Market analysis and trade recommendations by FBS

[riki143]

MARKET NEWS

July 1: Asian session

Asian shares rose driven by good news from Japan and China. According to Tankan survey, large Japanese companies plan to increase capital spending by 7.4% this fiscal year through March. China’s manufacturing expanded in June at the fastest pace this year with official PMI coming at 51, above the 50 threshold signaling expansion. MSCI Asia Pacific index rose by 0.6%. Japanese Nikkei added more than 1%. USD/JPY is trading on the upside in the 101.30/50 area.

AUD/USD strengthened by 45 pips to $0.9457. As it was widely expected, RBA left cash rate unchanged at 2.50%. The regulator has once again underlined that they expect a period of stability for interest rates. NZD/USD traded higher early in the session, but topped at $0.8770 and gave some gains back. Gold consolidates after spiking to $1332.

EUR/USD is trading a bit on the downside just below $1.3700 after it made a bit increase yesterday. GBP/USD is trading in the $1.7100 area.

More:
http://fxbazooka.com/en/news/show/1398

 

[riki143]

MARKET NEWS

Key option levels (July 1)

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).

Here are the key options expiring today:

EUR/USD: $1.3500, $1.3610, $1.3620, $1.3625, $1.3640;

EUR/GBP: 0.7900, 0.7990, 0.8010, 0.8020, 0.8065, 0.8075, 0.8135;

USD/JPY: 101.50, 102.50;

AUD/USD: $0.9350 (large), $0.9400, $0.9425, $0.9500 (large);

EUR/JPY: 138.00, 139.65 (large);

EUR/CHF: 1.22 (large).

More:
http://fxbazooka.com/en/news/show/1400

 

[riki143]

MARKET NEWS
1 July 2014

USD: the mood is sour

By Mark Jensen

Yesterday the US released mostly good, but relatively minor economic data. Pending home sales rose 5 times more than expected, but positive reaction was tempered by the slowdown in Chicago manufacturing activity. These figures failed to weaken expectations that the Fed will keep an easy monetary policy for some time.

San Francisco Fed President John Williams said on Monday the US central bank will probably need to keep interest rates near zero for at least another year, even as he expressed optimism the economy is on a recovery path.

So, now the general perception is that the Fed will keep interest rates near zero for more than a year.

The benchmark 10-year Treasury yield remains low at 2.54%. The greenback looks less attractive to investors when Treasury yields fall, because lower US yields mean smaller returns on dollar-denominated assets.

US 10-year Treasury yields (Bloomberg)

US dollar index is down to 79.87 from 80.6 at the beginning of June.

US dollar index (Bloomberg)

Investors await the US jobs report, which will be released Thursday and “the unemployment numbers are going to be more critical than ever”. People have started to think about the economic slowdown, and good data may lighten the mood: according to UBS, “there will be some level of comfort if we get the kind of numbers we've been getting.” Economists expect the report to show employers added 212K jobs in June, down from 217K jobs in May, a poll by Reuters says.

More:
http://fxbazooka.com/en/news/show/1401

 

[riki143]

MARKET NEWS

July 1: European session

The euro zone’s unemployment rate declined from 11.7% to 11.6%, while Spanish and Italian manufacturing PMIs showed industry expansion. EUR/USD is trading a bit on the downside, in the $1.3680 area consolidating after yesterday’s gains.

British pound surged as UK manufacturing growth accelerated to the fastest pace in 7 months. June Manufaturing PMI came above the forecast at 57.5 (prior: 57.0; forecast: 56.7). The indicator improved on increased demand, adding to signs of sustainable economic recovery and increasing the odds of a sooner rate hike. As a result, GBP/USD hit a new 6-year high of $1.7130. EUR/GBP dipped to 0.7990.

