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[KeyToMarketsUK]

KTM FX Daily: FX Data update

The forex market remains in the range overnight with the US closed in observance of Independence Day. Wednesday morning AUD grab the attention post the release of better May Retail sales and muted Trade balance data and Caixin PMI survey.

Data review:

Australian retail turnover rose 0.4% in May 2018 following a rise of 0.5% in April 2018, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures. The market forecasted at 0.3%.

The balance on goods and services was a surplus of $827m in May 2018, an increase of $355m on the surplus in April 2018, but fell short of the market forecast $1.2bn.

Caixin China General Services Business Activity Index Services activity expanded at the quickest rate for four months in June rising from 52.9 in May to 53.9, published by HIS Markit.

Eurozone PMI Services Business Activity Index posted a four-month high of 55.2 in June, up from May’s 16-month low of 53.8 and the earlier flash estimate of 55.0. The index has signaled expansion in each of the past 59 months.
“Eurozone growth regained momentum in June, rounding off a respectable second quarter performance, for which the survey data point to GDP rising by just over 0.5%. June also saw new orders and employment growth perk up, suggesting rising demand continues to motivate companies to expand capacity”, Chris Williamson, Chief Business Economist at HIS Markit, commented.

UK Services PMI printed the Strongest rise since October 2017. UK Services PMI Business Activity Index posted 55.1 in June, up from 54.0 in May, signalled the strongest rate of expansion since October 2017.
“Stronger growth of service sector activity adds to signs that the economy rebounded in the second quarter and opens the door for an August rate hike, especially when viewed alongside the news that inflationary pressures spiked higher” Chris Williamson, Chief Business Economist at IHS Markit commented. The economist also said, “The survey data indicate that the economy likely grew by 0.4% in the second quarter, up from 0.2% in the opening quarter of 2018”.

What’s on today?

We expect a quiet trading session in Asia and things will improve a little bit in Europe session with Germany factory orders (not a market mover). Turning to the US, data flow picks up rapidly with the June ADP employment, Weekly unemployment claims, June ISM Non-Manufacturing PMI and FOMC meeting minutes.

In the June meeting, FOMC raised the fed funds rate by 25bps, as expected. In the June meeting minutes, our particular attention to the trade tensions and the FOMC communication.

USDJPY: Strong selling pressure remains very strong between 111.00-111.40, a symmetrical triangle formation is still evident in the daily chart. The oscillator has been shaping to an inverse H&S pattern. While holding 109.00 level, we could expect a bullish print at 113.00, if well above 111.40.

Supports are at 110.00, 109.60 and 109.20.

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[KeyToMarketsUK]

KTM Commodity Daily: Copper update-oversold

Copper price may be falling into an area of support defined by the following:
• 38.2 fib reaction finds at (Jan 2016 low-June 2018 high) 2.8000
• 100MA (weekly) finds at 2.7910
• 500MA (Daily) finds at 2.7830
• 161.8fe (A-B-C corrective structure) pointing 2.7620
• The daily RSI study has been extremely oversold
• Overall between 2.8000-2.7620 the price offers very near-term support zone

For now, we view a decent bounce to 2.89 and 2.94 in the very near term.

What if the price falls to hold?

We could expect further retracement to 2.6270 its 200MA (weekly) which coincides with the 50.0% fib reaction and 2.5000 its 50MA (monthly) and finally the 61.8% fib reaction 2.4640.

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[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar (July09-13). Chart of the week: USDCAD

• UK GDP mom, BOC Monetary policy meeting, and US CPI are the key risk events lined up
• The US dollar responded negatively to the mixed June NFP
• We expect Bank of Canada to hike interest rate to 1.5%

Review: In response to the dollar weakness, EUR, GBP, AUD and NZD off from the June lows. Trade uncertainties and the mixed June non-farm payroll helped these pairs to bid last week.

With the start of the second week, Brexit news dragged the cable slightly.

News: The Brexit Department confirmed that former Minister David Davis has resigned from public office reported by Wallstreetcn.

Week ahead:

In the EA, German factory orders helped the euro to bounce last week. We learned that New orders in manufacturing had increased in May 2018 by 2.6% from the April 2018 a decrease of 1.6%. Looking ahead it’s a reasonably quiet week except for official export German data.

In the UK, political uncertainties just have been started weighing the pound in an early Asian bid. The week ahead, the UK monthly GDP is the more interest event to watch. It’s a way of keeping track of how the UK economy is doing. The Office for the National Statistics shifted from quarterly to monthly GDP releases from this week. This week’s ONS report covers the March-May. We still believe, looking over the coming weeks, the official data prints will pave the way to the Q3 rate hike. Recent better than expected PMI survey data (Services PMI) push the August BOE rate hike probability to nearly 80.00%.

In the US, June CPI is the principal risk event scheduled on Thursday. The Consumer Price Index (CPI) measures the change in prices paid by consumers for goods. In May, the CPI increased 0.2% after rising 0.2% in April. We expect both the headline CPI and core CPI remain unchanged again at 0.2%. Moreover, we are more interesting to watch the Trade war headlines and NATO.

Turning to the Central bank meeting, we expect Bank of Canada to hike interest rate to 1.5% in its Wednesday meeting. In the April BOC meeting, the bank said, “GDP growth in the first quarter was weaker than the Bank had expected, but should rebound in the second quarter, resulting in 2 percent average growth in the first half of 2018.” The bank also highlighted “Slower economic growth in the first quarter primarily reflects weakness in two areas, the housing market, and exports.”

