Stock Markets – GER30 approaches the 200DMA

August 3, 2016 Forex Analysis

GER30, Daily

Global stock markets achieved new highs during July and continue to grind ever higher as the only game in town for investors. However, the rate of increase has slowed and with the end of the earnings season and August upon us investors may be looking to realise some profits and square positions for the holiday month.

A scan of the equity markets (we are already SHORT UK100 from July 14) highlighted the GER30. A failure to break 10,400, pressure on the key banking and automotive sectors and persistently flat PMI figures has seen two big down days on the key German equity market. The misalignment of the moving averages suggests that we are at best in a consolidation phase. My preference would be for a short position if the 200 DMA was breached and broken significantly on the daily time frame. This would mean a clear close below 10,077 which would generate Target 1 at 9960 and Target 2 9782.

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.

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Manufacturing PMI – Better in Europe, Worse in UK

August 1, 2016 Forex Analysis

EURGBP, H4

Final Eurozone manufacturing PMI was unexpectedly revised higher, slightly, to a reading of 52.0 versus the preliminary estimate of 51.9. This is down form 52.8 in June, indicating an abatement in the pace of expansion in the sector. Weakness in France and in peripheral economies weighed on the pan-region reading, offsetting a rise in activity in Germany and some of the smaller northern European member nations. The lop-sidedness was strong, with France showing a sub-50.0 contractionary reading of 48.6, although this was a four-month high and a rise from 48.3 in June. Greece’s reading was 48.6, while at the other end of the spectrum; Germany’s was 53.8, which is the lowest reading in two months.

Meanwhile, across the English Channel in post Brexit UK; UK final manufacturing PMI for July unexpectedly revised lower, to 48.2 from the preliminary estimate for 49.1. This follows 52.1 in June, with the deterioration blamed squarely on disrupting uncertainties thrown up the June-23 to exit the EU. The preliminary estimate comprised 80% of the survey’s responses, and the big revision suggests that the first month after the Brexit vote was even worse than previously thought. The final composite PMI will be released on Wednesday alongside the final services PMI reading. The flash composite PMI dove to 47.7, consistent with Q3 GDP of -0.4%. Sterling took a clobber on the data today. BoE MPC member Weale, who is by reputation a relative hawk on the policy-setting Committee, suggested last week that the dismal preliminary PMI data had convinced him that the policy loosening would be justified.

EURGBP rallied to 0.8470 on the news release and the GBPUSD was as low as 1.3171, before recovering to 1.3180.

We remain in SHORT positions in Cable (from 1.3450 July 14^th) and GBPJPY (from 138.77 July 27^th).

Janne Muta

Chief Market Analyst

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About Janne Muta, HotForex’s Chief Market Analyst

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US Data – all relatively positive today

July 26, 2016 Forex Analysis

EURUSD, H4

Consumer Confidence, New Home Sales, Richmond Fed Manufacturing Index and Services PMI and relatively positive and better than expected.

U.S. consumer confidence dipped 0.1 point to 97.3 in July after jumping 5.0 points to 97.4 in June (revised from 98.0). The index was 91.0 last July. The present situations component climbed to 118.3 from 116.6 (revised down from 118.3). The expectations index fell to 83.3 from 84.6 (revised from 84.5). The labor market differential rose to 0.7 from -0.5 (revised from 0.1). The 12-month inflation index slowed to 4.7% from 4.8% (revised from 4.7%). The headline data are better than forecast.

U.S. new home sales rose 3.5% to 0.592 mln in June, well above expectations (and is the best since February 2008), following an unchanged 0.572 mln print in May (revised up from 0.551 mln). April’s prior 12.3% surge to 0.586 mln was revised down to a 6.5% increase to 0.572 mln. Sales were mixed regionally with gains in the West and Midwest. The months’ supply of homes fell to 4.9 from 5.1 (revised from 5.3). The median sales price jumped 6.2% to $306,700 following a 9.8% drop to $288,800 (revised from $290,400). On an annual basis, prices are up 6.1% y/y following a 0.5% y/y pace.

U.S. Richmond Fed manufacturing index climbed 20 points to 10 in July after dropping 10 points to -10 in June (revised from -7). Most of the components improved, with upward revisions to several of the June readings. The employment index rallied to 6 from 1 (revised from -1). The workweek bounced to 1 from -7 (revised from -4). Wages dipped to 14 from 15 (revised from 14). New orders surged to 15 from -17 (revised from -14). Prices paid slowed to 0.64% from 1.14% (revised from 1.25%), with prices received at 0.48% from 0.79% (revised from 0.88%). The 6-month index improved to 19 from 11 (revised from 9), with employment at 7 from 2 (revised from -1).

