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[KeyToMarketsUK]

KTM FX Daily: Wednesday FX. Latest bullish findings on EURUSD

The dollar index (KTM: USDX) began Wednesday on a back foot following a mixed session. Besides U.S yields on the 10-year Treasuries closed at 3.21% down from Friday’s closing of 3.23%.

AUD and NZD continue to rebound against the USD this morning with 0.30% each and extends the overnight gains. The dollar is a little bit down against majors EUR and GBP by 0.15% each and down by 0.20% against CHF, CAD, DKK, NOK and SEK in the G10.

Wednesday FX insights:

GBPUSD is trading in line with our bullish forecast and EURUSD has been forming a base at 1.1460. It seems intraday upward momentum is catching up for 1.1530 and 1.1550. At shorter time frame (H1) the price action traced out a short-term price bottom near 1.1460 via the formation of a double bottom. The shift in the sentiment indicated that rallies to resistance at 1.1550 and 1.1590/1.1615 with support against the recent lows at 1.1460.

Below here, the focus will move down to the 78.6%/80.0% fib reactions at 1.1410/1.1400, followed by near-term support at 1.1350.

Latest findings:

Base formation at 1.1460
The daily RSI study has been developing positive divergence
Price action settles above the descending trendline

Day Ahead:
In Europe, lack of market movers for the single currency remains to focus on Italy assets and the U.S bond yields.

In the UK, we will GDP and August manufacturing (Wed). We expect UK GDP to have expanded 0.1% in August, down from 0.3% in July. According to ONS, the month-on-month gross domestic product (GDP) growth rate was 0.3% in May 2018, 0.1% in June and 0.3% in July.

In the past three months up to July, the growth in the economy picked up. Forecasting this week’s GDP figures, Danske Bank said in a note to clients “We estimate GDP grew 0.2% m/m in August”.

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

What is your Technical View?

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[KeyToMarketsUK]

KTM FX Daily: Risk asset rout extends through Asia; Bitcoin slump more than 5.00%: Ma

The dollar index (KTM: USDX) began Thursday on a back foot again following a mixed session. Besides U.S yields on the 10-year Treasuries closed at 3.22% up from Tuesday’s closing of 3.21%.
AUD, EUR, GBP, and NZD continue to rebound against the USD this morning with 0.35% each.
In commodities, Gold and Silver remain neutral whereas Brent and WTI crude fell more a percent.
Thursday FX insights:

In majors, EURUSD and GBPUSD are trading in line with our bullish forecast. Besides Gold and Silver too joined the club.

Read the latest EURUSD, GBPUSD, Gold and Silver forecast in our KTM blog

EURUSD gained 0.40% this morning to 1.1570; intraday resistance seems to be at 1.1585 its 38.2 fib reaction (1.1815-1.1430 low) coincides with 50MA. Above this 1.1600 and 1.1620 exists against supports 1.1540 and 1.1500/1.1480. The price ran through the targets we set yesterday.

The daily RSI is catching the momentum upside, and the oscillator just has been turned bullish. Based on these, a weekly close above 1.1630 the current rally could stretch the arms to 1.1730.

USDJPY: The lower low and lower high pattern drag the pair to sub-112 levels. The price action lost both 14 and 20MAs, now 50MA in focus finds at 111.80. As of now this morning the price made a low at 111.95. We believe today’s pivotal is 111.80. Flipside resistance seems to be at 112.80, 113.20 and 113.50. Any shift in sentiment could change the short-term term to a minor rally to 112.80 and 113.20 levels.

While the daily RSI study has been propelling down and the oscillator is remaining bearish. Based on this, below 111.80 the current retracement extends further to 111.00/110.80 its 20MA (Weekly).

Bitcoin: The most famous cryptocurrency slump of more than 5.0% in thin Asia trade, while manages to hold the parallel support zone. While the corrective A-B-C structure is pointing to 4700$ per coin. A break below 5630$ could strengthen this view.

In major equity indices, Australia’s ASX 200 (KTM: AUS200) closed with 2.50% losses. The index runs through the target we set last week.
Find out the chart in our blog

What’s on today?
In the U.S, data-wise we will see CPI data for September. We expect the CPI to rise 0.2% m/m basis. With the limited data releases, market participants remain to focus on the geopolitical concerns with ongoing Trade war risk especially US-China and rising bond yields which lead to the global equity indices sell-off.

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

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[KeyToMarketsUK]

KTM FX Daily: Focus on USDJPY

USDJPY: Intraday pivotal still finds between 111.80 it’s 50MA and 111.65 while overnight it has managed to hold the 50MA and close above. The price action lost both 14 and 20MAs, now 50MA in focus finds at 111.80/111.65. As of now this morning the price made a low at 112.00 and currently trading at 112.20.
Resistances seems to be at 112.50 and 112.80. Above these could rally towards 113.20 and 113.50. Any shift in sentiment could change the short-term trend to a minor rally to 112.80 and 113.20 levels.
We would look to capitalize on these developments by using moves to 113.20-113.50 as a selling opportunity, with a take profit for half the position at 112.00 and the balance at 110.50. Place a stop loss above 114.00 to limit the risk.

