank is ready to stabilize the situation.

Earlier today, Sentix released its monthly survey on EU investor sentiment. The data came in at 1.7 points in July– the lowest level since February 2015. Meanwhile, the reading for the preceding month was at 9.9 points. Weakening investor sentiment indicates a lack of belief in growth, implying that the euro zone could enter a period of further slowdowns/recession.

On July 06, ECB President Mario Draghi will deliver a speech in Frankfurt. Some clues and statements on current and future monetary policy are awaited. Additionally, on the same day, FMOC will release its minutes from the June meeting, which may provide deeper insights into the Fed’s view on current and medium term economic and financial conditions. Dovish leanings of the US central bank on future rate hikes may help further bolster German bunds, as expectations of interest rate hikes decrease.

Fig. German 10-year bund D1 Technical Chart

German bunds are creating a gradual up channel and hit a record high of 167.343 on the last day of June. A higher-than-average reading of RSI (14) indicates that the bulls are strongly dominant. The price is expected to enjoy support from the two MAs below and may continue to climb further. The trend indicator has suggested longs positions since May 11.

Trade suggestion

Buy stop at 167.075, Stop loss at 166.519, Take profit at 167.534

 

[CapitalStreetFX]

Shorts In Control – AUDUSD Falls As RBA Leaves Rates Unchanged

The AUDUSD is moving downwards in the current session without volatility following the Reserve Bank of Australia announcement of maintaining an unchanged benchmark rate at 1.75%.

The report from the Australian Bureau of Statistics on Monday (4/7) hinted at a steady waning of inflation, which has fallen under the 2-3% target zone. Australia’s trade balance in May fell to a seasonally adjusted -2.218 billion, from -1.785 billion in the preceding month. A negative balance of trade indicates that more goods and services were imported than exported. Additionally, Australian retail sales in May came in at 0.2%, missing the expected reading of 0.3%. The reading was most affected by a sharp deceleration of 1.1% in the household goods retailing sector.

Today, the Reserve Bank of Australia (RBA) ended its July policy meeting with no guidance on whether there might be any further easing measures in the future. RBA decided to keep its interest rates at an all-time low of 1.75%, due to political uncertainty at home and abroad and a lack of supportive data on domestic inflation.

A rate cut at the next meeting in August still lingers on the minds of some traders, with the probability of an interest rate decrease, priced at 60%. The mounting concern on interest rates, has cast a shadow on the Aussie dollar, dragging down the pair AUDUSD to 0.75067 after a 5-day up move.

Meanwhile, later today, the U.S Census Bureau is due to release some important data. Factory Orders in May are expected to register at minus 0.8%. The reading for April came in at 1.9%. A positive reading indicates rising purchase orders, which lifts manufacturing activity and vice versa. Also, the TIPPOnline consumer confidence index, also scheduled to be released later today, is forecast to come in at 49.3, suggesting continuing pessimism over current and future economic conditions.

The dollar index DXY, which tracks the strength of U.S dollar against a basket of six major currencies, fell 0.62% to 94.3 from the last settlement.

Markets are waiting for any surprises from the minutes of the June FOMC meeting, to be released on Wednesday (6/7) and, more importantly, the Non-farm payrolls on Friday (8/6).

Fig. AUDUSD H4 Technical Chart

After 5-days of a sharp rise in the buildup to the RBA meeting, the AUDUSD failed to surpass the 23.6% Fibonacci retracement, and has been falling back today. The AUDUSD is on track to weaken against the greenback. Currently, AUDUSD has been locked in an upward channel and has just hit the upper bar. The pair is expected to fall back to the 38.2% support at 0.74555. Before that, the price is nearing the two Mas, and may attempt to test the support levels. A brief correction is anticipated.

Trade suggestion

Sell stop at 0.74812, Take profit at 0.74406, Stop loss at 0.75118

Sell stop at 0.74812, Take profit at 0.74406, Stop loss at 0.75118.

 

[CapitalStreetFX]

Euro Below 1.10000 – Can Buyers Attempt Bottom Fishing?

Euro Below 1.10000 – Can Buyers Attempt Bottom Fishing?

The Euro gained against the US dollar on Monday to $1.09866 after a widely watched German sentiment survey reported increased optimism among businesses after the Brexit vote.

