Daily Fundamental Analysis By ForexTime ( FXTM )

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Old Dec 11, 2017, 10:35am   #17
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FXTM Official started this thread Daily Fundamental ForexTime ( FXTM )

Bitcoin future trading kicks off; Investors awaiting central banks decisions


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Trading bitcoins entered a new phase today, after Chicagoís CBOE listed the first futures contract on the cryptocurrency. The initial reaction was beyond expectations with the futures contract climbing more than 20% and triggering two trading halts. CBOEís website experienced unprecedented traffic which may well have sent a new benchmark, the frenetic activity lead to delays and outages. So far, it seems professional investors arenít willing to bet against the bitcoin, despite the many warnings of a bubble that will burst soon. Many traders arenít even interested in the price direction, but the listing of the futures contract on CBOE and later next week on the CME, will provide them an arbitrage trading opportunity due to the vast pricing differences. However, the arbitrage trading will lead to improved price efficiency and probably less volatility. After volatility settles down, the focus will return to the price direction.

Central Banks Meetings

Currency markets were trading in tight ranges early Monday with the dollar slightly weaker against its major peers. Expectations of the Fed hiking rates on Wednesday, stands at 90.2% according to CMEís Fedwatch tool which means the disappointment in wage growth wonít shift the needle for US monetary policy. However, it isnít the rate hike that will move the dollar on Wednesday, itís the tone, economic projections and the dot plot. Given that weíre getting closer to a deal on tax reforms, the Fed might become slightly more hawkish. It remains to be seen whether this will shift up the Fedís dots for future interest rate expectations.

The European Central Bank and Bank of England are also meeting this week. Despite no substantive monetary policy changes expected, the language might still move the Euro and the Pound.

Will the Fed support further rotation in stocks?

Tech shares have been in focus over the past two weeks after the S&P tech index plunged more than 4% between 29-Nov and 05-Dec, before recovering last week. The fall in Teck stocks wasnít accompanied by a selloff in other sectors, particularly the financials which have been on the rise. This is a classic type of rotation with active managers balancing their portfolios before year end. Tax reforms donít seem to be of great support to Tech firms, given that their effective tax rate is considered to be the lowest in the U.S. Meanwhile, itís a big deal for the rest of the U.S, with financials having an effective tax rate of more than 30%. The new Fed Chair, Jerome Powell will likely speed up deregulation for the financial sector which will drive more inflows. And of course, higher interest rates for 2018 will further support the banks' profit margins. Thatís why the trajectory of interest rates in 2018 will likely lead to more portfolio balancing before year end.

EU Summit

The breakthrough in Brexit talks on Friday was a great relief for policymakers, who can now move to phase-2 of the talks. Interestingly though, Sterling instead of rising sharply, dropped on the news. Investors seem reluctant to buy Sterling as they view the next phase more complicated than the first. They want to see details of the transition agreement and trade talks concluded before buying Sterling. I donít think the EU summit on Friday will reveal much, but blessings from EU leaders might lend some support to the Pound.




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Old Dec 15, 2017, 6:12am   #18
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FXTM Official started this thread Daily Fundamental ForexTime ( FXTM )

US retail sales beat expectations


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It's been a funny day for the USD as it slipped lower on Tax legislation worries. For the most part it has fallen around two senators who are keen to fix the current child tax credits. In reality this is something republicans are likely to help remedy in order to get this bill over the final hurdles and in front of the president to sign before Christmas. However, for me the big mover - and what might have a much more interesting impact - was of course today's retail sales which lifted sharply to 0.8% m/m (0.3% exp). This is a very strong move just ahead of the December rush season and in return we could expect to see GDP forecasts raised for the 4th quarter going forward. I would be surprised if we didn't see solid earnings this season in the equity markets as well given the huge rises in consumer and business confidence. For now it would seem the Trump effect might be still there after all heading into the new year.

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One of the key areas this was felt was on the USDCAD which was swinging heavily today, not only on the USD weakness but also Bank of Canada comments which pushed up the chances of a rate hike for March next year. For the most part the USDCAD has been ranging for some time, and it has struggled to break through the major resistance level at 1.2921, which has so far seemed like an impossibility at present. One of the main reasons also has been the 200 day moving average bearing down on that level which of course adds further pressure. At the same time the swing lower today failed to stay below support at 1.2759 which leads me to believe that the bulls are still in this market despite the Canadian recovery we've seen. If the bulls do leap back into the market 200 day moving average will be the key level to close above, and if we do close above then expectations are that we could see a move upwards to the 1.3000 level. For now though it's a case of waiting to see if the ranging does stop and the trends continue.

