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ActivTrades UK
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ActivTrades is a leading award-winning broker specialised in Forex, CFds and Spread Betting.
ActivTrades is a leading award-winning broker specialised in Forex, CFds and Spread Betting.

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It's all about France's election but what might traders be thinking?

Thursday's Harris poll in France gave Emmanuel Macron a slightly increased lead in the French Presidential election race and the currency market reacted by taking the euro higher versus the dollar (EURUSD). Whether or not that was cause and effect is a matter for individual traders to decide. Nevertheless it's worth noting that research produced by French bank Societe Generale on Tuesday argued that in any potential scenario where Macron reaches the second round of the election, Macron wins the Presidency. So if the euro did rise on Thursday as a consequence of Macron's improved poll showing then by the same logic it could react favourably to confirmation after Sunday's election that Macron has got through to the second round. Euro/yen (EURJPY) might then be one pair that attracts traders' attention. SocGen wrote that "Japanese investors sold a net JPY1.52trn of French bonds in February, the most on record" and that while "outflows likely cooled off in March...they have picked up of late again, as the remarkable gains of Mélenchon in the polls have changed the election into a four-way race." Traders might logically infer that if Japanese investors have been selling down their French bonds and then converting the received euros into yen on worry that a mainstream candidate like Macron might not be the next President of France, they may choose to reverse the process if their concerns prove to be without basis.

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 

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NASDAQ 100: Developing a potential head and shoulders pattern

The initial jobless claims in the US released by the US Department of Labor showed a unexpected increase to 244K in the week ended April 15th compared to 234K in the previous week, the data showed an increase of 10K new Americans filing for the first-time claims and came out above the analysts forecast of 242K.

Today on the economic front the focus will be on the preliminary Markit Manufacturing PMI where the market is expecting a rise to 53.5 after the previous month number of 53.3, a reading above 50 suggests the economy is expanding while a result below 50 points indicates an economic contraction.

Since the beginning of April the US Technology Index is trading flat with minor gain of 0.14% but continues in a well-established bullish phase since early December 2016.

On yesterday session the NASDAQ 100 rallied with a wide range and closed near the high of the day, in addition managed to close above Wednesday high, which suggests a strong bullish momentum.

The stochastic is showing bullish momentum however is still below the 50 mid line.

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

UsaTec is a CFD written over NASDAQ 100 futures.

Written by Hugo O’Neill, External Analyst.

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Analysts talking Cable to 1.34-1.35 but will the crowd buy that notion?

Writing on Wednesday, National Australia Bank (NAB) wrote that "with a substantially improved technical picture and with opinion polls showing a substantial lead for the incumbent Conservative government and its leader Theresa May, it is not difficult to envisage a return to the USD1.34-1.35 area [in Cable]. This is where [sterling/dollar] fell to in the immediate aftermath of the EU referendum and also marks the high (1.3445 to be precise) of the rally in early September 2016." NAB might well be proven correct but at the very least it might not be a straight road. Setting aside for one moment that whatever happens in the UK general election will not affect the European Union's negotiating stance and although sterling bears were arguably always on a hiding to nothing given the way that Prime Minister May articulated the logic for her calling of the UK election, there are a couple of other points that need to be kept in mind. Commodity Futures Trading Commission data for the week ending April 11 had showed a further expansion in bullish dollar bets versus sterling compared to the prior week. It is hard not to conclude that the currency market was short and so got caught when Prime Minister May spoke. At the same time, sub-forecast US inflation and retail sales data in the days prior to Tuesday's announcement had contributed to a drift lower in US Treasury yields, rendering the dollar slightly less attractive anyway. Positioning, lower US yields and May's announcement combined to make the perfect storm for traders who were short of sterling. Many of those positions will now have been unwound. But to make the leap of faith that many analysts are now making, that the pound can forge yet higher, needs traders to adopt a new psychology. The wisdom of the crowd has to foresee a higher pound driven by its own merits if traders en masse are going to be prepared to buy sterling afresh at the top end of the recent range. That's completely different to just buying sterling because you are caught short or because you think the market is caught short.

