Dollar Exhibits Weakness Against Rivals

Trading 19 sept 2019 Commentaire »

The U.S. dollar exhibited weakness against most major currencies on Thursday, as traders reacted to a slew of global economic data and the monetary policy statements from the Federal Reserve, the Bank of England, Bank of Japan and the Swiss National Bank.

The dollar index eased to a low of 98.20 around mid afternoon, but recovered some lost ground as the session progressed and was at 98.35 by late afternoon.

The dollar weakened to a low of 1.1075 against the euro early on in the session, but recovered to 1.1044 later on in the day, but was still down in negative territory, trailing its previous close by about 0.12%.

Against British Pound Sterling, the dollar dropped to a low of 1.2559 before recovering to 1.2524, limiting its loss to about 0.4%.

The Bank of England retained the interest rate at 0.75% and quantitative easing at GBP 435 billion, as expected.

The Japanese yen was around 108.05 a dollar, after having strengthened to 107.78 earlier in the day after the Bank of Japan maintained its monetary policy, but reiterated its willingness to pursue additional easing measures to support the economy.

The BoJ maintained interest rate at -0.1% on current accounts that financial institutions maintain at the bank.

The bank said it will purchase government bonds so that the yield of 10-year JGBs will remain around zero percent.

The Swiss franc spiked up against its key counterparts, after the Swiss National Bank kept its key policy rate and expansionary monetary policy intact, and tweaked rules for calculating negative interest rates on sight deposits to support banking system.

Against the dollar, the Swiss currency was up nearly 0.5% with the dollar-franc pair at 0.9927.

In the monetary policy assessment, the SNB said it is maintaining its policy rate and the benchmark sight deposit rate at -0.75 percent. The decision was in line with forecasts.

The dollar was down 0.2% against the loonie at 1.3264 and up nearly 0.5% at 0.6795 against the Aussie.

In economic news, data from the Labor Department showed initial jobless claims inched up to 208,000, an increase of 2,000 from the previous week's revised level of 206,000. Economists had expected jobless claims to climb to 213,000.

A separate report from the Philadelphia Federal Reserve showed a modest slowdown in the pace of growth in regional manufacturing activity in the month of September.

The Philly Fed said its diffusion index for current general activity fell to 12.0 in September from 16.8 in August, although a positive reading still indicates growth in regional manufacturing activity. The index had been expected to drop to 11.0.

A report from the National Association of Realtors showed existing home sales surged up by 1.3% to an annual rate of 5.49 million in August after spiking by 2.5% to a rate of 5.42 million in July. Economists had expected existing home sales to pull back by about 0.4%.


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Treasuries Pull Back Off Best Levels But Close Modestly Higher

Trading 19 sept 2019 Commentaire »

Extending the upward trend seen over the past few sessions, treasuries moved modestly higher during trading on Thursday.

Bond prices gave back ground after an early move to the upside but still managed to close in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.2 basis points to 1.774 percent.

The ten-year yield closed lower for the fourth consecutive session, pulling back further after ending last Friday's trading at its highest closing level in over a month.

Treasuries benefited from uncertainty about the outlook for interest rates following the Federal Reserve's monetary policy announcement on Wednesday.

The Fed lowered interest by 25 basis points as expected but indicated officials are mixed about whether the central bank should cut rates again before the end of the year.

While seven participants expect another rate cut before the end of year, five expect rates to remain unchanged and another five expect rates to be raised back to 2 to 2-1/4 percent.

The central bank reiterated that it will "act as appropriate" to sustain the economic expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

CME Group's FedWatch Tool currently indicates a mixed outlook for rate cuts at the Fed's next meetings in October and December.

On the U.S. economic front, the Labor Department released a report showing a modest rebound in initial jobless claims in the week ended September 14th.

The report said initial jobless claims inched up to 208,000, an increase of 2,000 from the previous week's revised level of 206,000. Economists had expected jobless claims to climb to 213,000.

A separate report from the Philadelphia Federal Reserve showed a modest slowdown in the pace of growth in regional manufacturing activity in the month of September.