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

What is your Technical View?

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[KeyToMarketsUK]

KTM FX Weekly: Renewed Brexit headlines remain the key driver on GBP

1. • All eyes towards the support zone 0.8720-0.8700
   • We are ripe for a breakdown to 0.8600
   • Renewed Brexit headlines remain the key driver on GBP

The euro cross traders remain focused on both data and event risk. Since more than a week the UK media hinting that the UK and the EU reaching a Brexit deal sooner than later, but the confirmation note is as uncertain as ever. We still believe the Brexit headlines remain the key driver on GBP in the near term (up to year-end).

According to Bill Diviney Senior Economist and Nick Kounis Head Financial Markets Research in ABN AMRO said, Our base case remains that an orderly Brexit is the most likely outcome to the negotiations. To break the impasse, it looks likely that the UK will accept that the backstop is in some way indefinite, but with some creative wording to ease the concerns of eurosceptics in the Conservative Party. However, as the latest developments underscore, our conviction level in this base scenario is low, and the risk of a disorderly Brexit continues to be very high.

Whereas Credit Agricole analysts said, Our central case remains that the EU and UK will clinch a Brexit deal by the end of 2018.

At the time of preparing this article, recent Brexit headlines strengthen the GBP across the board. The cross EURGBP is trading at 0.8730 (8.50AM, AEST).

EU data shows that they are prepared to provide the UK with an “independent mechanism” to end the temporary tariff arrangements (British Times), reported by Wallstreetcn.

Besides, the recent mixed PMI data are not that supportive to the GBP. The UK manufacturing sector slowed sharply during October, HIS Markit reported. Output growth weakened, while new order inflows and employment both declined for the first time since July 2016.

Turning to Construction PMI, IHS Markit said UK construction companies indicated a sustained increase in business activity during October.

Data review:

IHS Markit Manufacturing PMI fell to a 27-month low of 51.1, down from September’s revised reading of 53.6.
At its meeting ending on 31 October 2018, the MPC voted unanimously to maintain Bank Rate at 0.75%.
Construction PMI printed at 53.2 in October, up from 52.1 in September.

Data preview:

We will see Q3 GDP figures (Fri), and we expect Q3 GDP could be around 0.7%.

TECHNICAL OVERVIEW​

As we said in the last couple of weeks, renewed Brexit headlines are the catalyst for the GBP in the coming days/weeks. We also think the euro cross EURGBP to remain volatile in the tight range between 0.8900 and 0.8600 in the week ahead.

The weekly technical outlook remains extremely volatile; daily and weekly indicators are still very bearish. We expect the cross could fell below 0.8700; this would point to a new downward wave towards the next support around 0.8620/0.8600.

The flip side, resistance levels are located at 0.8775 and 0.8800. A breakout above 0.8800 would strengthen the ultra short-term recovery to 0.8900.

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: RBNZ review; NZDUSD pauses at 100EA; AUDNZD trade idea

• November MPS review was balanced. RBNZ removed the keyword “up or down.”
• Held OCR unchanged for a 24th month in a row at 1.75%
• Downside risks to the growth outlook remain

The Reserve Bank of New Zealand said the Official Cash Rate (OCR) remains at 1.75 percent. The central bank also said OCR at this level through 2019 and into 2020. In FX NZD remains neutral across the board, whereas NZDUSD rejected at 100EA.

Labor market: The RBNZ acknowledge “We estimate employment to be near its maximum sustainable level.” Governor Orr said, “The labor market is projected to tighten, with the unemployment rate dropping further over 2019 and 2020”.

Inflation: “We project that annual CPI inflation will rise to 2 percent in the December 2018 quarter, but drop back below 2 percent in 2019 when the recent increase in fuel prices drops out of the annual calculation”.

Growth outlook: The Reserve Bank believes “Downside risks to the growth outlook remain. Weak business sentiment could weigh on growth for longer. Trade tensions remain in some major economies, raising the risk that trade barriers increase and undermine global growth.”.

Read the full Monetary Policy Statement: https://www.rbnz.govt.nz/monetary-policy/monetary-policy-statement.

FX reaction: Following the November RBNZ policy review, the FX market is relatively quiet. In the M5 chart, the NZD is eased initially and later firmed at 0.6780 against the dollar. Overnight the price action was rejected at 0.6820 its 100EMA, which is our first target set yesterday. The commodity cross NZDCAD rejected at 200MA and AUDNZD remains in the falling streak but manages to hold yesterday’s low. Now focus shifts to 1.0650 level. The other cross NZDCHF is facing stiff resistance at 200MA (weekly) and 20MA )monthly.

AUDNZD: A limited downside approach.

Trade Idea: Buy between market rate (cmp 1.0710) -1.0650 use stop loss below 1.0620 targets 1.0840 and 1.0880

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

What is your Technical View?

