Key To Markets - Discussions

[KeyToMarketsUK]

KTM FX Daily: April NFP preview. USDJPY sell trade available

The dollar index is facing plenty of resistance at 92.60 October 13 low and an earlier swing low. Traders are waiting for today’s April NFP figures after FOMC meeting (Thu).

In March, the numbers were disappointing but we expect they will bounce back in April. Total nonfarm payroll employment edged up by 103,000 in March, and the unemployment rate was unchanged at 4.1 percent. Whereas, total nonfarm payroll employment increased by 313,000 in February. Awe believe, after a big rise in February the numbers were corrected a bit in March.

Preview: In April we expect the numbers will bounce back to 190k and the unemployment rate to fall to 4.0% from 4.1%, average earnings to steady by 0.3%. Whereas Westpac, Barclays and NAB Research forecast “192K “. ING and Danske Bank are reported an extreme bullish number at “200k”.

According to Sean Callow, Analyst at Westpac, “Consensus is 192k for Apr, with the chance that the Apr headline NFP reading is muted by an upward revision to Mar. The unemployment rate is seen edging down to just 4.0%, which would be low since Dec 2000. But average hourly earnings are still a bit lackluster, seen at 0.2%mth, 2.7%yr, the annual pace steady vs Mar and short of the Sep 2017 high of 2.8%”.

According to Barclays, “For the April employment report, we forecast nonfarm payrolls to increase 175k, in line with the long-run trend of monthly employment growth (Friday). We expect the unemployment rate to fall one tenth, to 4%, average hourly earnings to rise by 0.3% m/m and 2.8% y/y and average weekly hours to hold steady at 34.5”.

According to NAB, “Payrolls tonight are expected to print at 192K, the unemployment rate at 4.0% (down from 4.1%) while average hourly earnings to print at 0.2%/2.7% after 0.3%/2.7%”.

James Smith at ING said, “We saw a bit of a readjustment in March, and a further fall in unemployment in April is likely to have dragged the overall rate down to 4.0% – another post-crisis low and this month we could see a rebound to the 200k area after the March drop”.

Danske Bank also forecast a rebound to 200k in April, reported in its research note. “We expect employment growth to rebound from the weak print of 103,000 in March to around 200,000 in April. We would not be surprised to see a decline in the unemployment rate from 4.1% to 4.0%, as employment growth remains higher than labour force growth”.

FX comments:

• AUDUSD: Holding the 50.0% fib reaction
• EURUSD: Paused at the 61.8% fib reaction. Sell the rally.
• GBPUSD: Holding the 200MA
• USDJPY: Rejected at 200MA (supply zone seems to be between 110.40-111.00)
• USDCAD: On the verge of a minor range breakdown. Limited upsdie risk.
• NZDUSD: Holding the support 0.6980

FX market is heading to the NFP event with oversold RSIs. On the daily chart AUDUSD, RSI study is at 39 bounce from 29, EURUSD RSI stands at 31.50, GBPUSD at 26.75 and NZDUSD at 33. On the other hand USDCHF study has been consolidating at 82.00, USDJPY study cooled to 59 from 70.50 and USDCAD study has been in a sloping mode, currently stands at 55.00.

Trade: We prefer selling USDJPY between 110.40-111.00 with a target 108.00. To limit the risk use sl above 111.65.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar ( May 07-11)

• CPI for UK and US
• RBNZ and BOE are in focus

The dollar seems to be predominant for the third week in a row when compared to the most traded currencies. We still expect the continuation of this dollar momentum in the weeks ahead, as the tradable dollar index (DXY) rises above 200MAs and settles.

Among the dropping factories, the cable price action remains vulnerable, whereas rest of the pairs/crosses manage to hold the support levels.

Review:

In the EA Service and Manufacturing PMI data continues to show weakness. In addition, weak inflation data discounted the euro bullishness. As 2018 unfolds the euro lovers rushed to buy the common currency, now the view has been shifted to cautious mode after early 2018 gains were wiped off completely.

Turning to the UK, Manufacturing PMI lost the momentum in April, whereas Services growth accelerates and Construction sector rebounded strongly.

The Fed decided to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent with an accommodative stance. The statement suggests that labor market has continued to strengthen and that economic activity has been rising at a moderate rate. Looking into the April jobs data, the wage growth is still subdued but June Fed hike still on the table.

Preview:

This week seems to be a quiet start week with the only data as Australia Business Confidence reported by NAB. Things should pick up rapidly from Tuesday with Aussie Retail sales, China Trade Balance and NZ Inflation expectations. Moving to the European session, German Trade balance and IP are scheduled.

In the mid of the week (Wednesday) US CPI and RBNZ monetary policy statement are due, followed by the press conference.

The Mega Thursday offers CPI for China YoY and US MoM basis, BOE Monetary Policy Report, and Inflation report.

Finally (Friday) Canada jobs data and ECB President Draghi speaks at the 8th edition of The State of the Union, organized by the European University Institute, in Florence.

RBNZ Monetary Policy Statement
We expect the RBNZ will leave the OCR unchanged at 1.75% since Nov 2016.

