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[KeyToMarketsUK]

KTM FX Daily: EURUSD and EURGBP strategies

A morning walk down Europe

Euro traders should watch out for Service PMI data. The stronger US ISM data, rising dollar, and a neutral EZ Manufacturing PMI are a lethal combination for EURUSD.

Recent EZ Manufacturing PMI unchanged at 54.6 (Flash: 54.6, July Final: 55.1). Besides, the ISM manufacturing index suggests the August PMI registered 61.3%, an increase of 3.2percentrage points from the July reading of 58.1%. The PMI reached its highest level since May 2004, acoording to ISM.

In today’s macroeconomic data, we see EZ and UK Services PMI surveys.

Any upside surprise from UK Services PMI would boost GBP. Back in July, UK service sector growth slips to a three-month low.
Recent data highlighted a disappointing start to the third quarter for the UK service sector, with business activity and incoming new work rising at softer rates than in June, accoridng to IHS Markit.

At 53.5 in July, down from 55.1 in June, Business Activity Index signaled the slowest expansion of service sector output since April, IHS Markit reported.

In the EZ, 3Q slowdown was mainly centered on the service sector. Back in July, Services PMI posted 54.2 in July, down from June’s four-month high of 55.2 and below the earlier flash estimate of 54.4, according to IHS Markit.

FX Technical View​

• EURUSD maintains a near-term top, enters a consolidation phase
• EURGBP faces its next resistance test at the 61.8% fib reaction

EURUSD failed to hold on to 1.1550 and dipped to the other support 1.1530. It lost the 14 and 50MA but found support near its 20MA on the daily chart on Tuesday.
The volatility has again risen on Tuesday after the US back from the Labor holiday. Ahead of the today’s macroeconomic data risk, now, the support for the EURUSD will now come in at 1.1530 and 1.1500 while bulls only regain the strength only above 1.1630-1.1650 levels. In this case, 1.1700 and 1.1730 are achievable.

The GBP crosses were outperformed across the board, but the cable closed with marginal losses. On Tuesday, EURGBP falling briefly below 0.8900 levels but manage to hold the 20MA and closed at 0.9000 levels.

Ahead of the today’s macroeconomic data risk, now, the support for the EURGBP will now come in between 0.9000- 0.8990 while bulls only regain strength only above 0.9035 targets at 0.9060 and 0.9080. A break of 0.9100 level would be needed to initiate a stronger recovery to 0.9140 its 61.8% fib reaction.
Note that a drop below 0.8940 needed to forecast a serious trend change.

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

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[KeyToMarketsUK]

KTM Crypto Wrap: Bitcoin is in freefall

Bitcoin is in freefall overnight, with the other cryptos tumbling as Goldman reportedly drops crypto trading plans. CNBC reported, “Goldman Sachs is dropping its plan to open a trading desk for cryptocurrencies, Business Insider says, citing people familiar with the matter.”

Overnight, the world’s largest cryptocurrency (KTM: BTCUSD) Bitcoin fell nearly 6.0% and extend the losses of 10.0% this morning to below 6300$.

Following three weeks of affirmative price action, the cryptocurrency lost 1000$ a coin (16% from recent high) over the past three days.

Horrible start to the day, this morning the Bitcoin lost nearly 700$ a coin in just an hour. At the time of writing 10.30AM (AEST), BTCUSD is currently trading at 6250$ and is down almost 10% in the thin liquidity session.

Parallel support finds at 6200$ below here 5855$, and 5766$ exists.

We expect it will sink to 5000$ a coin.

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

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts​

 

[KeyToMarketsUK]

KTM FX Daily: USDJPY starting near-term pullback

• JPY setting the stage vs USD on new trade jitters
• Data wise today’s main focus will be on the release of the August NFP
• Starting near-term pullback

USDJPY traced out a near-term price top between 111.75-111.83 in August-September via the formation of a double top pattern. Ahead of the August NFP data, the outlook remains exceptionally bearish; a rectangle breakdown has visible on the four-hour chart.

The daily studies RSI is below 50.0, and the oscillator is remaining bearish. Moreover, the pair has lost both its 20 and 50 MAs and currently trading at 100MAs.

Intraday pivotal is finds at 110.30 its 200EA below here could retrace to 110.00-109.80 respectively. Note that Since May, twice the 100MA has provided decent support.

Resistances are at 110.65 and 111.00. The downside breakout of 110.30 would call for 110.00 and 109.80 its 38.2% fib reaction.

Rallies to resistance should attract selling interest to 38.2% fib reaction. Below here the focus will move down to 109.00 its 50.0% fib reaction and 108.50. The corrective A-B-C structure is pointing to 108.50.

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 (Sep 10-14)

• Central bank meetings for ECB and BOE
• Employment data for UK and Aussie
• CPI for China and the US

Trade protectionism weigh on markets
US President Trump said he has tariffs ready another 267$billion in Chinese imports. “The $200 billion we are talking about could take place very soon depending on what happens with them. To a certain extent it’s [sic] going to be up to China, Trump said. ” reported by Daily Sabah.

Week’s highlights:

Central banks: Key market events for the week includes European Central Bank and Bank of England policy meeting, we expect on hold. Besides, Turkey Central Bank will grab the attention in the EM space; we expect to raise interest rates in Sep 13th meeting.

