Profile cover photo
Profile photo
Veselka Nikolova
1,063 followers
1,063 followers
About
Posts

Post has shared content
Just A Minute

Euro bulls won't have enjoyed the sight of the euro hitting 3-week lows versus the US dollar [EURUSD] on Thursday 's dip and the move below $1.1700 will have led to some long euro positions being liquidated. While that might have cleared away some stale positioning, the question for traders is whether the euro is going to base out or fall further. Each trader will have their own opinion, and each opinion will be based both on a view on the euro and a view on the US dollar. So what might the currency market's consider is important. On the US dollar side of the equation, one point that traders might focus on is that, as Canada's TD Securities wrote on Wednesday, the Federal Reserve's latest minutes reveal "that “many” participants believe the [Fed's] balance sheet run-off would “contribute only modestly to the reduction in policy accommodation.” In contrast with the market, which has increasingly priced out subsequent rate hikes as the Fed has discussed the balance sheet, much of the FOMC does not view them as substitutes. This is a marginally more hawkish signal, as it explicitly is not a potential reason to slow down rate hikes in the mind of the Committee." In the opinion of France's BNP Paribas, "the bottom line from the Fed now is that, while balance sheet reduction is likely to begin very soon, further hikes in the Fed funds target will be contingent on the recovery in price data that the Fed has long been anticipating actually beginning to materialize." In a nutshell, if US data is robust then the Fed could continue to tighten even at the same time as embarking on balance sheet reduction. And of course the Fed can do against the backdrop of a greenback that's weaker now than when 2017 began. Contrast that with Thursday's European Central Bank minutes for the July 19-20 meeting (when euro/dollar was still around $1.1500) which revealed that even then "concerns were expressed about a possible overshooting in the repricing by... markets, notably the foreign exchange markets, in the future." The comparison is telling. One central bank has concerns about a possible further rise in its currency, the other seems set out on tighter monetary policy one way or another if the data is robust. Purely from a monetary stance comparison, and while there are multiple drivers of the exchange rate which might change the calculation, it could be argued that the hurdle for renewed euro strength versus the US dollar just got raised.

Written by Neal Kimberley, External Currency Analyst.
All financial products traded on margin carry a high degree of risk to your capital. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader

Post has shared content
FTSE 100: Makes a U turn

According to data from Office for National Statistics (ONS) revealed yesterday that UK retail sales fell to 1.3% year-over-year on July, comparing to the downwardly revised 2.8% in the previous month and marginally lower than analysts’ estimates there were expecting 1.4% increase.

UK ILO unemployment rate fell to 4.4% in the three months to June, stronger than analysts’ forecast of 4.5%. The ONS data showed that employment rate increased to an all-time high of 75.1% as the number of people in work rose by 125K and potentially indicating an expansion within the UK labour market.

Since the beginning of August the main UK index FTSE 100 is running flat with a minor loss of almost 0.2% and is in a potentially phase change, shifting from a bullish to a warning phase.

On yesterday session the UK100 tried to rise however found enough selling pressure to erase all of its gains and closed in the red, near the low of the day, in addition managed to close below Wednesday low, which suggests a strong bearish momentum.

The price is trading below the 10 day moving average and seems to be providing dynamic resistance where selling is believed to be strong enough to prevent prices from rising higher.

The stochastic is showing bearish momentum and is below the 50 mid line.

UK100 is a CFD written over FTSE100 futures.

Written by Hugo O’Neill, External Analyst.

Leveraged products carry a high degree of risk to your capital and any forecasts given are not a reliable indicator of future performance.
Photo

Post has attachment
GBP/USD Remains under pressure
Last days the GBP/USD pair is bounded within tight
range is currently is settled at 1.2876. The better than expected numbers on UK
retail sales released this morning pushed the pair higher, but bulls couldn’t
fight the psychological level at 1.2900. However...

Post has shared content
Looking Ahead To Jackson Hole

The Fed-hosted Jackson Hole Economic Symposium takes place next week (24-26 August) with European Central Bank chief Mario Draghi in attendance. Markets are hoping that Draghi will provide a steer on how the ECB's next policy meeting on September 7 will play out. Some might wonder if the rise in the value of the euro, which by definition reduces imported inflation, might lead ECB policymakers to conclude that any withdrawal of ultra-accommodatory monetary policy might not yet be needed. Certainly euro appreciation, by weighing on euro zone inflation, could delay a return to the ECB's target of close to but below 2 per cent inflation. It's also likely that ECB staff members will tweak their 2018 inflation forecast lower to take into account the impact of the euro's rise. But that might not preclude the ECB moving ahead, even if their actions fuel further euro strength. In the first instance, the ECB might well see demand for euros as reflecting returned confidence in the euro zone economy. Such demand might be welcome. Secondly, while the currency market understandably fixates on the euro's value, the ECB doesn't have an explicit exchange rate policy target. The euro intrudes on the ECB's policy stance when the ECB perceives it to be affecting price stability in the medium, but not short, term. Traders will be hanging on every word Draghi says in Jackson Hole and if the ECB chief doesn't overtly focus on the euro's appreciation in recent months, the currency market may conclude that omission is telling.