According to Liz Kendall, Senior Economist at ANZ reported, “we expect the RBNZ will retain a cautious approach, with the policy outlook little changed”. The Economist also said, “The RBNZ will remain cautious until it sees a definitive broadening in inflationary pressures, with the OCR to remain on hold for some time yet. We continue to pencil in August 2019 for the first increase.”

FX reaction: AUDNZD (Buy the dip) and NZDUSD (limited downside)

MEGA Thursday
BOE Monetary Policy Summary: Post the data the GBP was beaten down hard and on the other side sent expectations for a May hike lower and chances to downgrade the inflation forecast. A surprise hike would be a shock to the GBP bears.

FX reaction: GBPUSD (Tad above minor support) and EURGBP (sideways)

US CPI
We expect April CPI to rise by 0.3% and core CPI to rise by 0.2%.

FX reaction: USDJPY (Selling opportunity) USDCAD (Bearish) USDCHF (Parallel resistance in focus)

Chart of the week: GBPNZD

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[KeyToMarketsUK]

KTM FX Weekly: Not too bearish on EURUSD

The underperformance of the EURUSD has been continuing for the four weeks in a row and tested the support level. Recent strength in the dollar index (DXY) has pressed the major below 200MAs and we expect a further continuation of this dollar momentum in the weeks ahead., as the tradable dollar index (DXY) rises above 200MAs and settles.

Data Review:

In the EZ Service and Manufacturing PMI data continues to show weakness. In addition, weak EA inflation data discounted the euro bullishness.

EZ Manufacturing PMI fell to a 13-month low of 56.2 in April, down from 56.6 in March and slightly above the earlier flash estimate of 56.0.
Eurozone PMI Services Business Activity Index fell to an eight-month low of 54.7 in April, down from 54.9 in March and below the earlier flash estimate of 55.0.
Euro area annual inflation is expected to be 1.2% in April 2018, down from 1.3% in March 2018.

Data Preview:

Germany IP (Tue) and ECB President Draghi speech.

TECHNICAL OVERVIEW​

As 2018 unfolds the euro lovers rushed to buy the common currency, now the view has been shifted to cautious mode after early 2018 gains were wiped off completely. The dollar index technical breakout from the 16-month descending trendline indicating further upward momentum is underway in the coming weeks.

Even with a DXY breakout, we are not too bearish EURUSD, our near-term support zone spread between 1.1900 and 1.1850 below this 1.1750 exists. On the other side, resistance seems to be at 1.1980 and 1.2050. Noting that the 161.08 fe (below chart) pointing 1.1830 coincides with the 14MA (weekly) and as shown on the below chart, 250MA sits at 1.1880.

Turning to daily studies, the daily RSI has been forming a base at an oversold level and underneath the oscillator has been turned to bullish. We believe from the current levels the major is offering limited downside risk in the near term. Overall, between 1.1900-1.1830 we could expect the price action will resume the short-term rally to 1.2000 and 1.2050 levels or even 1.2080 could possible.

View: Limited downside risk


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[KeyToMarketsUK]

KTM Commodity Daily: Gold price remained locked in a tight range

The precious metal traced out a near-term price top between 1361.50$-1366.25$ in January-February and April 2018 via the formation of a triple top pattern. While the resulting downward resumed in mid-April and the corrective phase has tested the parallel support at 1301.00$ March 01 low which coincides with the 161.8% A-B-C corrective pattern (1365.25$-1333.70$-1355.60$).

Between 1295.00-1301.00$ the price has a near-term cluster support zone. Turning to underlying indicators the daily study RSI has been sloping whereas the oscillator has been turned bullish, overall a mixed bias.

Earlier we spotted the same kind of pattern in AUDUSD, EURUSD, GBPUSD, and NZDUSD (dropping factories). All the four pairs were attracted with selling interest and completed the A-B-C corrective pattern targets.

Coming back to gold, since seven-sessions in a row the price has been rotating between 1301.70$-1319.00$ with weekly support available at 1295.00$. While hold 1295.00$, we could expect a short-term rally to 1327.00$ and 1340.00$ levels. This view will strengthen if the price close above 1320.00$. In the extreme case, we could expect to test the triple top levels.
On the flip side, close below 1295.00$ could open further downside risk to 1275.00$.

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[KeyToMarketsUK]

KTM FX Daily: AUDNZD Trade update.

Beautiful picture emerges

The Official Cash Rate (OCR) will remain at 1.75 percent for some time to come. The direction of our next move is equally balanced.

The Kiwi dollar down 0.60% against the USD after the RBNZ Governor Orr says his decision to keep the OCR at 1.75%. The losses are gradually increasing to 0.90% post media conference.

The cross AUDNZD trading 0.85% higher on the Asian session. We have been recommending the bullish view since early April and again updated in mid-April. Today morning the cross elevated the nose again raises further and settles above 100MAs. On the daily and H4 charts a beautiful picture emerges from the double bottom pattern posted at 1.0658. We are still biased for another leg up to ideal target at 1.0920 upgraded from 1.0800. Over the medium term, 1.0655 should hold to maintain the upside potential.

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[KeyToMarketsUK]

KTM FX Daily: Canada employment data is the catalyst

In response to the Central bank meetings RBNZ in the Asian session and BOE in the European session, local currencies weaken by a percent each. Turning to the US, the U.S dollar eases after a soft April U.S inflation data. Post the data, dollar selling was accelerated, supported the Aussie dollar and Kiwi dollar to resume the forward thrust, as a result, AUDUSD rose nearly a percent and the NZDUSD manage to filled the Asian session gap. The major EURUSD rallied nearly 0.90% to 1.1946.

