Tuesday, 23 August 2016 19:57

Greenback drops against yen

On Tuesday, the evergreen buck tumbled against the Japanese yen, while the New Zealand dollar went up right after the country’s major financial institution informed that they don’t see the necessity for a rapid succession of interest rate drops.

The evergreen buck lost 0.1% to 100.220 against the safe-haven Japanese yen amid a pullback in Tokyo shares.

The greenback had soared to nearly 101.00 yen overnight, reacting to hawkish-sounding comments by Federal Reserve Vice Chair Stanley Fischer.

The euro grew 0.1% to $1.1332, thus stepping off an overnight minimum of $1.1271.

The Australian dollar ascended 0.1%, being worth $0.7638 , moving up on the coattails of the New Zealand dollar.

The New Zealand dollar appeared to be a relatively big mover in a subdued Asian trading session.

The New Zealand dollar earned 0.6%, being worth $0.7308 after Reserve Bank of New Zealand Governor Graeme Wheeler informed that the current interest rate track suggests further monetary easing, although he didn’t see the need for an instant series of rate drops. 

Kiwi rises further along with yen and Aussie

The New Zealand dollar kept rising in Asia, notwithstanding remarks from RBNZ Governor Graeme Wheeler on the scope for further interest rate drops, while the Australian dollar and the Japanese yen ascended too, following a light regional data day.

The currency pair NZD/USD was worth 0.7298, rising 0.36%. Meanwhile, AUD/USD traded at 0.7635, demonstrating a 0.20% soar, while USD/JPY was worth 100.13, tumbling 0.20%.

The US dollar index, gauging the US dollar’s value against a trade-weighted basket of six key counterparts, traded 94.46, descending 0.06%.

Traders are currently focused on a highly anticipated speech by Fed Chair Janet Yellen at the annual gathering of top major bankers as well as economists in Jackson Hole, Wyoming, this week for new signals on the timing of the approaching US rate lift.

Overnight, the evergreen buck pared profits against the other key currencies in subdued trade on Monday, though hopes for a probable American rate lift before the end of the year still ensure support to the US dollar. 

Bazooka

Published in Forex

On Tuesday, the British pound sagged to fresh one-month minimums against the major American currency, after the issue of gloomy British manufacturing data contributed to worries regarding the actual strength of the British economy.

The currency pair GBP/USD grasped 1.2968 during European morning trade, the pair’s lowest reading since July 11. However, the given pair subsequently consolidated at 1.2978, dropping 0.47%.

Cable was about to find support at 1.2848, the minimum of July 11 as well as resistance at 1.3178, the peak of August 5.

The British Office for National Statistics told manufacturing production slumped by 0.3% in June, somewhat worse than expectations for a 0.2% dip and following a sag of 0.6% a month earlier, that was revised down from an initial 0.5% slump.

On an annualized basis, in June manufacturing production edged up 0.9%, worse than forecasts for a 1.3% leap.

The report also revealed that in June, industrial production went up by 0.1%, in line with forecasts. In June, year-on-year, industrial production soared by 1.6%, matching forecasts.

Aussie drops after weak NAB polls

The Australian dollar sagged during Asia trade after downbeat business surveys from National Australia Bank as well as consumer and producer prices data from China, suggesting mild pressure on prices although unlikely enough to spur any monetary policy action.

The currency pair AUD/USD was worth 0.7639, demonstrating a 0.16% tumble, while USD/JPY traded at 102.51, rising 0.06%.

In Australia, NAB business confidence was at plus-4 for July, compared to a previous outcome of plus-6, along with the NAB business poll that reached plus-8, versus a previous reading of plus-12.

China posted CPI for July with a 0.2% revenue in July, a faster tempo than the 0.1% revenue observed month-on-month as well as an annual level of 1.7%, just a bit below a 1.8% pace observed year-on-year. Meanwhile, PPI figures from China disclosed a dip of 1.7%, less than the drop of 2.0% year-on-year expected. The data came after weaker than expected imports the previous month in China posted on Monday and hit sentiment on demand prospects.