Chart of the week: USDCAD

Bulls will regain strength well above 1.3165 with targets 1.3220 and 1.3280. Support zones remain between 1.3000-1.2920. In case of a dovish take, the cross USDCAD could be rebound to 1.3280-1.3300 levels.

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[KeyToMarketsUK]

KTM FX Weekly: Doctoring the EURGBP pitch

• Pound was rocked by three resignations last night, had a weak session
• Things are always changing in the UK political landscape

In the last 24 hours, the GBP started vibrating again as the UK cabinet received a handful of ministerial resignations. The pound began the week with David Davis resignation followed by Junior minister Steve Baker. The pound remains stable despite Davis and Baker departure in an Asian session, whereas Foreign Secretary Boris Johnson departure caused shaking in the European session.

The week ahead, focus now shifts on Thursday’s events.” The 100+ page “white paper” will be released, laying out in fuller detail the UK’s vision as summarised in the Chequers agreement” reported by TD Securities.

In addition to the political woes, BOE August policy meeting is the other catalyst to be watched closely.

UK Data Review: Services PMI continued the recovery in growth seen since March’s snow-related disruption.

• The manufacturing sector remains subdued at the end of second quarter, PMI broadly unchanged at 54.4 in June
• Construction PMI posted 53.1 in June, up from 52.5 in May. Construction output growth reaches seven-month high in June
• Services PMI posted 55.1 in June, up from 54.0 in May, indicated the fastest expansion of business activity for eight months in June.

Data Preview:

The week ahead, the UK monthly GDP is the more interest event to watch. It’s a way of keeping track of how the UK economy is doing. The Office for the National Statistics shifted from quarterly to monthly GDP releases from this week. This week’s ONS report covers the March-May. We still believe, looking over the coming weeks, the official data prints will pave the way to the Q3 rate hike. Recent better than expected PMI survey data (Services PMI) push the August BOE rate hike probability to nearly 80.00%.

TECHNICAL OVERVIEW​

The euro has been consolidating effectively between 0.8800-0.8900 levels. As we pointed in our earlier notes, the weekly resistances are seemed at 0.8900/0.8920 above this 0.8970 exists. While remains below the weekly supply zone, we foresee a downside risk to re-test the support levels 0.8800 and 0.8760. Flipside side, well settle above 0.8970-0.9000 could rally further to 0.9050/0.9070.
Nothing that, the 50.0% of the fib reaction (0.9599-0.8300 correction) seems to be at 0.8950, and the descending trendline coincides at 0.8920. Overall, between 0.8920-0.8950 we could expect stiff resistance in the week ahead.

Forecast: Remain sidelines

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[KeyToMarketsUK]

KTM FX Daily: Wednesday FX overview. Chart of the day: USDCAD

NAB Business Confidence fell; China June CPI up; UK May GDP up; German ZEW Economic sentiment tumbles; Canada Housing starts to jump and JOLTS Job Openings edged down.

The market sentiment was constructive in Asian and European session whereas in late NY session recent US-China trade war headlines dampen the emotion again. JPY strengthen across the board, and the US Dow Jones futures fell rapidly. The 10-year Treasury yield closed at 2.87 vs. 2.86 Tuesday.

AUD: The business confidence edged down 1pts to +6 index points, to be around its long-run average level. China PPI rose by 4.7% from 4.1% in May and the CPI on an annual basis in June up by 1.9% from 1.8% a year earlier. On a MoM basis, CPI fell 0.1%.
GBP: The monthly UK GDP grew by 0.3% in May. Services, Construction and Agriculture output expanded but drop in production was learned.

EUR: The Economic Sentiment for Germany recorded a decrease of 8.6 points in July 2018 and now stands at minus 24.7 points. This is the lowest reading since August 2012, and well below the long-term average of 23.2 points, ZEW reported.

ZEW President Professor Achim Wambach said “The current survey period has been marked by great political uncertainty. In particular, fears over an escalation of the international trade war with the United States have dampened the economic outlook. The positive news regarding industrial production, incoming orders and the labour market have been greatly overshadowed by the anticipated negative effects on foreign trade”

CAD: Building permits month on month basis increased 4.7% followed a 4.7% drop in April.

USD: The number of job openings edged down to 6.6 million on the last business day of May, the U.S. Bureau of Labor Statistics reported.

News: The Dowjones futures fell rapidly in late NY session on the story that US is preparing to publish a 200$B China Tariff list. Bloomberg reported, “President Donald Trump is preparing to release a list of an additional $200 billion in Chinese products to be hit with tariffs, according to two people familiar with the matter.” The article also discussed “The list could be released as soon as Tuesday, and likely this week, according to the people, who spoke on condition of anonymity because the matter isn’t public.”

What’s on today?

In Asian session we have Japan Core Machinery Orders and PPI (YOY), Westpac Consumer sentiment and Aussie home loans, not market movers though. Moving to European session, ECB President Draghi due to deliver opening remarks at the ECB Statistics Conference, in Frankfurt.
Things will rapidly pick up on the US session with PPI data and BOC policy meeting followed by press conference. Additions to these, worth to focus on BOE Governor Carney Speech about the global financial crisis at the National Bureau of Economic Research conference, in Boston.

Chart of the day: USDCAD

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[KeyToMarketsUK]

KTM FX Daily: Tailspin continues

What’s going on?

The Financial market risk sentiment has been deteriorated further after Trump imposes an additional $200billion in Chinese products. Tremors spread across the board as Risk-off mood escalated from Wednesday Asian session to NY session.

Here’s a glance at the best & worst performers:
With Yen appreciation against the most traded currencies, Equities skid, FX weakened and the commodities melted were the themes on Wednesday.

