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Thread: Daily Technical Analysis from ACFX

  1. #481

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    MARKET BRIEFING – LONDON OPEN 19.10.2015




    This morning’s news that Chinese growth data continues to decline has somewhat overshadowed the start of an official and high-profile visit by the Chinese President to the United Kingdom.

    With growth rates exceeding 6%, most countries in the West would look with considerable envy at first glance what appears to be the very healthy growth numbers.

    However, this morning’s announcement by the National Bureau of Statistics that Chinese quarterly GDP had dropped from 7.0% to 6.9% would be weighing on the mind of President Xi Jinping during his meetings with British Prime Minister David Cameron.

    There was an expectation that that this morning’s Gross Domestic Product release would be lower than July’s release. However, the decline was less than the 6.8% that the market had expected. This had the effect of limiting the decline in Asia equity markets such as the Shanghai Composite, Hong King Hang Seng and Japanese Nikkei Index.

    The drop off in growth has significance from an emotional standpoint in that the drop beneath 7.0% takes Chinses GDP to levels last seen at the beginning of 2009.

    This follows a downgrading of 2014 from 7.4% to 7.3% which is the lowest level of GDP for 25 years. For 2015, the Chinese Governments growth target is in the region of 7%.

    Although, in comparison to the rest of the world, growth numbers in the region of 7% are still very impressive, there was many who feared that the Chinese economy risked a hard landing.

    That the decline was less than expected does lend itself to the view that the action taken by the Chinese Government to limit the impact of the recent slowdown will avert the risk of this hard landing taking place.

    The Chinese Government, the Central Bank and Financial Regulators still have to address the big issues of ever increasing non-performing loans, industrial overcapacity and a lack of demand from the outside world for domestic produce.

    Although this morning’s GDP number would have given both Chinese Government and the markets much encouragement there is still concern that the growth number could slip to 6.5%. If such a scenario was to play out the impact on jobs would be both measurable and painful.

    The Chinese Government has already embarked on an aggressive program of stimulus. However, the benefit so far would seem to be one of delaying the inevitable much steeper slowdown.

    The question many now are asking is what more can the Chinese authorities do in terms of stimulus and would further and more aggressive action bring the level of GDP back above 7%.






    EURUSD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.1445

    Target 2: 1.1260

    Projected range in ATR’s: 0.0093

    Daily control level: 1.1395



    GBPUSD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.5545

    Target 2: 1.5330

    Projected range in ATR’s: 0.0107

    Daily control level: 1.5410


    USDJPY




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 120.10

    Target 2: 118.60

    Projected range in ATR’s: 0.75

    Daily control level: 120.35


    USDCHF




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 0.9600

    Target 2: 0.9345

    Projected range in ATR’s: 0.0083

    Daily control level: 0.9555



    USDCAD




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.3010

    Target 2: 1.2795

    Projected range in ATR’s: 0.0108

    Daily control level: 1.2950


    AUDUSD




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 0.7415

    Target 2: 0.7235

    Projected range in ATR’s: 0.0088

    Daily control level: 0.7365



    GOLD





    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1192.80

    Target 2: 1160.00

    Projected range in ATR’s: 16.32

    Daily control level: 1185.00


    OIL




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 49.00

    Target 2: 46.10

    Projected range in ATR’s: 1.84

    Daily control level: 45.75




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  2. #482

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    MARKET BRIEFING – LONDON OPEN 20.10.2015




    This week, there will be a plethora of Central Bankers commenting. However, with the ECB road show heading to Malta, the focus this week will be on this Thursday’s press conference.

    The European Central Bank, President, Mr. Mario Draghi and his colleagues on the Governing Council will hold their scheduled policy meeting on October 21st to 22nd against the backdrop of increasing uncertainty over the timing of a the United States, Federal Funds increase.