More:
http://fxbazooka.com/en/news/show/1403

 

[riki143]

MARKET NEWS

July 2: Asian session

Asian stocks rose, with the regional index extending gains from a 6-year high, after good manufacturing PMIs in the world’s two biggest economies – the United States and China – sent US equity gauges to records. MSCI Asia Pacific Index advanced 0.7%. Japanese Nikkei 225 increased by 0.4%. USD/JPY rose to 101.64.

Demand for the commodity currencies declined in the Asian trade. AUD/USD fell from the $0.9500 mark back to $0.9450 on the release of Australia trade data. May trade deficit came at 1.91B, while the April reading was revised down to 0.78B. NZD/USD weakened to $0.8745. Gold price sits at $1325.

EUR/USD is testing support at $1.3670 (200-day MA). GBP/USD is little changed in the $1.7145 area.

More:
http://fxbazooka.com/en/news/show/1408

 

[riki143]

MARKET NEWS

Key option levels (July 2)

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).

Here are the key options expiring today:

USD/JPY: 101.25, 102.50 (large);

USD/CAD: 1.0630, 1.0675, 1.0770 (large);

EUR/USD: $1.3600, $1.3610, $1.3640, $1.3650, $1.3675; $1.3700

AUD/USD: $0.9350, $0.9450;

EUR/GBP: 0.7950, 0.7985;

EUR/CHF: 1.2200.

More:
http://fxbazooka.com/en/news/show/1410

 

[riki143]

MARKET NEWS

July 2: European session

EUR/USD slid to $1.3655. According to the data released today, producer prices in the euro area contracted in May by 0.1%, while the number of unemployed people in Spain increased more than expected.

Great Britain released another bunch of GBP-positive data today. UK June construction PMI jumped from 60.0 to 62.6 in June (forecast: 59.7). This is the highest level since April 2014. What’s more, UK nationwide HPI added 1.0% in June (forecast: 0.6%). As a result, GBP/USD rose to fresh 6-year highs, facing resistance at $1.7175. EUR/GBP dropped to 0.7950 before retracing some pips higher.

More:
http://fxbazooka.com/en/news/show/1412

 

[riki143]

MARKET NEWS
2 July 2014

Yellen's speech eyed

The Federal Reserve Chair Janett Yellen will speak at the International Monetary Fund today at 15:00 GMT. She will then discuss the questions of US financial stability with the IMF Head Christine Lagarde. Investors will closely monitor the Yellen's rhetoric to gauge the likely time gap between the end of the QE3 program and the beginning of the rate hiking cycle.

"If Yellen does discuss current monetary policy, we can probably expect more of the same overall dovish tone that we saw from her post-FOMC press conference", analysts at Deutsche Bank forecast. "Recall also that at that press conference, Yellen mentioned that 'high yield bonds have certainly caught our attention', so it will be interesting to see whether she elaborates on this topic given the IMF appears to have become more vocal about the issue of financial stability lately."

Strategists at RBS point that that the USD decline from any dovish comments is "more limited than the potential USD upside on a hawkish surprise."

Note that Yellen will speak ahead of the US nonfarm payrolls release on Thursday.

More:
http://fxbazooka.com/en/news/show/1413

 

[riki143]

MARKET NEWS
2 July 2014

PIMCO: Fed to hike in mid-2015

According to the Pimco's chief economist Paul McCulley, the US economy is getting closer to where the Federal Reserve needs it to be to start tightening. He expects the first hikes to come in mid-2015. Rates are expected to increase until 2%.

While gross domestic product and productivity plummeted in the Q1, McCulley does not think that will be repeated in Q2 of the year 2014. "The fact that consumer income and job creation held up I think is the silver lining in what happened in the negative productivity in the first quarter," McCulley said.

James Bullard, head of the Federal Reserve Bank of St. Louis, said last week the Fed should raise rates by the end of Q1 2015. In his view, the Fed will raise rates until 4%.