The other key one to watch out for is the AUD, with the market likely to be looking forward now to next week's RBA minutes on the economy and their thoughts after the most recent unemployment figures. We could certainly see the case made for a potential rate rise in the future, but for now it's a case of wait and see - even though the market is fairly bullish.

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Chart wise, and it's clear the AUDUSD bulls are back in fashion and looking to make up some ground. After the positive news yesterday and weak USD it is a surprise to see that it has failed to climb higher to the 200 day moving average and resistance at 0.7687. I still believe this is a key level to watch and if we do see further extensions it could lead to bigger things. For now though like the USDCAD it's a case of wait and see as the market looks to enter Friday trading.



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Old Dec 21, 2017, 9:59am   #19
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FXTM Official started this thread Daily Fundamental ForexTime ( FXTM )

Equities reaction muted on tax breakthrough; Watch the bond market



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Asian markets woke up on Thursday to the news that Republicans had passed the long-awaited tax bill. President Trump is now just a pen stroke away from overhauling the tax code. Interestingly there arenít any fireworks on the announcement of Trumpís Christmas gift; because as expected, the good news is already priced in.

In fact, the reaction was more evident in fixed income markets. U.S. 10-year bond yields traded above 2.5% for the first time since March 2017, allowing the yield curve to steepen after flattening for most of 2017. The spread between 2-year and 10-year treasury bonds climbed more than 12 basis points, reaching 63 basis points, after falling to its lowest level in a decade last week. The spike in long-term bond yields is supposed to be positive for the U.S. dollar, as it suggests the Federal Reserve should become more aggressive in tightening policy next year. However, the dollarís reaction was muted because thereís another side to this story. The additional supply of U.S. bonds due to the unfunded tax cuts, will probably make U.S. treasuries less attractive in the longer run, and given that most central banks are trying to catch up with the Federal Reserve, yields in Europe and other markets are also anticipated to move higher in 2018, thus narrowing the interest rate differentials gap.

The enormous expected increase in U.S. deficit will also put the U.S. sovereign credit rating at risk. If any of the credit agencies- Standard & Poorís, Moodyís or Fitch downgrades the U.S. sovereign rating, yields will spike even higher. However, the impact on the dollar wonít necessarily be positive, with the opposite reaction being more likely.

The Yenís reaction was also muted to Bank of Japanís monetary policy decision. As expected, the central bank kept interest rates unchanged at -0.1% and maintained its 10-year bonds yield target at around 0%. Given that weak inflation is expected to continue dominating the monetary policy outlook, I donít expect any significant change in policy next year. Thus, the Japanese Yen will continue to take its cue from risk appetite/aversion in equity markets for the foreseeable future.

Euro traders are awaiting the outcome of todayís Cataloniaís election. Polls are suggesting that it will be a tight race between the Catalan Republican Left party, which supports independence and Ciudadanos which is in favor of a unified Spain. Given that the election is not expected to be decisive and parties may form coalitions to govern, the risk of tensions flaring with Madrid again, remain limited.



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Old Jan 8, 2018, 11:37am   #20
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FXTM Official started this thread Daily Fundamental ForexTime ( FXTM )

A critical week for the US Dollar after a fragile start



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After having the worst annual performance since 2003, the dollar continued to struggle in the first trading week of 2018. The dollar index fell to a three-and-a-half-month low to trade below 92, leaving many traders wondering whether this year will be another devastating one for the greenback. When looking at the Commitment of Traders (COT) report, speculators are not showing interest in buying the U.S. dollar yet, and the latest bunch of data did nothing to support the dollar.

Friday's jobs report did not motivate the dollar bulls to return, with non-farm payrolls rising 148,000 in December versus expectations of 190,000. Although I think the numbers werenít bad and the labor market remains healthy with unemployment at 4.1%, wages are not yet showing signs of accelerating, and this remains the key missing ingredient of the U.S. economyís recovery.

