AUDUSD – Target 2 Achieved – Interesting

April 19, 2016 Forex Analysis

USDAUD, Daily

I first posted March 23^rd on the strengthening Australian dollar as commodity prices recovered from their early year nadir and the negative sentiment (for now) over China began to wane. The news flow from Australia continues to be received in a positive light and the good jobs data last week helped the pair get very close to Target 2, before finally closing above it yesterday.

This trade is a good example of the cycles within cycles that occur on the currency markets and that patience is one of the key assets of a successful trader. The trade reversed for 2 days before recovering and hitting Target 1 (0.7690 +110 pips) within the following 4 days.

The extended target at Target 2 (0.7730 +150 pips) was more interesting. The pair did not have the energy on this initial attempt at the psychological 0.7700 to hold above this level. It then reversed for another 5 days, but again finding support at another round number, this time 0.7500. The rally in the pair from April 8^th posting higher highs and lower lows allowed it to finally close over 0.7700 on Friday, yesterday’s large volatility allowed Target 2 to be achieved.

Although the rally in this pair may have further to run Target 1 and Target 2 have been accomplished and this trade is now closed.

Janne Muta

Chief Market Analyst

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jmuta Janne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.

Traders and fund managers from around the world have benefited greatly from Janne’s technical analysis methods. The indicators and price action based trading models he has developed, have, after rigorous testing, proven to be invaluable in identifying high probability trades.

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Macro Events & News for 04.19.2016

April 19, 2016 Forex Analysis

FOREX News Today

European Outlook: Global stock markets recovered yesterday in tandem with oil prices and Asian markets followed suit with Japan in particular staging an impressive rebound. The Nikkei is up nearly 3.5% and the Topix gained nearly 3% after yesterday’s steep decline. The front end WTI (USOil) future is slightly off earlier highs, but still just shy of the EUR 40 per barrel mark and the weaker Yen helped stock markets to recover in Japan. Mixed U.S and UK stock futures are painting a more cautious picture although the DAX is higher ahead of the official opening. The local calendar has German ZEW investor confidence, seeing improving slightly amid the general recovery in risk appetite, as well as Eurozone current data and the latest ECB bank lending survey. The UK remains focused on the Brexit debate.

IMF Estimates Still too Rosy as Global Growth Slows: The IMF’s recent world growth downgrades left 2016 estimates that are still too optimistic given the ugly Q1 performance for both the developed and emerging economies. The market’s early-year panic alongside the winter oil price plunge proved partly justified, though most of the year’s bad news is hopefully behind us. We expect a modest 2016 undershoot of IMF growth estimates across all the major countries and regions except Canada and the U.K., Brexit risk aside, before an improved trend into 2017.

Fedspeak: The Fed’s Kashkari said Chair Yellen is open-minded in her policy approach. The comments are from an interview posted on the Minneapolis Fed’s website. He noted the various challenges facing policymakers, including a slowing in China which has caused shocks around the world, and Brexit. And he added the Fed of course has a “de facto, huge global influence,” and is aware of its impact on world economic developments (it’s part of the Fed’s calculus). He thinks the existing structure of the Fed is working well. There wasn’t anything new or especially market moving in his remarks, especially since the FOMC is universally expected to be on hold at next week’s meeting.

ECB’s Knot: Realistic to think rates won’t rise for a while. The Dutch central bank head said at a conference in The Hague that “for the short term its realistic to think the interest rate won’t rise”, although he warned home buyers to take possible increases in the future into account. It’s hardly a surprise that the ECB is not thinking about rate hikes at the moment, but Knot is right of course to remind consumers that in the long run rates will go up again. The last thing the ECB needs is a real property bubble and excessive risk taking in the mortgage market.

Main Macro Events Today

US Housing Starts: March housing starts data is later today and should reveal a slight headline increase to 1,185k (median 1,170k) from 1,1798k in February. Permits should be 1,200k from 1,177k in February and completions are seen at 1,040k in March from 1,016k in February. There is some upside risk to the data as construction employment remained firm in March and the NAHB remained stable.