The Munich-based IFO economic institute said its business climate index, based on a monthly survey of some 7,000 firms, fell to 108.3 in July from 108.7 in June. However, the data was stronger than the consensus forecast from economists. Forecasts had expected a reading of 107.7. The IFO infex is a leading indicator of economic health, as businesses react quickly to market conditions, and changes in their sentiment can be an early signal of future economic activity such as spending, hiring, and investment.

According to the director of the IFO institute – Dr Clemens Furst, the German short-term economic outlook seemed to be improving significantly. In particular, sentiment among manufacturers improved with regards to the present as well as short-term future outlook. However, over a third of the respondents surveyed, still expressed their concerns over the impact of the Brexit referendum’s result.

The US dollar was down today as investors stayed cautious ahead of the FOMC meeting this week. The Fed is not expected to tighten rates on Wednesday. Investors will be sifting through its statements for hints of a near-term rate increase following the recent strong of firm U.S. economic data that have revived tightening expectations.

The US dollar index, measuring the strength of the greenback against major currencies, was down 0.09% to 97.31 compared with the last settlement.

In data being watched, US Consumer Confidence, measuring the relative level of current and future economic conditions, will be released tomorrow. It is expected to reach a reading of 95.6 in July, down from June’s 98.0. Consumer Confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity in the US.

Fig. EURUSD Technical Chart

The euro has inched up against the US dollar today to hit 1.09889, bouncing back up from the lowest level in nearly a month. The –DI (red line) has begun to turn down towards the +DI (green line), suggesting that the bear market has become weaker. RSI is at level 40, and is expected to boost the price upwards after some time spent trading sideways. EURUSD is expected to gain a little in the short-term, to test the resistance area of 1.10601. A potential reversal could happen (if it does) if the market fails at this resistance.

Trade suggestion

Buy stop at 1.09877, Stop loss at 1.09453, Take profit at 1.10286

 

[CSFX.Support]

Daily Report on September 06, 2016

Daily Report on September 06, 2016



Crude prices held onto most of their gains from yesterday in the Asian trading session on Tuesday, as top producers Russia and Saudi Arabia, despite failing to announce concrete steps to limit output, agreed to cooperate on stabilizing the oil market. Russian Energy Minister Alexander Novak and his Saudi counterpart have moved toward a strategic energy partnership after a meeting at the G-20 summit in China.

Saudi energy minister Khalid al-Falih stated that he was optimistic about cooperation with other producers ahead of a meeting this month in Algiers, adding that freezing production was not the only solution to a supply glut. The oil price advance led energy stocks higher, which in turn supported Asian shares edge up on Tuesday.

A report by the British Retail Consortium (BRC) and KPMG published overnight showed that UK retail sales decreased 0.9pc in August compared to the same month last year on a like-for-like basis. The weakest performance since September 2014 was attributed to the warm weather that retrained clothing sales, and the Olympics that distracted shoppers by keeping them indoors.

Having already pulled the trigger on policy easing in May and August, the Reserve Bank of Australia (RBA) held its interest rate unchanged as expected at Tuesday's meeting. The central bank stated that it will let the stimulus measures already introduced, to percolate through the economy before deciding if yet more stimulus is needed.



Technicals

EURAUD



Fig: EURAUD H4 Technical Chart

EURAUD has fallen off the 23.6% retracement level at 1.46967 and continues to head downwards with the pressure from the two MAs placed above the price action. The MA20 has crossed over the MA50 from above, not to mention that the ADX index has soared higher. The pair is anticipated to dip lower to test the support at 1.45450.

Trade suggestion

Sell Stop at 1.46015, take profit at 1.45450, stop loss at 1.46615



USDCAD



Fig: USDCAD H4 Technical Chart

USDCAD has been on a decline since it reversed from a nearly one-month high at 1.31471 reached on Friday. The short-term MA has penetrated the long-term MA from above, signaling further slump in the market. Additionally, since the ADX has surged higher to 53.19, with a big divergence between the +DI and –DI line, the bears are expected to gain momentum and push the pair lower. However, the USDCAD is up against a strong support zone, which is an ascending trendline formed during the period from August 18 to date. To extend the down move, USDCAD needs to make a breakout through this support first.

Trade suggestion

Sell Stop at 1.29000, take profit at 1.28570, stop loss at 1.29500



USDCHF



Fig: USDCHF H4 Technical Chart

USDCHF has been moving sideways around the key 0.98000 level for the last three trading days. The pair initially breached the upper boundary of the ascending trading channel and broke out of it. But has now fallen back into the trading channel. The market has been locked under the MA20 for a while but has not been able to cross below the MA50. As the %K line is pointing down and the RSI has dipped below 50, the pair is forecast to fall further to the support at 0.97500.

