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MARKET NEWS

 

June 24: Asian session

 

Asia_eng.jpg

 

Asian shares were mixed today after a much muted Wall Street finish. Investors are digesting improved manufacturing data from China, Japan and the United States augured well for global growth, though result from the euro zone was disappointing. The greenback remains under pressure ahead of US new home sales data later today. USD/JPY is little changed in the 101.90 area.

 

There are no market moving releases in Australia and New Zealand for today. AUD/USD gained some ground, recovering to $0.9430. The pair holds below the yesterday’s peak of $0.9445. NZD/USD followed the Aussie, recovering to $0.8720. Gold trades under a slight bearish pressure around $1315.

 

EUR/USD edged down a bit from $1.3600. GBP/USD is trading in the $1.7025 area.

 

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MARKET NEWS

 

Key option levels (June 24)

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT). 

 

Here are the key options expiring today: 

 

EUR/USD: $1.3500 (large), $1.3530, $1.3545, $1.3600, $1.3635 (large);

 

USD/JPY: 102.05, 102.75, 103.00 (large);

 

USD/CHF: 0.8900, 0.9005;

 

AUD/USD: $0.9350/60 (large);

 

NZD/USD: $0.8655;

 

EUR/JPY: 138.50, 139.55;

 

EUR/GBP: 0.7975, 0.7985/90.

 

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June 24: European session

 

German IFO business climate came at 109.7, below expectations of 110.3. According to IFO, the ECB’s measures had no major impact on German economy; Q2 will be significantly weaker, but outlook for the German economy is good and consumer activity remains strong and stable. EUR/USD rose from $1.3590 above $1.3620 as the market players bought euro on the dips.

 

In the UK the Bank of England’s Governor Mark Carney and MPC members had to answer question on the monthly inflation report before the parliamentary Treasury Select Committee. Carney said that the pace of job creation in the UK remains strong, but the rate hikes will be limited and gradual with timing dependant on the economic data. He underlined that the recent sterling strength has not yet been supported by improvement in competitiveness. The BoE’s Bean said that early withdrawal of stimulus may risk productivity gains and that he sees a case for later rather than earlier exit from stimulus. GBP/USD was hurt by this last comment and slid below $1.6980.

 

Europe_eng.jpg

 

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June 24: American Session

 

Tatiana Norkina, analyst at FBS

 

The dollar has begun to strengthen considerably today, after the positive statistics data from the U.S. The CB Consumer Confidence Index has risen to the 85.2 mark, instead of the forecast 83.5, while new home sales have exceeded all expectations - up to 504 thousand (predicted nimber - 440 thousand). This has allowed the U.S. dollar index to rise to the 80.45 figure, after a morning dip to 80.25. Thus, a positive trend is in effect and the index is adding about 0.15%. Major U.S. stock markets have opend in the green zone as well: DJIA is adding about 0.15%, S&P500 - 0.25%. A speech by Secretary of the Treasure Lew is expected a little later.

 

Currency markets are witnessing a significant recovery of the dollar against the majority of the world currencies today. Thus, the EUR/USD pair has once again got under the 1.3600 figure, after a day's testing of the 1.3620 resistance. The GBP/USD currency pair has fallen to around 1.6970. USD/CHF is trading in the 0.8950 area, after finding support at the 0.8930 mark. In the meantime, USD/JPY has soared to the 102.10 figure - the bears have refused to break through the 101.80 support.

 

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June 25: Asian session

 

Asia_eng.jpg

 

Asian shares fell on Wednesday, echoing losses on Wall Street as concerns about escalating violence in Iraq eclipsed stronger economic data. MSCI’s broadest index of Asia-Pacific shares outside Japan fell about 0.4%, while Japan’s Nikkei stock average lost 0.5%.

 

Commodity currencies are trading under a slight bearish pressure following the yesterday’s sharp selloff on strong US data. AUD/USD trades to the downside with a support seen at $0.9350. NZD/USD bounced 15 pips up from $0.8660. Gold remains under selling pressure as well.