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[KeyToMarketsUK]

KTM FX Weekly: Global economic calendar (Nov 12-16)

The dollar index has rallied after U. S midterm elections, currently trading on the verge of the previous resistance zone 96.80-97.00 levels. In G10 the dollar index (KTM: USDX) posted a mixed bag with NZD settled with 1.40% gains followed by AUD 0.40%. Whereas NOK down by 0.70%, DKK down by 0.50% and EUR down by 0.45%.

The higher dollar tends to drag the commodities lower; we understand there’s an inverse relationship between the dollar trend and commodity prices. As a result, Silver down nearly 4.00% percent, Gold down of almost 2.00% followed by Platinum by 1.70%.

With the Brent oil price corrected over 20.00% from their early-October peak, finally, we confirm the price enter into bear territory. The weekly close below 50MA and mid-August low 70.50/70.00$ confirmed the current bearish trend continuation which opens the way towards next support finds at 66.00$ it’s 20MA (monthly) and 200EA (weekly).

With the US midterms election over, the focus of the FX and commodity markets this week would shift to macroeconomic data surveys. CPI for the UK, US and EZ are the highlights. It seems economic data should drive the FX technical landscape in the G10 block.

• Labor market surveys for UK and Aussie
• CPI for UK, USD, and EZ
• China PI

In the week ahead we see November UK labor statistics (13 Nov), September Aussie Wage Price Index (Nov 14), China IP (Nov 14), October UK CPI (Nov 14), October US CPI (Nov 14), October Aussie Labor force (Nov 15), October US Retail Trade (Nov 15) and finally EZ CPI (Nov 16).

Chart of the week: AUDNZD-A limited downside approach update

Read our long AUDNZD trade idea in our KTM blog

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

What is your Technical View?

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[KeyToMarketsUK]

KTM FX Weekly: EURGBP-Minor consolidation

• Risk around the negotiations between EU-UK keeping Sterling strings calm
• Heavy data week likely to accelerate the volatility
• The euro cross has tested and held critical support, so far

The euro cross has brought to May low by concerns about the EU-UK negotiations. The long saga of “No Deal” remains which keeping the bids away from the GBP and the Brexit worries are putting the pressure on the UK economy. The recent set of data, Services PMI, revealed the same, but the UK gross domestic product (GDP) grew by 0.6% in Quarter 3 2018.

Data review:

UK Services PMI dropped to 52.2 in October from 53.9 in September, to signal the slowest rate of business activity expansion since March, IHS Markit reported.

UK GDP grew by 0.6% in Q3 2018, grew at its fastest rate since Q4 2016.

Commenting on GDP figures for Q3 (July to Sept) 2018, Head of National Accounts Rob Kent-Smith said: “The economy saw a strong summer, although longer-term economic growth remained subdued.”.

Data preview:

We see November UK labor statistics (13 Nov) and October UK CPI (Nov 14).

FX: Clarity around Brexit may turn the fate of GBP

The daily bearish turnaround of the oscillator should cap the rallies in the coming days. Overnight the euro cross rejected at the parallel resistance level 0.8775 but on a weekly basis, still manages to hold the 100EA.

The euro cross has reaffirmed support since last week. Though the oscillator is remaining bearish, the daily RSI is making a higher low pattern, suggesting a mixed bag. The price has been well supported at 0.8690 in the recent sessions, and a break below this level may pave the way for further lower prices back to 0.8620/0.8600.

On the higher side, an hourly trend is supportive, but the price action needs to take out Monday’s high at 0.8770 to confirm the quick rally to 0.8800/0.8820 and 0.8850.

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 Commodity: Crude oil prices plummeting; Falling like a dead weight in the sky

• Crude oil prices plummeting; Falling like a dead weight in the sky
• The prices have dropped for a record of 12 straight sessions, the most significant decline since 1984.

Crude oil prices declined over 6% on Tuesday; Brent dropped below 65.00$ and WTI at 55.0$. International Brent price dipped below 100EA (Weekly) and currently trading at the lowest level since March 2018, besides West Texas Intermediate plummeted below 200EA.

Brent has corrected over 25.00% and WTI 29.00% from their early-October peak; falling like a dead weight in the sky.

Brent following the same trend as the WTI, both the grades break down the ascending channel. WTI is pointing 52.00$ its 200MA (Weekly) which coincides with 50.0% fib reaction of Jan 2016-Sep 2018 rally.

Whereas Brent is indicating 100MA (Weekly) finds at 62.00$ below here focus shifts to 56.0$ its 200MA (Weekly) coincides with 50.0% fib reaction.

Selling pressures remain very strong even at daily RSI of 17, the level which we haven’t seen since Jan 2016.
The big intraday sell-off took place after US President Trump tweeted “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!”.

There are other factors behind the screen participating actively. According to Forbes “The expectation that oil demand will grow at a slower pace in 2019, the booming shale oil industry, the Iran sanctions waivers, and global economic uncertainty”.

