Daily Market Analysis by Vinson Financials

VinsonFinancialsFX

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Financial News December 22, 2015


Firmer USD likely to continue through 2016
After almost a decade, the U.S. Fed decided to hike its bank rate in mid of December. The economy is back on track, as growth rate picked up, and labor market has improved.

On the other hand, the economy is expected to face higher inflationary pressure in near future.
The central bank is expected to deliver four more hikes next year, and thereby capital inflows will intensify. This will inturn strengthen the US dollar in the currency market.

"Every Fed tightening cycle is different and how USD trades depends on the path of rates relative to expectations, the path of rates in the rest of the world, and the reasons why the Fed is hiking, amongst other things. In the current cycle, these factors generally argue for USD strength extending into 2016. We think the forward curve significantly understates the extent to which rates will rise through 2016 and this is against a background where most other central banks are on hold or easing", states RBC Capital Markets.


Market Review December 22, 2015


British consumer morale in December edged up from a six-month low in November, while households remain more worried about the economy than they were at the end of last year. Moreover, GfK said that its monthly consumer sentiment indicator rose to +2 in December from +1 in November, marginally stronger than a median forecast of +1. Furthermore, the Royal Institution of Chartered Surveyors (Rics) states that the lack of housing supply will drive prices up faster than household pay rises with an average 6% rise across the country and 8% in East Anglia. The rise in house prices was also supported by low interest rates and stable economic growth.

Released during the early European session, Swiss Trade Balance came in at 3.14bln versus the estimated 3.82bln, German Import Prices declined -0.2% missing the estimated 0.2% rise and GfK German Consumer Climate came in at 9.4 beating the estimated 9.3. The financial markets are generally quiet this week as we approach the holiday season.

The key events for the day are the United States Final GDP and Existing Home Sales, the United Kingdom Public Sector Net Borrowing and New Zealand’s Trade Balance.


Data releases to monitor:
EUR: German Buba Monthly Report, Consumer Confidence.

GBP: CBI Realized Sales.

Trade Idea of the Day

EUR/USD


Currently the pair is trading at 1.0921. Traders must monitor the 1.1059 resistance level and the support level 1.0802 for possible breakouts. A possible scenario would be a movement towards the 1.0960 resistance level, where a break may lead to the 1.1000 area. An alternative scenario could be a movement towards the 1.0862 support level, where a break may lead to the 1.0830 area.

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VinsonFinancialsFX

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Financial News December 23, 2015


Key extracts from OPECs World Oil Report
Oil producing nations' cartel OPEC has revised its demand estimate in its latest World Oil Outlook, however has warned over declining investments. OPEC demand projections are still higher than those projected by International Energy Agency (IEA).

Saudi Arabia, also, few days back warned on declining investments posing challenge to future energy security.
According to OPEC, from here till 2040, every year $400 billion investments are required to keep supply in line with rising demand. According to the cartel, demand is likely to come from emerging market economies, namely China and India. Overall global demand is likely to increase by 18 million barrels/day by 2040 to 109.8 million barrels per day. This figure, is however 1.3million barrels/day lower from previous projections, probably taking into account recent climate accord in Paris. Figure is still higher from IEA projections of 103.5 million barrels/day.

In the medium term however it feels, oil demand to rise from current 92.8 million barrels/day in 2015 to 97.4 million barrels/day by 2020.

On the supply side, the organization expects non-OPEC production to rise to 61.5 million barrels/day by 2025 but decline to 59.7 million barrels/day by 2040. On the other hand it expects OPEC production to rise by 10 million barrels/day by 2040.

On the price front it now expects price to reach $70/barrel by 2020 and $95/barrel by 2040.

Oil is currently trading at $36.8/barrel.