    There has over the past few months, been increasing speculation that the ECB will expand its current large stimulus program Eurozone economies continue to struggle. The problems facing Greece have for now been discreetly brushed under the carpet and a German industrial giant in the form of Volkswagen has now been hit by a major scandal which could damage the German economy.

    Furthermore, with Governing Council member, Ewald Nowotny stating that CPI data is “clearly” below target, the prospect of a QE2 program would seemingly look more and more inevitable.

    There has been chatter amongst analyst that Light Sweet Crude has put in a bottom and would soon be trading above its 200 period’s daily moving average. Crude, however, has failed to make any headway above its major daily averages and with the US50.00 per barrel area offering stiff resistance, the view that higher Oil prices in the medium term will bring inflation back on track is rather premature and unproven.

    Much like their colleagues across the English Channel at the Bank of England and further afield at the United States Federal Reserve, the Central Bankers at the ECB are very much dependent on the data.

    As the data has yet to confirm that Euroland has returned to sustainable growth, the prospect of the ECB extending the duration of the current QE program past September 2016 or increasing the size of the assets to be purchased becomes a possibility.





    EURUSD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.1415

    Target 2: 1.1240

    Projected range in ATR’s: 0.0090

    Daily control level: 1.1380


    GBPUSD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.5565

    Target 2: 1.5360

    Projected range in ATR’s: 0.0104

    Daily control level: 1.5410


    USDJPY




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 120.15

    Target 2: 118.80

    Projected range in ATR’s: 0.70

    Daily control level: 120.35


    USDCHF




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.9645

    Target 2: 0.9485

    Projected range in ATR’s: 0.0081

    Daily control level: 0.9495



    USDCAD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.3120

    Target 2: 1.2910

    Projected range in ATR’s: 0.0107

    Daily control level: 1.2900


    AUDUSD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 0.7330

    Target 2: 0.7160

    Projected range in ATR’s: 0.0087

    Daily control level: 0.7365



    GOLD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1186.00

    Target 2: 1155.00

    Projected range in ATR’s: 15.66

    Daily control level: 1178.00


    OIL



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 48.50

    Target 2: 45.00

    Projected range in ATR’s: 1.85

    Daily control level: 45.75

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  3. #483

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    MARKET BRIEFING – LONDON OPEN 21.10.2015


    The Canadian Liberal Party has been elected to power on an anti-austerity programme. With Greece having elected the leftist SYRIZA Party to power and with the British Labour Party also electing a traditional leftist leader in the shape of Jeremy Corbin, it would appear that there is a groundswell of opinion forming in many developed countries that reject the accepted mantra that austerity is the only medicine that can bring sustainable growth and jobs.

    The real test for global populist left-leaning movements will happen later this year when the Spanish public vote in a general election that takes place on December 20. The fear within the corridors of European power that are located in Brussels, Frankfurt and Berlin is that the charismatic leader of Podemos, Mr Pablo Iglesias could cause enough damage to the traditional Spanish political parties that a seismic shock that is centred in Madrid ripples across the whole of the European Union.

    After ten years of rule by the Conservatives, the citizens of Canada decided that a change was needed. This change was made with the young and charismatic leader of the Liberal Party Mr Justin Trudeau sweeping to power with a 54% landslide victory.

    Mr Trudeau who comes from a political dynasty is the son of the former Prime Minister has vowed to increase public spending and invest in infrastructure as part of a plan to boost demand and growth in what has been a flagging economy.

    With respect to taxation, the Liberal Party manifesto has identified wealth inequality as an issue and plan to address this problem by increasing taxes on the wealthy and reducing them on the middle classes.

    The scale of the victory gives the Liberal Party a strong mandate. Governments are not known to be good at spending public money. This new Canadian experiment that promises fiscal stimulus will be watched closely by other developed nations.