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: Aussie stellar October Labor force data; AUD crosses strategies

The Australian dollar pulled up some 50 pips after the October labor force data. October unemployment rate remained stable at 5.0%, and the economy created more jobs than expectations. We continue to expect the economy has a long way to go to join the rate hike club.

Key points: Great set of numbers
• The unemployment rate remained steady at 5.0% in October 2018, its six-year low
• Labor participation rate increased 0.1% to 65.6%
• Full-time employment grew by 42,300
• Part-time employment decreased 9,500

The unemployment rate was steadily remained unchanged at 5.0% in October, according to the Australian Bureau of Statistics.

The economy created 32,800 jobs in October on a seasonally adjusted basis beats our expectation of 20,000. Since October 2017, full-time employment increased by 238,800 persons, while part-time employment increased by 69,400 persons.

FX reaction:

The cross AUDUSD rose as much as 0.60% following the October employment data. Post-the data released the cross made a high at 0.7281 and retraced back to 0.7260.

TECHNICAL OVERVIEW​

AUDUSD has gained some 2.40% since September Labor force data.

The erosion of the 0.7300-0.7315 thresholds is highly encouraging all the more so as the daily volatility tends to increase markedly and as the daily indicators are mildly bullish. Besides, the pickup of the weekly indicators also underlines further upside potential.
A break of these last barriers would be needed to initiate a more pronounced recovery to 0.7390, 0.7450 and finally 0.7500.

For AUDNZD and AUDJPY strategies please check our KTM Blog

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 Friday FX: Focus on EURUSD

The dollar index (KTM: USDX) traded lightly overnight; US Treasury 10-year yield closed at 3.11%. Pound punctured, Commodities and commodity-based currencies rallied; Bitcoin extend the losses; Market wrap

Overnight wrap: The dollar index remains neutral amid strong CPI data. In G10 commodity currencies AUD, CAD, and NZD rallied 0.50% each overnight whereas pound punctured after Brexit Secretary Raab resigned and still it is unclear who will be his descendant. By the end of the day, pound decreased between 1.70% and 2.40% across the board.

In EM currencies Turkish Lira up by nearly 2.00%, South African Rand up by 1.50% and the Mexican Peso rallied almost a percent.
Pound was the worst performer decreased between 1.70% and 2.40% across the board.

The weak dollar helped the commodities to find the foot better. After a massive sell-off, Brent managed to hold the weekly lows on the second straight session, up by a percent, Gold up by 0.20% but Palladium up by more than 3.00% and Copper and Silver up by more than a percent.

Day Ahead:

In Europe, we see EZ CPI not a market mover though. It’s a relatively quiet day in terms of Macroeconomic data in Europe and US.

EURUSD: Against the recent backdrop, the pair is seen to recover to 1.1360 ahead of the resistance 1.1370 its 20MA. A small ascending channel has formed in the hourly chart, on top of it daily indicators are still very upbeat.

Supports located at 1.1270/1.1260 below here focus shifts back to 1.1200/1.1180 it’s 61.8% fib reaction of Jan 2017 low-Feb 2018 peak.
To confirm a change in trend, the price action needs to break through 1.1500.

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 Weekly: EURGBP has reaffirmed support since last week

UK political noise and renewed Brexit pessimism to remain to drive the GBP. Rising “no-deal” Brexit expectations keeping the pound under pressure, expect higher volatility than usual into year end. We continue to believe most negatives are priced in.

Data review:

Average weekly earnings increased by 3.2% excluding bonuses, and by 3.0% including bonuses, compared with a year earlier.
The unemployment rate was 4.1%, slightly higher than for April to June 2018 but lower than for a year earlier (4.3%).
The Consumer Prices Index 12-month rate was 2.4% in October 2018, unchanged from September 2018.
In October 2018, the quantity bought fell by 0.5% when compared with September 2018.

Data preview:

There are no important macroeconomic releases this week; but we focus on Bank of England inflation report, 10.00am GMT (Tue).

TECHNICAL OVERVIEW​

Last week EURGBP was the top euro cross gainer after it rose more than 1.80%. As protracted buying triggered a break of 100MA. Overnight the euro cross settles above 100MA confirming sustained upside sentiment.

On the upside, despite recent 2.00% rally, we focus on the parallel resistance zone 0.8940-0.8970. A break above the higher end of the resistance zone may pave the way for further higher to 0.9000 and 0.9030.

The flip side, support finds at 0.8860, 0.8820 and 0.8770. We recommend caution if the price could not push-and hold -above 0.8940 over the next day or two. Traders may need to focus on UK politics before chasing a move in EURGBP.

Besides a weekly close above 0.8970 needed to forecast 0.9100/0.9140, moreover, the pickup of the weekly RSI and oscillator underlines the threat of further upside risk.

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: Focus on USDJPY

The Japanese Yen further lifted on Tuesday against most-traded currencies, overall so far this week GBP fell 2.60% followed by CAD 1.80%, USD and AUD by 1.30% each, NZD by 0.80% and EUR by 0.5% respectively.

