USDJPY holds firmly above 108.50 ready for its next move higher

Trading 24 oct 2019 Commentaire »

USDJPY is still above the Ichimoku cloud indicator and above both the tenkan- and kijun sen indicator. Price has broken the important resistance of 108.50 and holding above it is a positive sign.

analytics5db20d53117f1.png

Orange rectangle- support (previous resistance)

USDJPY is trading above both the tenkan- and kijun-sen indicators. Price is also above the Kumo (cloud) and holding above 108.50 would be supportive for the short-term bullish trend. Support is at 108.50 and next at 107.70. Major trend change level is at 107.20. USDJPY is making higher highs and higher lows.Until we see a cloud breakdown we consider each pull back as a buying opportunity.

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Euro Falls As ECB Mario Draghi Defends Sept. Stimulus Measures

Trading 24 oct 2019 Commentaire »

The euro depreciated against its key counterparts in the European session on Thursday, after the European Central Bank President Mario Draghi indicated that recent weak economic data justified that the central bank was appropriate to announce a raft of stimulus measures last month.

In his press conference in Frankfurt, Draghi said that the incoming data since the last meeting confirmed the previous assessment of a protracted weakness in euro area growth momentum, the persistence of prominent downside risks and muted inflation pressures.

The risks surrounding the euro area growth outlook remained on the downside, Draghi cautioned.

These risks reflect the prolonged presence of uncertainties arising from geopolitical factors, rising protectionism and vulnerabilities in emerging markets.

Draghi said that latest stimulus package would help support the euro area expansion, the ongoing build-up of domestic price pressures and the sustained convergence of inflation to medium-term inflation aim.

The ECB retained the main refinancing rate at its record low 0 percent and the deposit rate at -0.50 percent after the latest Governing Council meeting.

The marginal lending facility rate was kept unchanged at 0.25 percent.

The bank also retained its forward guidance on both interest rates and asset purchases.

"The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 percent within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics," the bank said.

Soft PMI readings from Germany and Eurozone triggered a pull back in the euro earlier in the European session.

Survey data from IHS Markit showed that the euro area private sector remained close to stagnation in October as manufacturing continued to shrink amid subdued expansion in services activity.

The flash composite output index rose slightly to 50.2 in October from 50.1 in September. A score above 50 indicates expansion, and that below 50 suggests contraction. The score was forecast to improve to 50.3.

The currency held steady against its major counterparts in the Asian session.

The euro slipped to 1.1111 against the greenback, down by 0.5 percent from a 3-day high of 1.1163 hit at 3:15 am ET. At Wednesday's close, the pair was worth 1.1131. The euro is seen finding support around the 1.09 region.

After rising to a 3-day high of 121.39 at 3:15 am ET, the euro slipped 0.7 percent to 120.54 against the yen. The pair was quoted at 120.98 at Wednesday's close. Next immediate support for the euro is seen around the 118.00 level.

Final data from the Cabinet Office showed that Japan's leading index fell less than estimated in August but remained at the lowest level in nearly ten years in August.

The leading index, which measures the future economic activity, fell to 91.9 in August from 93.7 in July. The initial estimate was 91.7.

The single currency was 0.3 percent lower at 1.1010 versus the Swiss Franc, following a 1-week high of 1.1042 seen at 3:15 am ET. The pair had finished Wednesday's deals at 1.1023. The euro is poised to challenge support around the 1.09 level.

The euro was trading lower at 1.7388 against the kiwi, after rising to a 3-day high of 1.7434 at 3:15 am ET. At yesterday's trading close, the pair was quoted at 1.7333. Continuation of the euro's downtrend may lead it to a support around the 1.70 region.

Reversing from an early 2-day high of 1.4590 against the loonie, euro slipped to a new 3-week low of 1.4528. The pair had ended yesterday's trading session at 1.4548. On the downside, 1.42 is possibly seen as the next support level for the euro.

The euro held steady against the aussie, after having eased from a weekly high of 1.6310 it touched at 3:15 am ET. The euro-aussie pair was trading at 1.6239 at Wednesday's close.

Survey data from IHS Markit showed that Australia's private sector logged a weaker growth in October.

The Commonwealth Bank of Australia Flash Composite Output Index dropped to 50.7 in October from 52.0 in September. A score above 50 indicates expansion.

In contrast, the single currency appreciated to 0.8654 against the pound, rebounding from a 2-day low of 0.8600 seen at 3:00 am ET. The pair was valued at 0.8615 when it ended trading on Wednesday. The euro is likely to face resistance around the 0.88 region, if it gains again.


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EURUSD has many chances for an upward reversal

Trading 24 oct 2019 Commentaire »

EURUSD is trading above the support area of 1.11-1.1080. A reversal from this area is highly probable. EURUSD has the potential to move towards 1.1250. What is needed for the bullish scenario to come true, is a bounce of current levels.

analytics5db20bab9f251.png

Green lines- bullish channel

Black line -expectations

Orange rectangle - support area

EURUSD remains inside the bullish channel. EURUSD is approaching the important support area shown in the chart above as an orange rectangle. EURUSD has the potential to reverse its pull back to a move higher. I do not believe the entire move upwards is complete and I also believe that we should expect more upside. Breaking below 1.1080 would be a bearish sign.