    EURUSD




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.1435

    Target 2: 1.1260

    Projected range in ATR’s: 0.0090

    Daily control level: 1.1300


    GBPUSD




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.5540

    Target 2: 1.5340

    Projected range in ATR’s: 0.0103

    Daily control level: 1.5410


    USDJPY




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 120.15

    Target 2: 118.80

    Projected range in ATR’s: 0.70

    Daily control level: 119.40


    USDCHF




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.9640

    Target 2: 0.9480

    Projected range in ATR’s: 0.0081

    Daily control level: 0.9495


    USDCAD




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.3080

    Target 2: 1.2875

    Projected range in ATR’s: 0.0106

    Daily control level: 1.2900


    AUDUSD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 0.7340

    Target 2: 0.7175

    Projected range in ATR’s: 0.0084

    Daily control level: 0.7310



    GOLD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1191.50

    Target 2: 1160.00

    Projected range in ATR’s: 16.05

    Daily control level: 1167.15





    OIL



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 47.70

    Target 2: 44.00

    Projected range in ATR’s: 1.76

    Daily control level: 45.75




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  4. #484

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    MARKET BRIEFING – LONDON OPEN 22.10.2015


    The European Central Bank roadshow hits Valetta, Malta today. This latest ECB meeting and press conference will take place against a backdrop of increasing speculation that the President of the ECB, Mr. Mario will announce further stimulus measures.

    Sluggish German manufacturing and export data has caused concern, however, this has been discounted by the German Economy Ministry that views these disappointing readings as being due to seasonal factors.

    The main issue for the ECB, of course, is the outlook for Euro-Zone inflation. The recent dip of Euro-Area inflation to -0.1% has coincided with what seems to be an overly optimistic outlook expectation that inflation will reach 1.7% by Q4 in 2017.

    The other main concern is what Janet Yellen and her colleagues on the committee of the Federal Reserve decide to do with respect to interest rate increases.

    It would seem fairly obvious that the ECB would want to wait for the FOMC to either move first or at least offer further clarity on its future monetary policy. Only then will the ECB take further measures.

    The fear being that an ECB decision to increase stimulus will not have any significant impact if this takes place prior to the Federal Reserve moving on rates.
    The consensus for today’s press conference is that the ECB will not announce any changes to current policy. However, it would be likely that the downside risks will be emphasized in what should be a dovish press conference. This would be line with comments made by other members of the ECB board.

    The ECB does have additional tools that it can implement and Mario Draghi has informed the markets that the Central Bank will do whatever it takes to bring back growth and inflation to the Euro-Area.

    These measures could include extending the duration of the current programme or expanding the scope of asset purchases.

    Although such move would be in line with the ECB mandate the German Bundesbank may offer some resistance to such a move as it would question why would more QE work?
    If, as it is expected the ECB announces that no further measure will be taken today, it is clear that this is not the end of this story.

    The ECB will leave the door ajar for further stimulus. It is to be expected that Mario Draghi and fellow board members will do their best to guide the market and talk down the value of the Euro.







    EURUSD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.1415

    Target 2: 1.1260

    Projected range in ATR’s: 0.0080

    Daily control level: 1.1300




    GBPUSD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.5515

    Target 2: 1.5315

    Projected range in ATR’s: 0.0101

    Daily control level: 1.5410




    USDJPY




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 120.50

    Target 2: 119.30

    Projected range in ATR’s: 0.60

    Daily control level: 119.40




    USDCHF





    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.9665

    Target 2: 0.9520

    Projected range in ATR’s: 0.0076

    Daily control level: 0.9525




    USDCAD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.3245

    Target 2: 1.3025

    Projected range in ATR’s: 0.0111

    Daily control level: 1.2935




    AUDUSD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 0.7295

    Target 2: 0.7120

    Projected range in ATR’s: 0.0087

    Daily control level: 0.7240




    GOLD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1182.75

    Target 2: 1152.00

    Projected range in ATR’s: 14.49

    Daily control level: 1180.75




    OIL



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 47.50

    Target 2: 44.00

    Projected range in ATR’s: 1.72

    Daily control level: 47.00






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  5. #485

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    MARKET BRIEFING – LONDON OPEN 23.10.2015





    Yesterday afternoon, the ECB President, Mr Mario Draghi surprised the markets by the extremely dovish tone of the scheduled press conference that took place in Valetta, Malta.