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 

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USDCHF: Developing lower highs and lower lows

By the end of last week the US Bureau of Labour Statistics released the Consumer Price Index (CPI) data that revealed a declined to 2.4% year-on-year in March, comparing to the 2.7% rise in February and missed analysts forecast of 2.6%. It is the lowest inflation rate in three months fuelled by to a slowdown in energy and services prices.

However on the other side of the Atlantic, the Consumer Price Index (CPI) in Switzerland released by the Swiss Federal Statistical Office showed an unchanged rate of 0.6% year-on-year in March, comparing to 0.6% gain in February and beating analysts forecast of 0.5%. The CPI remains at the peak level since June 2011.

Since the beginning of April the USDCHF lost almost 0.5% and is in a potential phase change, shifting from a bullish to a distribution phase.

During yesterday session the currency pair rose with a narrow range although found enough selling pressure around the 200-day moving average to give some of its gains back to the market and closed in the middle of the daily range, in addition closed within the previous day range, which suggests being slightly on the bullish side of neutral.

The stochastic is showing an oversold market however is still displaying a strong bearish momentum.

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

Written by Hugo O’Neill, External Analyst.

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Crude Oil: Making healthy correction to a key level

Since the beginning of 2017, the Organization of the Petroleum Exporting Countries (OPEC) agree to decrease oil production by 1.2 million barrels a day (bpd) for a period of six months and believe that inventories should fall as healthy oil demand growth steps in this year.

According with the last data from energy Services Company Baker Hughes released on April 7th, the average number of US oil drilling rigs rose to 789 from 744 hitting a new high.

In the meantime, markets remain cautious on the US Energy Information Administration (EIA) report on crude inventories due today, following last week’s number of -2.166 million barrels. Today we will have the release of EIA latest survey the report is expected to show a decrease in crude oil stocks with estimates at -1.500 million barrels.

Since the beginning of April crude oil gained more than 3.0% and is in a bullish phase since early April.

On yesterday session, crude oil initially fell with a wide range and closed near the low of the day, in addition managed close below the Monday low, which suggests a strong bearish momentum.

The convergence of the 10 day moving average plus the key level may provide a good support for the price of crude oil and potentially turn into an inflection point.

The stochastic is showing an overbought market and is displaying a bearish momentum.

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

LCrude is a CFD written over Light Crude futures.

Written by Hugo O’Neill, External Analyst.

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BOJ-watching: new nominees to BOJ Board should shore up support for Kuroda's monetary policy settings

Tokyo-based analysts at Mitsubishi UFJ Morgan Stanley Securities (MUMSS) "expect the Japanese economy to lose momentum, with real GDP growth of 1.2% in FY16 followed by 1.0% in FY17 and 0.7% in FY18" so it could be argued it is good news for Japan's economy that on Tuesday the Japanese parliament nominated banker Hitoshi Suzuki and economist Goshi Kataoka to the Bank of Japan board to succeed Takahide Kiuchi and Takehiro Sato, whose terms end on July 23. Kiuchi and Sato have both previously dissented at the policy direction being set out by BOJ Governor Haruhiko Kuroda. In contrast, Kataoka published a research paper in 2016, called "A Reboot of Reflationary Policy Is Wanted," that called for greater fiscal spending and a halt to raise Japan’s sales tax in 2019. Such reflationary views will likely boost support on the BOJ's policy committee for Kuroda’s aggressive stimulus policies. Meanwhile, Suzuki will bring valuable experience in banking to the table. The bottom line for currency markets may be however that whatever the short-term safe haven attractions of the Japanese yen, the underlying BOJ monetary policy settings, that have previously weighed on the value of the Japanese currency, remain firmly in place and have arguably only been reinforced by Tuesday's nominations to the BOJ board.

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

Sterling regains poise as UK faces new general election but there will be twists and turns ahead

The currency market's reaction, both to the news that UK Prime Minister would hold an unscheduled press conference and then to her announcement of her intention to seek House of Commons approval to call a General Election on June 8, is perhaps telling. The initial sell off in sterling was followed by a rebound. In the short term that arguably makes sense. The currency market will be aware that the current polls would indicate the return of Theresa May as Prime Minister with an enhanced majority and may have reacted to that given that there is also an argument that such a scenario would lend gravitas to the UK's negotiating position when it debates the terms of Britain's withdrawal from the European Union. But forex traders will have to be flexible. While traders could perceive that the outcome of a British general election might make negotiations smoother, and that such a prospect could lend sterling some support, if the poll also reinforces the position of the Scottish National Party in Scotland, it might also reinforce the SNP's own calls for a second referendum on independence for Scotland. That might be more of a negative for the pound. Meanwhile, the British general election campaign will be beginning even as the French Presidential election draws to a close. No one as yet has any clarity on that outcome either. The bottom line is surely that yet another element of political uncertainty has entered the currency markets. Traders will likely have to keep an open mind on position-taking as there will no doubt be many twists and turns before the proposed June 8 poll even takes place.

