Daily Market Analysis by Vinson Financials

[VinsonFinancialsFX]

Financial News October 19, 2015

 

USD to continue to ease

 

A few things would have to change in case of strong commodities increasing possibilty of Fed raising rates. A view such as this would assume, once it became a broad-based market consensus, that a large share of the USD strength seen since mid-2014 was based on incorrect assumptions and would have to be corrected almost completely.

 

That is still a long way off. Based on the ICE's dollar index approx. ¼ of the dollar appreciation has been corrected. In particular speculative market participants continue to hold net USD longs as Friday's CFTC data suggests.

 

"Even though there is a trend among these investors to reduce its USD longs this is happening at a snail's pace. No, Fed that is never going to hike interest rates again is not fully priced in. If that was going to be the case (which our Fed watchers do not assume) the dollar would continue to ease", says Commerzbank.

 

 

Market Review October 19, 2015

 

The Bank of Japan maintained its optimistic assessment for all eight of the country's regional economies despite looming external risks such as China's slowdown, suggesting that it saw no immediate need to expand monetary stimulus further. Moreover, the BOJ said that "all regions saw their economies recover or recover gradually." Furthermore, four economic regions, including western and central areas home to big Japanese auto and electronics goods exporters, offered a depressed view on output than three months ago, reflecting soft emerging market demand. The Japanese government cut its assessment of the economy last week, warning that some parts of the recovery have declined due to weak overseas demand, such weak signs in the economy have kept alive market expectations that the BOJ may expand its already massive stimulus program at its rate review next week. BOJ Governor Haruhiko Kuroda sounded unfazed, maintained his optimism on the prospects for achieving his ambitious 2% inflation target. USD/JPY remained well below the 120.00 level and is currently trading near the 119.36.

 

Released during the Asian session this morning, GDP growth in China slowed to 6.9% below government's target of 7.0%, however slightly better than the expectation of 6.8%. Retail sales rose 10.9% versus expectation of 10.8% and industrial production slowed to 5.7% versus expectation of 6.0%. In addition, fixed asset investments slowed to 10.3% versus expectation of 10.8%. The Australian dollar rose sharply against its US counterpart after Chinese economic growth figures beat estimates, projecting a slightly better picture of the outlook for Australia. China has for a long time been Australia's top export destination, and the slowdown in China has had a huge impact on the Australian economy, particularly in the resource sector. AUD/USD pair is currently trading near the 0.7290 area with the next resistance seen at 0.7381 level.

 

The key events for the day will be the German Buba Monthly Report, NAHB Housing Market Index and FOMC Member Brainard speech.

 

Additional economic releases would be the Canadian Federal Election and FOMC Member Lacker speech.

 

View our full economic calendar for a daily roundup of major economic events.

 

Data releases to monitor:

 

USD:    Capacity Utilization Rate, Industrial Production, Prelim UoM Consumer Sentiment, JOLTS Job Openings, Prelim UoM Inflation Expectations, TIC Long-Term Purchases.

 

EUR:    Italian Trade Balance, Final CPI, Final Core CPI, Trade Balance.

 

CAD:    Manufacturing Sales, Foreign Securities Purchases.

 

GBP:    MPC Member Forbes speech.

 

 

Trade Idea of the Day     

 

EUR/JPY

 

Currently the pair is trading at 135.55. Traders must monitor the 136.96 resistance level and the support level of 134.79 for possible breakouts. A possible scenario would be a movement towards the 136.13 resistance level, where a break may lead to the 136.70 area. An alternative scenario could be a movement towards the 135.30 support level, where a break may lead to the 134.90 area.

[VinsonFinancialsFX]

 

Financial News October 20, 2015

 

CNY is no longer significantly undervalued

 

The U.S. Treasury dropped its view that China's currency is "significantly undervalued" while saying that the forces driving appreciation in the longer term remain and China needs to allow such strengthening eventually.

 

The CNY remains "below its appropriate medium-term valuation," the department said yesterday in its semi-annual report on foreign-exchange policies. The "core factors" that have driven the appreciation of CNY in recent years remain in place, such as a large and growing current-account surplus, and net inflows of foreign direct investment.

 

Even so, the department refrained from characterizing China's currency as significantly undervalued, as it has in each foreign-exchange report since May 2012. The Treasury also recognized that with an economic slowdown and stock-market volatility, "market factors are exerting downward pressure" on CNY.

 

The International Monetary Fund, by contrast, adopted the view in May that CNY is "no longer undervalued." 

 

"To a large extent, both statements appear in line with the fact that market expectations of continuous CNY appreciation are gradually diminishing. Given the economic slowdown, CNY is under pressure to weaken in the next 12-18 months", says Commerzbank.

 

October ECB bank lending survey, credit standards to ease

 

Euro area banks reported low investment decisions in H1 15, in Q2, the fixed investment contribution on firms' demand for credit represented 11pp, whereas the contribution from inventories stands at 10 and the contribution from other financing needs (LBO, M&A.

 

..) stands at 12.

 

"The October ECB bank lending survey that was conducted in September is likely to show signs of continued easing in credit standards, especially for households. Consumer demand for credit is likely to remain relatively buoyant with ongoing strength in demand for housing credit (49% in Q2, up from 30% in Q1) as interest rates remain low", says Societe Generale.

 

The picture is more uncertain for firms. Uncertainty over global demand and high corporate debt levels means reluctance by firms to take out loans to invest. The point is that actual demand has not met expectations for the past three quarters.

 

 

Market Review October 20, 2015

 

 

The RBA said the Aussie's depreciation, in line with falling commodity prices, along with low interest rates had helped the economy re-balance without costing jobs. After weak expansion in gross domestic product in the June quarter, growth in the September quarter was "expected to have strengthened", the RBA said.  However, the board also noted a build-up of risks in commercial and residential property development, mainly concerning oversupply. The Reserve Bank of Australia left interest rates unchanged at a record low 2.0% and did not look eager to cut them any soon. Rates have not changed since The AUD/USD pair remained in tight range and near the 0.7275 area, with the next support seen at the 0.7240 level.

 

Released during the early European session, Swiss Trade Balance came in at 3.05B beating the estimated 2.51B and compared to the previous of 2.86B. USD/CHF is currently trading near the 0.9555 area with the next resistance seen at the 0.9577 level. Released from Germany, Producer Price Index (PPI) declined -0.4% missing the estimated -0.1%.

 

The key events for the day will be the United States Housing data, such as Building Permits and Housing Starts, the Canadian Wholesale Sales and New Zealand’s GDT Price Index.

 

Additional economic releases would be ECB Current Account, BOE Gov Carney speech and Fed Chair Yellen speech in Washington DC.

 

View our full economic calendar for a daily roundup of major economic events.

 

 

Data releases to monitor:

 

USD:    Building Permits, Housing Starts, FOMC Member Dudley and Member Powell speeches, Fed Chair Yellen speech.

 

EUR:    Current Account.

 

CAD:    Wholesale Sales.

 

GBP:    MPC Member McCafferty speech, BOE Gov Carney speech.

 

NZD:    GDT Price Index.

 

 

Trade Idea of the Day     

 

AUD/USD

 

Currently the pair is trading at 0.7280. Traders must monitor the 0.7381 resistance level and the support level of 0.7197 for possible breakouts. A possible scenario would be a movement towards the 0.7310 resistance level, where a break may lead to the 0.7345 area. An alternative scenario could be a movement towards the 0.7240 support level, where a break may lead to the 0.7210 area.

 

[VinsonFinancialsFX]

 

Financial News October 21, 2015

 

BCB to stay on hold?

 

It is pretty much a foregone conclusion that the Brazilian central bank (BCB) will keep rates on hold at tonight's Copom meeting at 14.25%. The improvement in external financing conditions (lower US yields etc.

 

) alongside generally better sentiment towards EM as a whole means that BCB is under no immediate pressure to raise rates.

Moreover, as long as the political stalemate in Brasilia continues, BCB will not want to make an already bad situation (budget deficit) worse with further rate hikes. However, inflationary developments give some cause for concern.

 

According to local newspapers, the central bank now believes CPI inflation will converge to the 4.5% target only by 2017 rather than 2016.

 

"No one realistically expected inflation to reach the target range in 2016, but the question is whether the admission by the central bank is a case of simply being realistic or indicative of a change in policy stance where they favour a less hawkish stance with respect to overall inflationary developments. Buying dips in USD-BRL is recommended", says Commerzbank.

 

 

Market Review October 21, 2015

 

 

Japan's trade deficit narrowed in September to 114.5 billion yen, while exports fell short of expectations as demand from China waned. More specifically, the monthly trade data released by the Ministry of Finance showed that the country’s trade balance rose to a seasonally adjusted -0.36T, from -0.37T in the preceding month whose figure was revised down from -0.36T. Exports rose only 0.6 percent from the year before to 6.42 trillion yen while imports fell 11%, to 6.53 trillion yen. Moreover, Japan's trade balance has improved with the fall in prices of crude oil and other fuels. In September, imports of oil, gas and coal fell 36 percent from the year before. The slowdown in China has hindered a recovery in exports, adding to pressure on Japan's central bank to expand monetary stimulus to help revive growth. Released also from Japan during the Asian session, All Industries Activity declined -0.2% versus the estimated -0.1%. USD/JPY rose to the 120.07 level, where it found strong resistance and currently is trading near the 119.88 area.

 

Released from Australia during the session, CB Leading Index declined -0.4% versus the previous of 0.3% and MI Leading Index rose 0.1% compared to the previous -0.3% decline. Released from New Zealand, Credit Card Spending rose 7.3% versus the previous of 10.4% and Visitor Arrivals rose 4.2%.

 

The main events for the day will be the Bank of Canada rate decision, Policy Report and Press Conference. The central bank is expected to keep interest rate unchanged at 0.50%.

 

 

Data releases to monitor:

 

USD:    FOMC Member Powell speech, Crude Oil Inventories.

 

CAD:    BOC Monetary Policy Report, BOC Rate Statement, Overnight Rate, BOC Press Conference.

 

GBP:    Public Sector Net Borrowing, BOE Gov Carney speech.

 

 

Trade Idea of the Day     

 

EUR/CAD

 

Currently the pair is trading at 1.4768. Traders must monitor the 1.4896 resistance level and the support level of 1.4605 for possible breakouts. A possible scenario would be a movement towards the 1.4810 resistance level, where a break may lead to the 1.4850 area. An alternative scenario could be a movement towards the 1.4715 support level, where a break may lead to the 1.4670 area.

 

[VinsonFinancialsFX]

 

Financial News October 22, 2015

 

USD/CAD currency outlook?

The Canadian dollar has been the third best-performing G10 currency against the USD over the past month. Evidence that crude oil prices may have found their lows in August, combined with a recent firming in domestic economic data, has provided major support for the currency.

 

Now that Federal Elections are out of the way focus will turn to monetary policy.