Data review:

• RBNZ: The Official Cash Rate (OCR) will remain at 1.75 percent for some time to come. The direction of our next move is equally balanced, up or down. Only time and events will tell.
• BOE: The MPC voted by a majority of 7–2 to maintain Bank Rate at 0.5%.
• The CPI increased 0.2% vs forecast 0.3% in April after falling 0.1% in March, the U.S. Bureau of Labor Statistics reported Thursday. Core CPI also increased 0.1% vs forecast 0.2%. The dollar index settled at 92.54 and the U.S 10year treasure yield settled at 2.97%.

What’s on today?
Canada employment data and ECB President Draghi speaks at the 8th edition of The State of the Union, organized by the European University Institute, in Florence.
According to Westpac Analyst Sean Callow, “Consensus is +20k on employment and a steady unemployment rate at 5.8%”.

Chart of the day: USDCAD (buy the dip)

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[KeyToMarketsUK]

• GDP for Japan and EA
• Jobs data for Aussie and UK
• Retail sales for US and Canada

Last week, the dollar index momentum eased slightly and the 10-year Treasury Yield failed to close above 3.00%.

Brent oil continues to rally as the Trump announce US withdraw from Iran nuclear deal (Tue). And as we discussed last week’s article, there is so far sufficient evidence to pause the rally at the resistance zone. We are watching particularly on monthly reports by OPEC (Mon) and the International Energy Agency (Wed).

Elsewhere, May 18th is the absolute deadline for NAFTA negotiation.
“Administration officials have told reporters they believe the deadline is May 18, but have avoided saying that publicly, because they don’t want to be tied to that date if they cannot make it” reported by Washingtonexaminer.com.

This week seems to be a quiet start week with FOMC Member Mester speaks. Things should pick up rapidly from Tuesday with China IP, moving to the European session, German Prelim GDP, UK jobs data, EA Flash GDP and US Retail sales are due.

In the mid of the week (Wednesday) Japan Q1 GDP and EA Final CPI are the key drivers.

The Mega Thursday offers CPI for China YoY and US MoM basis, BOE Monetary Policy Report, and Inflation report. Thursday Aussie jobs data are the only data available.

Finally (Friday) occupied with Canada CPI and retail sales data.

Japanese Q1 preview:
GDP data due on Wednesday, we expect a minor contraction of 0.2% annual pace.
According to Marcel Thieliant of Capital Economics “GDP growth slowed sharply last quarter and we think that the economy won’t expand as strongly this year as it did in 2017,” reported by AP NEWS.

We also expect the economic data should continue to have a limited impact on JPY.
FX reaction: USDJPY (Limited upside risk), EURJPY and GBPJPY manage to hold the parallel support.

US Core retail sales:
April Monthly retail sales are expected to gain 0.4% slightly less than March gain of 0.6,% was the first gain in four months.

FX Reaction: EURUSD (Bullish)

UK employment figures:
Market traders are closely watching the employment figures after BOE stays on hold.
At its meeting ending on 9 May 2018, the MPC voted by a majority of 7-2 to maintain Bank Rate at 0.5%. “Wage growth and domestic cost pressures are firming gradually, broadly as expected” reported in the MPC minutes report. The bank also reported, “Hiring intentions have remained strong and, over the past three months, the unemployment rate has fallen slightly further.”
We expect the unemployment rate will remain at 4.2% and the average weekly earnings are likely to rise by 2.9 y/y basis vs 2.8%. A solid report could uplift the cable’s range from the key support level.

FX reaction: GBPUSD (Bearish- Mild bullish) and EURGBP (sideways)

Aussie jobs data:
RBA minutes, Wage growth and jobs data are the catalysts for AUD. In April unemployment rate likely to remain steady at 5.5% and the economy is forecast to add 20.3K.

FX Reaction: AUDUSD(Bearish-Slight bullish) and AUDNZD (Bullish)

Chart of the week:

EURUSD (Bullish)

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[KeyToMarketsUK]

KTM FX Weekly: EURUSD wheels leave the runway

Since CPI data, the dollar index eased slightly whereas on the Monday’s session the tradable index (DXY) bounce back and the US 10-year yields close for the day at 3.0% (below chart). The euro bulls have utilized the recent dollar weakness and resumed the short-term rally. We believe the dollar is subjected to downside risk again in the near -term

In Monday’s European session the euro bulls were encouraged after the news of an “agreement between Italy’s populist parties 5-star Movement and far-right league close to a deal to form a new government”, reported by Telegraph. We also believe EURCHF is exposed upside risk to Italian political development rather EURUSD.

Review:
In March 2018, German production in industry was up by 1.0% from the previous month

Preview:
The week ahead it will be quiet in terms of data risk events. EA CPI is the catalyst for the major. Considering euro positioning “In the week ending 8 May, leveraged funds’ positioning turned long EUR again for the first time in two weeks” reported by Nomura in a note to the clients.