 

USD/JPY slid to 101.85. EUR/USD is trading just above $1.3600. GBP/USD slid to $1.6970.

 

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Key option levels (June 25)

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT). 

 

Here are the key options expiring today:

 

EUR/USD: $1.3530/40 (large), $1.3550 (large), $1.3560 (large), $1.3600 (large), $1.3625 (large), $1.3650 (large), $1.3655 (large);

 

GBP/USD: $1.6975, $1.7030

 

USD/JPY: 101.50, 101.70, 102.00 (large) 102.10/20 (large);

 

USD/CHF: 0.8945;

 

AUD/USD: $0.9400;

 

EUR/CHF: 1.2200.

 

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25 June 2014

 

Japan's Abe: end of deflation

 

Prime Minister Shinzo Abe said deflation has ended in Japan and will be wiped away by new government policies designed to encourage business expansion. His ruling party will seek to pass a law in the next session of parliament to legalize casinos as part of a plan to boost tourism before the Tokyo Olympics in 2020, the premier said in an Bloomberg interview yesterday.

 

“Through bold monetary policy, flexible fiscal policy and the growth strategy we have reached a stage where there is no deflation,” Abe said in the interview yesterday. "With the first sales tax rise since 1997 that took effect in April, this was an extremely difficult time for management of the economy, but I believe we were somehow able to overcome it.”

 

Despite the BOJ's optimism, most economists still believe it will need to ease policy again this year, supposedly in December. Nevertheless, the yen (JPY) looks strong unless the regulator steps in with the new easing measures. 

 


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Jun 25th: American session

 

america1.png


Tatiana Norkina, an analyst at FBS

 

The dollar is weakening in early U.S. session after the release of negative statistics. Thus, the country's GDP in the last quarter has changed significantly to the worse, to -2.9%, while analysts forecast a decline of only 1.7%. The previous change was -1.0%. In addition, durable goods orders became 1% smaller (forecast: growth of 0.2%). As a result, the dollar index dipped to 80.14 and is currently losing about 0.25%. Stock markets show a positive trend at the opening: DJIA adds about 0.20%, while the S & P500 - 0.10%.

 

 

Apparent weakness of the dollar is obviously seen in the currency markets as well: EUR/USD soared to 1.3650; GBP/USD pair is testing 1.7000. Currency pair USD/CHF fell to the support 0.8910, USD/JPY broke 101.80 and is testing the next important level of 101.60 now.

 

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June 26: Asian session

 

Asia_eng.jpg

 

It was a quiet session with all the major pairs trading in tight ranges. The yesterday's USD pessimism turned to be short-lived. Asian shares rose as investors believe that the US economy is emerging from a worse-than-estimated contraction last quarter. Japanese Nikkei is up by 0.3%. USD/JPY keeps on testing the 101.80 support to the downside.

 

NZD/USD was the only big mover, jumping to $0.8770. Kiwi strengthened as New Zealand offers the highest interest rate among the developed nations. AUD/USD weakened to $0.9410.

 

EUR/USD consolidates around $1.3630, while GBP/USD - around $1.6990. Watch the BoE Financial Stability Report and Carney's speech in the European session. 

 

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Key option levels (June 26)

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT). 

 

Here are the key options expiring today:

 

EUR/USD: $1.3570/75, $1.3585 (large), $1.3600 (large), $1.3610/20 (large);

 

GBP/USD: $1.6900, $1.7000;

 

USD/JPY: 101.00 (large), 101.50, 101.65, 102.00 (large), 101.95 (large), 102.20/25 (large), 102.30;

 

AUDUSD: $0.9400;

 

EUR/GBP: 0.7970, 0.8930;

 

EUR/JPY: 138.00, 138.20.

