Sample Category Title

Daily Pivots: (S1) 0.9713; (P) 0.9745; (R1) 0.9761; More.....

USD/CHF's consolidation from 0.9691 temporary low is still in progress and intraday bias remains neutral. Another recovery cannot be ruled out. But upside should be limited by 0.9858 support turned resistance and bring fall resumption. Whole decline from 1.0342 is still in progress and below 0.9691 will target 100% projection of 1.0342 to 0.9860 from 1.0099 at 0.9617. We'll start to look for reversal signal below there.

In the bigger picture, USD/CHF is bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level.

Daily Pivots: (S1) 1.2934; (P) 1.2967; (R1) 1.3007; More...

Intraday bias in GBP/USD remains neutral as consolidation from 1.3047 is still in progress. As long as 1.2844 minor support holds, further rise remains mildly in favor. Nonetheless, as we are still viewing price actions from 1.1946 as a corrective move, we'd expect upside to be limited below 1.3444 resistance to bring near term reversal. On the downside, break of 1.2844 will indicate short term topping and turn bias back to the downside for 1.2614 resistance turned support first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There are signs of reversal, like breaking of 55 week EMA, weekly MACD turned positive, and monthly MACD crossed above signal line. But still, break of 1.3444 resistance is need to confirm medium term bottoming. Otherwise, outlook will remains bearish for extend the down trend through 1.1946 low.

Daily Pivots: (S1) 1.1184; (P) 1.1202 (R1) 1.1235; More....

EUR/USD failed to take out 1.1267 with today's rebound and weakens again. The pair is staying in tight range below 1.1267 and intraday bias remains neutral first. Overall, we'd stay cautious on strong resistance from 1.1245/98 (138.2% projection of 1.0339 to 1.0828 from 1.0569 at 1.1245) resistance zone to limit upside and bring reversal. But decisive break of 1.1298 will carry larger bullish implication and target 1.1615 resistance next. On the downside, though, break of 1.1020 resistance turned support will indicate rejection from 1.1245/98 and turn bias to the downside for 1.0838 support first.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD now far above 55 week EMA. Also, bullish convergence condition is seen in weekly MACD. Focus will now be on 1.1298 key resistance. Rejection from there will maintain medium term bearishness and would extend the whole down trend from 1.6039 (2008 high). However, firm break of 1.1298 will indicate reversal. In such case, further rally would be seen back to 1.2042 support turned resistance next.

Dollar recovers in early US session after solid job data. Initial jobless claims rose 1k to 2.34k in the week ended May 20, below expectation of 238k. The four week moving averaged dropped to 235k, down from 241k. The average stands at the lowest level since 1973. Continuing claims rose 24k to 1.923m in the week ended May 13. Also from US, trade deficit widened to USD -68.0b in April. Wholesale inventories dropped -0.3% in April. Released earlier today, UK GDP growth was revised lower to 0.2% qoq in Q1, index of services rose 0.2% 3mo3m in March, BBA mortgage approvals dropped to 40.8k in April.

Markets disappointed with FOMC minutes

The market was somewhat disappointed over the FOMC minutes for the May meeting released yesterday. While the minutes should be considered as a confirmation of a rate hike in June, it raised the uncertainty over the future rate hike path. The members appeared divided over the inflation outlook. While one camp was concerned over the impact of falling unemployment on inflation, another camp remained focused on the downside risk to inflation. Meanwhile, it is getting more likely that the balance sheet reduction might begin 'this year'. More in Fed 'Confirmed' Rate Hike In June, Signaled Balance Sheet Reduction To Come Later This Year.

OPEC agreed on production cut extension

OPEC agreed to extend production cut for nine months through next March. Formal announcement will be made later today. Saudi Oil Minister Khalid Al-Falih said at the opening session of the group's meeting in Vienna that the decision is a "very safe and almost certain option to do the trick". And, production surplus will be "balanced earlier than later". Nigerian Oil Minister Emmanuel Kachikwu said the extension would bring price stability and suggests a "USD 50 floor" for oil. WTI oil dips back to 50.65 after hitting 52.0 earlier today as the news should be priced in.

EU Tusk: No common position with Trump on Russia, climate and trade

EU President Donald Tusk met US President Donald Trump today. After the meeting, Tusk said that they discussed topics on foreign policy, security, climate and trade relationship. Tusk noted that "we agreed on many areas, first and foremost on counter-terrorism". However, "some issues remain open like climate and trade". And, Tusk is "not 100% sure" he can say that Trump and himself have a common position, common opinion about Russia". Tusk emphasized values of freedom, human rights and dignity, and "the greatest task today is the consolidation of the whole free world around those values."

BoJ Sakurai: Crucial to patiently maintain easing

BoJ board member Makoto Sakurai said that "the economy is in good shape and the government's fiscal spending plans are being implemented now." Hence, "maintaining the current fiscal and monetary stimulus measures would be enough." Meanwhile, Sakurai also noted that "there were some views in the market that the BOJ would consider raising its long-term interest rate target in the near future." But he warned that "underlying price growth remains moderate and uncertainties on overseas economies persist." Therefore, "it is therefore crucial to patiently maintain our monetary easing." And for the moment, he believed that BoJ should keep the JPY 80T bond purchase target.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1184; (P) 1.1202 (R1) 1.1235; More....