The Philly Fed said its diffusion index for current general activity fell to 12.0 in September from 16.8 in August, although a positive reading still indicates growth in regional manufacturing activity. The index had been expected to drop to 11.0.

Looking ahead, the survey's future general activity index moderated but continues to suggest growth over the next six months.

The National Association of Realtors also released a report showing an unexpected jump in existing home sales in the month of August.

NAR said existing home sales surged up by 1.3 percent to an annual rate of 5.49 million in August after spiking by 2.5 percent to a rate of 5.42 million in July.

The continued increase came as a surprise to economists, who had expected existing home sales to pull back by about 0.4 percent.

"Buyers are finding it hard to resist the current rates," said NAR chief economist Lawrence Yun. "The desire to take advantage of these promising conditions is leading more buyers to the market."

Comments from several Fed officials may attract some attention on Friday amid an otherwise quiet day on the U.S. economic front.


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Oil Futures Pare Early Gains, Settle Nearly Flat

Trading 19 sept 2019 Commentaire »

Crude oil futures settled just marginally up on Thursday, despite moving up sharply early on in the session.

Concerns about supply in the market following the drone attacks on Saudi oil facilities last Saturday pushed crude oil prices in morning trades.

However, prices started climbing down as the session progressed amid reports disruptions to refining activity in Texas due to flooding from Tropical Storm Imelda and a likely drop in demand for crude.

West Texas Intermediate crude oil futures for October ended up by 2 cents at $58.13 a barrel.

On Wednesday, WTI Crude oil futures for October ended down $1.23, or about 2.1%, at $58.11 a barrel, after having plunged 5.7% a session earlier.

On Monday, crude oil prices soared more than $8 a barrel, lifted by worries about supply after the drone attacks on a couple of Saudi oil facilities.

A report from the U.S. Energy Information Administration today said that domestic supplies of natural gas rose by 84 billion cubic feet for the week ended September 13.

Data released by the Energy Information Administration Wednesday morning showed crude inventories in the U.S. rose by 1.06 million barrels in the week ended September 13, compared with expectations for a drawdown of 2.5 million barrels.

Gasoline inventories were up by 780,000 barrels last week, against forecasts for a drop of 540,000 barrels. Meanwhile, distillate stockpiles increased by 440,000 barrels, compared with forecasts for a rise of 535,000 barrels.


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Gold Futures Snap 3-day Winning Streak, Settle Lower

Trading 19 sept 2019 Commentaire »

Gold futures drifted lower on Thursday and snapped a three-day winning streak, as traders switched over to riskier assets such as equities thanks to positive economic data.

The Federal Reserve, which cut interest rates by 25 basis points on Wednesday, did not provide any hint about future rate cuts and just reiterated that it would act as appropriate to support economic expansion.

The dollar index declined to 98.20 and was last seen hovering around 98.25, down 0.3% from previous close.

Gold futures for December ended down $9.60, or about 0.6%, at $1,506.20 an ounce.

On Wednesday, gold futures for December ended up $2.40, or 0.2%, at $1,515.80 an ounce.

Silver futures for December ended down $0.035, at $17.884 an ounce, while Copper futures for December settled at $2.6085 per pound, down $0.0045 from previous close.

On Wednesday, Fed Chair Jerome Powell described the U.S. economic outlook as "favorable," and shot down media speculation about the yield curve signaling a recession on the horizon.

"We are adjusting monetary policy in a more accommodated direction to try to support what is in fact a favorable outlook," he said.

Elsewhere, the Bank of Japan kept its monetary policy on hold, but reiterated its willingness to pursue additional easing measures to support the economy.

The Bank of England today held its interest rate and the quantitative easing programme amid the heightened uncertainty as the October 31 deadline for the UK's exit from the European Union looms. The bank warned that the global slowdown and a no-deal Brexit would hurt the economy severely.

Investors also looked ahead to a potential cooling of U.S.-China trade tensions, as the two sides gear up for talks.

In economic news, a report from the National Association of Realtors said existing home sales in the U.S. surged up by 1.3% to an annual rate of 5.49 million in August after spiking by 2.5% to a rate of 5.42 million in July.