U.S. Markit services PMI fell 0.5 points to 50.9 in the flash July reading, after inching up to 51.4 in June from 51.3 in May. It was at 55.7 a year ago. The numbers indicate the service sector remains in expansion for a 5th straight month, but only marginally, after slipping to 49.7 in February. The employment component rose to 52.6 from 52.4. The composite index edged up 0.3 points to 51.5 versus 51.2 in June and 50.9 in May.

EURUSD continues to meander lower, currently trading at 1.0990 having been as high as 1.1029, buyers appeared around 1.0980 earlier but 1.1000 could not be maintained.

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”

German Ifo better than expected, Outlook OK

July 25, 2016 Forex Analysis

EURUSD, H4

The German Ifo holds up better than feared, with the overall reading coming in a tad above our forecast, which was already more optimistic than consensus. The expectations index eased to 102.2 from while the current conditions indicator unexpectedly improved and rose to 114.7 from 114.6 in the previous month. This brought the overall index to 108.3, down from 108.7, but versus our median of 107.9 and much higher than Bloomberg consensus of 107.5. Confidence in the construction and retail sectors actually improved and like the PMIs the data confirms that the financial sector has been hit more by the Brexit vote than real sector confidence, at least so far. More than to back Draghi’s wait and see stance.

Yesterday (Sunday) meanwhile, the Bundesbank President Jens Weidmann told reporters after the G-20 finance chiefs’ meeting that German growth will accelerate again in the second half and that the G-20 agreed that the world economy will continue to recover, even if Brexit was singled out as a risk factor and it must not be used as an excuse for expansive fiscal policies. A “straight bat” as ever from the combative Weidmann.

EURUSD continues to meander lower, currently trading at 1.0980 having been as low as 1.0951, buyers appeared around 1.0960. Our Daily trade is still open with target 1.0930.

Janne Muta

Chief Market Analyst

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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”

EURAUD looking interesting on break of 20 DMA

July 22, 2016 Forex Analysis

EURAUD, Daily

The EURAUD pair first caught my eye yesterday (July 21) after a long sustained (over 30 day) down move from the May 24 high. It formed a five day floor around the 1.4520 level earlier this week and then rallied and attempted to break the 20 DMA and 23.6 Fibonacci zone around 1.4730-1.4750. A close above 1.4730 on the Daily chart will generate a LONG position with Target 1 at 1.4870 and Target 2 1.5025.

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 did not run out of steam in time

July 22, 2016 Forex Analysis

GBPAUD, H4

Our 4h GBPAUD Short trade yesterday was stopped out. Accepting a loss is part of successful trading and probably one of the most difficult psychological factors to overcome. However as with any business it is important to accept your losses, learn from them and move on. Good Risk and Money Management keep you in the game and allow you to keep trading. The trade has been logged in our Trading Journal and we wait for the next wave on the trading ocean to arrive.

As I type the pair is back through our entry price (1.7596) and looks like it could hit our 50 pip target, (1.7546) following the very poor UK PMI data. That is how it goes sometimes.

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”

PMI – UK Big miss, Germany & France OK

July 22, 2016 Forex Analysis

GBPUSD, H4

UK flash July PMI plunged to 47.7 in the composite reading from 52.2 in June and below the median forecast for a decline to 48.5. The headline and nearly all of the component parts fell at the lowest levels since the height of the financial crisis in early 2009, giving a clear indication of the impact that the Brexit vote has had. Markit, the compiler of the survey, described the data showing a “dramatic deterioration in the economy,” estimating that the data is signalling a 0.4% contraction in Q3 GDP, assuming that August and September continue the slowing seen this month. A sharp drop in new orders, to 45.5 from 52.3, and a dive in the expectations component of the services PMI, both good leading indicators of the economy, suggest that the pain will continue. Sterling dove over a big figure to a 1.3165 low versus the dollar in the wake of the data release. The flash indicator is based on 80% of responses to the full survey. Final data will be released at the beginning of August.

The 4h chart has support at the 20 MA at 1.3182 and 1.3110 and resistance at 1.3275.

Meanwhile across the English Channel, French and German PMIs better than expected. French manufacturing as well as services PMIs unexpectedly improved in July, and while the German manufacturing reading eased, it fell back less than feared and remains firmly above the 50 point no change mark, while the services reading actually jumped higher. So a confirmation of what French national business sentiment numbers already indicated yesterday, namely that the impact of the Brexit vote on real sector sentiment has been limited so far, even as uncertainty increases. The financial sector by contrast has been hit severely, which confirms the issues Draghi raised yesterday – the apparent divergence between financial market and real sector confidence.