Canada's central bank left its key policy rate on hold in September at 0.50%, sounding more neutral after reducing its policy rate twice this year, noting that weak crude oil prices were likely to have only a transitory impact on inflation. While that may be the case, the negative impact of low crude oil prices on the oil & gas sector and wider economy has been sustained, with GDP contracting for two straight quarters in a row this year.

 

"Given this, it is believed that the market may be attaching too low a probability to further rate cuts over the coming months. While our forecast of higher crude oil prices should provide some further support to the Canadian dollar to around 1.25-1.20 against the USD, the possibility of further monetary easing suggests a return to 2014 sub-1.20 levels may be a stretch", argues Lloyds Bank.

 

BoC downgrades its outlook for economic growth in Canada

Bank of Canada left its key policy rate unchanged at 0.50%. The Bank judges the current level of the overnight rate to be appropriate, but maintained a cautious tone in its outlook, acknowledging global risks and citing that the persistently low level of commodity prices has led to a modest downgrade to the bank's growth forecast.

 

The Bank's decision to leave rates unchanged was widely expected. It maintained a cautious tone, acknowledging that the Canadian economy rebounded smartly from the contraction in the first half of the year, but that it continues to adjust to lower prices for oil and other commodities.

 

The current level of monetary policy stimulus is necessary to facilitate this ongoing adjustment. The downgrade to the Bank's growth outlook further out in the horizon is in line with more modest global growth and continued weakness in energy prices.

 

This would typically mean the economy returning to full capacity at a later date, but the Bank also downgraded its estimate of Canada's pace of potential growth. As a result, there is little effect on the outlook for inflation.

 

At the same time, with the Bank now focused on a measure of underlying inflation rather than core, the performance of the economy relative to growth expectations is particularly important.

 

The new forecasts in the MPR set the bar that Canada's economy must attain to see the eventual removal of monetary stimulus. If growth falls short of the mark, it could elicit further rate cuts.

 

"Overall, with the outlook for inflation little changed and the growth much the same as our latest outlook, the bank is expected to remain comfortably on the sidelines until the second half of 2017, when it is expected to embark on a modest pace of interest rate hikes", says TD Economics.

 

Market Review October 22, 2015

 

The Bank of Canada (BOC) downgraded its economic outlook again as the country continues to face the “complex” aftershocks of lower prices for oil and other commodities. Furthermore, the central bank kept its key overnight lending rate unchanged at 0.5 % on Wednesday as widely expected, following two surprise rate cuts earlier this year. Moreover, in the latest monetary policy report BOC said that “the Canadian economy is expected to grow just 2.00% in 2016 and 2.50% in 2017”. That is down from previous forecasts of 2.30% and 2.60%. Lower oil prices are continuing to sap business investment and put a dent in the value of Canadian exports, overwhelming improvements elsewhere in the economy. In addition, the central bank warned that the two-track economy would persist longer than expected, in spite of the positive effects of earlier interest rate relief and the cheaper Canadian dollar. USD/CAD rose sharply from the 1.2970 area, reaching as high as the 1.3125 area, where is currently trading.

 

Released during the Asian session Australia NAB business confidence dropped to 0 versus the previous of 4.

 

Released during the early European session, Spain's third-quarter unemployment rate fell to 21.2%, the lowest level in four years, driven by strong job creation. Moreover, the National Statistics Bureau said that the number of people without jobs in the Eurozone’s fourth-largest economy fell by 298,200 in the quarter to 4.85 million, with the economy adding 182,200 jobs. Of those, 152,100 corresponded to the private sector, with the remainder linked to the public sector. EUR/USD remained above the 1.1300 level until the moment, but seems that it is heading south.

 

The main events for the day will be the ECB rate decision and press conference, where the central bank is expected to keep policies unchanged and pledge to continue implementation of the QE program through September 2016 and reiterate commitments to extend stimulus whenever necessary.

 

Additional economic releases would be the United Kingdom Retail Sales, the Canadian Core Retail Sales and the United States Unemployment Claims.

 

Data releases to monitor:

 

USD:    Unemployment Claims, HPI, Existing Home Sales, CB Leading Index, Natural Gas Storage.

 

CAD:    Core Retail Sales, Retail Sales.

 

GBP:    Retail Sales, MPC Member Cunliffe speech.

 

EUR:    Minimum Bid Rate, ECB Press Conference, Consumer Confidence.

 

 

Trade Idea of the Day     

 

NZD/USD

 

Currently the pair is trading at 0.6750. Traders must monitor the 0.6895 resistance level and the support level of 0.6617 for possible breakouts. A possible scenario would be a movement towards the 0.6835 resistance level, where a break may lead to the 0.6870 area. An alternative scenario could be a movement towards the 0.6723 support level, where a break may lead to the 0.6675 area.

 

[VinsonFinancialsFX]

 

Financial News October 23, 2015

 

Deposit rate cut back in ECB's toolbox

To boost the ECB's toolbox, the ECB also reinserted the deposit rate as a possible instrument to be used. While last year's assessment suggested that the "effective" lower bound for rates had been reached, the view now, due to "changed conditions", is that there is some further room to cut the deposit rate.

 

"While this tool has the potential to affect the exchange rate, it is less clear why a cut in the deposit rate would have a bigger impact on the economy or the exchange rate than accelerating asset purchases. In view of the potential negative effects on the real economy and the limited room for manoeuvre, we would mainly expect this tool to be used in a much worse economic scenario or as a compromise if other options are not possible", says Societe Generale.

 

 

 

Market Review October 23, 2015

 

Yesterday, the European Central Bank left the main refinancing rate unchanged at 0.05%. The marginal lending rate also stayed unchanged at 0.3% and the deposit rate at -0.2%. At the press conference, President Mario Draghi surprized markets by signalling that the ECB is prepared to cut interest rates and step up quantitative easing to stave off the risk of a renewed economic slump in the Eurozone. Moreover, President Draghi acknowledged that the QE program has been "proceeding smoothly" and would "continue to have a favourable impact". Furthermore, he indicated that the decline in commodity prices and concerns about slowdown in emerging markets would extend deflation, and that in this case the central bank would re-examine its bond-buying program in December. In addition, Draghi announced that the ECB’s governing council had discussed expanding its €1.1tn bond-buying programme and cutting the rate on reserves held at the central bank. The reserves rate is already negative, at -0.2%, meaning banks effectively have to pay the ECB for holding their reserves, a measure aimed at keeping money flowing around the economy. The value of the single currency dropped sharply against the US Dollar. EUR//USD dropped below the 1.1200 reaching as low as the 1.1075 area, and currently is trading near the 1.1115 area.

 

Released during the Asian session, Japan Flash Manufacturing PMI came in at 52.5 beating the estimated 50.6. USD/JPY is currently trading near the 120.75 area with the next resistance seen at the 120.97 level.

 

Released during the early European session, French Flash Manufacturing PMI came in at 50.7 beating the estimated 50.2, while French Flash Services PMI came in at 52.3 versus the estimated 51.9.

 

The main events for the day will be German Flash Manufacturing PMI, the Eurozone Flash Manufacturing PMI and Flash Services PMI and the Canadian Core CPI.

 

Additional economic releases would be the United States Flash Manufacturing PMI and Canadian CPI.

 

View our full economic calendar for a daily roundup of major economic events.

 

 

Data releases to monitor:

 

USD:    Flash Manufacturing PMI.

 

CAD:    Core CPI, CPI.

 

EUR:    German Flash Manufacturing PMI, German Flash Services PMI, Flash Manufacturing PMI, Flash Services PMI, Italian Retail Sales, Belgian NBB Business Climate.

 

 

Trade Idea of the Day     

 

AUD/USD

 

Currently the pair is trading at 0.7275. Traders must monitor the 0.7362 resistance level and the support level of 0.7182 for possible breakouts. A possible scenario would be a movement towards the 0.7293 resistance level, where a break may lead to the 0.7330 area. An alternative scenario could be a movement towards the 07225 support level, where a break may lead to the 0.7195 area.

 

[VinsonFinancialsFX]

 

Financial News October 26, 2015

 

PBoC to cut RRR by another 50 bps in Q4 2015

 

Theoretically it does not make sense for China to maintain a stable currency amid monetary policy easing. Nonetheless, it appears that the PBoC still caps the upside of USD/CNY and USD/CNH via selling its foreign reserves, suggesting that the Chinese authorities do not want to see a fast depreciation of its currency.

 

Market Review October 26, 2015

 

Investors focus right now is on central banks and monetary policy actions ahead of a FOMC, BOJ meeting later and RBNZ this week. The risk appetite is returning to ‘’normal’’ levels after China monetary easing and announcement from PBoC to extend the pilot program on bank lending that allowed banks to pledge assets to secure the central bank's lending. China's easing on Friday was the latest reminder of the monetary policy divergence taking place between the FED and other central banks.

 

The U.S. Federal Reserve makes a policy decision on Wednesday. While the Fed is widely expected to refrain from raising interest rates this time, the easing stance taken by its counterparts have kept the divergence theme alive. Furthermore, the RBNZ meets on Thursday and the BOJ on Friday. The RBNZ has cut rates three times this year. Also the BOJ is also gathering attention as a run of downbeat Japanese indicators has fanned expectations of further monetary easing.

 

In Europe the German Ifo Business Climate released at 108.2. Later on the US New Home Sales and the New Zealand’s Trade Balance may cause volatility in the market.

 

View our full economic calendar for a daily roundup of major economic events.

 

 

Data releases to monitor:

 

GBP:      BBA Mortgage Approvals, CBI Industrial Order Expectations

 

USD:      New Home Sales

 

EUR:      German Buba Monthly Report

 

NZD:      Trade Balance

 

Trade Idea of the Day     

 

GBP/USD

 

Currently the pair is trading at 1.5342. Traders must monitor the 1.5505 resistance level and the support level 1.5220 for possible breakouts. A possible scenario would be a movement towards 1.5305 support level where a break may lead to 1.5280 and possible to 1.5250 area. An alternative scenario could be a movement above 1.5350 and a testing of 1.5385 resistance level.

 

[VinsonFinancialsFX]

 

Financial News October 27, 2015

 

China may adopt flexible exchange rate to attract investors

 

Chinese top leadership is holding a plenum session this week, and the focus will be the eye-catching 13th Five-Year Plan. What market focuses in the first glance is the growth target.

 

"China should have at least 6.5% growth during 2016-2020 to meet the old goal of doubling per-capita GDP and overall GDP by 2020 from 2010 levels. That said, the most likely case is to set the growth target at 6.5% - 7.0%. To achieve this aggressive growth target, the base case is that China will still maintain an expansionary monetary policy and proactive fiscal policy", says Commerzbank.

 

Different from solely relying on bank credits in the past, Chinese corporates will be encouraged to tap capital market to get access to funding. From this perspective, further development in financial markets can be expected. China is still ambitious to push RMB's international status and export its economic power.