    As expected the ECB did not cut its key benchmark interest rate from the current 0.05% level. However, following on from comments made over the summer, that the ECB will do what it takes to get the Euro-Zones economy back on track, the announcement that the European Central Bank will now “re-examine” its Euro 1 trillion quantitative easing stimulus programme at the December meeting sent the Euro crashing against the US Dollar.

    Draghi said during the press conference that “The degree of monetary policy accommodation will need to be re-examined at our December meeting.”

    It would now appear that almost everything will be considered as a policy tool, that can introduce inflation and sustainable growth back into the Euro-Areas flagging economies.

    By reading between the lines that ECB Governing Council must have some good insight from the United States Federal Reserve that it will not act on US interest rates before December. If this is the case and with the US Dollar continuing to depreciate in value, the ECB felt had to act now.

    Yesterday’s comments can be seen as a passing shot across the bows of the market. The threat to expand European QE programme should see the markets now price this event into their forward outlook.

    The reason why the ECB took this action now is due to the realisation that the current QE programme is not having the desired effect of boosting the Euro-Area. Although the current trend amongst the Euro-Zone economies is positive, the issue of soft inflation data continues to be a concern to Mario Draghi and his colleagues. Furthermore, the recent economic problems that are facing China and the Emerging Market has only added to the ECB’s worries as this could have an impact down the line on European economies.

    The question many economist and analyst will of course ask is will an aggressive expansion of the ECB’s stimulus programme only squander more tax payers money?

    The problem with QE is that it is not a one shot cure for an economy that is facing issues of chronic low inflation and stagnant growth. One only needs to look at older stimulus programmes that have been adopted by the United States and Japan. The Bank of Japan and the FOMC have continuously stimulated their economies by applying further QE.

    The effect of adding further QE acts as a booster to the medicine that has already been administered. A failure to boost QE will see the positive effect of such a programme wear-off. In this context and with a degree of hindsight it was fairly obvious that the ECB would have to expand its programme.

    This brings us to some more questions.

    1. Are the major global economies now addicted to a diet of quantitative easing?
    2. Furthermore, will we ever see the economies of the United States, Euro-Area and Japan ever move back to a situation which can be described as normal or is this the new normal?



    Only time has the answer to these questions






    EURUSD




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.1200

    Target 2: 1.1015

    Projected range in ATR’s: 0.0092

    Daily control level: 1.1385


    GBPUSD




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.5495

    Target 2: 1.5290

    Projected range in ATR’s: 0.0104

    Daily control level: 1.5505


    USDJPY




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 121.30

    Target 2: 120.05

    Projected range in ATR’s: 0.64

    Daily control level: 119.60


    USDCHF




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.9810

    Target 2: 0.9650

    Projected range in ATR’s: 0.0082

    Daily control level: 0.9580



    USDCAD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.3195

    Target 2: 1.2980

    Projected range in ATR’s: 0.0109

    Daily control level: 1.2935



    AUDUSD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.7295

    Target 2: 0.7120

    Projected range in ATR’s: 0.0088

    Daily control level: 0.7180


    GOLD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1190.00

    Target 2: 1161.00

    Projected range in ATR’s: 14.46

    Daily control level: 1162.35


    OIL



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 47.00

    Target 2: 44.00

    Projected range in ATR’s: 1.69

    Daily control level: 46.25


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  6. #486

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    MARKET BRIEFING – LONDON OPEN 26.10.2015



    This morning at 10:00 London time Ifo Institute for Economic Research will release the German Ifo Business Climate number.