TECHNICAL OVERVIEW​

As we discussed in the last two weeks we remain to our forecasted targets at “1.2000 and 1.2050 levels or even 1.2080 could possible”. The major was rejected at the 23.6 fib reaction 1.1995 (1.2555-1.1822) beyond this resistance comes between 1.2050-1.2090 with support exists at 1.1890 and 1.1820. Before rebounded to 1.1995 the major spotted with an inverse H&S pattern aimed at 1.2010, but rejected at 23.6% fib reaction (below chart). Buying the dip favors the trend and looking beyond the near -term we believe 1.2240 is an open target in the Q2.

View: Wheels leave the runway

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[KeyToMarketsUK]

KTM FX Daily: Equity indices and Gold take a hit as US government yields hit four-yea

Higher yields indicate higher interest rates. They are now at four-year highs.

U.S Treasury yields finally settle above 3.0%, hit four years high and the tradable dollar index (DXY) jumped to 2018 high. Post the retail sales data, the yield on the benchmark 10-year treasury settle above 3% resistance eventually indicating that the U.S economy is improving and more hikes are coming.

As we pointed in our earlier article, we remain to our forecast, “expect four Fed hikes in 2018, but more confirmation will be available at the June meeting”. Overall, further dollar strength lot depends on the yields movement.

As bond yields rise money starts shifting from risk asset class, like equities to Bonds which offers less risk. The Dowjones 30 index(KTM: US30) down by 0.75%. The index has been locked in a tight range since the end of Jan, facing resistance at the middle of the tight range.

The spikes in the dollar dragged the Gold price below its multi-support level. We expect further selling with targets at 1277.00$ and 1265.00$. In Q2 potential support zone spread between 1265.00$-1260.00$. Silver-spotted with a bearish H&S pattern (Daily chart) but still above the neckline (16.10-16.00). A move below 16.00$ needed to forecast 15.60$ levels. Platinum has been dropping in a falling channel (below chart) with immediate multi-support zone spread between 888.00$-873.00$ levels. Interestingly Palladium spotted with an inverse H&S pattern.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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[KeyToMarketsUK]

KTM FX Daily: AUD and NZD grabs the attention in the Asian session

• Aussie April labor force
• NZ Annual budget
• U.S weekly unemployment claims

What’s on today?
Today in the Asian session, Aussie labor force data and NZ annual budget are the risk events scheduled. Overnight the cross AUDUSD recover lost ground and again closed above 14MA. We believe the further rally in the Oil price has supported the AUD on Wednesday session. Brent oil is just sitting at 79.00$.

We expect in April, unemployment rate likely to remain steady at 5.5% and the economy is forecast to add 20.3K.
According to Westpac, “Consensus in the Bloomberg survey is for the unemployment rate to hold at 5.5%, with jobs expected to have risen 20k (Westpac +17k and 5.5%).”

The new government will deliver the NZ annual budget this afternoon (2.00pm local time). In Grant Robertson’s first budget we are mainly focusing on the kiwi build plan.
The new Government has committed $2 billion for KiwiBuild, an ambitious programme that aims to deliver 100,000 affordable, quality homes for first home buyers over the next decade. 50,000 of these homes will be in Auckland.

Today’s U.S data is unlikely to move the DXY. The yield on the benchmark 10-year treasury closed at 3.09% (Source: U.S. Department of Treasury)

FX REACTIONS:

The AUDNZD is teasing at 1.0900 levels, a tad below to our target 1.0920. We suggest “taking profit” at the current market price. Support finds at 1.0840 below this, 1.0800 exists.

AUDUSD recover lost ground and again closed above 14MA. Ahead of today’s labor force data the trading range will remain between 0.7385-0.7600 with support finds at 0.7440. We prefer buying in the dip with sl below 0.7330 initial targets at 0.7600 and 0.7650. We remain cautiously bullish as we continue to study the price action.

Yesterday’s chart:

NZDUSD manage to hold the support zone, widely spread between 0.6860-0.6815 which coincides with the 50.0% reaction. The 61.8% fib reaction (below chart) lies at 0.6660 which corresponds with the weekly A-B-C corrective wave pattern target (100.0fe).
On the flip side, intraday resistance seems to be at 0.6925 above this, scope to rally further to 0.6965 levels.

USDJPY gave a bullish break through an inverse H&S pattern and nearly completed the pattern target. The cross finally closed above 200MA for the first time since early Jan 2018. The daily study of an RSI has been consolidating at 67.00 levels. In case of an RSI break out, we could expect further elevation to 111.00 with support finds at 110.00 below this, 109.50 and 109.15 exists.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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​

 

[KeyToMarketsUK]

KTM EURUSD Daily: Can the official data rebound in Q2?

Within the G10, the euro has underperformed

The euro continues to remain under pressure led by1Q weak economic data, dollar strength and recent Italian political concerns. The combination of these factors dampened the EURUSD near-term momentum.

Since the beginning of the year, the EZ economic growth fell below expectations. The fresh catalyst, EZ GDP, and core inflation data failed to impress the euro bulls.

GDP rose by 0.4% in both the EA and the EA during the first quarter of 2018, compared with the previous quarter. In the fourth quarter of 2017, GDP had grown by 0.7% in the euro area and by 0.6% in the EU. 1Q GDP data has provided a clear picture that EZ growth has slowdown. The critical question is Can the official data rebound in Q2?

