Europe rating rumors brings down the Euro

The Euro weakened again following rumors of a possible down grade on Portugal’s and Greece’s rating.

USDJPY lead another quiet session as the currency traded in a range of 83.50/83.90.

Again today, we have very little data, so we may again see a fairly quiet market.

I’ve not really gotten any trading done; I’m already feeling the holiday mode.

Data Today

Italian December Consumer Confidence – 9am GMT

UK GDP – 9.30am GMT

US GDP – 1.30pm GMT

US November existing home sales – 3pm GMT

quiet session yesterday.

It was a quiet start to the holiday week yesterday. Dollar performance was quite mixed. The Euro and Sterling were pressured down from sovereign worries, whereas the Aussie strengthened a little.

Again today, there isn’t much data out today. It looks like we will be seeing a fairly quiet week.

Data Today

UK November Public Sector Net Borrowing – 9.30am GMT

USDJPY found its top?

Looks like USDJPY may have found its top on the 4-hour chart. 84.37 seems to be holding up strongly as a resistance level.

At the same time USDJPY also looks as though it may be ranging. 

A good level to sell USDJPY would be around the 84.37 levels. But keep a stoploss in case a breakout happens. It is after all the holiday season, which means thin markets!    

Focus on Europe today.

Developments in the Eurozone takes centre stage as markets shifted their attention from the mid-week FOMC. Moody’s announcement of a five-notch downgrade of Ireland’s credit rating.  The German IFO report on the other hand came in stronger than expected at a high of 109.9. 

The BoE's semi-annual financial stability report recommended that UK banks build up their resilience gradually, by using retained earnings rather than by resorting to tighter credit conditions

Aussie has been ranging between 0.9840 – 0.9930 for the past few sessions. If the events in Korea escalate, we may see some volatility coming into play here.

Data Today:

German November Producer Prices – 7am GMT

Eurozone December Consumer Confidence – 3pm GMT

Range play on the Euro?

Looks like Euro is in a range on the 4 hour chart (pink rectangle). 

green candles have just broken past the 23.6% fib level, and looks like we may just see the pair hit higher up again.

Now i overall still think Euro is bearish, so selling the pair at 1.3469 levels looks like a good level to sell.

But as always i'm going to keep a watch on this, because markets are thin at the moment and there's a chance we could see a breakout.  It's Friday as well, and i'm always extremely careful in opening a new position.

What's do you guys think?  

Dollar rockets up!

Overall good news came out of the US and bad news out of the UK yesterday.

Dollar and US yields benefitted yesterday from the stronger US empire state manufacturing index which came out at 10.57 from -11.14 last month.

US Industrial production and core CPI pushed back up to 0.8% y/y from 50-year lows of 0.6% y/y previously.

EURUSD was under pressure for most of the session after Moody's put Spain's Aa1 ratings on watch for a possible downgrade and S&P continued to be negative on Belgium.  The Irish government passed the EU/IMF bailout package of 85bln EUR as expected. However, fears persist as Portugal's finance minister said the government is taking additional measures so as not to resort to a bailout.

The pound was weaker overnight with rumoured sovereign buying of EURGBP. UK Nov. claimant count jobless came out worse at -1.2k vs consensus of +3.0k. 

Data Today:

German PMI Manufacturing – 8.30am GMT

German PMI Services – 8.30am GMT

Eurozone PMI Manufacturing – 9am GMT

Eurozone PMI Services – 9am GMT

Eurozone CPI – 9am GMT

UK November Retail Sales – 9.30am GMT

US Initial Claims -1.30pm GMT

US housing starts – 1.30pm GMT

US Philadelphia Fed – 3.00pm GMT

Cable heading lower - 4 hour chart trade

a red candle has closed completely below the 100 SMA on the 4- hour chart. And looks like the other indicators are also suggesting a downward trend for the sterling, with the Moving average crossover and MACD and stochastics heading lower.