More:
http://fxbazooka.com/en/news/show/1414

 

[riki143]

MARKET NEWS

July 3: Asian session

Asian shares swung between gains and losses, with the regional index trading near a 6-year high, as ADP data showed US companies added more workers than estimated before a government Non-Farm Payrolls report today. The Fed’s Chair Janet Yellen said yesterday that concerns about financial stability shouldn’t prompt a change in current monetary policy. USD/JPY rose to 101.93.

EUR/USD slid to $1.3447, but is trading above yesterday’s low at $1.3638. GBP/USD is trading on the downside in the $1.7155 area.

More:
http://www.fxbazooka.com/en/news/show/1417

 

[riki143]

MARKET NEWS

July 3: European session

EUR/USD is making small swings around $1.3650. Spanish and Italian Services PMIs were above the key level of 50 that indicates industry expansion. However, euro zone’s retail sales stagnated in May after sliding by 0.2% in April.

Great Britain released weak Services PMI figure on Thursday. The index came at 57.7 in June versus expected 58.1 and 58.6 in May. The index is important for the markets as services make up around 75% of the UK economy. However, the headline figure masks some good news: for example, new business rose to the highest level in 6 months. GBP/USD dipped to $1.7130, but found support and recovered some pips. EUR/GBP peaked at $0.7970 on the release.

More:
http://fxbazooka.com/en/news/show/1418

 

[riki143]

MARKET NEWS
3 July 2014

ECB Draghi's press conference

Key points

• ECB expects rates to stay low for a prolonged time period. All the ECB members support the unconventional policy measures if needed
• Economic risks remain on the downside
• Price risks are balanced in the medium term
• From January 2015 ECB meetings will take place every 6 weeks. What’s more. ECB will publish monetary policy minutes.

Targeted long term refinancing operations (TLTRO)

• There will be 6 TLTRO’s running through June 2016
• TLTRO volume could be 1 trillion
• TLTRO’s will help boost inflation
• More details on TLTRO will come at 13:30 GMT

More:
http://fxbazooka.com/en/news/show/1421

 

[riki143]

MARKET NEWS

July 4: Asian session

Asian shares initially rose as US unemployment rate fell to the lowest level since before the peak of the financial crisis. Then the assets started correcting after their gains. American markets are closed for the July 4 Independence Day holiday.

USD/JPY slid from yesterday’s high at 102.26 to the 102.00 area. AUD/USD recovered to $0.9366 after falling from $0.9440 to $0.9320 yesterday. NZD/USD is trading on the downside in the $0.8740 area, but above yesterday’s low at $0.8716.

EUR/USD is testing levels below $1.3600. GBP/USD is consolidating at the highest levels since 2008 in the $1.7165 area.

More:
http://fxbazooka.com/en/news/show/1423

 

[riki143]

MARKET NEWS

July 7: Asian session

US dollar edged higher on Monday and touched its highest level in more than a week versus a basket of major currencies. The greenback remained in demand after last week’s solid US jobs data.

USD/JPY is trading a bit on the upside in the 102.10 area. AUD/USD is trying to hold above $0.9340. NZD/USD fell to $0.8712. New Zealand’s dollar declined after a government report showed house-price inflation slowed to the least in a year.

EUR/USD slid to $1.3580. The ECB policymaker Benoit Coeure said rates must stay very low for a long time to ensure monetary stability. GBP/USD edged down to $1.7135, but remained within reach of the 6-year high in the $1.7180 area.

More:
http://fxbazooka.com/en/news/show/1425

 

[riki143]

MARKET NEWS

Key option levels (July 7)

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).

Here are the key options expiring today:

EUR/USD: $1.3500 (large), $1.3525, $1.3545 (large), $1.3600, $1.3610 (large), $1.3615, $1.3650/55 (large)

USD/JPY: 101.00, 101.50, 102.00 (large), 102.20, 102.50/55 (large);

USD/CHF: 0.9000;

AUD/USD: 0.9360, 0.9495;

USD/CAD: 1.0700, 1.0725, 1.0735;

NZD/USD: $0.8800 (large);

EUR/JPY: 138.50, 139.75.

