Daily Market Analysis by CapitalStreetFX

[CapitalStreetFX]

The AUD/USD pair advanced to a daily high of 0.7391 during the past Asian session, following the release of Australian employment figures, showing that the country managed to create 38.5K new jobs against expectations of 15K, although the Aussie quickly shed its gains, as at the same time, the unemployment rate sore to 6.3%.

Also, failure around the 0.7400 level and the fact that the pair posted a lower low daily basis, suggest selling interest is building up after the latest RBA shock.

Now consolidating above the 0.7300 level, the 1 hour chart presents a mild positive tone, as the price holds a few pips above its 20 SMA, whilst the technical indicators are aiming higher, but in neutral territory.

In the 4 hours chart, the price is hovering around a mild bullish 20 SMA, the Momentum indicator heads sharply lower below the 100 level and the RSI lacks strength around 52, giving little room for a stronger recovery during the upcoming session.

 

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Dollar Plunges As China Devalues Yuan For Second Day

China devalued the Yuan for second day in-a-row, sending the American dollar sharply lower across the board, whilst stocks nose-dived and commodities also fell. Oil and Gold however, bounced, this last due to its safe-haven status.

In the EU Industrial Production in June resulted in a 0.4% drop monthly basis, whilst the year-on-year reading gained 1.2% against expectations of a 1.5% advance.

In the US, the number of job openings reached 5.2 million in June, according to the US Bureau of Labor Statistics, slightly below market’s expectations, whilst FED’s Dudley said that the hopes they can lift rates soon, but avoid to comment on a certain time.

The EUR/USD surged to a fresh 5-weeh high of 1.1213 in the American afternoon, but the pair retreated some from the mentioned daily high, ending the day, however, with strong gains, and despite being extremely overbought in the short term, the 1 hour chart is far from suggesting a reversal, as the price remains well above a bullish 20 SMA, whilst the technical indicators have barely corrected extreme readings and the RSI indicator is now turning flat around 69.

In the 4 hours chart the technical indicators are also showing signs of upward exhaustion in extreme overbought territory, not yet suggesting a downward correction move.

As long as the price holds above 1.1120, the risk will remain towards the upside, with scope to extend its gains on a break above 1.1240, a strong static resistance level.

 

[CapitalStreetFX]

US, UK Stocks Rise Ahead of FOMC Minutes, CPI News

Wall Street closed in the green yesterday, with the DJIA up 67 points of 0.39%, ending the day at 17,545.18, and the housing sector leading the advance. The index dropped at the opening weighed by a weaker-than-expected New York manufacturing index that fell to levels not seen since 2009. But it slowly came back and extended its advance above a daily descendant trend line coming from July 20th high at 18,136.

The daily chart shows that the index stalled around its 20 SMA, whilst the technical indicators aim higher, but are still below their mid-lines, providing little support to a new leg higher.

In the short term, the 20 SMA heads higher currently around 17,455, the Momentum indicator heads lower, but remains above 100, while the RSI indicator holds flat around 58, also lacking enough upward potential to confirm further advances for the Tuesday.

 

[CapitalStreetFX]

The GBP/CAD surged to a daily high of 2.0586. But the cross gave back most of its intraday gains, as surging oil prices boosted a recovery in the Canadian dollar by the end of the day.

The pair however, closed the day in the green and above its 20 DMA, maintaining its latest positive tone.

Short term, the 1 hour chart shows that the price is below its 20 SMA, whilst the technical indicators have retreated from overbought territory and aim lower around their mid-lines, suggesting the decline may extend in the short term.

In the 4 hours chart, the price is hovering around a mild bullish 20 SMA, whilst the technical indicators also head lower around their mid-lines, supporting the shorter term view, particularly on a break below 2.0410, the immediate support.

 

[CapitalStreetFX]

Cable Faces Tough Resistance at 1.5700

The GBP/USD pair was unable to regain the 1.5700 level on Wednesday, having spent most of the first half of the day consolidating below it.