EUR/USD failed to take out 1.1267 with today's rebound and weakens again. The pair is staying in tight range below 1.1267 and intraday bias remains neutral first. Overall, we'd stay cautious on strong resistance from 1.1245/98 (138.2% projection of 1.0339 to 1.0828 from 1.0569 at 1.1245) resistance zone to limit upside and bring reversal. But decisive break of 1.1298 will carry larger bullish implication and target 1.1615 resistance next. On the downside, though, break of 1.1020 resistance turned support will indicate rejection from 1.1245/98 and turn bias to the downside for 1.0838 support first.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD now far above 55 week EMA. Also, bullish convergence condition is seen in weekly MACD. Focus will now be on 1.1298 key resistance. Rejection from there will maintain medium term bearishness and would extend the whole down trend from 1.6039 (2008 high). However, firm break of 1.1298 will indicate reversal. In such case, further rally would be seen back to 1.2042 support turned resistance next.

Economic Indicators Update

USD/CHF - 0.9721

Original strategy :

Bought at 0.9700, Target: 0.9800, Stop: 0.9700

Position : - Long at 0.9700

Target :  - 0.9800

Stop : - 0.9700

New strategy  :

Hold long entered at 0.9700, Target: 0.9800, Stop: 0.9700

Position : - Long at 0.9700

Target :  - 0.9800

Stop : - 0.9700

As the greenback has retreated after meeting resistance at 0.9777 yesterday, as long as support at 0.9692 holds, further consolidation would take place and prospect of another rebound remains, above said resistance at 0.9777 would add credence to our view that temporary low is formed, bring retracement of recent decline to 0.9800, then 0.9819-25 (38.2% Fibonacci retracement of 1.0025-0.9692 and previous resistance) but price should falter below resistance at 0.9851 (also just below 50% Fibonacci retracement at 0.9858), bring another decline later.

In view of this, we are holding on to our long position entered at 0.9700. Below said support at 0.9692 would signal recent decline has resumed and extend weakness to 0.9670-75 but reckon downside would be limited to 0.9650 and 0.9620-25 should hold, bring another rebound later. 

GBP/USD - 1.2952

Original strategy :

Bought at 1.2960, Target: 1.3060, Stop: 1.2925

Position : - Long at 1.2960

Target :  - 1.3060

Stop : - 1.2925

New strategy  :

Hold long entered at 1.2960, Target: 1.3060, Stop: 1.2925

Position : - Long at 1.2960

Target :  - 1.3060

Stop : - 1.2925

Failure to extend intra-day rebound and current retreat from 1.3015 suggest caution on our long position entered at 1.2960 but as long as yesterday’s low at 1.2926 holds, prospect of another rebound remains, above said intra-day high would bring test of strong resistance at 1.3043-48, however, break there is needed to confirm early upmove has resumed and extend headway to 1.3075-80 and possibly towards 1.3100-10 later.

In view of this, we are holding on to our long position entered at 1.2960. Below said support at 1.2926 would abort and risk weakness to 1.2900 but break of indicated support at 1.2889 is needed to signal top has been formed at 1.3048 earlier, bring retracement of recent upmove to 1.2850-55 first.

EUR/USD - 1.1207

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the single currency has rebounded after holding above previous support at 1.1161 and retest of this week’s high at 1.1268 cannot be ruled out, break there is needed to signal recent upmove has resumed and extend further gain to 1.1280-85 (61.8% projection of 1.0839-1.1172 measuring from 1.1076) and possibly towards 1.1300-10. If said resistance continues to hold, then further consolidation would take place.

On the downside, below 1.1195-00 would bring another corrective fall to 1.1161-68 support but break there is needed to signal top has been formed at 1.1268, bring retracement of recent upmove to 1.1130 but reckon downside would be limited to 1.1100-05 (38.2% Fibonacci retracement of 1.0839-1.1268) and price should stay well above support at 1.1076, bring rebound later.

USD/JPY - 111.77

Original strategy  :

Bought at 111.50, Target: 112.50, Stop: 111.15

Position :  - Long at 111.50

Target :  - 112.50

Stop : - 111.15

New strategy  :

Hold long entered at 111.50, Target: 112.50, Stop: 111.15

Position :  - Long at 111.50

Target :  - 112.50

Stop : - 111.15

Although the greenback retreated after meeting resistance at 112.13 yesterday, reckon the lower Kumo (now at 111.45) would limit downside and bring another rebound, above said resistance would extend the erratic rise from 110.24 low to 112.36 (100% projection of 110.4-11174 measuring from 110.86) and then 112.45-50 (61.8% Fibonacci retracement), however, reckon 112.75-80 would limit upside.

In view of this, we are holding on to our long position entered at 111.50. Below the lower Kumo (now at 111.45) would risk weakness to 111.25-30 but break of indicated support at 110.86 is needed to signal top is formed and suggest the rise from 110.24 has ended, then further fall to 110.50-55 would follow.