 

But this requires a sophisticated financial market to connect onshore China and the rest of the world. China is accelerating the interest rate liberalization reform, which will be a key element for further capital account openness. Nonetheless to attract global investors China will have to allow a more flexible RMB exchange rate regime, suggests Commerzbank.

 

Market Review October 27, 2015

 

ew Zealand trade deficit widened to NZD -1222M in September versus expectation of NZD -822M, More specifically, exports fell to $3.69 billion from $3.73 billion in August, marking the lowest monthly export total seen since January this year. While exports slipped, imports rose to $4.91 billion, an increase on the $4.77 billion level of August, with the monthly figure the largest recorded since September last year. With imports growing whilst exports slipped, the monthly trade deficit grew to $1.22 billion, a 12-month high. Despite the monthly miss, the annual trade deficit narrowed to $3.2 billion from $3.33 billion in August. Released from Japan, Services Producer Price Index (SPPI) rose 0.6% compared to the previous of 0.8%.

 

Released during the early European session, Swiss UBS consumption indicator rose slightly to 1.65 in September compared to the previous of 1.64.

 

The main event for the day would be the United Kingdom GDP data, which will offer a first look on the country’s performance in the third quarter. Economists estimate that the United Kingdom economy has been losing momentum, stymied by China’s downturn, a construction slump and ailing manufacturers. It is expected that the UK economy will grow 0.6% in Q3, slightly lower than the Q2's 0.7%. Furthermore, BoE Governor Mark Carney said on Saturday that an increase in Britain's interest rates is not guaranteed although households should prepare for higher borrowing costs, The Bank of England cut interest rates to a record low of 0.5 percent in 2009 and has kept them there ever since, even as Britain's economy recovered strongly over the past two years. Moreover, Governor Carney has previously said that a decision about when to raise rates would become clearer around the turn of the year. GB/USD is currently trading near the 1.5345 area with the next support seen at the 1.5108 level while EUR/GBP remained near the 0.7200 area.

 

Additional economic releases would be the European Central Bank M3 Money Supply and Private Loans, the United States Core Durable Goods Orders, CB Consumer Confidence and Richmond Manufacturing Index.

 

View our full economic calendar for a daily roundup of major economic events.

 

 

Data releases to monitor:

 

USD:    Core Durable Goods Orders, Durable Goods Orders, S&P/CS Composite-20 HPI, Flash Services PMI, CB Consumer Confidence, Richmond Manufacturing Index.

 

GBP:    Prelim GDP, Index of Services, 10-y Bond Auction.

 

CAD:    Gov Council Member Lane speech.

 

EUR:    M3 Money Supply, Private Loans.

 

Trade Idea of the Day     

 

NZD/USD

 

Currently the pair is trading at 0.6777. Traders must monitor the 0.6863 resistance level and the support level of 0.6696 for possible breakouts. A possible scenario would be a movement towards the 0.6800 resistance level, where a break may lead to the 0.6840 area. An alternative scenario could be a movement towards the 0.6735 support level, where a break may lead to the 0.6700 area.

 

[VinsonFinancialsFX]

 

Financial News October 28, 2015

 

USD may trade firmer after Fed meetings

 

The Federal Open Market Committee (FOMC) members may have said time and again that they could hike rates at their October meeting, but the markets have not believed them. And with nobody expecting a rate hike today.

 

The Fed certainly will not want to wrong-foot the markets in the current environment.

However, it will have to become more explicit in its communications if it wants to hike rates at any time in the future. Nevertheless, it is unlikely that it will clearly signal a rate hike in December today, as doing so would undermine its mantra of "data-dependency". The USD exchange rate will depend on what the Fed statement says on the recently weaker data.

 

"If the Fed believes that the US economy is still recovering nicely, the USD might trade somewhat firmer after the meeting, as the markets are currently overly cautious and predicting a rate hike only for March 2016. The Fed will certainly not sound even more pessimistic today. Rather, it might cautiously hint at approaching rate hikes. However, that will not be enough to justify EUR-USD to break out of its trading range of 1.08-1.15", says Commerzbank.

 

Market Review October 28, 2015

 

FOMC rate decision the main focus today and is widely expected that FED will keep policies unchanged. Nonetheless the big question is whether Fed will signal any chance in December. Some analysts believe that Fed will not hint anything since they need more time to clarify the recent slowdown in jobs data. Furthermore, assessment for inflation would likely remain unchanged. Analyst support this based on recent dovish comments from ECB, weakness in oil price and firmness in US stocks and they assume that USD will not affected by the FOMC statement.

 

Last night AUD dropped after release of consumer inflation data. Headline CPI rose 0.5% q/q, 1.5% y/y in Q3, missing the estimation of 0.7% q/q and of 1.8% on y/y. The RBA trimmed mean CPI rose 0.3% qoq, 2.1% y/y, below expectation of 0.5% q/q, 2.4% y/y. RBA weighted median CPI rose 0.3% q/q, 2.2% y/y versus expectation of 0.5% q/q, 2.5% y/y. Analyst speculated that that RBA may cut interest rate next week since the largest retail banks in the country increase there rates. Also analysts supported this from current inflation reading and if not done in November, there is still a high chance for the central bank to lower interest rate during the next 3 months.

 

Elsewhere, Germany released Gfk consumer sentiment at -0.7% missing the forecast of -0.2% we also have German 10 year bond auction later today. Later today US will release trade balance.

 

RBNZ will announce rate decision and is expected to keep interest rate unchanged at 2.75% so traders must be aware for any different announcement that may cause volatility in the market.

 

View our full economic calendar for a daily roundup of major economic events.

 

 

Data releases to monitor:

 

USD:      Goods Trade Balance, Crude Oil Inventories, FOMC Statement, Federal Funds Rate

 

EUR:      German 10-y Bond Auction

 

NZD:      Official Cash Rate, RBNZ Rate Statement

 

 

Trade Idea of the Day     

 

EUR/CAD

 

Currently the pair is trading at 1.4619. Traders must monitor the 1.4905 resistance level and the support level 1.4394 for possible breakouts. A possible scenario would be a movement towards 1.4952 support level where a break may lead to 1.4480 and possible to 1.4440 area. An alternative scenario could be a movement above 1.4675 and a testing of 1.4730 resistance level.

 

[VinsonFinancialsFX]

 

Financial News October 29, 2015

 

Fed's rate hike likely in imminent future

 

The Fed left the door open for a rate hike in December as it dropping its previous warning about the risk global economic and financial development posed to the US economy and repeated that economic activity is expected to expand at a moderate pace.

 

Given the souring tone of recent US economic data and mixed signals from Fed officials, it is no surprise that the Fed kept rates unchanged today. Also in line with expectations, Richmond Fed President Lacker dissented again, supporting an immediate 25bp rate increase.

 

December rate hike remains on the table: While the Fed acknowledged the recent slowdown in job growth, an otherwise roughly unchanged statement on the economy indicates that the Fed leadership still believes lift-off in December is likely, if the US economy performs in line with the central bank's forecast of continued moderate growth and higher inflation, argues Nordea Bank. Thus, today's FOMC statement repeated that economic activity is expected to "expand at a moderate pace" and there were no major changes to the description of either inflation or inflation expectations.

 

"Regardless of the exact timing of the first hike, we continue to believe that rising inflation pressures will imply that the Fed will raise rates faster than is currently priced in by markets. Therefore, the Fed funds target range at 0.25-0.50% by end-2015, 1.25-1.50% by end-2016 and 2.25-2.50% by end-2017", foresees Nordea Bank.

 

Market Review October 29, 2015

 

The Federal Open Market Committee (FOMC) voted to maintain its zero interest rate policy, citing weakness in exports and soft inflation as reasons to continue its historically easy monetary policy. More specifically, FOMC kept overnight federal funds rate unchanged at 0-0.25%, nonetheless the committee indicated the possibility of a December rate hike. Fed officials have been saying for months that they believed the economy was nearly strong enough to tolerate an increase in the benchmark short-term rate from near zero, where it has been since December 2008, but they have hesitated to move. The key sentence in the FOMC statement was "in determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation”, where the phrase "next meeting “clearly indicated the possibility of December hike.  The US Dollar rose sharply against the other majors, especially against the Euro, pushing the EUR/USD pair to the 1.0925 area.  

 

Elsewhere, the Reserve Bank of New Zealand (RBNZ) kept the OCR at 2.75%, however it signalled that further reductions may be required to reach the inflation target. Moreover, the RBNZ noted that "concerns remain about the prospects for slower growth in China and East Asia especially," and that "the sharp fall in dairy prices since early 2014 continues to weigh on domestic farm incomes."

 

Released during the Asian session, Japan’s Prelim Industrial Production rose 1.0% beating the estimated -0.5% while Australia’s Import Prices rose 1.4% missing the estimated 1.6%.

 

Released during the early European session, the United Kingdom Nationwide HPI rose 0.6% versus the estimated 0.5% and Spanish Flash CPI declined -0.7% versus the estimated -0.6%.

 

The main event for the day would be the United States Unemployment Claims, Advance GDP, Pending Home Sales and Advance GDP Price Index.

 

Additional economic releases would be the German Unemployment Change, German Prelim CPI and the United Kingdom mortgage approvals and Net Lending to Individuals.

 

View our full economic calendar for a daily roundup of major economic events.

 

 

Data releases to monitor:

 

USD:    Advance GDP, Unemployment Claims, Advance GDP Price Index, FOMC Member Lockhart speech, Pending Home Sales, Natural Gas Storage.

 

GBP:    Net Lending to Individuals, M4 Money Supply, Mortgage Approvals, CBI Realized Sales.

 

CAD:    RMPI, IPPI.

 

EUR:    German Unemployment Change, German Prelim CPI, Italian 10-y Bond Auction.

 

NZD:    Building Consents.

 

 

Trade Idea of the Day     

 

USD/JPY

 

Currently the pair is trading at 120.71. Traders must monitor the 121.46 resistance level and the support level of 119.60 for possible breakouts. A possible scenario would be a movement towards the 121.06 resistance level, where a break may lead to the 121.40 area. An alternative scenario could be a movement towards the 120.31 support level, where a break may lead to the 120.00 area.

 

[VinsonFinancialsFX]

 

Financial News October 30, 2015

 

Fed likely to postpone first rate hike to January

 

U.S. economic data have disappointed over the past month. Industrial and export data indicate a slowdown and retail sales and employment growth have also eased.

 

While long the bright spot in a weak global economy, the US has dimmed of late.

 

Nevertheless, the US slowdown comes from a position of strength and so is not particularly alarming at this time.

"However, we do expect slower growth to cause the Federal Reserve to postpone its first rate hike. We are now pencilling in the first rate hike for Q1 16 rather than December this year - albeit the latest Fed statement was more hawkish than what we had expected", says Danske Bank.

