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German unemployment rate hit record low, but no support to Euro

    By
    ActionForex.com
    -

    German unemployment dropped -19k to 2.373m in March, more than expectation of -15k.

    Unemployment rate dropped from 5.4% to 5.3%, met expectation. That’s also the lowest level on record.

    EUR, however, receives no support from the data. It’s trading down against all major current in the current 4H bar. And for the week, EUR is also reversing much of the earlier gains and is turning mixed.

    The only exception is against CHF, which is trading as the second weakest one for the week, next to JPY. EUR/CHF is still on track to test 1.1832 resistance.

    Swiss KOF: Dropped but still indicates above average growth

      By
      ActionForex.com
      -

      Swiss KOF economic barometer dropped to 106.0 in March, down from 108.4, below expectation of 107.2.

      KOF noted in the release that “notwithstanding this decline, the present position is still on a level clearly above its long-term average.” This indicates that in the near future the Swiss economy should continue to “grow at rates above average”.

      Also noted:

      • The strongest negative contributions to this result come from manufacturing, followed by the indicators from the exporting industry.
        • Within manufacturing, clear negative outlook came from metal, followed by wood, textile and food processing
      • The indicators from the financial sector, from the hospitality industry and those relating to domestic private consumption have remained practically unchanged.

      Tech stock recovery short-lived as NASDAQ dropped 0.85%, 10 year yield hit 7-week low

        By
        ActionForex.com
        -

        The recovery in tech stocks in the US proved to be weak and short-lived. NASDAQ hit 7036.09 initially but failed to sustain above 7000 handle. It closed down -59.58 pts or -0.85% at 6949.23. Near term direction is still on the way down considering it’s staying comfortably below falling 55 H EMA. Note that it’s now trying to sustain below 61.8% retracement of 6630.67 to 7637.27. Next target will be 6630.67 key structural support.

        The deterioration in investor sentiments seem to be finally having an impact in the bond markets too. 10 year yield closed down -0.11 to 2.775 after hitting a 7-week low. Safe haven flow is noted as the correction in equity markets look far from being over. TNX is now sitting on 55 day EMA but we’d see it probably dip further to 38.2% retracement of 2.033 to 2.943 at 2.595 before bottoming.

        US Q4 GDP finalized at 2.9%, Muted Reaction, DOW Can’t take out 24000 yet

          By
          ActionForex.com
          -

          US data wrap up:

          • GDP annualized Q4 F : 2.9% vs exp 2.7% vs prior est 2.5%
          • GDP price index Q4 F: 2.3% vs exp 2.3% vs prior est 2.3%
          • Personal consumption Q4 F : 4.0% vs exp 3.8% vs prior est 3.8%
          • Core PCE Q4 F Q/Q: 1.9% vs exp 1.9% vs prior est 1.9%
          • Wholesale inventories mom Feb: 1.1% vs exp 0.5% vs prior 1.0%
          • Trade balance (USD) Feb: -75.4b vs exp -74.4b vs prior -75.3b
          • Pending home sales M/M Feb: 3.1% vs exp 2.0% vs prior -4.7%

          Reactions to the data are rather muted. DOW posts slight gains in early US session but is struggling to break through 24000 handle so far. It remains to be seen whether today’s recovery could sustain. We maintain the near term bearish view that as long as 24453.14 resistance holds, DOW will more likely revisit 23360.29 than not.

          With markets back to risk on mode, JPY and CHF suffer much selling pressure. So far for today, USD/CHF and USD/JPY are the biggest winner.

          JPY and CHF lower as stocks rebound in premarket, EUR/CHF and GBP/CHF surge

            By
            ActionForex.com
            -

            US stocks futures reverse earlier loss and point to a higher open. The move was triggered by news that Facebook is going to streamline privacy settings. Facebook shares trade more than 1% higher in premarket. The development triggers intensified selling in JPY and CHF. Both are in deep red in 4H heatmap.

            But for now, EUR/JPY is held well below 132.40 resistance, GBP/JPY below 150.92, and USD/JPY below 106.63. There is confirmation of bullish trend reversal in these pairs yet.

            On the other hand, developments in CHF crosses look more promising. EUR/CHF is on track for a test on 1.1832 resistance.

            GBP/CHF is even close to equivalent resistance at 1.3491.

            Based on current momentum, 1.1832 in EUR/CHF and 1.3491 in GBP/CHF could be taken out without much problem.

            Germany rumored to be willing to offer concessions to US on trade, European Commission rules that out

              By
              ActionForex.com
              -

              Bloomberg reported the European Commission urged the region’s governments today to stand united in trade talks with the US, and be ready to “think out of the box fast”. EU is seeking to follow South Korea to get indefinite exemption on the steel and aluminum tariffs by May 1.