With no fundamental releases in the UK, the pair fell down to 1.5634 early in the US session, from where it jumped up to the 1.5700 figure following FOMC’s Minutes.

The pair trades a few pips below it after the dust settled, but maintains a generally positive technical tone, as the 1 hour chart shows that the retracement held above a mild bullish 20 SMA, whilst the technical indicators remain above their mid-lines, albeit lacking directional strength.

In the 4 hours chart, the price also recovered from its 20 SMA that presents a firmer bullish tone, whilst the technical indicators have bounced from their mid-lines and head north, supporting the bullish tone and in line with markets’ sentiment.

Above 1.5700, the pair will meet some intraday resistance at 1.5735, July high, but a break above it should confirm the upward continuation in the midterm.

 

[CapitalStreetFX]

Gold prices soared on the back of a risk aversion environment, with spot gold reaching a fresh 5-week high of 1,153.99 a troy ounce.

The bright metal demand was boosted by the continued decline in Chinese stocks, spurring concerns that the PBoC will intervene again the Yuan in an attempt to cold down financial markets.

Additionally, the commodity latest decline was related to the possibility that the FED would raise rates in September, but ever since the latest Minutes were dovish, gold buyers are now betting a rate hike will be delayed towards December.

Technically, the gold is extremely overbought according to the 4 hours chart, after advancing almost $35 in the last two days.

In the same chart, the technical indicators are partially losing their upward strength, but remain in extreme levels, while the 20 SMA heads sharply higher, now around 1,128.05.

On daily basis, the technical picture is strongly bullish, with the indicators heading north well above their mid-lines, and the price approaching a critical dynamic resistance, the 100 DMA at 1,161.45.

 

[CapitalStreetFX]

Gold prices soared on the back of a risk aversion environment, with spot gold reaching a fresh 5-week high of 1,153.99 a troy ounce.

The bright metal demand was boosted by the continued decline in Chinese stocks, spurring concerns that the PBoC will intervene again the Yuan in an attempt to cold down financial markets.

Additionally, the commodity latest decline was related to the possibility that the FED would raise rates in September, but ever since the latest Minutes were dovish, gold buyers are now betting a rate hike will be delayed towards December.

Technically, the gold is extremely overbought according to the 4 hours chart, after advancing almost $35 in the last two days.

In the same chart, the technical indicators are partially losing their upward strength, but remain in extreme levels, while the 20 SMA heads sharply higher, now around 1,128.05.

On daily basis, the technical picture is strongly bullish, with the indicators heading north well above their mid-lines, and the price approaching a critical dynamic resistance, the 100 DMA at 1,161.45.

 

[CapitalStreetFX]

Dollar’s demand weighed heavily on gold prices, as the commodity gave back most of its latest gains. Spot gold added another $12 to its latest decline, ending the day around $1,138.80 a troy ounce, as risk aversion sentiment eased across most of the financial markets, while the dollar recovered some of its shine.

The metal managed to hold above $1,110, a critical level that has become a line in the sand for this recent recovery, as renewed selling interest below it should signal a retest of July low around $1,071.

Technically, the daily chart shows that the 20 SMA maintains a bullish slope well below the current level, but that the technical indicators continue to head lower, coming from overbought levels, and still above their mid-lines.

In shorter term, the 4 hours chart presents a firmer negative bias, with the 20 SMA gaining bearish potential well above the current level and the technical indicators heading sharply lower below their mid-lines.

 

[CapitalStreetFX]

Dow Jones Up by 3.95% After A Record-Breaking Intraday Gain

Wall Street closed sharply higher, with the DJIA up 3.95% or 619 points, closing the day at 16,285.51, and posting one if its largest ever intraday gain.

The limited slide in Chinese stocks after the latest PBoC decision to cut rates, alongside with Dudley’s comments, suggesting that the FED may delay a rate hike, boosted optimism among US traders.