“We still feel that peak growth is now behind us” according to ING Chief Economist Belgium, Peter Vanden Houte
He said “After a robust 2017, growth has somewhat slowed since the beginning of the year. While the first quarter has been affected by a number of one-off effects and underlying fundamentals remain supportive, we still feel that peak growth is now behind us.”

According to Williamson, Chief Business Economist, IHS Markit “The official growth rate for the first quarter was below the signal from IHS Markit’s Eurozone PMI, for which the first quarter average continued to run at a level broadly consistent with approximately 0.5-0.6% GDP growth.”

Inflation story remains weak

EA annual inflation rate was 1.2% in April 2018, down from 1.3% in March. A year earlier, the rate was 1.9%. EU annual inflation was 1.4% in April 2018, down from 1.5% in March. A year earlier, the rate was 2.0%. Especially the core inflation was 0.7%.

Since mid-April, the dollar is appreciating the fundamental shift. The yield on the benchmark 10-year treasury closed at 3.11% (Source: U.S. Department of Treasury).

“IHS Markit’s PMI surveys indicate that the US economy started the second quarter on a solid footing, commensurate with a robust increase in GDP. However, the surveys also point to accelerating inflationary pressures”, reported by Chris Williamson, Chief Business Economist, IHS Markit.

“The USD upward correction is not yet complete. Over the course of this week, our USD scorecard provided more signs of USD strength”, reported by Morgan Stanley. Also said, “However, there are limitations to this current USD advance. Ultimately, we believe that the steepening of the US yield curve, which for now is a USD-bullish signal, will undermine USD in the long term”,

Looking through Italian politics

We think EURUSD has been overreacting to the Italian political risk. As we pointed in our Tuesday’s article, we continue to be bullish on “EURCHF” over the medium term. The max downside we could expect is 1.1600 target at 1.2200 with supports are widely spread between 1.1730/1.1700-1.1660-1.1600. Every support is vital here.

The major EURUSD is traidng at 1.1800 and expect to remain in a tight range 1.1700-1.2000 in the near-term.

UBS reported, “The Italian political situation has so far failed to prompt a return to the wider market panic we saw at the height of the Eurozone crisis.”

Petr krpata analyst at ING reported the same. “The eurozone political risk premium as a driver of EUR/USD has diminished meaningfully over the past years (recall the flattish EUR/USD during the summer 2015 Greek crises and the lack of EUR/USD downside ahead of the first round of French presidential elections last year). We thus don’t look for any eurozone political risk premia driven EUR/USD downside.”

Conclusion: We expect in EA various economic indicators to show an expansion in May. The Flash Manufacturing and Services May PMIs are due next week (May 23). The surveys will provide further clues to 2Q growth.
Credit Suisse forecast “Manufacturing and services PMI should rise to 56.7 and 55.2, respectively, in May and bring the composite PMI to 55.6 (vs. 55.1 previously).”

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar (May 21-25). Chart of the week- Gold

• Inflation for UK and Japan
• Flash PMIs for EA and PMIs for the US are in focus this week
• May FOMC minutes could provide clues for future rate path

AUDUSD, NZDUSD, and Gold manage to off marginally from weekly lows. Whereas, EURUSD and GBPUSD closed at the multi-month lows. The USD strength since the end of Jan 2018 and rising US government bond yields have been the trigger for the sentiment. The 10-year government bond yields pushed to 3.11% on Thursday but retraced and closed at 3.06% on Friday.

EUR:

Also read: Can the official data rebound in Q2?
http://www.keytomarkets.com/blog/blog/ktm-eurusd-daily-can-the-official-data-rebound-in-q2/

We expect in EA various economic indicators to show an expansion in May. The Flash Manufacturing and Services May PMIs are due next week (May 23). The surveys will provide further clues to 2Q growth.

GBP:

After the Bank of England monetary policy summary, market participants and economists have downgraded the GBP bullishness. April inflation report, CPI data and the 2nd estimate of 1Q GDP are the catalysts for the pound’s near-term action. These releases will provide clues for BOE’s future rate hike path.

According to Chris Williamson, Chief Business Economist, IHS Markit “The week includes a particular wealth of data releases which will provide clues as to whether the Bank of England will remain on course to hike interest rates this year.”

USD:

The USD strength since the end of Jan 2018 and soaring US government bond yields are the little reason to focus on the FOMC minutes in an ultra-edge view. In May meeting FOMC has changed the inflation language. “Inflation on a 12-month basis is expected to run near the Committee’s “symmetric” 2 percent objective over the medium term.” Also said, “The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal.” We are seeking more clarification in the May minutes.

Chart of the week: Gold

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[KeyToMarketsUK]

KTM EURUSD Weekly: Every support is vital

It’s a big week for EUR with concerns over Italian politics and May PMIs grab the central stage. The common currency tested the 38.2% fib reaction 1.1716 and rebound to 1.1795 overnight. Italy 40 (KTM terminal: Italy FTSE MIB 40) index closed below 100MAs and retraced 50.0% of the recent rally (March 05-May 07).

The Eur enthusiasts are more concentrating on “Mini-BOTs” a common Italian Treasury bill which pays no interest, proposed by Five Star Movement and the anti-immigration League.

