NFP Friday: Are we in for another surprise!

July 7, 2016 Forex Analysis

Tomorrow Friday 8^th July is one of the most important days in July from traders’ perspective. Both institutional and retail traders alike globally are focussing on the US June Non-Farm Payroll report (at 12:30 pm GMT) after the May payroll growth number came in surprisingly low at 38.000 jobs (73.000 when adjusted for Verizon strike). Now the question is whether this number was an outlier or a real indication of the US jobs market slowing down significantly.

We assume that it is likely that the June number was an outlier. As the three month average before the horrendous May reading was 181.000 analyst expectations for the July number range from 160.000 to 210.000 we believe the June payroll increase to be in between these forecasts. The consensus is expecting 178.000 new jobs. The ADP employment number published today (172.000) indicates that this number isn’t probably too far from the actual release tomorrow. However, the NFP number has surprised from time to time as we know.

If the actual number deviates strongly from the expectations market volatility usually increases and could create trading opportunities or even an intraday trend after the initial and often unpredictable see sawing settles down. We do not recommend holding geared positions into the event or taking geared positions during the initial volatility that arises from the announcement. However, we are looking for trading signals 20 to 30 minutes after the announcement. We will keep you updated via the analysis.hotforex.com analysis page and my Facebook page (HotForex Janne Muta) with some live commentary on the results and market action.

Come and join us tomorrow around 12:30 pm GMT. If the number differs strongly from analyst expectation tomorrow could be an interesting and exciting day!

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

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.

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

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Daily Shooting Star in USDCAD

July 7, 2016 Forex Analysis

USDCAD, 240 min

USDCAD created a daily shooting in yesterday’s trading and is now trading at support at 1.2943. The pair is trading between 4h moving averages (30 and 50 SMA). The 15 min chart shows a series of lower high values in the high values over the last two hours. Only one of the recent candles at the time of writing has tried to challenge this pattern. This suggests that market is not trying turn higher from this support. Nearest resistance is at 1.2940 (next at 1.2930) while the nearest support is at 1.2940 (next at 1.2930).

The 4h Stochastics are oversold indicating that the market could rally before breaking lower. However, this would need to be confirmed by the price action. With the daily shooting star candle created in yesterday’s trading I’m preparing for this market to break lower rather than rallying higher first. If price breaks below 1.2940, I looking for sell signals after rallies with targets as follows: 1.2905 (T1) and 1.2860 (T2). Should the market however rally higher first I would be looking for sell signals at 1.3017 – 1.3030 sell area. If this was the case my targets are higher as follows: 1.2975 (T1) and 1.2340 (T2).

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”

Mr Draghi remains quiet – FOMC, ADP & NFP ahead

July 6, 2016 Forex Analysis

EURUSD, Daily

How long can Mr Draghi stay stumm? Eurozone stock markets continue to sell off sharply and Eurozone spreads remain volatile, while Italy’s banking problems are looking ever more threatening. That the Eurozone can escape serious negative implications from the UK is clearly wishful thinking and while central bankers have been eager to hand part of the responsibility for the Eurozone’s economic health back to politicians, it is clear that those in charge on both sides of the channel were simply not prepared for the outcome of the referendum. Nor are they willing to work together in order to limit the fallout of Brexit. So its back to central banks, but while the BoE already moved to free up pressure on UK banks and hinted at further easing over the summer, Draghi has been remarkably absent from the public stage so far. Wait and see remains the order of the day and that may also be because many of the ECB’s options are facing serious challenges. A tweaking of the capital key rule in the QE purchases as suggested by some, would only increase EMU fatigue in Germany and likely face fresh legal challenges. Further deposit rate cuts will add to pressure on banks. A relaxation of state aid rules for banks may be needed in Italy, but could push a finalisation of the banking union out even further. So Draghi may be busy behind the scenes trying to evaluate political and legal risks to more radical steps, but likely will be forced to resort to tweaks and minor changes that will leave markets disappointment.

The risk off rush continues, USDJPY struggling with 100.00, GBPUSD struggling with 130.00 and Gold comfortably north of 1360.