FX Scoreboard (Base currency: USD):
TRY weakened 3.5% followed by ZAR 1.80%, CNH nearly a percent, MXN 0.90% respectively. In the G10 block, AUD and NZD were the weakest down 1.2% each, followed by JPY and SEK 0.90% each and CAD 0.80% respectively.
There is a strong inverse correlation between the greenback and the commodities. As a result, precious metal and the industrial commodities hammered.

Downward pressure continues:
Scoreboard: Brent oil plunged by 5.00% followed by Copper 3.00%, Platinum 2.5%, Silver 1.50% and finally Gold down by a percent (Wednesday closing).

Overview: At the time of preparing the article TRY fell as low as 4.9734 in an early Asian bid against the dollar.

Our bullish forecast on USDJPY has been doing well, trading at 111.95.

After Trump imposes an additional $200billion in Chinese products, USDCNH popped into early July high in the Asian session and later further extended the gains in NY session. We believe the cross has entered the supply zone, worth to observe for a reversal. Now the conviction factor is low.

All we can say is AUDJPY, AUDUSD, USDCNH, and Copper prices directly associated with the Trade-War.

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[KeyToMarketsUK]

KTM FX Daily: Risk on. Chart of the day: Brent

During risk-on time, investors are willing to take or buy risk assets. In such circumstances, commodities perform better

Review: The recovery in risk markets has prompted a little bounce in commodities and commodity currencies. Over the past 24 hours, commodity prices manage to hold the parallel support levels.

Gold: Parallel support finds at 1236$
Silver: Parallel support finds at 15.60$
Palladium: Lower end of the range is 930$
Copper: The 161.8fe finds at 2.73$
Brent: Tested and held the 100MAs

(Readers can read commodity stories on our blog)
Equity markets are higher across the globe with Dow Jones 30 (KTM: XUS30) up by 0.90%, and the dollar index (KTM: USDX) rose by 0.70%. The cross USDTRY and USDCNH traced out a double top, whereas the USDJPY keep moving higher (near to our target 113.00) and settles above the three-year descending trendline.

Bitcoin a new kind of money fails to attract investors since the beginning of 2018. The most famous cryptocurrency lost its value by 70.00% from Dec 2017 high, still struggling to find the better foot. In Thursday session the digital current rejected at 20MA and fell by 5.00%. It has parallel support finds between 5945$-5600$.

Chart of the day: BRENT

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[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar (July16-20). Charts of the week: AUDJPY and G

The brand-new week is preparing the ground to take off with the Chinese activity data. Rising geopolitical tensions and escalating Trade tensions between the US and China have grabbed trader’s attention to the Chinese data (Mon).

• Chinese economic activity estimates
• CPI for NZ, UK, and EA
• GBP grab’s the attention again

China 2Q GDP, June Industrial production, Retail sales and fixed asset investments are the critical data risk events due in today’s Asian session. We are more focusing on USDCNH, AUDUSD, and AUDJPY in the FX and the commodities, block we are interested on the Copper’s price action.
China’s 2Q GDP: We expect the 2Q GDP to grow from 6.8% from 6.7%. As trade war looms, the 2QGDP is scheduled to be moderated from the Q1.
“The synchronised slowdown in domestic and external demand is likely to put pressure on economic growth in the second half,” said Lian Ping, chief economist at Bank of Communications.
Week ahead:

In Australia, Minutes of July 2018 Monetary Policy Meeting of the Reserve Bank Board (17 July 2018, 11.30 am AEST) and June labor force (Wed) is the principal risk event scheduled.

In the NZ, 2Q inflation is the catalyst to the kiwi dollar. We expect the inflation reading is likely to remain below the RBNZ’s mid-point target 2.0%. We also hope the recent NZD depreciation could support the import prices. On a QoQ basis, we expect a small uptick from 0.5% to 0.6% and from 1.1% to 1.2% in YoY basis.

1Q Review: The annual inflation rate of 1.1 percent in the year ended March 2018 fell from 1.6 percent in the year ended December 2017. In the March 2018 quarter compared with the December 2017 quarter, the CPI rose 0.5 percent.

In the UK, the official labor market (Tue), inflation data (Wed) and retail sales readings (Thu) could guide the August 2nd BOE policy meeting. Recent better than expected PMI survey data (Services PMI) push the August BOE rate hike probability.

Read: USDCNH technical overview in our KTM blog.

According to IHS Markit, “If labour market data show rising wage pressures and inflation numbers indicate sustained upward price pressures, the odds of an August rate hike will shorten”.

Feb-April labor market summary:
The unemployment rate was 4.2%, down from 4.6% for a year earlier and the joint lowest since 1975
Latest estimates show that average weekly earnings for employees increased by 2.8% excluding bonuses, and by 2.5% including bonuses, compared with a year earlier.

In the EA, EA Trade data (Mon) and the final EA inflation reading (Wed) are the catalysts for the single currency.

Turning to the US, Retail sales. IP, Building permits, Weekly unemployment claims and the critical economic events we are watching closely. We are also watching closely to the Fed chair Powell’s speech on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington DC.


Charts of the week: AUDJPY and GBPCHF

AUDJPY: The level to watch is 84.55

GBPCHF: The level to watch is 1.3270

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​

 

[KeyToMarketsUK]

KTM FX Weekly: EURUSD is largely restricted within the range

• Rising Trade tensions have escalated the market volatility and keeping the lid on euro
• Overnight Trump and Putin summit grabbed the attention
• Recent Germany data and the political calmness in the EU supporting the euro somewhat

The rebound in the Q2 economic data encourage us to re-assess the EURUSD technical picture. The Q3 technical landscape is likely to remain in the restricted zone. Moreover, we still believe the trade war likely to bid the dollar for some more time.