“Mini-BOT — is a play on BOT, or Buoni Ordinari del Tesoro, a common Italian Treasury bill or short-term credit note,” reported by Bloomberg.

Data preview:

• GDP rose by 0.4% in both the EA and the EU during the first quarter of 2018, compared with the previous quarter
• EA annual inflation rate was 1.2% in April 2018, down from 1.3% in March. A year earlier, the rate was 1.9%

Data preview:

We expect in EA various economic indicators to show an expansion in May. The Flash Manufacturing and Services May PMIs are due next week (May 23). The surveys will provide further clues to 2Q growth.

Credit Suisse forecast “Manufacturing and services PMI should rise to 56.7 and 55.2, respectively, in May and bring the composite PMI to 55.6 (vs. 55.1 previously).”

Nomura: We expect the euro area composite PMI for May to climb to 55.3 from 55.1 in April. At the sector level, we expect the regional manufacturing PMI to increase to 56.4 from 56.2 and the services PMI to increase to 54.9 from 54.7.

Read full story:
http://www.keytomarkets.com/blog/blog/ktm-eurusd-daily-can-the-official-data-rebound-in-q2/

TECHNICAL OVERVIEW​

Eur manages to hold the 38.2% fib reaction (1.0340-1.2550 rally) which is our lower end of the forecasted range. As we pointed in our earlier articles, the near-term action packed in a tight range between 1.1700-1.2000. Break lower could open further to 1.1660 and Nov 07 low 1.1555 with resistance seems to be at 1.1900 and 1.2000.

Looking through Italian politics

We continue to be bullish on “EURCHF” over the medium term. The max downside we could expect is 1.1600 target at 1.2200 with supports are widely spread between 1.1730/1.1700-1.1660-1.1600. Every support is vital here.
Read full story:
http://www.keytomarkets.com/blog/blog/ktm-eurusd-daily-can-the-official-data-rebound-in-q2/

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KTM Crypto Daily: Bitcoin is coming to the three-month support

The most famous virtual currency Bitcoin has taken power out (moving averages) on Wednesday. Bitcoin (KTM: BTCUSD) is trading below 8000.00$ mark for the first time since May 18. Since February 2018 the cryptocurrency has been locked in a symmetrical pattern formation. Breaking below will allow room to extend further retracement to the A-B-C corrective pattern pointing to 4450.00$ with potential resistance seems between 8550.00$-8600.00$.

In the near-term the price is coming to the parallel support (H4 chart) is found at 7595.00$ below this 7450.00$ exists.

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Read Trade 6 new cryptocurrencies directly on KTM Metatrader 4
http://www.keytomarkets.com/blog/ne...ryptocurrencies-directly-on-ktm-metatrader-4/

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KTM FX Daily: USDCAD strategy

After another successful test of the lower end of the consolidation range on Tuesday, the USDCAD bounced back to the higher end of the range. Since, two weeks, the price has been locked in a tight range between 1.2925-1.2728 levels. On top of it the price traced out a near-top near between 1.2925-1.2915 in May 15-18-23 via the formation of a triple top.

In a bearish scenario, we can see some near-term topping where a break below 1.2728 May 11 low. In this case, as per the A-B-C corrective pattern target comes into the limelight which is pointing at 1.2400.

Noting that the parallel support zone spread between 1.2660-1.2600 levels.

Alternatively, a breach above 1.2930 could open to 1.2990/1.3000 levels. A further boost could possible when a breach above 1.3000 targets 1.3200 noting that 1.3125 mid-March high is key resistance.

1.2925>1.2990/1.3000>1.3125>1.3200

Earlier we suggested to buy the dip but we missed the recent rally. We remain cautiously NEUTRAL as we continue to study the action.

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[KeyToMarketsUK]

KTM FX Daily: USDJPY and EURJPY overview

The dollar index (KTM: DXY) retraced and US 10- year yields fell again to 2.98% overnight after Trump canceled his summit with North Korea. The yellow metal resume short-term rally to the 200MA.

USDJPY tested and held the 100EA overnight, EURUSD consolidating at six-month lows, AUDUSD consolidating in a tight range between 0.7520-0.7585 and the kiwi dollar has been facing stiff resistance at 14MA. The USDCAD again bounced back to the higher end of the range. Since, two weeks, the price has been locked in a tight range between 1.2925-1.2728 levels. On top of it, the price traced out a near-top near between 1.2925-1.2915 in May 15-18-23 via the formation of a triple top.
Whereas things change short-u-turn in the Asian session, Yen lower marginally.

News: KCNA reported, North Korea says leader Kim Jong un has made utmost efforts to hold the summit with Trump

JPY crosses: Correction at early stages

USDJPY

This week USDJPY retraced more than 2%. We suggested taking profit on sell trade with 1.5% profit.
After the volatile retracement pattern from this week’s high the USDJPY lost more than 2%. We saw and continue to see a further retracement in the coming days. Having completed our suggested selling trade, we are cautiously bearish anticipation for another correction leg to 108.00, and 107.30 levels with resistances seem to be at 110.00 and 111.00. This suggests that the downtrend is set to reassert itself as the daily RSI study unwinds a series of bearish divergence that formed between 110.00-111.39 levels. The shift in sentiment indicates that rallies to resistance at 110.00 and 110.80 should attract selling interest with support against the May 04 low at 108.65. Below here the focus will move down to 50MA and Sep 08 low.