    This report is released on a monthly basis and some three weeks into the current month.
    The Ifo is a survey of current and future business sentiment with respondents also requested to rate their expectation six months forward from the survey date.

    Due to the size and breadth of this report the result of this survey is highly respected. This is because some 7000 business across Germany which are active in diverse sectors from manufacturing, construction, wholesale and retail are requested to respond.

    The German Ifo Business Climate Survey is a leading indicator of the economic health of the country. As businesses can quickly recognize and adapt to the constantly changing market environment, this survey has proven to be a timely leading indicator to possible future economic activity.

    Germany is the 4th largest economy in the world and by far the biggest and the most dominant within the European Union. This makes what happens in Germany very important. The release of the German Ifo can affect economic expectations and values of financial instruments not only in Germany but throughout the European Union.
    The Ifo furthermore can have a dramatic effect on the Euro and the Euro crosses. Market volatility around the time of the Ifo release can potentially increase.

    The forecasts for this month release are projecting the slight increase to 108.1, as compared to the previous number of 108.5.

    A result that is higher than expected could potentially have a positive effect on the Euro currency whereas an actual release that is lower than expected could see the single currency come under pressure.

    The reason for this is an optimistic business outlook can precede an increase in business activity and economic growth whereas a pessimistic business outlook could indicate a future contraction in business activity and possible stagnation or drop off of economic growth.

    As economic expansion is seen as being inflationary and economic contraction being deflationary the European Central Bank, (ECB) may step in an increase or decrease interest rates so as to ensure that the influential and dominant German economy does not grow or contract too quickly.







    EURUSD




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.1100

    Target 2: 1.0910

    Projected range in ATR’s: 0.0094

    Daily control level: 1.1140


    GBPUSD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.5410

    Target 2: 1.5200

    Projected range in ATR’s: 0.0105

    Daily control level: 1.5420


    USDJPY



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 122.15

    Target 2: 120.75

    Projected range in ATR’s: 0.70

    Daily control level: 120.20


    USDCHF



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.9875

    Target 2: 0.9715

    Projected range in ATR’s: 0.0083

    Daily control level: 0.9710


    USDCAD




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.3230

    Target 2: 1.3055

    Projected range in ATR’s: 0.0112

    Daily control level: 1.3040


    AUDUSD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.7295

    Target 2: 0.7100

    Projected range in ATR’s: 0.0086

    Daily control level: 0.7180


    GOLD




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1177.00

    Target 2: 1148.00

    Projected range in ATR’s: 14.65

    Daily control level: 1158.75


    OIL




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 46.00

    Target 2: 44.00

    Projected range in ATR’s: 1.56

    Daily control level: 45.90







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  7. #487

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    MARKET BRIEFING – LONDON OPEN 27.10.2015



    Tomorrow’s Federal Reserve meeting will not be accompanied by a press conference. However, we will get from the FOMC a monetary statement.

    The lack of a press conference should discount the possibility of the Federal Reserve Chairwoman, Mrs. Janet Yellen announcing a rise in interest rates.

    Although a December rate move is not priced in by the markets, it would be expected that the Federal Reserve would like to keep its options open. The FOMC’s need for flexibility could, therefore, see the committee give the latest monetary policy statement a somewhat hawkish slant.

    The outcome of Wednesday’s meeting could, therefore, see the Federal Reserve announce a US Dollar supportive statement.

    Following the European Central Banks extremely dovish statement we have seen the Euro put a ceiling at its recent highs. Therefore, a statement by the FOMC that is seen by the markets as hawkish could potentially see the US Dollar experience a broad rally.

    The Federal Reserve is not the only Central Bank that is due to meet during this week. The Bank of Japan will add to the debate when it meets on October 30. The Bank of Japan could decide to increase its QE programme, however, there is also a possibility that the Japanese Government decides to adjust its fiscal policy.

