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22/03/16 Market notes

Exchange Rates Are To Be Pushed Down Deeper By ECB & BOJ

Exchange Rates Are To Be Pushed Down Deeper By ECB & BOJ

The negative interest rates are used by the European Central Bank and Bank Of Japan in order to push down their currencies value deeper. However, there are certainly limits to the effectiveness of such rates. At the moment where rest of the world is not growing normally, pushing down the exchange rate has become essential.

Nonetheless, The ECB and BOJ representatives argued that the aiming for weaker currencies with policies aimed at bolstering growth and inflation is not a deliberate matter. Earlier this month, ECB President Mario Draghi said that it is true that some of the measures have obviously a spillover on the foreign-exchange market. However, he also stated that the ECB is not in the war at all and denied that it is intent on manipulating the Japanese currency.

In the G-20 meeting last month that took place in Shanghai, global finance ministers and central bankers reiterated their past commitment to hold back from such thing as competitive currencies devaluations.

In the future, the role of the central banks will somewhat ignite a debate due to the scope in which central banks mandates have eventually expanded, often by default to deal with crisis. In such particularly uncertain world as it is now, an intelligent and collective respond to it has become the utmost importance and necessity.

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22/03/16 Market notes

April Rate Increase Still In The Business, Dollar Climbs

April Rate Increase Still In The Business, Dollar Climbs

US Dollars has soared for two consecutive days as The Fed officials hinted that the interest rate hike would take place as early as April, resulting a boosting of assets appeal denominated in the US currency. The officials post-meeting statement sounds to be reiterating Chair Janet Yellen statements that the rate would hike in April.

The US Dollars rose against most of its major peers as recent economic data may give grounds for additional policy tightening following the first rate hike in nearly a decade last December.

A great momentum is believed to be occuring in term of justfying the increase as it is shown in the economics report. Head of foreign-exchange trading and research at Aspen Trading Group, Dave Floyd, has said that they are apparently “the prettiest of the ugly” from the interest rate and central banking point of view, which gives the Dollars a favor. San Francisco Fed chief John Williams also said that if the data continues to come in the expected way, April or June would be the potential, ideal time to rise the rate.

As how it stands, the inflation rate, which is currently behind The Fed’s 2 percent target, could significantly get closer to the target when the oil prices bottom out.

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18/03/16 Forex education

Chart Pattern Types: Part 1

Chart Pattern Types: Part 1

As a continuance of the technical analysis learning, now we will learn about Chart Pattern. Beforehand, it is suggested that you learn the Trend Line and Support & Resistance topic because basically, Chart Pattern is formed by concepts of those prior topics. The nature of Chart Pattern is somewhat pretty similar to what has been discussed on those topics.

As mentioned above, Chart Pattern is a graphic pattern which is made of concepts of the Trend Line and Support & Resistance. This pattern is basically formed by the understanding of traders throughout the world in identifying and responding the happening situation and condition.

In the beginning, Chart Pattern was not something taken seriously in case of technical analysis until 1920s when an accountant named Ralph Nelson Elliot brought up his observation about the relationship between basic concept of Support & Resistance and price tendency to form a pattern. What he put forward had confirmed the existing assumption that humans have similar feelings or emotions for a certain condition or situation. Based on the assumption, Elliot predicted that humans reaction (read: traders) will be identical. It makes a particular pattern recurs until the nature of it is possible to predict or understand.

Actually, Chart Pattern is a more specific form of a trend phase. Chart Pattern summarizes the whole activity perspectively and formatively. It is perspectively because the formed pattern will depend on who is looking at it and formatively because it contains particular formations of price movements.

Basically, Chart Pattern can be seen by different points of view as traders would have dissimilar views on recognizing the occuring event. Yet, in recognizing pattern, the perspective is not the only thing that matters, but the validity as well. Chart Pattern’s validity level on a wide time frame will certainly be higher than the narrower one. For example, it will have more validity to observe pattern on H4 time frame than M15.

In terms of formation, Chart Pattern is divided into two categories, which are Reversal Pattern and Continuation Pattern. As mentioned on the Trend Line topic, reversal is an event in which the price movement takes a “U-turn” or in other words, it is a pattern indicating a reversal of the ongoing trend. On the other hand, Continuation Trend, as what it is called, is a pattern indicating a continuation of the ongoing trend. It is important for a trader to be able to identify and take an advantage of an information as quick as possible if an optimum profit is desired.

Both Chart Patterns have their own forms. Moreover, they have several unique forms in general, which are:

Reversal Chart Patterns:

Head and Shoulders
Inverted Head and Shoulders
Triple Tops
Triple Bottoms
Double Tops
Double Bottoms

Continuation Chart Patterns:

Triangles
Flags
Pennants
Rectangles
Cup and Handle

Each pattern will be discussed further in Chart Pattern part 2.