German ZEW: German ZEW investor confidence is expected to have recovered somewhat, in line with the stabilisation on markets and we are looking for a rise in the expectations reading to 7.0 (med 8.0) from 4.3 in the previous month. Confidence data nevertheless is pointing to a gradual loss of momentum in core Eurozone countries including Germany, with the second quarter likely to look weak in comparison to the first quarter.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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About Janne Muta, HotForex’s Chief Market Analyst

“My mission is to help you to become a confident and successful trader”

GBPCAD gap play

April 18, 2016 Forex Analysis

GBPCAD, Daily

As we know Canadian dollar and WTI crude oil have an inverse relationship were CAD usually goes up if the price of oil appreciates and vice versa. The strong drop in the price of oil lifted GBPCAD higher and created a significant gap to the upside. Markets have however been selling the pair from the opening of trading in the Asian session and now with the oil price apparently finding some support it’s I’m looking at GBPCAD as a potential short play. Gaps are often closed before markets start to move again in the direction of the prevailing momentum. If crude oil (USOIL in MT4) continues to attract buyers and is likely to close the gap then it makes sense to expect GBPCAD to move in the opposite direction.

I’m looking for sell signals in GBPCAD a sell area between 1.8350 and 1.8380 with targets as follows. Target 1: 1.8276 – 1.8304 and Target 2: 1.8183 – 1.8230. If price moves to Target 2 we are interested in turning the position around and go long in the pair with an idea to take money off the table at 1.8304 (T1) and 1.8390 (T2).

Using strict risk management is recommendable as usual. If you don’t know how to manage your trading risks professionally you are welcome join to my free webinars to learn more.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

“My mission is to help you to become a confident and successful trader”

Doha oil meeting failure and USDCAD update

April 18, 2016 Forex Analysis

USDCAD, Daily

AUD and CAD got hammered as the Doha meeting on oil restrictions failed and caused substantial concerns over the oil cartel OPEC’s ability to restrict and control the oil production. This caused the oil futures to open significantly (3.86%) lower today while it also caused the commodity currencies to gap overnight. According to Reuters tensions between Saudi Arabia and Iran were blamed for the failure, which revived industry fears that major government-controlled producers will increase their battle for market share by offering ever-steeper discounts.

Among others the USDCAD pair jumped above my sell area. I wrote two last week that USDCAD is oversold and therefore vulnerable to contra trend moves. I mentioned that Crude oil was also looking weak and I thought it might incite a rally in the inversely correlated USDCAD. This is indeed what indeed happened: market rallied higher and provided us a great sell signal that led to a nice move lower and a profitable trade. My T1 was hit on Thursday providing our traders with up to 100 pips depending on the strategy applied. Those that closed the whole position at T1 or followed the risk management rules laid out in my Position Management webinar weren’t hurt by the weekend gap. This gap is yet another reminder that it’s the risk management that is the single most important feature in our business plan.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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About Janne Muta, HotForex’s Chief Market Analyst

“My mission is to help you to become a confident and successful trader”

The Economic Week Ahead for 04.18.2016

April 18, 2016April 18, 2016 Forex Analysis

Main Macro Events This Week

United States: The US markets will monitor earnings announcements, which get into full swing this week and will fill an otherwise light economic calendar. The April NAHB homebuilder sentiment index opens the week (Today) and is forecast to inch up to 59 after holding at 58 in February and March, from 61 in January. Housing starts for March (Tuesday) should rise 0.6% to a 1.185 mln unit pace following the 5.2% February rebound to 1.178 mln. March existing home sales (Wednesday) are forecast jumping 4.3% to a 5.30 mln clip in March after dropping 7.1% to 5.08 mln in February. The February FHFA home price index (Thursday) should rise to 231.0 after gains of 0.5% over the prior four months. The April Philly Fed manufacturing index is forecast falling 4 points to 8.0 after surging an outsized 15.2 points to 12.4 in March. That was the highest level since December 2014. The April flash Markit PMI is due (Friday). Initial jobless claims for the week ended April 16 are seen slipping to 252k after dropping 13k to 253k in the prior week (the lowest since 1973). This week’s figure will be important since it coincides with the BLS job survey week. It should reinforce signs of ongoing strength in the labor market. Fedspeak is very light, and all on Monday, before the pre-FOMC blackout period begins.

Canada: The economic data will finalize the February GDP projection. We expect wholesale trade shipments (Wednesday) to tumble 1.0% in February after the flat reading in January. Retail sales (Friday) are anticipated to fall 0.8% in February after the 2.1% surge in January while the ex-autos aggregate drops 1.0% in February on the heels of the 1.2% gain in January. CPI rounds out the week, with a slowing to a 1.1% y/y growth rate in March seen from the 1.4% pace in February. The Bank of Canada’s core CPI is expected to moderate to a 1.8% clip in March from 1.9% in February. There is nothing from the Bank of Canada this week.