The post Brexit EURUSD rally petered out yesterday and we trade below the 200 DMA, however, with attention now turning to the FOMC minutes later today at 18:00 GMT, the ADP numbers tomorrow and the main event NFP on Friday this could simply be movements ahead of the news. Technically, on the Daily timeframe the support area is down at 1.0930 – 1.0825 and resistance at 1.1160 and 1.1220. My preference would be for SHORT positions from here, dependent on the news flow.

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”

Sterling, Sentiment & Correlation Trades

July 6, 2016 Forex Analysis

XAUUSD, Weekly

The impact of Brexit on the UK: Less than two weeks after the vote and, as Carney put it yesterday, the risks of the vote to leave the EU “have started to crystalize.” A YouGov CEBR survey this week found that 49% of the UK businesses it polled as being pessimistic on the economic outlook, up from 25% from before the referendum. The same pollster saw its consumer confidence reading fall to 104.3 in the days after June 23 Brexit vote, down from 111.9 for the first three weeks of June. There was also the news that three major property funds run by Aviva Investors, Standard Life and M&G have halted investor redemptions due to a lack of liquid holdings in what the former describes as “extraordinary market circumstances.” There are also growing anecdotal signs of slowing activity in such sectors as the housing and automobile markets. Most economists are anticipating a recession, driven principally by a drop in investment. Assuming this turns out to be the case, which we think it will, it will be interesting to see if this makes it politically viable for politicians to backtrack on Leave campaign promises to get a better trade deal with the EU, and whether sufficient momentum builds for a second referendum on EU membership.

The trade deal situation is far from clear the Norwegian solution will be the preferred from an economic view but the Norwegians have free movement of people, something the Leave group could not accept. A good old political FUDGE, (to “deal with something in a vague or inadequate way, especially so as to conceal the truth or mislead”) on principles and fundamentals is in the air once and if Article 50 is invoked (which now looks unlikely until January 2017).

How do we trade this situation? As ever financial markets are driven by fear & greed, sentiment, fundamentals and technicals. At the moment sentiment is THE main driver of Sterling and there are very high correlation trades available in this significant risk-off environment.

Yesterday I wrote “GBPJPY can trade lower still from these levels (134.00), the next Support is at 131.50, 128.50 and 125.60. However, as we move lower these targets become more difficult to achieve. Momentum is to the downside and although technically oversold, never underestimate the power of fear and greed”. The drive lower continued and first target support area was breached overnight. Target 2 at 128.50 and lower down to 125.60 remain.

On Friday (July 1) I anticipated a retrace for USDGBP to 134.50 before 130.00 was reached during Q3. The retrace did not happen as sentiment overtook the technicals and 130.00, 129.00 and even 128.00 were broken, before a sharp retrace to the 129.800 level this morning. Target 2 at 125.00 is still a target in the weeks ahead.

The sentiment and mood of the post Brexit market has also encouraged the correlation trade. Gold and other commodities (particularly Silver and Copper) continue to rise and yield on government and corporate bonds plummet as prices rocket. Gold currently at 1370 has weekly target 1 1394 and 1428 further out. Silver has upside targets at 21.06, and 22.19 & 23.00 further out.

As traders we require volatility, the Brexit vote has created that additional spike to volatility and until new levels are established, lows can get lower and highs can get higher. The old adage “Trade what you see not what you think” and strict risk management are rules that come into their own in these very interesting times.

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”

Pounding on Pound, GBPUSD makes new lows

July 6, 2016 Forex Analysis

Gold rallies, Japanese 20 year bonds slip to the negative territory and GBP slips new lows in the Asian session. Yesterday it seemed for a while that the 1.30 round number was going to hold as cable rallied almost 100 pips from the level. Now GBPUSD has tested 1.28 region and rallied strongly from the low print of 1.2998. The pair created a hammer candle yesterday after the strong move lower. This suggests that the move was over extended and the market is looking to rest. However, due to the recent volatility and the resistance levels above the pair could provide intraday opportunities.

At the time of writing the pair has reacted to a resistance area between at 1.2934 and 1.2948. This area coincides with a down sloping trendline and the upper 15 min Bollinger Bands. Market has also created bearish shooting star candle in the 15 min chart. This suggests weakness. I am looking for sell signals between 1.2920 and 1.2950 with target one at 1.2895 and target 2 at 1.2840. Price is now trading inside my sell area.