The latest minutes of the Fedís meeting also showed that policymakers arenít sure whether inflation will return to the central bankís target which is why markets believe that only two rate hikes will occur in 2018, as opposed to the three in the Fedís dot plot. This week many Fed speakers are due to speak including the two dissenters against a rate hike in December, Neel Kaskhari and Charles Evans. Whether they have changed their mind, or still believe rates shouldnít be hiked, remains to be seen but weíll also tune into other Fed speakers for fresh insights.

If the Fed speakers donít deliver news, tier one economic releases may provide the needed clues. Consumer prices and retail sales are both due for release on Friday. Given that energy prices spiked in December consumer prices are expected to increase 0.2%. However, I think traders will be more interested in the core CPI figure, which strips out volatile items like food and energy. Any upside surprise in the inflation numbers will likely bring back the dollar bulls.

Given that the major U.S. economic releases are four days away, many traders will focus on whether any technical breakouts will occur. EURUSD failed to break above 1.2092 (2017 high) last week, but a successful breakout will likely lead to further buying of the single currency towards 1.22. Similarly, Sterling is only 100 pips short of 1.3656 (2017 High). So traders should keep a close eye on these levels.




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Old Jan 26, 2018, 8:54am   #21
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FXTM Official started this thread Daily Fundamental ForexTime ( FXTM )

US dollar claws back some ground



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It's been a mixed day for the USD, but it has seen some respite from the relentless selling as of late. With Trump in Davos it has meant more positive than controversial from him, as he puts the gloss on with world leaders. However, economic data continued to be mixed and not necessarily positive, as US new home sales m/m dropped to 625K (675K exp) , this is a -9.3% drop on the previous month. So not positive at all. The big ray of light though, was that the US job market continues to thrive and tick over, with US jobless claims coming in at 233k (235K exp), showing that the labour market is still the major story when it comes to positivity. The consumer market though will be a key focus for the incoming chair Powell as any movements here are likely to have big impacts, but also could point to future inflation rates and the chance to lift rates higher, as 2018 is set to be the year of hikes I feel for the FED.

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For me the USDCAD is still in the focus when it comes to bearish movements at present, the reason being that oil prices have risen higher and the USD continues to fall. All the while the Canadian economy is not doing so bad either on the back of stronger commodity prices. As a result the bears have been chipping away forcing it lower, and support at 1.2256 is likely to be in the cross hairs for traders drifting lower, followed by 1.2108. If the bulls do come back into the market then resistance levels at 1.2423 and 1.2585 are likely to come under some pressure. However, the recent market conditions have not warranted any serious bullish pullbacks as of late.

Meanwhile it could be more trouble in the United Kingdom, as news has come out that there might be further political revolting in Theresa Mays Tory party. This is not likely to topple the prime minister, but it does show the growing discontent within the party relating to current Brexit negotiations. The flow on effect for the pound of such events has been negative, with it taking some heat today and losing ground against the USD. It's likely that tomorrow will bring further news, but if none then the market is likely to focus on US GDP figures when it comes to moving the GBPUSD.

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The GBPUSD though is currently caught on support at 1.4117 with the market looking to find some breathing space before continuing. I would expect the bulls to either take another big run, or the bears to take a firm hold and drive it back down from the recent volatility. Resistance can be found at 1.4240 and this will be the key level at present. Support levels can be found at 1.3996 and 1.3856 is the GBPUSD continues to find itself under bearish pressure.
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Old Jan 31, 2018, 10:31am   #22
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FXTM Official started this thread FXTM Forex Market Update | 31/01/2018

New Video from FXTM Market Update with Research Analyst ForexTime, Lukman Otunuga


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Global stocks were under pressure on Tuesday as investors remained cautious ahead of the Federal Reserve meeting. The Dollar struggled to hold ground against a basket of major currencies while Sterling was bruised by Brexit jitters. In the commodity arena, Gold benefitted from a vulnerable Dollar. The main event risk today will be BoE Mark Carneyís testimony and CB Consumer confidence for the United States.