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 Running out of Steam ?

July 21, 2016 Forex Analysis

GBPUSD, H4

The close of the latest 4 hour candle was sufficient for us to take a SHORT position in this pair following a run up. The UK Retail Sales data (see below) simply added some fundamental momentum. The 4hour candles had been forming a steady six consecutive march upwards from the Hammer candles of July 19. The peak bull candle at yesterday’s (July 20) close and with a long wick followed by the following bearish candle with a wick to the south suggested at least a pause in the uptrend or a further retrace. The 08:00 candle this morning suggested further downside with target 1 at 1.7546 and possible target 2 at 1.7465 where we started a few days ago.

UK June retail sales undershoot expectations due to wet weather, which stirred apathy for summer fashion purchases. The headline sales figure contracted by 0.9% m/m, reversing the 0.9% m/m gain of May. The median forecast had been for a 0.5% decline. The y/y comparison was 4.3%, short of the 5.0% median forecast and down from the 5.7% y/y gain seen in May. It’s not clear if the June 23 referendum, either the run-up or in the initial wake of, had much impact. Anecdotal signs suggest that retail sales dipped in the week after the Brexit vote, but have since rebounded.

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”

UK Employment at Record Levels…..however

July 20, 2016 Forex Analysis

GBPUSD, H4

The UK headline unemployment rate fell unexpectedly to 4.9% from 5.0% and employment and inactivity rates registered record highs.

UK unemployment fell by 54,000 to 1.65 million between March and May. Average weekly earnings including bonuses increased from 2% to 2.3%, in line with expectations. The employment rate – the proportion of people aged 16 to 64 in work – was 74.4%, the highest since comparable records began in 1971 and the Office of national Statistics also reported that the inactivity rate rates those 16-64-year-olds not working and not seeking work – was 21.6%, the lowest since 1971. The new finance minister Philip Hammond “Today’s employment and wage figures are proof that the fundamentals of the British economy are strong”.

All this is a pre-Brexit snapshot. The median forecast had been for an unchanged 5.0% outcome. The more timely claimant count figures, for June, painted a slightly different picture, with jobless claimants rising fractionally, with May data revised to 12.2k from -0.4k reported originally. All this is what we’re seeing in the rear view mirror; a view that’s changing for the worst in the wake of the Brexit vote.

A survey of 1,000 heads of businesses by the Institute of Directors, conducted in the two days after the vote to leave the EU, found that 24% were planning to freeze recruitment, 5% were planning on making reductions, and 22% were considering moving some of their operations abroad (versus only 1% who said they were bringing their operations back).

Sterling spiked up on the release of the headlines with cable touching 1.3175, GBPJPY up to 140.30 and EURGBP down to 0.8350. Our Quarterly position on Cable remains and we are still in our SHORT GBPUSD trade from July 14^th.

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”

More Stimulus from Abe ahead, USDJPY jumps to a resistance

July 12, 2016 Forex Analysis

USDJPY, 240 min

Prime Minister Shinzo Abe’s Abenomics mandate got a boost today from the Upper House elections and yesterday’s visit to the BoJ by Ben “Helicopter” Bernanke. These events stirred up expectations for an aggressive expansion in monetary policy. These expectations were rewarded as Reuters now reports that Japanese PM Abe said on Monday that he will instruct Economy Minister Nobuteru Ishihara on Tuesday to start work on compiling a fiscal stimulus package, but did not mention how much the size of spending will be. Another factor is the recovery in risk appetite in global markets aided by the surprisingly quick selection of a new PM, and expectations for the BoE to cut rates on Thursday. This backdrop has eroded yen safe haven premium and given sterling a boost, the latter logging one-week highs versus both the dollar and euro.

The above news has driven USDJPY to test levels above a resistance at 103.40. These levels weren’t sustained however and the pair dropped below the resistance. There is however, a minor support at 102.88 which has been attracting buyers this morning this suggests that the pair will try to challenge today’s high of 103.62 again. The next intraday support can be found at 102.40. If the pair fails to close the current 4h candle above 103.30 a bearish shooting star will be created. The candle closes at 09:00 am GMT. This would be a bearish sign and could bring USDJPY lower to test the 102.40 support. Whether the market then could react lower towards the 50 period SMA that coincides with 0.50 Fibonacci retracement level would need to be analysed after we’ve seen how it trades after possibly touching 102.40 support.

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”