Trade suggestion

Sell Stop at 0.97880, take profit at 0.97500, stop loss at 0.98200



GOLD



Fig: GOLD H4 Technical Chart

Gold has been on a rise since the beginning of September but the rally is being held back within the descending channel. While the bull is overwhelming in the market and the upcoming convergence of the two MAs placed below the price action looks likely, a breakout though the channel resistance is anticipated. However, in case the precious metal can breach this handle, the major resistance at 1330.00 will be another solid stance for gold to get through.

Trade suggestion

Buy Stop at 1328.50, take profit at 1333.20, stop loss at 1325.00



BRENT



Fig: Brent H1 Technical Chart

Brent witnessed a spike yesterday which took the commodity beyond the 23.6% retracement level to retest a nearly one-week high at 49.37. Brent pared most of its gains afterwards but failed to break below the MA20 and is currently trading above this support. The ongoing up-wave has created a bullish impulse in the market, with other indicators currently supporting the up move.

Trade suggestion

Buy Stop at 47.80, take profit at 48.45, stop loss at 47.40



DAX



Fig: DAX H4 Technical Chart

Germany's DAX30 index has been moving in an ascending triangle pattern. Higher lows have been continuously created but the index has been restrained from forming new highs due to the resistance at 10740.00. DAX seems to be trading with a sideways to downwards bias currently. However, any down move is expected to subside and the market may bounce back once it hits the MA20 and may go on to retest the 10740.00 resistance level.

Trade suggestion

Buy Limit at 10636.00, take profit at 10740.00, stop loss at 10600.00

 

[CSFX.Support]

Gold Signal by Capital Street FX

Go Longs on Gold as Fed May Need To Stand Pat on Rates This September

Gold retested over one-week high at 1342.11 after a couple of data released on Tuesday that were not only far beyond earlier expectations but also completely dislodged any thought of a U.S economy that is “healthy enough” to withstand a rate hike as soon as later this month.

Report from the Institute for Supply Management showed that America’s service industries expanded in August at the weakest pace in six years. The ISM non-manufacturing index nose-dived to the lowest since February 2010 to 51.4, from 55.5 in July, while economists forecast the figure to come out at 55.4.

In a separate report, the Federal Reserve’s labor-market conditions index also swung back into negative territory last month after a positive reading in July, marking the seventh negative reading in the past eight months. The Fed’s gauge, which combines 19 labor market indicators, fell to minus 0.7 in August from 1.3 in one month earlier.

Trade suggestion

Buy Stop at 1340.50, Stop loss at 1333.00, Take profit at 1345.90

 

[CSFX.Support]

Copper Market Outlook by Capital Street FX

Copper Picks Up On Signs of Rising Demand – Traders Advised To Be Cautious As Market May Not Easily Re-Balance

Copper opened Tuesday’s trading session with a small gap down but quickly covered the gap to extend bullish momentum to a second consecutive trading day despite swelling inventories, as demand is showing signs of pick-up while cross currents in supply reduced pressure cast by worries over a market surplus.

Inventories tracked by the London Metal Exchange rose by 10,025 tons to 328,525 tons, causing stocks of copper held at LME approved warehouses to rise by more than 60 percent since Aug. 11. However, stocks held by the Shanghai Futures Exchange fell to 152,404 tons as of September 2, down eight percent compared to the previous week.

The decline in SHFE may be the result of a marginal rise in demand in Europe and Asia after the summer vacation has ended. “Feedback from fabricators onshore points to a pick-up in orders from the construction sector in recent weeks”, said Standard Chartered.

Elsewhere, striking workers at Codelco’s small Salvador mine (producing 49,000 tons per year) and Anglo American’s Los Bronces mine (producing 437,800 tons per year) following failed wage negotiations in Chile – the world’s top copper producing nation – could cause production to fall further in the coming months.