 

RUB might weaken temporarily against USD over next 3 months

 

Any significant impact of rate cuts is not seen on the RUB if the CBR cuts its policy rate according to expectations. OFZs seen benefiting further from anchored expectations on monetary easing.

 

"The key rate is likely to fall to 7% in late 2016, which would support the restoration of economic growth. Any tightening would be very destructive for Russia's economy, while it would not prevent possible RUB weakening if the oil price continues to fall", says Danske Bank.

 

Yet, a marginal RUB strengthening effect cannot be excluded from possible monetary easing, as, in Russia's case, the markets have been interpreting rate cuts as RUB supportive on improving economic prospects rather than seeing cuts as diminishing carry opportunities.

 

"The RUB might weaken temporarily against the USD over the next three months to 70.00, as the Fed is likely to start tightening its monetary policy in Q1 16, weighing on emerging markets assets globally", added Danske Bank.

 

Market Review October 30, 2015

 

The Bank of Japan has kept monetary policy on hold, betting prices and growth will pick up enough to sustain the credibility of its 2 per cent inflation target. Moreover, BoJ held Interest rate near zero and reiterating its pledge to increase its monetary base at an annual rate of 80 trillion yen.

 

At the press conference, BOJ Governor Haruhiko Kuroda said there were no proposals at Thursday's meeting to ease monetary policy and he added that while the timing for achieving the price target has been delayed, it was largely due to the effect of energy price falls. "We've said two years is the timeframe we have in mind when we say we will aim to achieve our inflation target at the earliest date possible," Kuroda said. The bank has not expanded its stimulus program since last October, even as falling oil prices and weaker exports, particularly to a slowing China, made it more difficult for Japan to reach the BOJ's 2 percent inflation target.

 

Released from Japan during the Asian session, Tokyo Core CPI declined -0.2%, Household Spending dropped -0.4%, National Core CPI declined -0.1% and Unemployment Rate rose 3.4%. Released from Australia, Producer Price Index (PPI) rose 0.9% versus the estimated 0.3% and Private Sector Credit rose 0.8% beating the estimated 0.5%.

 

Released during the early European session, Japan’s Housing Starts rose 2.6% missing the estimated 6.5%, German Retail Sales rose 0.0% missing the estimated 0.4%, French Consumer Spending rose 0.0% versus the estimated 0.2% and Spanish Flash GDP rose 0.8% versus the estimated 0.9%. EUR/USD remained below the 1.1000 level and currently is trading near the 1.0995 area, while USD/JPY is trading near the 120.75 area after reaching the 121.48 level yesterday.

 

Released from Switzerland, KOF economic barometer fell more than expected last month, In a report, the KOF Economic Research Agency said that its economic barometer fell to a seasonally adjusted 99.8 versus the estimated 100.1 and compared to the previous of 100.3 in the preceding month whose figure was revised down from 100.4.

 

Elsewhere, the Chinese state-run news agency Xinhua reported that China is to scrap its one-child policy, first implemented in 1979. The news emerges at the end of a four-day meeting of China’s ruling Communist Party. All Chinese couples will now be able to have two children, not just one, according to the news agency.

 

The main events for the day would be the United States Employment Cost Index, Personal Spending, Chicago PMI and Revised UoM Consumer Sentiment. Canada will also release its GDP report.

 

Additional economic releases would be the Eurozone CPI and Unemployment Rate.

 

View our full economic calendar for a daily roundup of major economic events.

 

 

Data releases to monitor:

 

USD:    Employment Cost Index, Core PCE Price Index, Personal Spending, Personal Income, Chicago PMI, Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations, FOMC Member Williams speech.

 

CAD:    GDP.

 

EUR:    Italian Monthly Unemployment Rate, CPI Flash Estimate, Core CPI Flash Estimate, Unemployment Rate, Italian Prelim CPI.

 

 

Trade Idea of the Day     

 

EUR/AUD

 

Currently the pair is trading at 1.5473. Traders must monitor the 1.5787 resistance level and the support level of 1.5163 for possible breakouts. A possible scenario would be a movement towards the 1.5547 resistance level, where a break may lead to the 1.5630 area. An alternative scenario could be a movement towards the 1.5400 support level, where a break may lead to the 1.5350 area.

 

[VinsonFinancialsFX]

 

Financial News November 2, 2015

 

Will RBA cut rates or not?

 

The Reserve Bank of Australia (RBA) will decide on its key rate tomorrow morning. Almost half of the market expect a rate cut. That means no matter what happens the decision is likely to cause some volatility.

 

The reason behind the disagreement amongst the analysts is the uncertainty about the interpretation of the recent inflation data. At 0.5% (quarter on quarter) the overall rate of consumer price inflation was not that bad. The trimmed mean on the other hand reached an all-time low though.

 

If the RBA really was to cut the key rate at this stage the step no doubt would be of a pre-emptive nature. It is certainly not entirely clear whether the rate of inflation is under pressure.

 

As concerns about a collapse of the Chinese economy (by far the largest export partner of Australia) are easing the real economic risk factors should also point towards a wait-and-see approach.

 

"However, it has to be admitted that the outlook provided by the dollar block central banks resembles a lottery at present. Non-linear positions seem much more rewarding at present", says Commerzbank.

 

Market Review November 2, 2015

 

The Asian session this morning was quite busy with economic releases from China, Australia and Japan. Released from China, the Caixin Manufacturing PMI rose to 48.3 in October from 47.2 in September while the official China PMI manufacturing, released over the weekend, remained unchanged at 49.8 in October, below expectation of 50.0. Moreover, the official PMI non-manufacturing dropped to 53.1 and hit the lowest level since December 2008.

 

Released from Australia, Building Approvals rose 2.2% beating the estimated 1.8%, Commodity Prices dropped -19.8% and MI Inflation Gauge rose 0.0%. Released from Japan, Final Manufacturing PMI came in at 52.4 versus the estimated 52.1.

 

Elsewhere, Turkey's ruling Justice and Development Party (AKP) has won a critical parliamentary election, regaining the majority it lost in June. With almost all ballots counted, the AKP had won 49.4% of the vote, with the main opposition CHP on 25.4%. In a major comeback from the previous general election, the AKP, led by Prime Minister Ahmet Davutoglu, seems to have secured a large enough majority of seats in parliament for single-party rule, according to preliminary results released by the semi-official Anadolu News Agency. President Recep Tayyip Erdogan said voters had "shown that they prefer action and development to controversy". EUR/TRY pair opened the week around 770 pips lower, as it closed around the 3.2050 area and opened near the 3.1280 area.

 

Released during the early European session, Switzerland’s Retail Sales rose 0.2% that was in line with expectations, while Manufacturing PMI came in at 50.7 beating the estimated 50.2. Furthermore, Spanish Manufacturing PMI came in at 51.3 missing the estimated 51.9, while Italian Manufacturing PMI came in at 54.1 beating the estimated 52.9.

 

The main event for the day would be the United Kingdom Manufacturing PMI and the United States ISM Manufacturing PMI.

 

Additional economic releases would be the Eurozone Final Manufacturing PMI, RBC Manufacturing PMI and the United States Construction Spending and Final Manufacturing PMI.

 

 

Data releases to monitor:

 

USD:    Final Manufacturing PMI, ISM Manufacturing PMI, Construction Spending, ISM Manufacturing Prices, Loan Officer Survey, FOMC Member Williams speech.

 

GBP:    Manufacturing PMI.

 

EUR:    French Final Manufacturing PMI, German Final Manufacturing PMI, Final Manufacturing PMI.

 

CAD:    RBC Manufacturing PMI.

 

Trade Idea of the Day     

 

AUD/USD

 

Currently the pair is trading at 0.7140. Traders must monitor the 0.7295 resistance level and the support level of 0.7068 for possible breakouts. A possible scenario would be a movement towards the 0.7181 resistance level, where a break may lead to the 0.7235 area. An alternative scenario could be a movement towards the 0.7122 support level, where a break may lead to the 0.7080 area.

 

[VinsonFinancialsFX]

 

Financial News November 3, 2015

 

Weak euro with nice side effects for ECB

Neither the slightly improved euro zone PMI nor the struggling ISM index were able to cause a notable reaction in EUR-USD yesterday. In the end the deviation from expectations was simply too small, thus not providing the market with a reason to change its view of the world.

 

However, the data was not entirely uninteresting. It illustrated how the industry in both regions is coping with the head winds caused by the struggling export markets, in particular the Emerging Markets. It is very obvious that the industrial sector in the euro zone is notably more robust than its counterpart in the US. The ISM index has been easing notably, in particular since the summer, while the index for the euro zone has been stable. This is due to the strong US dollar and the weak euro respectively. However, in particular in the euro zone the currency effect should start to fade in the near term, argues Commerzbank.

 

The euro has recovered notably since the spring and on a trade weighted basis it has now appreciated by approx. 4%. The data thus underlines why ECB President Mario Draghi is likely to be so keen for the euro to return to its depreciation trend at present: not only as it will provide a quick relief on the inflation front due to higher import prices but also due to the pleasant side effects for the export sector. 

 

"If anything a strong industrial sector can only support inflation developments. And in view of the fact that the outlook remains uncertain for the important export markets of the euro zone a weak euro is no doubt a good reinsurance strategy", says Commerzbank.

 

 

Market Review November 3, 2015

 

The market got volatile after RBA decision to hold rates, nonetheless the market was quiet due to the Japan holiday. Australia's central bank kept its cash rate unchanged at the low of 2% as widely expected the same time left the window open for possible rate cuts due to low inflation if needed. In New Zealand the Commodity Price Index came in at 6.9% in October. Further to this we are expecting jobs data from New Zealand later tonight.

 

U.S. NFP data on Friday remains the key event of the week, therefore rather the market would be rather quiet. The number is important since it will signal if the FED will hike rates in December.

 

Today other events that worth monitoring are UK PMI construction and US factory orders.

 

 

Data releases to monitor:

 

GBP:      Construction PMI,

 

USD:      Factory Orders m/m,

 

EUR:      ECB President Draghi Speaks

 

NZD:      Employment Change q/q, Unemployment Rate

 

Trade Idea of the Day     

 

EUR/CAD

 

Currently the pair is trading at 0.6727. Traders must monitor the 0.6895 resistance level and the support level 0.6618 for possible breakouts. A possible scenario would be a movement below 0.6725 support level where a break may lead to 0.6675 area. An alternative scenario could be a movement above 0.6760 and a testing of 0.6790 resistance level.

 

[VinsonFinancialsFX]

 

Financial News November 4, 2015

 

ECB unlikely to force EUR/USD lower with higher rate cuts

 

ECB might not go higher than the priced in rate cuts and weigh on EUR/USD in near future. It can go to the extent of 12bp by mid 2016 is what some of the market participants expecting.

 

The pair is currently at 1.952 and might stay above the March lows, although with the risk of downside of 1.08 in coming months.