USDJPY: On Tuesday the cross failed to gain a footing above the Monday high 112.90 which coincides with 50MA. Underneath the indicators give a bearish outlook with RSI sloping down and the oscillator is remaining bearish.
Support at the 100MAs has held so far firm keeping the momentum in a tight range between 113.00-112.00. However, the reaffirmation of support at the 100MA could trigger a rebound to through the 50MA. To confirm a change in trend, the cross needed to break through 50MA, in this case, 113.40/113.50 and 113.80 could possible.
Technically, the 20MA has remained crossed above the 50MA, and the 50MA crossed remained above 100MAs which is bullish.
The flip side, a break below 100MAs may trigger a new leg down towards 111.40 before 111.00.

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:The broader financial markets mood has improved overnight; Market wrap

The broader financial markets mood has improved overnight; Crude oil and Bitcoin rebounds; Gold and Copper rallied; Market wrap

Equity indices and G10 currencies rebound on Wednesday, and the dollar index (KTM: USDX) fell, and US 10TY remained at 3.06$. Most of the G10 currencies are in green except GBP and JPY. The antipodeans rallied strongly 0.70% which had lost more than a percent combined Monday and Tuesday besides Yen down over 0.30%.

Overall, we believe the overnight rally in Equities, Brent, Bitcoin, and recent pull up in EURSUD is backed by technical as the indicators are oversold. Besides Trade war, Fed rate hike cycle, Italy budget concerns and Brexit headlines still likely to dominate the markets.

Here are the G10 technical insights:

• USDJPY jumped through the 50MA, but facing resistance at 20MA 113.15
• GBPUSD remains struct in a narrow range between 1.2720-1.2885
• USDCHF consolidating above the area of support
• USDCAD traded out a double top after Tuesday’s massive rally and rejected at the higher end of the ascending channel
• EURUSD manages to hold the 20MA so far, but a break out through 1.1500 needed to change the trend
• NZDUSD is likely to trade in the narrow range between 0.6900-0.6760 for the next two days.
• AUDUSD held 20MA on Wednesday; likely to remain in the narrow range between 0.7160-0.7340 for the next two days.
• Like AUD and NZD, USDSEK also remains in a narrow range between 9.1520 and 8.9580.
• The bullish trend continues in USDNOK; anchor pull, anchor push-repeat as needed which is bullish.
• In USDDKK We expect a technical rebound in a narrow range between 6.6000 and 6.4850

Read: EURUSD USDJPY and USDCHF strategies in our blog

In the U.S it is a short trading week, Thanksgiving and Black Friday holiday on Thursday and Friday. Elsewhere, its a quiet session in Asia and Europe. We focus on Friday’s PMIs surveys.

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 Weekly: Global economic calendar (Nov 26-30); Chart of the week: AUDJPY

• AUD and NZD halt three-week rally as weak commodities weighed
• All eyes to be at G20 Buenos Aires summit
• Financial Stability review for NZ, UK, and EA

Antipodeans AUD and NZD ended a three-week strong rally, their longest in over ten and six months respectively, as commodities weighed ahead of G20 summit. Brent crude oil plunged more than 12.00% last week to a one-year low; currently sits below 60.00$.

The commodity-based currencies AUD fell 1.30%, NZD was the worst performer in G10 with 1.70% and CAD down by 0.5% respectively against the greenback. The oil-based currency NOK down by 1.75%.

As we noted last week, the dollar index (KTM: USDX) still likely to consolidate between 95.00$-97.00$.

In majors, the pound remains neutral whereas euro again down by 0.70% as disappointing PMI surveys dented the sentiment further. Besides Brexit uncertainty remains rattle over GBP trend.

Overnight Brexit developments fail to cheer the pound in Monday opening trade.
“The EU has agreed to British Prime Minister Theresa May’s Brexit deal. However, the deal is likely to be rejected by the UK parliament when it returns to the House of Commons in early December. Meanwhile, May faces a fresh rebellion from her Cabinet” Businessinsider reported.

The week ahead will be busy on the macroeconomic data front; besides G20 summit in the spotlight.

The week ahead will be busy with the release of US Consumer confidence (Tue), US Prelim GDP q/q (Wed) and ANZ business confidence (Thu). Besides Financial Stability Review for NZ, UK and EA will provide an overview of potential risks in the financial industry and among the public.

Furthermore, Fed minutes grab the attention too. Market participants are a focus on the comments on the future rate cycle.
“The Fed is still expected to tighten further (with the next rate hike highly likely in December), the market is questioning if three hikes will be delivered next year” Kiwi bank said in a weekly note.

Besides ECB President Draghi and ECB Executive Board members testimonies grab the euro traders attention.

G20 summit: World leaders are set to meet in Argentina, all eyes on the meeting between Trump-Xi.
Beijing and Washington are frequently talking as they nail down the details for President Xi Jinping’s dinner meeting with US President Donald Trump in Buenos Aires on December 1, South China Morning Post reported.

