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Usa 500: Squeezed between the 10 and 50 day moving average

The US initial jobless claims increased to 254K in the week ended September the 24th compared with the downwardly revised previous week number of 251K. The figure came in way below 260K beating the market expectations showing strength in the labor market conditions.

The Gross Domestic Product in US expanded an annualized 1.4% on the second quarter following the previous quarter number of 1.1%, being the strongest growth rate in three quarters and beating the market consensus of 1.3% growth.

Since the beginning of July the Usa500 index lost more than 1.0% and is in a warning phase since the start of September.

On yesterday session the Usa 500 fell with a wide range after bouncing from the 50-day moving average at 2163.37 and close in the red, near the low of the day, however closed within the previous day range, which suggests being slightly on the bearish side of neutral.

The stochastic is showing bullish momentum and is above 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.

Usa 500 is a CFD written over S&P 500 futures.

Hugo O’Neill

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Yes, hard to decide a direction.
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Much foreign exchange analysis when centred on the oil price, and particularly pertinent as OPEC was meeting in Algiers, focuses on the impact of movements in the price of crude on currencies whose economies include a substantial energy producing sector. As Wednesday’s research note from ING Bank argued “USD/CAD has been pressing resistance at 1.3250 and could nudge a little higher as the headwinds build ahead of US elections. Any Trump-inspired re-negotiation of NAFTA would initially hit CAD and at the same time the pressure from the commodity markets will also weigh. Today’s OPEC meeting in Algeria looks highly unlikely to generate any agreement on output and consensus expects a large 2-3mn build in crude stocks today. With CAD sensitive to global risk, our preference remains USD/CAD can trade 1.35 pre-US elections.” Of course as it turned out, OPEC did come to a form of agreement and oil rallied yesterday. But there are also less obvious implications of changes in the oil price that traders arguably should also consider. For example, “a renewed drop in crude oil prices,” Japan’s BTMU believes “would have greater consequences for monetary policy in the euro-zone and Japan than in the US. Both the ECB and the BoJ officially target an inflation rate including energy while we suspect upward pressure on inflation in the US is building based on a gradual tightening of the US labour markets and hence the Fed are likely to maintain more of a focus on domestically generated inflation risks fuelled by potential wage inflation. EUR/USD downside risks are beginning to emerge once more.”



Written by Neal Kimberley, External Currency Analyst



Forex and CFDs carry a high degree of risk to your capital. Forecasts are not a reliable indicator of future performance.

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The Los Angeles Times’ judgement on Monday night’s first US Presidential debate between Democrat Hillary Clinton and the Republican candidate Donald Trump was pretty representative of how the US mainstream media viewed the contest. “Scorecard: Clinton ends the debate victorious as Trump fails to win a single round,” the LA Times said. From a currency market perspective however, the most interesting thing is to look at how currencies reacted to that. The Mexican peso rose, as might have been expected, on a perception Clinton won the debate but, as one bank in Hong Kong put it, “Asian currencies also rallied, implying clearly that a Trump victory would hurt Asian currencies on impact.” But not all Asian currencies. The yen weakened versus the dollar. Traders could argue that was a classic “risk on” reaction with higher yielding currencies in Asia, and indeed the Mexican peso, being bought while the yen, as the low yielding funding currency, was sold. Maybe so, as that is a plausible argument. But what is perhaps more pertinent, looking ahead, may be not to analyse the knee-jerk price action in isolation but to compute how the market reacted, to the debate, as perhaps indicative of the way traders might respond in the coming weeks to similar or opposite indicators of the way the US Presidential race is moving.

Written by Neal Kimberley, External Currency Analyst



Forex and CFDs carry a high degree of risk to your capital. Forecasts are not a reliable indicator of future performance.

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''Trump fails to win a single round'', quite expected. 
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“The pound continues to consolidate at weaker levels following its sharp initial adjustment lower triggered by the Brexit vote,” wrote currency analysts at BTMU London last Thursday but argued that “it is also very difficult for the pound to rebound sustainably while Brexit uncertainty remains elevated.” If markets sense Britain is heading for the so-called “hard” Brexit, given that “it is the prevailing consensus view that a “hard” Brexit would be the most damaging outcome for the UK economy,” the Japanese bank concluded that “any signals from the UK government and/or other EU members that talks are heading in that direction could trigger fresh pound selling.” Interestingly however, US firm Morgan Stanley wrote on Monday that according to their FX Positioning Tracker in the period since Monday, September 19, “GBP short positioning was reduced for the second straight week” but that “sentiment remains most bearish [for] GBP within G10 [currencies].” Given where Cable is currently trading, traders might reasonably conclude that any reduction in sterling short positioning versus the dollar, which would be incorporated in Morgan Stanley’s reference, has been well absorbed by the market as a whole given that the pound did not catch a bid versus the greenback. By implication, that also suggests that BTMU may be reading the market psychology well when it argues it is tough for sterling to “rebound sustainably.” A third bank, Australia’s NAB, takes an even dimmer view of sterling’s prospects, writing on Monday that “GBP looks increasingly vulnerable as the release valve from apparent increasing scepticism the UK will be able to hold onto access to the single market. There is clear anxiety building across financial services at the lack of detailed debate on protecting its interests.” Traders might conclude the pound remains unloved even if it is trading at the lower end of its recent range against the dollar.