EURJPY
EURJPY retraced 2.80% this week finally pauses the sliding action at parallel support at 127.55. Before retraced to 127.70 levels the cross spotted with a bearish H&S pattern aiming at 126.80 which coincides with the 38.2 fib reaction (below chart) with resistances seems at 129.60 and 131.40.
Looking through the price action from Jan high’s the price has been sliding in the falling channel. The corrective wave structure marked as A-B-C pointing to 124.90 below this the 50.0% fib reaction exists at 123.50. Overall in the medium-term (Q2), support zone finds between 125.00-123.00 its 100MA (monthly)

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[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar (May 28-June 01)

Data wise this week’s primary focus is on the release of the May NFP.

The commodity currencies AUD and NZD were off marginally from weekly lows against the greenback last week. Especially gold breaks above the six-day trading range but rejected at 200MA. Whereas, the common currency EURUSD and GBPUSD closed below the 38.2% fib reaction each on a weekly basis. Fully established Brent oil breaks the H&S and Ascending triangle patterns and lost the height rapidly. US T10s were closed below 3.0% last week

EUR

Last week’s weaker PMI and recent Italian political situation has triggered the EUR sell-off. The week ahead new official data EZ inflation print (Thu) is likely to engineer the EURUSD near-term range. Concerning FX technical pattern the major has been sloping for the second consecutive month. The run last extended to 2 months between Sep-Oct 2017.

GBP

Data releases this week likely to have a limited impact on the GBP. Looking over the coming weeks, we believe the official data prints will pave the way to the Q3 rate hike. The cable closed below the 50MA; euro cross remains in a tight range, GBPJPY closed blow the pivotal and shifted the focus to the parallel support.

USD

The FOMC minutes revealed the next rate hike is coming soon. The persistent dollar buying is increasingly overbought ahead of the NFP (Fri). We expect the May payroll will be in a growth mode of 215k. We are mainly focusing on the wage growth.

HIS Markit’s flash PMI survey data for May point to a jobs gain slightly in excess of 200,000 a number which would fuel higher expectations of up to three further hikes in 2018.

CAD

We expect the Bank of Canada should key the interest rate at 1.25%. A hawkish shift would keep the take the pace off. USDCAD closed tad below 1.3000-mark, breakout and settles through the 12-month descending trendline could boost further to 1.3200 levels.

Read: USDCAD strategy
http://www.keytomarkets.com/blog/blog/ktm-fx-daily-usdcad-strategy/

Chart of the week:

EURUSD: Seventeen-month Ascending trendline have captured our attention
http://www.keytomarkets.com/blog/blog/ktm-fx-weekly-eurusd-closed-below-the-safe-altitude/

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[KeyToMarketsUK]

KTM EURUSD Weekly: More vibrations ahead of EZ inflation and NFP

Euro rattled in the European session after a gap up opening. In yesterday’s Asian session, EURUSD was reacted positively rallied to 1.1728 but wiped off earlier intraday gains in the European session. The Italian equity index (KTM: ITA40) down more than 2.0% and Italy 10y risk spread over Germany jumped to 230 pips.

Continued Italy political concerns are weighing on the euro currency and European equity markets. Now Spain too added to the political concern camp. “Spain’s parliament agreed Monday to subject Prime Minister Mariano Rajoy to a vote of no confidence this week in the wake of graft convictions of businesspeople and officials tied to his conservative Popular Party” reported by Associated Press.

EZ growth has slowed since the beginning of 2018 after a substantial growth posted in 2017. Continued soft data in Q1, concerns related to Italy political developments and the rate divergence are the critical pieces of evidence we have, to confirm further euro depreciation. Last week’s German Ifo data force us to stay cautious neutral ahead of the EZ inflation data. A better reading could provide quick rally but will it sustain is the vital concern.

Besides, the dollar index (KTM: DXY) surge above mid-Dec 2017 high despite US holiday. The parallel resistance spread between 95.00-95.30.

Data wise this week’s primary focus will be on the release of the May NFP (Fri). In EZ new official data inflation print (Thu) is likely to engineer the EURUSD month end positions. The other week the price was capped at 1.1998 whereas near-term price action remains cast on the data (EZ inflation and NFP).

“The preliminary May month-end FX hedge rebalancing estimate points to USD selling and buying of all other currencies on Thursday, 31 May” reported by CitiFX. Analyst Kristjan Kasikov said in the report, “Poor performance of Euro Area equities and bonds makes buy EURUSD the strongest signal this month-end at +1.1 standard deviations. Other USD sell signals measure around 0.8 standard deviations.”

Data review:

Flash France Manufacturing PMI up to 55.1 from 53.8 in April,3-month high
Flash France Services PMI falls to 54.3 in May from 57.4 in April, 16-month low
Flash Germany Manufacturing PMI falls to 56.8 from 58.1 in April, 15-month low
Flash Germany Services PMI falls to 52.1 from 53.0 in April,20-month low
Flash Eurozone Manufacturing PMI falls to 55.5 from 56.2 in April,15-month low
Flash Eurozone Services PMI falls to 53.9 from 54.7 in April, 16-month low
Germany Ifo Business held steady at 102.2 points (bright spot)

Data preview:

We expect EZ inflation (Thu) to accelerate to 1.6% from 1.2%.
The volatility maker NFP (Fri) will direct the DXY’s near-term as the index is getting tactically overbought. We expect the May payroll will be in a growth mode of 215k. We are mainly focusing on the wage growth.