I entered into the position as soon as the candle closed. Since this is a play on the 4 hour chart i'm going to hold this position a little longer than i normally do.

I'm going to use a risk-reward ratio of 1:2 on this trade.

I'm placing my stoploss at 1.5771which is 10 pips above the high of the last candle above the 100SMA. 

I'll place my target level at 1.5309, and if spot moves 100 pips below my entry level, i will move my stoploss to breakeven.

Trade:

Sell GBP/USD at 1.5617

Stoploss at 1.5771

Target at 1.5309

Euro trade - pretty big moves!

As i had written in my earlier post (A possible Euro trade in the making) , i was waiting for a trigger for me to enter a short position in the Euro. Last night i managed to find exactly that. 

On the 15 minutes chart a moving average crossover happened (pink square) around 1.45GMT. Which i picked up on. I decided to wait one more candle to see if the crossover holds which it did. I then entered in a short position at the market.


I decided to keep a stoploss at  1.3520 which is 20 pips higher than the previous high. I will keep my first target at 1.3335 ( S1 from today's pivot point analysis). I will move my stoploss to break even over here.


Trade:
Sell EUR/USD at 1.3413.
Stoploss at 1.3520
1st Target at 1.3335


Update on this trade:
yesterday spot moved below 1.3335, which is when i moved my stoploss to 1.3413.
today i moved my stoploss again now to 1.3280 which is just above the 23.6% fibonacci level, and i've moved my target price now to 1.3180.

No surprises from FOMC

FOMC keeps its fund targets the same, so there wasn’t much surprises in the FOMC statements as well. US retail sales came in better than expected as well at 0.8% vs 0.6%.

Dollar strengthened after the retail sales and the lack of concern at the FOMC over the rebound in US yields to accelerate its bonds purchases.

An early London morning sell off in the USDJPY was followed by a sharp reversal after huge strides in the US 10 year yield.

EURUSD touches 1.3500 for the first time in 3 weeks during Europe session before giving back its gains. EURUSD was undermined by news that Belgium outlook is revised to negative from stable by S&P. S&P says prolonged political uncertainty may hurt Belgium rating, Bloomberg reports. Meanwhile, Italy's Berlusconi wins no-confidence vote; government survives. PM won the confidence vote in the lower house by a majority of just 1; which means 314 MPs voted against it. So the government, while still in power, is held up by 1 MP.  Ahead, Ireland votes on whether to accept the EU/IMF package.

UK CPI numbers were higher than consensus at 3.3% y/y while the RPI numbers also beat expectations at 4.5%. Our UK economist notes that the main drivers were food and clothing, which posted the highest inflation rate since 1997. Sterling failed to react positively to the news, as although it reduces the prospect of further QE and gives the hawks more weight, the fears over stagflation also linger.

We have another fun-filled day of Data today, so we just may see some more volatility today.

Data Today:

UK Claimant count rate - 9.30am GMT

UK jobless claims change - 9.30am GMT

UK average weekly earnings - 9.30am GMT

UK ILO Unemployment rate - 9.30am GMT

US CPI - 1.30pm GMT

US Empire Manufacturing - 1.30pm GMT

US Totel Net TIC Flows - 2pm GMT

US Net Long term TIC Flows - 2pm GMT

US Industrial production - 2.30pm GMT

US Capacity Utilization - 2.30pm GMT

A possible Euro trade in the making.

Looking at the 4 hour chart we can see that Euro is holding up a resistance below the 38.2% fibonacci. Also looks like we have a double top being made.

To reconfirm, the daily chart also is showing the 100 SMA (pink line) to be holding up as a strong resistance. This looks like a good area to sell the Euro. 

However, Euro is stuck in a range at the moment on the 15minutes and 1 hour chart. So i'll only enter into a short trade if i get a confirmation of a moving average crossover, just in case Euro ends up breaking towards the upside.