Written by Neal Kimberley, External Currency Analyst



Forex and CFDs carry a high degree of risk to your capital. Forecasts are not a reliable indicator of future performance.

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APPLE: Failed to close above the 10-day moving average

Apple Inc. is one of the world's leading consumer electronics and personal computer, established in 1977. Apple has remained focused on developing its own hardware, software, operating systems and services to provide its customers with the best user experience possible, having retail stores around the world, with more than 300 locations as of 2012.

The Apple Inc. is quoted on the New York Stock Exchange and is one of the largest companies in the NASDAQ 100 Index with a weighting of 10.809%.

Apple’s fiscal year 2016 runs from September 27, 2015 through September 24, 2016. Apple announced Financial results for its fiscal third quarter, which ended in June 25 posting quarterly revenue of -14.51% to $42.4 billion and quarterly net income of -27.10% to $7.8 billion comparing to the same quarter one year-ago. Gross margin was 38% compared to 39.7% in the third quarter one year-ago.

Since the beginning of the year Apple Inc gained more than 10.0% and is in a well-established bullish phase since mid-September.

Yesterday, the stock opened with a gap down of 1% but quickly recovered and closed in the green near the high of the day however managed to close within the previous day range, which suggests being slightly on the bullish side of neutral.

The RSI is showing lack of momentum although is above 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.

AAPL.US is a CFD written over Apple Inc Stock.

Hugo O’Neill

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It's a sign that the bull market is winding down. When money is out of AAPL via profit taking it gets distributed across the market, when that distribution is taken out via profit taken it gets distributed to peoples bank accounts. Coupled with stagnant small-cap market share prices and we have a pervasive bearish signal. This is probably applicable to the current economic trend, possibly not future ones. As illustrated, when AAPL is at highs, the NASDAQ follows. 
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Amidst Friday’s euro zone purchasing manager index data, it was revealed that Germany’s economy lost momentum in September. “IHS Markit’s composite Purchasing Managers Index [for Germany] dropped to 52.7, a 16-month low, from 53.3 in August,” Bloomberg reported. Mind you, weaker-than-expected data for Germany, the economic power house of the euro zone, cannot be said to have fed through into a materially lower value of the euro on the currency markets. That said, traders will have seen reports over the weekend that Germany’s Finance Minister Wolfgang Schaeuble has purportedly again been exhibiting irritation at European Central Bank (ECB) criticism of Germany’s trade surplus and suggesting German parliamentarians take a hard line with ECB President Mario Draghi on the issue of the ECB’s current interest rate settings when the latter appears before German lawmakers on Wednesday. Traders might reasonably take the view that while the euro might be able to shrug off as transitory data such as Friday’s German composite PMI, it’s harder to dismiss such readings when there are hints that Germany’s Finance Minister is again at odds with the ECB. In the round, traders might conclude that the euro is looking a little less attractive.



Written by Neal Kimberley, External Currency Analyst



Forex and CFDs carry a high degree of risk to your capital. Forecasts are not a reliable indicator of future performance.

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Ger30: Flirting 2016 high

The Consumer Price Index (CPI) in Germany rose 0.4% year-on-year in August, matching July numbers and in line with preliminary forecasts. The data revealed that cost of food and services rose at a slower pace, while the cost of energy fell less than in a month earlier.

Although German economic growth was strong in the first half of the year it is set to lose steam in the second half of 2016 as weaker overseas demand causes industrial productivity to slowdown.

Since the beginning of September the European locomotive gained more than 0.5% and is in a bullish phase since mid-August.

Yesterday the Index rallied with a wide range closed near the high of the day, in addition managed to close above the previous day high, which suggests a strong bullish momentum.

The stochastic is showing a strong bullish momentum and crossed above 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.

Ger30 is a CFD written over DAX30 futures.

Hugo O’Neill

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There's a good chance to reach the high!
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Referring to this week’s decision by OPEC to curb oil production, France’s Credit Agricole CIB argued on Thursday that the focus will now shift to OPEC’s 30 November meeting in Vienna and that “it appears unlikely that commodity price developments will come under major pressure in between.” The preliminary deal adopted by OPEC was for a cut in oil production to 32.5 million barrels a day (mbd) down from 33.3 mdb. The intention is to cut oil production by about 796,000 barrels/day from the levels seen in August but the details will not be finalized until November. In the aftermath of the announcement the Canadian dollar surged in value given Canada’s position as an energy exporter. The Norwegian crown also benefited for the same reasons as did the Russian rouble. On the other side of the coin, the yen fell in value as Japan is a major importer of crude oil and thus sees its import bill rise when the price of oil rises. But 30 November is a long way off when it comes to trading. In Dutch bank ING’s opinion, writing on Thursday morning, “some caution is required: the finer details (eg, size of the cut and how it will be split among members) have yet to be thrashed out and we suspect that much of the initial positive sentiment is priced into petro currencies. Any further upside will be a function of the scale and magnitude of supply cutbacks, which won't be known until the 30 Nov OPEC meeting. Either way, we wouldn’t rule out a possible setback and prefer to view the OPEC announcement as placing a near-term floor on oil prices (rather than a more sustained boost).” Only time will tell.