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18/03/16 Market notes

World Crude Oil Price, Next Rumor In April

World Crude Oil Price, Next Rumor In April

Questions on when the world oil producers will held a meeting regarding oil problems are answered. The meeting of the Organization Petroleum Exporting Countries (OPEC) and other oil producing countries will take place on April 17 in Doha. However, the list of attending countries is yet to be announced.

In the last few weeks, the oil price has soared due to the expectation that the oil producers would freeze production as an attempt to cut the supply off the market and lift the price. Qatar, as the head of OPEC, has given its best effort to support the freezing of oil production. Its representative has said that the proposal received immensely huge support not only from the OPEC, but from the non-OPEC as well, including Saudi Arabia and Russia.

Russia and Saudi Arabia have agreed to hold production to the level of last January. Nevertheless, the deal comes along with certain conditions. Most importantly, both said, they have an expectation that other oil producers will take the same path as they do.

The issue regarding the low price of world crude oil has not seemed to be over. The OPEC deal in which the production would be cut off in order to elevate the oil price has found itself some obstacle as Iran is having a policy where the production is not cut at all after a sanction aimed at the country. Iran said that the deal is a pure joke and even have increased production after the lifting off of the international sanction.

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17/03/16 Forex education

Trend Line, A Basic Analysis

Trend Line, A Basic Analysis

The decision to buy or sell should go according to the ongoing trend most of the time. Why does it matter? Placing a buy order in a bearish trend would be dangerously risky as it would be more likely to hit the stop loss than when the trend is followed.

Does taking benefit of the trend gives consistent profits? Trend has become the very foundation of decision making. To gain the optimal profit in forex trade, other analyzing tools would be needed. However, before building a trading system, analyzing the trend becomes an important matter, for system without understanding the trend would be just like blind people not knowing where to go.

How is the trend formed? There are several ways to form it. First, it is by using the line tool provided on MetaTrader4 platform or charting websites such as tradingview.com.

wt

A price will form waves (red lines) which are highs and lows. If higher highs and higher lows are continuously formed, it is called Bullish trend. In order to form a trend line when bullish occurs, a line that connects lows and higher lows should be drawn (blue lines). If you want to give it a try, you can go to www.tradingviews.com, pick any pair you desire (such as EURUSD) and a chart would come out.

tools

Tools above could be used to form a trend and help us to recognize if it is in a bullish, bearish, or sideways trend. Afterwards, the highs, lows, higher highs, and higher lows could be decided. After deciding the points, lows and higher lows should be connected for bullish trend or highs and lower highs for bearish trend. When bullish trend occurs, the formed trend is below the price and it is called the support. On the other hand, when bearish trend takes place, the trend line would be above the price which is called the resistance.

line

As in the example above, the trend line is connecting the low and the higher low.in many occasions, the price was heading to the trend line before reversing to keep on going along with the trend. Trend line is a psychological line that is widely used by traders to decide which price level they would open a position on. In the example above, if we place a buy order on the trend line, there is a possibility that the price would rebound. It shows that forming a trend line would not only help us to gain profit, but to mitigate the risk as well.

Not only the trend line, there are also other indicators we could utilize to recognize a trend. One of them is the Moving Average (MA). MA is an indicator in which the average price of a certain period is shown. For example, MA 10 shows the average price of the last ten days.

How does MA become a trend? As an illustration, let us say that the last ten days average price is 1.1340 and the current price is 1.1240. It means that the current price of the currency pair is being traded below average price that was traded ten days earlier. Such condition suggests that the pair is in a bearish trend which means that if the price hits the MA 10, there is a huge possibility that the price would rebound and be back on its track of declining. Similar to trend line, MA could also be utilized as the support or resistance of the price movement. It can be seen that the MA could function as the support or resistance, being an alternative to form a trend line.

ma

After understanding the utilization of trend, the other important thing to learn is the waves. Waves are the price movements that form a trend. Waves become important because identifying waves is needed to recognize a trend precisely. Waves could be decided by identifying the forming of new high and low.

highlow

The capability of recognizing waves would bring us a precise trend line. In terms of utilizing MA, waves are not usually detected in the short period MA most of the time. It would require a longer period MA in order to avoid the waves trap (Tail whip).

ma2

3 TYPES OF TRENDLINE

There are three types of trend line. They are the uptrend (Bullish), the downtrend (Bearish), and Sideways. In the Bullish trend, the low and the higher low should be connected, while in the Bearish trend, the high is connected with the lower high. On the other hand, in the Sideways, a channel in which the price remains inside the channel without penetrating the highs and lows could be seen.

sw

Now that you have learned what trend line is and how to draw it, what else are you waiting for? Try to draw a trend line on any charting platform you like and share it here with us for a further discussion.