The continued increase came as a surprise to economists, who had expected existing home sales to pull back by about 0.4%.

The Labor Department also released a report showing a smaller than expected rebound in weekly jobless claims, while a report from the Philadelphia Federal Reserve showed growth in regional manufacturing activity slowed less than expected.


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Treasury Announces 2-Year, 5-Year, And 7-Year Note Auction Details

Trading 19 sept 2019 Commentaire »

The Treasury Department announced the details of this month's auctions of two-year, five-year, and seven-year notes on Tuesday.

The Treasury revealed plans to sell $40 billion worth of two-year notes, $41 billion worth of five-year notes and $32 billion worth of seven-year notes.

The results of the two-year note auction will be announced next Tuesday, the results of the five-year note auction will be announced next Wednesday and the results of the seven-year note auction will be announced next Thursday.

Last month, the Treasury also sold $40 billion worth of two-year notes, $41 billion worth of five-year notes and $32 billion worth of seven-year notes, attracting below average demand.

The two-year and five-year note auctions attracted above average demand, while the seven-year note auction attracted below average demand.


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South Africa Holds Rate Steady After July Cut

Trading 19 sept 2019 Commentaire »

South Africa's central bank left its key interest rate unchanged in September, as expected, after cutting it by a quarter-point in July.

The Monetary Policy Committee of the South African Reserve Bank unanimously decided keep the rate unchanged at 6.5 percent.

The bank left the growth forecast for this year unchanged at 0.6 percent, while cut the outlook for 2020 to 1.5 percent from 1.8 percent. The growth projection for 2021 was lowered to 1.8 percent from 2 percent.

"The MPC assesses the risks to the growth forecast to be balanced in the near term, but remains concerned about medium term growth and weak employment prospects," the bank said.

The average inflation projection for this year was cut to 4.2 percent from 4.4 percent, while the forecast for next year was kept at 5.1 percent. The outlook for 2021 was raised to 4.7 percent from 4.6 percent.

Risks to both the growth and inflation forecasts are balanced in the near term, the central bank said.

"The MPC welcomes the sustained moderation in inflation outcomes and the fall in inflation expectations of about one percent since 2016," SARB Governor Lesetja Kganyago said.

"The Committee would like to see inflation expectations also anchored closer to the mid-point of the inflation target range on a sustained basis."

The next policy session is scheduled for November 21.


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September 19, 2019 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 19 sept 2019 Commentaire »

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Two weeks ago, a quick bearish decline was demonstrated towards 1.0965 - 1.0950 where the backside of the broken channel came to meet the EURUSD pair again.

Risky traders were advised to look for a valid BUY entry anywhere around the price levels of 1.0950. All T/p levels were successfully reached within the recent bullish movement during last weeks' consolidations.

Earlier last week, the EUR/USD pair was testing the backside of both broken trends around 1.1060-1.1080 where significant bearish pressure pushed the pair directly towards 1.0940 (Prominent Weekly Bottom).

Bearish Breakdown below the price level of 1.0940 was needed to enhance further bearish decline towards 1.0900 and 1.0840 (Fibonacci Expansion Key-Levels).

However, SIGNIFICANT bullish rejection was demonstrated as a quick bullish spike towards 1.1100 where a recent episode of bearish rejection was expressed.

Currently, the GBPUSD is trapped within a narrow consolidation range extending between 1.1090 - 1.0995 until breakout occurs in either directions.

Bearish Breakout below 1.1030 is needed to render the recent bullish spike as a bullish trap. If so, bearish decline would be expected initially towards 1.0940-1.0920.

On the other hand, Bullish breakout above 1.1080 gives an early signal of short-term bullish reversal possibility as a bullish double-bottom pattern with a projected target towards 1.1175.

Trade recommendations :

Risky traders are advised to have a short-term BUY Entry upon bullish breakout above (1.1090-1.1110).

S/L should placed below 1.1050 while target level should be located at 1.1175.

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U.S. Leading Economic Index Remains Unchanged In August

Trading 19 sept 2019 Commentaire »

The Conference Board released a report on Thursday showing its reading on leading U.S. economic indicators came in unchanged in the month of August.