Meanwhile, also on the supply side, Vedanta – India’s second largest copper producer with current output of 400,000 tons a year – is harboring the ambition to dethrone its rival Hindalco (500,000 tons) from first place in terms of output. Vedanta is reported to be restarting a cooper mine on Tasmania’s west coast in 2017, three years after the mine’s operations were suspended due to the death of two workers in 2014 and another in 2013. The mine is estimated to possess 200 million tons of reserves with an annual output of 100,000 tons

Previously, CEO of Vedanta’s Copper business R Ramnath stated that the conglomerate is planning to invest up to Rs. 3,000 crore ($450 million) in its Indian copper operations to double the capacity to 800,000 tons by 2019, making the firm India’s largest producer of the metal.

In a recent meeting with the government, India’s top copper producers — Hindalco, Vedanta and Hindustan Copper — have demanded that import duty on finished copper products be raised to 7.5% from 5% now as the country’s imports are growing at an alarming rate of over 20% for the last five years. These domestic producers are afraid that copper from Asean countries and Japan which is benefitting from export incentives could take over their market share that is about 80% at around 1 million tons a year in total.

Copper has been trading sideways in a thin range between 2.0900 and 2.0695 for nearly two weeks, after stabilizing post the sharp down move between mid/late July and August 24. The metal continues to remain in the downward sloping trading channel. Bears currently seem exhausted after having continuously pushed prices lower and held the market near oversold zone. Some bullish interest has come back into the market at the lows, but bulls are facing strong resistance at 2.0900. Bears are expected to get back into the market, after a period of short-covering inspired bounce-backs, and may push copper prices back down again.

Trade suggestion

Sell Stop at 2.0900, take profit at 2.0680, Stop loss at 2.1140

 

[CSFX.Support]

EUR/CHF signal by Capital Street FX

EUR/CHF signal by Capital Street FX

From GMT 10:15 06/09/2016
Till GMT 21:00 06/09/2016

Buy at 1.09315
Take profit at 1.09450
Stop loss at 1.09200

 

[CSFX.Support]

Daily Report on September 07, 2016 by Capital Street FX

Daily Report on September 07, 2016



Asian shares rose to one-year highs on Wednesday, carrying forward the bullish momentum from the US equity markets after Wall Street had finished yesterday’s session in the green. A spate of weaker-than-anticipated data released on Tuesday has nudged investors to bet against any U.S rate hike this month and created some doubts over an interest rate increase by the end of 2016.

The Federal Reserve was handed some reasons to delay increasing rates after the Institute for Supply Management published its non-manufacturing PMI for August. The August PMI fell to 51.4. The result was far short of expectations, marking the largest one-month drop since November 2008 and the lowest PMI reading since February 2010. The Fed’s labor-market conditions index also swung back into negative territory last month after a positive reading in July, slipping to -0.7 from 1.3 one month earlier.

In response, the U.S dollar fell sharply against most of its peers. The Japanese Yen strengthened on the back of a softening greenback and was also bolstered further by a reported split between Bank of Japan officials ahead of the BOJ meeting on September 20-21. According to a report in the Sankei newspaper, BOJ policymakers are currently divided into three groups. One supports negative interest rates, another advocates more government bond purchases, while the third group opposes further stimulus.

The Australian dollar edged down 0.1 percent to $0.7681 after rising more than 1 percent on Tuesday after the Reserve Bank of Australia held interest rates steady at 1.5 percent. The Australian Bureau of Statistics reported the country’s gross domestic product (GDP) for the second quarter decelerated to 0.5%, indicating a cooling off in growth compared to the January-March period.



Technicals

GBPUSD



Fig: GBPUSD H4 Technical Chart

GBPUSD broke above the ascending trading channel that has formed since early August, after a steep up move from the key support level at 1.33000. The market has pulled back for some consolidation after bulls pushed the prices into overbought territory. However the upper boundary of the trading recent trading channel is now acting as support after the breakout from the channel, and has kept the market from falling back into the price range. This support zone is expected to push the price higher from the current levels

Trade suggestion

Buy Stop at 1.34400, Take profit at 1.34800, Stop loss at 1.34000.



EURCHF



Fig: EURCHF H4 Technical Chart

EURCHF has breached below the 50.0% retracement at 1.09090 after decisively dropping from the 61.8% level at 1.09774. A brief correction was seen yesterday but weak bulls failed to retain the bullish momentum and had to reverse lower after coming up against the short-term MA. The MA20 has just converged with the MA50 from above, signaling more declines for the pair.