We expect the ECB and BOE to leave interest rates as well as the rate path forecast untouched. Besides, a 300bp hike on the back of the weaker currency and looming inflation pressure, Danske bank reported.

China: Early this week, the focus will be on August CPI y/y basis, where we expect 2.1% vs. 2.1%
Australia: We see NAB Business confidence (Tue), Westpac Consumer Sentiment (Wed) and August employment report (Thu). In FX, selling pressure remains strong, a descending channel is still in evidence in the daily chart. Markets have become overly bearish on AUD after Australian banks started to raise the variable interest rates.

Europe: Macroeconomic event highlights include the German ZEW Economic Sentiment, EZ IP and Trade balance.

The ZEW Indicator of Economic Sentiment for Germany recorded an increase of 11.0 points in August 2018 and now stands at minus 13.7 points. According to ZEW President Professor Achim Wambach “The recent agreement in the trade dispute between the EU and the United States has led to a considerable rise in expectations for Germany and also, to a lesser degree, for the Eurozone.” He also said, “The economic outlook for Germany is now significantly less favorable than it was six months ago,”

Turning to the EA Industrial Production, we expect the IP will fall to -0.5% vs. -0.7%.

We expect the ECB remains on hold and remains data dependent; thus it will be uneventful. ECB meeting on 13 September 2018. At 13:45 CEST, followed by a press conference at 14:30 CEST.

“We think that the ECB is in the process of engineering a very slow policy shift.” Morgan Stanley said in a note to clients.

EURUSD has fallen by around 1.5% relative to its level at the July policy meeting review.

UK: We expect the UK monthly gross domestic product (GDP) growth rate to expand to 0.2% from 0.1% in June. Back in June, UK GDP growth was driven by services, offset by a fall in production. In August we expect the manufacturing production has slowed to 0.2% vs. 0.4%.
On Tuesday, UK unemployment data due for release by the ONS. We expect the unemployment rate will remain at 4.0% and we are more focusing on the wage growth.

On Thursday, we expect the Bank of England remains on hold and, thus it will be uneventful.

UK Politics and the data outcome are the catalysts for the GBP this week.

US: Last week’s upside surprise from ISM print and better than NFP reading keeping the US momentum steady and lift dollar. Turning to the weekly economic data, we see PPI (wed), CPI (Thu) and Retail sales (Fri).
We expect August CPI to increase 0.2% vs. 0.2%.

In our view, we expect the dollar remain elevated against the AUD but weakens against the JPY.


Chart Patterns:
USDX: Bullish H&S (H4)
USDCZK: Bullish H&S (H4)
EURUSD: Bearish H&S
GBPUSD: Double top (Daily)
USDJPY: Double top (H4)
Brent: Double top (Daily)
Copper: Double bottom (Daily)

Chart of the week: AUDUSD-pivotal 0.7100-0.7080
Trade risk and the Aussie data risk events are the catalysts for the AUD. This morning the cross is trading at 0.7100, last week the cross lost the 78.6% fib reaction of 2016-2018 rally. We are focusing strictly on 80.0% fib reaction finds at 0.7080 below here the risk stays further lower at 0.7000-0.6970, 0.6900 and the full retracement to 0.6825.
Resistances seems to be at 0.7140, 0.7200 and 0.7235.

Trend: A top remains in place, and the pattern stays lower

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[KeyToMarketsUK]

KTM FX Weekly: Downward pressure on EURGBP

• GBP spikes again on the latest positive Brexit headlines. EUR’s chief negotiator Barnier said agreement possible early November.
• UK macroeconomic news support GBP. The GDP MoM growth rate was 0.3% in May 2018, 0.1% in June and 0.3% in July.
• Today’s UK employment data is likely to provide a larger clue for EURGBP.

The latest positive Brexit headlines are supportive to the pound overnight. Brexit negotiator Michel Barnier said “a Brexit deal is possible within six to eight weeks” BBC reported. The other week he said “We are prepared to offer a partnership with Britain such as has never been with any other third country,” the negotiator told reporters following a meeting with the German foreign minister in Berlin, reported by Telegraph. It seems Michele Barmier have held responsible for GBP rally, 1.50% against the USD and 2.00% against the EUR.

The cross EURGBP has hit a fresh 2018 high in end of the August led by no-Brexit pricing but rejected at the 61.8 fib reaction of 0.9598-0.8300. Turning to the technical picture, the daily studies RSI is below 50.00, and the oscillator is remaining bearish. Moreover, the cross has lost both its 20 and 50MAs and currently trading tad above 100EA.

The crucial, pivotal level, which will act as crucial support, is placed at 0.8890. Below here, the focus will move down to 0.8860 its 50.0% fib reaction, followed by 0.8850 it’s 20MA (Weekly) and 0.8830 its 200MA. Fresh catalyst (Today’s UK employment data and ECB meeting, Thu) needed to forecast further retracement to 0.8800 and 0.8730.
The shift in the 4hr chart indicates rallies to resistance at 0.8940/0.8960, 0.9000 and 0.9030 should attract selling interest.