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17/03/16 Market notes

The Dovish Fed, Where Would US Dollars Go?

The Dovish Fed, Where Would US Dollars Go?

The Fed’s statement last night sounded like a dovish tone. The Fed is believed to be in need of further confirmation if an interest rate is about to hike. One of the The Fed’s considerations is the labor market as The Fed is still waiting for the strengthening of the labor market in order to state that US economy is in line with the recovery target.

The other considerations are the inflation and the slow going growth of global economy. Will the inflation rate hit the target this year? Prior to The Fed’s rate hike last December, it was believed that 2% of inflation rate would be hardly achievable, even until 2017. However, should The Fed not rise the interest rate, risks, such as bubble asset, would come.

The global economy growth is estimated to keep going on a moderate level. The fairly low price of crude oil would still hugely contribute to it, not to mention the China economy condition. The currency war among countries such as the Europeans, China, and Japan has not brought any significant outcome to each one of them.

In such condition, where would the US Dollars go? Will it rise or will it fall? For now, the strengthening of USD could lead to the decline of US export number and it would give an impact on the employment which has become one of the concerns. On the other hand, the weakening of USD has not been on top of the The Fed ‘s to-do list. In 2015, the EURUSD was staying between the range of 1.15 and 1.05 and it is generally possible that it would stay that way. The USD and other currencies do not possess any reason to form a long term trend. At the moment, investors still have their assets on stocks and gold. The fairly low interest rate brings a big hope that the stock market would keep on going on a rally, while the generally similar conditions of economy among big countries give the investor no choice but to hold the gold instead of allocating their money on a certain currency.

Thus, is our open position in line with the ongoing trend of currency trade? In fairly small amount, yes, it is.

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16/03/16 Market notes

GBPUSD Weekly Outlook

GBPUSD Weekly Outlook

gua

Earlier this week, GBPUSD was opened on 1.4379 level. On a daily basis, this particular pair is in an uptrend. The rise of GBPUSD started on February 28th 2016 where the GBPUSD was right on its lowest point on 1.3835 level. At the moment, this pair is strengthening to 1.4326. Will it keep getting stronger? What exact price could this pair actually reach?

When the Bollinger Bands indicator (20 period) is applied, it is seen that the upper band is nearly hit, while the breakout level is on 1.4045 level. Compared to current price, it has reached 2% from the breakout level and is going through its 11th day. Is the GBPUSD saturated already in terms of rising? Currently, it becomes relative to say that GBPUSD is in a saturated condition because on a daily trend basis, it can be seen that the pair has had a quite big rise these past two weeks while in weekly term, it clearly shows that GBPUSD has been in a bearish condition for a fairly long period of time. Thus, there comes a possibility that in mid term, a correction would occur in this pair.

gub

The graphic shows the GBPUSD on weekly period with MA 10, MA 25, and MA 50 indicators on. It can be seen that the Bollinger Bands are widening, as it is known that it is Bollinger Bands nature to widen and then narrow afterwards. In such widening condition, there is a huge possibility that GBPUSD will rise. At the moment, it is also attempting to penetrate the MA 10 and once it happens, the GBPUSD will make its way to the MA 25 (Bullish Target).

In such condition, GBPUSD trading scenarios could be applied for both long and short positions. Here they are:

LONG POSITION

In order to take a long position on GBPUSD with a quite high risk/reward ratio, stop loss order on level 1.4116 could be placed, as well as a profit target on 1.4909 level. In such scheme, the targeted profit is counted to be near 593 pips while the loss on the stop loss point would be around 200 pips. In the meantime, a certain scenario in which the firstly mentioned scenario does not take place should wisely be prepared. For the open position of plan B, the stop loss point should be used as the position where the sell order should be placed. With such position, a target of roughly 280 pips from 1.4116 to 1.3838 could be achieved.

guc

SHORT POSITION

At the moment, the risk/reward ratio for the selling scenario is around 1.36. The sell position could be ordered at the current price of 1.4326 with 1.3838 as the target, making around 488 pips as the profit target. The stop loss point would better be on 1.4669 (around 343 pips). Once the stop loss point is hit, a position of sell should be opened on the exact same price with 1.4909 as the profit target (around 240 pips).

Considering both scenarios, at the moment it is believed that the long position is more profitable even though the GBPUSD is seemingly high enough. On a daily trend basis, it surely has been going on for 11 days. However, in weekly terms it has already started the bearish trend since last November, resulting the trend considered to be saturated and could lead to the beginning of bullish trend.