 

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MARKET NEWS

26 June 2014

 

The BoE caps mortgage lending

 

GBP/USD hit the new session highs after the release of the BoE Financial Stability Report and the Governor’s Carney speech. Mark Carney said the recovery in the UK economy is broadening and strengthening, but the property market poses significant risks to financial stability.

 

To mitigate them the UK regulator will cap mortgages from October, so that people borrowing 85% of a house's value will not be allowed to borrow more than 4.5 times their income. They also announced new stress tests for the banks.

 

Carney underlined that the monetary policy outlook remains unchanged: rate hikes are needed, but they will be gradual and moderate.

 

GBP/USD moved higher on Carney’s comments, but faced resistance around $1.7030.

 

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Jun 26th: American session

 

america1.png

 

Tatiana Norkina, an analyst at FBS


 

Today U.S. dollar index was supported, in general, by fairly neutral data on the labor market. Despite the expected 310 thousand, the number of applications for unemployment benefits was 312 thousand last week, but it is lower than on the previous week - 314 thousand dollar index soared on the news to around 80.45, recouping yesterday's drop. Positive dynamics are preserved: +0.15%. But stock markets sagged noticeably at the opening. DJIA has lost about 0.60%, while the S & P500 - 0.50%.

 

 

Against this background, the pair EUR/USD fell to 1.3575 support and USD/CHF rebounded to the level of 0.8950. Currency pair GBP/USD tested 1.7040, but could not be held here: the ensuing course correction made ​​it back down to 1.7000 figure. USD/JPY is out of context, it is currently trading at today's lows, in 101.50.

 

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June 27: Asian session

 

Asia_eng.jpg

 

USD/JPY fell to 101.30. US dollar slumped to its lowest level in 5 weeks against the yen after downbeat US spending data gave investors no reason to hope for higher US rates anytime soon. Japanese inflation was in line with expectations.

 

NZD/USD touched $0.8790, hitting a new 12-month high. Kiwi buyers were inspired by a bigger-than-expected trade balance (285M vs. 250M expected). AUD/USD strengthened to $0.9430 mark – this is the one-month resistance area. Gold recovered to $1320.

 

EUR/USD rose to $1.3628 after dipping to $1.3575 yesterday. GBP/USD rose to $1.7050.

 

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June 30: American Session

 

Tatiana Norkina, analyst at FBS

 

U.S. dollar index is sticking to the Friday's gradual decline and is losing about 0.10% by the time of American session opening, keeping near an important figure of 80.00. Against the background of a positive euro zone data, mixed statistics from the U.S. restrains the bulls. Thus, PMI by Chicago Management Association has fallen to 62.6 points, from 65.5. The forecast was at 63.00. At the same time, the number of pending home sales has increased by 6.1% from 0.5% (forecast - 1.5%). The trend is probable to change upward a little later, in case of retaining the 80.00 mark. Stock markets have opened trades with different trends. DJIA is slightly below 0.05%, while S&P500 is growing, adding about 0.20% already.

 

Currency markets are also keeping to the Friday's trends. Thus, EUR/USD has grown to around 1.3667, GBP/USD is storming new hills in the 1.7060 area. The USD/CHF currency pair is testing the 0.8890 support, while USD/JPY has rebounded from the 101.20 support and corrected to the 101.40 area.

 

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July 1: Asian session

 

Asia_eng.jpg

 

Asian shares rose driven by good news from Japan and China. According to Tankan survey, large Japanese companies plan to increase capital spending by 7.4% this fiscal year through March. China’s manufacturing expanded in June at the fastest pace this year with official PMI coming at 51, above the 50 threshold signaling expansion. MSCI Asia Pacific index rose by 0.6%. Japanese Nikkei added more than 1%. USD/JPY is trading on the upside in the 101.30/50 area.

 

AUD/USD strengthened by 45 pips to $0.9457. As it was widely expected, RBA left cash rate unchanged at 2.50%. The regulator has once again underlined that they expect a period of stability for interest rates. NZD/USD traded higher early in the session, but topped at $0.8770 and gave some gains back. Gold consolidates after spiking to $1332.