Trade suggestion

Sell Stop at 1.09000, Take profit at 1.08800, Stop loss at 1.09230



USDJPY



Fig: USDJPY H4 Technical Chart

USDJPY has been on a precipitous down move which helped the pair easily move past both the long-term and short-term MAs. In general, the U.S dollar has been trading in a shrinking range against the JPY and is currently moving towards the lower boundary of the trading range. As the market has entered the oversold zone, we may witness a period of consolidation moves. More declines in USDJPY are expected since two MAs placed above the price action are casting downward pressure on the price.

Trade suggestion

Sell Stop at 101.300, Take profit at 100.850, Stop loss at 101.700



SILVER



Fig: SILVER H4 Technical Chart

Having surged more than 9.5 percent from two-month lows at 18.371 created on August 29, the grey metal retreated after the market entered a state of overblown volatility. Nonetheless, silver is forecast to extend the up wave as the two moving averages placed below the price action are exerting upward pressure which could send the price higher.

Trade suggestion

Buy Stop at 20.100, Take profit at 20.300, Stop loss at 19.910



WTI



Fig: WTI H4 Technical Chart

WTI crude prices are continuously forming lower highs and higher lows causing the commodity to move in a narrowing range. The market has failed to define a clear direction for itself and reversed regularly every time it hits the upper or lower trend lines that have marked the recent trading range, and no clear breakout or resolution of the trend has been observed. At the moment, crude prices are moving towards the 23.6% retracement at 45.55 and anticipated to reverse lower below this resistance.

Trade suggestion

Sell Limit at 45.55, Take profit at 44.50, Stop loss at 46.00



SP500



Fig: SP500 H4 Technical Chart

The SP500 has recorded a crossover by the MA20 through the MA50 from below, suggesting further up moves on the index after the price action broke above the 2184.00 resistance. RSI (14) that has soared to 59.74 is also supportive for the prices to retest the recent high at 2193.00 reached on August 15.

Trade suggestion

Buy Stop at 2186.00, Take profit at 2193.00, Stop loss at 2177.50

 

[CSFX.Support]

USD/CHF signal by Capital Street FX

USD/CHF signal by Capital Street FX

From GMT 11:00 07/09/2016

Till GMT 21:00 07/09/2016

Sell at 0.96850

Take profit at 0.96400

Stop loss at 0.97650

 

[CSFX.Support]

USDCAD trade idea by Capital Street FX

USDCAD Pares Losses After Weak Ivey PMI Data

USDCAD reversed into an uptrend after the Bank of Canada decided to maintain the Overnight Rate on hold at 0.50% but stated that second-quarter gross domestic product was affected by a drop in exports that was “larger and more broad-based than expected.”

Although in general, the central bank delivered an optimistic attitude towards its economy, analysts claimed that weak exports would demand the BOC unleash more monetary easing to drive stronger growth.

The Loonie today was also hit by the Canadian Ivey PMI. The indicator released by the Richard Ivey School of Business, decreased from 57.0 points to 52.3 points, missing consensus estimate of 55.5 and signaling an aggressively decelerated expansion.

Trade suggestion

Buy Stop at 1.29000, Take profit at 1.29250, Stop loss at 1.28840

 

[CSFX.Support]

Daily Report on September 08, 2016 by Capital Street FX

Daily Report on September 08, 2016



Crude prices extended their winning streak in early trading on Thursday after data from the American Petroleum Institute on Wednesday indicated that U.S crude stocks unexpectedly dropped by 12.1 million barrels last week. Oil hit one-week highs as the report was starkly contrasting with expectations of an increase of 200,000 barrels. Official data from the U.S government will be out later today. Should the data from the EIA confirm the drawdown, it will be the largest weekly decline since April 1985.

Also on Wednesday, the U.S Labor Department published its monthly Job Openings and Labor Turnover Survey, or JOLTS, which pointed to tightening conditions in the labour market. U.S. job openings were reported to have surged to a record high in July. However, employers were having difficulty in filling vacancies with appropriately qualified workers.

The number for worker demand increased by 228,000 to a seasonally adjusted 5.9 million – the highest level since the survey was started. In theory, this situation could spur faster wage growth. But according to the Fed’s latest Beige Book report, “expectations of wage growth for the coming months were modest” as a strong labor market failed to create much upward pressure on wages and prices.

Data from Japan reported on Thursday that the Japanese economy grew by 0.7% in the second quarter compared with the same quarter last year. The reading for the annualized growth rate was revised upwards, from a preliminary reading of a 0.2% expansion. On a quarter-on-quarter basis, the world’s third biggest economy expanded by 0.2%, largely due to upbeat capital expenditure and inventories, which outpaced the decline in domestic and overseas demand caused by a strong yen.