As there would be expectations on the possibitly of further ECB cuts and as there will be first rate hike from US Fedral Reserve, the pair might also be weighed on. It is skeptical that the ECB settles on -30bp for the deposit rate and EUR/USD will be continued to be pressurized to go much lower beyond Q1.

 

With ECB waiting for the economic impact of previous easing and the shallow US Fed hiking cycle is adjusted into the money markets, the downside risks are set to wane and the factors supporting EUR should slowly dominate.

 

"In terms of the impact on EUR/USD, the ECB will be satisfied to see it stop strengthening, rather than force about a drop towards, say, parity. While the USD is important for the effective euro, the CNY has a higher weight, hence in terms of the impact on inflation, the CNY should be followed more closely than the USD", says Danske Bank.

 

Market Review November 4, 2015

 

New Zealand posted yesterday its Job data, and it was worse than expected. More specifically, employment fell by 11,000, or 0.4%, missing expectations for an increase of 0.4%, the first fall in employment seen since the June 2012. Moreover, unemployment rate ticked up to 6.0% from 5.9%, in line with expectations, but this was entirely due to a plunge in labour market participation. Furthermore, Labour Cost Index rose 0.4% missing the estimated 0.5%. The recent poor job data is seen by many as an additional reason for the RBNZ to maintain its easing bias after it left the OCR unchanged at 2.75% last week. NZD/USD dropped to the 0.6630 area and currently is trading near the 0.6655 area.

 

Released during the Asian session this morning , Australian  Retail Sales rose 0.4%, which is in line with expectations, while Trade Balance came in at -2.32B versus the estimated -2.85B.

 

Released also during the session, the BOJ monetary base rose 32.5% on year in October, as the Bank of Japan stated, coming in at 338.887 trillion yen and compared to the previous of 35.1% in September. In addition, Japan Consumer Confidence came in at 41.5 beating the estimated 41.1.

 

Elsewhere, the EUR fell against the GBP and the USD last night, following European Central Bank (ECB) president Mario Draghi reiterating the dovish comments he made in October. Speaking at a cultural event in Frankfurt, Draghi repeated that the ECB would review the amount of monetary stimulus required at the next governing council meeting in December, but is “willing and able to use all the instruments available”. Growth prospects in emerging markets and “external factors” are dragging on the outlook for growth and inflation, he said. Domestic demand remains “resilient”, however. Last month, Draghi said the ECB would be better able to decide the level of stimulus needed once the latest inflation forecasts for the Eurozone came in. EUR/USD is currently trading near the 1.0935 area with the next support seen at the 1.0895 level.

 

The main event for the day would be the United Kingdom Services PMI, the United States ADP Non-Farm Employment Change, Trade Balance, ISM Non-Manufacturing PMI and Fed Chair Yellen Testimony.

 

Additional economic releases would be the Eurozone Final Services PMI.

 

Data releases to monitor:

 

USD:    ADP Non-Farm Employment Change, Trade Balance, Final Services PMI, Fed Chair Yellen testimony, ISM Non-Manufacturing PMI, Crude Oil Inventories, FOMC Member Dudley speech, FOMC Member Brainard speech.

 

GBP:    Services PMI.

 

EUR:    Spanish Services PMI, Italian Services PMI, French Final Services PMI, German Final Services PMI, Final Services PMI, PPI.

 

CAD:    Trade Balance.

 

Trade Idea of the Day    

 

USD/CHF

 

Currently the pair is trading at 0.9919. Traders must monitor the 0.9956 resistance level and the support level of 0.9805 for possible breakouts. A possible scenario would be of the 0.9924 resistance level, where a break may lead to the 0.9950 area. An alternative scenario could be a movement towards the 0.9881 support level, where a break may lead to the 0.9855 area.

 

[VinsonFinancialsFX]

 

Financial News November 5, 2015

 

Daily Economic Outlook: 5th November 2015

 

Today, market's focus will be on the BoE monetary policy announcement, with the simultaneous publication of the MPC minutes and the Inflation Report. 

 

"Due to the poor performance of the global economy and recent fall in domestic momentum, the MPC will need to re-examine its previous assumptions of ongoing relative UK economic strength leading to firmer cost pressures.The MPC's communications overall is likely to paint the prospect of an eventual but unhurried tightening", says Lloyds Bank.

 

FOMC speakers alongside US productivity data for 2015 Q3 are likely to be observed for implications on US monetary policy lift-off. With the profile of GDP growth choppy over 2015, underlying productivity trends are hard to gauge.

 

Lloyds Bank says that the MPC will perhaps point towards an inflation overshoot "beyond the 2-year horizon", thereby emphasizing on an eventual policy tightening, regardless of the possibility of downward near-term revisions to the GDP growth as well as inflation projections of the economy. But with the timing allowed to slip by a quarter, even this passive change could be seen as dovish. Crucially, the MPC's forecasts will be conditioned on a much shallower policy rate profile than in August.

 

"As such, the MPC's indication of steeper rate expectations would start from a much lower base. In terms of the vote split, one MPC member, more likely Forbes than Weale, is expected to join McCafferty in voting for higher rates. An unchanged 8-1 vote split would render more likely a move later in 2016 than our current expectation of February 2016", added Lloyds Bank.

 

 

Market Review November 5, 2015

 

Federal Reserve chair stated yesterday to the House committee that no decision has been made but a rise in rates is still a ‘live possibility’ if the upcoming data are supportive and despite continued low inflation. "If the incoming information supports that expectation, then or statement indicates that December would be a live possibility," she said.

 

Yellen also said she and the committee expect the economy to grow "at a pace that's sufficient to generate further improvement in the labour market, and to return inflation to the 2 percent target." Yellen also provided testimony on the health of U.S. banks, which has improved, but some problems still remain. Testifying before the House Financial Services Committee, Yellen said capital at the eight biggest U.S. banks has nearly doubled and now sits at about $500 billion. The US Dollar was supported by job data and Fed chair Yellen's comment and remains firm today.

 

Elsewhere, the minutes for BOJ's meeting released during the Asian session, unveiled that domestic demand remained firm despite stagnant growth in exports and the economy in general. Policymakers agreed that the underlying trend in inflation would continue to improve and they pledged to continue implementation of QQE until the target inflation rate of 2 per cent is stable. On global economic developments, the central bank, however, noted concerns over slowdown in China and other emerging market would eventually affect Japan's exports and economic activities.

 

Released during the early European session, the Swiss SECO Consumer Climate came in at -18 versus the estimated -14 and compared to the previous of -19. German Factory Orders declined -1.7% versus expectations of 1.1% rise. EUR/USD extended losses reaching to fresh 3 months low of 1.0833. Released from the United Kingdom, Halifax HPI rose 1.1% beating the estimated 0.7%.

 

The United Kingdom will remain the focus of the day, as the BoE will have another "Super Thursday”. The BoE will release its Inflation Report, Official Bank Rate Votes, Monetary Policy Summary and Official Bank Rate.

 

Additional economic releases would be the United States Unemployment Claims and ECB President Mario Draghi speech.

 

 

Data releases to monitor:

 

Member Fischer speech, Natural Gas Storage, FOMC Member Lockhart speech.

 

GBP:    BOE Inflation Report, MPC Official Bank Rate Votes, Monetary Policy Summary, Official Bank Rate, Asset Purchase Facility, MPC Asset Purchase Facility Votes, BOE Gov Carney speech.

 

EUR:    ECB Economic Bulletin, Retail PMI, EU Economic Forecasts, Retail Sales, Spanish 10-y Bond Auction, French 10-y Bond Auction, ECB President Draghi speech.

 

CAD:    Ivey PMI

 

Trade Idea of the Day     

 

GBP/CAD

 

Currently the pair is trading at 2.0239.  Traders must monitor the 2.0320 resistance level and the support level 2.0120 for possible breakouts. A possible scenario would be a movement above 2.0270 resistance level where a break may lead to 2.0320 and possible to 2.0390 area. An alternative scenario could be a movement near 2.0220 and a testing of the level.

 

[VinsonFinancialsFX]

 

Financial News November 6, 2015

 

Daily Economic Outlook: 6th November 2015

 

Market will be focusing on today's U.S. labour market report. Fed Chair Yellen and FOMC members gave a hint of interest rate hike in December, but the upcomming data will determine the rate hike.

 

"This week's releases, including a very strong ISM non-manufacturing survey for October, have boosted expectations of a December Fed move. However, it is undoubtedly the case that today's labour market data and the subsequent release in early December will be key inputs into the decision", says Lloyds bank.

 

Experts believe that U.S. employment rate in October will be increased by 182k. Though this figure is beter than past past two months performance but it is still less than the average rise in 2014 as well as 2015. 

 

"Yesterday's Inflation Report and press conference by BoE Governor Carney appear to make an early 2016 interest rate hike look unlikely, even if the Fed moves in December. Markets are now pricing in no change until early 2017. Looking at today's data, UK industrial production is expected to have declined modestly in September, although manufacturing output is forecast to rise on the month. A significantly different outturn for industrial production would increase the probability that the initial estimate of Q3 GDP growth of 0.5% will be revised", notes Lloyds Bank.

 

Market Review November 6, 2015

 

Traders are waiting for the US NFP data later today as the USD stays strong compare to the other majors. Earlier this week, Janet Yellen indicated that if the upcoming jobs data supports Fed expectations regarding the US economy there is a possibility for a rate hike in December. Most of forex traders, bond and stocks investors have speculated for a positive number and any deviation in regards the NFP would cause huge impact in the market.

 

Yesterday the market got volatile after RBA decided to hold rates. The BOE voted 8-1 to keep the Bank rate unchanged at 0.5% with Ian McCafferty the sole dissenter proposing a rate hike. Additionally Australia's central bank kept its cash rate unchanged at 2% as widely expected and the same time left the window open for possible rate cuts due to low inflation if the economy outlook demands it.

 

U.S. NFP data on 13:30 GMT time remains the key event of the day since it will affect the upcoming weeks market movements as well, therefore the market would be rather quiet until the actual release.

 

Today other events that worth monitoring are UK Manufacturing Production m/m, and UK Trade Balance. Canada will also release Jobs data.

 

In regards to economic releases announced so far we had the Australia’s AIG Construction Index at 52.1, Japan’s Leading Indicators at 101.4%, German Industrial Production m/m at -1.1%, Switzerland Foreign Currency Reserves announced at 551 billion.

 

View our full economic calendar for a daily roundup of major economic events.

 

 

Data releases to monitor:

 

BP:      Manufacturing Production m/m, Trade Balance,

 

USD:      Non-Farm Employment Change, Average Hourly Earnings m/m, Unemployment Rate

 

CAD:      Employment Change q/q, Unemployment Rate

 

Trade Idea of the Day     

 

EUR/JPY

 

Currently the pair is trading at 132.56. Traders must monitor the 133.37 resistance level and the support level 131.59 for possible breakouts. A possible scenario would be a movement towards the 132.70 resistance level, where a break may lead to the 133.20 area. An alternative scenario could be a movement towards the 132.27 support level, where a break may lead to the 131.85 area.