China brings Dollar down

Dollar weakened last night thanks to China. risk sentiment was supported in the absence of China hiking rates while US sentiment was hurt by Moody's suggesting that the US may face a negative outlook on its debt over the next two years

EURUSD rose more than 2 big figures overnight, pushed higher by rumored fixing-related buying and sovereign demand interests. EUR led the pack as Moody's brought US into the fold, shifting some of the attention from the Eurozone to the American government.

Sterling did too but lagged compared to the Euro.

Today is a big data day, so keep a look out for some movement this evening.

Data today:

UK Nov CPI -9.30am GMT

German ZEW survey – 10am GMT

Eurozone ZEW survey – 10am GMT

Eurozone industrial production – 10am GMT

US PPI – 1.30pm GMT

US advance retail sales – 1.30pm GMT

US FOMC rate decision – 7.15pm GMT

no data out today.

China was the key driver of movement on Friday. Price action was primarily driven by PBOC decision to hike China’s reserve ratio requirement by 50bps.

This week market will be eyeing the US FOMC meeting on Tuesday and the Irish vote on EU/IMF package on Wednesday.

BoJ Governor Shirakawa again raised the possibility of further JGB purchases if the economy slows down faster than expected. Talks of heavy offers for USDJPY between 84.02/05.

Irish banks' borrowings from the ECB rise to EUR136.4 bn as of end-November, from EUR130 bn at end-October. Irish central bank offers EUR44.7 bn euros in special liquidity assistance to banks in Ireland.

GBPUSD likely to continue to stay quiet until UK CPI tomorrow.

No data out today, so we may just see a quiet market today.

Ireland downgraded by Fitch

It was a bit of a mixed session yesterday for the dollar, but it still managed to hold versus the Euro as a rating agency downgraded Ireland. Political uncertainty was reintroduced following the recent budget vote as the Irish government announced an upcoming vote in the EU/IMF package.

Among the US data, the initial jobless claims declined more than expected at 421k vs 425k.

USDJPY came off as US Treasury yields were slightly lower following a better than anticipated auction of $13bn 30y Treasurys, which prompted some short-covering as indirect bidders took down a higher than expected amount. Bank of Japan policy board member Morimoto said that one-sided dollar weakness seems to have subsided, although he warned that sharp FX volatility can have a large effect on the economy and so he is always watching FX moves carefully. He added that increasing the size of the BoJ's asset purchase facility is a strong policy option, and Bloomberg reported him saying that he hopes BoJ easing will have some effect on FX.

 BOE kept the rates unchanged last night, which was expected. UK trade deficit for October widened more than expected at 8.6bn versus 8.1bn.

Data Today

UK PPI – 9.30am GMT

US trade balance – 1.30pm GMT

University of Michigan confidence – 2.55pm GMT

US Monthly Budget statement – 7pm GMT     

quiet session yesterday.

We saw a pretty quiet market yesterday considering there was no data that came out yesterday.

USDJPY was range bound and quiet.  

We saw thin liquidity yesterday in the Euro. Initially there was Euro selling and stops were triggered 1.3300 onwards down to 1.3250. We saw the Euro recover back from 1.3250 to 1.3300. On the headliners front, Germany rejected calls to increase the EU’s EUR 750bn fund and Moody’s downgraded Hungary credit rating to just above junk grade. Today the Irish finance minister is expected to detail the budget measurements starting at 3.45pm GMT.

Aussie was under pressure this morning from reports that China may raise interest rates this weekend. The RBA maintained its rate and we saw Aussie drop down but recovered quickly back up.

We’ve got some data out today mainly on the Euro and UK front. So watch out for some possible moves later this evening when Europe and the U.S opens up.

Data today

Germany factory orders – 11am GMT

UK industrial production – 9.30am GMT

UK manufacturing production – 9.30am GMT

US consumer credit – 8pm GMT

NFP vs Euro debt. which one is going to take charge on the markets today.