Europe: The focus is squarely on the ECB meeting (Thursday), although central bank officials have made pretty clear that for now the focus is on the implementation of the easing package from March and that no further action is on the table for now. Data releases this week focus on the first round of confidence data for April in the form of the German ZEW and preliminary PMI readings. The calendar also includes national French business confidence, as well as German PPI, Eurozone current account as well as the preliminary reading of Eurozone consumer confidence, although market impact here is likely to be limited. Germany sells 10 year Bunds (Wednesday). The event calendar also has Eurogroup and Ecofin meetings with markets likely to hope for comments on Greece at the former and possible Brexit implications at the latter.

UK: Brexit risk continues to overshadow proceedings. The calendar this week is highlighted by labour data (Wednesday), official retail sales data (Thursday) and government borrowing figures (also Thursday). We expect the labour data to see the headline claimant count fall by 12k in March and the unemployment rate remain unchanged at 5.1% in February. Retail sales are seen ebbing 0.1% m/m, which would translate to a 4.4% gain in the y/y comparison.

China: There are no scheduled economic releases this week.

Japan: The March trade report is due on Wednesday, where the surplus is expected to widen to JPY 750.0 bln from February’s JPY 242.2 bln. The February tertiary index (Friday) is seen falling 1.0% m/m versus the 1.5% increase previously.

Australia: The minutes to the Reserve Bank of Australia’s April 5 meeting will be released (Tuesday). The Bank left the target rate unchanged at 2.0%, as expected. The last policy action was a 25 bp cut in May 2015. Employment picked up in March, while the unemployment rate dipped to 5.7%, after dropping to 5.8% in February. But the stronger AUD and uncertainties over Chinese and EM growth have been headwinds to more robust growth, and that’s keeping policymakers on guard. RBA Governor Stevens (Tuesday) delivers a speech. The economic data calendar is thin this week, with no top tier releases scheduled.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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About Janne Muta, HotForex’s Chief Market Analyst

“My mission is to help you to become a confident and successful trader”

Looking to sell USDJPY if it rallies further

April 15, 2016 Forex Analysis

USDJPY, 240 min

Earlier today the yen eked out fresh lows against the dollar and euro, among other currencies, in what has been generally lacklustre trade in Asia. A solid set of Chinese data failed to lift spirits in most Asian stock markets, with investors in need of a breather after a week of strong rallies. A major earthquake was reported to have hit Japan’s Kyushu island. It caused damage and very unfortunately deaths but hasn’t caused a tsunami. This morning’s Japanese industrial production numbers for February came in at -5.2% while the previous number was -6.2%. There was no immediate reaction to the number even though the JPY strengthened a little bit later on.

USDJPY has rallied from Monday’s low of 107.63 until the pair corrected lower today. It is now trading relatively near the 109.10 support which coincides with 23.6% Fibonacci level. I’m interested in the levels near the 50% Fibonacci retracement (at 110.72) for short entries as it coincides with 110.65 level that used to be an important support for the pair. The 50% level adds to this levels significance.

Should the pair rally to my sell area between 110.25 and 111.00 I will be looking for sell signals inside the sell area. The target 1 (T1) area is between 109.08 and 109.75 while those looking for a longer term target might choose to exit at target 2 between 104.75 and 105.50. I recommend using strict risk management as per usual. If you don’t know how to manage your trading risks professionally you are welcome join to my free webinars to learn more about it.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

“My mission is to help you to become a confident and successful trader”

Macro Events & News for 04.15.2016

April 15, 2016 Forex Analysis

FX News Today

China’s economic growth was slowest in seven years in the first quarter. At the same time though indicators from consumer, investment and factory sectors show encouraging signs that the slowdown in Chinese economy may soon be over. Official government data on Friday showed GDP grew 6.7 percent in the Q1 2016 from the previous year, (in line with analyst forecasts). This was slight drop from 6.8 percent in the fourth quarter. Reuters reports that while this was the weakest pace of expansion since the first quarter of 2009, when growth tumbled to 6.2 percent, other activity data reinforced previous signs that the economy may be finding traction with better-than-expected growth seen in retail sales, industrial output and fixed asset investment.