Succinct review:
• The euro area recorded a €16.5 bn surplus in trade in goods
• German trade balance recorded a surplus of 20.3 billion euros in May 2018
• Economic expectations in the eurozone may stabilize slightly in July following the sharp slide in June. The index rose from 9.3 to 12.1 points, Sentix reported
• The Economic Sentiment for Germany recorded a decrease of 8.6 points in July 2018 and now stands at minus 24.7 points. This is the lowest reading since August 2012, and well below the long-term average of 23.2 points, ZEW reported
• The accounts of the June monetary policy meeting statement said “it would reduce the monthly pace of net asset purchases to €15 billion until the end of December 2018 and then end net asset purchases” in line with the previous communication.

Preview:

In the EA, the final EA inflation reading (Wed) are the catalysts for the single currency.

Turning to the US, Retail sales. IP, Building permits, Weekly unemployment claims and the critical economic events we are watching closely. We are also watching closely to the Fed chair Powell’s speech on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington DC.

Technical overview​

The potential path for EURSUD in near-term remains sideways. The daily volatility tends to increase evidently, and the daily indicators are bullish, this factor underlines further upside potential. The price action sounds finally ready to re-test the resistance 1.1850 in the coming days.

The supports are at 1.1650, 1.1600 and 1.1500 with resistance seems to be at 1.1850. A well above 1.1850 could rally further to 1.1980 its 20MA (weekly).

Turning to the recent FX positioning, “EUR was the most sold currency by non-commercial IMM accounts, with these accounts holding the smallest EUR long positions since late November 2017” reported by Morgan Stanley strategist.

Weekly forecast: Largely restricted within 1.1850 -1.1600 range

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[KeyToMarketsUK]

KTM Crypto Daily: Bitcoin strategy

The world’s first decentralized digital current spike has risen more than 10% in short time (within the 1hr period) in the late NY session on Tuesday. Before the price popped, it spotted with an inverse H&S pattern. The pattern usually identified to predict the trend reversal. We forecasted and posted the pattern in one of our marketing channels last week and again tweeted in the European session. Finally, the price breach through the neckline and rose as high as 7450$ (KTM: BTCUSD) but pauses at the four-month descending trendline.

Please read this article in our KTM blog to find our earlier updates
Trading an inverse H&S pattern

Pattern trader: Technical and Pattern Traders tends to place a buy stop order above the neckline using the stop loss at the right shoulder lowest point.
The pattern trader could take profit by measuring the height amongst neckline and the lowest point of the head (below chart). The pattern is pointing 7820$, well above the descending trendline could fuel the rally further.

Swing trader: Yesterday’s breakout completed the 100.0fe (A-B-C structure). The 161.8 fe seems to be at 7700$ coincides with the June 07 high 7703$.
In the Asian session, immediate supports find at 7260$ and 7100$ levels. The neckline breakout finds at 6790$.
In both the cases, an old-school stop loss can be placed slightly below the right shoulder.

Looking beyond the short-term, between 7700-770$ the price could face stiff resistance. Well above the red line only could confirm the bottom if fails, we say a gap-filling activity.

We are glad to announce the introduction of 6 new Cryptocurrencies, which are now available in your Metatrader 4: Bitcoin (BTCUSD, BTCEUR), Ethereum, Ripple, Litecoin, Dashcoin, Bitcoin Cash.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

Have a question? Let us help!

A KTM Analyst is ready to assist you, click on the comment section below​

 

[KeyToMarketsUK]

KTM FX Daily: Thursday FX overview. Chart of the day: GBPAUD

UK CPI 12-months rate was unchanged, EA annual inflation rate was up, U.S. Housing Starts Plunge, and Beige book trace tariff concerns.
The dollar index had advance overnight but failed to breach June high 95.25, Gold was recovered from intraday lows and closed neutral, Brent edged higher by 1.75$ and Bitcoin moved up by 10$.

Succinct review:

The annual inflation rate for UK and EA remain stable. Quick reaction was cable re-tested the 1.30 handle, and the EURUSD stay in the range. US Housing starts are weaker than expected.

UK CPI: GBP fell with the latest UK inflation data. Annual UK inflation remains unchanged at 2.4% in June 2018 from May 2018. The forex market is preparing for the August rate hike, but the data out is keeping the lid on the growing rate hike probabilities.

EA CPI: Euro area annual inflation rate was 2.0% in June 2018, up from 1.9% in May 2018. The euro area flash estimate for June 2018, published on 29 June 2018, was 2.0%. The next flash estimate of euro area inflation with data for July 2018 is scheduled for 31 July 2018.

Housing Starts: Residential starts annual rate fell to 12.3% to 1.17m. Building permits in June fell 2.2% to 1.27m.

Beige book: The July Beige book expressed “Economic activity continued to expand” across the Federal Reserve Districts with 10 of the 12. In the first paragraph itself, the Beige book raised concern about tariffs, especially in the Manufacturing sector. “Manufacturers in all Districts expressed concern about tariffs and in many Districts reported higher prices and supply disruptions that they attributed to the new trade policies.” The book also expressed “All Districts reported that labor markets were tight”. With the recent dollar strength, Consumer spending was up in all districts.
Regarding prices “The extent of pass-through from input to consumer prices remained slight to moderate.”

What’s on today?
UK Retail sales, Philly Fed manufacturing Index and Unemployment claims.