Official data from the Customs General Administration of China reported that the country’s trade surplus in August was slightly below July’s $52.31 billion at $52.05 billion and missed estimates for a reading of $58 billion. Weakening exports continued to weigh on the world’s second-largest economy. Exports slid by 2.8 percent on a year-on-year basis, following July's 4.4 percent drop.

Investors are shifting their attention to the meeting of the European Central Bank where all main rates are expected to be left unchanged. President Mario Draghi will update growth and inflation projections in the Press Conference due after the rate decision.



Technicals

NZDUSD



Fig: NZDUSD H4 Technical Chart

NZDUSD has broken above the ascending channel but has currently been trading sideways below the 50.0% retracement at 0.74709. The pair is currently locked between the upwards sloping trendline, marking the boundary of the ascending channel, which is acting as a support and the resistance at the 50.0% Fibonacci level. A breakout is expected as the trading range is becoming narrower. The ADX is still pointing upwards, suggesting a continual uptrend.

Trade suggestion

Buy Stop at 0.74750, Take profit at 0.75200, Stop loss at 0.74400



CADJPY



Fig: CADJPY H4 Technical Chart

CADJPY has been moving sideways within the price range from 78.750 to 79.175. The pair is currently in a phase of consolidation, after a sharp decline from a more than one month high at 80.298. The pair is under the downward pressure heaped by the two MAs placed above the price action. The short term MA20 has been an especially strong level of resistance so far, and has forced the price to reverse lower every time CADJPY has hit this resistance. Further declines are expected.

Trade suggestion

Sell Stop at 78.750, Take profit at 78.500, Stop loss at 79.200



USDCAD



Fig: USDCAD H4 Technical Chart

USDCAD retreated after failing to break back above the support trendline underlying the price action created since August 18. After having violated the uptrend on Monday, the pair bounced back from the support at 1.28300 but could not cross back over the support trendline at around 1.29126, and was further pressured by the MA20 hovering above the price action. The market has remained in bearish territory but the near-term support at 1.28570 should be monitored carefully.

Trade suggestion

Sell Stop at 1.28570, Take profit at 1.28300, Stop loss at 1.29050



SILVER



Fig: SILVER H4 Technical Chart

Silver resumed the uptrend after retreating from the high at 20.100. While the %K line reversed higher to penetrate the %D line from below, RSI remains in the bullish zone, indicating an overwhelming bull. With two MAs placed below the price action, silver is on course to soar higher.

Trade suggestion

Buy Stop at 19.900, Take profit at 20.100, Stop loss at 19.700



COPPER



Fig: Copper H4 Technical Chart

Copper has breached the solid resistance at 2.0900 which restrained the metal for two weeks until yesterday. The RSI index has surged above the 50 line, and the MA20 has crossed over the long-term MA50 from below, preparing the stage for further advances in copper. Nonetheless, the up-move could be limited as prices are moving in an upward sloping channel and the upper boundary of the channel is foreseen to be a firm handle, where prices could be contained.

Trade suggestion

Buy Stop at 2.1050, Take profit at 2.1170, Stop loss at 2.0900



NASDAQ



Fig: NASDAQ100 H4 Technical Chart

The Nasdaq failed to surpass major resistance at 4837.00, yet again, yesterday. Bulls are overshadowing the market but also taking cautious steps when facing this key level. The two MAs placed below the price action, are continuously fueling bullish momentum in the index but a chance for a break out is still even. Any considerable force that could help the index one way or the other, would need to come from the fundamental side. Therefore traders should be patient ahead of the crude oil inventory data due later today.

Trade suggestion

Sell Limit at 4837.00, Take profit at 4811.50, Stop loss at 4851.50

 

[CSFX.Support]

AUD/CAD signal by Capital Street FX

AUD/CAD signal by Capital Street FX

From GMT 11:15 08/09/2016
Till GMT 21:00 08/09/2016

Sell at 0.99525
Take profit at 0.99000
Stop loss at 0.99970

 

[CSFX.Support]

USDZAR Market Outlook by Capital Street FX

Blockbuster Economic Dominates Political Uncertainty – USDZAR Set To Crash

USDZAR continued to drop on Thursday after a sole winning session in the month-to-date on Wednesday. News about a rebound in South Africa’s economy came at the same time as weaker-than-anticipated economic data from the the U.S. Prospects of a Federal Reserve rate hike in September worsened significantly after the weaker than expected data reading, which helped boost demand for higher-yielding emerging-market assets and in particular, helped power the Rand to rally nearly 6% in September against the background of political uncertainty.