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ECB's Draghi Urges More Fiscal Policy Support To See Higher Rates

Trading 24 oct 2019 Commentaire »

The outgoing European Central Bank President Mario Draghi on Thursday stressed the need for a more active fiscal policy in the euro area to help create a conducive environment to raise interest rates in future.

In his final post-decision press conference, Draghi said, "If one wants to see higher rates sooner, fiscal policy should be active."

"With fiscal policy, the monetary policy objective will be reached sooner with less side-effects," Draghi told reporters. Eurozone interest rates were raised last in July 2011, by 25 basis points, and Draghi is set to be the only ECB chief thus far who did not raise interest rates.

But Draghi's decisions raised several eyebrows in his eight-year term as he was bold enough to undertake several unconventional measures at the ECB, mainly asset purchases and negative interest rates, which were inconceivable in the euro area years ago. Earlier on Thursday, the ECB maintained interest rates and its stimulus measures, including asset purchases and forward guidance, unchanged. "The mildly expansionary euro area fiscal stance is currently providing some support to economic activity," Draghi said in his introductory statement. Citing the weakening economic outlook and the persistence of downside risks, the ECB chief urged "governments with fiscal space" to act in "an effective and timely manner". "All countries should intensify their efforts to achieve a more growth-friendly composition of public finances," Draghi said. Risks surrounding the euro area growth outlook remain on the downside, he said, adding that the weak growth momentum is delaying the pass-through of labor cost pressures to inflation. The main risk is a downturn in the economy, whether global or domestic, the central banker added. While the lower likelihood of a hard Brexit has improved the situation, the uncertainty remains, he warned. Regarding negative rates, Draghi said the overall assessment was positive as the improvements in the economy more than offset the adverse side effects.

"The Governing Council reiterated the need for a highly accommodative stance of monetary policy for a prolonged period of time," Draghi said.

The Italian economist is set to handover the reins of the ECB to former IMF Managing Director Christine Lagarde on October 31.

Draghi, the savior of euro who is known for his buzzwords "whatever it takes", leaves behind a legacy marred by controversy. His departure comes at a time when growth in the 19-nation euro area is sagging and inflation is far away from the ECB's goal of "below, but close to 2 percent".

And it is this worrying economic picture that prompted Draghi to unveil a host of stimulus measures in September, the effectiveness of which are increasingly being doubted. The euro area economy is facing a prolonged sag than was expected earlier, he told lawmakers in September.

The latest stimulus package failed to get the full backing of the Governing Council and the policy-making body has never seen such a major divide in views.

However, Draghi defended the stimulus measures on Thursday, telling reporters that "Unfortunately everything that has happened since September has shown abundantly that the Governing Council's determination to act was justified."

Quizzed on the rift in the Governing Council, Draghi took it lightly. He told reporters that Thursday's decisions were unanimous.

Under the former French finance minister Lagarde, it is widely expected that the ECB monetary policy strategy will under go a major overhaul.

Responding to questions regarding his role as ECB chief, Draghi said, "If there is one thing that I'm proud of then it is that we have always pursued our mandate. Never give up."

The experience as ECB President has been "intense, profound, and fascinating", Draghi added. He said he felt like he tried to comply with the policy mandate in "the best possible way".

Draghi also showered praise on the ECB staff and expressed gratitude for their contribution to the debates in the policy sessions.

"The popularity of the euro has never been so high," the outgoing ECB chief said.


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ECB Maintains Status Quo As Draghi Bids Adieu

Trading 24 oct 2019 Commentaire »

The European Central Bank on Thursday left its key interest rates, forward guidance, and stimulus measures unchanged as expected in the final policy session chaired by President Mario Draghi.

The main refinancing rate was retained at its record low 0 percent and the deposit rate at -0.50 percent after the latest Governing Council meeting. The latter was slashed by 10 basis points in September. The marginal lending facility rate was kept unchanged at 0.25 percent.

The bank also retained its forward guidance on both interest rates and asset purchases.

Interest rates are expected to remain "to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close" to ECB's aim of "below, but close to 2 percent" and " such convergence has been consistently reflected in underlying inflation dynamics."

In September, the ECB announced a restart of its asset purchase programme at a monthly pace of EUR 20 billion from November 1. The bank reiterated this on Thursday.

"The Governing Council expects them to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates," the ECB reiterated. Draghi, the savior of euro known for his buzzwords "whatever it takes", leaves behind a legacy marred by controversy.

The latest stimulus package failed to get the full backing of the Governing Council and the policy-making body has never seen such a major divide in views.

The Italian economist is set to handover the reins of the ECB to former IMF Managing Director Christine Lagarde on October 31. Draghi's departure comes at a time when growth in the 19-nation euro area is sagging and inflation is far away from the ECB's goal of "below, but close to 2 percent".