Chart of the day: GBPAUD

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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[KeyToMarketsUK]

KTM FX Weekly: FX overview for the week July 23-27

The financial market reacted negatively to the Trump’s remarks with the dollar index, and the USDJPY wobbled at resistance levels. Rising geopolitical tensions and Trade tensions have escalated the market volatility again. The Chinese Yuan (KTM: USDCNH) hits 12-month low pushed the cross to 6.8077 in Friday’s Asian session.

On Friday night Trump tweeted “China, the European Union, and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day – taking away our big competitive edge. As usual, not a level playing field”. It seems the trade war has entered into the second phase. The quick reaction was the USD fell against major pairs on Friday, recorded a large intraday move but not a game changer in the G10FX basket.

We believe U.S President remarks mostly altered the USDJPY near-term landscape. The price has traded through our target 113.00 we set in early July whereas failed at the supply zone 113.00-113.30 levels and lost the initial support at 112.20. Thus, we are focusing on the other key supports finds at 111.40 and 108.10.

Turning to G10 currencies they are largely trading in ranges (G10 FX: AUDUSD, EURUSD, GBPUSD, NZDUSD, USDCAD, USDCHF, USDDKK, USDJPY, USDSEK and USDNOK). Moreover, the dollar index (KTM: USDX) remains between 93.00-95.50.

• AUDUSD: 0.7300-0.7550
• EURUSD: 1.1500-1.1850
• GBPUSD: 1.3000-1.3360
• NZDUSD: 0.6685-0.6900
• USDCAD: 1.3000-1.3300
• USDCHF: 0.9785-1.0068
• USDDKK: 6.2862-6.4743
• USDJPY: 108.00-113.30
• USDSEK: 8.5670-9.0370
• USDNOK: 7.9755-8.3320

Besides, Gold held the 50.0% fib reaction (1046.30$-1375.00$ rally) elsewhere Copper re-tested and held the breakout trendline.

We still forecast the assets AUDUSD, GBPUSD, EURUSD, and NZDUSD continue to rebound to the higher end of the ranges.

Read: FX strategies in our KTM Blog

Before we go further USJDPY technical details, readers can go through the EURUSD and GBPUSD forecasts. We have the top two that are USDJPY and GPBUSD which traded through the targets.

Chart of the week:

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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[KeyToMarketsUK]

KTM Commodity Weekly: Momentum appears to have locked

• The Oil market has kicked off the first day in positive territory but closed flat
• We remain cautiously NEUTRAL as we continue to study the action

Brent oil price well bid on Monday in response to Trump war of words. Oil traders should be looking at the increasing trade and geopolitical tensions.

Trump appeared to be responding to Iranian President Hassan Rouhani threatening statement. Who warned: “Mr. Trump, don’t play with the lion’s tail, this would only lead to regret…America should know that peace with Iran is the mother of all peace, and war with Iran is the mother of all wars.”

On Sunday night President Trump warned “To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!”

The quick reaction was the oil price rebounded nearly a percent on Monday session. In the first half of 2018, the price gained almost 20% since then shaping out a trip top formation between May-July. We believe yesterday’s move was restricted mainly to intraday, not a game changer. Currently, Brent oil is trading at 73.23$ (Monday’s closing) down by more than 10% from May high to three-month lows.

The recent data showed, Hedge funds cut bullish bets on U.S. crude for the first time in nearly a month, Reuters reported.
In the near term, the price has been capped at 75.50$; we would look to capitalize by using rebounds to 75.50$-76.30$ as a selling opportunity.

Turning to the medium term, we also expect the price will retrace further to 68.50$ and 66.50$ levels.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

What is your Technical View?

Do you have a different idea? Please leave us a comment and get an answer from our professional analysts.​

 

[KeyToMarketsUK]

KTM FX Daily: AUD charts pack ahead of June quarter CPI

Australia Q2 CPI is the principal risk event which is out on Wednesday at 11.30 AEST. We expect in June quarter CPI will rose 0.4% compared with a rise of 0.4% in Q1 and 0.6% in the December quarter of 2017. Fundamentally, the CPI is an important economic indicator used in formulating monetary policy. In each quarter the CPI is released on the last Wednesday of the month.

CPI is the picture of a basket of goods and services comprising items bought by Australian households in each quarter. The total basket is divided into 11 major groups, each representing a specific set of commodities, according to ABS (Australian Bureau of Statistics).

In Q1, CPI rose 0.4% followed by 0.6% in December quarter 2017. On an annual basis, the CPI rose 1.9%. The RBA set an inflation rate target at 2–3 percent, on average, over time. “The inflation target is defined as a medium-term average rather than as a rate (or band of rates) that must be held at all times” RBA said. Inflation targeting is widely used as the framework for monetary policy.

In April Dep.Gov Debelle said “keeping ‘underlying inflation between 2 and 3 percent, on average, over the cycle’ to keeping ‘consumer price inflation between 2 and 3 percent”.

The tradables component of the All groups CPI fell 0.4% in the March quarter of 2018 whereas the non-tradables component of the All groups CPI rose 0.8% in the March quarter of 2018.

In July policy meeting RBA said, “Further progress in reducing unemployment and having inflation return to target is expected.” The recent unemployment rate was steadily remained unchanged at 5.4% in June, according to the Australian Bureau of Statistics. In May the RBA said, “The recent inflation data were in line with the Bank’s expectations, with both CPI and underlying inflation running marginally below 2 percent.”

The trimmed mean rose 0.5% in the March quarter of 2018, compared to a rise of 0.4% in the December quarter of 2017. We expect in the June Quarter it remains steady at 0.5% vs. forecast 0.5%.