 

 

[VinsonFinancialsFX]

 

Financial News November 11, 2015

 

EUR/USD to reach new low in 2016

 

Despite the survey data remain constructive; the real financial conditions in euro area are showing some downward risks to the economic activity.

 

The Fed's tightening policy, less extreme positioning and some central bank reserve liquidation are together may drive down the EUR/USD pair to new cycle lows, argues RBC Capital Markets.

 

There is a long time for inflationary pressures start to show which should keep EUR/USD cyclically weak as a slow pace of recovery in the economy is seen.

 

Daily Economic Outlook: 11th November 2015

Data wise, the latest UK labour market report will provide some reassurance that underlying trends remain solid. Employment in the 3 months to August rose by 140k which, alongside a 79k drop in unemployment, combined to nudge the jobless rate lower to 5.4% from 5.5%.

 

The latest surveys of hiring intentions point to further job gains in UK and a rise of 120k in the 3 months to September, notes Lloyds Bank. While a further decline in the number unemployed is expected. The jobless rate is expected to remain at 5.4% for now, forecasts Lloyds Bank. Consistent with a firm pace of labour market activity, earnings growth is also expected to firm over the same period to 3.2% on the headline measure despite a modest easing in regular pay growth.

 

The Bank of England's Open Forum will be attended by ECB President Mario Draghi, who is scheduled to speak at 13:15 GMT, while comments from Governor Carney are also expected throughout the day.

 

The recent Chinese data are unlikely to have materially altered ongoing speculation of further bouts of easing from the People's Bank of China, the reported health of the Chinese economy remains a key influence over the outlook for US monetary policy.

 

The downside risks to the US economy from weakening global growth may be less severe than previously thought will be the key reason for the shift towards a more hawkish stance by the FOMC.

 

Market Review November 11, 2015

 

China’s Singles’ Day, an e-commerce shopping festival, revealed new batch of economic data, showing that retail sales rose 11% beating the estimations of 10.9%, that is the fastest pace this year. Alibaba, China’s e-commerce giant that accounts for more than 80% of China's internet sales market, said sales surpassed the record amount of $9.3bn made last year in just over half the time. Furthermore, the firm stated via its news website Alizila.com that “in just over an hour total GMV reached 4 Billion US Dollar” and that “more than 27 million purchases came via mobile devices in the first hour”. The latest developments derived despite the recent slowing growth in China, giving the world's second-biggest economy another chance to prove that it can improve the economic outlook of the country.  Released also from China during the Asian session, Industrial Production rose 5.6% versus the estimated 5.8% and Fixed Asset Investment rose 10.2%, which was in line with the consensus.

 

Released during the early European session, Japanese Prelim Machine Tool Orders declined -23.1% versus the previous of -19.1% and German WPI dropped -0.4% missing the estimated 0.2%.

 

The key event for the day would be the United Kingdom job data. Claimant Count Change is expected to rise 1.6k, while unemployment rate is expected to remain at 5.4%. Moreover, Average Earnings Index is expected to rise 3.2% compared to the previous of 3.0%.

 

Additional economic events would be ECB President Mario Draghi speech and Business NZ Manufacturing Index.

 

Despite the economic events, it is expected to be a quiet trading day as the United States, France and Canada are on holiday.

 

View our full economic calendar for a daily roundup of major economic events.

 

 

Data releases to monitor:

 

EUR:    ECB President Draghi Speaks.

 

GBP:    Average Earnings Index, Claimant Count Change, Unemployment Rate.

 

NZD:    Business NZ Manufacturing Index, FPI.

 

 

Trade Idea of the Day    

 

EUR/JPY

 

Currently the pair is trading at 132.19.  Traders must monitor the 133.18 resistance level and the support level 131.46 for possible breakouts. A possible scenario would be a movement towards the 132.52 resistance level, where a break may lead to the 132.85 area. An alternative scenario could be a movement towards the 131.87 support level, where a break may lead to the 131.55 area.

 

[VinsonFinancialsFX]

 

Financial News November 12, 2015

 

Daily Economic Outlook: 12th November 2015

 

Swedish CPI, Eurozone industrial production and US weekly jobless claims data are expected to release today. The Swedish numbers deserve extra mention in light of the Riksbank's recent decision to expand its QE programme and its willingness to cut rates further.

 

Markets are looking for Sweden October CPI to stay at 0.1%y/y, but for CPIF to edge up to 1.1%y/y, notes Lloyds Bank.

Fed Chair Yellen is likely to give welcoming remarks, but more detailed comments may come from Evans, Dudley and Fischer. In particular, the views of the potential for December liftoff from dovish Evans could garner the most attention. Lacker and Bullard, both on the more hawkish end of the spectrum, are also scheduled to speak.

 

ECB President Draghi will speak at the quarterly hearing before the European Parliament's Economic and Monetary Affairs Committee today morning. His comments will be closely scrutinised to gauge the degree of consensus on the Governing Council to expand the QE programme and/or cut the deposit rate at the next meeting on 3 December.

 

More hawkish members have indicated caution about easing policy further, but Mr Draghi last week reaffirmed comments he made at the last press conference that "the degree of monetary accommodation will need to be re-examined". In the UK, Bank of England Chief Economist Haldane is due to speak at 17:00GMT.

 

Market Review November 12, 2015

 

Australia’s jobless rate has fallen to 5.9% versus the expectations of 6.2%, hitting an 18-month low, according to the Australian Bureau of Statistics. Furthermore, the Australian economy added 58.6K jobs in October, almost four times more than consensus forecasts of 14.8K, while MI Inflation Expectations rose 3.5%. AUD/USD rose sharply during the Asian session in response to surprising employment report, the pair rose from the 0.7060 area to the 0.7150 area, where is currently trading.

 

Released from Japan during the Asian session, Core Machinery Orders rose 7.5% beating the estimated 3.3% while Producer Price Index (PPI) declined -3.8% versus the estimated -3.5% USD/JPY remained near the 122.95 area with the next resistance seen at the 123.60 level.

 

Released during the early European session, German Final CPI stayed flat at 0.0% while French CPI rose 0.1%. EUR/USD is currently trading near the 1.0735 area, with the next resistance seen at the 1.0789 level.

 

The key event for the day would be ECB President Draghi speech, the United States Unemployment Claims and Fed Chair Yellen speech.

 

Additional economic events would be JOLTS Job Openings, Federal Budget Balance and the Eurozone Industrial Production.

 

View our full economic calendar for a daily roundup of major economic events.

 

 

Data releases to monitor:

 

EUR:    ECB President Draghi Speech, Industrial Production.

 

GBP:    MPC Member Haldane speech.

 

CAD:    NHPI.

 

USD:    Unemployment Claims, Fed Chair Yellen speech, JOLTS Job Openings, FOMC Member Evans speech, Crude Oil Inventories, FOMC Member Dudley speech, 30-y Bond Auction, Federal Budget Balance.

 

Trade Idea of the Day    

 

CAD/JPY

 

Currently the pair is trading at 92.59.  Traders must monitor the 93.24 resistance level and the support level 92.13 for possible breakouts. A possible scenario would be a movement towards the 92.39 support level, where a break may lead to the 92.20 area. An alternative scenario could be a movement towards the 92.82 resistance level, where a break may lead to the 93.05 area.

 

 

[VinsonFinancialsFX]

 

Financial News November 16, 2015

 

Daily Economic Outlook: 16th November 2015

 

The final euro area CPI prints for October and US Empire manufacturing survey will draw markets' attention today. The headline CPI growth of the euro area relapsed into negative territory during September.

 

"We expect another -0.1% y/y print as downside signals from the latest BRC survey look set to be offset by forecourt prices. Meanwhile, the core rate, which excludes energy and food, is anticipated to edge down to 0.9% y/y from 1.0% in September. After spending linked to the Rugby World Cup propelled headline retail sales to 1.9% m/m (6.5% y/y) in September, we are looking for a flat October reading from Thursday's release. This would still leave annual sales growing by a very healthy 4.9%", says Lloyds Bank.

 

There is a speculation of the monetary policies of the FOMC and ECB are likely to move in opposite directions in December.

 

Market Review November 16, 2015

 

The Japanese economy deteriorated more severely than expected in the third quarter extending a downturn into a second consecutive three-month period and putting the country in technical recession. More specifically, Japanese gross domestic product (GDP) fell by an annualized 0.8% from a year earlier in the September quarter, the second straight decline. A darkening outlook for global growth has put Japanese businesses on the defensive. One concern is China, where growth in Asia’s largest economy is slowing, in some sectors markedly, meaning there is less demand for industrial equipment, construction machinery and other capital goods, much of which has been supplied by producers in Japan. Released also from Japan, Prelim GDP Price Index rose 2.0% versus the estimated 1.7%. USD/JPY is currently trading near the 122.65 area with the next support seen at the 122.22 level.

 

Elsewhere, global stock markets reacted after the deadliest attacks to hit France since the Second World War. The attacks left more than 100 people dead, dozens injured and left warnings that the terrorist attacks in Paris could spark a renewed session of volatility. The euro fell with French stock-index futures as investors responded to Europe’s worst terror attack in a decade by shifting out of riskier assets. Demand for havens boosted gold, government bonds and the dollar. Europe’s common currency weakened 0.3% and futures on France’s CAC 40 Index sank 1.5% as the violence in Paris on Friday sparked concern that geopolitical tensions will hurt trade and consumer confidence. Chinese shares in Hong Kong paced losses in Asian equity markets after authorities restricted the use of borrowed money to buy shares, while U.S. index futures dropped. Gold advanced the most in a month and Treasuries climbed for a fifth day, while Oil halted two weeks of losses.

 

The key events for the day would be the Eurozone’s Final CPI, Final Core CPI, ECB President Mario Draghi speech and the Canadian Manufacturing Sales.

 

Additional economic releases are the Canadian Foreign Securities Purchases, Empire State Manufacturing Index and RBA Assist Gov Kent speech.

 

Data releases to monitor:

 

EUR:    Final CPI, Final Core CPI, ECB President Draghi Speech, German Buba Monthly Report.

 

CAD:    Manufacturing Sales, Foreign Securities Purchases.

 

USD:    Empire State Manufacturing Index.

 

AUD:    RBA Assist Gov Kent speech.

 

 

Trade Idea of the Day    

 

NZD/USD

 

Currently the pair is trading at 0.6532. Traders must monitor the 0.6624 resistance level and the support level 0.6497 for possible breakouts. A possible scenario would be a movement towards the 0.6560 resistance level, where a break may lead to the 0.6600 area. An alternative scenario could be a movement towards the 0.6515 support level, where a break may lead to the 0.6500 area where the support level would be tested.