PBoC Deputy Governor said the economy is “pretty robust” in late-breaking remarks that China GDP could grow by 6.5-7.0% this year given electricity consumption figures and other data. The biggest challenge was to continue to carry out reforms, he said, while he felt the message had been received that the yuan is pegged against a basket of currencies, of which the dollar still has a relatively large weight. He concurred that market forces were the primary driver of FX moves and the bank doesn’t want to see a severe overshoot from current near-equillibrium levels. He also endorsed the independence of China monetary policy. USD-JPY got a little bid with the remarks as USDCNY cruised aback over 6.48%.

US Fed Lockhart: June should remain an option for a rate hike, he told reporters. But he added that Brexit is a consideration for policymakers, though how it “will be weighed, or should it be weighed is an open question.” It could affect exchange rates and raise long-term questions on the euro area. Yet, he doesn’t think it should “stop the music” for the FOMC, however.

BoE Holds Steady Amid Brexit Risk: The BoE once again voted unanimously to keep rates on hold yesterday, as widely expected. The uncertainty ahead of the Brexit referendum on June 23 is starting to have an impact on investment and the central bank like many investors seems to be in wait and see mode, even if the implicit tightening bias was left in place. The MPC highlighted that in this climate even the interpretation of economic indicators will be more difficult and that means no major decisions either way are likely to be made ahead of the referendum.

Main Macro Events Today

US Industrial Production: The US Industrial production is expected to fall 0.4% in March, after falling 0.5% in February. Forecast risk: downward, as March mining data remained depressed. Market risk: upward, as a run of weaker data could impact rate hike timelines.

US Capacity Utilization: The US Capacity Utilization numbers are out today and are expected to come in slightly lower than in March. The consensus expectation is 75.4% in March after 76.7% level in February. This follows a descending trend in the capacity utilization in 2015 after the index peaked at 80% in December 2014.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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About Janne Muta, HotForex’s Chief Market Analyst

“My mission is to help you to become a confident and successful trader”

Coffee makes a successful retest of support

April 14, 2016 Forex Analysis

Coffee, Weekly

It’s been a year since my last analysis Coffee futures market. At the time Coffee was trading at $142.10 and I gave three targets of which lowest was at $115. Coffee hit all those targets and turned higher at $111.05, in the scheme of things very close to my $115 target level. The theme in my 2015 coffee analyses was shorting the market but now a year later it’s time to start looking at the long side as both technical and fundamental reasons suggest this market is tightening over the coming months.

In March coffee futures rallied over 16% on the dry weather forecasts that prompted Brazil the second biggest producer to cut its forecast for the next harvest to levels well below consensus estimates. There’s actually been a drought in the top Brazilian coffee production region, Espirito Santo. This has led to banks raising their target prices for the coffee futures, adding to the bullish sentiment in coffee but at the same time the fact remains that the coffee rallies are vulnerable to any news on new large crops.

Technically the rally in prices seen in March was significant. It was the first time since October 2014 that the price of coffee was able to rally above the upper weekly Bollinger Bands. This was a clear breakout from the trading range and triangle formation that have kept the prices from advancing since November 2015 and suggests that the bottoming process is now nearing the end. Price declined back to the 30 period moving average and $121 support level created by weekly candle highs in February. This week’s price action has stayed above the support.

Coffee, Daily

In the daily chart we can see how the price of coffee dropped down to $121.13 support that coincided with the 61.8% Fibonacci retracement level. From this level price has bounced again today which means that we have a successful retest in place. The 38.2% Fibonacci level at $126.62 is a minor resistance while the sideways move above $131.64 could prove to be a tougher level to penetrate. If today’s close is above $122.50 we have a bullish pin bar in the daily chart, which could be seen as a confirmation of the bullish view on the price of coffee.

Conclusion

As we have the dry weather causing draught in the important coffee producing regions in Brazil the prices are likely to be supported on the fundamental basis over the coming months. At the same time the technical picture supports long trade ideas on coffee. If market manages to create a bullish pin bar today, we have a potential lift-off that could take the prices to at least $126.60 resistance but possibly further to $131.60 resistance near the recent high. These are short term targets while in the longer term picture (over several weeks) price could move to August 2015 highs and a likely significant resistance at $140 dollars.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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About Janne Muta, HotForex’s Chief Market Analyst

“My mission is to help you to become a confident and successful trader”

GBPAUD Continues Lower

April 14, 2016 Forex Analysis

GBPAUD, Weekly

This pair are looking to continue their downward movement as the AUD recovers (following good jobs data today) and the pressure continues on the GBP due to persistent Brexit fears and dovish tones from the BOE. As the AUD strengthens and the GBP weakens in the short term we are looking for SHORT trades on any retracement from current levels.

