EURUSD: sitting on the trend line

Previous:

On Wednesday the 27th of February, trading on the euro closed down. The bulls couldn’t make it past the sell wall at 1.1403. The euro slumped to 1.1362 against the dollar. The trend line and balance line both provided support. The drop was brought about by a sharp rise in US10Y bond yields from 2.631% to 2.6987%.

Day’s news (GMT+3):

  • 10:00 UK: Nationwide housing prices (Feb).
  • 10:45 France: consumer spending (Q4), CPI (Feb).
  • 11:00 Switzerland: KOF leading indicator (Feb).
  • 16:00 Germany: harmonised index of consumer prices (Feb).
  • 16:30 Canada: current account (Q4), industrial product price (Jan).
  • 16:30 US: GDP (Q4), initial jobless claims (23 Feb).
  • 16:50 US: Fed’s Bostic speech.
  • 17:45 US: Chicago PMI (Feb).

EURUSD H1



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Current situation:

Buyers encountered resistance around the 67th degree. The growth in US10Y bond yields shifted sentiment on the market with regard to the US dollar. The rate returned to the trend line as a portion of market participants closed their long positions.

It’s worth noting that the 1.1370 support didn’t hold up, so we can now ignore it.

Another important thing to consider is the double top formation at 1.1403. This was activated with the breakout of the 1.1373 low, which can be seen between the two tops. However, I don’t consider this a true double top as the rate has already risen above 1.1373 again.

In today’s Asian session, trading on the dollar is mixed. It’s trading up against the yen and Swiss franc. This is a bad sign for bulls as this means that capital is flowing into the safe haven assets. Today, there should be a press conference to discuss the US-North Korea summit. This may explain why investors have retreated to the yen.

Take note of the support line that runs below the trend line. If there’s an attack on 1.1370, there’s a high probability of the rate bouncing from 1.1365.  If this bounce makes it as far as 1.1382, we should see a new set of long positions from buyers. If you’ve done any analysis of the daily timeframe, you’ll have seen the resistance at 1.1430 in the form of a trend line drawn from the highs of 1.1569 and 1.1514. I’d like to see a downwards correction take place from here.

US and DPRK did not sign an agreement on the denuclearization of the Korean Peninsula

Donald Trump and Kim Jong-un did not agree to conclude a deal for North Korea to abandon nuclear technology in exchange for economic assistance. Their negotiations ended even 2 hours earlier than planned. Investors decided that this increases global risks and US stock indices dropped. However the S&P 500 is now 11% higher than the opening level of the year, which is a good indicator. Data on US GDP for the 4th quarter were noticeably better than expected. Its growth was 2.6%. As a result, for the entire 2018 year the American economy grew by 2.9%, which is the maximum since 2015. Due to this futures on US stock indices are now trading with a marked increase and we can assume growth of quotations at the opening of stock exchanges in the United States. The ICE US Dollar Index is growing for the 3rd day in a row today. In addition to positive data on GDP, this is facilitated by the collapse of the Japanese yen against the background of US-DPRK unsuccessful negotiations . Today at 14:30 CET the data on personal income and expenses for December will be released in USA . At 16:00 CET ISM business and consumer confidence indicators from the University of Michigan will be published as well.

Today at 11:00 CET data on inflation for February and unemployment for January will be published in the Eurozone. Yesterday inflation in Germany exceeded forecasts. If it significantly increases in the whole EU, then this may encourage the ECB to postpone the launch of TLTRO (Targeted Longer-Term Refinancing Operations). Yesterday against the backdrop of increasing global risks the Swiss Frank strengthened as shelter currency. Today CHF again weakened after reports of a decline in retail sales for January in Switzerland. The European-wide STOXX 600 stock index rose 3.9% in February after a 6.2% increase in January. Yesterday it slightly decreased, but market participants remain optimistic. The growth leader was the banking sector, which could benefit from the launch of the TLTRO program.