South Africa reaped the benefits of a weak rand in the second quarter, posting an 18.5% surge in exports and a 5.1% decline in imports. The country managed to avoid a recession in the April-June period, as mining and factory output rebounded. A report from the national statistics agency on Tuesday reported that the country’s gross domestic product (GDP) grew at an annualized rate of 3.3 percent on-year, recovering from a 1.2% contraction in the first quarter.

Manufacturing, which accounts for the largest share in South Africa’s GDP at 13%, reported growth of 8.1% compared with the previous quarter, reaching the highest rate of quarterly growth in three years. Meanwhile, mining output recovered from an 18.1% decline in the first quarter to increase by 11.8% in the three months through June.

Given the positive figures released a day earlier, The South African Reserve Bank Governor Lesetja Kganyago stated on Wednesday that “the Monetary Policy Committee will be able to revise upwards its annual economic performance estimates at the September meeting”. South Africa’s Central Bank is scheduled to hold its monetary policy meeting on September 22.

The Rand added to its recent gains earlier today after an unexpected rise in Chinese imports. China’s imports rose for the first time in nearly two years in August, suggesting a pick-up in domestic demand and buoying commodity-linked currencies such as the Rand, as China is one of the biggest markets for all commodity producing countries(if not the biggest market).

However, data from Statistics South Africa indicated that manufacturing output expanded only by 0.4% year-on-year in July, well below expectations of 3% advance after rising by a revised 4.7% in June. Factory production was also down 1.5% on a monthly basis last month. The results of the nation’s Q3 business confidence survey on Friday will round up the week for the Rand. Forecasts point to a dip from a reading of 32 points to 30.

The currency has recently been under pressure due to political uncertainty after its respected Finance Minister Pravin Gordhan was summoned by a special unit of the police, in relation to an investigation over the activities of a surveillance unit set up during his time as head of South Africa’s tax agency. Gordhan has not been arrested but his case has put the country in danger of a ratings downgrade to junk level by rating agencies, as he is widely considered to be a progressive policy maker.

USDZAR penetrated both the short-term and long-term Mas from above, heading back towards the nearly one-year low at 13.19334 after a sharp spike in the second half of August. Obviously bears have taken over the market. The –DI line has already crossed over the +DI from above while the RSI has retreated to 32.14 from the high of 42.52 reached during the recent rally. A short correction yesterday has balanced the market a little and prevented a move into the oversold territory. The RSI is indicating that there is room for the pair to fall further.

Trade suggestion

Sell Stop at 13.88000, Take profit at 13.64845, Stop loss at 14.08500

 

[CSFX.Support]

WTI Trade Idea By Capital Street FX

Brent Rallies on Record U.S Crude Inventory Draw

Crude prices jumped more than 4 percent on Thursday after the U.S. Energy Information Administration announced a not-so-surprisingly large drawdown in the country’s oil stocks. The report was considered as a confirmation for data published by the API which indicated a decrease of 12.1 million barrels last week.

Thursday’s data showed U.S. crude stocks dropped by 14.5 million barrels in the week through September 02, to 511.6 million barrels, marking the biggest weekly drop in stockpiles since January 1999. This loss was driven by limited imports and shipping into the U.S. Gulf Coast owing to Tropical Storm Hermine last week.

Trade suggestion

Buy Stop at 50.00, Take profit at 50.25, Stop loss at 48.85

 

[CSFX.Support]

Daily Report on September 09, 2016 by Capital Street FX

Daily Report on September 09, 2016



The European Central Bank decided to leave interest rates unchanged on Thursday as expected but disappointed the markets with a lack of dovish statements on the Euro. With no immediate action to extend/expand the current asset purchase plan, and no explicit guidance about the central bank’s next moves, the markets were left hanging dry by the ECB. Speaking at the press conference after the rate decision, ECB President Mario Draghi stated that the bank was studying potential changes to its asset-buying program, but maintained the March 2017 end-date for the plan.