Edit: GBPUSD rallied through my sell area without giving a sell signal. Currently the market is trading near levels that supported price yesterday at around 1.30. Market could experience weakness at this level I’m looking for short opportunities again as I don’t believe the GBP related problems and worries are over. But before committing to a view that the market turns there needs to be price action based evidence of this happening. There should be plenty of volatility ahead. I have time to time been commenting the market moves live on my Facebook page. For my live commentary on please follow my Facebook page: HotForex.JanneMuta

Edit: Target 1 at 1.2940 and my target 2 at 1.2874

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”

Sterling registering record levels – GBPJPY

July 5, 2016 Forex Analysis

GBPJPY, Weekly

A second UK property fund stopped redemptions, with Aviva Investments earlier halting retail investors from cutting out of its UK Property Trust, citing “extraordinary market circumstances.” This follows the lead of Standard Life, which yesterday blocked retail investor redemptions from its commercial property fund. Both funds said they lack liquid holdings to cover withdrawal demands. The fear is that more will follow, and that these funds will in turn be forced to sell property. Welcome to post-Brexit Britain. BoE Governor Carney earlier said that the central bank has “a clear plan” to keep the banking system operating and that the central bank is “rapidly putting its main elements into place,” emphatically adding that “it is working.” Carney conceded that the BoE will not “fully and immediately” be able to offset market and economic volatility..

Sterling continues to weaken: cable breaches 1.3100 (losing 1.5% today and recording new 31 year lows) and EURGBP breaks 0.8500 gaining 1.7%. The heaviest fall, as the markets move to significant risk off thanks to continued Brexit uncertainty, is GBPJPY losing over 2.3% today.

GBPJPY can trade lower still from these levels (134.00), the next Support is at 131.50, 128.50 and 125.60. However, as we move lower these targets become more difficult to achieve. Momentum is to the downside and although technically oversold, never underestimate the power of fear and greed.

Always trade with strict risk management and remember that your capital is your single most important financial trading asset.

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”

Services PMI Numbers : Eurozone Up, UK Down

July 5, 2016 Forex Analysis

EURUSD, H4

Eurozone June services PMI revised up to 52.8 from 52.4. But this still left the reading down from 53.3 in the previous month. Spanish and Italian readings in particular surprised on the upside but the French services number remains stuck in contraction territory, as did the composite reading. The Eurozone composite PMI was unchanged from May, after the upward revision to manufacturing and services readings and still points to ongoing expansion, but while the data confirms that activity picked up again toward the end of the second quarter, the readings don’t capture the impact of the Brexit referendum yet and as such are already outdated to some extent.

EURUSD traded as high as 1.1184 before reversing to 1.1145. In the 4 hour chart support is being provided by the 20 period MA, and resistance by the upper Bollinger band as the pair trade in a tight upward sloping range.

The numbers from the UK were down to 52.3, missing expectations (53.1) and down from last time significantly (53.5). This weaker number for June again does not reflect the Brexit impact (as 89% of data was collected before June 23^rd) but will only add to the gloomy outlook. At 52.3 the figures matches the April figure which was a 38 month low. Growth over the whole of the second quarter was the weakest since the first quarter of 2013. Given the post-Brexit political mess and uncertainty, which will be continue for a considerable time, there is a high risk that the UK economy will slip into recession in the second half of the year.

Sterling continues to weaken and trades at 1.3130 against the USD (a post Brexit Low) and EURGBP at a post Brexit high of 0.8486.

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”

AUDNZD Update – Talk of parity premature ?

July 4, 2016 Forex Analysis

AUDNZD, Daily

Currencies have seen little direction for the most part as we begin the week, though the Australian dollar has been volatile following the inconclusive general election results over the weekend. AUDUSD initially dove, but subsequently managed to rebound to a 10-day peak at 0.7522, despite all three of the main credit ratings responding with warnings about the implications of the election to the government budget.

The AUD and the NZD have been remarkable robust recently and it led me to review the Analysis from June 15^th when I was looking for a retrace before taking a SELL position. I wrote then that…”Technically, the Daily down trend remains is intact, a potential SELL area appears where the channel, 20 DMA and 23.6 FIB retrace levels coincide between 1.0580 – 1.0620. This would generate Target 1 – 1.0486, Target 2 1.0340 and Target 3 1.0173. A break above 1.0750 would be of interest for BUY positions.”