The benchmark however, is still far from Friday’s close around 16,455, the level to break to confirm an interim bottom in place.

Technically the daily chart shows that the 20 SMA maintains a sharp bearish slope well above the current level, although the technical indicators head clearly higher, recovering from extreme oversold readings and supporting and upward continuation, at least in corrective mode.

The 4 hours chart presents a more constructive outlook, as the Momentum indicator has crossed above its 100 level and maintains its bullish slope, whilst the RSI indicator heads higher around 49 and the index extends below its 20 SMA, still with a clear bearish slope.

 

[CapitalStreetFX]

The USD/JPY pair regained the 120.00 level during the past Asian session, boosted by the recovery in Asian share markets and renewed dollar’s buying interest.

The pair however, held near the 120.50 before finally surging in the American afternoon, up to 121.39, meeting selling interest around the 61.8% retracement of these last two-weeks decline.

Japan will release its National and Tokyo inflation during the upcoming session, and better-than-expected results may help the yen extending its recovery.

In short term, the 1 hour chart shows that the price is now well above its 100 SMA that anyway maintains a bearish slope, whilst the RSI retreats from overbought readings, now heading lower around 61, limiting the upside as long as the price holds below the mentioned Fibonacci level.

In the 4 hours chart, the Momentum indicator turned south, but remains above the 100 level, whilst the RSI hovers around 53, supporting additional gains, should the price extend beyond 121.40.

 

[CapitalStreetFX]

Dow Jones: An Upbeat NFP Figure Might Incite Renewed Selling Pressure

Wall Street rallied at the opening, but faded before the closing bell, with the indexes closing barely unchanged daily basis.

The Dow Jones Industrial Average surged 23 points and ended the day at 16,374.76, down from a daily high around 16,554. The initial rally came after yesterday’s big rebound and local positive data, showing the services sector keeps growing.

However, investors choose to take profits out of the table ahead of Friday’s US employment report, the ultimate risk event ahead of FED’s economic policy meeting in two weeks.

Technically, the downward potential is firm in place, as the daily chart maintains the negative tone seen on previous updates, with the index well below its moving averages and the technical indicators unable to pick up below their mid-lines.

The 4 hours chart presents a neutral stance, with the index hovering above a bearish 20 SMA and the technical indicator losing their upward strength, barely above their mid-lines.

The index upcoming direction will likely be determinate by how the market understands the employment figures, as if investors suspect that the FED may raise rates as soon as this month, stocks may plummet by reflex.

 

[CapitalStreetFX]

AUD/USD Hovers Around 6-Year Low Ahead of Aussie Employment News

The AUD/USD pair closed last week at its lowest level in over six years, as the liquidation of the antipodean currency remains firm in place.

The Aussie was also affected by the sharp slide in metals, as except for platinum, all closed in the red last Friday.

The overall negative sentiment has increased these last few weeks amid of the Chinese economic slowdown weighing on the local recovery.

Later on this week, Australia will release its monthly employment figures, and a positive reading may take off some of the pressure over the local currency.

Nevertheless, the pair has broken below a long term ascendant trend line coming from September 2001 low at 0.4815, currently around 0.7160, with high bearish implications for the upcoming weeks.

The daily chart shows that the technical indicators continue to head south, despite being I extreme oversold territory, whilst the 20 SMA has accelerated its decline well above the current price.

In the 4 hours chart, the technical indicators also head lower in oversold levels, with no signs of exhaustion at the time being whilst the 20 SMA provides a strong dynamic resistance around 0.6990 in the case of an upward correction.

 

[CapitalStreetFX]

Oil Dips Below $45 After EIA Forecast

Oil futures dipped below $45 a barrel yesterday, settling at the lowest level in nearly two weeks after the Energy Information Administration lowered its crude-oil price forecasts for this year and next. Prices also saw pressure ahead of weekly data that’s expected to show a rise in U.S. crude supplies.

