Daily Market Analysis by CapitalStreetFX

Aug 7, 2015
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#46
Dollar Hits Multi-Year High Ahead of NFP News



The dollar traded within sight of its highest level in a decade versus major peers ahead of U.S. employment reports that may help determine if the Federal Reserve will raise rates this year. Chinese stocks were mixed after the Shanghai Composite Index entered a bull market Thursday.

The Dollar Spot Index was steady, with the greenback having gained against 12 of 16 major peers over the past five days. Gold was higher after seven straight daily declines. U.S. crude was headed for a weekly retreat amid ongoing supply concerns.

The Shanghai Composite Index extended gains after closing at its highest since Aug. 20, while a gauge of Chinese shares in Hong Kong pared its weekly advance.

The dollar has surged as Fed officials including Chair Janet Yellen have reiterated that they may well lift rates next month if the data support it.

Economists predict the October payrolls report will show an increase in hiring from September, albeit at a pace below the year-to-date average, while the unemployment rate may drop to 5 percent; the lowest since April 2008.
 
Aug 7, 2015
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#47
Aussie Dollar Plunges To 9-Month Low



The double whammy of a stronger dollar and weak Chinese trade data weighed on copper and Australia’s currency, with most Asian index futures foreshadowing declines after U.S. payrolls data bolstered prospects of an interest-rate increase this year.

Both the Aussie and New Zealand’s dollar were near one-month lows as the biggest increase in U.S. employment this year underpinned the greenback. Copper futures fell a fourth day after Chinese trade slumped more than analysts anticipated, stoking bets that regulators there will have to expand economic stimulus.

While Australian stocks opened lower and futures signaled losses from Hong Kong to Seoul, Japanese contracts climbed with the yen at an 11-week low. Oil and gold were steady after tumbling on Friday.

Odds on the Federal Reserve hiking benchmark rates at its next meeting in December jumped to 68 percent after the payrolls data signaled the U.S. labor market is on a solid footing.

The report vindicated rhetoric from Fed officials, who had been working to reintroduce the prospect of a 2015 rate increase after citing lackluster inflation and concern over China’s slowdown for their inaction in September and October. Data on Chinese consumer prices to retail sales this week set will help investors get a handle on Asia’s largest economy, and color speculation on the outlook for further easing.
 
Aug 7, 2015
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#48
Crude Oil Surges After China’s Inflation Data



Crude oil staged a minor rebound in Asia on Tuesday as consumer prices rose less than expected in China and raised speculation that the government would do more to stimulate the economy.

On the New York Mercantile Exchange, WTI crude for December delivery rose 0.39% to $44.04 a barrel.

In China, consumer prices for October rose 1.3% year-on-year, below the 1.5% gain expected, while producer prices eased 5.9%, less than the 5.9% fall seen.

Later on Tuesday, the American Petroleum Institute will releases its survey of crude and refined product stockpiles last week, followed on Wednesday by more closely watched figures from the U.S. Department of Energy.

Overnight, U.S. crude futures tumbled below $44 a barrel on Monday, as a steady inventory build at the Cushing Oil Hub intensified concerns related to excess oversupply throughout domestic energy markets.

On the Intercontinental Exchange (ICE), Brent crude for January delivery wavered between $47.77 and $49.13 a barrel, before closing at $47.91, down 0.27 or 0.56% on the day. North Sea brent crude futures have also closed lower in four of the last five sessions. After peaking above $52.50 in early-October, brent futures have tumbled by nearly 10% in value.
 
Aug 7, 2015
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#49
Aussie Dollar Poised For A Reversal



The Aussie eased slightly on Wednesday in early Asia in a light data day regionally ahead.

AUD/USD traded at 0.7028, down 0.02%, while USD/JPY changed hands at 123.22, up 0.05%.

In Australia, the Westpac consumer sentiment survey is due.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was quoted flat at 99.27.

Overnight, the dollar remained at seven-month highs against the other major currencies on Tuesday, as growing expectations for a December rate hike by the Federal Reserve continued to lend broad support to the greenback.

The greenback remained supported after the Labor Department reported on Friday that the U.S. economy added 271,000 jobs last month, well ahead of the 180,000 expected by economists and the largest increase since December.