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

US Treasury is Frank about the Franc in its Assessment of Swiss Currency Policies.

Switzerland remains on the US Treasury's Monitoring List of "major trading partners that merit close attention to their currency practices." In its latest report, released last Friday, the US Treasury wrote that "Switzerland over the past few years has used foreign exchange purchases to help counter persistent pressures from safe haven inflows and deflationary forces" before arguing that "Switzerland has space to deploy fiscal policy more forcefully to support domestic economic activity, and could also rely more heavily on traditional monetary policy tools (e.g., interest rates) to combat deflationary pressures, which would help reduce the need for foreign exchange intervention." Later in the report the US Treasury noted that International Monetary Fund staff have suggested that future foreign exchange interventions by the Swiss National Bank "should be limited to managing safe haven inflows, and that more traditional monetary tools (e.g., interest rates) be used rather than intervention to manage inflation. [The US] Treasury supports this recommendation." Whether or not the Swiss authorities will choose to heed this recommendation is unknowable but forex traders should at least be aware of the fact that, for the second semi-annual report in succession, the US Treasury has felt justified in focusing in on Switzerland's currency practices (EURCHF, USDCHF).

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

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Nikkei 225: Making a bullish engulfing pattern

The Merchandise Trade Balance Total released by the Japanese Ministry of Finance narrowed 245% year-on-year in February to JPY 813.4 billion compared to JPY 235.5 billion a year earlier, although missed analysts forecast of a JPY 822.0 billion surplus highest gain since January of 2015, fuelled by sales to China.

The Japanese Consumer Price Index (CPI) decreased to 0.3% year-on-year in February, compared to a 0.4% rise registered in January but matching with analysts’ expectations. Food prices fell abruptly, while cost of housing continued to drop although inflation was stable in the transport sector.

Since the beginning of April the Japanese main index lost 2.5% and since late March made a phase change, shifting from a bullish to a warning phase.

On yesterday session, the Nikkei initially fell but found enough support at 50% Fibonacci retracement to reverse and managed to close in the green, near the high of the day, however closed within Friday’s range, which suggests being slightly on the bullish side of neutral.

The stochastic is showing an oversold market and is beginning to display a weak bullish momentum.

The bullish engulfing pattern provides a visual comprehension into market psychology and can suggest changes in sentiment which is useful in finding a market reversal.

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

Jp225 is a CFD written over Nikkei 225 futures.

Written by Hugo O’Neill, External Analyst.

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Germany Again on US Treasury's Radar Screen

No one got called out as a currency manipulator by the US Treasury in its latest semi-annual Report on the Foreign Exchange Policies of Major Trading Partners of the United States, released late on Friday, but the same six countries remain on the US Treasury's Monitoring List, namely China, Germany, Japan, South Korea, Switzerland and Taiwan. In the case of the euro (EURUSD), the US Treasury noted that "the real euro is currently 10 percent weaker than the monthly-average real euro since 2000. On a bilateral basis, over the same time period, the euro is 12 percent weaker against the dollar." As for Germany alone, its "real effective exchange rate has depreciated by 10 percent since 2009, a shift that would be counterintuitive in light of Germany’s large and persistent current account surplus but for its membership in the monetary union." While the US Treasury accepts that Germany, as a member of the euro zone, "does not exercise its own monetary policy" "nevertheless, Germany has a responsibility as the fourth largest global economy and as an economy with a very large external surplus to contribute to more balanced demand growth and to more balanced trade flows." This is a slow-burning issue but given the trade priorities of the Trump Administration, it's hard not to discern a degree of impatience in the US Treasury Report when it comes to the current settings of Germany's economic and fiscal policies.

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
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