The “real possibility” of Brexit, as the IMF termed it in this week’s release of its semi-annual world outlook, adds to the pressure on sterling. This is also why it failed to sustain gains in the wake of Tuesday’s UK inflation data, which showed March headline CPI rising more than expected to a cycle high of 0.5% y/y. The IMF also revised UK growth down to 1.9% for this year, down from 2.2%, and this assumes the UK remaining in the EU. As for Brexit risk, the latest FT poll tracker shows a narrow 1 percentage point lead for the Remain camp, with 43% compared to the 42% support for the Leave camp, narrowing over the last couple of weeks from respective levels of 45% and 40%.

I’m therefore looking for sell signals inside my 1.8526 – 1.8610 sell area (50% and 38.2% Fibonacci retracement levels) with Target 1 (T1) at 1.8010- 1.8000 (Weekly low, 200 DMA and round psychological number) and Target 2 (T2) at 1.7845 (Next support level).

Only trade based on my analysis and trade ideas if you agree with the analysis and if you are (after substantial testing) confident that you can assume the risk. Should you need further training on trading and risk management please attend any of our free webinars.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

“My mission is to help you to become a confident and successful trader”

Macro Events & News for 04.14.2016

April 14, 2016 Forex Analysis

FX News Today

ECB’s Constancio: Helicopter money would not make a big difference, adding that “its something that of course we are very much limited by the treaty to embark upon”. At the same time he stressed that the ECB’s Negative-Rate Policy has its limits, as “there is always the possibility of hitting the limit where the preference for cash withdrawals would set in”. He added that “the instruments should not push banks to pass on their additional direct costs by turning deposit rates negative or increasing lending rates to increase margins. Both developments would be problematic for our monetary policy goals”. For now Constancio argues that the net effect of the negative deposit rate is “positive for the euro area as a whole”, while stressing that it takes time for the positive effects to materialise fully.

Australian unemployment fell to a cycle low of 5.7% in March, which offset a Moody’s warning to the Australian government that it needs to hike taxes at its budget in May. As a result Australian dollar is now up against all the major peers between 0.3 to 0.9% expect the USD that has gained 0.5% against the AUD.

As expected, the BoC left rates steady at 0.50%. The growth outlook was boosted a bit too GoC yields pulled back to session lows in tandem with the drop in the Treasury 10-year rate following the stellar Treasury auction. The market had already reflected its approval of what Governor Poloz had to say in his press conference, where he maintained two way risk in terms of the policy rate (BoC is not “sidelined”). He also talked-up the negative shocks seen since January, which were more than offset in the projection by impending fiscal stimulus.

Fed’s Beige Book said activity expanded modestly in most Districts, though the pace of growth varied. The report, prepared by the Chicago Fed, did note though, that wages increased in 11 of the 12 Districts (excluding Atlanta), and there were signs of a pickup compared to the last survey period. The strongest wage pressures continued to be seen for occupations where there were labor shortages. Labor market conditions continued to strengthen, with only Cleveland reporting a decline. Consumer spending mostly increased and retailers remained generally optimistic about the growth outlook over the rest of 2016. Manufacturing mostly increased and nonfinancial services picked up too. Construction and real estate generally expanded too. While the report was mostly optimistic, nearly all the adjectives were moderate or modest, suggesting the hit to the economy from the oil recession is dissipating.

Main Macro Events Today

Euro Area CPI: The consumer price index for March is expected to come in unchanged from the -0.1% in February. The March HICP (Harmonised index of consumer prices) was confirmed at -0.1% at the end of March and therefore the CPI reading probably follows in its footsteps. The difference between Italian and German inflation numbers (Italian HICP fell further to negative territory) likely makes the ECB’s job harder.

BoE Vote and Minutes: The BoE is widely expected to maintain an unchanged policy stance, by a unanimous vote. The start of rate normalisation is still a long way off and the uncertainty over the outcome of the Brexit referendum in July is the main focus for markets as polls are pointing to a close outcome at the Jun-23 referendum. We expect the vote will swing to the “remain” side given the fear of near- to medium-term economic disruption. However, there are signs that the uncertainty about what will happen in the event of leaving the EU has been casting a negative impact on economic activity. A survey published by Deloitte last Monday found that a “fog of uncertainty has descended on the corporate sector” as a consequence of uncertainty about EU membership.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

About Janne Muta, HotForex’s Chief Market Analyst

“My mission is to help you to become a confident and successful trader”