The retrace never occurred and the pair continued to consolidate sideways, the threat of a hung parliament following the Australian general election over the weekend cased the pair to fall to a low of 1.0378 before recovering to north of 1.0450 today.

The pair remains bearish trading close to the trend line on “Brexit Friday” and again last Thursday, also rejecting the 20 DMA on both occasions too. A clear breach and break of the 1.0450 level on the Daily time frame will generate a SELL position with Target 1 1.0340 and Target 2 at 1.0173.

Tomorrow (Tuesday) sees Retail Sales from Australia and the RBA decision on interest rates. This will clearly have an impact on the pair as further easing from the RBA cannot be discounted although this is unlikely tomorrow, due in part to the current political uncertainty. Further out (over the next few months) and parity between the two cannot be discounted, much will be dependent on inflation (CPI) in both Australia and New Zealand.

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 Construction PMI falls sharply

July 4, 2016 Forex Analysis

EURGBP, H4

UK June construction PMI dove to 46.0, firmly and unexpectedly signalling that the sector is in contraction. This compares to the 51. 2 reading of May and the median forecast for a much more modest dip to 50.7. The 46.0 reading is the lowest level this series has seen since June 2009. Incoming new work fell by its steepest pace since December 2012. The survey found there has been a steep drop in residential building and the first decline in commercial work for the first time since May 2013. The survey is almost entirely a snapshot of conditions before the June 23 referendum on EU membership, and reflects caution in the sector ahead of the vote. Given the vote to leave and consequent political turmoil and uncertain economic future, the construction sector is likely to remain in decline over the coming months. The manufacturing PMI figure for June (also a pre-Brext vote snapshot), painted a much better picture, however, and focus will now be on the PMI survey of the big service sector, released tomorrow.

“Widespread delays to investment decisions and housing market jitters saw the UK construction sector experience its worst month for seven years in June. Construction firms are at the sharp end of domestic economic uncertainty and jolts to investor sentiment, so trading conditions were always going to be challenging in the run-up to the EU referendum. However, the extent and speed of the downturn in the face of political and economic uncertainty is a clear warning flag for the wider post Brexit economic outlook.”

GBPUSD fell below 1.3250 having been as high as 1.3296 earlier and EURGBP grinds higher to 0.8380.

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”

Live Analysis – USA500 Hits Target 2 too

June 29, 2016 Forex Analysis

USA500, Daily

Brexit Day 5 The uncertainty continues but the bounce back also continues. UK PM Cameron outlined the choices the country will face in negotiations to establish a new relationship with the EU. He said, during a comparatively un-tempestuous prime ministers question time session in parliament, that his successor will have to examine the different ‘models’ to see what works best, mentioning as examples the Canadian model, the Swiss model and the Norwegian model. All of these would constitute a marked deterioration in the UK’s current trading terms with the EU as a fully paid up member, and in the case of the Swiss and Norwegian examples would involve an open-border commitment. Many of those who had been in the Leave campaign, meanwhile, are hoping that the EU itself, sensing an existential threat, will change its attitude toward the migration issue and allow the UK access to the single market while controlling its borders. The idea is that there will be free movement of labour as opposed to free movement of people, with a reformed Europe comprised of individual but globalised economies. Some right-wing Leavers have been promoting Singapore as an example model.

Cable made up some ground overnight, topping at 1.3454, though so far unable to best Monday’s 1.3485 peak. EUR-USD traded over 1.1100, though continues to find sellers over the level. USD-JPY gains have stalled despite the improved risk backdrop, while USD-CAD has traded under 1.3000 on higher oil prices. Brexit uncertainty remains a market driver, though for now at least, unwinding of the sharp risk-off movements which began last week continue.

Global equities moved higher for the second day, and U.S. futures indicate a higher Wall Street open today. This meant that Target 2 at 2042 on the USA500 was achieved and a further advance to 2067 cannot be ruled out, however, this position is now closed.

I explained the approach to taking this trade during yesterday’s live analysis webinar together with the importance of risk management and always doing what is probable.

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”