The yen collapsed after unsuccessful negotiations between the US and North Korea. Against this background, the shares of exporting companies were in demand: TDK Corp (+ 4.3%), Advantest Corp (+ 4.1%) and Fanuc Corp (+ 1.9%). This morning data on unemployment, inflation in Tokyo and other indicators were released in Japan. Generally they were neutral. Capital expenditures for the 4th quarter and PMI Manufacturing in February for industry increased. This had an additional positive impact on Nikkei. Australianand New Zealand dollar continued strengthening due to the publication of good statistics in China, which is the main trading partner of these countries. The growth of the indicator of business activity in the industry – Caixin / Markit Manufacturing Purchasing Managers’ (PMI) for February turned out to be better than expected.

World oil prices rose due to the announcement by the Venezuelan oil company PDVSA to reduce exports by 40% after the introduction of US sanctions on January 28. In February oil exports from Venezuela decreased to 920 thousand barrels per day (bwd) from 1.56 million bwd on average in previous months. In addition according to official U.S. Energy Information Administration, US oil production declined in December 2018, for the first time since May to 11.85 million bwd. This is 56 thousand bvd less than in November.



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Market Overview IFC Markets chart

EM currencies threatened by trade and geopolitical tensions

Emerging market currencies are struggling to hold ground against the Dollar as geopolitical tensions across the globe dampen investor risk appetite.

Reduced optimism over US-China trade talks, an abrupt end to a second summit between the United States and North Korea coupled with Brexit uncertainty among many other geopolitical risks are leaving investors on edge. With market sentiment still fragile and ongoing concerns over plateauing global economic growth draining investor confidence, EM currencies remain in the firing line.

In China, the Yuan is performing relatively well when compared to other emerging market currencies. The Yuan’s trajectory is likely to remain influenced by US-China trade developments and the Dollar’s valuation. With the Dollar’s long-term outlook swinging in favour bears amid speculation over the Fed taking a pause on rate hikes this year, this is good news for the Yuan and emerging market currencies in general. In regards to the technical picture, the USDCNY is in a downtrend on the daily charts with prices trading around 6.6911 as of writing. Sustained weakness below the 6.7000 level is likely to encourage a decline towards 6.6500.

It has been an incredibly positive trading week for the British Pound thanks to growing expectations over Brexit being delayed beyond the March 29 deadline. While this development will remove some element of uncertainty over Brexit, it may result in the UK trapped in a Brexit limbo. I see the Pound pushing higher in the short term as expectations mount over the government extending Article 50. However, with uncertainty still a major theme when dealing with Brexit, the Pounds medium to longer-term outlook remains open to question.



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Across the Atlantic, the tired Dollar was thrown a lifeline after reports showed that the US economy cooled less than expected last quarter. US GDP grew an annual 2.6% during the final trading quarter of 2018. Although this was below the 3.5% growth achieved during the third trading quarter, it was still above the 2.2% estimates which help lift market sentiment. While the Dollar is likely to extend gains on the GDP figures, the upside is poised to face multiple headwinds down the road. In regards to the technical picture, the Dollar Index experienced a technical rebound from the 96.00 level. The upside momentum should instil bulls with enough inspiration to challenge the 96.50 level.

In the commodity markets, Gold bulls may have lost the battle this week but the war still rages on. The combination of Dollar strength and profit-taking have sent Gold prices tumbling near the end of the week with prices trading around $1313 as of writing. With geopolitical risk factors stimulating risk aversion and the Dollar’s longer-term outlook in favour of bears, Gold’s medium to longer-term outlook remains bullish.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Intraday Technical Analysis 01 March

By Orbex

The U.S. dollar maintained strong gains at the close of the last trading day of the month. The markets were somewhat mixed following news that President Trump’s meeting with the North Korean leader ended without results.

On the economic front, Switzerland’s GDP in the fourth quarter of 2018 increased by 0.2%. This was slightly below the consensus estimates of a 0.4% increase. However, the third quarter GDP went down, showing a 0.3% decline during the period.

From the eurozone, Germany’s import prices fell 0.2% in January. These missed initial estimates of a 0.2% increase. The declines come after import prices fell 1.3% on the month previously. Preliminary inflation reports showed that consumer prices stabilized, rising 0.5% on the month in February and matching estimates. Inflation estimates for France, however, showed an unchanged print. Meanwhile, Spain’s inflation was at 1.1% for the year, according to preliminary estimates.