 

[VinsonFinancialsFX]

 

Financial News November 17, 2015

 

EUR/USD likely to trade at 0.95 by Q3 16

 

TThe poor performance of the Chinese economy is likely to increase downside risks for euro area growth and inflation. Therefore, ECB is likely to respond the down momentum with additional policy easing in the form of a time extension to QE.

 

Barclays anticipates deposit rate cut of 10 bp. However, a deposit rate cut is likely to build pressure on the EUR. Therefore, EURUSD pair is likely to fall further.

 

"We forecast EURUSD to depreciate to 1.03 by year-end and trade at 0.95 by Q3 16", argues Barclays.

 

Market Review November 17, 2015

 

ECB Vice President Vitor Constancio , during an event in Frankfurt yesterday, warned that the terror attacks in Paris could hit investor confidence in Europe. Moreover, he condemned the “terrible events” in Paris and cautioned that they would compound the problems already facing the region. “Several factors surround what happened and responses are not easy to find because it then compounds on all the problems we were already facing quite recently,” Constancio said. Furthermore, Vice president Constancio noted, “markets are so far taking it calmly,” but warned that it was still too early to know the economic cost of the attacks and added that if they affect consumer and business confidence and risk aversion, “the consequences can of course be worse,” he said. The common currency had seen some down pressure, EUR/USD dropped to the 1.0655 area, while EUR/GBP plunged to the 0.7020 area.

 

In addition, European equity markets had seen some slight movement. FTSE Eurofirst 300 was little changed compared with Friday’s close, while the French stock market index, the CAC 40, was fractionally down having recovered from a 1 per cent drop at its opening.

 

The Asian session was rather quiet with no economic few economic releases. Released from New Zealand, longer term inflation expectations weakened marginally, with annual consumers price inflation expected to be 1.85 percent in two years' time, compared with an expectation of 1.94 percent for the same measure in the September survey. NZD/USD is currently trading near the 0.6460 area, with the next support seen at the 0.6286.

 

The key events for the day would be the United Kingdom inflation data, German ZEW Economic Sentiment, the United States Consumer Price Index (CPI), Core CPI and New Zealand’s GDT Price Index.

 

Data releases to monitor:

 

EUR:    Italian Trade Balance,German ZEW Economic Sentiment, ZEW Economic Sentiment.

 

GBP:    CPI, PPI Input, RPI, Core CPI, HPI, PPI Output.

 

USD:    CPI, Core CPI, Capacity Utilization Rate, Industrial Production, Mortgage Delinquencies, NAHB Housing Market Index, TIC Long-Term Purchases.

 

NZD:    GDT Price Index.

 

Trade Idea of the Day    

 

AUD/USD

 

Currently the pair is trading at 0.7082. Traders must monitor the 0.7158 resistance level and the support level 0.7015 for possible breakouts. A possible scenario would be a movement towards the 0.7049 support level, where a break may lead to the 0.7027 area. An alternative scenario could be a movement towards the 0.7127 resistance level, where a break may lead to the 0.7150 area.

 

[VinsonFinancialsFX]

 

Financial News November 18, 2015

 

Daily Economic Outlook: 18th November, 2015

 

In the United States, housing starts and building permits will update the performance of housing market. Construction in the U.S. has accelerated as the housing sales have started growing this year.

 

"After a surge in September, concentrated in the volatile multi-unit sector, starts are expected to have fallen in October. However, a solid rise in permits should point to further construction increases in the pipeline", says Lloyds Bank.

 

The release of the minutes for the October FOMC meeting is expected to draw markets' attention. Experts are eagerly waiting to know how many members are interested on rate hike in December.

 

Similarly, minutes of recent Bank of Japan policy meeting will be released tomorrow. As the GDP growth of the economy declined in Q3, which is second consecutive quarterly fall, the BoJ is expected to be under pressure to bring back the economy on track.

 

Market Review November 18, 2015

 

Yesterday, data released from the United States showed that the inflation rose slightly, raising the chance of interest rate hike in December. More specifically, the consumer price index rose 0.2% after falling the previous two months. Apart from energy and food, sectors with volatile price changes, U.S. consumer prices rose 1.9 percent over the past year, which is close to the Federal Reserve's target of two percent. The US Dollar remained firm against other majors such us EUR, CHF and JPY, while remained relatively stable against the GBP. EUR/USD extended losses reaching as low as the 1.0630 area, while USD/JPY rose to the 123.48 area. USD/CHF rose to the 1.0150 area and GBP USD remained near the 1.5201 area.

 

Released from Australia during the Asian session this morning, CB Leading Index declined -0.1% versus the previous of -0.4% while MI Leading Index and Wage Price Index remained flat at 0.1% and 0.6% respectively. AUD/USD is currently trading near the 0.7095 area with the next support seen at the 0.7070 level.

 

The key event for the day would be released from the United States. FOMC Meeting Minutes will be monitored closely, as information regarding a possible rate hike in December may be revealed from FOMC members.

 

Additional economic releases would be the United States Building Permits, Housing Starts and FOMC Member Dudley speech.

 

View our full economic calendar for a daily roundup of major economic events.

 

Data releases to monitor:

 

CHF:     ZEW Economic Expectations.

 

GBP:    10-y Bond Auction.

 

USD:    FOMC Member Dudley speech, Building Permits, Housing Starts, Crude Oil Inventories, FOMC Meeting Minutes.

 

NZD:    PPI Input, PPI Output.

 

Trade Idea of the Day    

 

USD/CAD

 

Currently the pair is trading at 1.3312. Traders must monitor the 1.3369 resistance level and the support level 1.3225 for possible breakouts. A possible scenario would be a movement towards the 1.3297 support level, where a break may lead to the 1.3270 area. An alternative scenario could be a movement towards the 1.3338 resistance level, where a break may lead to the 1.3360 area.

 

[VinsonFinancialsFX]

 

Financial News November 24, 2015

 

Daily Economic Outlook: 24th November, 2015

 

The German IFO survey, Bank of England MPC testimonies and the second estimate of US Q3 GDP will draw market attention today. The BoE Governor Carney and Chief Economist Haldane will confirm to the Treasury Select Committee, along with external MPC members Forbes and Vlieghe.

 

The November Inflation Report was more dovish than expected. The annual CPI inflation was expected to remain below 1% until the second half of next year and coming to target only in late 2017, based on market-implied interest rates, estimates Lloyds Bank.

The U.S. Q3 GDP second estimate is likely to be revised up to around 2% on a qoq annualized basis. The detail should confirm that underlying domestic activity posted a robust growth to warrant a potential rise in policy rates in December. Consumer confidence and the Richmond Fed survey are also expected to release.

 

A moderate improvement in the German IFO headline index is expected at 108.4, says Lloyds Bank. However, despite the expected increase, the implied pace of growth would be observed as insufficient by the ECB to enable it to meet its inflation mandate.

 

Market Review November 24, 2015

European Central Bank executive board member Sabine Lautenschläger said on Monday that she does not see a need for the central bank to boost up its stimulus measures, suggesting that if the ECB presses forward with more easy-money policies in December, it will do so without the support of its influential German contingent.

 

"For me it is clear: At the moment I see no reason for further monetary policy measures, especially not an expansion of the asset-purchase program," Ms. Lautenschläger said in prepared remarks for a conference in Munich.

 

Her comments come just days after ECB President Mario Draghi sent a strong signal that the ECB was ready to expand its bond-purchase program and reduce its deposit rate further into negative territory at the December policy meeting.

 

"If we conclude that the balance of risks to our medium-term price stability objective is skewed to the downside, we will act by using all the instruments available within our mandate," he said last Friday. EUR/USD remained near the 1.0640 area, with the next support seen at the 1.0592 level.

 

Released during the Asian session this morning, Japan’s Flash Manufacturing PMI came in at 52.8 beating the estimated 52.1 and causing insignificant impact on the on the USD/JPY, which is currently trading near the 122.62 area.

 

Released during the early European session, German Final GDP showed that the German economy have grown by 0.3% in the third quarter, as predicted in an earlier estimate.

 

The key events for the day would be the German Ifo Business Climate, the United Kingdom Inflation Report Hearings, the United States Prelim GDP, CB Consumer Confidence and RBA Gov Stevens speech.

 

 

Data releases to monitor:

 

CHF:     Employment Level.

 

GBP:    Inflation Report Hearings, CBI Realized Sales.

 

USD:    Prelim GDP, Goods Trade Balance, Prelim GDP Price Index, S&P/CS Composite-20 HPI, CB Consumer Confidence, Richmond Manufacturing Index.

 

EUR:    German Ifo Business Climate, Belgian NBB Business Climate.

 

CAD:    Gov Council Member Patterson speech.

 

AUD:    RBA Gov Stevens speech.

 

Trade Idea of the Day

 

USD/CAD

 

Currently the pair is trading at 1.3327. Traders must monitor the 1.3435 resistance level and the support level 1.3246 for possible breakouts. A possible scenario would be a movement towards the 1.3290 support level, where a break may lead to the 1.3260 area. An alternative scenario could be a movement towards the 1.3363 resistance level, where a break may lead to the 1.3400 area.

 

[VinsonFinancialsFX]

 

Financial News November 25, 2015

 

Daily Economic Outlook: 25th November, 2015

 

PCE deflator data of the U.S. will draw markets' attention today. The Fed's preferred measure of inflation, is likely to increase to 1.4% on the 'core' rate in October, says Lloyds Bank.

 

This will boost the Fed confidence that inflation is returning to its target level.

The Chancellor's Autumn Statement in U.K. is likely to provide the day's domestic focus. The Autumn Statement provides a scope for a mid-year adjustment.

 

"Although we expect the Chancellor to claw his way back to the balanced budget objective for 2019/20 - and the OBR to still project a surplus in the final year of the projections in 2020/21 - we look for a cumulative increase in borrowing of around £40bn over the 5-year forecast horizon. The overshoot for 2015/16 should still be sufficiently modest, however, to avoid any meaningful change for the planned gilt issuance in this fiscal year", argues Lloyds Bank.

 

 

Market Review November 25, 2015

 

Reserve Bank governor Glenn Stevens signalled yesterday, at a business economists forecasting conference in Sydney, that interest rates will stay on hold at next Tuesday's meeting saying the case for leaving them steady was one he "happened to agree with". The RBA had not cut rates even though the economy was growing more slowly than it could and inflation was low. RBA governor also added, “I'm more than content to lower it if that actually helps, but is that the best thing to do at any particular time?” Stevens asked, while replying to a question on the cash rate.  In addition, he said, “We've got Christmas. We should just chill out, come back and see what the data says.” The Australian dollar surged to one month high after RBA governor hints no rate cut plan in 2015, AUD/USD rose sharply to the 0.7282 area and currently is trading near the 0.7265 area.