“No one expects the [Trump-Xi] talks to prevent the US tariffs on US$200 billion [worth of goods] from moving up to 25 percent from 10 percent on 1 January 2019,” said Eugene Leow, a rates strategist at DBS Bank, reported by SCMP.

Hence we expect volatility remains on the table ahead of the G20 summit and we focus more on AUDJPY cross.
"China and US may reach a “framework agreement” to provide some temporary tariff relief " Barclays reported in a note. In this case, AUDJPY will beak higher towards 84.50.

Chart of the week: AUDJPY

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 Commodity Weekly: Brent Technical setting is positive

Trade strongly overnight but lost momentum slightly into the close, following two days of heavy fall.

The fundamental outlook remains skeptical but technical landscape remains favorable for the Brent crude, which advanced nearly 3.00% overnight since testing the support.

Brent crude oil remained well bid overnight, but broader picture remained capped by headwinds from supply concerns whereas traders remain to focus on G20 summit in Argentina. We could expect a relief rally/oversold rally if market senses a trade deal between US-China.

This year’s high marked the end of the 2-year oil bull run, and we expect a choppy year into 2019. The new technical profiles are consistent with a temporary bounce in oil prices.

We forecast the Oil price will be in a rangebound between 56.00$-70.00$ until the upcoming OPEC’s meeting. We also believe recent massive landslide push the daily indicators into highly oversold territory. The daily indicators are very bullish, and the weekly RSI has been stood still at the oversold level. Under these conditions, keep an eye on the support zone 58.00-56.00$. Until 56.00$ is the support (weekly closing basis), watch out for 64.50$, 68.50 and 70.00$ levels.

A weekly close below the 55.00$ confirmed the downward continuation which opens the way towards supports around 50.00$.

Things to watch in Brent:

1. 50MA (Monthly) 58.00$
2. 200MA (Weekly) @56.50$, coincides with 50.0% fib reaction
3. Earlier swing low at 50.75$ its Jan 2017 low
4. The 61.8% fib reaction of 27.00$-86.60$ rally finds at 50.00/49.70$.

Hence, we forecast a limited “downward approach.” Brent oil might have put in a meaningful bottom between 56.00$-50.00$ and could consolidate sideways for few days.

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

What is your Technical View?

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[KeyToMarketsUK]

The Brent crude oil ended the month 22.00% marked its first biggest one month fall since July 2015, several events cause the fall in Oil prices. Ahead of the OPEC meeting this week the price is sitting at the crucial juncture.

Over the weekend developments, Oil price opened higher on Monday as trailing stop losses have been stopped out who sold with against the resistance at 61.50$ before the G20 meeting.

The daily indicators still suggest higher prices in the near term, RSI and RVI confirming upside sentiment.
On the upside, despite apprehension amongst traders increasing at 62.60, a break above this level may pave the wave for a higher price through 64.70 its 20MA and 65.00$ the psychological level if the price struggled to close above 14MA at 62.60$ prompting a retracement back to 60.50$/60.00$ and 59.00$ levels.

We continue to forecast “Technical setting is positive” given last week at 60.30$ targeting a move to 64.50$, 68.50 and 70.00$ levels.

Developments around Dec 6th OPEC meeting will be watched closely for a production cut.
Gulf nation’s energy minister says withdrawal from 15-nation bloc will come into effect next month, Aljazeera reported.
Aljazeera news also reported, Sheikh Hamad bin Jassim Al Thani, Qatar’s former prime minister, called the withdrawal a “wise decision”.
“This organisation has become useless and adds nothing to us,” Sheikh Hamad wrote on Twitter. “They are used only for purposes that are detrimental to our national interest.”

Barclays come up with three options at Thursday’s OPEC meeting. In a weekly note to clients, the British multinational investment bank said “In our view, OPEC has three real options at this week’s meeting; a “quiet cut,” a “precision cut” or the “elegant solution.”
The note also reported, OPEC’s “elegant solution” appears the most agreeable, likely supporting prices in the near term. A less likely “quiet cut” would disappoint.

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[KeyToMarketsUK]

Equities were renewed their fall on Tuesday, pressured by the bond markets. The US Treasury yield curve has inverted which ignites the recession rumors. As a result Dow (KTM Symbol: XUS30) down over three percent or 800 points.

What do you mean by yield curve?
The difference between yields on two different bonds (long-dated and shorter-dated). Usually, Economists or analysts watch 10 Years – 2 Years, five years- 3 years and five years- 2 years.
Ever since Fed raises rates in Dec 2015 the yields on short-dated Treasuries are rising faster but not long-dated Treasuries, because they do not have a direct impact even if the Fed raises rates.