              But, the option of re-negotiation of EU-US free trade agreement is ruled out by EC. Unilateral European concessions to the US is also ruled out. It seems that EC is asking the officials to stay “inside” the box but think “out of” it. Well, there is no logical contradiction.

              It was also reported by Bloomberg that Germany is adopting a flexible approach in dealing with the US and is willing to offer concession to the US. Germany Chancellor Angel Merkel is believed to be ready to lower the 10% EU tariff on autos to avoid a trade dispute.

              But that is in total opposite position to France. President Emmanuel Macron is clear in his message that European steel and aluminum exports pose no security threat to the US. And the rules of international trade need to be “reinforced” to ensure such a level playing field.

              So, the EC’s message seemed to be directed at Germany.

              AUD/USD falls but will face 4H, D, W pivot S1 confluence

                By
                ActionForex.com
                -

                Markets are generally back in risk averse mode today. Nikkei lost -286 pts or -1.34% to close at 21031.31. Major European indices are in red in initial trading, with DAX due -1.5%, CAC down -1.3% and FTSE down -0.6%.

                AUD is a currency that’s usually weighed down by risk aversion. EUR/AUD extended recent rally and reaches as high as 1.6189, and regains upside H action bias.

                AUD/USD also drops through 0.7671 support to resume whole fall from 0.8135.

                However, as AUD/USD dips lower, it will face confluence of 4H S1, D S1 and W S1 at 0.7648/9. AUD/USD might struggle to build downside momentum for a short while.

                Euro stays strongest after jitters, EURAUD with solid upside bias

                  By
                  ActionForex.com
                  -

                  After some jitters yesterday, EUR remains the strongest major currency for the week as seen in W heatmap. Strength is apparent against USD, GBP and AUD. Meanwhile, JPY is trading as the weakest, followed closely by USD, CHF and AUD.

                  Looking at EURAUD action bias table, the biases are consistent across time frame.

                  And EURAUD is seen as in up trend in 6H, D and W charts. So, the current H neutral could present an opportunity to long EUR/AUD.

                  An intraday strategy could be buying at PP at 1.6120 with a stop below S1 at 1.6081.

                   

                  DOW closed down -1.43% after 737 pts swing, rejected by 24453 resistance

                    By
                    ActionForex.com
                    -

                    DOW initially gained 244 pts to 24446.22 but reversed to closed down -344.89 pts or -1.43% at 23857.71. Considering that it hit as low as 23708.73, that was indeed a massive 737 pts swing. The reversal was mainly because tech stocks were crushed. S&P 500 lost -45.93 pts or -1.73% to 2612.62. NASDAQ suffered most and closed down -211.73 pts or -2.93% at 7008.81. Selloff continues in Asia with Nikkei down -1.8%, HK HSI down -0.9% at the time of writing.

                    Technically, we’ve mentioned before (here) that there will be no change in near term direction before a break of 24453.14 resistance. That is, DOW is expected extend recent decline to 23360.29 and below. The development is no far in line with our near term bearish view.

                    US consumer confidence dropped moderately in March, dollar and stock lack direction

                      By
                      ActionForex.com
                      -

                      US Conference Board consumer confidence dropped moderately in March to 127.7, missing expectation of 131.0 But it stayed close to 18 year high at 130 in February.

                      Reaction to the data is muted though. Dollar rebounded earlier today, but it’s struggling to extend gain in US session so far.

                      Stocks also struggle to find a direction as DOW is trading nearly flat.

                      USD in counter trend rebound as buying emerges in European session

                        By
                        ActionForex.com
                        -

                        Buying emerges for USD in European session as seen in the 4H heatmap. And that also majors USD as the strongest one for the day.  H action bias of dollar also turned all up. (EUR/USD, GBP/USD, AUD/USD, NZD/USD down means USD up, just in case).

                        However, it should be noted that firstly, 6H action bias of USD is all neutral. Indeed, USD is in down action bias against EUR and GBP in daily chart. USD is also in down action bias against JPY, GBP and CAD in weekly chart. Hence, the momentum across time frame is not consistent. That means, the current rebound in dollar in counter trend.

                        For example, for GBP/USD’s we’d prefer to see a break of 1.4075 before weighing the chance of a near term reversal. Otherwise, GBP/USD is seen as in a correction only.

                        ECB Nowotny: Could reduce asset purchase “significantly” after September

                          By
                          ActionForex.com
                          -

                          Outspoken ECB Governing Council member Ewald Nowotny commented again today. He said that the central bank will decide on the future of monetary policy in the summer. This is rather apparent as the current EUR 30b per month asset purchase program is set to end in September. Nowotny also said that “if things continue as they are, ECB will be able to reduce asset purchases significantly” after that. While he cautioned not to make any abrupt change to policy, he also emphasized not to fall behind the curve.