Ahead of the event risk, the cross AUDUSD is trading at 0.7430 shies at some immediate resistances seems at 0.7445 and 0.7475 its 50MA. For three weeks the cross has been locked between 0.7485-0.7310. Supports are at 0.7400, and 0.7350 below these 0.7300 exists.

Read the full technical overview in our blog

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KTM FX Daily: EURJPY is ready to advertise the new corrective wave

The combination of risk-off and the BOJ meeting is removing the gravity

Selling pressure remains very strong between 130.30-130.40 levels its 23.8% fib reaction. The euro reaction to the July ECB meeting subdued, but the cross EURJPY tagged with the BOJ tail risk. Over the past seven trading sessions the cross down six sessions and retraced to 38.2% fib reaction (124.60-132.00 rally). This morning the cross fell as much as 129.23 and tested the 50MA finds at 129.20.

The daily studies RSI and the oscillator are remaining bearish. Under these conditions, there are chances of further damage into the next week’s BOJ meeting (Tue). A well below 128.90 could open to 128.30 its 50.0% fib reaction coincides with the A-B-C corrective wave structure.

Overall the fib reactions (below chart) are actively working on the current corrective wave C.

Cautions will be ordered if the cross fails to break below 128.95 a parallel support. This re-test would point a short-term rebound to 129.40 and 130.00/130.30.

Area of support defined by the following:

• The 38.2% fib reaction finds at 129.20 coincides with 50MA
• Parallel support finds at 128.95
• The 20MA (weekly) finds at 128.70
• The 100MA (monthly) finds at 127.90
• The 61.8% fib reaction finds at 127.45 coincides with the August 18 low.

Forecast: We are waiting for 50.0% and 61.8% fib reactions

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KTM FX Weekly: G3 preview. JPY crosses are under the hammer

Economic data risk for the week ahead includes G3 central banks BOJ, FOMC and BOE monetary policy meetings. We expect that BOJ and FOMC to hold the interest rates at -0.1% and 1.75%-2.00% respectively, whereas BOE to hike by 0.25 bps.

Bank of Japan preview: Over the past two weeks rumors are growing around to the BOJ’s monetary policy meeting (July 30-31) that the bank may alter its asset purchase program.

Since the introduction of quantitative and qualitative monetary easing (QQE) in 2013 intending to achieving the price stability target of 2%, the Bank has been maintaining highly accommodative financial conditions by consistently pursuing strong monetary easing, according to the BOJ.

The framework of QQE with Yield Curve Control adopted by the Bank consists of two significant components, i.e., yield curve control and inflation-overshooting commitment.

Looking at the perplexity on the components face, the Bank sets the short-term rate at minus 0.1 percent and the target level of JGB yields at around 0 percent. Besides, Five and a half years have passed since the Bank introduced the price stability target in 2013, but the necessity of the 2 percent price stability target concerning the year-on-year rate of change in the CPI seems to have not yet been widely accepted by the public, according to the BOJ.

Recent inflation printed remain below the target. The CPI for Tokyo in July up 0.9% and Core CPI up 0.8% from a year earlier. Besides, the Nikkei Flash Manufacturing PMI falls to 20-month low of 51.6 in July vs. 53.0 in June.

Forecast: In case of any tightening of the financial conditions in the July 30-31 meeting, it is likely given the risk of yen appreciation across the board. Based on this forecast, we expect the cross USDJPY to retrace 108.00. Subject to the Monetary Policy Meeting (MPM) outcome, the currency yen, share prices and the JGBs are set to move either side rapidly. The JP10Y yield broken the 10-year descending trendline and sixteen-month symmetrical triangle pattern too.

Read the JPY10Y chart outlook in our KTM Blog

FOMC Preview: Looking ahead, the August FOMC to leave rates unchanged. We are more focusing the remarks on the inflation and GDP in the policy statement.

The CPI increased 0.1 percent in June after rising 0.2 percent in May, Whereas GDP grew at an annual rate of 4.1 percent in the second quarter of 2018 according to the “advance” estimate released by the Bureau of Economic Analysis released last Friday.

The U.S. relatively strong rates of business activity growth recorded in both the manufacturing and service sectors.

Manufacturing PMI little changed at 55.4 in July vs. 55.4 in June. 2-month high, manufacturing companies remained upbeat about the year-ahead business outlook. Services PMI eased to 56.2 in July vs. 56.5 in June. 3-month low signaled a robust rise in service sector output, but the rate of expansion was the slowest since April.

BOE Preview: Elsewhere, Bank of England to hike by 0.25bps to 0.75% with an 8-1 vote. The recent set of data is enough to support our rate hike forecast. Rising wage growth is our base case scenario to expect a rate hike in August. Latest estimates show that average weekly earnings for employees increased by 2.7% excluding bonuses, and by 2.5% including bonuses, compared with a year earlier.

Turning to inflation data, UK Consumer Prices Index 12-month rate was 2.4% in June 2018, unchanged from May 2018. Currently, the market is pricing nearly 90% of the August rate hike. Besides, the Bank is publishing the inflation Report forecast too.

Back in May inflation report, the bank said that GDP growth was weaker than expected in Q1, in part due to a temporary drag from adverse weather. GDP growth slowed to 0.1% in Q1, according to the preliminary estimate, from 0.4% in Q4 and below the projection three months ago.