The unemployment rate fell to a seven-and-a-half year low of 5.0%.

The strong data paved the way for the Fed to raise interest rates at its December meeting, a move that would make the dollar more attractive to yield-seeking investors.
 
Aug 7, 2015
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#50
Yen Gains Strength Ahead of Key Economic Releases



The yen was slightly stronger in early Asia on Wednesday ahead of a look at company prices and machinery orders.

USD/JPY changed hands at 122.83, down 0.02%, while AUD/USD traded at 0.7066, up 0.06%.

In Japan, the corporate goods price index is due for October with a fall of 3.5% seen year-on-year, as well as core machinery orders for September with a decline of 4.0% seen year -on-year.

Ahead in Australia comes employment data with a gain of 15,000 jobs seen in October.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.02% at 99.04.

Overnight, the dollar edged lower against the other major currencies on Wednesday, but remained close to a seven-month peak as growing expectations for a U.S. rate hike before the end of the year continued to support the greenback.

The greenback remained supprted as last week’s strong U.S. employment data paved the way for the Federal Reserve to raise interest rates at its December meeting.

The Labor Department reported on Friday that the U.S. economy added 271,000 jobs last month, well ahead of expectations of the 180,000 expected by economists and the largest increase since December.

The unemployment rate fell to a seven-and-a-half year low of 5.0%.
 
Aug 7, 2015
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#51
Gold Rallies After Fed Comments on Rate Hike



Gold prices gained in Asia on Friday as investors parsed comments from Federal Reserve officials for insight on prospects of a rate hike next month.

Gold for December delivery on the New York Mercantile Exchange Comex division rose 0.28% to $1.084 a troy ounce. Silver for December delivery rose 0.18% to $14.285 a troy ounce.

Copper for December delivery gained 0.13% to $2.169 a pound.

Overnight, gold fell to a fresh five and a half year low, as investors continued to stake their bets on a December interest rate hike by the Federal Reserve following comments from a host of influential policymakers from the U.S. central bank on Thursday.

On Thursday, a half dozen monetary policymakers from the Federal Open Market Committee, including chair Janet Yellen and vice chairman Stanley Fischer were scheduled to make public comments ahead of its highly anticipated meeting next month on Dec. 15-16.

In welcoming remarks at the Fed’s conference on Monetary Policy Implementation and Transmission in the Post-Crisis, Yellen declined to address the FOMC’s near-term outlook regarding a potential rate hike or the current state of the U.S. economy.

Instead, Yellen spoke briefly on the importance of assessing how monetary policy impacts the global economy in the post-crisis period.
 
Aug 7, 2015
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#52
Gold Prices Rise Amid France Attacks

Gold Prices Rise Amid France Attacks



Gold prices gained in Asia on Monday in possible safe haven reaction to the deadly weekend attacks in Paris and on expectations for further monetary easing in China.

Gold for December delivery on the Comex division of the New York Mercantile Exchange rose 0.98% to $1,091.50 a troy ounce on Friday.

Also on the Comex, silver futures for December delivery jumped 1.24% to $14.380 a troy ounce. while copper futures eased 0.21% to $2.158 a pound.

In Japan, quarter-on-quarter third quarter GDP fell 0.2%, compared to an expected 0.1% drop, while the year-on-year pace slumped 0.8%, compared to a 0.2% drop seen.

Earlier in New Zealand, retail sales quarter-on-quarter in the third quarter rose 1.6%, beating an expected 1.3% gain.

Elsewhere in metals trading, copper for December delivery dropped 0.4 cents, or 0.21%, on Friday to settle at $2.168 a pound. It earlier fell to $2.151, a level not seen since July 2009.

In the week ahead, investors will be turning their attention to Wednesday’s minutes of the Fed’s latest policy meeting for fresh indications on the prospects of a December rate hike.

Market players will also be looking ahead to U.S. data on inflation, building permits and manufacturing activity for further clues on the strength of the economy.

On Monday, the European Central Bank President Mario Draghi is to speak at an event in Madrid. The U.S. is to release data on manufacturing activity in the New York region.

Last week, gold prices ended the week near the lowest level since February 2010 on Friday, as investors cut holdings of the precious metal amid expectations the Federal Reserve will raise interest rates for the first time in nearly a decade next month.