                          Overall, Nowotny’s comments were consistent with his usual stance, which is slightly on the hawkish side of the spectrum.

                          European Commission: Economic sentiment weakend in all the five largest euro-area economies

                            By
                            ActionForex.com
                            -

                            Eurozone confidence indciators generally deteriorated in March.

                            The European commission noted in the release:

                            Euro area developments

                            In March, the Economic Sentiment Indicator (ESI) decreased markedly in both the euro area (by 1.6 points to 112.6) and the EU (by 1.9 points to 112.5).1 While this is the third consecutive drop, the indicators remain at elevated levels.

                            The deterioration of euro-area sentiment resulted from drops in industry, services and retail trade. Confidence among consumers remained unchanged, while it increased among construction managers. The ESI weakened in all the five largest euro-area economies; significantly so in Germany (-2.4), Italy (-1.8) and Spain (-1.2) and, less so, in the Netherlands (-0.5) and France (-0.4).

                            EU developments

                            The marginally stronger decrease of the headline indicator for the EU (-1.9) was mainly due to the marked deterioration of sentiment in the largest non-euro area EU economies, the UK (-4.2), and Poland (-2.0). In line with the euro area, confidence deteriorated strongly in industry, services, and retail trade, while it increased slightly in the construction sector and remained unchanged among consumers. The fall in EU confidence in the financial services sector was slightly less pronounced than in the euro area.

                            By contrast to the euro area, EU managers’ employment expectations improved in retail trade, while they remained broadly stable in services. Price expectations differed from the euro area mainly in retail trade, where they decreased markedly.

                            Full release here.

                            EUR/GBP rally drags down GBP/JPY and GBP/USD

                              By
                              ActionForex.com
                              -

                              EUR/GBP spikes higher in early European session, after clearing 0.8750. A major reason is believed to be Bundesbank’s monthly purchase for UK’s contribution to EU membership. Today’s move could be exaggerated by thinner holiday liquidity. Also EUR/GBP bearish could be finally giving up after the cross failed to sustain below 0.8686 last week. But it’s worth a watch to see if the rebound is turning into something sustainable. For now, based on current momentum, it could be heading back to 61.8% retracement of 0.8967 to 0.8666 at 0.8852 with a short term based formed.

                              The move in EUR/GBP is also affecting other pairs. GBP/JPY dip notably lower after hitting 150.48.

                              GBP/USD also dips after hitting 1.4243.

                              On other hand, EUR/USD is staying firm after edging higher to 1.2475.

                              DOW surged in late hour, Nikkei and HSI follow, JPY paring recent gains

                                By
                                ActionForex.com
                                -

                                Risk aversions receded much as markets, in the end, responded rather positively to news of trade talks between the US and China. For now, it seems both countries will hold fire first, and come back to the table.

                                After struggling below 24000 handle for most of the session, DOW finally made up its mind in the last two hours and surged sharply. DOW ended the day up 669.40 pts or 2.84% at 2420.60. S&P 500 gained 70.29 pts or 2.72% to close at 2658.55. NASDAQ also rose 227.87 pts, or 3.26% to 7220.54.

                                Still, for now, DOW is limited below 24453.14 minor resistance and thus, there is no change in the near term direction yet. It’s still more likely to revisit 23360.29 support then not.

                                Asian markets follow with Nikkei trading up over 1.6% at the time of writing. Hong Kong HSI is up 0.9%.

                                From D heatmap, JPY is extending this week’s fall in Asian session while Canadian Dollar is picking up some steam.

                                The W heatmap shows JPY as the weakest one, consistent with the daily developments. But holding above last week’s low against all but GBP only. Euro and GBP are the strongest ones for the week so far.

                                Also, note that EUR/JPY is held well below 132.40 resistance. GBP/JPY also stays below 150.92 resistance. Current rebound in JPY is more seen as a corrective move. The picture suggests that intraday or swings traders could ride on improved sentiments to sell JPY for quick profits. But for position traders, it could be an opportunity to buy JPY once the rebound loses steam.

                                Goldman Sachs bullish on gold price, and our technical view on XAU/USD

                                  By
                                  ActionForex.com
                                  -

                                  Goldman Sachs published a note that’s bullish on gold price yesterday and expected it to outperform over the coming months. It’s forecasting four Fed hikes this year, which is one more than FOMC’s own projection. And the bank admitted that its upbeat view on gold is “counter-intuitive”.

                                  However, the report pointed to empirical data for the past six tightening cycles of Fed, and found gold has “outperformed post rate hikes four times”. And according to their analysts, “the dislocation between the gold prices and US rates is here to stay”.

                                  It added that the bullish view was also driven by higher inflation, rising EM wealth and increased risk of equity correction. Also, it’s a likely a function of investors “waiting on the sidelines” and the becoming interested in Gold again once the tightening “catalyst” has passed.