Crude prices pulled back on Friday as investors booked profits after prices rallied more than 4 percent a day earlier. U.S. Energy Information Administration confirmed a surprisingly huge draw-down in U.S. crude inventories, which had been reported first on Wednesday by the API. Government data showed that U.S. crude stocks dropped by 14.5 million barrels last week to 511.4 million barrels - the biggest weekly drop in stockpiles since January 1999.

This loss was driven by limited imports and shipping activity in the U.S. Gulf Coast owing to Tropical Storm Hermine last week. Higher oil prices powered the U.S dollar’s rally overnight, by raising U.S. inflation expectations, which led some investors to speculate that the Federal Reserve could hike interest rates sooner rather than later despite a recent spate of disappointing economic data.

Reports by China’s National Bureau of Statistics indicated that the country's consumer price inflation slowed to its weakest pace in almost a year in August. Food costs continued to abate despite unreliable agricultural production due to severe summer flooding. The consumer price index (CPI) growth posted the slowest pace of price inflation since October 2015. CPI growth was at 1.3 percent in August on a year-on-year basis, compared with a 1.8 percent increase in July. The producer price index (PPI) dropped 0.8 percent in August compared to a year earlier, virtually in line with expectations for a fall of 0.9 percent.



Technicals

EURGBP



Fig: EURGBP H4 Technical Chart

EURGBP has been on a sharp rise without a single bearish candle since it broke above the 50.0% retracement level at 1.09090. However, the aggressive and sharp up moves may have exhausted the bulls and slowed down the pace of the up-wave, which is showing up in the short bodies of the last two bullish candles (not including the current one). The pair may continue to surge higher, as the MA20 has converged with the MA50, and both are placed below the price action, thus powering the bullish momentum in EURGBP.

Trade suggestion

Buy Stop at 1.09600, Take profit at 1.09774, Stop loss at 1.09400



GBPAUD



Fig: GBPAUD H4 Technical Chart

GBPAUD crawled back from the low at 1.72600 but has been hesitant around the 1.74150 level as the pair is facing a stiff zone of resistance at the trendline marking the descending downtrend created since May 26. A pullback is expected as there is no support for further advances, with the two MAs placed above the price action. Furthermore, the %K line of the stochastics has entered the overbought zone, indicating the possibility of upcoming profit-taking.

Trade suggestion

Sell Stop at 1.72600, Take profit at 1.72600, Stop loss at 1.75070



AUDUSD



Fig: AUDUSD H4 Technical Chart

AUDUSD has entered a consolidation phase after nose-diving and moving past the 20-period moving average yesterday. The MA is now acting as a resistance and forcing the price to go down further after each attempt to gain back territory. The RSI has fallen from the overbought threshold to the neutral 50 level. AUDUSD is anticipated to retest the 23.6% retracement level at 0.76144.

Trade suggestion

Sell Stop at 0.76430, Take profit at 0.76144, Stop loss at 0.76730



GOLD



Fig: GOLD H1 Technical Chart

Gold has been trading with a sideways to upwards bias since yesterday following a steep decline which depressed the precious metal below both the two moving averages. The MA20 has penetrated the MA50 from above is casting downward pressure on current up moves. Both MA's are currently placed above the price action. While the RSI is in bearish territory, the %K line has reversed lower and crossed the %D line from above. The metal is expected to pull back lower after attempting a test of the MA20 just above the price action.

Trade suggestion

Sell Stop at 1335.90, Take profit at 1330.00, Stop loss at 1342.50



Natural gas



Fig: Natural gas H4 Technical Chart

Having surged sharply from the 23.6% retracement level, at 2.667, Natural gas’s up moves have slowed down. The two MAs placed below the price action are supporting further advances, but prices rising too far too fast have led the market into an overbought zone. The resistance from the upward sloping trendline through recent lows from early August to date is offering a strong road block to further gains currently. Natural gas is expected to reverse lower.

Trade suggestion

Sell Stop at 2.800, Take profit at 2.770, Stop loss at 2.825



SP500



Fig: SP500 H4 Technical Chart

SP500 has been restricted below the MA20 recently, even though the index is moving in an upward trending price channel, with higher highs and higher lows since early August. The price is nearing the lower boundary of the channel and is forecast to fall out of the range as bulls seem to be losing steam, with the RSI index pointing downwards and remaining below the 50 line. Prices have broken below both the MA's from above and bounce-backs have not been able to cross back above the MA's thus far.

Trade suggestion

Sell Stop at 2177.50, Take profit at 2172.40, Stop loss at 2182.83