Market players shrugged off weaker than expected U.S. retail sales and producer price inflation data on Friday, and instead focused on upbeat consumer sentiment figures.

On Thursday, gold fell to $1,073.00, the lowest level in almost six years, after a raft of Federal Reserve speakers suggested a December rate hike.

Gold prices have lost nearly 9% since mid-October as investors recalibrated their expectations of U.S. monetary policy in response to hawkish signals from the Fed.

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.
 
Aug 7, 2015
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#53
Crude Oil Rises As Key Supply Data Looms



Crude oil prices continued gains in Asia on Tuesday with estimates of U.S. stockpiles ahead.

The American Petroleum Institute will release its estimates of crude and refined stockpiles at the end of last week later today, followed Wednesday by more closely watched figures from the U.S. Department of Energy.

On the New York Mercantile Exchange, WTI crude for December delivery rose 0.34% to $41.88 a barrel.

Overnight, crude futures rose considerably Monday after falling to fresh 10-week lows earlier in the session, as investors reacted to a series of airstrikes from France against the Islamic State in Syria in response to Friday’s terrorist attacks in Paris.

On the Intercontinental Exchange (ICE), Brent crude for January delivery wavered between $43.16 and $45.17 a barrel before closing at $44.59, up 0.13 or 0.29% on the day.

Over the last 30 days of trading, North Brent Sea crude has fallen precipitously amid continuing fears regarding the impact of a glut of oversupply on global markets. Since approaching $51 a barrel on Oct. 16, Brent crude futures have fallen by more than 9%.

In Iraq, output remains near record-highs after surging to an all-time high of 4.1 million barrels per day earlier this summer. At that point, ISIS controlled approximately 10% of the nation’s oil fields, according to CNN. As geopolitical tensions intensify, oil prices generally spike amid stronger demand.

The U.S. Dollar Index, which measures the strength of the greenback against a basket of six other major currencies, jumped more than 0.45% on Monday to an intraday high of 99.40. In U.S. afternoon trading, the index neared last week’s highs when it surged to its strongest level in seven months.

Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.
 
Aug 7, 2015
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#54
EUR/USD Continues Historic Losing Streak



Risk aversion eased on Tuesday, with safe havens JPY and gold coming under pressure alongside with the EUR, this last due to its latest status of funding currency. Macroeconomic data had little to do with the EUR/USD pair decline towards 1.0630, a fresh 7-month low, as imbalance between Central Banks continues to be the main driver of the pair.

The German ZEW survey for November, released at the beginning of the day, showed that economic sentiment continued to decrease in the EU, down to 28.3 from a previous 30.1 and expectations of 32.5. German current situation is also seen worse than previously estimated albeit economic sentiment has improved from 1.9 to 10.4. Nevertheless, a tepid improve in US inflation data for October, weighed more in the market, as the CPI rose 0.2% compared to a year before, against previous 0.0%.

The EUR/USD pair closed the day a handful of pips above this fresh low,, maintaining the dominant bearish tone, despite the limited intraday volatility seen in the pair during these past couple of weeks, with investors still considering a possible retest of the year low at 1.0461. Short term, the 1 hour chart shows that the 20 SMA presents a strong bearish slope, and that advances towards it attracted selling interest. In the same chart, the technical indicators hold below their mid-lines, lacking directional strength at the time being. In the 4 hours chart, the price extended further below a mild bearish 20 SMA, while the RSI indicator heads strongly lower near oversold territory, and the Momentum indicator aims higher below the 100 level, rather reflecting the latest bounce than suggesting further gains.
 
Aug 7, 2015
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#55
Crude Oil Surges In Asia Amid Oversold Sentiment



Crude oil prices gained smartly in Asia on Thursday as investors saw a recent sell-off overdone and tension in the Middle East support prices.

On the New York Mercantile Exchange, WTI Crude Oil for December delivery traded between $39.92 and $41.53 a barrel before settling at $42.20 a barrel, up 1.12%.

The Bank of Japan will release its latest monetary policy views at 0330 GMT followed by a 0630 GMT press conference by Governor Haruhiko Kuroda. The central bank is expected to hold policy steady on asset buying, but may highlight risks to meeting its 2% sustained inflation target.