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15/03/16 Market notes

Investors Expecting Bank Of Japan’s Policy

Investors Expecting Bank Of Japan’s Policy

What would BOJ do following the easing and negative interest rate policy earlier this year? BOJ might not implement any significant policy two months in a row. At the moment, witnessing the impact of the implemented policy has become a priority as investors being eager to see BOJ’s view on its own policy.

By now, Japanese Yen is being traded on 113.75 per USD. Market’s reaction is quite similar to what happened during the ECB’s interest rate cut. Without any new policy coming, does it mean that Japanese Yen is strengthening? Technically speaking, this currency is in saturated condition in terms of selling on weekly period basis as the widening Bollinger Bands indicator signifying that the accumulation phase is about to take place. The weakening target of Japanese Yen on US Dollars is to around 116.271, where the 50% retracement level of Fibonacci lies.

a

In daily period, the Japanese Yen is in an accumulation phase and a major movement is about to happen. This movement would not occur until the very best moment, which is this week. Fundamentally, the currency could continue its uptrend as it becomes one of the most wanted currencies when the global economy is being challenged by the decreasing of global demand, China’s growth slowdown, and low energy price.

How do we place an open position safely in USDJPY? At the moment, sell position has a higher reward ratio than buy position. With 2.29 reward ratio, we could sell USDJPY on the current price (113.347) along with a stop loss of around 100 pips on breakout level of 114.405 and taking profit on 111.019 (around 235 pips). If the stop loss price is hit, a buy order should be placed on the exact same price with 116.271 as the profit target.

b

Therefore, short position is generally considered as a safe position in spite of a possibility in which the pair would hike after the consolidation phase. We might not be able to predetermine where the price would move to but surely we could create scenarios for all movement possibilities.

P.S : In the education section, basic to intermediate level of information regarding  how to make a technical analysis will be discussed further.

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14/03/16 Market notes

US Stocks Keep On Rising

US Stocks Keep On Rising

Last Friday, DJIA was closed on 17213.31 level. In other words, it had 1.3% of rise. On the other hand, S&P 500 rose to 1.6% or 2022.19. The closings of both indices were recorded to be on the highest level since last 2015.

The rise of S&P 500 was pushed by the energy sector as it advanced to 2.2%. Not only by it alone, but it was also supported by the increase of oil price that reached the highest level of last three months.

Chevron became the stock with the highest rise after advancing to 7.6% on last week trade. Meanwhile, safe haven assets, such as gold and risk-free asset, had a correction. Gold futures fell 1% into 1258.70 per ounce.

The US stocks rise was followed by other major indices, such as Russell 2000 (2.22%), Global Dow (1.89%), Nikkei 225 (0.51%), and Stoxx Europe 600 (2.62%). Stoxx Europe 600 had the highest increase that was caused by ECB’s action last Thursday in which the interest rate was cut.

In such condition, stock investors are advised to anticipate the interest rate hike rumor. It is so to mitigate the risk of leaving the portfolio of risky assets for portfolio of fixed-income assets. At the moment, regarding the attempt to achieve the desired level of inflation rate, The Fed is still concerned about the labor payroll. However, a number of investors are certain that the hike would eventually take place in mid-year.

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11/03/16 Market notes

Why was Euro Currency Appreciated With ECB’s Stimulus Policy?

Why was Euro Currency Appreciated With ECB’s Stimulus Policy?

ECB’s ambition to hit the target of 2% inflation rate was put into business more seriously last night. Mario Draghi, the President of European Central Bank, ensured that ECB will give its utmost best to get to that level. ECB has decided to continue the stimulus by acquiring €80 Billion worth of assets, adding the previous same amount of assets. This particular program also includes corporate bonds in its portfolio so that ECB will not run out of instruments to buy.

ECB also cut the deposit rate to -0.4% from -0.3%. This policy will encourage European banks to lend their money to businesses. However, there is still a worry that the non-performing loan will grow as Europe’s export to China is dipping down in number.

The stimulus policy and rate cut were responded counter-wisely by the market. EUR was appreciated to $1.12 level. One of the reasons was the market considers that Europe is almost out of ammo to shoot the target. The indication could be that “the interest rate probably will not fall any deeper”.

The situation in Europe is not in the most supportive state to achieve the target right now. The inflation rate projection is targeted to be at 0.1% this year. Draghi is an ambitious man who will find lots of ways to accomplish his mission. It is not impossible that this policy will be accompanied by other policy along the road to ensure that the Euro currency will be depreciated to the ECB target.

Thus, Euro currency appreciation is an impact of market reaction to Draghi’s statement. Even so, does it suit the EUR in long term? It is hardly believed so as most will find it unwise to hold EUR for the longest time in such stimulus condition. In long term, the EUR/USD is still bearish.