Week’s highlights:

Data review:
UK GDP in July expanded by 0.3% from 0.1% in June. In the three months to July (May-July) the growth picked up to 0.6%, highest since August 2017. The growth was driven by services and construction, with a small drag on growth from production, according to Office for National Statistics.

Data preview:

Central banks: Key market events for the week includes European Central Bank and Bank of England policy meeting, we expect on hold.

On Tuesday, UK unemployment data due for release by the ONS. We expect the unemployment rate will remain at 4.0% and we are more focusing on the wage growth.

On Thursday, we expect the Bank of England remains on hold unanimous and, thus it will be uneventful.

UK Politics and the data outcome are the catalysts for the GBP this week.

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

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts​

 

[KeyToMarketsUK]

KTM FX Daily: USDJPY and EURUSD overview

USDJPY: Raises the nose​

USD/JPY has closed above the previous day’s high for 3 days in a row. The key resistance is placed between 111.75-111.85 earlier double top. We expect the downside prevails as long as 111.85 is resistance. If the cross starts moving upwards, the key resistance levels to watch out are 112.15 and 113.00/113.30 levels. Flip side, intraday pivotal finds at 111.40 below here supports are at 111.20 and 111.00.

EURUSD: Rangebound​

The key support level is placed at 1.1550 and 1.1530/1.1525 followed by 1.1500 and 1.1460. If the price action started moving upwards, key resistance levels to watch out are 1.1615 and 1.1660.

A break above the second resistance 1.1660 needed to initiate a strong recovery to 1.1730 and 1.1790. We believe ahead of the Thursday’s ECB event risk; the price action may have contained within the 1.1525-1.1660 range unless a fresh catalyst emerges.
The daily studies RSI is a tad below 50.00, and the oscillator is remaining bearish. Under these conditions, a recovery back above 1.1660 still seems difficult today.

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

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts​

 

[KeyToMarketsUK]

KTM FX Daily: Australian dollar rally; technical rebound in a bearish trend

AUD relief rally

The Australian dollar rallies to the 0.72 handle, 0.35% after ABS reported the August employment report printed above all analysts’ expectations.
The Australian Bureau of Statistics (ABS) said employed increased by around 44,000 persons in August 2018 while the unemployment rate remained at 5.3%, a six- years low. Besides, the participation rate rose to 65.7.

Key points:
• Employment increased 44,000 to 12,631,300
• The unemployment rate remained steady at 5.3%
• Participation rate increased by 0.2 pts to 65.7%

AUDUSD: Held weekly pivotal 0.7100-0.7080 so far (Read our earlier article in KTM Blog)

AUDUSD has closed above the previous day’s high for two days. The key resistance is placed between 0.7200-0.7210 above this 0.7240 its 20MA exists. The daily studies RSI is still below 50.00, and the oscillator just has been turned bullish. Under these conditions, a recovery back above 0.7200/0.7210 still seems possible.

The key support level is placed at 0.7160, 0.7130 and 0.7080.
Bulls perspective: A break above the resistance 0.7210 needed to initiate a strong recovery to 0.7240.

AUDNZD: Outlook remains favorable​

The near-term price action may have contained within the 1.1020-1.0840 range unless a fresh catalyst emerges, most possible upside. The daily studies RSI is above 50.00, and the oscillator has been bullish. Under these conditions, the cross can be expected to break out above the resistance zone 1.0975-1.1020 before eyeing 1.1070 and 1.1100 its 80.0% fib reaction of 1.1175-1.0847 correction. Supports are at 1.0930, 1.0880 and 1.0840.

Flip side, a drag below 1.0840 could attract additional selling interest to 1.0800 levels.

The strength of the Aussie dollar remains cast on the EM landscape.

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

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts​

 

[KeyToMarketsUK]

KTM FX Daily: G10 currencies emotion travel to the North; US CPI was the source of in

• The US dollar edged lower overnight after weak CPI data; G10 currencies were traded higher except JPY and CAD.
• Turkish Lira lifted 4.00% after Turkey Central Bank raised interest rate; other EM currencies followed the trend with MXN and ZAR up by a percent each.
• BOE and ECB decided that the interest rate remain unchanged at 0.75% and 0.0% respectively. No changes at the BOE policy review whereas ECB downgrade growth forecast.

USD edge lower on weak CPI.

CPI increased 0.2% in August, the same increase as in July, the U.S Bureau of Labor Statistics reported. The reading was a little lower than the expected 0.3%.

Overnight, G10 currencies emotion travel to the North; US CPI was the source of inspiration. EURUSD settled at 1.1700, GBPUSD settled above 1.3100, and AUDUSD tad closed below 0.7200 mark. Besides Gold rallied to 1212.0$ but rejected at the 50MA and closed at 1200$.

The dollar index (KTM: USDX) closed at 94.50 overnight down 0.30% and the US 10year Treasuries held at 2.97%

With the Risk-on mood, JPY on the back foot overnight.

JPY crosses are ending the week on a higher note so far, with GBP and CAD rallied by 2.30% each, followed by EUR 1.75% and AUD, CHF and USD by 1.0% each.

Commodities:

Brent oil down by 1.80% and Gold down by 0.4% rejected at 50MA.