Turning to the recent set of UK PMIs we believe they are consistent. Construction PMI and Services PMI indicated expansion, but subdued Manufacturing PMI learned.
Services PMI indicated the fastest expansion for eight months in June posted at 55.1, up from 54.0 in May. Besides June Construction PMI revealed a substantial increase, posted 53.1 in June, up from 52.5 in May. Whereas, Manufacturing PMI broadly unchanged at 54.4 in June.

Looking forward, we expect the UK political concerns and the Brexit uncertainty to weight on the GBP in the medium term.

Economic data preview:
Flash Q2 GDP for EA, GDP for Canada, jobs data for NZ and U.S, Aussie Retail sales, Trade balance for Aussie and Canada, PMIs for UK and U.S.

Europe:
We expect July CPI and core CPI to remain unchanged at 2.0% and 1.0% respectively. We also expect Flash Q2 GDP for EA to expand to 0.5% from 0.4% in Q1 2018.

U.S:
The monthly job reports for July is set to roll in Friday (August 03). After adding 231k in June, we expect a modest increase to 190k.

Charts of the week: JPY crosses are under the hammer

USDJPY and EURJPY have broken its recent ascending trendline, whereas GBPJPY has been down warding in the falling channel but holding the 100MA and the weekly pivotal.

Read the EURJPY technical strategy in our KTM blog

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KTM EURGBP Weekly: Higher lows into BOE meeting

GBP weakness 0.30% against the euro overnight, events to watch BoE inflation report and Monetary Policy meeting accompanying by Services PMI.

BOE Preview: We expect Bank of England to hike by 0.25bps to 0.75% with an 8-1 vote. The recent set of data is enough to support our rate hike forecast. Rising wage growth is our base case scenario to expect a rate hike in August. Latest estimates show that average weekly earnings for employees increased by 2.7% excluding bonuses, and by 2.5% including bonuses, compared with a year earlier.

Inflation data: UK Consumer Prices Index 12-month rate was 2.4% in June 2018, unchanged from May 2018. Currently, the market is pricing nearly 90% of the August rate hike. Besides, the Bank is publishing the inflation Report forecast too.
Back in May inflation report, the bank said that GDP growth was weaker than expected in Q1, in part due to a temporary drag from adverse weather. GDP growth slowed to 0.1% in Q1, according to the preliminary estimate, from 0.4% in Q4 and below the projection three months ago.

Turning to a recent set of UK PMIs we believe they are consistent. Construction PMI and Services PMI indicated expansion, but subdued Manufacturing PMI learned.
Services PMI indicated the fastest expansion for eight months in June posted at 55.1, up from 54.0 in May. Besides June Construction PMI revealed a solid increase, posted 53.1 in June, up from 52.5 in May. Whereas, Manufacturing PMI broadly unchanged at 54.4 in June.

Looking forward, we expect the UK political concerns and the Brexit uncertainty to weight on the GBP in the medium term.

Turning to the latest FX positioning via Morgan Stanley, Non-commercial IMM accounts resumed GBP selling after briefly turning into buyers last week, bringing shorts to the largest since May 2017. Leveraged funds sold while asset managers kept positioning unchanged.

Technical overview​

Technically, the euro cross is getting stronger day by day via higher low patterns. Last week’s price path printed another higher low at 0.8860 but failed to settle above the mid-July high 0.8960. The risk-reward looks unattractive to bulls at the current price with the 50.0% fib resistance seems at 0.8970, and the 61.8% fib reaction seems at 0.9035. Noting that psychological resistance seems to be at 0.9000. Supports are at 0.8900, 0.8860 and 0.8820. Near-term weakness looms below 0.8900 but bearish only below 0.8860 could open to 0.8820-0.8800.

Forecast: Into the BOE meeting trading range remains between 0.9070 its 161.8fe (0.8620-0.8840-0.8700) and 0.8800 it’s recent higher low.

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KTM FX Daily: NZD crosses trading strategies

In the commodity block of currencies, the kiwi dollar underperformed overnight, whereas AUD and CAD well bid. Today we have NZ Q2 employment data in the Asian session (10.45am Local time).
The unemployment rate reflects conditions of the labor market and economy overall.

Labor market preview:
• The Q2 Unemployment rate remains at 4.4%
• Annual wage inflation to stay unchanged at 1.8%

NZ unemployment rate has been declining for five quarters, set to pause in June quarter.

NZDUSD: Paused against strong resistance
The cross failed to breach the six-week resistance trendline but settles above 20MA. A well above the trendline needed to race further to 0.6870 its 50MA and 0.6900 with solid support well placed at 0.6760.
Ahead of the labor data pivotal finds at 0.6800 below this 0.6760 exists. Near-term weakness persists below 0.6760 to 0.6725 and 0.6700.

EURNZD: Descending Triangle
The level to watch in EURZND is 1.7110 rounded to 1.7100. Ahead of the data risk, the price likely to remains between 1.7100-1.7200. Until the 1.7100 level holds, a corrective rally could trigger to 1.7190-1.7200 above these 1.7260, and 1.7300 exists.
The flip side, breaking below 1.7100 the initial target is 1.7010.

GBPNZD: Parallel support zone
The levels to watch in between 1.9215-1.9190. The price has been capped at 1.9365 since it formed the price remains in consolidation. The bears will strengthen further below 1.9170 with a target at 1.9140, 1.9110 and 1.9080.

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KTM FX Daily: GBP/crosses short-term strategies

We continue to foresee broad GBPUSD range-trading, with some upside risk if price through the descending wedge pattern.