It’s a new week and a lot of news came out on Friday. US NFP was the big boy of data that came out on Friday. Unfortunately it came out disappointing at 39K vs 150k consensus.  On the other hand the ISM came out better at 55.0 vs 54.8 consensus.

USD selling was high on Friday after the data, and increased after Bernanke stated that UST purchases beyond the $600bn currently marked for Q2 would not be ruled out.

We saw the Euro take out stops on the top clearing 1.3300 all the way to 1.3415. But sovereign bond spreads are tightening sharply and ECB is to release the value of ECB’s bond purchases today.

Aussie followed in-tail on the risk sentiment above 0.99.

No important data coming out today, so keep a watch on sentiment play.  Will the poor NFP data push markets even higher today or will the Euro debt issues come to the fore front again for another bear move.

non farm payroll day today!!

We saw some more pressure on the dollar yesterday despite a disappointing ECB press conference as rates were unchanged at 1% and little discussion on the securities market program. 

We saw risk assets perform very well yesterday as US data came in positive with the US initial claims coming in at 436k vs 425k, and US pending home sales at a 10.4% gain vs -0.5% dip.

We had a bit of a mixed session with the Euro. Euro came down as markets were disappointed with Trichet conference. But news of ECB buying Irish and Portuguese debt boosted the Euro up again.

Aussie got boosted up after equity markets performed well.

I still think this is a retracement and would look to sell the Euro and Aussie against the dollar.

Data Today:

UK PMI services – 9.28am GMT

German PMI services – 8.53am GMT

Euro zone PMI services – 8.58am GMT

Euro zone retail sales – 10am GMT

US change in nonfarm payrolls – 1.30pm GMT

US unemployment rate – 1.30pm GMT

US ISM non-manufacturing – 3pm GMT

US factory orders – 3pm GMT

Mid week retracement

Looks like we had a little bit of a retracement yesterday. Markets in general were in a bid tone yesterday, as US and European equity markets rallied quite a bit.

US data came in fairly good yesterday, with the US ADP estimate being slightly stronger at +93K and ISM manufacturing coming in at 56.6. The Beige book sounded more positive as well.

USDJPY surge up to 84.40 can be attributed to the US yields.

Euro jumped up on headlines about US willingness to back Europe via IMF funds. This shortly came down as a spokesperson from the US treasury department stated that there have not been any discussions on extra commitment of funds for the European stabilization fund.

Sterling was lifted by broad wave of risk assets recovery. Also the UK PMI came in at 58 which is the highest reading since 1994.

Aussie took another blow as retail sales came out worse than expected this morning at -1.1%.

Looks like there was a lot of data that kind of brought out a strong bid sentiment yesterday. However I still think the trend is still towards the downside due to some problems in the Eurozone, and also this morning reports of North Korea possibly attacking South Korea.

I would look at this rally as a possible opportunity to sell at a higher level.

Data Today

UK PMI construction – 9.30am GMT

Eurozone GDP – 10am GMT

Eurozone PPI – 10am GMT

ECB rate decision – 1.30pm GMT

US initial jobless claims – 1.30pm GMT

US pending home sales – 3pm GMT

Euro debt still a concern

Euro debt issue still remains to be the main concern for markets.

Euro closed lower for the 7^th consecutive session, on the back of rumored downgrade on French sovereign debt.

Sterling was quite resilient yesterday and didn’t push down as low. We see it trading back up to above 1.5550.

Aussie just got hammered down this morning after poor results of GDP. Looks like we may just see aussie fall further today.

Yen saw some correction as it pushed lower to below 83.50. I would still look to buy USDJPY. So we may just see some bids coming in.

Data Today

German PMI manufacturing – 9am GMT

Eurozone PMI manufacturing – 9am GMT

UK PMI Manufacturing – 9.30am GMT

US ADP employment change – 1.15pm GMT

US ISM manufacturing – 3pm GMT

Fed Beige Book – 7pm GMT