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10/03/16 Market notes

Is Japan’s Negative Interest Rate Policy Effective?

Is Japan’s Negative Interest Rate Policy Effective?

Credit growth in Japan slowed down last February. Bank of Japan’s data quoted that it only rose to 2.2% from the previous year. That number is lower than January’s 2.3%. On the other hand, the deposit rate rose to 3.1% on February, higher than January’s 2.9%.

The deceleration did not occur until the central bank implemented the negative interest rate policy. In contrast to what was planned, the policy was set in order to stimulate the credit. The board of directors of BOJ, led by Haruhiko Kuroda, set the interest rate on -0.1% level. In the voting process, the ratio of those who agreed the negative interest rate policy and those who did not was 5:4.

The inflation rate target is considered hardly achievable as the world crude oil price is low and the salary growth is decelerating. The raise of the oil price lately could not afford to optimize several countries’ inflation rate target.

The negative rate policy implementation contributed to the strengthen of Japanese Yen last February. In such condition, it is possible that the Japanese would respond further by implementing a stimulus policy.

Recently, USD/JPY is on 112-113 level and repeatedly trying to penetrate this level. The Japanese Yen currency is too strong in such rate policy condition. Thus, regarding the trade of USD/JPY currency, long position is considered as a quite safe position. Commitment of Trader data has also shown a decrease of short position, which is 5.197% along with a 1.694% increase of long position.

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10/03/16 Forex education

Trading Session? What Exactly Is It?

Trading Session? What Exactly Is It?

Trading Sessions

Forex market is open for 24 hours 5 days a week. This is a really long period of time as it is a sleepless market. For traders, it is really exciting, for they have the opportunity to multiply their profits anytime they desire.

However, just like a traditional market, it’s not always crowded. There are times when it’s so full of traders and there are also times when you can count them with just one hand. That’s how the knowledge of market hours and timing becomes important as you can adjust your trading strategy better so that it suits the market hours and timing, therefore brings you maximum profit.

Market Hour

First of all, we need to know that in forex trading, the market hour is divided into several main trading sessions, which are Sydney Session (Australia), Tokyo Session (Asia), London Session (Europe), and New York Session (America). As we all know, there is a pretty big time difference between Australia and America (+16 hours), resulting the forex market opens all the time as at least one of the markets is still open when the others are closed.

session

Tokyo Trading Session

Widely known as Asia Market, since Tokyo is the Asian trading center, this session has approximately 21% of the trade share a day with Japanese Yen as its favorite currency traded. Not only Japan, but other strong economy powers, such as Hongkong, Singapore, Australia, and South Korea, are also actively involved in transactions. Similar to China, Japan is an exporting country, leading to Bank of Japan not becoming the sole foreign exchange trader, since China and commercial companies also actively trade.

At certain times, liquidity could be considerably low which could be seen when the price movement is slightly low (price does not change for a fairly long period). Such condition could lead to the forming of breakout level from the previous trend occurs in American Market which results to a consolidation phase of a pair. Most of major movements occurs earlier in the session as it is generally the time where fundamental economy news is being released.  Tokyo Market is likely to have an impact on the next markets session, since traders in Europe and America would observe what was happening in Tokyo Session.

Pairs that are quite interesting to trade in this session would be Japanese Yen and Australian Dollars. Considering that China has grown into new economy power, those pairs would likely to receive a significant impact by the time China releases important news.

Europe/London Trading Session

Europe Market has the biggest trade share with approximately 36% of all transactions. Europe Trading Session is where the transaction highly occurs as thousands of “big bosses” throughout the world put themselves in.

This session has some characteristic. Firstly, as it overlaps other markets, it makes this session exceptionally crowded. It also leads to a high liquidity and volatility and low pips spreads. Secondly, trend that occurs during this session mostly would keep its track until the beginning of New York Trading Session. Thirdly, the volatility would be low at noon during the lunch time, waiting for the New York Trading Session to open. Some important news in Europe would also affect the price movement.

During this session, all pair would usually become interesting because of the number of traders involved. However, the tightest pairs would still be the major pairs, such as EUR/USD, GBP/USD, USD/JPY, and USD/CHF.

timetable

Market Hour (GMT)

New York Trading Session

This market takes around 19% of the trade share. New York is the center of trade and business in America. This city is also widely known as “The City That Never Sleeps”. We also know that US Dollars is the world currency as it is involved in nearly 90% of the world trade.