Overnight, U.S. crude futures turned positive late in Wednesday’s session after dipping below a key technical level of $40 a barrel for the first time since late-August, following a modest build in crude inventories last week.

On the Intercontinental Exchange (ICE), Brent crude for January delivery wavered between $43.34 and $44.74 a barrel before closing at $44.16, up 0.59 or 1.34% on the day. It marked just the fourth time North Sea Brent futures have closed in the green during the month of November. Since closing October around $50 a barrel, brent futures have crashed by more than 11%.

On Wednesday morning, the U.S. Energy Information Administration (EIA) reported that crude stockpiles nationwide increased by 0.3 million barrels last week for the week ending on Nov. 13. While analysts forecasted a build of 1.6 million barrels for the week, energy traders had prepared for a possible draw after the American Petroleum Institute reported a decrease of 482,000 on Tuesday evening.

At 487.3 million barrels, U.S. commercial crude inventories still remain near levels not seen in at least the last 80 years. For the week, distillate fuel inventories decreased by 0.8 million barrels while motor gasoline inventories increased by 1.0 million barrels.

U.S. crude output, meanwhile, fell by 3,000 barrels to 9.182 million barrels per day halting a seven-week streak of production gains.
 
Aug 7, 2015
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#56
Aussies Dollar, Japanese Yen Fall After US Initial Jobless Claims News



AUD/USD traded at 0.7190, down 0.06%, while USD/JPY changed hands at 122.93, up 0.05%.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.03% to 99.06.

Overnight, the dollar remained broadly lower against the other major currencies on Thursday, as traders continued to lock in profits from the greenback’s recent rally to seven-month highs. after data showed that the number of people who filed for unemployment assistance in the U.S. fell in line with expectations last week.

The U.S. Department of Labor reported on Thursday that the number of individuals filing for initial jobless benefits in the week ending November 14 declined by 5,000 to 271,000 from the previous week’s total of 276,000.

Separately, the Federal Reserve Bank of Philadelphia said that its manufacturing index improved to 1.9 this month from October’s reading of -4.5. Analysts had expected the index to rise to -1.0 in November.

The greenback remained supported after the minutes of the Federal Reserve’s October meeting showed on Wednesday that a majority of board members are in favor of a December rate hike.

Meanwhile, the yen regained strength after the Bank of Japan maintained its current pace of monetary stimulus on Thursday, going against recent market expectations for additional easing measures.

The euro came under pressure earlier, after the minutes of the European Central Bank’s October meeting said the risk that it would miss its inflation target again has increased.

Most members of the Governing Council shared the view that inflation risks have increased and anticipated the timing of inflation getting back to target is likely to be pushed back again.

The central bank reiterated that it is ready to act and would reexamine its policies at its upcoming meeting on December 3.

Elsewhere, the dollar was lower against the pound and the Swiss franc, with GBP/USD up 0.33% at 1.5285 and with USD/CHF sliding 0.40% to 1.0158.
 
Aug 7, 2015
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#57
Can EUR/USD Rebound From the 7-Month Low?



The imbalance between Central Banks continues weighting over the EUR/USD, as the pair closed the week near a fresh 7-month low of 1.0616 established this past Wednesday.

The minutes of the meeting of the ECB and the FED showed that whilst the first repeated the December QE extension´s rhetoric, FED officers continued to hint a possible rate hike in December, keeping the greenback strong, particularly against its European rivals.

The pair has shown little intraday volatility during the last two weeks, but that has resulted in a correction of the extreme oversold conditions reached lately, rather than a signal downward exhaustion. Technically, the daily chart shows that that the price remains well below a sharply bearish 20 SMA, whilst the Momentum indicator has turned flat well below its 100 level after correcting oversold readings, whilst the RSI indicator is resuming its decline around 32.

In the 4 hours chart, the pair presents a neutral-to-bearish stance, given that the price has been hovering back and forth around a horizontal 20 SMA, while the technical indicators present tepid bearish slopes around their mid-lines.
 
Aug 7, 2015
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#58
Yellen Remarks Incite Downside Momentum In JPY, AUD



The yen and the Aussie ticked lower on Tuesday in Asia with comments in a letter released by the Federal Reserve chief in focus.