Crypto:

Bitcoin (KTM:BTCUSD) closed with 2.5% gains, closed at 6450$.

What’s on today?

In Asia, we see China releases August retail sales and industrial production data. Turning to Europe, we see EZ Trade balance, not a market mover. Finally, in the US we see Retail sales and consumer sentiment.

Chart of the day: EURCHF

As long as 1.1260 is support look for 1.1315 and 1.1340. The RSI has been painting RSI divergence on the daily chart, and the oscillator is remaining bullish.

Intraday pivotal finds at 1.1280 below here support find at 1.1260 and 1.1230. The selling pressure accelerates below 1.1230 to 1.1180 and 1.1150.

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

What is your Technical View?

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[KeyToMarketsUK]

• EZ final CPI and flash PMIs
• BOJ, Norges Bank, and SNB monetary policy meetings
• UK CPI and Retail sales

Ahead of BOJ meeting JPY crosses are in focus. On top of it, recent development over US-China Trade disputes earns more attention. The combination of these factors shapes the JPY crosses in the sandwich position. Data wise, it is a quiet week except for few economic risk events from Canada, UK, and NZ.

Week’s highlights:
Central banks: Key market events for the week includes Bank of Japan and Swiss National Bank monetary policy meetings, we expect on hold. In contrast, we hope the Norges Bank is likely to hike from 0.50% to 0.75%. With the recent NOK strength, we believe this week’s rate hike is nearly priced in, but further NOK appreciation will be available if the Norges bank hints the second hike in December 2018.

“We expect the bank’s forecast path to steepen somewhat, especially for 2020 and 2021. In particular, we expect about an 8bp upward revision to the projected rate for year-end 2020 and about 12bp for year-end 2021” Barclays reported in the weekly note.

Our base case scenario into this week’s monetary policy meetings:
BOJ: Neutral, SNB: Dovish and Norges Bank: Hawkish

Macroeconomic data:

The week ahead, a set of economic data releases likely to steer the FX market especially G10 currencies. Data front flash PMIs for EZ, CPI and Retail sales for UK and Canada, and 2Q GDP for NZ are the highlights.

On the EZ economic data front, we see August final CPI (Monday) not a market mover though. Besides euro traders are focusing more on the flash IHS Markit PMIs (Fri), which provides economical
performance insights into the end of Q3.
“The predictive powers of the PMI in 2018 have been rather wanting, particularly in the first two months of each quarter. As such, the recent stability might be simply reflecting the stability in 2Q GDP, with September’s PMI taking on increased importance as a result.” Macquarie reported in a note to clients.

Turning to the UK data front, we see CPI and Retail sales, given an increase in expectations of a downtick. The CPI 12-month rate was 2.5% in July 2018, up from 2.4% in June 2018, whereas the BOE’s 2.00% inflation target. We expect August headline inflation and core inflation is likely to drop back to 2.4% and 1.8% respectively.
Besides, UK retail sales set to fall in August. We expect a contraction to 0.0% or even into negative territory. Back in July, retail sales increased by 0.7% from a decrease of 0.5% in June.

Besides, for the US we see limited data releases. We expect Housing starts flash Manufacturing and Services PMIs unable to change the dollar index landscape. Last week’s missed inflation and retail sales data drag the dollar index to a month low. Whereas the rising trade tensions have supported the dollar index.

Elsewhere we see NZ Q2 GDP, and Canada inflation and retail sales.

NZ economic growth has slowed recently.
Annual GDP growth was 2.7 percent in the March 2018 quarter, down from over 4 percent in mid-2016, RBNZ reported in the August MPS. The central bank also highlighted the risk “with surveyed business confidence falling and continued softness in the housing market, GDP growth may not recover as expected.”
Back in Q1, NZ economy grows 0.5% and 2.7% over the year ended March 2018. With the recent strong retail sales, in Q2 we expect the country’s economy to increase by 0.7%.

Trade for the week: Sell EURNOK

Read our earlier EURNOK short trade strategy in our KTM blog

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

What is your Technical View?

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[KeyToMarketsUK]

KTM Commodity weekly: Brent bound to consolidate-part 2

• Brent crude oil move up rejected but still above 20MA, as the trade tensions escalate further.
• Brent up to 78.50 overnight but off since NY session as traders focus new tariffs on Chinese imports.

Recent price action scenario looks so unlikely to breach the May high 80.50$. If the price started moving higher watch out for 82.70$ its 100MA (monthly). A break above the 100MA (monthly) would be needed to initiate a more pronounced recovery.

The RSI study and the oscillator underneath remains unfavorable at all time frames (Daily, Weekly and Monthly). Under these conditions, a recovery back above 80.50-82.70$ still seems difficult. Watch out instead for a new pullback towards 75.50$. Caution will be ordered if the price lost 75.50$, this would point to a further downward wave towards 72.00$ and 70.50$.

Weekly supports find at 75.50$. As we forecast last week, the price bound to consolidate between 75.50-80.50$ unless a fresh catalyst emerges, most possible downside.

Trade war vs. Supply concerns:

Turning to fundamental factors, Oil traders concerns over US-China trade tensions. New tariffs on $200billion on Chinese imports due today. Besides Iran sanctions could expect sooner than later, which offers upside risk to the oil price. The tale of these two factors could bound the price in a tight range, at least for now.