This session also has certain characteristics. Firstly, it has high liquidity because of its overlapping on London Trading Session. Secondly, when the US government release important news, prices in the market would be significantly affected, since most of the world trade involves US Dollars in it. Thirdly, after the London Trading Session is closed, the liquidity and volatility would tend to lower (during mid day in America). Fourthly, on Friday, transactions would reduce as Asian and European traders are no longer active on the weekend. Finally, trend reversals could possibly occur after the afternoon session in America. It is caused by traders unwilling to keep an open position to avoid unwanted events triggered by releases of news during weekend. Just like in Europe, every pair would be good to trade in this session but a full attention should be given because when important news is about to be released, price of US Dollars would usually move wildly.

General characteristics of each session have been discussed. Now let us proceed to pair’s characteristics on certain day so that a full picture would be gotten and timing of transaction could be well decided.

Below is pips movement of each pair on each day:

pips

It can be seen that Wednesday, Thursday, and Friday are the busiest days. So, the best time for forex trading would be in London Trading Session on Wednesday, Thursday, and Friday because it is the busiest time and the overlapping period would provide high liquidity and volatility and higher chances to gain profit in shortest time possible.

When is the worst time to trade?

For aggresive traders, Asian Market would not give the best satisfaction due to its low volatility and liquidity. Saturday is also not recommended because it is time when the market is closing (after afternoon session in America). Finally, when world major events are happening, such as FIFA World Cup, the market would tend to be quiet as traders’ attention would be distracted.

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09/03/16 Market notes

Rally in gold, stock, and oil price. Which one would hike?

Rally in gold, stock, and oil price. Which one would hike?

Europe GDP (YoY) has shown a 1.6% raise. This number is slightly higher than the forecasts of analysts which mentioned  that it would only reach 1.5%. However, this is not the only condition that it takes to stimulate the strengthening of Euro currency against the USD as other data would be needed such as inflation rate.

In the previous trade, S&P reached psychological level of 2002. This raise was supported by the simultaneous hike of WTI Crude Oil price these five days. However, profit taking and long term trend reversal should be anticipated for sure.

What would turn the US Stock Market trend around? Firstly, US stocks have risen considerably high since the Quantitative Easing was implemented and they also have taken the bubble burst risk high up there along with them. Secondly, interest rates hike rumor has also been spreaded lately which could lead to investors being not so eager to put their assets in the capital market. In such condition, they would tend to hold safe haven instruments, such as gold.

In January-March 2016, gold price has risen around 20%. This raise, however high it could be considered, still brings much more safety regarding asset placement than other instruments, such as stocks. It is also logical to hold it until The Fed provides certainty over this year’s rate hike.

A decline in EUR/USD could possibly occur as the resistance is being tested on 1.1080 level. As mentioned above, rate hike rumor could drive the EUR/USD to decline further.

 

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09/03/16 Market notes

US stocks sinks as Oil drops 4% after session, Micron is the worst performer.

US stocks sinks as Oil drops 4% after session, Micron is the worst performer.

US Stock markets almost erased gains in Tuesday as Oil rally turned into abrupt retracement, dragging down commodity and oil firms. The drop could be also attributed to the downbeat data from China, renewing concerns over world economy slowdown. Futures on US benchmark, WTI, plunged more than 4% after official session close, posting the biggest decline since 11 February. 

According to the views of Goldman Sachs, recent Oil upturn didn’t have reasonable grounds under it as Oil prices should stay depressed for a longer period to bring market into balance later this year. The shares of biggest Oil producers Exxon and Chevron, appearing in Dow index, tumbled more than 2 percents. S&P energy sector plunged 4,1 percents.

Trade data from China which came out yesterday disappointed investors as it showed Chinese industrial sector contracts faster that it was expected. Exports decline in February was the worst for six years, while drop in imports for consecutive 16 week drove shares of raw material companies into red, with 2 percent loss average. 

Dow Jones dipped 0,64% to 16.964,1 points, S&P 500 sunk 1,12% to 1.979,26, Nasdaq Composite lost 1,26% with 4.648,83 point at Tuesday close. Chipmaker Micron was the worst performer, which shares lose 7.9%, dropping to $10,66.

Oil prices managed to rebound in Wednesday session, WTI advanced 0.36% to $36.62, Brent gained 0.48% to $39.85, consolidating before an attempt to occupy $40 level. Gold fell 0.33% to 1,258.60 as investors drop safe heavens to catch the wave of equity upturn.

Brokerarena.com

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08/03/16 Market notes

Oil retreats after yesterday surge, Japanese indices sink.

Oil retreats after yesterday surge, Japanese indices sink.

Oil prices are trimming down gains today after substantial growth in Monday session. Brent prices met resistance at $40.48/bbl. level while WTI retreated hitting resistance at $37.56. Both benchmarks depreciated around 1percent.