 

Elsewhere, the BoJ minutes of October 30 noted that some members of the Bank of Japan's (BOJ) policy board believe that an output gap was one reason the country was taking longer to meet inflation targets, minutes of the central bank's latest meeting showed Wednesday. Concerns about the output gap were not shared by the majority, but they highlighted a lingering worry that the delay in Japan meeting the BOJ's 2 percent target meant that its quantitative easing had been ineffective. An output gap is the difference between what an economy is producing and what it could produce if operating at its most efficient. A negative output gap - when a economy is producing less than it could at optimum - indicates weak demand, which in turn can mean low inflation pressure. USD/JPY dropped slightly today and currently is trading near the 122.35 area.

 

Released during the Asian session this morning, Japan’s SPPI rose 0.5% missing the estimated 0.6% while Australian Construction Work Done declined by -3.6% versus the estimated -1.8%.

 

The key events for the day would be the United Kingdom Autumn Forecast Statement and BBA Mortgage Approvals, the United States Core Durable Goods Orders, Unemployment Claims and New Zealand’s Trade Balance.

 

 

Data releases to monitor:

 

NZD:    Trade Balance.

 

GBP:    BBA Mortgage Approvals, Autumn Forecast Statement.

 

USD:    Core Durable Goods Orders, Unemployment Claims, Core PCE Price Index, Durable Goods Orders, Personal Spending, Personal Income, HPI, Flash Services PMI, New Home Sales, Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations, Crude Oil Inventories, Natural Gas Storage.

 

EUR:    Italian Retail Sales, German 10-y Bond Auction.

 

AUD:    RBA Assist Gov Debelle Speech.

 

Trade Idea of the Day

 

USD/CHF

 

Currently the pair is trading at 1.0164. Traders must monitor the 1.0225 resistance level and the support level 1.0091 for possible breakouts. A possible scenario would be a movement towards the 1.0142 support level, where a break may lead to the 1.0115 area. An alternative scenario could be a movement towards the 1.0196 resistance level, where a break may lead to the 1.0215 area.

 

[VinsonFinancialsFX]

 

Financial News November 26, 2015

 

Daily Economic Outlook: 26th November, 2015

 

Japan's October CPI and labor market data will draw market attention today. In the last policy meeting, BoJ did not make any change on broad assessment of inflation expectations. The headline CPI is priced to stay in negative territory at -0.1% y/y for October, foresees Lloyds Bank.

 

It also anticipates some modest policy easing by BoJ in October to 0.8% from 0.9%.

In the euro area, ECB's easing in credit conditions supports the economic activity of the region. In the past couple of months, a weaker pace is observed in the growth of annual money supply in the euro area. The consumer spending in German is supported by solid consumer confidence.

 

"Since hitting a thirteen year high in June, the GfK measure of German consumer confidence has weakened in recent months and a further easing is expected in the reading for December. However, it still remains elevated and points to the prospect of further gains in German consumer activity", added Lloyds Bank.

 

 

Market Review November 26, 2015

 

Australian business investment plunged during the third quarter, the Australian Bureau of Statistics figures showed today. In the three months to September, capital expenditure fell a staggering 9.2%. It came as a huge shock to most economists as many were expecting a decline of just 2.9%. More specifically, total investment amounted to just $31.4 billion in Q3, while business spending declined by 20% compared to last year. The latest economic figures from Australia will put pressure on the Reserve Bank to cut interest rates again, which contradicts with the latest comments of the RBA governor Glenn Stevens who suggested to ‘chill out’ on prospects for interest rate cuts. The Australian dollar wiped out some of yesterday’s gains against the US Dollar and fell to the 0.7220 area, after reaching to the 0.7282 area.

 

Reuters news agency reported yesterday that Euro zone central bank officials are considering options such as whether to stagger charges on banks hoarding cash or to buy more debt ahead of the next European Central Bank meeting. Furthermore, some ECB officials said that “even buying rebounded loans at risk of non-payment has been discussed in preparatory meetings, although such a radical step is highly unlikely for now”. The meeting of the ECB's monetary policy committee next Tuesday (December 3) is firmly in focus, with expectations that the central bank could introduce more stimulus measures to revive inflation and boost growth in the region. The Euro dropped to a more than seven-month low of $1.0565 on Wednesday as speculation mounted over what form the stimulus might take.

 

The day is expected to be quiet, as the US banks will be closed in observance of Thanksgiving Day. The key events for the day would be the ECB M3 Money Supply, GfK German Consumer Climate and Private Loans.

 

 

Data releases to monitor:

 

EUR:    M3 Money Supply, Private Loans, GfK German Consumer Climate.

 

CAD:    Corporate Profits.

 

Trade Idea of the Day

 

GBP/JPY

 

Currently the pair is trading at 185.09. Traders must monitor the 187.00 resistance level and the support level 183.85 for possible breakouts. A possible scenario would be a movement towards the 184.90 support level, where a break may lead above the 184.30 area. An alternative scenario could be a movement towards the 186.00 resistance level, where a break may lead to the 186.00.

 

[VinsonFinancialsFX]

 

Financial News November 27, 2015

 

2016 global macro economic outlook

 

In 2015, global macro economic outlook was mostly dominated by the hike aniticipations from Fed and global growth. There were obstacles in US growth in the beginning of the year, in Q2 and early Q3 there was increase in Euro area's sovereign debt concerns, with August's Chinese currency volatiltiy.

 

The inflaxion point likely remains in place for the next year. 

 

According to RBC Capital Markets, 

 

Global growth and global headline inflation should stabilize and start picking up,

Fed hikes will highlight central bank policy divergence,

USD has room for further gains, even after the first Fed hike,

RMB is likely to weaken through the year

EM corporate debt/leverage will remain a concern.

 

Market Review November 27, 2015

The Asian session was busy with economic releases from Japan. More specifically, National CPI core stayed unchanged at -0.1%, while Tokyo CPI core improved more than expected to 0.0. Furthermore, household spending dropped sharply by -2.4% in October. Nonetheless, unemployment rate dropped to 3.1% in October, hitting the lowest level in 20 years. USD/JPY is currently trading near the 122.30 area with the next support seen at the 122.25 level.

 

Released from the United Kingdom during the session,. Gfk index of consumer confidence fell unexpectedly last month. In a report, GfK NOP said that U.K. Gfk Consumer confidence fell to a seasonally adjusted 1, from 2 in the preceding month.

 

Released during the early European session, German Import Prices declined -0.3% versus the estimated -0.1% while French Consumer Spending declined by -0.7% versus the estimated rise of 0.2%. Furthermore, Spanish Flash CPI declined by -0.3% versus the estimated -0.5%. EUR/USD rose slightly despite the negative economic data and currently is trading near the 1.0625 area.

 

The key events for the day would be the United Kingdom Second Estimate GDP, Prelim Business Investment and Index of Services.

 

Additional economic releases are the Italian 10-y Bond Auction, GfK German Consumer Climate and the Canadian Raw Materials Price Index (RMPI).

 

 

Data releases to monitor:

 

EUR:    Italian 10-y Bond Auction, GfK German Consumer Climate.

 

GBP:    Second Estimate GDP, Prelim Business Investment, Index of Services.

 

CAD:    RMPI, IPPI.

 

Trade Idea of the Day

 

USD/CAD

 

Currently the pair is trading at 1.3319 Traders must monitor the 1.3435 resistance level and the support level 1.3246 for possible breakouts. A possible scenario would be a movement towards the 1.3340 resistance level, where a break may lead to the 1.3375 area. An alternative scenario could be a movement towards the 1.3291 support level, where a break may lead to the 1.3260 area.

 

[VinsonFinancialsFX]

 

Financial News November 30, 2015

 

EUR/CHF likely moves upside ahead of ECB's December meeting

 

The KOF leading growth indicator in Switzerland, GDP and CPI inflation will slightly impact and the import data will only be of second importance despite expectations for a stabilization in inflation and growth.

 

The Swiss Franc will likely trade largely after the ECB meeting. Latest ECB meeting rhetoric has risen market expectations for additional stimulus from SNB, which causes CHF depreciation.

 

Swiss National Bank might not pre-empt the ECB, but however respond at its December meeting with its "nuclear" option, causing material CHF depreciation.

 

"We see EUR/CHF higher post the SNB meeting and expect the SNB to actively intervene post ECB should EURCHF depreciate. We remain long USDCHF spot and look for material further upside", says Barclays in a research note.

 

Market Review November 30, 2015

 

The Asian session was busy with economic releases from Japan and Australia. Released from Japan, Retail Sales rose 1.8% beating the estimated 0.9%, while Prelim Industrial Production rose 1.4% versus the estimated 1.9% and Housing Starts declined -2.5% versus the estimated rise of 2.5%. USD/JPY is currently trading near the 122.80 area with the next resistance seen at the 123.05 level. Released from Australia, MI Inflation Gauge showed a 0.1% rise versus the previous of 0.0%, Company Operating Profits rose 1.3% beating the estimated 1.1% and Private Sector Credit rose 0.7% versus the estimated 0.6%. AUD was strong in November as RBA maintained a neutral stage and supported by strong job data. However, the AUD is vulnerable to any weak Chinese data such as Chinese PMI data. AUD/USD is currently trading near the 0.7200 area with the next support seen at the 0.7158 level.

 

Released during the early European session, German Retail Sales dropped -0.4% missing the estimated 0.3%. The Euro remained weak thru the previous week and today, and seems that would continue heading south. The focus this week would be on the ECB Meeting on Thursday, where the European Central Bank is widely expected to announce additional easing measures. Some of these measures may include further reduction in the deposit rate and expansion of the asset purchase program. EUR/USD remained near the 1.0590 area with the next support seen at the 1.0565 level.

 

Elsewhere, KOF Economic Barometer came in at 97.9 versus the estimated 100.3. The USD/CHF pair currently trades at 1.0301, which was last seen in August 2010. Furthermore, Gold (XAU/USD) hit fresh five-year low by reaching to the 1052.63 level on Friday.

 

The key events for the day would be the United Kingdom Net Lending to Individuals, M4 Money Supply and Mortgage Approvals.

 

Additional economic releases are the United States Chicago PMI, Pending Home Sales and the Canadian Current Account.

 

 

Data releases to monitor:

 

EUR:    Italian Prelim CPI.

 

GBP:    Net Lending to Individuals, M4 Money Supply, Mortgage Approvals.

 

CAD:    Current Account.

 

USD:    Chicago PMI, Pending Home Sales.

 

NZD:    Overseas Trade Index.

 

Trade Idea of the Day

 

NZD/USD

 

Currently the pair is trading at 0.6555. Traders must monitor the 0.6603 resistance level and the support level 0.6492 for possible breakouts. A possible scenario would be a movement towards the 0.6579 resistance level, where a break may lead to the 0.6600 area. An alternative scenario could be a movement towards the 0.6518 support level, where a break may lead to the 0.6500 area.