Market Review December 23, 2015


The Asian session this morning was rather quiet with insignificant market movement and very few economic data. During the session, the United States Bureau of Economic Analysis released a report, which shows that consumer spending rose in November by 0.3%, that is in line with the expectations. The US Dollar seems to be paring back some of last week's gains against other major currencies such as the Euro and the Swiss Franc, which are the strongest major currencies for the month. For instance, EUR/USD remained near the 1.0930 area after reaching to the 1.0983 level yesterday, while the months’ highest was seen at the 1.1059 level until the moment.

Released during the early European session, French Consumer Spending declined -1.1% missing the estimated 0.2%.

The economic calendar is rather heavy today despite the fact that minor or perhaps muted reactions are expected in the market as the financial markets are in holiday mood.

The key events for the day would be the United Kingdom Current Account and Final GDP, the Canadian Core Retail Sales, GDP and Retail Sales and finally, the United States Core Durable Goods Orders, New Home Sales and Personal Income reports.

Additional economic releases would be the United Kingdom Index of Services, the United States Revised UoM Consumer Sentiment and the Canadian Retail Sales.


Data releases to monitor:
EUR: Italian Retail Sales.

GBP: Current Account, Final GDP, Index of Services, Revised Business Investment.

USD: Core Durable Goods Orders, Core PCE Price Index, Durable Goods Orders, Personal Income, New Home Sales, Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations, Crude Oil Inventories.

CAD: Core Retail Sales, GDP, Retail Sales.

CHF: KOF Economic Barometer.


Trade Idea of the Day

EUR/JPY


Currently the pair is trading at 132.23. Traders must monitor the 133.78 resistance level and the support level 131.01 for possible breakouts. A possible scenario would be a movement towards the 131.67 support level, where a break may lead to the 131.25 area. An alternative scenario could be a movement towards the 132.72 resistance level, where a break may lead to the 133.20 area.

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VinsonFinancialsFX

Member
93 0


Financial News December 28, 2015


US household consumption likely to drive growth in 2016
University of Michigan index of consumer sentiment December final estimate was up to 92.6, slightly over expectations of 92.0.

Current conditions were up to 108.1, the highest since June. The consumer expectations were revised upwards a tick to 82.7, below November print but still over October.

Both were led by concerns related to personal finances, the current personal finances index climbed to 113 and expected personal finances went up to 124.

"Buying conditions for durables now stand at 167 (previous: 154), the highest since 2005 and consistent with continued strength in motor vehicle sales. Sentiment now stands in line with its average pace of improvement over the course of the recovery, and we expect household consumption will continue to drive growth in 2016", says Barclays in a research note.

Market Review December 28, 2015


The financial markets remain quiet with insignificant market movement as another holiday week begin. Released during the Asian session this morning, Japan's factory output fell for the first time in three months in November and retail sales slumped, suggesting that a clear recovery in the world's third-largest economy will be postponed until early in 2016. While manufacturers expect to increase output in coming months, the weak data casts doubt on the Bank of Japan's view that an expected pick-up in exports and consumption will help jump-start growth and accelerate inflation toward its 2% target. Industrial output fell 1.0% t in November from the previous month, more than a median market forecast for a 0.4 percent decline, data by the trade ministry showed on Monday. Moreover, retail sales fell 1.0% in November from a year earlier, more than a median forecast for a 0.1 percent drop. The USD/JPY pair remained near the 120.55 area, after dropping to the 120.15 area in the previous week.

The economic calendar is rather empty for the day and rather light for the whole week as the holiday spirit is dominating the markets. The key events for the week would be the United States CB Consumer Confidence and Unemployment Claims.

View our full economic calendar for a daily roundup of major economic events.

Data releases to monitor:
CAD: Bank Holiday (Boxing Day).

GBP: Bank Holiday (Boxing Day).


Trade Idea of the Day

EUR/CAD


Currently the pair is trading at 1.5182. Traders must monitor the 1.5318 resistance level and the support level 1.4955 for possible breakouts. A possible scenario would be a movement towards the 1.5241 resistance level, where a break may lead to the 1.5275 area. An alternative scenario could be a movement towards the 1.5137 support level, where a break may lead to the 1.5095 area.

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