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

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts

​

 

[KeyToMarketsUK]

KTM FX Daily: Fresh catalyst needed for EURUSD

There are few important data releases today, on top of it traders focus remains on the US-China trade disputed. Besides US 10year Treasury yields settles above 3.0%, USDJPY followed the shoes overnight.

The Bank of Japan will announce its policy review today, we expect on hold. In FX, we expect the market reaction to the meeting is limited.

In the UK, we see CPI data for July. The CPI 12-month rate was 2.5% in July 2018, up from 2.4% in June 2018, whereas the BOE’s 2.00% inflation target. We expect August headline inflation and core inflation is likely to drop back to 2.4% and 1.8% respectively.


FX:

EURUSD: Selling pressure remains very strong at the parallel resistance level in the daily chart, while the daily studies RSI and oscillator are staying bullish. For intraday, pivotal finds at 1.1650. Below these 1.1610/1.1600 and 1.1570 exists. The flip side, initial resistance seems to be at 1.1700 above here 1.1730 exists.

Given the lack of data clues, USD price action is the catalyst for this week’s EURUSD price action. It seems the weekly price action may have contained within the 1.1735-1.1525 range unless a fresh catalyst emerges, most possible upside.

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

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts​

 

[KeyToMarketsUK]

KTM FX Daily: CHF and NOK crosses need attention

NZD rallied in the Asian session, fuelled by brilliant Q2 performance. Besides the dollar index was muted.

Elsewhere, Silver and Copper outperformed by 0.50% each and Gold up 0.15% respectively.

NZD: The kiwi dollar rallied 50 points this morning as New Zealand economy growth surprise the market.
The latest GDP figures released at 1.0% beats the economist forecast 0.8%. Gross domestic product (GDP) provides a snapshot of the performance of the economy. GDP is New Zealand’s official measure of economic growth.
According to Stats NZ, Economic activity, as measured by gross domestic product (GDP), was up 1.0 percent in the June 2018 quarter. This rise follows a 0.5 percent increase in the March 2018 quarter.
We understand this is the largest broad-based growth in two years.

“Growth was broad-based, with 15 of 16 industries recording higher production. Mining was the only industry to decline, reflecting one-off factors” Stats NZ said today.

“Once again service industries led growth. Goods-producing and primary industries also saw rises this quarter,” national accounts senior manager Susan Hollows said.

Day Ahead:

We see few important Central Bank policy meetings includes Swiss Nation Bank and Norges Bank.

We expect SNB to remain on hold, whereas the Norges Bank is likely to deliver the first rate hike in seven years from 0.50% to 0.75%.
With the recent NOK strength, we believe this week’s rate hike is nearly priced in, but further NOK appreciation will be available if the Norges bank hints the second hike in December 2018.

“We expect the bank’s forecast path to steepen somewhat, especially for 2020 and 2021. In particular, we expect about an 8bp upward revision to the projected rate for year-end 2020 and about 12bp for year-end 2021” Barclays reported in the weekly note.

Data wise, there are no market moves for the euro and US dollar today. Elsewhere UK Retail sales grab the attention. We expect UK retail sales set to fall in August. We expect a contraction to 0.0% or even into negative territory. Back in July, retail sales increased by 0.7% from a decrease of 0.5% in June.

Chart of the day: GBPCHF

As long as 1.2600 is support look for 1.2770 and 1.2890.

Read full story in our blog

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

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts​

 

[KeyToMarketsUK]

KTM FX : Weekly Market summary 17-21 September

G10 currencies in Asia set to trade marginally higher against the USD as trade tensions ease. Overall G10 currencies movement was mostly upbeat this week, so far.
News this morning: S&P Global Ratings raised its outlook on Australia’s AAA credit rating to stable from negative, reported by Bloomberg.


Weekly Top gainers and losers:

The dollar index (KTM: USDX) edge lower by more than a percent, currently trading at 93.40 two and a half month low. The parallel support finds at 93.15 below here 92.40 its 200MA and coincides with the 50.0% fib reaction of 88.15-96.80.

G10 weekly scoreboard: Swedish Krona is on course for the best week up more than 3.0%, followed by Kiwi dollar 2.20% and Aussie dollar by 2.0%. Turning to majors EUR and GBP up by 1.30% and 1.60% respectively. On top of these, Emerging market currencies South African Rand rallies more than 4.0% whereas Turkish Lira keeps tumbling by a percent.

In commodities, Palladium is on course for the top gainers for 7.80%, followed by platinum 5.10% and Copper and Silver by 2.30% each. Gold advanced 1.30% so far.

Risk aversion: The CHF and JPY crosses rally from recent lows, set to round out a strong week as trade tensions ease.

Money Market:
US 10y Treasury yields closed overnight at 3.07 %, up from 2.99% on Sep 14.

Day Ahead:
In Europe, we see flash IHS Markit PMIs (Fri), which provides economical performance insights into the end of Q3.
“The predictive powers of the PMI in 2018 have been rather wanting, particularly in the first two months of each quarter. As such, the recent stability might be simply reflecting the stability in 2Q GDP, with September’s PMI taking on increased importance as a result.” Macquarie reported in a note to clients.
Besides, for the US we see limited data releases elsewhere Canada inflation and retail sales eyed.