Written by Neal Kimberley, External Currency Analyst.
All financial products traded on margin carry a high degree of risk to your capital. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader

Post has shared content
NZDUSD: Bullish divergence

At its August meeting, the Reserve Bank of New Zealand (RBNZ) kept unchanged the interest rate at 1.75% as widely expected by the market. The bank officials highlighted that major challenges remain with persistent surplus capacity and extensive political uncertainty therefor monetary policy will remain accommodative for a considerable period, as numerous uncertainties remain and policy may need to adjust accordingly.

Yesterday FOMC minutes revealed that several Fed policymakers were prepared to announce the beginning date for the reduction of the US central bank’s balance sheet, however most preferred to wait for additional information on the economic outlook and developments potentially affecting financial markets.

Since the beginning of August, the NZDUSD currency pair lost over 2.5% and is in warning phase since early August.

On yesterday session, the currency pair initially fell but found enough buying pressure to erase all its losses and closed near the high of the day, in addition managed to close within Tuesday’s range, which suggests being slightly on the bullish side of neutral.

The NZDUSD is trading below the 10-day moving average that seems to be demonstrating a dynamic resistance since early August.

The stochastic is showing an oversold market and is setting higher lows while price is making lower lows, signs of a potential bullish divergence.

Written by Hugo O’Neill, External Analyst.

Leveraged products carry a high degree of risk to your capital and any forecasts given are not a reliable indicator of future performance.
Photo

Post has attachment
AUD/USD Moves higher due to better than expected AU jobs data
AUD/USD extends Wednesday's strong rally and today marked fresh high at 0.7962, as latest economic and political
developments boosted the pair. Greenback is suffering after the release of latest FOMC minutes and the political
uncertainty in the USA. Of cour...

Post has shared content
Inflation Is In The Eye Of The Beholder

Headline data releases elicit immediate market responses that generally reflect whether or not the economic numbers match or beat forecasts or whether they come in below expectations. The sell off in the US dollar and the paring back of Fed rate hike expectations following last Friday's benign US CPI data is a case in point. But what immediate market responses do not necessarily reflect is how policymakers perceive the importance of those same data points. While Minneapolis Fed chief Neel Kashkari, who has consistently voted against this year's Fed rate hikes, feels, as might be expected, that as US CPI again came in low "we have the luxury of waiting to see what actually happens... before we decide where to go with monetary policy," others, who have voted with the majority, may think differently. Speaking ahead of Friday's CPI data New York Fed chief and vice-chairman of the rate-setting Federal Reserve Open Market Committee (FOMC) William Dudley said "people think about inflation on a year-over-year basis, and those year-over-year measures are going to be depressed for a while. But thinking about it sequentially, we would expect the inflation data to show a little bit more upward pressure than what we've seen over the last four months or so." French bank Societe Generale therefore thinks that the FOMC "will continue to look for the 3-month and 6-month annualized rates to accelerate in the second half in order to justify a rate hike" and isn't ruling out a US rate hike in December. If, as seems likely, Dudley's views are a reasonable reflection of Fed chief Janet Yellen's view of the world, markets may have to adopt a different approach to their interpretation of monthly US price inflation data in coming months.
Written by Neal Kimberley, External Currency Analyst.
All financial products traded on margin carry a high degree of risk to your capital. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader

Post has shared content
Gold: Drops as North Korea tensions ease

This past week we witness rising military threats between the US and North Korea however yesterday the North Korean leader surprisingly indicated he would delay a decision on firing missiles towards Guam, a US territory in the Pacific.

Overall the US dollar index rose to near a three-week high on the back of strong US retail sales.

Also weighing on gold is the prospect of another increase in US interest rates as market analysts expect one more rise this year by the Federal Reserve (Fed) which may fuel US dollar appreciation thus diminishing the value of other countries’ currencies and potentially leading to decrease in demand for commodities expressed in US dollars including gold, consequently dragging down the precious metal price.

Since the beginning of August the precious metal is practically running flat with a minor gain of 0.2% although is in a bullish phase since late July.

On yesterday session, gold fell with a wide range and closed near the low of the day, in addition the precious metal managed to close below Monday’s low, which suggests a strong bearish momentum.

The stochastic is showing a strong bearish momentum and crossed below the overbought zone.

Gold is trading above all three daily moving averages the 10, 50 and 200 which may provide a dynamic support for the precious metal.

Written by Hugo O’Neill, External Analyst.

Leveraged products carry a high degree of risk to your capital and any forecasts given are not a reliable indicator of future performance.
Photo

Post has attachment
USD/JPY Close to the psychological threshold at 110.00
During the Asian session today the USD/JPY pair marked
a weekly high at 110.95 but the situation changed after the FOMC minutes, which
led to a broad-based US Dollar sell-off. The policymakers exposed their
concerns about the inflation’s slowdown. So the ne...

Post has attachment
Aussie extends weakness after RBA minutes and US upbeat data
Aussie continues to run on the downside and
today dropper to four week  low, having marked daily low at 0.7805
with closure around 0.7820.  The minutes of the latest RBA rate decision are hinting some  disinflationary impact of the strong currency and are
t...
Wait while more posts are being loaded