- The #EURUSD remains bullish on the daily charts
- #GBPUSD is currently towards 1.4175
- #Gold bulls are eying $1360


Watch The Video @ https://youtu.be/Ab_PJqjlVj8


For more Market Analysis read the latest @ http://fxtm.co/marketupdate-yt
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Old Feb 2, 2018, 6:36am   #23
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FXTM Official started this thread Daily Fundamental ForexTime ( FXTM )

Markets set to focus on non-farm payroll



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The market is currently taking a breather after the US data today as it's almost time for non-farm payroll. Markets previously have been surprised by the recent swings in the labour market, especially with wage growth not matching the pace, but analysts and economists are now expecting wage growth to pick up, and this in turn could lead to a more aggressive hawkish Fed if that is the case. The Fed has always commented on the lack of wage growth being a key factor in holding it back, but if we were to see that growth then certainly there would be a case for further future hikes at a more aggressive pace. Analysts are expecting 180k, the reality could be much lower, but whatever the case there will be some large swings.

The USDCAD has been a key one for me to watch as of late with all the USD weakness we've seen. Commodities have risen in value as a result, and none more so than oil which has lifted on the back of it. At the same time the NAFTA treaty negotiations are looking positive thus far, and the Canadian economy is positive all round about expectations for further growth. The Bank of Canada has been a little bit more neutral, but that's more to take pause and look at its southern neighbour the US more than anything else.

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So far the USDCAD has slipped lower to support at 1.2256 and is looking to extend even lower to 1.2108. While a bit of a slow mover it has been trending fairly reasonably so markets have taken notice and played on that accordingly. If the USD did see some strength from the bulls then resistance at 1.2423 and 1.2585 would be key targets for the market to move to. I still believe that if there were any bulls in this market that the 200 day moving average would be the real test, as the market has been quick to bounce of it and give up and bullish sentiment in the previous months.

The S&P 500 has shown another day of losses on the charts which is quite rare, so much so that people have taken a fair degree of notice. In part this has been driven by the rise in treasury yields which is starting to look like it could compete in the future with the current rates of return from equity markets. Expectations still continue to mount that the market may be slightly overbought and this may be a correction.

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For me the S&P 500 is a great technical mover and this can be seen from the levels it plays off. One of the most important things though at present is the 20 day moving average which has been a sign of bullish action lately. Support can be found at 2825, 2806 and 2775, but I would mainly focus on the moving average. Resistance can be found at 2850 and 2875 in the current market climate.
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Old Feb 19, 2018, 12:49pm   #24
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FXTM Official started this thread Daily Fundamental ForexTime ( FXTM )

Global shares extend recovery; dollar remains weak


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Asian equity markets continued to build on last weekís gains, after U.S. stocks capped their best week since 2013. Investor sentiment has gradually improved after fears of rising inflation sent most global indices into correction territory. The Cboeís Volatility Index (VIX) ended Fridayís session below 20, suggesting that indictments from Special Counsel Robert Mueller against 13 Russian nationals for alleged interference in the 2016 elections did little to impact investor decisions. With the U.S. markets closed on Monday for Presidentís Day and the Greater China region remaining offline for the Lunar New Year, expect trading volumes to be below average.

The U.S. Dollarís weakness remained a bit of a mystery for many currency traders, as it is supposed to follow differential in yields. The gap between U.S. and German 10-year yields widened to 217 basis points, and had gained 28% since mid-July 2017. Similarly, U.S. Ė Japan 10-year yields widened 285 basis points, the highest increase since 2007. Still, the Dollar declined against the Euro, Japanese Yen and all other major currencies.

One explanation for why the correlation between the Dollar and yield differentials has broken recently, is that financial market participants are forward-looking. Investors believe that rising inflation in the U.S. will spread to other economies, leading to tighter monetary policies elsewhere. When major central banks such as the European Central Bank, Bank of England and Bank of Japan begin normalizing policies, rate differentials will narrow at a fast pace, given that they are starting from a very low base.

Yields in the U.S. are not just rising because of higher inflation expectations, but also due to rising twin deficits Ė the fiscal and current account. This should make U.S. debt less attractive, and gold will likely become the primary beneficiary as it continues to benefit from inflationary pressures and budget deficit worries.

However, this view may change if the Fed decides to take a more aggressive approach in fighting inflation. Wednesdayís FOMC minutes will likely reveal fresh hawkish insights, but for the dollar to make a U-turn, it requires the Fed to tighten policy faster than previously estimated. Any indication of four rate hikes instead of three in 2018 will do the trick, but this is unlikely to appear in Wednesdayís minutes, and investors will probably need to wait until the March meeting.

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