The NY trading session saw the release of the fourth quarter GDP report. Beating estimates, GDP advanced 2.6% during the three months ending December. Economists expected GDP to rise just 2.2%. The third quarter GDP lowered to show a 3.4% increase. The GDP price index gained 1.8% which was also above estimates.



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Chicago PMI data showed that the index rose to 64.7, following a soft reading of 56.7 the month before.

The markets look to the first trading day of March. The Asian trading session showed that the Tokyo core CPI rose 1.1%. Economists polled forecast a 1.0% increase on the year.

The Fed Chair, Jerome Powell had been speaking at an event earlier in the day.

The European trading session will see the release of the manufacturing PMI report coming out. The manufacturing sector is expected to remain weak with the index forecast to fall below the 50-level at 49.2. This would signal a contraction in the manufacturing activity.

The UK’s manufacturing PMI could likely hold steady, easing to 52.0 from 52.8 in January. Flash inflation estimates from the eurozone will follow this data, with headline inflation is likely to rise by 1.5%. This would mark a modest increase from 1.4% previously. Core inflation will most probably hold steady at 1.1% on the year.

Data from Canada will see the monthly GDP report which could show no change during the month. From the U.S. the core PCE price index report is forecast to rise 0.2% on the month while personal spending and income could likely rise 0.3% and 0.5% respectively.

The ISM will be releasing its manufacturing PMI later in the day, which could ease to 56.0 after rising to 56.6 in January.

EURUSD Intraday Analysis

forex eurusd

EURUSD (1.1373): The EURUSD currency pair was retracing the gains from the previous sessions yesterday. Price action remains flat in the medium to long term, and the retracement could see prices falling back to the 1.1327 level of support in the near term. With the resistance level at 1.1435 being established and yet to be tested, we expect the common currency to remain subdued into next week. This will be as the ECB meeting is due to be held. In the near term, the support level at 1.1327 – 1.1309 is likely to see price action forming a base. As long as this support holds, the EURUSD will remain range-bound with the bias to the upside likely to be tested in the near term. If the currency pair slips below the support level, then EURUSD could ease lower toward 1.1256.

USDJPY Intraday Analysis

forex usdjpy

USDJPY (111.66): The USDJPY currency pair maintains its bullish moment. Price action broke past the sideways range formed between 111.31 and 109.74. The breakout to the upside could see the USDJPY retesting the level to establish support at 111.31. Such a move could potentially make way for further gains in the currency pair. The next main resistance to the upside comes in at the 112.50 level. This previously served as support before price broke past it.

XAUUSD Intraday Analysis

forex xauusd

XAUUSD (1312.65): Gold prices extended strong declines for the second consecutive day. After clearing the support level at 1321.58, price briefly tested intraday highs of 1327.18 before pulling back. On the 4-hour chart, we expect the declines could push lower to the minor support level at 1306 level. A rebound off this level could see gold prices retracting back to the breached support level at 1321.58. This would potentially create a head and shoulders pattern with the neckline support at 1306. It could also set the stage for further declines. Alternately, a continuation to the downside will see gold prices extending the declines to the 1300 round number support.

By Orbex

Construction of Gold Mine in the Yukon Three-Quarters Complete

By The Gold Report

Source: Streetwise Reports   02/26/2019

The explorer and developer intends to accelerate the schedule by one month.

Victoria Gold Corp. (VIT:TSX.V) announced in a news release that construction of its Eagle gold mine is 75% complete after 1.2 million hours of work were put into it.

The company is currently focusing on the mine starter pit along with the crushing, heap-leach and gold recovery facilities.



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“We are rapidly turning our attention to commissioning and operations to transform the Eagle gold mine into reality,” President and CEO John McConnell said in the release.

Victoria Gold is aiming to deliver first ore to the heap-leach pad in July 2019, a month earlier than originally estimated. Subsequently, the first gold pour would occur in September 2019.

As for construction costs, the project has required an additional CA$45 million of capital because surprise geotechnical conditions required extra earthworks. However, no additional capital outlays are expected, the company stated.