    With so much news out during this coming week, combined with the expectation that the Fed will attempt to push the hawkish line in its monetary statement, there is potential for USDJPY to break above an area of resistance around the 121 level which ties in with a potential break above the 200 period daily moving average.





    EURUSD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.1200

    Target 2: 1.0950

    Projected range in ATR’s: 0.0092

    Daily control level: 1.1000



    GBPUSD




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.5450

    Target 2: 1.5250

    Projected range in ATR’s: 0.0100

    Daily control level: 1.5380





    USDJPY




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 121.70

    Target 2: 120.30

    Projected range in ATR’s: 0.70

    Daily control level: 121.10




    USDCHF



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.9900

    Target 2: 0.9745

    Projected range in ATR’s: 0.0082

    Daily control level: 0.9750



    USDCAD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.3270

    Target 2: 1.3050

    Projected range in ATR’s: 0.0108

    Daily control level: 1.3120



    AUDUSD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.7325

    Target 2: 0.7160

    Projected range in ATR’s: 0.0082

    Daily control level: 0.7200


    GOLD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1177.00

    Target 2: 1148.00

    Projected range in ATR’s: 14.30

    Daily control level: 1158.75



    OIL




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 45.50

    Target 2: 42.50

    Projected range in ATR’s: 45.62

    Daily control level: 45.20








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  8. #488

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    MARKET BRIEFING – LONDON OPEN 28.10.2015








    According to latest estimates, there is only a 4% chance that the United States Federal Reserve will increase interest rates this evening.

    The market also sees a low likelihood that an increase in the Federal Funds rate will happen in December with this scenario priced into expectations by 25%.

    The chances of a March hike increases notably with the market pricing in this expectation by 50%.

    With the market making its own mind on the timing of the first interest-rate increase and if we discount anything happening today, it is, therefore, important to take a close look at the language of the report. Especially as we have been receiving conflicting messages from the FOMC with some Governors wanting to see a rate increase to happen this year and others want it to happen in 2016.

    The Federal Reserve has what is known as a dual-mandate which is to look after interest rates and employment.

    However over recent times the FOMC has begun to take into account issues that are external to the US economy. This can now be considered as the third mandate.

    The question vexing many market analysts and no doubt the decision makers on the FOMC is should the Federal Reserve just stick to its dual mandates or is it right to look at the external factors?

    In this modern, interconnected global economy, the FOMC has no choice but to take into external factors when it considers its monetary policy.

    Furthermore, it is fairly obvious that all central banks are now actively briefing one another and where possible planning together so as to solve the problems facing the global economy.

    The FOMC is obviously treading very carefully as it plans its next move with China, the Emerging Markets and Europe being of high consideration.

    China for the past two decades has seen its economy expand at a phenomenal pace. However during 2015 the Chinese economy has grown at its slowest pace in 25 years.

    The Chinese Government and Central Bank have taken steps to cushion the country’s economy from the first major contraction since the open door policy was brought into being.

    The steps taken include a devaluation of this country’s currency and a cut in the rate of interest by 25 bp.

    Europe is also high in the FOMC’s thinking. The European Central Bank President Mr. Mario Draghi has said that the ECB’s QE programme could be extended.

    We now have a scenario of China / EU easing happening at a time when US rates will increase. The fallout from this is a strengthening US Dollar and its negatives implication for US competitiveness on the global markets.

    Back to the dual mandate, the US economy and the employment outlook. The jobless numbers calculated on a three-month average have been good but not impressive.
    There are two more payroll numbers to be released before the meeting in December together with inflation and manufacturing data.

    The Federal Reserve, therefore, does have some time to look at the incoming data. The two most recent job numbers were below expectation. However, the FOMC could be tempted to act if it sees the next two NFP releases reach levels above 200,000.

    Some would say that the FOMC has been overly cautious as it waits for all the boxes to be ticked before it moves ahead and tightens its monetary stance by increasing interest rates.