What is yield curve inversion?
Usually, yields on long-dated Treasuries are higher than the short-dated one’s; the different is called term premium. However, on Tuesday, Dec 04, short-dated Treasuries cross over long-dated Treasuries, it is called inversion which was happened for the first time since 2008.
“The yield on the Five-year US Treasury note fell below the yield on the Three-year note.” NZ Herald reported.
“Back in March 2006, the yield curve inverted and the Bank of Japan expressed confidence that the U.S. economy would not go into a recession. Two years later, the global economy was brought to its knees.” Forbes reported.
According to the balance “An inverted yield curve means investors believe they will make more by holding onto a longer-term Treasury than a short-term one. They know that with a short-term bill, they have to reinvest that money in a few months. If they believe a recession is coming, they expect the value of the short-term bills to plummet soon.”

What happened overnight?
The 5-year note was closed at 2.79 vs. 2-year note 2.80, that is long-dated yield closed slightly lower than the short-dated ones.

U.S Department of Treasury web page is very handy to track Daily Treasury Yield Curve Rates

In this type of market conditions, traders prefer to unload the riskier assets and tend to move to safe haven currencies Japanese Yen and Swiss Franc and Gold in commodities.
As we tweeted, earlier this week gold rallied to our forecasted level and paused at the parallel resistance level which coincides with 200EA at 1243.50$. The trend remains bullish, and now we forecast another upside risk on gold for 1257.00$ and 1268.00$. A daily close above 1245.00$ is needed to rally to out next targets with supports at 1230.00$ and 1211.00$.

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[KeyToMarketsUK]

Crude Oil prices are likely to elevate the volatility ahead of the today’s OPEC meeting. In early October Brent, the Crude oil price has reached a four-year high of 86.50$, but have since corrected Brent WITH 33.00% and WTI nearly 35.00% respectively.

Recent fall in crude oil prices deteriorated the global demand and outlook of the global economy. According to provisional data, “Both European and OECD Asian demand continues to be relatively weak, reflecting the fact that prices remain significantly higher than a year ago and a slowdown in economic activity. US demand, by contrast, is very robust, albeit slowing towards the
end of 3Q18”.

November IEA Oil Market Report suggested, “For now, forecasts of oil demand growth remain solid with an increase of 1.3 mb/d this year and an increase to 1.4 mb/d in 2019, even though the macro-economic outlook is uncertain.”

Ahead of Thu and Fri OPEC meeting, crude oil prices manage to hold and settle above the support level of Brent at 56.50$ and WTI at 48.80$ respectively. Currently, the market is expecting a production cut from leading producers; the market is not pricing “how big is the cut.”

Here are the few forecasts:

• S&P Global Platts comes with a forecast “A 1.2 million b/d-1.4 million b/d reduction compared with October’s output.”
• “Nobody wants to mention a number, because it means you’re committing yourself to how much you’re going to cut,” said Al Rumhy. “Especially the big boys — they would want to keep this cut very close to their heart.” Oman’s Oil Minister Mohammed Al Rumhy said to reporters on Wednesday, Bloomberg reported.
• Barclays weekly note says “OPEC’s “elegant solution” appears the most agreeable, likely supporting prices in the near term. A less likely “quiet cut” would disappoint, sending WTI below $50/b and weighing on FX of oil exporters”.
  In a weekly note, Barclays comes with three real options, quiet cut, precision cut, and elegant solution.

A “quiet cut,” lacking specifics about country-level adjustments, a “precision cut” with explicit country-level new production adjustments or the “elegant solution,” excluding Venezuela and Iran from compliance calculations and allowing Saudi Arabia and other countries to reduce output.

On Wednesday, Crude oil prices pulled back to the 20MA but settled lower as traders wait for the clarity on the production cut, as in early November the US surpassed Russia and Saudi Arabia in oil supply. Means Russia and Saudi Arabia is no more the world’s largest producer.

In the near-term Oil prices, CAD and NOK currencies trend cast on this week’s OPEC meeting.

Things to watch in Brent:

• 50MA (Monthly) 57.40$
• 200MA (Weekly) @56.50$, coincides with 50.0% fib reaction
• Earlier swing low at 50.75$ its Jan 2017 low
• The 61.8% fib reaction of 27.00$-86.60$ rally finds at 50.00/49.70$.

Interestingly, weekly RSI has entered to the oversold level of 34.00, but oscillator remains bearish.

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[KeyToMarketsUK]

JPY crosses are lower since Thursday Tokyo fix, led by escalating trade war concerns. They continue to slide into NY session but manages to hold crucial support/MAs and rebounds marginally. Among, GBPJPY and CHFJPY are the gainers and showing signs of bottoming process.​

At the time of preparing this article, GBPJPY entirely erases intraday losses, currently trading at 144.15 and CHFJPY trading at 113.45 on the verge of a range breakout (113.50-112.90).
Insights:

• CADJPY completed the 78.6% A-B-C corrective pattern retracement, but the full retracement, i.e. 100.0% is pointing to 82.60. Note that 200EA(Month) finds at 83.15. Moreover, it respected the 1y ascending trendline, likewise CADCHF (2Y TL). The cross lost all daily Mas, now 200MA is acting as initial resistance.

• AUDJPY fell below the parallel support 81.18 which coincides with 100MA & 50MA but rebounds sharply, currently trading at 81.60. Near-term support finds between 80.50-80.00.