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

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts

 

[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar (Oct 01-05). Trade of the week: Sell USDCAD

• PMI surveys for EA, UK and the US
• RBA monetary policy meeting, expected to hold
• Dollar trend awaits Sep. jobs report

The weak head, September PMI surveys and US non-farm payrolls are the highlights. It seems economic data should drive the FX technical landscape in the G10 block.

In the past quarter, JPY was the weakest among G10 block with 2.70% followed by AUD and NZD 2.30% each.. Flipside CAD was the winner with 2.0% gains.

We see a muted start: The Asia morning is relatively quiet on the first day of the four quarter with National day in China is a holiday and Labor day in Australia.

The week ahead: Turning to the central bank meeting, we expect the RBA to leave the interest rates unchanged. We also hope the AUD titled to the downside risk ahead of the monetary policy and economic data risk.

Macroeconomic data and event highlight Sep. PMI surveys which will gauge the further trade war damage and Aussie Retail sales. Finally, the week is going to end with the September US non-farm payrolls.

• In Asia

, National day in China is a holiday period between 01Oct to 07 Oct (Mon-Sun). On Sunday, Sep 30, Caixin released the latest manufacturing PMI; we understand that Chinese manufacturers signaled sluggish operating conditions at the end of the 3Q.
According to the recent Caixin PMI data, China manufacturing PMI fell from 50.6 in August to the neutral level of 50.0 in September.

Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, said: “The Caixin China General Manufacturing PMI dipped to 50 in September, marking the fourth straight monthly drop and an acceleration in the index’s decline”. He also said “expansion across the manufacturing sector weakened in September, as exports increasingly dragged down performance and continued softening demand began to have an impact on companies’ production. In addition, the employment situation worsened further. Downward pressure on China’s economy was significant.” Reported by IHS Markit.

The specific data was lower than the official data released by the National Bureau of Statistics. According to the NBS Sep. Manufacturing PMI fell to 50.8 from 51.3 in August. A 7-month low.

In Australia, the Reserve Bank of Australia meets on Oct 2. We and the market are expected to keep the cash rate on hold.

• Turning to Europe

, we see September PMI surveys (not a market mover though) which will gauge the further trade war damage. Last Thursday, the Italian government announced a budget deficit of 2.4% for each of the next three years, i.e. 2019, 2020 and 2021; which was the higher end of the market expectations.
The euro lost more than a percent last week and took our long EURUSD trade stop loss. Besides EURNOK sell trade ran through the second target we set in August and again given the other week.
As lack of market movers for EURUSD, this week’s catalysts are Italian assets and the NFP data.

The next focal point for markets is 15 October, when we will get more details on the budget and the government will have to submit it to the EU, who will then have to respond by 30 November, said by Thomas Harr, PhD, Global Head of FI&C Research, reported by Deutsche Bank.

• In the UK

, the start of the week with Conservative Party Conference runs from Sep 30-Oct 03 in Birmingham at the International Convention Centre. Key speeches to focus is Philip Hammond scheduled on Oct 01, and the conference will close with the Prime Minister will speak on Oct 03.
Interms of data wise, we see September UK PMI surveys.

• In the US

, along with the PMI survey, we see non-farm payrolls. We expect the data from the US continue to show a healthy labor market. We are more focusing on wage growth.
Danske Bank forecast, non-farm payrolls rose around the current trend of 190,000, estimate average hourly earnings to have risen to +0.25% m/m in September, which would lead to a decline in the annual growth rate to 2.7% y/y.

Trade of the week: Sell USDCAD
The downside prevails as long as 1.3080 is resistance and trading below 200MA. Thus, we forecast 1.2730 its 50.0% fib reaction is the immediate downside target. Below here, finally pointing to 1.2635 its 200EA (weekly). This morning in Asia the price action was rejected at 1.2885 its 20MA (monthly).

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[KeyToMarketsUK]

KTM FX Weekly: What do the EURGBP want to make a bounce?

UK Prime Minister Theresa May scheduled speech at the Conservative Party in Birmingham is the crucial driver for EURGBP in the near term.

What the going on?

In the UK, the start of the week with Conservative Party Conference runs from Sep 30-Oct 03 in Birmingham at the International Convention Centre. The conference will close with the Prime Minister speech scheduled on Oct 03.

Data review:

UK GDP was estimated to have increased by 0.4% between Quarter 1 2018 and Quarter 2 2018;

UK’s current account deficit was £20.3 billion in Quarter 2 2018, a widening of £4.6 billion from a revised deficit of £15.7 billion in Quarter 1 2018 and the widest deficit since Quarter 2 2017, Office of National Statistics reported.

Data preview:

Regarding macroeconomic data, we see September UK PMI surveys. Our focus remains on Theresa May’s speech schedule tomorrow.

FX:

The cross pulling back sharply after the failure against the 0.9000 marks and shifted back to the lower low and lower high pattern. The ST and NT essential support find at 0.8850 below here 0.8840 its 200MA exists.