Victoria Gold, though, does need CA$25 million more to be fully funded through construction and to positive cash flow, the company stated. As such, it plans to conduct a non-brokered, flow-through financing for gross proceeds of up to CA$15 million. The company could gain another CA$16 million should its 40 million common stock warrants be exercised by the expiration date, May 10, 2019.

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( Companies Mentioned: VIT:TSX.V,
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Video: Market Forecasting You Just Cant Beat!

By TheTechnicalTraders.com

Chris Vermeulen walks you through the financial markets every morning before the
opening bell so you know how to trade it and manage your positions.

By TheTechnicalTraders.com



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Ireland Factory Growth Improves In February

Ireland’s manufacturing growth strengthened further in February with solid gains in output and employment, survey data from IHS Markit showed on Friday.

The Purchasing Managers’ Index, or PMI, for the manufacturing sector rose to 54 from 52.6 in January. A reading above 50 suggests growth in the sector. The sector has now improved for 69 consecutive months.

Output grew at the fastest pace in three months, while employment grew at the quickest rate in four months

Meanwhile, stocks of purchases among Irish manufacturers grew at the fastest pace in the near 21-year series history, thanks to the Brexit uncertainty.

Business optimism fell to its lowest level in 18 months, due to the Brexit uncertainty.

The material has been provided by InstaForex Company – www.instaforex.com

Source:: Ireland Factory Growth Improves In February




Potential NZ Housing Market Contagion?

As traders know, in economic terms, Australia and New Zealand are connected at the hip. It’s not uncommon for economic issues to hop across the Tasman Sea, usually from west to east.

Given the ongoing housing issues affecting Australia, it’s reasonable to worry that a similar pattern might emerge in New Zealand. And a quick glance at the latest data releases shows some worrying trends.

One of the factors that we have to be aware of is the potential of a self-fulfilling prophecy. If enough people think that there will be a housing problem in New Zealand, it will happen regardless of the underlying macroeconomic issues. This phenomenon can override even the best economic and financial explanation for why there shouldn’t be housing contagion. This is, of course, assuming there is a case for such an argument.

Similar Issues

One of the ways to understand the potential for contagion is to look deeper into the similarities between the two countries to see if the same housing circumstances exist.

So, we go back to Australia. There, the “crisis” was precipitated by almost a decade of significantly increasing house prices. That, coupled with relatively low interest rates and large amounts of foreign investment into real estate, chiefly from China.

Is that the situation in New Zealand? Well, there are some worrying figures proving it just might be. Although the affordability index is not as high as Australia’s (since theirs is the highest in the world, even with the drop in prices over the last months), it is still pretty high.

Housing prices rose faster in New Zealand than in its larger neighbor. They were the fastest growing of the OECD following the sub-prime crisis. In fact, the only reason New Zealand homes are not more expensive than Australia, is because they started out at a lower baseline.

New Zealand also receives substantial capital flows from China, as well as housing pressure from immigration prompting demand to far outstrip supply. The slowing of Chinese growth and global economic resilience concerns have the same effect in reducing the amount of demand for houses.

Dissimilar Issues

New Zealand is a lot smaller than Australia, and the dynamics of capital flows are somewhat different. The effect also tends to be slightly delayed in New Zealand. This is because the wave of investment started well over a year after it had already reached Australia.

The metropolitan area of Auckland has had similar real estate development as other major cities. However, property beyond that which constitutes the overwhelming majority of housing in New Zealand, has not behaved in the same way.

The Kiwi government is also discussing whether to introduce a new capital gains tax to affect housing. This would drastically increase the cost of housing speculation and reduce the incentives to treat housing as an investment.

The Worries

Housing prices in Auckland have primarily stagnated, with similar average prices as those a year ago. This is not a downturn or a crisis, evidently. But a rising market first goes flat before turning downwards.

On the other hand, the number of mortgages continues to grow apace. House transfers remain at similar levels as the prior years. However, there’s a notable drop in the amount of foreigners buying homes.

In the end, there is a key element to form an economic “crisis” for a certain sector, which is basically a sector-specific recession. And that is excess inventory.

If inventory outstrips demand, then prices will drop until that excess demand gets taken out of the market. So, even with similar situations in terms of a drop in capital flows and immigration, if there is enough elasticity between supply and demand, New Zealand could technically not have a housing problem.