 

EUR/USD is trading a bit on the downside just below $1.3700 after it made a bit increase yesterday. GBP/USD is trading in the $1.7100 area.

 

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Key option levels (July 1)

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT). 

 

Here are the key options expiring today:

 

EUR/USD: $1.3500, $1.3610, $1.3620, $1.3625, $1.3640;

 

EUR/GBP: 0.7900, 0.7990, 0.8010, 0.8020, 0.8065, 0.8075, 0.8135;

 

USD/JPY: 101.50, 102.50;

 

AUD/USD: $0.9350 (large), $0.9400, $0.9425, $0.9500 (large);

 

EUR/JPY: 138.00, 139.65 (large);

 

EUR/CHF: 1.22 (large).

 

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MARKET NEWS

1 July 2014

 

USD: the mood is sour


By Mark Jensen

 

Yesterday the US released mostly good, but relatively minor economic data. Pending home sales rose 5 times more than expected, but positive reaction was tempered by the slowdown in Chicago manufacturing activity. These figures failed to weaken expectations that the Fed will keep an easy monetary policy for some time.

 

San Francisco Fed President John Williams said on Monday the US central bank will probably need to keep interest rates near zero for at least another year, even as he expressed optimism the economy is on a recovery path.

 

So, now the general perception is that the Fed will keep interest rates near zero for more than a year.

 

The benchmark 10-year Treasury yield remains low at 2.54%. The greenback looks less attractive to investors when Treasury yields fall, because lower US yields mean smaller returns on dollar-denominated assets.

 

10%20year%20yields.png

 

US 10-year Treasury yields (Bloomberg)

 

US dollar index is down to 79.87 from 80.6 at the beginning of June.

 

us%20dollar%20index.png


US dollar index (Bloomberg)

 

Investors await the US jobs report, which will be released Thursday and “the unemployment numbers are going to be more critical than ever”. People have started to think about the economic slowdown, and good data may lighten the mood: according to UBS, “there will be some level of comfort if we get the kind of numbers we've been getting.” Economists expect the report to show employers added 212K jobs in June, down from 217K jobs in May, a poll by Reuters says.

 

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July 1: European session

 

Europe_eng.jpg

 

The euro zone’s unemployment rate declined from 11.7% to 11.6%, while Spanish and Italian manufacturing PMIs showed industry expansion. EUR/USD is trading a bit on the downside, in the $1.3680 area consolidating after yesterday’s gains.

 

British pound surged as UK manufacturing growth accelerated to the fastest pace in 7 months. June Manufaturing PMI came above the forecast at 57.5 (prior: 57.0; forecast: 56.7). The indicator improved on increased demand, adding to signs of sustainable economic recovery and increasing the odds of a sooner rate hike. As a result, GBP/USD hit a new 6-year high of $1.7130. EUR/GBP dipped to 0.7990.

 

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July 2: Asian session

 

Asia_eng.jpg

 

Asian stocks rose, with the regional index extending gains from a 6-year high, after good manufacturing PMIs in the world’s two biggest economies – the United States and China – sent US equity gauges to records. MSCI Asia Pacific Index advanced 0.7%. Japanese Nikkei 225 increased by 0.4%. USD/JPY rose to 101.64.

 

Demand for the commodity currencies declined in the Asian trade. AUD/USD fell from the $0.9500 mark back to $0.9450 on the release of Australia trade data. May trade deficit came at 1.91B, while the April reading was revised down to 0.78B. NZD/USD weakened to $0.8745. Gold price sits at $1325.

 

EUR/USD is testing support at $1.3670 (200-day MA). GBP/USD is little changed in the $1.7145 area.

 

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Key option levels (July 2)

 

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT). 