TECHNICAL OVERVIEW​

The shared currency technically getting oversold, the next level to watch is 1.1610-1.1550 (17-month Ascending trendline). A break below could open to a final retracement to 1.1450 its 50.0% fib reaction -1.1400 levels. With breaking and closed below the 38.2%, fib reaction the major’s risk-reward profile has titled to the further downside. We see levels at 1.1740 as likely to meet initial resistance above this, 1.1835 exists. The price has been dropping for the second consecutive month. The run last extended to 2 months between Sep-Oct 2017.

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KTM FX Daily: NFP preview and FX comments

The tradable dollar index (KTM: DXY) down 0.9% whereas the US 10year treasury yield rose from 2.77% to 2.84%, still far below the benchmark level 3.00%.

FX comments:

USDCHF shifted to a lower to lower high pattern after traced out a double top 1.0038-1.0056 between Oct 2017 and May 2018

USDJPY manage to hold the 100MA which nearly coincides with the earlier breakout level. Ahead of the payroll data (Fri) trading range remains between 107.30-110.00 levels.

USDCAD again rejected at 100MA (weekly), in the case failed to close above 1.30 on a weekly basis could confirm a triple top pattern

USDZAR refused at 200MA; trading range remains between 12.35-12.90

USDTRY remains under pressure ever since traced out with a double top at 4.80, today in Asia session hovering above 20MA.

Finally, the dollar index (KTM: DXY) rejected at a parallel resistance and traced out a double top pattern at 94.94. Ahead of the May employment data potential opposition seems between 95.00-95.50. Mon-end FX positioning is indicating strong USD selling.

According to Juan Prada analyst at Barclays, “The passive rebalancing model at month-end points to dollar selling against major peers. The signal is strong against EUR and GBP, moderate vs. CAD and AUD, and weak vs. JPY” reported in a note to the clients.

Read EURUSD: Technical overview
http://www.keytomarkets.com/blog/blog/ktm-eur-fx-daily-sentiment-has-improved-for-now/

Data risk:

On the data front, May NFP scheduled on Friday. We expect the May payroll will be in a growth mode of 215k. We are mainly focusing on the wage growth.

Here are the analysts forecast on the upcoming NFP data.

HIS Markit’s flash PMI survey data for May point to a jobs gain slightly in excess of 200,000 a number which would fuel higher expectations of up to three further hikes in 2018

Nomura: We expect a solid 205k gain in nonfarm payroll employment in May. We also forecast average hourly earnings (AHE) to increase 0.2% m-o-m with only a small downward bias from calendar effects. Finally, we expect the unemployment rate to remain unchanged at 3.9%.

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[KeyToMarketsUK]

KTM FX Daily: FX insight

The dollar index (KTM: DXY) further weakened on Thursday and tested the 50MA. The US 10YT remain far below 3.0% closed at 2.83% overnight.
We are closely monitoring the dollar index as it is facing stiff resistance at the parallel resistance. Ahead of today’s NFP supply pressure remains between 95.00-95.50. The daily studies are staying bearish, and the month-end positioning is too suggesting bearish views.

According to Juan Prada analyst at Barclays, “The passive rebalancing model at month-end points to dollar selling against major peers. The signal is strong against EUR and GBP, moderate vs. CAD and AUD, and weak vs. JPY” reported in a note to the clients.

Morgan Stanley reported, “Our scorecard is increasingly suggesting the USD rally is over and USD weakness should begin soon.”

The technical pictures of USDCAD, USDCHF, USDDKK, and USDJPY are remaining bearish.

We forecasted a bearish view on USDJPY with a target at 108.00, on Tuesday the price traded through our given target we set early May. Now we remain cautiously NEUTRAL as we continue to study the action.
Intraday support finds at 108.00 and 107.30, on the flip side resistance seems to be at 109.50 and 110.10 levels.

USDCHF has shifted to a lower low and a lower high pattern after traced out a double top 1.0038-1.0056 between Oct 2017 and May 2018. Intraday trading range remains between 0.9770-0.9980 levels.

EURUSD has erased the falling channel, the next level to watch is 1.1720 its 14MA above this, 1.1770 its 20MA exists. Flipside 1.1600-1.1575 and 1.1500 are the support levels to watch. A break above 1.1835 could confirm the corrective rally to 1.1900 and 1.1950 levels.

AUDUSD has been in a narrow range for five weeks with potential resistance seems to be at 0.7610 its 50MA. Today’s trading range likely to be remain between 0.7610-0.7460 levels, noting that its20MA sits at 0.7530. Breaking and close above the 50MA would confirm further rally to 0.7640

Gold price remains locked in a tight range between 1308$ and 1292$ breaking below could open to re-test the 1285$ and 1277$ level. Flipside multiple resistance seems to be at 1308$ a breakout could offer further bullish targets to 1314$.


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