• NZDJPY rejected at 200MA(Weekly) early this week, since then the RSI negative divergence is speaking loudly. Intraday support (Fri) finds at 77.15/77.00 below here, focus shifts to 76.50 and 76.20 and even 75.50. Flipside resistance seems to be at 77.65, 78.00 and 78.35 levels.

• USDJPY: Selling pressure remains very strong at 20MA, a descending channel is still evident in the hourly chart. On top of this, the daily indicators are staying bearish, but 100MA & 20MA (Weekly) is the superheroes overnight. This morning the cross is trading at 112.70. Friday Asia resistance could be 112.85 and 113.30.
  The corrective structure on the daily chart is point 111.00.

• EURJPY: For four weeks the cross has been bouncing between127.50-129.30. Overnight the cross-posted a low at 129.70 and currently trading at 128.35. Friday Asia resistance could be between 128.40-128.60 above here the focus shifts to the higher end of the range 129.30. We expect a tight range trading action for the next few days.

• GBPJPY: The cross manages to hold the previous day low, a symmetrical triangle formal is still evident in the hourly chart. In the daily chart, the cross has traced out a double bottom at 124.75 while holding we could expect a rally towards 144.50 and 145.50/145.80 in the near term. Though the RSI has been marking a higher low pattern, the oscillator is not supporting the bullish view. We remain focused on the daily oscillator and prefer buying on the dip. A daily close above 146.00 could strengthen the bulls to rally further to 149.50.
  If the cross fails at the double bottom, we could see another leg down to sub-140 levels.

• CHFJPY: The cross traced out a short-term price bottom near 112.85 via the formation of a triple bottom pattern. However, in the Friday Asia session, the cross could face stiff resistance at the higher end of the range at 113.50, support finds at 113.15 and 113.00/112.85.
  For bulls, if the price settles above 113.50, could rally to 113.75/113.85 and 114.00 by today. Note that the 50MA seems to be at 113.65. The flip side, selling could accelerate below 112.85, in this case, 112.30 and 112.00 are possible.

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[KeyToMarketsUK]

KTM FX Daily: AUD insights​

• AUD smoked last week, rebounded and retraced
• Chronical of events dampens the $A sentiment

In the worst week for the Australian dollar over the previous two months, the AUD down between 1.50%-2.50% across the board after Last Monday’s gap up opening. Intensified trade-war risk, weak local macroeconomic data and soft Chinese data keeping lid on the AUD.
Reuters ran a strong headline on Trade war a few minutes ago, “U.S. says March 1 ‘hard deadline’ for trade deal with China.”
Reporter Howard Schneider said U.S. Trade Representative Robert Lighthizer said on Sunday, clarifying there is a “hard deadline” after a week of seeming confusion among President Donald Trump and his advisers.
Robert also said “As far as I am concerned it is a hard deadline. When I talk to the president of the United States he is not talking about going beyond March,” said on the CBS show “Face the Nation,” referring to President Donald Trump’s recent decision to delay new tariffs while talks proceed.

On top of this latest developments, yesterday’s soft Chinese data clouded the sentiment again during early Asian session this morning. At the time of preparing this, AUD down between 0.30-0.5% in early Monday’s trade.
Chinese data review: November PPI rose 2.7% on YoY basis but down 0.2% monthly. The other relevant data, CPI rose 2.2% YoY in November vs. 2.5% in October, according to the National Bureau of Statistics.
What’s on today?
We will see October Home loans data today.
Overall, the combination of risk factors trade war, soft Chinese data and weak local economic data and concerns over global growth which dampens the commodities likely to pressure the AUD into the year-end.

• Among AUD crosses, EURAUD favors bullish, intraday resistance seems between 1.5890-1.5910 above this, 1.5940 and 1.5980 exists.
• 

• AUDUSD support finds at 1.7160 and 0.7130 below here psychological support 0.71 handle exists. This morning the price lost 50MA aswell. Weekly resistance seems to be at 0.7240. Weakness persists until capped at 0.7240. Intraday pivotal finds between 0.7160-0.7130. Besides the dollar index (KTM symbol: USDX) is currently trading on the verge of a symmetrical triangle breakdown. We keep an eye between 96.00-95.50 below here deep cut could be expected. In this case, AUDUSD could rally back to 0.7300, 0.7400 and even 0.7500 possible.
• 

• AUDNZD: The cross manages to find the foot around support 1.0440, currently trading at 1.0485. The price has been capped between 1.0520-1.0530, downside prevails until 1.0530 is the resistance, and we are waiting for sub-1.0400 levels. However, over the long-term, the cross offers better risk: reward ratio. We expect the downside is limited to 1.0300 and the upside forecast at 1.0800 and 1.1000. Instead of selling at current levels, better buy/accumulate on dips.
• GBPAUD remains in the tight range between 1.7750/1.7735-1.7600 levels. The week ahead the pound is associated with both the risks macroeconomic data event. Above 1.7750 the key resistance 1.7820 exists.

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​