The leading economic index was unchanged at 112.1 in August after climbing by a revised 0.4 percent in July. The index had been expected to remain unchanged compared to the 0.5 percent increase originally reported for the previous month.

Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board, said the index came in unchanged as housing permits and the Leading Credit Index offset weakness in the index from the manufacturing sector and the interest rate spread

"The recent trends in the LEI are consistent with a slow but still expanding economy, which has been primarily driven by strong consumer spending and robust job growth," Ozyildirim added.

The report also said the coincident economic index rose by 0.3 percent in August after showing no change in July, while the lagging economic index fell by 0.3 percent following a 0.6 percent increase.


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U.S. Existing Home Sales Unexpectedly Show Continued Jump In August

Trading 19 sept 2019 Commentaire »

Citing falling mortgage rates, the National Association of Realtors released a report on Thursday showing an unexpected jump in U.S. existing home sales in the month of August.

NAR said existing home sales surged up by 1.3 percent to an annual rate of 5.49 million in August after spiking by 2.5 percent to a rate of 5.42 million in July.

The continued increase came as a surprise to economists, who had expected existing home sales to pull back by about 0.4 percent.

"Buyers are finding it hard to resist the current rates," said NAR chief economist Lawrence Yun. "The desire to take advantage of these promising conditions is leading more buyers to the market."

The report said the median existing home price in August was $278,200, down 0.8 percent from $280,400 in July but up 4.7 percent from $278,200 a year ago. August's price increase marks the 90th straight month of year-over-year growth.

"Sales are up, but inventory numbers remain low and are thereby pushing up home prices," said Yun. "Homebuilders need to ramp up new housing, as the failure to increase construction will put home prices in danger of increasing at a faster pace than income."

NAR said total housing inventory fell to 1.86 million existing homes available for sale at the end of August, representing 4.1 months of supply at the current sales pace.

The report also said single-family home sales surged up by 2.9 percent to a rate of 4.90 million, while existing condominium and co-op sales jumped by 1.7 percent to 590,000.

Next Wednesday, the Commerce Department is scheduled to release a separate report on new home sales in the month of August.


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September 19, 2019 : GBP/USD Intraday technical analysis and trade recommendations.

Trading 19 sept 2019 Commentaire »

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On July 26, Bearish breakdown below 1.2385 (Wedge-Pattern Key-Level) facilitated further bearish decline towards 1.2210 and 1.2100 which corresponded to significant key-levels on the Weekly chart.

In Early August, another consolidation-range was temporarily established between the price levels of (1.2100 - 1.2220) except on August 9 when temporary bearish movement was executed towards 1.2025 (Previous Weekly-Bottom).

Since then, the GBP/USD pair has been trending-up within the depicted bullish channel except on September 3 when a temporary bearish decline was demonstrated towards 1.1960.

Around the price level of 1.1960, early signs of bullish recovery (Bullish Engulfing candlesticks) brought the GBPUSD back above 1.2100 and 1.2220 where the GBPUSD pair looked overbought.

However, further bullish momentum was demonstrated towards 1.2320 maintaining the bullish movement inside the depicted movement channel.

As Expected, Temporary bullish advancement was demonstrated towards 1.2475 - 1.2500 where the upper limit of the current movement channel applied considerable bearish rejection on September 13.

Today, another bullish trial is currently being expressed towards 1.2500 where a possible Double-Top reversal pattern may be established.

The Long-term outlook remains bearish as long as the upper limit of the current movement channel around 1.2475-1.2500 remains defended by the GBPUSD bears.

On the other hand, Bearish breakdown below 1.2400 (Reversal-Pattern Neckline) can turn the short-term outlook into bearish, thus allowing more bearish decline towards the lower limit of the movement channel around 1.2330.

Trade Recommendations:

Conservative traders can look for a valid SELL entry anywhere around the price levels of 1.2475-1.2500 for a valid SELL entry.

T/P level to be placed around 1.2330, 1.2280 and 1.2220 while S/L should be placed above 1.2550.

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