The commodity is under pressure today after release of gloomy economic news from China. Foreign trade data for February came out worse-than-expected: exports fell by whopping 25.4% comparing to the same period of last year, while imports dropped 13.8% posting 16-months consecutive decline. The drop appeared to be the worst from post-crisis 2009 year.

Brent soared 6% breaking through the level of $41/bbl. in the evening session yesterday. The rally of crude prices is associated with continuing cutback of shale drilling in US (more and more rigs are idled). Crude output in US fell to the lowest level since November 2014.  Further signs of decline in US oil production and forthcoming Oil freeze talks  may trigger the wave of calls on Crude but more corrections are expected before WTI firmly occupy $40 level.

The meeting on output cap will be held on 20 March. Positive expectations serve as a decent boost factor to Oil prices. Russia and majority of OPEC and Non-OPEC countries express their willingness to team up in efforts to return market into balance, but participation of Iran is essential to set the plan into motion.USD/RUB followed the course of Oil retreating from 80 peaks to 71.40 level. Further strengthening is tightly bound to the prices on Oil.

Japanese indices suffer from moderate selloff today as automotive manufacturing, gas and water companies, banks post negative performance. Toshiba Corp are the worst performer with 7.01% decline today. 

USD Index showling the value of USD against the basket of six overseas peers slid 0.03% today to 97.09 points.

USD/JPY declined as Yen strengthens on Oil decline and worrisome equity markets, -0.37% today, GBP/USD drops 0.22% ahead of BoE Carney speech on UK EU membership, AUD/USD extend drop as Australian currency gains bullish momentum on Global commodity upturn. EUR/USD remains near yesterday session close at 1.1020.

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07/03/16 Market notes

Oil prices extend rally on output cap expectations, Oil rig count drops in US.

Oil prices extend rally on output cap expectations, Oil rig count drops in US.

Oil prices stage a substantial rally in Asian session on Monday fueled by speculations Oil producing nations will soon freeze production on January levels. 

WTI futures with April delivery trading on NYMEX surged 1.92% to $36.61/bbl. Internationally traded benchmark Brent advanced 1.94% to $39.47, meeting resistance on $39.50 level. 

At the annual communist party meeting this time held in Sunday, Chinese government reported about eased goals of economic growth in next five years, downsizing the target to 6.5%. Other plans and targets were announced as well. 

As the crude prices dismissed downbeat data on US crude inventories last week (10M barrels growth, versus 3M estimate) and kept rallying, its hard to say whether the growth on this week will be able to stir bearish sentiments on Oil market.  Though surplus concerns yet weight on prices, they are mostly propelled by expectations of output caps discussed between Russia, Iran and OPEC cartel. Oil prices rose to 3-months high in Friday on these rumors as well as signs shale drilling slows in US. 

Baker Hughes rig count report released in Friday showed the number of working rigs in US dropped from 400 to 392, contracting 11 consecutive week to the lowest level since 2009. Comparing to the October 2014 period with 1609 rigs used, current number of working rigs dropped by around 69%. The cut in rig count is often considered as as bullish signal which bodes well in easing Oil glut. 

Next meeting between Oil-producing nations where output cap will be discussed should be held later in March. 

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01/03/16 Market notes

China Manufacturing PMI disappoints, Oil rebounds after a short dip.

China Manufacturing PMI disappoints, Oil rebounds after a short dip.

Energy prices slightly declined during Asian session in Tuesday as Oil traders are still highly cautious and tend to take profit from short-term rallies. 

WTI futures with April delivery quoting on NYMEX are trading on $33.84 (+0.27%), recoiling from $33.50 support point. Weekly support and resistance levels are $31.07 and $34.69 respectively. 

Brent futures, crude benchmark which is on ICE exchange in London, with may delivery fell half of percent to $36.37 and the difference between WTI and Brent rose to $2.74/bbl.

US Dollar Index showing performance of US currency to its six overseas peers forming a basket dipped 0.12% to $98.16.

On Comex exchange, gold futures with April settlement rose substantially by 0.82% to 1.244.50, reflecting the demand for safe heaven assets will be probably high today. The commodity was as high as 1249.30 today and support level were met on $1212.20 for troy ounce. 

Other precious metal, silver, gained 1.61% advancing closely to $15 level, while Copper futures with march delivery tumbled 1.13% to 2.105 for pound. 

Highly-important indicator for world market today, China manufacturing PMI, dropped to 49.0 points in February comparing to 49.4 reading in January. Analysts estimated the index will shows 49.3 points. Stalling Chinese economy especially manufacturing sector will make it hard for Chinese government to think out measures to extricate the country from Yuan devaluation and intensified stock rout so another spin of selloff on equity markets is expected. 