However, we’ll have to watch the data (and the corresponding effect on the NZD) for the next couple of months to be sure.




Oil Prices Mixed In Cautious Trade

Oil prices were trading mixed on Friday as concerns over surging U.S. output and global growth worries offset optimism over output cuts by producer club OPEC.

Global benchmark Brent crude slipped 0.25 percent to $66.15 per barrel while U.S. West Texas Intermediate (WTI) crude oil futures were marginally higher at $57.23 per barrel.

There are signs of tightening in the oil market, with Venezuela’s oil exports plunging 40 percent to around 920,000 barrels per day (bpd) since the U.S. government slapped sanctions against its petroleum industry on Jan. 28.

The drop in supply comes following OPEC efforts to withhold around 1.2 million bpd of supply since the start of the year.

On the flip side, it is expected that growth concerns and surging U.S. supply may slow the speed of a recovery in oil prices.

China’s factory activity contracted for a third straight month in February but at a slower pace as output and new orders expanded, a report showed today.

Elsewhere, data from Japan and Europe proved to be a mixed bag.

The material has been provided by InstaForex Company – www.instaforex.com

Source:: Oil Prices Mixed In Cautious Trade




Copper Prices Shake Off Weak China Data & Resurgent USD

Gold

Following an impressive run over recent weeks, gold prices retreated this week as the US Dollar rebounded from initial lows. Despite a heavy tone to the week initially, the USD was buoyed by the release of the 2018 4Q GDP on Thursday.

This saw the final reading of the year print 2.6%, well above the expected 2.2%. The reading brings overall 2018 growth to 2.9%, just shy of Trump’s 3% target, and sill a very a firm reading indeed.

Gold prices also received a knock this week from improved risk sentiment in response to the Hanoi summit between President Trump and North Korean leader Kim Jong Un.

The meeting ended prematurely and without an agreement. However, it seems it was indeed a positive step and has left the door open for further talks. The market welcomed Trump’s optimistic ton. For now, it seems happy to trade higher on the ongoing dialogue between the two sides.

xauusdxauusd

Gold prices traded steadily lower this week. They made their way back under the 1325.96 level, which has now turned resistance. Price is fast approaching a key area where we have confluence between structural support at 1298.29 and the rising trend line from 2015 lows. Bulls are likely to use this area to reload. Only a break of this level would negate the bullish bias in the near term.

Silver

Prices were similarly lower this week, weighed on by the pullback in gold as well as the resurgence in USD over the week. Silver prices continue to receive bullish forecast by investment banks projecting higher prices on increased demand from the auto-sector. However, with world trade currently faltering, this increased demand seems yet to materialize. And, for now, prices remain subdued.

silversilver

After trading up to test both the bearish trend line and the 16.2267 structural resistance a second time, silver prices have turned sharply lower. Once again, they are testing the 15.5700 – 15.1800 support. If price can hold above here, focus remains on an eventual break above the bearish trend line.

Copper

Though nowhere near as explosive as the moves we saw last week, Copper price continued to trade higher this week. Continued optimism around the ongoing US/China trade talks has kept the metal well bid.

However, a weaker than expected Chinese manufacturing reading, as well as a resurgent USD, combined to cap the rally this week. If headlines around US/China trade negotiation remain positive, we can expect higher prices to continue in copper as speculators look through short term weakness in Chinese data.

forex copperforex copper

Price is now challenging key structural resistance at the 2.958 level (2015 high, late 2018 swing lows). If we retrace from here, bulls will be looking to use a retest of the 2.854 level as support for a further topside run keeping a focus on an eventual test of the highs around 3.280. Below 2.854, support is along the rising trend line from 2916 lows.

Iron

Despite a soft tone to the week’s trading initially, iron ore prices eventually began to rally later in the week. The move came despite the downside surprise in Chinese manufacturing. It seems to link to speculation of an increase in steel demand in China as the weather has started to warm up.

forex ironforex iron

For now, iron ore prices remain below the 2016 swing high, keeping the threat of a double top formation alive. If price can break back above that structural resistance, focus will be on a test of the key psychological $100 level. If we move lower from here, any retest of the breakout base around $78 should provide initial support.