GBPUSD: Ahead of the BOE event, we likely to trade between 1.3145-1.3050 with a neutral RSI study. The next physiological support finds at 1.3000; breaking below there, exposes the downside risk to mid-July low 1.2950. It’s worth considering the downside risk heighten below 1.2950 to 1.2800 it’s 61.8% (2016 low-April 218 high).

As a reminder, the cable is facing potential resistance at the higher end of the descending wedge pattern. This break indicates that the price has scope to resume a short-term rally to 1.3200-1.3220 initially. The confidence in the next leg higher will increase above 1.3220 with an extending target at 1.3290.

At higher time frame, the price has been holding 100MA (weekly) for six weeks. This week’s closing is very crucial to bulls; if lost the 100MA, then focus shift to the 61.8% fib reaction and even lower to the descending trendline (below chart).

GBP/crosses technical overview:

GBPCAD: 100MA (weekly) 1.6960, current trading level 1.7050

GBPCHF: Parallel support finds at 1.2950. Breaking below there exposes the downside risk to 1.2900 and 1.2860. The 100MA (weekly) finds at 1.2820.

GBPNZD: The cross has been consolidating between 1.9190-1.9365 levels. The level to watch in the cross os 1.9380 its 200EA (monthly), advance above that has potential to elevate as far as 1.9430-1.9460, 1.9500 and 1.9580.

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KTM FX Weekly: Global economic calendar (Aug06-10). Chart of the week: AUDNZD

RBA and RBNZ monetary policy meetings, Data releases and headlines in US Trade policy are likely to grab attention in the week ahead.

Trade headlines review: Last week, US announced that it would issue a 10% tariff list on China’s 200$Bln in exports to the US with an increased tax rate from 10% to 25%. In a press release by Ministry of Finance of the People’s Republic of China announced that “The State Council’s Customs Tariff Commission decided to purchase about 60 billion US dollars of goods under the US$5,207 tax items. Add tariffs of 25%, 20%, 10%, and 5%.”

PBoc intervention: Before the Friday’s NFP hit the wires USD down across the board 0.20% after PBoC stepping in. “The People’s Bank of China: Adjust the foreign exchange risk reserve ratio of the forward sales business to 20%” -Wallstreet cn. Post the news, AUD lifted by 0.60%, followed by EOR, GBP, and NZD by 0.20% each. Copper strengthens +2.0% and Platinum 1.30%

Week ahead:

• Policy meeting for RBA and RBNZ
• UK GDP
• US CPI

Today in early Asian session Saudi news hit the CAD. “Saudi Arabia recalled the ambassador to Canada, frozen all trade and investment with Canada, and said that the Canadian ambassador to Riyadh is unpopular and will leave the country within 24 hours” Saudi News Agency reported.

At the time of writing CAD down 0.15% against the dollar in the very thin trading session. Intraday support finds at 1.2965 with an immediate resistance seems at 1.3040 above this 1.3090-1.3100 exists.

The incoming risk events are mainly from the Asia-Pacific region accompanying by UK GDP from the European area. In US-Canada, we will get July US CPI and Canada jobs data. Our primary focus should be on the July US CPI.

RBA: Monetary Policy Decision 7 August 2018, 2.30 pm AEST
The RBA meets on August 07, and we expect the central bank to keep the interest rate unchanged at 1.5%. Inflation remained low, reflecting low growth in labor costs are the headwinds to the members.
In July meeting the central bank said on GDP, “Australian economy continues to be consistent with the Bank’s central forecast for GDP growth to average a bit above 3 percent in 2018 and 2019.” The bank also said GDP grew strongly in the March quarter, with the economy expanding by 3.1% over the year. The statement also said on the labor market “A gradual decline in the unemployment rate is expected, after being steady at around 5½ percent for much of the past year. Whereas the bank also acknowledged Wages growth remains low.
Recalling recent labor force data the unemployment rate was steadily remained unchanged at 5.4% in June.

Turning to the inflation, CPI rose 0.4 percent in the June quarter 2018 below forecast 0.5%. The CPI rose 2.1% percent through the year to June quarter 2018, having increased 1.9% through the year to March quarter 2018.
With the quiet wage growth and low inflation, the RBA likely to paint a neutral color in August meeting.

The Aussie dollar traders are also watching for Speech by Philip Lowe on 8 August 2018, 1.05 pm AEST and Statement on Monetary Policy 10 August 2018, 11.30 am AEST. In the statement, we are more focusing on the GDP forecast for 2018 and 2019 and inflation forecast for 2018.



RBNZ: Official Cash Rate (OCR) and Monetary Policy Statement 09 August, 9.00am NZST
The RBNZ meets on August 07, and we expect the central bank to keep the OCR unchanged at 1.75%.
The recent set of data painted a mixed view on the NZ economy. June quarter inflation printed below forecast and the ANZ Business outlook continued to fall in July.
Recalling CPI data, in the June 2018 quarter compared with the March 2018 quarter, the CPI rose 0.4% vs. 0.5% forecast. Whereas from the June 2017 quarter to the June 2018 quarter, the CPI increased 1.5%.
In the June statement, the bank said: “Employment is around its sustainable level, and consumer price inflation remains below the 2 percent mid-point of our target”.

With the low inflation, we expect the RBNZ is expected to keep the OCR at 1.75%.

Data releases:

UK GDP:
We expect prelim Q2 GDP to print 0.4% vs 0.2% earlier and GDP on MoM basis to print at 0.3% vs 0.2%.

US July CPI:
We expect the MoM inflation is reading to print an uptick above 0.2% from 0.1%in June and on an annual basis, it will tick to 3% from 2.9%.

Chart of the week:

Please check our KTM Blog for the Weeakly bearish H&S pattern chart.

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