 

Here are the key options expiring today:

 

USD/JPY: 101.25, 102.50 (large);

 

USD/CAD: 1.0630, 1.0675, 1.0770 (large);

 

EUR/USD: $1.3600, $1.3610, $1.3640, $1.3650, $1.3675; $1.3700

 

AUD/USD: $0.9350, $0.9450;

 

EUR/GBP: 0.7950, 0.7985;

 

EUR/CHF: 1.2200.

 

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July 2: European session

 

Europe_eng.jpg

 

EUR/USD slid to $1.3655. According to the data released today, producer prices in the euro area contracted in May by 0.1%, while the number of unemployed people in Spain increased more than expected.

 

Great Britain released another bunch of GBP-positive data today. UK June construction PMI jumped from 60.0 to 62.6 in June (forecast: 59.7). This is the highest level since April 2014. What’s more, UK nationwide HPI added 1.0% in June (forecast: 0.6%). As a result, GBP/USD rose to fresh 6-year highs, facing resistance at $1.7175. EUR/GBP dropped to 0.7950 before retracing some pips higher.

 

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MARKET NEWS

2 July 2014

 

Yellen's speech eyed

 

The Federal Reserve Chair Janett Yellen will speak at the International Monetary Fund today at 15:00 GMT. She will then discuss the questions of US financial stability with the IMF Head Christine Lagarde. Investors will closely monitor the Yellen's rhetoric to gauge the likely time gap between the end of the QE3 program and the beginning of the rate hiking cycle. 

 

"If Yellen does discuss current monetary policy, we can probably expect more of the same overall dovish tone that we saw from her post-FOMC press conference", analysts at Deutsche Bank forecast. "Recall also that at that press conference, Yellen mentioned that 'high yield bonds have certainly caught our attention', so it will be interesting to see whether she elaborates on this topic given the IMF appears to have become more vocal about the issue of financial stability lately."

 

Strategists at RBS point that that the USD decline from any dovish comments is "more limited than the potential USD upside on a hawkish surprise."

 

Note that Yellen will speak ahead of the US nonfarm payrolls release on Thursday. 

 

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2 July 2014

 

PIMCO: Fed to hike in mid-2015

 

According to the Pimco's chief economist Paul McCulley, the US economy is getting closer to where the Federal Reserve needs it to be to start tightening. He expects the first hikes to come in mid-2015. Rates are expected to increase until 2%.

 

While gross domestic product and productivity plummeted in the Q1, McCulley does not think that will be repeated in Q2 of the year 2014. "The fact that consumer income and job creation held up I think is the silver lining in what happened in the negative productivity in the first quarter," McCulley said.

 

101754883-450339982.530x298.jpg?v=140382

 

James Bullard, head of the Federal Reserve Bank of St. Louis, said last week the Fed should raise rates by the end of Q1 2015. In his view, the Fed will raise rates until 4%.

 

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July 3: Asian session

 

Asia_eng.jpg

 

Asian shares swung between gains and losses, with the regional index trading near a 6-year high, as ADP data showed US companies added more workers than estimated before a government Non-Farm Payrolls report today. The Fed’s Chair Janet Yellen said yesterday that concerns about financial stability shouldn’t prompt a change in current monetary policy. USD/JPY rose to 101.93.

 

EUR/USD slid to $1.3447, but is trading above yesterday’s low at $1.3638. GBP/USD is trading on the downside in the $1.7155 area.

 

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July 3: European session

 

Europe_eng.jpg

 

EUR/USD is making small swings around $1.3650. Spanish and Italian Services PMIs were above the key level of 50 that indicates industry expansion. However, euro zone’s retail sales stagnated in May after sliding by 0.2% in April.

 

Great Britain released weak Services PMI figure on Thursday. The index came at 57.7 in June versus expected 58.1 and 58.6 in May. The index is important for the markets as services make up around 75% of the UK economy. However, the headline figure masks some good news: for example, new business rose to the highest level in 6 months. GBP/USD dipped to $1.7130, but found support and recovered some pips. EUR/GBP peaked at $0.7970 on the release.

 

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