CSI 300 and ShComp are in temporary rally now with 0.25 and 0.40% gains respectively as of 04:54 GMT. 

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26/02/16 Market notes

WTI takes wait-and-see position climbing on 33 level, markets are waiting for PBOC head speech

WTI takes wait-and-see position climbing on 33 level, markets are waiting for PBOC head speech

After a sharp rally from $31.50 to $33.00 level during late session yesterday WTI managed to hold its own on this level. Currently the commodity floats in a $32.80-33.10 level, waiting for London session which will set Friday trend. Crude prices can be also affected by resolutions made on G-20 summit in Shanghai. Session support has been found on $32.77 level, weekly support is $29,48 level and resistance is $33,53. 

USD index which shows the value of greenback to the basket of other six majors dropped 0.19% to $97.25 indicating US Dollar is weakening against its overseas peers.

Brent futures with April delivery declined 0.63% to $34.94 and spread between two crude benchmarks rose to $2,06 bbl. 

Australian Dollar depreciated against Euro and Japanese Yen, EUR/AUD added 0.26% ti 1,5265 level, AUD/JPY dipped 0.05% to 81,73 level. Japan CPI came out in early Asian session showed 0% growth and met expectations, while previous reading was 0.2%. 

GfK report showed UK Consumer Confidence fell to zero points beating estimate of 3 points, while in previous month it showed 4 points.

EUR/USD advanced 0.24% today trading at 1,1040 level with support at 1.10 (key level) and local resistance at 1,1150 level. 

EU CPI which is due later today with 0.1% forecast may pave the way for Euro, while US GDP for 4Q  will bear significant influence on US currency. Baker Hughes rig count for this week will throw the light on drilling activity in US and help WTI traders to price it in the market.

Brokerarena.com

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25/02/16 Market notes

Oil drops in Asian session, Gold advance on risk-averse sentiments.

Oil drops in Asian session, Gold advance on risk-averse sentiments.

Oil futures extend decline from Wednesday after Iran Oil Minister Bijan Zanganeh said OPEC’s plan to freeze output is “ridiculous” and put “unrealistic demand” to the Islamic country. The drop worsened after Saudi Minister of Oil Al-Naimi said his country won’t cut output on any conditions as other countries won’t support this action.
WTI futures with April delivery fell 0.47% to $32.00, Brent prices declined 0.41% to $34,27 as of 5:18 GMT. WTI found support on $29,48 and resistance on $33.53.
US Index which indicate the gauge of US currency to the basket of other major six currencies fell 0.01% and is trading on 97.50.
The odds that Fed will change interest rate to 0.75% in March fell from 19.7 to 8.3% according to CME group data. The change is likely caused by worse-than-expected Consumer Confidence data, important gauge of economic health in US, which show 92.7 points in January instead of 97.3 expected.
XAU/USD rose 0.40% on risk-averse sentiments trading at $1.234,40 on Comex Exchange during Asian session. Resistance were met at $1.250.40 and support at $1.203.00.
Silver futures with march settlement rose 0.24% to $15,260 and copper dropped 0.90% to 2,099 because of slowing China imports.

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17/02/16 Market notes

Crude prices lost support after Qatar talks, US stocks close session with gains.

Crude prices lost support after Qatar talks, US stocks close session with gains.

Crude futures prices staged minor recovery in Wednesday Asian session after tumbling off local highs on news that Saudis and Russia decided to freeze production on January levels. WTI went below $29 at close of Tuesday session but then managed to rebound by 0.62% from session close to $29.22 level. Brent added 1.15% rising to $32.55.
US stocks closed Tuesday with gains indicating that investors still show signs of risk appetite even falling Oil prices couldn’t deny that. Dow Jones added 1.39% rising to 16,196.41,S&P posted gains of 1.65% to 1,895.58, Nasdaq advanced by 2.27% to 4,435.96.
US Dollar index showing the weight of Dollar against the bask of 6 overseas major peers declined by 0.06% and is trading at 96.83 level.
NZD dairy Auction for Milk powder showed decrease of the price by $62, dropping from $1,952 to $1,1890. NZD priced in this change with more than 0.4% decrease, sending NZD/USD as low as 0.6558 level.
Gold futures gained 0.12% rising to 1,210 level, in case of further deterioration in Oil market gold may start heading highs again together with Yen and other safe heaven assets.
Eurozone Zew Survey Sentiment report posted 13.6 points indicating that less analysts expect improvement in economic situation in Europe comparing to the January reading (22.7).
GBP CPI report released numbers that were in line with expectations – 0.3%. After short a short rally GBP turned back to bearish movement, GBP/USD is at 1,4293 (-0.08%).

Brokerarena.com

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