US equity markets look likely to test their all-time highs on Thursday, with the S&P 500 on course to open at record levels and the Dow not far behind. The focus this morning has been on oil and UK markets, with OPEC making statements on the proposed oil cut extension and UK growth figures disappointing in the first quarter.

Buy the Rumour, Sell the Fact – Oil Hit on Cut Extension Comments

Brent and WTI got crushed earlier as energy ministers from within OPEC suggested that an extension will be agreed and will likely be at the same levels for six or nine months. It's been a classic case of markets buying the rumours and selling the facts. It would appear a nine month extension with the potential for deeper cuts was almost fully priced in so when the statements were made, there was nowhere left for prices to go but lower.

We've seen this kind of action time and time again. Traders buy on anticipation of the deal and when its delivered as expected, they take their profits and run. The unwinding of the positions, probably combined with some speculative selling, is what creates this sudden plunge. Prices have rebounded a little following the initial sell-off but remain below the pre-statement levels. With the Saudi Energy Minister confident that stocks can now fall back to their five year average by the first quarter of next year but open to another extension if needed, it will be interesting to see whether prices stabilise at these levels and remain supported – and if so how long for – or if they'll drift lower again as they did following the previous cut. He did suggest that he doesn't see US shale derailing their plans or believe forecasts that output will rise by one million barrels per day but OPEC has been wrong on this in the past.

EUR/USD – Euro Drifting Continues in Thinned Holiday Trade, Fed Minutes Disappoint

GBP Tumbles on Weakest Quarterly UK growth in More Than Four Years

Sterling has come under pressure this morning after the ONS confirmed that the UK grew by only 0.2% in the first quarter – 2% from a year earlier – which is the slowest rate of quarterly growth in more than four years.

It would appear the economic reliance on the consumer is finally taking its toll with higher prices seen as contributing to the softer activity in the first quarter. With wages now falling in real terms, this doesn't bode well for the coming quarters and while the Brexit vote may have taken a little longer than many expected to harm the economy, it would appear that the initial pain is starting to be felt.

Dollar Cannot Catch a Break

It's also worth noting that the pound was already looking a little unsettled at its highs against the dollar. It would appear we've been seeing something of a reluctant rally over the last month and perhaps the sell-off that we've seen in the pair this morning is a reflection of that. Should the pair break below 1.29, it could signal a sharper downturn in the coming weeks. The weakness in the dollar – with another downturn over the last couple of weeks – is certainly helping to support the pair but with a rate hike likely at the June meeting, I wonder whether this will continue.

Still to come today we've got jobless claims data being released from the US and we'll hear from Lael Brainard and James Bullard from the Federal Reserve.

The euro is showing little movement in the Thursday session, and with German and French banks closed for a holiday, this trend will likely continue throughout the day. Currently, EUR/USD is trading just above the 1.12 level. On the release front, OPEC members are meeting in Vienna, and the US releases unemployment claims, with the indicator expected to rise to 238 thousand.

The much-anticipated Fed minutes were released on Wednesday, but traders hoping for confirmation of a June rate hike came away disappointed, as the minutes conveyed a less hawkish tone than the markets had expected. Policymakers were careful in their message, saying that a rate hike was coming “soon”. Does that mean a move at the June policy meeting? The markets believe so, as Fed funds futures for a June hike remained at 78% after the minutes were released. At the same time, the Fed has given itself some wiggle room, and could opt to delay a hike until the second quarter if inflation or consumer indicators take an unexpected nosedive. The minutes stated that policymakers wanted to see additional evidence that the recent slowdown in the economy was temporary before raising rates. As for additional hikes in 2017, the markets remain skeptical. The odds for a September rate stand at just 37%. This pessimism is a result of a weak performance from the US economy in Q1, as well as doubts that President Trump, who is facing congressional investigations over his connections with the Russian government, will be able to pass his agenda of cutting taxes and government spending. Gone are the heady days at the end of 2016, when a red-hot US economy had analysts predicting four rate hikes in 2017. At the same time, a strong improvement in economic data could quickly change the cautious tone of the Fed and revive discussion of four rate hikes this year.

Earlier in the week, the White House presented President Trump’s 2018 budget proposal to lawmakers in Congress. Trump has promised to slash government spending, and much of the funds for the budget would come from huge cuts to the Medicaid health program and food stamps. The budget proposes slashing more than $600 billion from Medicaid and over $192 billion from food stamps over a decade. Trump has promised to balance the budget within 10 years, claiming this can be achieved through tax cuts and annual growth of 3 percent. However, experts are at odds as to whether the economy can reach and maintain such levels of growth, which is much higher than current economic expansion. The budget proposal is unlikely to remain in its present form for very long on Capitol; Hill. Democrats will want nothing to do with it, and Republicans will not want to make drastic cuts to federal programs that will incur the wrath of voters. Still, the Trump administration, which has been in damage-control mode for weeks over the firing of FBI director James Comey, can point to the budget as a step forward in trying to implement Trump’s pro-business agenda.