    The problem for Chairwoman Janet Yellen and her colleagues on the committee is that whatever they do would is bound to displease someone.







    EURUSD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.1130

    Target 2: 1.0950

    Projected range in ATR’s: 0.0089

    Daily control level: 1.1080



    GBPUSD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.5400

    Target 2: 1.5205

    Projected range in ATR’s: 0.0098

    Daily control level: 1.5380



    USDJPY




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 121.00

    Target 2: 119.70

    Projected range in ATR’s: 0.74

    Daily control level: 121.00


    USDCHF




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.9940

    Target 2: 0.9785

    Projected range in ATR’s: 0.0077

    Daily control level: 0.9800



    USDCAD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.3375

    Target 2: 1.3155

    Projected range in ATR’s: 0.0110

    Daily control level: 1.3120




    AUDUSD




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 0.7280

    Target 2: 0.7115

    Projected range in ATR’s: 0.0085

    Daily control level: 0.7255



    GOLD



    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1180.00

    Target 2: 1152.00

    Projected range in ATR’s: 14.08

    Daily control level: 1160.60


    OIL




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 45.00

    Target 2: 42.00

    Projected range in ATR’s: 1.44

    Daily control level: 45.20








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  9. #489

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    MARKET BRIEFING – LONDON OPEN 29.10.2015



    The zero interest rate will last for at least month and a half, with no changes in the current rate, the Federal Reserve statement asserted last night. In their view, economic conditions have not altered significantly leaving the possibility for the hawkish move as soon as this December’s meeting.

    As the investors had expected the Federal Reserve to remain dormant regarding the interest rate well until next year, the reference to the next meeting came as a surprise, sending the EURUSD pair to the new lows sharply.

    The pair reached below 1.0900 mark within the first hour of the statement release, being the EURUSD two and a half month low. The US Dollar strengthened further, with the index yesterday’s high at 97.875, gaining more than 270 pips just within a week.

    The line that was saying the global economic and financial developments “may restrain economic activities somewhat” was this time removed from the statement. It was also added that employment conditions are recovering at a satisfactory pace with “labour market indicators, on balance, show that underutilization of labour resources has diminished since early this year”.

    Nevertheless, as the economy expanding at the “moderate pace”, there are still no improvements in the inflation rate outlook, with the inflation continue to run well below the 2% target set by the Federal Reserve. It was commented however that the indicator underperformance is due to the low energy prices and the prices of non-energy imports.

    The votes came 9 to 1 with Richmond Federal Reserve Bank President Jeffrey M. Lacker expressed his view in favour of the interest rate hike once again.

    The investors were expecting the next interest rate hike not earlier than the March 2016, with most views have now shifted towards the late January.

    “The Fed statement was the first since 1999 in which policymakers pointed to a possible rate increase at the next meeting”, Michael Feroli, a previously economist at the US Central Bank, now at JPMorgan, commented to Reuters.

    The Federal Reserve will now have some time to look at several important data before the next meeting on 15-16 December. Even though the two recent NFP releases were below expectations, FOMC could be tempted to act these numbers will improve before the middle of December.

    The Bank will also closely observe the economic conditions outside the United States. The weakened markets such as China and Japan seeing the capital outflows to the more profitable venues, pushing the US dollar higher.

    The likely additional quantitative easing measures in Europe, announced last week, are having similar consequences to the world’s major reserve currency. Stronger Dollar, therefore, could hurt the domestic exporters, and could make it even harder to reach the desired inflation target. It also sets additional obstacles for the jobs market to improve.

    That might explain why the Fed might prefer to test waters and leave the door open, without making any solid commitments ate the moment.