                                  Our technical view

                                  From our technical view, gold’s recent jump from 1307.32 suggests that consolidation pattern from 1366.05 has completed. And, rise from 1236.66, and the larger choppy up trend, is ready to resume. Based on the near term pattern, Gold will likely target 100% projection of 1236.66 to 1266.05 from 1307.32 at 1436.07.

                                  However, bear in mind that gold is now close to an important long term fibonacci level. That is, 38.2% retracement of 1920.94 to 1046.54 at 1380.56. Gold failed this fibonacci resistance once back in 2016. And felt heavy approaching it twice since then. Add that to the fact that rise from 1122.81 is clearly not impulsive looking. For now, we’d be skeptical on gold bullish momentum ahead. And 61.8% projection of 1236.66 to 1266.05 from 1307.32 at 1386.88 is the hurdle to overcome.

                                  Fed Mester supports gradual rate hike, against a steep path

                                    By
                                    ActionForex.com
                                    -

                                    Cleveland Fed President Loretta Mester she supports gradual rate hike “this year and next year”. At the same time, she’s “against a steep path” in tightening because “we want to give inflation time to move back to goal”. She sounds optimistic saying that “this year is shaping up to be another good year for the economy.” And for monetary policymakers, the task is to “calibrate policy to this healthy economy so that the expansion is sustained.”

                                    The government’s tax cut poses “some upside risk” to the forecast, and Mester expects a better read on household spending “over the next several months”. Globally, she noted that “for the first time in many years, economic activity around the world is picking up and forecasts for global growth are being revised up.” And, “this should have a positive feedback effect on the U.S. economy via exports.”

                                    Meanwhile, she warned that trade developments are a “risk to the forecasts”. And the uncertainty “may not be resolved quickly”. But it didn’t change her outlook for the over economy yet.

                                    DOW feels heavy around 24000, Euro gains upside momentum

                                      By
                                      ActionForex.com
                                      -

                                      DOW opened notably higher today and breached 24000 handle to 24044.39. But it quickly lost momentum. For the moment, it’s feeling heavy from 24000. Current fall from 25449.15 is seen as resuming the decline from 26616.71 to 23360.29. Ideally, if our view is current, any interim recovery should be brief and there should be near them downside acceleration through 23360.29 support. And, break of 24453.14 resistance is needed to indicate bottoming. Otherwise, DOW will more likely have a take on 23360.29 than not.

                                      In the currency markets, after some strong momentum in early US session, Euro is now trading as the strongest one for today, overtaking NZD.

                                      In particular, EUR/USD’s breach of 1.2445 resistance is now setting up the pair for a test on 1.2555 high.

                                      EUR/AUD has met upside target of 61.8% projection of 1.5130 to 1.5976 from 1.5621 at 1.6130 first. With current solid momentum, it should be on track to 100% projection at 1.6444.

                                      EUR and GBP builds upside momentum, Yen retreats on stablizing market sentiments

                                        By
                                        ActionForex.com
                                        -

                                        Yen clearly weakens broadly today with stabilizing market sentiments. Fear of trade war seems to fade mildly on report that the US and China are now in dialogue. At the time of writing, FTSE is trading up 0.3%, DAX up 0.5% and CAC up 0.3%. US futures also point to triple digit gain at open, as markets digest Friday’s steep loss.

                                        Euro and Sterling both showing extra strength entering into US session. Both EUR/USD and GBP/USD surges through last week’s high.

                                        Meanwhile, for now, both NZD/JPY and GBP/JPY are having more than 1% gain for today.

                                        Bundesbank Weidmann: It’s important to start to end QE soon

                                          By
                                          ActionForex.com
                                          -

                                          Bundesbank President, Jens Weidmann, a known ECB hawk, called for ending stimulus again today.

                                          He painted an upbeat picture of Eurozone economic outlook and hailed that “the upswing is now everywhere on broad feet; the growth rates of the Member States are now scattering noticeably less. The unemployment rate has fallen to 8.6 percent, its lowest level since the end of 2008. The sentiment indicators continue to move at very high levels. This indicates that the favorable economic development continues for the time being.

                                          ECB economists projected 2.4% GDP growth in 2018, 1.9% in 2019 and 1.7% in 2020. Also, They forecast inflation to be at 1.4% in 2018 and 2019, and then rise to 1.7% in 2020. And to Weidmann, that is “a level that is broadly consistent with our medium-term definition of price stability.” With this background, “it is not surprising that the financial markets have been expecting net bond purchases to end in 2018.” He also emphasized that “the end of net purchases is only the beginning of a multi-year process of monetary normalization. That’s why it’s so important to actually start soon.”

                                          Regarding interest rates, Weidmann said that “the markets see a first rate hike around the middle of the year 2019, which is probably not entirely unrealistic.”

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