On the New York Mercantile Exchange, October West Texas Intermediate crude fell $1.79, or 3.9%, to settle at $44.15 a barrel. October Brent crude on London’s ICE Futures exchange fell $1.94, or 3.9%, to $47.58 a barrel.

Both contracts saw their weakest settlement since Aug. 27. Overall, oil prices have fallen by around 17% so far this year.

In a monthly report, the EIA said it expects WTI prices to average $49.23 a barrel this year, down from a previous forecast of $49.62. It also reduced its forecast to $53.57 for 2016, versus $54.42. For Brent, its 2015 forecast was at $54.07, down from the previous forecast of $54.40.

Oil prices lost more ground after the report. Considering the overall technical and fundamental outlook, waiting for a solid reversal candle on daily chart appears to be a good strategy in short to medium term.

 

[CapitalStreetFX]

FTSE100 Sheds 1.18% After Strong Fall In Morrisons Stock

The FTSE 100 lost 1.18% or 72 points, ending the day at 6,155.81, weighed not only by worldwide investors’ negative mood, by also by a strong fall in Morrisons shares, as the supermarket announced it was closing stores amid falling sales and profits.

Also, Home Retail Group edged lower, after reporting another fall in sales of Argos, which it owns, accounting for the 70% of the company’s revenues.

Beyond affecting shares, the decline in those stocks indicates, as the BOE announced earlier in the day that there are little chances for inflation to pick up in the upcoming months.

Technically, the index has made little progress over the last 24 hours, with the index stalling on an early advance around a still bearish 20 SMA, whilst the technical indicators remain in negative territory, albeit the Momentum indicator continues heading higher.

In the 4 hours chart, the index is now above a flat 20 SMA, while the technical indicators also lack directional strength right above their mid-lines, giving no clues on what’s next for this Friday.

 

[CapitalStreetFX]

Dow Bulls Remain In Control Amid Rate Hike Speculations

Wall Street closed with gains, with the DJIA up 102 points or 0.63%, ending the day at 16,433.09, and the week 2.05% higher.

A series of poor US data released on Friday, lifted hopes among stocks investors, on a delay towards December before the Central Bank actually raises rates.

The US Producer Price Index was unchanged in August compared to a month before, and down 0.8% on a yearly basis. Consumer sentiment, according to the preliminary Michigan/Reuters survey, declined down 85.7 in September, the lowest in a year.

The Dow managed to close the week above the 50% retracement of its latest decline and above a still bearish 20 SMA, but the technical indicators are far from supporting additional gains, as the Momentum indicator turned sharply lower above the 100 level, whilst the RSI hovers around 46.

In shorter term, the 4 hours chart shows that the technical readings are mostly neutral, with the index a few points above a horizontal 20 SMA, whilst the technical indicators aim higher around their mid-lines, lacking directional strength.

 

[CapitalStreetFX]

Gold Holds Range Ahead of US Interest Rate Decision

Gold prices held steady in European morning hours on Tuesday, as markets were jittery ahead of the Federal Reserve’s policy statement this week amid growing uncertainty over a potential rate hike.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were steady at $1,107.40.

The December contract ended Friday’s session 0.40% higher at $1,107.70 an ounce.

Futures were likely to find support at $1,098.20, the low of September 11 and a one-month low and resistance at $1,111.70, the high of September 11.

Investors remained cautious amid concerns that mixed U.S. economic reports and recent volatility in global financial markets will prompt the U.S. central bank to refrain from hiking interest rates on Thursday.

Fed Chair Janet Yellen has said that an interest rate increase is data dependent but has also indicated that she expects to begin raising rates before the end of the year.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Elsewhere in metals trading, silver futures for December delivery was little changed at $14.360 a troy ounce, while copper futures for December delivery held steady at $2.404 a pound.