The flip side, initial resistance seems to be at 0.8915. The erosion of the last Friday and Monday’s high appears at 0.8915 is highly encouraging us to forecast a more pronounced recovery to 0.8960, 0.9000 and 0.9015/0.9030.

If the euro cross lost the 200MA, we could not rule out a pullback to support at 0.8800 it’s 61.8 fib reaction (0.8620-0.9098 rally) and 0.8775 its 100MA (weekly).

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[KeyToMarketsUK]

KTM Commodity: Gold longer term support trendline grabs our attention. Will, it chang

Gold price set for a sparkling rally more than a percent to the highest in six days to 1208$. We believe the late rally was a short squeeze as the safe haven status back on the table after anti-euro comments from senior Italian lawmaker hits the wires.

A senior lawmaker in one of Italy’s ruling parties said most of the country’s problems would be resolved if it readopted a national currency, Reuters reported.

Overnight, the gold price ignored strong dollar, and the precious metal received a boost from the safe haven status. Overall the Gold and Silver was the most energetic performer on the back of Italian risk.

This morning gold up was up 0.30% to 1208.00$, unable to breach Tuesday’s high so far (11.30am AEST).

The daily studies RSI and the oscillator are remaining bullish. Moreover, the yellow metal settles above 50MA for the first time since April 24, 2018. If Italy risk becomes persistent, a move towards the 1214$ will beckon.
It will be interesting to see if we make a clean break of $1215 by this Friday. A breakout above (daily closing basis) the August high 1214.25$ level would point to a new acceleration of the uptrend towards 1230.00$ and 1235.00$.
Supports are located around 1201$, 1192$ and 1180$.

Longer term support trendline grabs attention Will, it changes to top gear?

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[KeyToMarketsUK]

KTM FX Daily: Thursday FX insights

The U.S 10year Treasury yield mounted about ten basis points to 3.10%. It was at 3.05% on Wednesday and 3.09 on Tuesday. The overnight rally was tagged to the strong U.S macroeconomic data from private jobs data and ISM non-manufacturing PMI survey.

Data review:
Based on the strong private jobs report, we understand that the U.S labor market continues to amaze the market. Private sector employment increased by 230,000 jobs from August to September according to the September ADP National Employment Report.

Mark Zandi, a chief economist of Moody’s Analytics, said, “The job market continues to power forward. Employment gains are broad-based across industries and company sizes. At the current pace of job creation, unemployment will fall into the low 3%’s by this time next year.”

Next release: October ADP National Employment Report will be released at 8:15 a.m. ET on October 31, 2018.

Market participants are anticipating a steady payroll growth at the end of the Q3. This Friday, September Nonfarm payroll will be released by the Bureau of Labor Statistics.

The other macroeconomic data ISM non-manufacturing index grew for the 104th straight month in September.

The Non-Manufacturing registered 61.6 percent, which is 3.1 percentage points higher than the August reading of 58.5 percent. The reading represents continued growth in the non-manufacturing sector at a faster rate and is an all-time high for the NMI since the inception of the composite index in 2008, according to the ISM (Institute of the Supply Management).

FX insights:
The rising yields push the safe haven currencies Japanese Yen and Swiss Franc to its weakest levels against the greenback. We believe the USDCHF’s momentum appears to have stalled between 0.9985 and 1.0065 levels ahead of Friday’s NFP. In other words, limited headroom available from the current price.

What if breaches?

We might see 1.0230 and 1.0340 its Dec 2016 high.

The euro closed below 61.8% fib reaction; changed the format to sell on rising strategy targets 1.1400 and 1.1350 with a stop loss at 1.1625.

Turning to cable, it has parallel support finds at 1.2890 below here 1.2865/1.2850, and 1.2820/1.2800 exists.

The kiwi dollar NZD sank below September low 0.65, currently trading at 0.6489.
Intraday pivotal finds at 0.6470/0.6460. Below here, 0.6400 and 0.6350 exists.

Finally, the Aussie dollar is testing the September low 0.7085, currently manages to hold the previous low and trading at 0.7100. A move below 0.7085 needed to retrace further to 0.7050 and 0.7000 mark.

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[KeyToMarketsUK]

KTM FX Daily: Focus on GBPAUD

The Yield on the benchmark U.S 10Year Treasuries on the move again

• JPY crosses hit a new low, AUD and NZD continue to tumble against the USD. In response to the latest ascent in U.S Treasury bond yields, the antipodeans are unloved.
• The yield on the benchmark U.S 10-year bond jumped to 3.19%, the highest since 2011.
• Brent Crude oil tumbles 1.50%, setting at 84.70%, still at the highest level since November 2014.
• The dollar index (KTM: USDX) was mixed overnight, euro and GBP up by 0.35% and 0.6% respectively.
• Emerging market currencies take a toll further, TRY down by 2.00%, and ZAR down by 1.80%.
• Global equity indices were down in response to the relentless U.S Treasury bond yields rally.
  

Day Ahead:

It’s a quiet data day in early Asia, we see Australia Retail sales and the U.S Nonfarm payroll data will hit the wires tonight.

We expect the data from the US continue to show a healthy labor market. We are more focusing on wage growth.