    EURUSD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.1020

    Target 2: 1.0830

    Projected range in ATR’s: 0.0096

    Daily control level: 1.1080


    GBPUSD





    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.5370

    Target 2: 1.5167

    Projected range in ATR’s: 0.0099

    Daily control level: 1.5380



    USDJPY




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 121.90

    Target 2: 120.30

    Projected range in ATR’s: 0.812

    Daily control level: 121.25



    USDCHF




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.0060

    Target 2: 0.9820

    Projected range in ATR’s: 0.0118

    Daily control level: 0.9800




    USDCAD




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.3320

    Target 2: 1.3070

    Projected range in ATR’s: 0.0127

    Daily control level: 1.3275


    AUDUSD




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 0.7200

    Target 2: 0.7000

    Projected range in ATR’s: 0.0095

    Daily control level: 0.7300



    GOLD





    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1172.00

    Target 2: 1140.00

    Projected range in ATR’s: 15.95

    Daily control level: 1180.00


    OIL




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 48.00

    Target 2: 45.00

    Projected range in ATR’s: 1.57

    Daily control level: 46.50






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  10. #490

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    MARKET BRIEFING – LONDON OPEN 02.11.2015





    The start of a busy week of financial data began on Sunday with news out from China.
    The Chinese Federation of Logistics and Purchasing (CFLP) published data that indicated that the manufacturing sector is still declining.

    According to the latest release, the Manufacturing PMI for October stood at 49.8. The market had expected a slight increase to the 50.0 level.

    As PMI readings that are higher than 50.0 indicate an expansion in the manufacturing sector, the release of yesterday’s number which was below the 50.0 mark does reinforce the current negative view analysts have of the Chinese economy.

    However, that yesterday’s release was in line with data for September does give those looking for signs of stabilization that a floor has been put under what has been a savage contraction.

    This view has gained some ground this morning with the independent Caixin Manufacturing PMI that is released by Markit indicated that there was a slight uptick.

    The actual number for this morning Caixin Manufacturing PMI being 48.3 against a forecast of 47.7 and prior 47.2.

    The mixed data with respect to the Chinese Manufacturing will most probably force the Chinese authorities to take further measures that will help create a bottom and stabilizes this country’s economy.

    In other news, PMI surveys dominate today’s releases. Japan this morning releases its monthly Final Manufacturing PMI. The latest release was reported as 52.4 beat the consensus forecast of 52.1 but was slightly below Septembers reading of 52.5.

    Across to Europe, Spanish Manufacturing PMI disappointed with the actual of 51.3 missing the 51.9 forecast and 51.7 prior release.

    However, there was better news from Switzerland which saw an expansion in the manufacturing sector with the latest report reported as 50.7. The October number was a strong beat on the 50.2 actual and 49.5 September reading.

    As I write, PMI data will be released shortly for Italy, Germany, France and the Euro-Area and later today, we have PMI data from the UK and the USA.





    EURUSD




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.1134

    Target 2: 1.0932

    Projected range in ATR’s: 0.0101

    Daily control level: 1.1095


    GBPUSD




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 1.5543

    Target 2: 1.5347

    Projected range in ATR’s: 0.0098

    Daily control level: 1.5240




    USDJPY




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 121.25

    Target 2: 119.53

    Projected range in ATR’s: 0.86

    Daily control level: 120.00



    USDCHF




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.9931

    Target 2: 0.9767

    Projected range in ATR’s: 0.0082

    Daily control level: 0.9815



    USDCAD




    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1.3185

    Target 2: 1.2960

    Projected range in ATR’s: 0.0115

    Daily control level: 1.3190


    AUDUSD




    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 0.7190

    Target 2: 0.7036

    Projected range in ATR’s: 0.0078

    Daily control level: 0.7079



    GOLD



    The intraday technical outlook

    Trend 1 hour: Down

    Target 1: 1156.00

    Target 2: 1127.00

    Projected range in ATR’s: 14.70

    Daily control level: 1150.00



    OIL





    The intraday technical outlook

    Trend 1 hour: Up

    Target 1: 48.00

    Target 2: 45.00

    Projected range in ATR’s: 1.41

    Daily control level: 45.85






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