Bazooka

Published in Forex
Monday, 01 August 2016 22:19

Aussie stands still, kiwi soars

On Monday, the Australian dollar stood still against its American counterpart, while the New Zealand dollar ascended after the release of China’s mixed manufacturing activity and Friday’s downbeat growth data kept weighing on the greenback.

The currency pair AUD/USD stood still at 0.7615, which is the highest value since July 15.

Data earlier demonstrated that in July China’s official manufacturing purchasing managers’ index ticked slumped to 49.9 from 50.0 last month, compared to hopes for an unchanged reading.

Meanwhile, the previous month, the Caixin manufacturing PMI headed north to 50.6 from June’s reading of 48.6, compared to hopes for a leapt to 48.7.

By the way, China appears to be Australia’s number major export partner and also New Zealand’s second biggest export partner.

As for NZD/USD, this currency pair soared 0.11%, being worth 0.7215, which is close to Friday’s two-week peak of 0.7233.

On Friday, the Commerce Department drew attention to the advance read on the second quarter, when American GDP disclosed a 1.2% annualized growth rate, which is below 2.6% expectations. 

Dollar pulls away

The evergreen buck pulled away from minimums it achieved following gloomy American growth figures late the previous week, while the Japanese yen pared some of the huge revenues generated after the BOJ disclosed a much smaller stimulus than it was actually expected.   

The dollar index, normally tracking the major American currency against a basket of key six counterparts, grew 0.1% being worth 95.578, thus rebounding from its Friday minimum of 95.384, its lowest value since July 5.

American GDP edged up at an annual 1.2% during April-June,and  Commerce Department figures unveiled on Friday, demonstrated a slight drift from the 2.6% surge forecast by financial experts surveyed by Reuters.

The greenback’s  advance was blocked in its tracks by the downbeat Q2 GDP figures.

The dollar index's next immediate technical target hit 94.75, as market speculation of an approaching interest rate lift keeps fading.

The FOMC statement earlier this week didn’t leave the impression that a September rate lift was quite probable and with mediocre growth numbers, the odds kept downgrading further.

Bazooka

Published in Forex

Figures from the UK national statistics agency announced yesterday showed that consumer price index (CPI) of UK in June rose 0.5% compared with the same period last year, higher than the increase forecast of 0.4% and the rise of 0.3% in the previous month. Core inflation, excluding energy and food prices, rose from 1.3% to 1.4% over the same period last year.

Positive inflation data did not bring more support to Pound after the International Monetary Fund (IMF) sharply lowered its growth forecast for the UK economy. According to the IMF, Brexit would make the growth of UK fell by nearly 1% in 2017 from the forecast of 2.2% to 1.3%. The agency also stressed that increasing instability following the referendum in the UK forecasts domestic demand weakened significantly. British Pound was under pressure after credit rating agency Moody's warned the UK's economic growth will slow significantly in the short term. Prospects for growth in the medium term will continue to weaken if UK doesn't reach a trade agreement with EU in the case of this country officially out of the coalition.

EUR/USD fell back yesterday 1.10 threshold after the economic sentiment index by ZEW's survey of the German economic prospects in the next 6 months dropped from 19.2 points to minus 6.8, lower than the forecast of analysts at 8.2. Indicators on the Eurozone also fell from 20.2 to minus 14.7 over the forecast of 12.3. ZEW survey showed investors and economists are pessimistic about the prospects of Eurozone after Brexit.

The market's attention focus on the results of the meeting of the European Central Bank (ECB) launched tomorrow. Analysts predict ECB will not have any change of policy in this session. However, ECB President Mario Draghi might open the possibility of economic stimulus in the near future if the area economic outlook deteriorated due to the influence of Brexit.

The commodity currencies dropped sharply in yesterday's trading session. Canadian Dollar CAD weakened when oil prices on world markets continue to decrease to the 4-month low. Meanwhile, the possibility of cutting interest rates of Reserve Bank of Australia (RBA) in August was up to 60% after the minutes of the July meeting of this agency announced yesterday that the AUD strength is difficult for rebalancing economy and it emphasized that inflation expectations remain below the targets, this suggests the possibility of easing further monetary policy in the near future.

AUD/USD: SELL: 0.7520 TARGET: 0.7440; STOP-LOSS: 0.7560

Thong Le

Published in Trading strategies

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