FX range:

• AUDUSD: 0.7000-0.7140, bearish
• EURUSD: 1.1400-1.1625, bearish
• GBPUSD: 1.2895-1.3060, neutral-bullish
• NZDUSD: 0.6400-0.6510,bearish
• USDJPY: 113.20-115.00, limited upside

Chart of the day: GBPAUD

Unfolding an excellent chapter (bullish) in the ongoing GBPAUD story.

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 (Oct 08-12)

• UK GDP
• US CPI
• China Trade data

The macroeconomic data releases in the FX market week ahead is relatively quiet. We see trade data for China, UK GDP and US CPI data releases are in focus. In addition to these, Trade war concerns, ongoing Italy budget headlines, rising Crude Oil prices and surging Bond yield are the key drivers.

In the past week, AUD and NZD were the weakest among G10 block with 2.85% and 2.50% respectively, followed by SEK and NOK 2.00% and 1.50% respectively against the USD.

Week ahead:

In Europe, lack of market movers for the single currency remains to focus on Italy assets and the U.S bond yields. Events wise, we will get the ECB minutes on Thursday. So far, EURUSD remains capped between 1.1590-1.1625, we favor sell on the rise strategy.
The next focal point for markets is 15 October, when we will get more details on the budget and the government will have to submit it to the EU, who will then have to respond by 30 November, said by Thomas Harr, Ph.D., Global Head of FI&C Research, reported by Deutsche Bank.

Turning to the UK, Brexit headlines renewed the buying the buying interest for GBP last week. Our upward bias for GBPAUD remains on the screen.

Data wise, we will see GDP and August manufacturing (Wed). We expect UK GDP to have expanded 0.1% in August, down from 0.3% in July. According to ONS, the month-on-month gross domestic product (GDP) growth rate was 0.3% in May 2018, 0.1% in June and 0.3% in July.

In the past three months up to July, the growth in the economy picked up. Forecasting this week’s GDP figures, Danske Bank said in a note to clients “We estimate GDP grew 0.2% m/m in August”.

In the U.S, data-wise we will see CPI data for September (Thu). We expect the CPI to rise 0.2% m/m basis. With the limited data releases, market participants remain to focus on the geopolitical concerns with ongoing Trade war risk especially US-China and rising bond yields which lead to the global equity indices sell-off.

The benchmark U.S 10-year Treasury yield posted a double bottom and gave a bullish breakout through the range, aiming above 4.00% in the coming weeks. Recent Fed hawkish talks and the strong macroeconomic data is supporting the yield rally. Based on this fact we expect a new leg higher in USDJPY and USDCHF if the price break through the strong resistance zone. We also expect the dollar to continue its strength against the Antipodeans.

Chart of the week: GBPUSD

As long as 1.3000 is support look for 1.3200 and 1.3300.

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

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[KeyToMarketsUK]

KTM FX Weekly:Rising U.S yields and Italy debt crisis are the key drivers for EURUSD.

• The past week U.S 10-year Treasury yields grabbed the market attention again than the macroeconomic data relevance.
• Italian assets are at a premium now, 10-year Italian yields jump more than 3.5% for 1st time since Feb2014 as the market is feeling the Italian budget is in off track. Besides, U.S 10-year Treasury yields closed at 3.23% on Friday.
• EURUSD down nearly 4.20% so far this year, may fall further if yields continue to climb either side.

Week ahead:

In Europe, lack of market movers for the single currency remains to focus on Italy assets and the U.S bond yields. Events wise, we will get the ECB minutes on Thursday. The next focal point for markets is 15 October, when we will get more details on the budget and the government will have to submit it to the EU, who will then have to respond by 30 November, said by Thomas Harr, Ph.D., Global Head of FI&C Research, reported by Deutsche Bank.

In the U.S, data-wise we will see CPI data for September (Thu). We expect the CPI to rise 0.2% m/m basis. With the limited data releases, market participants remain to focus on the geopolitical concerns with ongoing Trade war risk especially US-China and rising bond yields which lead to the global equity indices sell-off.

FX overview:

EURUSD is trading within the range, consolidating within, and giving you a desire to take the trade that pleases bulls. Moreover, here’s an interesting though. Since the EURSUD price action trading within the range, don’t go anywhere that you know it wouldn’t be pleased to go or get into situations you know it wouldn’t be delighted to be within.

Technically speaking, U.S and Italy 10-year Treasury Yield Cure rates formed a double bottom and produced a bullish break through the range. Both are pointing to 4.0% rates in the coming days/weeks. The yield-seeking investors and we believe the yields will continue to climb further higher.

Please find the Yields chart either side on our KTM blog

So far, EURUSD remains capped between 1.1590-1.1625, trend favor sell on the rise strategy. At short time frame (H1) the price action traced out a short-term price bottom near 1.1460 via the formation of a double bottom. Any shift in the sentiment indicated that rallies to resistance at 1.1550 and 1.1590/1.1615 should attract selling interest, with support against the recent lows at 1.1460. Below here, the focus will move down to the 78.6%/80.0% fib reactions at 1.1410/1.1400, followed by near-term support at 1.1350.

Weekly pivotal: 1.1450. Selling accelerates below here, to 1.1410/1.1400 and 1.1350

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