 

[CapitalStreetFX]

GBP/CAD Remains Vulnerable As Bearish Gain Momentum

The GBP/CAD edged lower this Tuesday, as the Pound was among the weakest currencies of the day, following the release of tepid Britain’s CPI figures, suggesting a rate hike in the UK may be delayer further beyond the first half of 2016.

Crude oil prices were hardly changed, with WTI crude oil futures advancing some cents, but ending the day below $ 45.00 a barrel. The GBP/CAD presents a clear negative tone by the US close, with the 1 hour chart showing that the 20 SMA gained bearish slope around 2.0410, and that the technical indicators maintain their sharp negative slopes, despite being in oversold territory.

In the 4 hours chart, the technical indicators head sharply lower whilst the price is now extending below its 200 EMA, currently around 2.0330.

A downward acceleration through the 2.0300 level exposes the cross to a test of 2.0260 region, where it has several intraday highs and lows. Additional declines below this last should see a stronger bearish momentum, with the target then at the 2.0200 level.

 

[CapitalStreetFX]

US Inflation Disappoints Ahead of Fed Interest Rate Decision

The U.S. Department of Labor released August’s CPI reading as being a drop by 0.1%. Forecast was calling for the reading to be flat. Another black eye on the headline CPI was that July’s inflation report was revised to 0.0% from a preliminary 0.1% gain.

The core-CPI, which excludes food and energy, showed a gain of 0.1% on the monthly reading. Bloomberg was looking for a consensus of 0.2% in August. The prior month was revised upward to a gain of 0.2% from 0.1%.

Perhaps the Fed can hang its hat on the annual numbers, comparing the inflation at the consumer level to August of 2014. That annual change was up 0.2% on the headline, but the core-CPI reading was up by 1.8% on an annual basis.

Remember that the Federal Reserve really wants the inflation rate at 2.0% to 2.5%.

 

[CapitalStreetFX]

Yellow Metal To Face Strong Resistance at $1143

Spot gold got a nice boost from the FED, rising up to a daily high of $ 1,135.74 a troy ounce, its highest since September 2, after US policy makers voted to keep the federal funds rates unchanged.

The bright metal closed the day around $ 1,132.00 a troy ounce, as the US Central Bank decision took out some of the pressure over the commodity.

Nevertheless, the recovery stalled short from confirming a longer term advance, although the daily chart shows that the price has managed to advance beyond its 20 SMA, whilst the RSI indicator heads higher around 56.

In the same chart however, the 100 DMA maintains a strong bearish slope above the current level, providing a strong dynamic resistance now around 1,143.50, while the Momentum indicator heads higher below the 100 level.

In the 4 hours chart, the price has extended above a now bullish 20 SMA, whilst the technical indicators have lost their upward strength near overbought levels. The immediate support is now around 1,126.60, September 8 daily high, with a break below it pointing for a continued decline towards the 1,110 region.

 

[CapitalStreetFX]

GBP/CAD Seeks Direction As Oil Strength Weighs

The GBP/CAD cross reversed its Friday’s losses and closed barely up at 2.0534, as the Canadian dollar was weighed by a slump in oil prices.

The black gold started the week with a strong note, with WTI advanced up to $ 47.69 a barrel, although the FED’s decision to maintain its economic policy unchanged raised concerns about the local economy, and therefore the energy demand.

News that US oil rig count fell the previous, with the Baker Hughes report showing 644 active rigs against previous 652, did little to help the black gold, particularly considering that oil production is still high.

The GBP/CAD however, closed at a 3-week high, and a slightly bullish tone prevails, as the daily chart shows the price bounced from a bearish 20 SMA providing a strong support around 2.0335, whilst the technical indicators lack directional strength above their mid-lines.

In the 4 hours chart, the price is well above a flat 20 SMA, whilst the RSI indicator heads higher around 58 and the Momentum indicator holds directionless above its 100 level.