ASIAN STOCKS TALKING POINTS:
- Most Asian indexes were lower
- The markets wondered what had actually been achieved by this week’s historic US/North Korea summit
- The Dollar made modest gains as that Fed meeting approached
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Asian markets were mostly lower Wednesday as investors looked toward the US Federal Reserve’s June monetary policy decision which will come early on Thursday local time.
The Fed is very widely expected to raise interest rates once more, with market focus on how many more there might come this year and next. Markets were also a little nonplussed by the immediate aftermath of this week’s meeting between US President Donald Trump and North Korean leader Jim Jong Un, uncertain as to what more will come of it.
Still, as the Fed loomed the Nikkei was a lone regional riser, up 0.5% in the Tokyo afternoon. All other major indexes were lower, however, if not by much. Shanghai was down 0.7% with the ASX 200 off by 0.6%.
The US Dollar edged broadly if only slightly higher through the session. Its Australian counterpart dipped a bit when Reserve Bank of Australia Governor Philip Lowe made a speech in Melbourne suggesting once more that while its next interest rate move will probably be a rise, such a thing is not coming soon. This take can hardly have surprised markets – futures didn’t suggest an increase until late 2019 in any case, but the Aussie slipped back a little anyway.
Gold prices were steady, but DailyFX’s own Senior Currency Strategist Ilya Spivak thinks that a hawkish Fed later could see it slip further. The spot price has been rangebound on its daily chart since the sharp falls seen in mid May.
Crude oil prices slipped, reportedly as the markets looked to the prospect of rising supply.
Still to come Wednesday are the UK Consumer Price Index and Eurozone industrial production data, with US mortgage application numbers and crude oil inventory figures from the Department of Energy also on the slate.
RESOURCES FOR TRADERS
Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.
— Written by David Cottle, DailyFX Research
Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!
Bitcoin Net-Longs Slide Into 1-Month Lows
Bitcoin Net-Shorts 5.2% Higher Since Last Week
Bitcoin: Retail trader data shows 76.8% of traders are net-long with the ratio of traders long to short at 3.3 to 1. The number of traders net-long is 1.1% lower than yesterday and 8.0% lower from last week, while the number of traders net-short is 0.5% lower than yesterday and 5.2% higher from last week.
Be sure to check out our Bitcoin Trading Guide if you’re new to cryptocurrencies!
Bitcoin Net-Long Dip Indicate Bullish Bias
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Bitcoin prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Bitcoin price trend may soon reverse higher despite the fact traders remain net-long.
— Written by Yayati Tanwar, DailyFX Research
Canadian Dollar (CAD) Eyes Latest Inflation Report
Canadian Dollar Price, News and Analysis
- Inflation expected unchanged, but any uptick could seal another rate hike in October.
- Canadian economy continues to grow strongly.
Canadian Dollar May Receive a Boost on Latest Inflation Report
The Canadian dollar is currently treading water ahead of the July CPI report with the market expecting a 0.1% month-on-month rise and a 2.5% annualized reading, both unchanged from last month’s strong report. Canadian CPI grew at its fastest rate in over six years in June, due to higher energy prices, and another strong reading today will increase pressure on the Bank of Canada to hike rates again, probably at the October meeting. The central bank has already hiked rates by 0.25% twice this year and by a total of four times in the last 12 months. Last week data showed Canadian unemployment falling to 5.8% from a prior 6% while employment grew by 54.1k against expectations of 17K and a prior month’s 31.8k.
USDCAD has remained in a 1.2950 – 1.3200 range over the last month, despite the strength of the US dollar and fears over the NAFTA negotiations. The pair currently trade at 1.3130, just above 23.6% Fibonacci support at 1.3118 and below the July 24 high at 1.3192. An inline or slightly stronger-than-expected reading would seal another 0.25% rate hike and see USDCAD break lower with the 38.2% Fibonacci retracement at 1.2952 the short-term target. A weaker-than-expected reading today would see the July 24 high under pressure.
We have recently released our Q3 Trading Forecasts for a wide range of Currencies and Commodities, including the Canadian Dollar.
USDCAD Daily Price Chart (January – August 17, 2018)
— Written by Nick Cawley, Analyst
To contact Nick, email him at email@example.com
Follow Nick on Twitter @nickcawley1
USD/CNH & Gold Price Action Point to Reversals Gaining Traction
Gold, USD/CNH Technical Highlights
- Gold price reversal and sentiment supportive of a low
- Correlation between Gold & CNH extremely high
- USD/CNH reversing hard from near Dec ’16 peak
For an in-depth intermediate-term technical and fundamental outlook, check out the Q3 Gold Forecast.
Gold price reversal and sentiment supportive of a low
On Wednesday, we were discussing the oversold, overly bearish backdrop in gold, but that first we needed to see some type of swift flush and reverse or something of that nature before looking for a low. We didn’t have to wait long, as the past few sessions qualified as flush-and-reverse price behavior, with silver, unsurprisingly and in silver-like fashion, displaying even more capitulation-like behavior, shedding 3 of its 4% in an hour on Wednesday.
As long as gold & silver can hold onto yesterday’s lows on a closing basis, we’re looking for at least a rebound back to the point of origination of the most recent leg lower (~1210 & 15.30). If another leg lower develops we’ll have to reassess.
Check out the IG Client Sentiment to see how other traders are positioned and why it can be used as a contrarian indicator.
Gold Daily Chart (Flush & Reverse)
Correlation between Gold & CNH extremely high
If gold is reversing then so is CNH and vice versa. Gold and CNH have a 3-month correlation of 97%. They are effectively the same market at this juncture. How one plays it is up to the instrument of choice, but be mindful of total risk if trading both.
Gold/CNH Daily Chart (97% 3-mo Correlation)
USD/CNH reversing hard from near Dec ’16 peak
USD/CNH is in the process of carving out a weekly key-reversal bar just shy of the December 2016 high, assuming it doesn’t post a big rally from here. Trade a little higher today or lower and the reversal currently in place will stand as confirmed.
The candle development along with a break in the upward channel on the daily time-frame should usher in more selling, and perhaps in swift fashion. Looking lower, there are minor levels along the way that were carved out as the channel matured, but the broader target is the bottom of the upward grind since last month, right around the 6.60 mark.
USD/CNH Weekly Chart (Key-reversal nearly complete)
USD/CNH Daily Chart (Channel break to send it lower)
Resources for Forex & CFD Traders
Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.
—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
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