Connect with us

Forex

Strong U.S. Retail Sales Report to Tame EUR/USD Rebound

Published

on


U.S. Retail Sales to Increase 0.3% After Unexpectedly Contracting 0.3% in January 2018. Rebound in Private Consumption to Keep Fed on Track for Three Rate-Hikes in 2018.

EUR/USD Carves Higher & Lows Following Recent Batch of Lackluster U.S. Data Prints. Monthly Range at Risk as Relative Strength Index (RSI) Threatens Bearish Formation.

Trading the News: U.S. Retail Sales

DailyFX Calendar

A 0.3% rise in U.S. Retail Sales may spark a limited reaction as it does little to alter the monetary policy outlook, but a marked rebound in household consumption may curb the recent advance in EUR/USD as it boosts the outlook for growth and inflation.

Signs of growing demand should keep the Federal Open Market Committee (FOMC) on course to further normalize monetary policy in 2018 as ‘members expected that economic conditions would evolve in a manner that would warrant further gradual increases in the federal funds rate,’ and a positive development may generate a bullish reaction in the greenback as it encourages to adopt a more hawkish tone at the next interest rate decision on March 21.

However, another below-forecast print may fuel the recent advance in EUR/USD as it curbs bets for four rate-hikes in 2018, and Chairman Jerome Powell and Co. may continue to project a neutral Fed Funds rate of 2.75% to 3.00% as the central bank struggles to achieve the 2% target for inflation.

IMPACT THAT THE U.S. RETAIL SALES REPORT HAS HAD ON EUR/USD DURING THE PREVIOUS RELEASE

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

JAN

2018

02/14/2018 13:30:00 GMT

0.2%

-0.3%

-29

+104

January 2018 U.S. Retail Sales

EUR/USD 5-Minute Chart

EUR/USD 5-Minute Chart

Household spending unexpectedly slipped 0.3% in January after holding flat during the last month of 2017, while a separate report showed the U.S. Consumer Price Index (CPI) holding steady at an annualized 2.1% during the same period amid forecasts for a 1.9% print. A deeper look at the report showed the weakness was led by a 1.3% decline in demand for motor vehicles/parts, with sales of building materials narrowing 2.4%, while clothing sales increased 1.2% during the same period.

EUR/USD edged lower amid signs of sticky inflation, but the market reaction was short-lived, with the pair pushing back above the 1.2400 handle to close the day at 1.2449. Want more insight? Join DailyFX Currency Analyst David Song LIVE for an opportunity to cover key market themes along with potential trade setups.

EUR/USD Daily Chart

EUR/USD Daily Chart

  • EUR/USD may continue to consolidate as it preserves the range from earlier this month, but the rebound from the March-low (1.2155) may gather pace over the coming days as the pair carves a fresh series of higher highs & lows.
  • Will keep a close eye on the Relative Strength Index (RSI) as it comes up against trendline resistance, with another failed attempt to break out of the bearish formation raising the risk for range-bound prices.
  • Need a break/close above the 1.2430 (50% expansion) region to bring the topside targets back on the radar for EUR/USD, with the next hurdle coming in around 1.2640 (61.8% expansion) to 1.2650 (38.2% retracement).

Additional Trading Resources

New to the currency market? Want a better understanding of the different approaches for trading? Start by downloading and reviewing the DailyFX Beginners Guide!

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

— Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David’s e-mail distribution list, please follow this link.



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Forex

Demand for Safe Havens Weakens as Market Sentiment Improves

Published

on

By


Safe haven prices, news and analysis:

Confidence is returning to financial markets, lessening the demand for safe-haven assets.

However, the recovery is precarious and they could soon be back in favor.

Check out the IG Client Sentiment data to help you trade profitably.

Market sentiment picks up

Indications that China’s central bank is looking to ease monetary policy are offsetting the continuing concerns about a US-China trade war, lifting market sentiment and prompting investors to move out of safe-haven assets into those seen as more risky and therefore potentially more profitable.

Prices of all the traditional safe-havens, including the Swiss Franc, the Japanese Yen, Gold, US Treasuries and German Bunds, are weakening Wednesday although many hurdles remain, including the possibility that the trade wars could flare up again.

Looking at these individually, USDJPY rose modestly Wednesday after three successive days of falls and the uptrend in the pair remains in place.

USDJPY Price Chart, Daily Timeframe (Year to Date)

Latest USDJPY price chart.

Chart by IG

Similarly, USDCHF is rallying and it too remains in an uptrend.

USDCHF Price Chart, Daily Timeframe (Year to Date)

Latest USDCHF price chart.

Chart by IG

The price of Gold continues to fall and is now down from a high of $1,365.36 per ounce on April 11 to $1,272.17 although any return of risk aversion would slow its decline. The yield on the benchmark US Treasury note – which moves inversely to its price – has increased from a low of 2.77% on May 29 to 2.90% and the yield on the 10-year German Bund is up from 0.255% to 0.367% over the same period.

You can click this link to discover more about which assets are currently risky and which are safe havens.

Resources to help you trade the forex markets

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you: analytical and educational webinars hosted several times per day, trading guides to help you improve your trading performance, and one specifically for those who are new to forex. You can learn how to trade like an expert by reading our guide to the Traits of Successful Traders.

— Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex



Source link

Continue Reading

Forex

Most Asian Shares Rise, Sentiment Better. ASX 200 Tests Breakout

Published

on

By


Asian Stocks Talking Points:

  • Most Asian shares recover as trade war worries settled down, anti-risk Yen fell
  • Next, markets eye a central bank panel with commentary from important officials
  • ASX 200 is testing a breakout, opening the door to a resumption of its uptrend

Just getting started trading equities? See our beginners’ guide for FX traders to learn how you can apply this in your strategy!

As expected, Asian shares took a breather from yesterday’s aggressive selloff which was sparked by increased trade tensions between the US and China. A lack of updates as traders await further escalation allowed some stock markets to consolidate.

BACKGROUND: A Brief History of Trade Wars, 1900-Present

In Japan, the Nikkei 225 rose more than 0.30 percent by Wednesday afternoon trade. Most of the gains were from the telecommunication services and health care sectors. Chinese shares were held down though with the Shanghai Composite falling about 0.60 percent. Australia’s ASX 200 climbed, pushed higher by financials and information technology. The KOSPI pulled ahead, rising more than one percent.

On the FX side of things, the lull in trade war rhetoric diminished demand for safe havens. The anti-risk Japanese Yen was cautiously lower while the sentiment-linked Australian and New Zealand Dollars appreciated.

From here, aside from updates on tariff retaliations, all eyes will be on a central bank policy panel that takes place in Sintra, Portugal. We will get commentary from Fed’s Jerome Powell, ECB’s Mario Draghi, RBA’s Philip Lowe and BoJ’s Haruhiko Kuroda.

Amidst last week’s monetary policy announcements from the Fed and ECB, speeches from Mr. Powell and Mr. Draghi can arguably have more potential for FX volatility. If the Fed Chair reiterates last week’s hawkish tone while the ECB President sticks to a more dovish one, then we may see some US Dollar gains at the expense of its European counterpart.

ASX 200 Technical Analysis: More Gains Ahead?

On a daily chart, Australia’s ASX 200 was stuck right below immediate horizontal resistance levels as of Tuesday’s close. These are a combination of the January, May and current June highs between 6,158 and 6,149. However, as of today’s cooldown in trade war fears, the index is attempting a push to the upside for a new 2018 high.

This opens the door to more gains in the coming days as the ASX 200 resumes its uptrend from early April. From here, a push above resistance exposes the 50 percent midpoint of the Fibonacci extension at 6,202 followed by the 61.8% level at 6,264. On the other hand, a turn below if resistance holds places the 23.6% extension as the first target at 6,064. Under that, the index faces a near-term rising support channel going back to late-May.

ASX 200 Daily Chart: Breakout on Ebbing Trade War Worries?

ASX 200 and other equities Trading Resources:

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter



Source link

Continue Reading

Forex

USD/JPY Could Be Set To Bounce

Published

on

By


JAPANESE YEN TECHNICAL ANALYSIS TALKING POINTS:

  • The Japanese Yen has seen broad gains against its developed market peers
  • However, its overall downtrend remains in place in many cases
  • This week could see it reasserted

Find out what the #1 mistake that traders make is so that you never have to join them in it!

The Japanese Yen has caught a quite strong haven bid this week as trade tensions between China and the US bubble back to the surface of market concerns once again.

Technically speaking however, US/JPY has tested the bottom of a minor uptrend channel which has been in place since May 30. It has survived, just but in any case the broader, longer uptrend which has bounded trade all through the year’s second quarter remains very much in place.

Double Uptrend: US Dollar Vs Japanese Yen Daily Chart.

The Japanese Yen remains under considerable fundamental pressure from widely diverging interest-rate differentials with the US. The Federal Reserve has just raised interest rates once again and seems determined to continue the process for as long as the data allow. The Bank of Japan meanwhile has been forced to watch the modest inflation resurgence seen early this year collapse, taking with it any prospect that its own ultra-loose monetary policy can be unwound anytime soon.

This week’s official Japanese inflation numbers are likely to underscore that weakness and may put the Yen under renewed pressure, provided that no more bad news appears on market radar from the direction of global trade. Another bout of Yen weakness could see USD/JPY back up to its recent highs of 110.74 in quite short order. That said a return to late May’s peaks in the mid 111s seems unlikely unless some clear resolution to trade difficulties is seen- an unlikely short term prospect.

Reversals for the pair are likely to find support at this week’s 109.49 lows, with the broader channel base of 109.20 waiting below that.

The Japanese Yen’s haven bid has been pretty universal, with the Australian Dollar a particular target. AUD/JPY has been returned to the lows of late May which had not previously been seen since November, 2016.

Under Pressure: Australian Dollar Vs Japanese Yen Daily Chart.

The cross is now skirting 50% Fibonacci retracement of its long climb up from the lows of mid-2016 to the highs of September, 2017. That comes in at JPY81.40 and seems to be failing. A weekly close below that level would probably bring the next, 61.8% retracement into Aussie bear’s sights. That comes in some way below the market at JPY79.54.

Worryingly for Australian Dollar bulls the currency does not yet look notably oversold, judging by the cross’ Relative Strength Index, and it is likely that momentum to the downside has yet to dissipate.

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!



Source link

Continue Reading

Trending

Copyright © 2017 Zox News Theme. Theme by MVP Themes, powered by WordPress.