Written by Neal Kimberley, External Currency Analyst



Forex and CFDs carry a high degree of risk to your capital. Forecasts are not a reliable indicator of future performance.


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Lets see if it will last in the longer term.
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EURUSD: Struggling to find a direction

In a choppy European session yesterday the currency pair fell under 1.1200, but after dropping 20 pips below the handle, it came back above this level amid reports of potential German government rescue for the injured Deutsche bank, being later denied by the German Finance Ministry.

On the other side of the Atlantic date front, durable goods came in flat in August, after a downwardly revised 3.6% gain in July and above than market consensus of a -1.4% drop, but attract little response from the markets ahead of Yellen’s testimony on banking regulations.

Since the beginning of September EURUSD gained more than 0.5% and is in a bullish phase since Monday.

On yesterday session the currency went back and forward without any clear direction and closed in the middle of the daily range, although managed to close within the previous day range, which suggests being clearly neutral, neither side is showing control.

The stochastic is showing lack of momentum however is above 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.

Hugo O’Neill

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Good resistance zone.
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Crude Oil: Plunges ahead of OPEC meeting

The producing countries are schedule to meet today in Algeria in hope to freeze output however yesterday Iran rejected an offer from Saudi Arabia to limit its oil output hammering market hopes that the two major members of the Organization of the Petroleum Exporting Countries (OPEC) would find a compromise this week to help ease a global surplus of crude. The Algiers talks are OPEC second effort to reach a deal after failed talks in April.

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 -6.200 million barrels. Today we will have the release of EIA latest survey the report is expected to show an increase in crude oil stocks with estimates at 2.995 million barrels.

Since the beginning of September the commodity lost more than 0.5% and continues in a potential phase change, shifting from a bullish to a warning phase.

On yesterday session, crude oil fell with a narrow range and closed near the low of the day, although closed within the previous day range, which suggests being slightly on the bearish side of neutral.

The stochastic is showing bearish momentum and is 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.

LCrude is a CFD written over Light Crude futures.

Hugo O’Neill

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Very undecided.
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EURGBP: Reaching for 2016 highs

The Consumer Price Index (CPI) in the Euro area came out unchanged at 0.2% year-on year in August comparing to the previous month in the same period and matching market expectations. The data remains below the European Central Bank (ECB) 2% inflation target which suggests that more measures will be needed to pump inflation up.

Also last week, as widely expected the Bank of England (BoE) voted unanimously to maintain the interest rate at 0.25% and keep the stock of purchased assets at £4735 billion. BoE also expressed that a majority of the Monetary Policy Committee (MPC) members see fit a further rate cut in November if the outlook at that time is according with the August Inflation Report projections.

Since the beginning of September the EURGBP gained more than 1.5% and is in bullish phase since Mid-September.

On Friday session, the pair rallied with a wide range and closed near the high of the day, in addition managed to close above Thursday high, suggesting a strong bullish momentum.

The stochastic is showing an overbought market and is displaying lack of momentum.

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

Hugo O’Neill

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lets see how high it goes.
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Thursday’s Reserve Bank of New Zealand policy meeting saw interest rates left unchanged at 2 per cent, with Governor Graeme Wheeler reiterating both that “monetary policy will continue to be accommodative” and stating that “a decline in the exchange rate is needed." Traders might reasonably point out that if 2 per cent is accommodative for New Zealand, that nominal interest rate is still far more attractive than can be earned elsewhere. Wheeler may wish to see a decline in the value of the New Zealand dollar but traders might not deliver it. Writing after the RBNZ decision, the Canadian bank, TD Securities, felt New Zealand’s central bank might choose to cut the benchmark rate by 0.25 per cent in November. But even then the nominal rate would be 1.75 per cent, compared with current benchmark rates of 0.25 per cent in the United Kingdom, the 0.5 per cent Fed Funds rate in the United States and the negative rates currently favoured by, among others, the European Central Bank and the Bank of Japan. Governor Wheeler would no doubt disagree but perhaps analysts at Australian bank NAB, also writing post-RBNZ, had a point when they concluded that “viewed from afar, it is hard to see much wrong with the exchange rate and plenty of reasons to still keep buying [the New Zealand dollar].” Perhaps traders will decide the kiwi can fly.



Written by Neal Kimberley, External Currency Analyst



Forex and CFDs carry a high degree of risk to your capital. Forecasts are not a reliable indicator of future performance.

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