Federal Reserve Chair Janet Yellen said Monday she and her colleagues hope and expect the economy will continue to expand and if that is the case, it will be appropriate to raise interest rates.

USD/JPY changed hands at 122.93, up 0.06%, while AUD/USD traded at 0.718, down 0.06%.

Ahead, Japan reports its PMI for November with a level of 52.1 seen, down from 52.4 in October.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell 0.06% to 99.77.

Overnight, the dollar remained higher against the other major currencies on Monday, despite the release of disappointing U.S. housing sector data, as expectations for a December rate hike by the Federal Reserve continued to support the greenback.

The U.S. National Association of Realtors said that existing home sales decreased by 3.4% to 5.36 million units last month from 5.55 million in September. Analysts had expected existing home sales to fall 2.3% to 5.40 million units in October.

But demand for the dollar continued to be underpinned by expectations that the Fed is on track to raise interest rates next month.
 
Aug 7, 2015
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#59
Oil Prices Slide Down After US Stockpile Estimates



Crude oil prices fell in Asia on Wednesday as investors turned to bearish U.S. industry stockpile estimates while keeping a sharp eye on Middle East tensions.

The American Petroleum Institute reported a 2.6 million build in U.S. crude stockpiles last week, far outpacing the 200,000 barrel decline seen. Separately, a more closely-watched government report on Wednesday could show that crude inventories increased by 1.1 million barrels for the week ending on Nov. 20.

On the New York Mercantile Exchange, WTI crude for January delivery fell 0.61% to $42.64 a barrel.

Overnight, crude futures surged more than 2% amid intensifying global political discord, after Turkey downed a Russia fighter jet on the Syrian border on Tuesday morning.

On the Intercontinental Exchange (ICE), Brent crude for January delivery wavered between $44.93 and $46.49 a barrel before settling at $46.16, up 1.33 or 3.00% on the day. With the considerable gains, North Sea Brent futures moved above $46 a barrel for the first time in nine sessions. Meanwhile, the spread between the international and U.S. domestic benchmarks of crude stood at $3.24, above Monday’s level of $3.08 at the close of trading.

NATO called an emergency meeting on Tuesday afternoon after a Turkish F-16 jet plane shot down a Russian jet along the Turkish province of Hatay. Turkey claimed the jet violated its air space, adding that it issued 10 warnings to Russia in a span of five minutes before firing the shots, Pentagon officials told Fox News. Officials from the Russian Defense Ministry, meanwhile, claimed the jet remained within the borders of Syrian territory, citing “objective monitoring data.”

Russia president Vladimir Putin warned that the attacks could place a serious dent in Russian-Turkish relations, calling the actions “a shot in the back.”
 
Aug 7, 2015
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#60
Oil Holds Range Amid Thanksgiving Holiday



Brent and U.S. crude oil futures traded nearly flat on Thursday on light trading due to the U.S. Thanksgiving holiday.

U.S. crude’s West Texas Intermediate (WTI) futures flirted in both negative and positive territory in morning trade, slipping 2 cents, or 0.05 percent, to $43.02 a barrel as of 0133 GMT. They finished the previous session up 17 cents, or 0.4 percent, at $43.04 a barrel.

Brent edged down 8 cents, or 0.17 percent, to $46.09 a barrel. It settled up 5 cents, or 0.11 percent, at $46.17 a barrel the day before, after falling more than $1 to a session low $45.03.

U.S. crude edged higher earlier in the day, supported by a smaller-than-expected build in U.S. inventories. Stocks rose 1 million barrels in the week to Nov. 20, the ninth consecutive week, compared with analyst expectations for a 1.2 million barrel rise, according to the U.S. Energy Information Administration. [EIA/S]

Analysts say U.S. crude was also boosted by a fall in oil rigs, a sign that drillers were waiting for higher prices before returning to the well pad. Drilled cut rigs for the 12th week in the last 13, data from services company Baker Hughes (N:BHI) showed.

Asian stocks advanced in early trade on Thursday as the euro remained under pressure on growing bets that the European Central Bank would deliver further stimulus steps. U.S. markets will be closed Thursday and most of Friday afternoon.