And it is this worrying economic picture that prompted Draghi to unveil a host of stimulus measures in September, the effectiveness of which are increasingly being doubted. The euro area economy is facing a prolonged sag than was expected earlier, he told lawmakers.

Under the former finance minister Lagarde, it is widely expected that there is likely to be a change in strategy in ECB monetary policy.

Eurozone interest rates were raised last in July 2011, by 25 basis points, and Draghi is set to be the only ECB chief thus far who did not raise interest rates.

Draghi's decisions also raised several eyebrows as he was bold enough to undertake several unconventional measures at the ECB, mainly asset purchases and negative interest rates, which were inconceivable in the euro area years ago.


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U.S. New Home Sales Show Modest Pullback In September

Trading 24 oct 2019 Commentaire »

New home sales in the U.S. pulled back in September after a sharp increase in the previous month, according to a report released by the Commerce Department on Thursday.

The report said new home sales slid by 0.7 percent to an annual rate of 701,000 in September after spiking by 6.2 percent to a revised rate of 706,000 in August.

Economists had expected slump by 1.7 percent to a rate of 701,000 from the 713,000 originally reported for the previous month.

The modest pullback in new home sales came as home sales in the West and Northeast tumbled by 3.8 percent and 2.8 percent, respectively.

New home sales in the South also edged down by 0.2 percent, while new home sales in the Midwest surged up by 6.3 percent.

The Commerce Department also said the median sales price of new houses sold in September was $299,400, down 7.9 percent from $325,200 in August and down 8.8 percent from $328,300 in the same month a year ago.

The estimate of new houses for sale at the end of September was 321,000 compared to the 323,000 for sale at the end of August. The months of supply at the current sales rate was unchanged at 5.5.

On Tuesday, the National Association of Realtors released a separate report showing existing home sales pulled back by much more than anticipated in the month of September.

NAR said existing home sales plunged by 2.2 percent to an annual rate of 5.38 million in September after jumping by 1.5 percent to an upwardly revised 5.50 million in August.

Economists had expected existing home sales to drop by 0.7 percent to a rate of 5.45 million from the 5.49 million originally reported for the previous month.


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*U.S. New Home Sales Drop 0.7% In September

Trading 24 oct 2019 Commentaire »

U.S. New Home Sales Drop 0.7% In September


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U.S. Durable Goods Orders Tumble 1.1% Amid Slump In Aircraft Demand

Trading 24 oct 2019 Commentaire »

A report released by the Commerce Department on Thursday showed a steep drop in orders for transportation equipment contributed to a bigger than expected decrease in U.S. durable goods orders in the month of September.

The Commerce Department said durable goods orders tumbled by 1.1 percent in September after rising by a revised 0.3 percent in August.

Economists had expected durable goods orders to decline by 0.8 percent compared to the 0.2 percent uptick that had been reported for the previous month.

The steeper than expected drop in durable goods orders came as orders for transportation equipment plunged by 2.7 percent in September after inching up by 0.2 percent in August.

Orders for non-defense and aircraft led the way lower, plummeting by 11.8 percent in September following a 17.2 percent nosedive in the previous month.

Excluding the slump in orders for transportation equipment, durable goods orders dipped by 0.3 percent in September after climbing by 0.3 percent in August. Ex-transportation orders had expected to edge down by 0.2 percent.

The more modest drop in ex-transportation orders came as notable decreases in orders for fabricated metal products and computers and electronic products were partly offset by a rebound in orders for electrical equipment, appliances and components.

Meanwhile, the report said orders for non-defense capital goods, excluding aircraft, a key indicator of business spending, fell by 0.5 percent in September after sliding by 0.6 percent in August.

Shipments in the same category, which is the source data for equipment investment in GDP, decreased by 0.7 percent in September after coming in unchanged in the previous month.

"These soft data confirm that business investment momentum has faded amid elevated trade uncertainty and deteriorating global growth and is likely to provide virtually no support to GDP growth in H2," said a note from economists at Oxford Economics.

The economists added, "And with business sentiment rapidly shifting toward a more cautious stance, we caution that risks to the investment outlook are tilted to the downside."


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U.S. Weekly Jobless Claims Show Modest Decrease

Trading 24 oct 2019 Commentaire »

The Labor Department released a report on Thursday showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended October 19th.

The report said initial jobless claims dipped to 212,000, a decrease of 6,000 from the previous week's revised level of 218,000.

Economists had expected jobless claims to inch up to 215,000 from the 214,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also edged down to 215,000, a decrease of 750 from the previous week's revised average of 215,750.

The report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also slipped by 1,000 to 1.682 million in the week ended October 12th.

The four-week moving average of continuing claims still rose to 1,677,250, an increase of 6,500 from the previous week's revised average of 1,670,750.

Next Friday, the Labor Department is scheduled to release its more closely watched monthly employment report for October.


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*ECB's Draghi: To See Higher Rates Sooner, Fiscal Policy Should Be Active

Trading 24 oct 2019 Commentaire »

ECB's Draghi: To See Higher Rates Sooner, Fiscal Policy Should Be Active


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