More:
http://fxbazooka.com/en/news/show/1426

 

[riki143]

MARKET NEWS
7 July 2014

COT: positions of large speculators

Here’s the summary of the latest COT (Commitments of Traders) report, released on July 4 for a week ended July 1. All currency positions are in direct relation to the US dollar.

Euro net bearish positions rose slightly after previous week’s small decline. Net bullish bets on British pound reached the maximum level since December 2007. Japanese yen net short positions declined to lowest level since May 27. Large traders and futures speculators turned bullish on the Canadian dollar for the first time since early 2013 last week. Australian dollar net long positions rose to a new high level since April 2013. New Zealand dollar net longs rose for a second week after a steep decline on June 17.

More:
http://fxbazooka.com/en/news/show/1427

 

[riki143]

MARKET NEWS
7 July 2014

Fed will tighten sooner than later

According to the new forecast by Goldman Sachs, the Federal Reserve will raise interest rates not in the first three months of 2016 as the analysts thought before, but already in the third quarter of 2015. The specialists revised their expectations after US Non-Farm Payrolls increased in June more than expected (288K vs. the forecast of 217K).

Other banks may follow suit bringing forward their rate-hike expectations. Bank of Tokyo-Mitsubishi UFJ said last week he expected the first rate increase in March next year instead of June. JPMorgan Chase brought forward his forecast last week by one quarter to Q3, 2015. Such mood is helping US Treasury yields increase and, consequently, is positive for USD.

More:
http://fxbazooka.com/en/news/show/1428

 

[riki143]

MARKET NEWS

July 8: Asian session

USD/JPY tested 101.68 on the downside. Yen remained higher after strengthening yesterday after Japan reported a bigger-than-expected current-account surplus. In addition, US stock futures point to declines in the S&P 500.

AUD/USD edged up to $0.9395. Aussie rose after a private gauge of business confidence climbed last month to match the highest level since January.

After an initial dip NZD/USD rose to $0.8770. New Zealand’s dollar reversed earlier declines that came after a report showed business sentiment dropped to a 15-month low.

EUR/USD is flat in the $1.3600 area. GBP/USD tested $1.7147, but then returned to the opening level of $1.7126.

More:
http://fxbazooka.com/en/news/show/1431

 

[riki143]

MARKET NEWS
8 July 2014

Pressure on ECB is increasing

Fabrice Brégier, chief executive of Airbus’s passenger jet business, said the ECB should intervene to push the value of the euro against the dollar down by 10% from an “excessive” $1.35 to between $1.20 and $1.25.

"Europe cannot be the only economic zone of the world that doesn’t consider its currency as a weapon . . . as a key asset to promote its economy,” he told the Financial Times in an interview.

Bearing in mind the calls from the IMF and some European politicians for the ECB to consider quantitative easing, one can say that the pressure on the regulator is increasing.

More:
http://fxbazooka.com/en/news/show/1433

 

[riki143]

MARKET NEWS

July 8: European session

GBP/USD slid below $1.7100 on weaker-than-expected data from the UK: manufacturing and industrial production unexpectedly contracted by 1.3% and 0.7% respectively. Such poor data will make the market expect a later rate hike from the Bank of England. EUR/GBP recovered to the 0.7960 area from yesterday’s low at 0.7914.

EUR/USD is testing levels below $1.3600. German trade surplus exceeded forecasts, but so did France’s trade deficit. The Bank of Spain head and the ECB Governing Council member Luis María Linde said on Tuesday that euro zone inflation would remain far from the central bank’s 2% target for some more time and that a possibility of deflation existed. Therefore, rates would be kept low for an extended period of time and the ECB would continue developing the asset backed security purchase program. The ECB executive board member Christian Noyer also spoke today about the threat of low inflation.

More:
http://fxbazooka.com/en/news/show/1432